1st deal! Am I missing anything on this BRRRR deal? Help!

[Tim Vecchioni]

First things first. I am not saying this is a great deal, or would even be accepted. However, I am looking to make my first purchase. Well second, kind of, but that is a different story! Looking for advice/direction. Thanks!

I am not a paid user, but here is the link from the calculator. Hope it works!

https://www.biggerpockets.com/brrrr-calc/294763

The house is listed at $195K and is a foreclosure. Been on the market some time now. Needs a lot of work but it looks like from the pictures (haven't walked the property) that the floors and such have already been removed like someone was going to try and rehab it. I feel the repairs may cost a little more but not much as I would be doing some of the work myself. I tried to find some comps for the ARV and I actually think I may have lowballed the ARV a little. So with 20% which I would need to find via private money/family/etc, The total project cost is $201,125. Now say everything goes perfect and the rehab costs $20K, we do it in 1 month, and find a tenant right after. Come a year down the road and the property is now "seasoned", comes the time to refinance. To my understanding, banks will only refi for 70% of the ARV/Appraised value, correct? Now with that, would leave a loan of $175K if it appraised for $250K. So with the original loan set at $140K, that would leave me with $35K which is $26,125 short of being able to pay off the private money. Yes, at the $175K, there is now $75K in equity but with no way to touch it? Also after the refi, there isn't exactly a cash flow but from reading about BRRRR, that is ok because of the equity you now have in the property. I have also heard/read back and forth some banks will give you a loan at appraised value, some won't. Is this true? If so, this problem wouldn't be a problem obviously. It would also put this particular property in a negative cash flow. I am also not positive this property would actually pull the $1,700 a month in rent, but it isn't that big of a stretch being an A/A+ neighborhood.

So am I missing anything here or is all of my logic, thinking correct? Also, some answers about the banks and refinancing maybe with some links/proof would be nice. 

Thanks again! And be nice, I am new! lol. Can't wait to get my feet wet and eventually be interviewed on the podcast!

[Brent Coombs]

@Tim Vecchioni, basically, IF a fair ARV for it is $250k, then yes, your all-in cost (including ALL your private borrowings and rehab and holding costs) would need to be no more than $175k (not $201k)! And yes, cash flow would STILL need to be positive, even allowing for all its ongoing expenses including a refinanced $175k mortgage.

This one is unlikely to meet either criteria. Also, please get into the habit of analyzing CONSERVATIVELY. Phrases like "it isn't that big of a stretch", "I feel the repairs may cost a little more but not much as I would be doing some of the work myself", "say everything goes perfect" - need to disappear from your guesstimates.

If you're suggesting that "some banks will give you a (100%) loan at appraised value" - then don't count on that. Rather, it's: "banks may give you a loan, usually at 65-75% their appraised value, but occasionally a bit more - with conditions"! All the best...