New to the BRRRR

[Harrison Taylor]

Hello,

New to the community and also a new investor. I've landed with wanting to try a BRRRR strategy on a house in my local market. I live in the Midwest, Illinois to be exact.

The house would be bought and rehabbed with cash. The house is in good shape at face value but is old. It is a 1300sq/ft 3 bed 1 bath with plenty of room to add a second bathroom.

I guess my question here is how to estimate a decent rehab budget. My plans are to add a second bathroom (sellers have already started this project). Maybe update HVAC system, the house doesn't have central air. Update the kitchen and windows. I'm hoping to keep it around 30K. Is this attainable? Is it wishful thinking?

Ideal purchase price: 65K

Ideal rehab cost: 30K

Ideal ARV: 160K

Thanks in advance for any advice/ input. 

-Harrison

[Nicholas L.]

@Harrison Taylor

you're on the right track, but the numbers can't be 'ideal,' they have to be rock solid. so, is the ARV really 160K? you need solid comps. and, 30K seems low for what you're proposing, but it's of course hard to tell since i haven't seen the house and don't know anything but the information you posted. to estimate the rehab you have to... estimate the rehab. add everything up down to lightswitch plates and cabinet hardware.

also remember to factor in purchase closing costs, holding costs, and refinance closing costs.  these can add up to thousands or even tens of thousands of dollars and often get overlooked.  refinancing can actually be pretty expensive.

check out Tarl Yarber's BRRRR walkthroughs on YouTube. He does a great job of going into the weeds on all of this stuff.

hope this helps