Below is the thorough analysis of my recent BRRR deal. Let me know your thoughts:
Buy:
- It was an off-market property, and the asking price was $232,500
- My hard-money lender said he'd finance 80% of the as-is property value.
- The as-is value was $265,000, and I was able to get a short-term loan for $212,000 (0.80 * $265,000)
- My down from hand was ($232,500 - $212,000) = $20,500
- Including the closing costs, appraisal, inspection, and all other charges, my total BUY was $32,598
Rehab:
- It was a fixer upper. Just cosmetic rehab. Fresh coat of paint, new LVP flooring, landscaping, fixtures, some basic service, and deep cleaning
- It was a total of $14,091, and it was from my pocket. Didn't go with HML/PML for this.
Refinance:
- After fixing up, the property's new appraised value (or After-Repair Value - ARV) was $312,500
- Lender was able to give me 75% of the appraised value as the conventional loan
- Conventional loan was $234,375 (0.75 * $312,500), and they gave me back the difference between this conv. loan and the short term loan ($234,375 - $212,000) = $22,375 to me as loan modification
- Refinance closing cost (incl. appraisal and others) was $13,502
Overall BRRR Analysis:
Purchase cost: $32,598
Amount on rehab: $14,091
Refinance closing: $13,502
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Total in the deal: $60,191
Loan modification: $22,375
(Lender gave back)
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NET IN THE DEAL: $37,816
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Why is BRRR so great compared with conventional? With just 12.10% down, I was able to get 25% equity in the property :)
