BRRRR Calculator: Gross Rent Multiplier Question

[Kevin Sobilo]

I've been looking at the Bigger Pockets BRRRR calculator and I think the "gross rent multiplier" is being calculated incorrectly.

The formula it appears to be using is:

Purchase Price / (Gross Monthly Income *12)

That would be correct for a buy and hold I believe, but for a BRRRR deal, I think it should be:

(Purchase Price + Rehab Cost) / (Gross Monthly Income * 12)

The reason I think that is because the purchase price alone doesn't get you a house that is rent ready. You need to rehab it first to have a fair comparison with a buy and hold deal.

Any thoughts?