All Forum Posts by: John Leavelle

Howdy @Roselin G.

What is the Misc expense $450? You did not include a line item for Property Taxes or PMI. PMI is required for deposits less than 20%.

Why are you using 5% for Expense annual increase and only 2% for income?  If you know expenses will grow that fast you need to increase income the same.

What type property is this?  Age?  Current condition?

@Ricardo Kendrick

I do not plan on Holding my Properties for 30 years either.  My current strategy is to only hold them for approximately 5 years.  I then do a 1031 exchange for a larger property.  Therefore, I want the lowest mortgage payment I can get to maximize Cash Flow without committing more cash to lower the loan amount.  besides my tenants are paying for the mortgage.

@Brent Coombs

I have been able to get 30 year amortization with 25% down. The APR is around 5%. I've been using Local Banks and credit unions (Portfolio lenders). I will have to use the commercial loans soon with my 1031 exchanges.

@Elliot Saks

Using the HELOC for the acquisition is good. What about the Refinance loan?

The Refinance loan will have closing costs or fees.  They may be paid separately or rolled into the loan.

Howdy @Ricardo Kendrick

Looks good to me.  Why 20 year amortization?  30 years would give you a lower P&I payment and better Cash Flow.

Howdy @Elliot Saks

Overall it looks good.  Just a few questions and comments.

1.  What kind of financing are use using for the acquisition?  Why are you using 20 year versus 30 year amortization for the Refinance?  Your P&I payment would be lower improving the Cash Flow.

2. Are you accounting for Holding costs in the $65,000 Rehab Budget? That includes (but not limited to) Mortgage payments, Taxes, Insurance, Utilities, HOA fees, etc. that occur during the Rehab phase and up until the property is fully rented.

3.  You should Closing costs/Fees with the Refinance.

Howdy @Bob Faulk

You are going to find it difficult to achieve 2% for Income-Expense Ratio on a BRRRR deal. The primary objective with this strategy is to recover all (or most) of your cash investment to use on the next deal. The secondary goal is to meet a minimum Cash Flow criteria. You meet the first using the numbers you are using. However, I question the optimistic numbers used for expenses in your Cash Flow analysis. Do you have experience in the area with rental properties to justify the low numbers? If not it is always best to stay conservative when analyzing deals. Depending on the type of property and the market the 50% Rule is usually fairly close for expenses.

How accurate is your ARV? You might think about Flipping the property versus BRRRR.

Sorry, I have to go.  Would make some more observations.

@Carl R.

CCR is short for Cash on Cash Return on Investment. It is one of the 8 bold titles on the top of your report. You calculate it like this: CCR = Annual Cash Flow / Initial Cash Invested. From your report it would be $4,360.56 ($363.38 x 12) / $72,100 ($59,600 Down payment + $2,500 Closing cost + $10,000 Rehab) = 0.06047 or 6.05%.

@Deforrest Ferguson

They are basically the same. MIP is actually the one you have if it is an FHA loan. Either way do not forget to include in your Cash Flow analysis.

Howdy @Carl R.

I would not do this deal. It does not meet my investment criteria. CCR 6.05% is way to low. I want a minimum of 12%. The Cash Flow is too low. $258.38 ($64.60 per unit) using the 50% Rule does not meet my minimum of $100 per unit.