Hey....want my first deal. Opinions on this deal??

[John Patton]

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

This property is off market.  Just had all new HVAC installed and still needs 35K of work.  But...seems like a great value add with good cash flow.  Verified rents with rentometer and local agent (not the listing agent).

Thoughts??

[John Leavelle]

Howdy @John Patton

Your numbers do not support a BRRRR deal. What type of property is it? Age?

Here's my quick look at the BRRRR calculation:

$220,000 ARV

x 70% (All-in Costs Target) & Refi LTV

= $154,000

- $35,000 Rehab estimate 

= $119,000

- Closing Costs 

- Holding Costs 

= Maximum Allowable Offer (MAO) or Purchase price

Your $165K Purchase price is already over the 70% (without Rehab, Closing, or Holding Costs). Even with the 75% LTV you use it doesn't work.

You would not be able to payoff the original Acquisition Loan and get your cash back.

How soon would you want to Refinance this property?  If you use conventional loan for the purchase you may have to wait longer to Refinance.  Double check with your Lender to make sure you can do it.

Your reserves are a little lower than I prefer. Vacancy 3%, CapEx 5%, and Repairs 5%. I like maintaining one month rent (8.34%) for Vacancy and hope for 3%. 12% - 15% combined for CapEx and Repairs depending on the age, current condition, and type of property.

It still may be a good Buy and Hold deal. Just not a BRRRR with that ARV and Purchase price.