All Forum Posts by: Lyanne Scott

Possibly that is the case, but I am also defining carrying costs as you describe above and I am getting the carrying cost number from what is calculated for carrying costs in the BRRR calculator of Bigger Pockets. Of most concern is the cost of the mortgage until I would be able to refi. I've run the numbers several times on a $480K hard money loan at 12%; with a 13 month period required to hold the initial hard money loan, I do not see how beginning investors (with not much cash to start out with) can carry that HM loan until the refinancing: I keep coming up with $16,795.75 in carrying costs for the estimated 3 mo rehab period in the BRRRR calculator. Secondly, during the duration of the HM loan of 10 months, the carrying costs exceed income by $2k/mo. I haven't seen this addressed in the webinars I've watched; in fact, the webinars state that not much money is needed to get started using the BRRRR method. So, I'm reaching out here to experienced investors. Although the webinars I've watched used a 12% HM rate, perhaps that is just too high? In looking for HM lenders, some do start at lower rates, but I used 12% to be conservative. Your thoughts are welcomed on what I may be miscalculating/missing in these calculations. Thank you in advance.

Thanks for responding @Odie Ayaga; the first 3 months is an estimated rehab time, with zero income from the property. The next 10 months, the property would hopefully be rented with income so that is the difference. However, with $20k in carrying costs during the rehab and an addition 10 months of $2k/mo loss, how are investors getting through this time period if they have little to no cash going into these BRRRR deals? It looks to me like $40k that will have to come from somewhere; but what am I missing? Many thanks!

Hello,

Great to be here, as a newbie - so much good information! Hoping to gain some clarification/insight, as I must have missed something:  I don't see how to carry a newly rehabbed property for the typical 13 month term of the hard money lenders I'm seeing...with approx $20k in carrying costs during 3 months of rehab, and 10 more months of $2k/mo losses until the loan can be refi'd, how are other investors covering these carrying costs? Is it built into the initial hard money loan request, or ?? What am I missing? Thanks in advance!