8 BEDROOM DUPLEX 4 BED PER[Calc Review] Help me analyze this deal

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  • John Leavelle
    Investor · La Vernia, TX · Member since 2015 · 1k+ posts · 865 votes
    8y

    Howdy @Corey Jacques

    This is not a good BRRRR deal. There are multiple things wrong.

    1. Not sure how you will get $268K ARV with only $7K Rehab. I'm not saying it can't be done.

    2.  Why are you willing to leave $20.8K plus in the deal?  Why not just Purchase it with a conventional loan at a low interest rate.  Avoid the extra points and Refinance fees.  You also would avoid having your credit rating hit twice.

    3.  Is the Acquisition Loan from a Hard Money Lender?  Are they allowing 20% Down payment?  Why do you have 30 years for amortization?  Shouldn’t it be 1 year?

    4.  Refinance loans have closing costs (usually called Fees). they can be paid separate or included with the loan.  You still need to account for them.

    5. Your Cash Flow analysis is inadequate. You did not include insurance. 5% is too low for Vacancy, Repairs, and CapEx. I would raise them all to at least 8%.

    Hope this helps get you going in the right direction.

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  • Corey Jacques
    OP
    Minneapolis, MN · Member since 2018 · 53 posts · 11 votes
    8y

    Thanks John, for the advise/coaching. 

    1. I saw the Zillow estimate and assumed I could get that value. I will re-evaluate based on the comps.
    2. I never knew that was in option. Thank you. 
    3.  The Acquisition loan will not be a Hard Money Lender. Does it makes sense that I use a conventional loan and use a hard money lender to fund the rehab and refi after 1 yr?
    4. Thank again, is there a formula to apply to assume the closing cost?
    5. I will edit my analysis to include these 2 factors. Thanks for all of the advise.
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