Please help! Sample BRRRR analysis

[Travis White]

Thanks for clicking in here :)

This is a sample analysis of a flooded property here in Houston. I want to make sure I'm getting my head around these deals in the right way. I've linked my BRRRR calculator output PDFs here and at the end of the post.

Target property - 4 bd, 2.5 bath, 3300 sq ft

- Purchase: $139k

- Rehab: $45k

- ARV: $235k

- Rent: $1800

Project Cost - 186.5k

- HML Loan 139k

- Rehab 45k

- Points (4) - 5560

- Closing costs (estimated) - 2500

Refi

- Loan (30 yrs @5%) - 164.5k

- Closing costs - 1500

- Cash left in deal - 29k

Cash flow

- Pre-refi - -$2200

- Post-refi - $292

CoC - 12.%

Some questions:

- Can someone help me out w/ calculating CoC? I've tried to get myself but I'm getting stuck.

- It looks like I need to account for holding costs like utilities and construction insurance on my own. Does that sound right?

- Does the BRRRR calculator have a way to add additional financing? My HML will loan 70% ARV which could help w/ rehab costs and would leave less money money in the deal.

- I could put more cash into this deal but I have some questions doing that. First, would it be right to think that I could do that analysis by adding a down payment to my HML? Adding extra money would make my CoC go down but I would save on financing costs. Are there other considerations? Would it also result in more cash being left in the deal?

- What ratios, numbers, metrics etc etc etc do you guys tend to focus on? Right now, I'm just tending to look at positive cash flow and 10%+ CoC; what else does can I look at that will help me better understand deals?

- Would you do this deal? By the looks of the numbers, it seems good to me.

- And the best one, what am I not asking about now that I should be? What am I not thinking about that I need to be?

Again, thanks so much for reading through my sample analysis here!

BRRRR Calculator Report 

[Derek Kirkwood]

@Travis White

Before answering your specific questions I wanted to point out:  You don't have to use the 70% Rule, its just a rule of thumb for flipping, but if you did the max you would offer for this would be $119,500. If you bought it at that price it would be 34% CoC with only about 10k left in the deal. For your specific questions in order:

-The CoC return in this case is one year of the $292/mo cashflow divided by cash left in: (292*12)/29000 = 12%

-Holding costs - yes! Holding costs are usually: property taxes, insurance, utilities, HOA, landscaping, financing costs. So for the 3 month rehab you will pay all those things, and the financing costs will be that 14% HML interest until you refi 6 months later.

-Putting more money down so that you have to borrow less HML will result in less financing costs overall, with everything else being equal will result in less cash left in the deal.

-Up to you on personal criteria, but a perfect BRRRR would result in no money left in the deal or even ending up with more than you started with.

-No I would stick to the 70% rule

Hope that helps!