Need advice for a great triplex opportunity

[Kevin Luttrell]

Hi BP,

I have a great opportunity to purchase an off-market triplex in Inglewood CA at a very low price and would love some feedback. I'm hoping to BRRRR this property, but I'm not sure if it makes sense yet. Here are some details:

Purchase price: $550k

Estimated rehab: $20k

ARV: $900k

Projected gross monthly rent: $5,700

Permanent financing details post-rehab:

$580k loan amount

5% interest rate

$3,886/mo PITI [$3,114 P&I, $573 taxes(1.25%), $200 insurance]

$1,881/mo expenses (8% vacancy, 8% maintenance, 7% CapEx, 10% PM)

Total Cash Flow: -$67/mo

All utilities are metered separately and paid by tenants. It seems like a great deal, but from my analysis it doesn't pencil out as a good cash flowing rental. Is my budget for expenses too conservative? Not including vacancy, maintenance and CapEx it would bring in around $1,200/mo and I can't see those expenses running that high, but it seems like most investors on BP estimate these 3 expenses at around 23%.

If I can't make it work as a rental I think it'll still be a great flip, but I really want it to work! Any advice would be greatly appreciated. 

Thanks! 

[Kevin Luttrell]

@Account Closed You're absolutely right about the appraisal, they definitely don't like valuing a property significantly higher than the purchase price in a short period regardless of what the comps show. Wouldn't matter for a flip, but as a BRRRR it'd be a concern.

@Tyler Gibson @Michael Carson Thank you very much for your input. Your comments got me thinking about running this as a short term rental instead of long term due to the proximity to LAX and the new Hollywood Park/stadium that's coming. I ran this through AirDNA online and they're projecting about $41k per unit in annual income as a STR...very interesting. That would be over $10k/mo in gross revenue, making this extremely profitable to hold. Gotta do some more research now!