BRRRR Strategy in Hollister, CA

[Rudy Figueroa]

Hi Everyone,

After listening to as many webinars and podcasts as I could fit into each day for a month, I have begun trying to find my niche and analyze my market. I want to start with SFRs before moving into small multi-family properties. My goal is to own 40 doors at minimum $200/month/door cash flow. (Is this too aggressive?)

I would like to follow the BRRRR strategy and am able to put in $15k-$20k in rehab costs (my skin in the game). I would take out a hard money loan of the purchase price and purchase/holding/refi costs for a 3 month rehab. Below is my analysis:

Assumptions:

3/2 rents for $1900 (varies between $1800-$2300 depending on location/lot size)

3/2 ARV $300K (low end of market)

Hard money purchase @ 11%, 4 points

3 month rehab

Purchase/Holding/refi costs ~ $20k

Refi @ 7% 30year

Yearly operating cost $6000 (includes property taxes)

Unit is rented out immediately at completion of rehab

Numbers after purchase:

Rent: $1900

Average operating expenses: $500

Minimum cash flow: $200

Left over for Mortgage: $1200

Refi max: $180k

LTV: 60%

Numbers for purchase:

Hard money max: $160K

Rehab: $20k (out of pocket)

Purchase/Holding/refi costs: $20k

Max offer: $140k <----------

Purchase price to ARV: 46.7%

How do my numbers look? Am I being too conservative? Is there anything I'm missing?All the help is really appreciated Thanks!