Jersey City, NJ · Member since 2017 · 36 posts · 3 votes
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.
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?
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?
I feel like you're missing some crucial info to know if it's a good deal. What is the refinance amount? How much cash do you have in the deal? And your reserves are off... you have $2400 as rent, but then 10% as $220, and your reserves @ 5% and $110. Those should be $240 and $120 respectively. It's a really slim cash flow deal, but if you are banking on appreciation (which is risky) then it could be a better deal. It's not a deal that I would consider but I dont invest based on appreciation.
It's hard to even find something that I can purchase with that strategy in NJ. The ARV I have is a conservative estimate and I want to hold it for long term so I am not that concerned about the short term swings. As long as I get my money out of the property in the next 2-3 months I am happy.
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?
@Brent Coombs yes it does look like I may not be able to get all of my money out in refinancing. But I'm ok with leaving a part of my cash in it. High cash flow is hard to find in Orlando downtown and surrounding areas in general. Thanks for your feedback.
@Jason D. - Good catch! I will fix the numbers. Thanks!
@Brent Coombs yes it does look like I may not be able to get all of my money out in refinancing. But I'm ok with leaving a part of my cash in it. High cash flow is hard to find in Orlando downtown and surrounding areas in general. Thanks for your feedback.
@Jason D. - Good catch! I will fix the numbers. Thanks!
My main point was that at (only) 0.85%/m gross rent, I don't see "high cash flow" happening!