BRRRR Deal Analysis

[Tim Hoh]

Hi All,

New investor here looking to do some out of state investing. Quick, hopefully simple question. When analyzing a deal, do you run the analysis with the mortgage that is before you refinance or after? Isn’t the mortgage going to be higher after you refinance? Just a little confused on that portion. Any other advice for a new investor would be greatly appreciated.

Thanks!

Tim

[Kenneth Garrett]

@Tim Hoh

You need to run the numbers after the refinance. It is best to pay cash for the property. It doesn't have to be your cash; private investor, hard money, etc. It's hard to use traditional financing with the BRRRR's since you're trying to buy it at a discount which means it needs work (distressed). This makes it difficult to acquire traditional financing, but not impossible. Make sure you include all of your cost when calculating your numbers.