Need help analyzing a deal

[William Kusznir]

I'm looking at a property that's listed at 35,000. I'm sure it needs work but I'm trying to figure out the numbers and need help. I'd like to use hard money to buy and rehab the house then refinance it to pay back the hard money. I used the BRRRR calc and Don't really know what I'm looking at. Is there anyone out there that can help me out. Thanks

[John Leavelle]

@William Kusznir points are the percentage amount due at closing with the HML. Example; If you get a $100,000 loan at 12% interest with 2 points, then 2 points equals 2% at closing or $2,000. So the loan is really for $98,000.

You will need to shop around and talk to the HMLs. They may not finance to entire purchase and Rehab if this is your first property. They may only do 65 - 70% of the price (maybe less and not the repairs). They will probably want you to have some skin (cash) in the game. How much will depend on each lender. Your best bet is to have an excellent deal to present. Make sure you have solid comps to justify your ARV.

As far as using the BRRRR Calculator I recommend you do your own calculation on paper for now. You need to understand the math and process. Once you are confident then the Calculator makes it easier/faster to do analysis.

Provide the following information for Purchase and Holding Costs:

Purchase Price

Estimated Rehab Costs

Closing Costs (if any, may be paid by Seller)

How many months to complete Rehab (will use the to calculate Holding Costs).  You should be making interest only payments during the Rehab and Seasoning period.  Full loan payoff will occur at Refi.

The following is needed to analyze Cash Flow before Refi:

How many units (1 - 4) and type (1 Bed/1 Bath, 2/1, 3/1,  etc)

Projected Rent rates

Vacancy Rate

All Operating Expenses

CapEx

Once rented the property will need to season (6 to 12 months) for the Bank Refinance requirements. I strongly recommend you get pre-qualified with a Refinance lender prior to purchasing the property. It will allow you to have a good estimate of the loan limit, terms, and interest rate. Of course interest rates can change over the seasoning period. You can use the information for your post Refinance analysis projection. Plus it lets the HML know you are ready to pay them back.