please help me analyze my first deal

[Anna Stratton]

hello all,

I had planned to BRRR a property for our first investment.

After a few months of searching and several "no contract", i finally have a contract on a house.  i am asking for help to analyze this and how to fund the deal

neighborhood- C+/B-

listed $100K,  buying for $43K

the house is a 1940s 4 br/2 bath, 1450 sq.ft. , is currently occupied.   needs medium/heavy rehab. such as new cabinets,appliances,  bathrooms, update electrical and some plumbing, wood floors in good condition,  it has window units for A/C ,as most of the other houses in the area, forced heat.

I only want to put about 20K in renovations  and  can have it ready in 3 mo.   We plan to do much of the work ourselves.

total cash in -$64K

estimated ARV-$120K

rent is expected to be $1000/mo

this is a cash deal, no financing and i have 30 days due diligence from today.

my questions:

1.  what do you think so far?

2. flip or BRRR?

2. I have cash , but should i use  hard money or my cash? is there an advantage for either?  I really don't want to tie it up here for 6-12 mo waiting for refi.

3. i used the BRRR model using the numbers above and it doesn't seem like a good deal, but how can having over $60 in equity not be a good deal? ( i must have not put in the numbers in quite right, though i have run them many times)

Any help here is very much appreciated.  I am getting paralyzed

thanks

[Greg Scott]

Anna:

Congratulations!   Assuming your rehab numbers are right, this is a very good deal.  (I would get a contractor in to really take a good look.  A 1940s property can have a lot of "issues" you may not notice.)

I would only buy and rehab with cash if you then do a deferred refinance to get your cash out. Otherwise, there is no point in the BRRR.

Or, you could do a hard money loan and after the work is done do a rate and term refi.

You may want to rethink about doing the work yourself.  A contractor can do it faster.     If you spend 6 extra months rehabbing the property a hard money loan can eat up most of the savings by doing it yourself.   There are also rules about timing of a deferred refinance.   In this case, spending more money on the rehab might make you the most money in the long run.   Plus, you can avoid all the brain damage of doing the work.