Shift to brrr strategy

[Jeremy England]

So I got back into rei this past few months after sitting on the sideline about 6 months before that.  I'm a former builder who got rocked pretty good in 2008 then took a job out of state and just recently moved back to the gulf coast.  

Anyways, so I found bp, soaked up the podcasts, read the forums, started to apply some of the ttp's.  Found a couple realtors that had similar mindsets, networked with other investors, made offers on auctions, reo's, wholesalers, and continued to grind.   so now I got a property under contract for about 62pct of its arv.  I found the property by tracking a fsbo that was in reality an investor who picked the property up at auction.  Rehab should cost no more than 15k (realistically it might even cost less than 7k depending on what I decide to do with it and how much I'll do myself.

More importantly I am not using any of my own money.  I got this property with the use of a personal loan from Sofi.  They gave me 100k at 8.6 pct amortized over 7 years.  Making my payments about 1590 per month but only 600 of that is interest, the other 1000 is principle.  I got the loan about a month before this purchase for a trustee auction but the auction was cancelled so I gave myself 3 months to either use the funds or repay the loan and call it a 1600 loss.  The use of the personal loan was invaluable because I could realistically make all cash offers because the money was sitting in my bank account. Plus closing costs were a fraction of what I have paid in the past.  Quick closings etc.  we signed the contract this past thurs.  We close tuesday.  Sofi may or may not be an option for some, they only lend to people with high credit scores and high incomes apparently.  I do ok with my ft job so I took advantage.  

So the numbers (so far) are:

Purchase price: 62k

ARV: 105,000

Buying costs: 961.00

Rehab: 7-15k

Unsure of what the holding costs will be until its rented but I'm estimating 4 months.

Utilities: 650

Taxes: 300

Insurance: 500

Interest: 2400

So I'll be in it for about 70% ARV.

Projected rent: 12000

Costs: prop mgt: 1080

Maint: 600

Capex: 360

Utilities: 0 (tenant pays)

Vacancy: 1200

Tax: 800 (this will go up in october but maybe only 300)

Insurance:  still getting numbers but no more than 1200

NOI: 6760

Debt service will be accounted for after rehab and when I find a good refi option, but I figure I'll pay about 5.5pct and have lending costs (unsure of what those will be) associated with it.  Theyll require a survey, and I'll pay some origination.  

That should leave me with all my money back and a property that cashflows at $149.00.  I'll go do it again after.  

If I get held up with seasoning periods to refinance i could be looking at an additional 1200 in interest costs. 

We'll see how it goes