Deal analysis for BRRRR

[Prashant Sharma]

Hello fellow BP members,

I'm under contract for a duplex in a hot neighborhood in Orlando. Bank owned property that had several offers. I'm looking for some help on the numbers.

This would be my first BRRRR deal so kind of nervous.

Purchase price $281K

Closing costs (Attorney fee 995 +inspection 600 +survey 250) = 1845

Total = 282,845

Rent estimate = $2400

Prop mgmt = 230 (10%)

Tenant turnover = 110 (5%)

Prop maintenance = 110 (5%)

Capex = 110 (5%)

Tax = $350

Ins = $100 (guestimate)

Reno budget = $25K

ARV = $330K

Refinance: 

P+I = $1275 (70% refi)

Prop mgmt = 230 (10%)

Tenant turnover = 110 (5%)

Prop maintenance = 110 (5%)

Capex = 110 (5%)

Tax = $350

Ins = $100 (guestimate)

Net = 2400-2285 = $115 /mo.

I know it's not a lot of cashflow, but A class neighborhood and potential equity make it a sweet deal. Feedback?

Thanks.

[Nicholas Lohr]

I don't think the spread between the original purchase price and the ARV is wide enough. As in you're not leaving yourself enough of a margin of safety there. If that renovation budget goes over, and it always seems to, then you're not going to be in good shape.

Also I see you are in NJ and this is in Florida. If I wasn't present almost every day for my first BRRRR deal, especially during the Rehab phase, it would have been a disaster. I know NJ may be too expensive but can't you find something within a drive from where you live?