Very first deal... Any opinion on the numbers appreciated!

[Adrian Fajardo]

Hello everyone, I'm a soldier in the US army but have big ambitions and don't plan on waiting to get out of the army to start. This is my first lead and a promising one. Here are the numbers.

- I am planning on using the BRRRR strategy on this one

- Duplex w/ 2 bed and 1 bath 

- Seller price $124,000. After calculations my offer = $90,000.

- needs $20,000 (rough estimate)

- both units would rent about $1,100

- ARV $200,000 (rough estimate, based on similar properties around it)

I guess my biggest concerns are the repair costs and ARV. I've never done any construction work, although I know this is an easy fix coz I could just ask a contractor to give me an estimate and also with the ARV, I could just bring in an appraiser however just with the estimate I put up, would this be a sound deal?

oh, based on BRRRR calculator, on Initial Rental Period my Cash on Cash would be 289.36% and on Refinance it would be 213.70%

[John Leavelle]

@Adrian Fajardo

I always want to help out a fellow Service member/Vet.  For J Scott's book and others look here on the BP Bookstore.  Go to the menu, then click on Education, then books.

You will not be able to use your VA loan unless you plan on living in one unit (House Hacking strategy).

You also may have a difficult time getting a Hard Money loan.  With you being a new investor (no experience) they may not give you a loan.  Or they may only fund part of the deal.  You will definitely need to have skin in the deal.   How much were you planning to cover?  Also what is your time estimate for the Rehab?  3 months?  You really will not know that until you have the contractor's estimate.

Try to find a local REI club or meet-up group in Fairbanks. They are a great source of information and help.

For your BRRRR Refinance planning purposes you need to try and keep your all-in costs (Purchase price, Rehab costs, Closing and Holding costs) to no more than 70% of your ARV. As you stated the Refinance Lender will give you a loan that's 70 - 80% LTV based on a new appraisal. Typically it is 75%. If you target 70% it leaves you a 5% buffer encase the appraisal is lower than expected or your Rehab costs are more. The closer you are to 70% or lower the better chance of getting 100% of your Cash out.

Do not be concerned about asking stupid questions.  That's how we all learn.  And it's much better than finding out the hard way.