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Hey BPers... taking up Brandon's challenge to do analyze 1 deal a day. So ran the numbers on this one. I wanted to quickly run by the numbers and get some input if 1) my approach was correct and 2) best practice for those numbers (I will be researching them myself also). I know this property (based on my numbers) doesn't make it a good deal. But I want to learn how to better process them. A lot of these numbers Brandon says to just do a combination of knowledge, quick online research and rough estimate:
Purchase price: $259,900 (this is pretty simple but I noticed in other BP's videos they will change the purchase price, either lower or higher, is there rhyme/reason to this?)
ARV: $300k (This is one the main questions I have, how do you quickly come to this number)
Purchase Closing Cost: $12,995 (I put in 5% of purchase price based on what I read)
Estimated Repair Cost: $15,000 (I've owned a house and built tiny houses but never to this magnitude, how do you quickly estimate repair costs by just looking at an online listing?)
Down Payment of purchase price: 10% (I know this varies depending on how you're doing the deal but if this is a traditional bank loan, what are the average percentages asked to put down?)
Since this analysis doesn't involved hard money lenders, in MOST cases bank mortgages don't ask for points or other charges that we should be aware about or what are your thoughts?
Amortized: 30yrs
Refi After: 6mons
Rehab Time: 2mons
Also since the approach is the BRRR method, can the initial purchasing money be a traditional mortgage (and not hard money) so it can be a 30yr term. Is it possible to refinance after 6mons?
REFINANCE LOAN DETAILS
Loan Amount: $210,000 (this is one of the numbers I didn't know how to come about. I read we should probably be doing 70% of the ARV right? Any input would help here)
Closing Costs: $10,500 (I put in 5% of new loan amount $210,000)
Include PMI: No (I put NO because this loan is 70% of the ARV. Notes here says it should be added if there is less than 20% downpayment in place. I didn't quite follow this.)
Amortized Yrs: 30
INCOME
Total Monthly Rent: $1500 (this is a 2 bedroom property, figured I could get $750 each room or the whole place for this amount. I researched on craigslist for the area to get an idea.)
FIXED LANDLORD-PAID EXPENSES
Electricity: $0 (tenant pays in most cases right?)
Water & Sewer: $0 (tenant pays in most cases right?)
PMI: $0 (should I be adding this in, sounds like the same as above under refi)
Garbage: $0 (tenant pays in most cases right?)
HOAs: $0 (didn't see any)
Monthly Insurance : $100 (is there an average estimate for this number, I found postings saying about $50/mon per $100k)
Other Monthly Expenses: $0 (I know this can vary a lot, what are ya'lls thoughts on what you often put here)
VARIABLE LANDLORD-PAID EXPENSES
these are based on Brandon's rough estimates:
Vacancy: 5%
Repairs: 6%
CapEx: 7%
Management: 10%
FUTURE ASSUMPTIONS
Annual Income Growth: 1%
Annual PV Growth: 1%
Sales Expenses: 8%
This is a lot of info, though I just need some input on the couple of numbers that I dont quite follow. Thanks for your input.
