Seeking BRRRR Analysis Help!!

[Mike Ventura]

Hello BP - Happy Holidays Man does it feel great to be posting! I'm seeking some help with crunching the numbers on a potential BRRRR property. My main question is around the financing for the purchase of the property. Every podcast I've listened to and post I've read make it seem that the purchase of the property is in cash obtained through a HML, etc. I am purchasing a foreclosed property through a conventional loan with 5% down. I'm hoping to get some clarification on the money I could have back after refinancing after 1yr: Purchase Price: $100,000 Down Payment: $5,000 Rehab Cost: $25,000 ARV: $180,000 If I understand correctly (which I'm not sure I do) my math is telling me that I'll have $45,000 after the refi. Assuming a 75% LTV. Looking forward to the feedback! Hopefully I'm not out in left field 🤔

[Nick Fitzpatrick]

Trent is spot on about the rehab costs and overestimating the ARV but also consider these potential issues:

1) Putting 5% down on a foreclosure isn't competitive, at least in Atlanta where the good deals are bought with cash. I have no idea about NJ but less than 1% of our market is foreclosures. 

2) Your lender (and appraiser) may require the property to be in functioning condition in order to complete the loan. If it's in foreclosure, this may cause issues. 

As for your numbers, if you have $125k into the property, you'll need the appraisal to be at least $167k to get all your money out.