Tax Deed to BRRRR
Hey BP!
I think I've built out a pretty sound investment strategy but I wanted to get everyone's input. This deal is based off a real tax deed auction property in FL:
1912 Sq ft 3/2 SFH in Bay County
- ARV: $415,101
- Estimated Monthly Rent $2,984- based off 6 comps within a 1 Mi radius.
- Adjusted Purchase Price/ Max Bid: $210,840.80- I start with the 1% rule (thus why I start the analysis by looking at rent) and then adjust the price based on the potential pay-out from a cash-out refi and equity position on the property- more on this in a second.
- Potential Investor payout (15%): $242,466
- Rehab total: $76,480.00- I just used $40/ sqft for an estimate. Obviously there would be a more in-depth analysis if I were actually buying the property. Rehab will be paid for with a HELOC on the property.
- Cash Out Refi: $318,946- This covers the $242,466 payout to the investor and repayment of the HELOC used for Rehab on the property. I could technically get $332K out, so this leaves a little meat on the bone to cover closing costs, potential unexpected rehab issues, etc. Renter would be in place prior to this.
Now I have an investor who's been paid, and a renovated rental property with a tenant that I haven't really put any of my own money into.
Monthly Expenses and Cashflow:
- Principal, Property Taxes, Home Insurance: $1,446.38
- Property Management (12% of Rent Price): $358.08/ mo.
- Monthly cashflow: $1,179.54
Obviously these are rough estimates, but I feel that I've given myself enough buffer throughout the calculation/ analysis that if there are any unexpected expenses, I'll still be able to cover them and have a property that Cashflows a decent amt each month.
What do y'all think? What am I missing
Thanks,
Chris