[Calc Review] Help me analyze this deal

[Chris Wange]

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*This link comes directly from our calculators, based on information input by the member who posted.

Hi everyone!  So I just became a Pro member today, and I'm hoping to get some more expert opinions on a property I found.  The numbers seem to line up so I'm curious if someone more experienced could see a hole in my calculations.  Very thankful for any help and advice you can give!

Chris

[John Leavelle]

Howdy @Chris Wange

I am going to make a couple of assumptions since you have not stated this straight out.

1. This is a SFR.

2. You are wanting to complete a BRRRR strategy.

3.  You are using conventional loans for both the Acquisition and Refinance of this deal.

If these assumptions are correct I will tell you you are not doing it right.  Here are my comments on your report based on my assumptions.

4.  Why are you starting out with a conventional loan with 8% Interest  to acquire the property?  The difference between the Acquisition Loan ($54,640) and the Refinance Loan ($58,000) is only $3,360.  Your closing costs are more than that ($5,000).  If you are willing to leave over $25,000 of your cash in the deal you should use just one loan at the lower interest rate.  Pay your down payment and do the Rehab.  It would be cheaper that way.  You also would only take one hit on your credit rating versus two.

5. Based on your ARV your Purchase price is too high for a BRRRR strategy. It should be closer to $44,500. This is the main reason your deal does not work.

6.  Your Cash Flow analysis looks good.  You are making good conservative estimates for all your expenses.  This confirms my comments about making this a regular Buy and Hold deal.  It works and provides good Cash Flow.

Let me know if my assumptions are wrong.