Some unclear points in the BRRRR calculator

[Drew Clayton]

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

The deal I'm analyzing is a condo where even if I offer 43% of the ARV ($220k on a $520k ARV), the deal won't cash flow due to really high reno costs that stem from lots of damage and biohazard cleanup (it's bad in there, you guys). But no matter how I adjust various numbers, I can't seem to make the deal work, and I'm wondering if I'm just not understanding what certain fields on the BRRRR calculator should have in them. Admittedly, some of this is on me for just not having enough experience with some of the BRRRR concepts too.

I'm a newbie still getting my head around the calculators, and have noticed some of the fields aren't super clear about what they entail, so I'm hoping more-experienced folks (and maybe some BP employees) can clarify for me, and eventually add more detail to the ? tooltip text and some new features to the calculator. 

• Are the holding costs calculated for you in this calculator (adding in your insurance, initial mortgage, HOA, utilities, etc.), or should I be adding them into the renovation costs?
• Is the Amortization period for the initial loan on a BRRRR usually a normal period like 30 years, or do we put in a lower number, since we only hold that loan for like six months? 
• If you don't want to take the full 80% of equity out during the refinance, is this minimum you'd refinance for adding up the purchase price + renovation & holding costs?
  
• Wouldn't it be great if you could just edit numbers inline on the results page, similar to how you can on the fix & flip calculator, instead of having to edit and go through the whole thing page-by-page? 
  

Drew Clayton

[Tim Herman]

@Drew Clayton certain areas don't cash flow. To cash flow your financing cannot be more than 280k. Using the 1% rule. 1% of monthly rent is max purchase price. $2800 monthly rent/.01=$280k. The way you have the BRRR calc is you only borrowing the mortgage to purchase and are using your own cash to fix up the unit. You can always borrow less. The max you can borrow is 75% ltv unless the bank carries its own loans on its books. A lot of times the loan is interest only and not amortized. Sometimes amortized over 30 due in a year. You have the insurance, taxes, utilities in your holding costs. If you want this to cash flow. Borrow 280k. 280k- 18k holding cost - 163k rehab= 99k purchase price to get this to cash flow. This might be a flip. Have you checked the association and see if you can even rent this unit.