All Forum Posts by: Account Closed

Hi @Jacob Phillips, I think this depends on your strategy. With NOI being the driving force, you have options to focus on immediate cashflow, value-add to refi and pull equity, among others. I think a reasonable indicator of success would be your IRR w/ time being a factor in your analysis. I personally want to see $200/door in cashflow and ability to get all my initial funds out w/in 3 years.

Hi @Kaushik Chatterjee -- it seems you have negative equity in this deal based on the all in costs and the ARV. The all-in costs are $162k and the ARV is $155k. How are you purchasing the property and rehabbing it -- HML, cash, HELOC, etc...?

At $155k, you'll get a 75% refi (SFH) at $116k. This money should be used to pay off your HML loan, HELOC or replenish your initial cash. With these numbers, you're leaving $162k-$116k = $46k in the deal.

I could be wrong, but this does not seem like a deal at all. You'll need your purchase price + rehab to be 70%-75% of the ARV. Quick example:

- purchase price: $60k

- rehab: $10k

- total: $70k

- arv: $100k

- cash out refi @ 75%: $75k

if you do this with cash, then you just make $5k profit, if you used a loan, chalk up the $5k to holding costs.

What are the market rents? The current "rental price"/"purchase price" is too low. It seems this deal is focusing on the appreciation not really the cash flow. You might be cashflow negative before you get your money out.

@Daniel Sanniti yeah that makes sense. I really like the BP BRRRR calc and sometimes it's complex for a quick analysis. I like to figure out what type of financing I'm using (HML, cash, private money, etc...), figure out all in costs on acquisition, and then back out percentage for refi.

I'm working on a BRRRR for a duplex:

- purchase price: $145k

- rehab: $87k

- all in price: $232k

- arv: $300,000 (low end/worst case)

- refi @ 70%: $210k

this leaves me with $22k in the deal. It's an awesome part of town and cashflows super nicely even after the rehab. I'm hoping to get the ARV increased and/or find commercial lender to refi @ 75%)

 I'm always down for a partnership if the deal is right. DM me and we discuss -- thanks!

@Raquel Rigby -- it might be useful to define your ROI criteria and *then* make the deal fit your criteria. For me on small MFH, I'm looking for the following:

• conventional financing: 25% down
• average unit price: $55k - $70k
• CoCROI: 15%
• cash flow per unit: $250

This is what I used to get my first few properties. Since then, I'm now looking at small MFHs that need rehab so the criteria is a bit different.

Hi @Steven Parks -- are you providing your offer price in the letter? If so, you might be locking price (at least in the recipient's mind). Is the ARV from an appraisal or how was it generated?

Aside from that, what is the strategy for the property -- wholesale, flip, rehab/refinance, tradition buy and hold? You can try going in at 65% and hope the rehab is only 10% so you're all in at 75%. If you're going to wholesale, use your minimum needed profit to determine the percentage. 

Hi -- if the ARV is $420k, what is your refi percentage? For SFH, you might be able to 75% LTV which is $315k.

Based on the report, you're doing a cash-out refi @ $96,000 so you're leaving a good amount of equity in the deal. Is this correct?

Congrats! I have toddlers and have thought about properties for them as college funds. For completeness, have you checked out Roth IRAs for your children? This works out well if you have a business where they can work and receive a wage. Definitely not saying that Roth IRAs are better/worse than rental properties for college prep. IIRC IRA funds can be used for college tuition/expenses and first-time home purchase.

Depends on the vacancy rate of that area, relationship/actions of the tenant, and cost to fix the unit once the tenant leaves. 

I would do an immediate increase if vacancy rate is super low and the cost to fix the unit is low. I understand there might be hesitation with an immediate increase because this would force out the current tenant or might lead to confrontation, but it's your business to manage.