All Forum Posts by: Ryan Ward

@Jason L. Thanks. I think we may have found a flaw in the calculator, as I in fact did input $1500 of annual repairs.

@Jason L. In my report I budgeted $1500 annually for repairs. In KY I could buy a new fridge, stove, toilet and clean HVAC... YEARLY with that amount.

I checked the origination costs with my lender just now and you are right, they charge $4000. I will add this to the calculation. Thanks!

@Tim Herman Thanks. My HML is also the lender facilitating the refinance...not a traditional bank. I can refinance immediately after the rehab with the rate and term I indicated in the calculator. I have this in writing form the lender.

Also, don't forget, on a buy and hold I am also getting a return on the principle pay-down (which my tenant is paying), and will be able to claim a tax deduction for the net operating loss from the depreciation. Therefore the small negative cash flow shown in this report using the 50% rule does not indicate an actual overall net loss.

Thoughts?

Thanks Tim. I was basing my expenses on my experience with the neighborhood. First off, I am in KY, which I think is currently tied in 2nd place for lowest cost of living in the country, so my expenses are very low, for example compared to North Dakota. Second, I already have one rental property 3 streets over from this one which has never had a vacancy and only minimal repairs (less than $400 annually for system check-ups and cleanings). I replaced the roof when I purchased it for $2,800 so I foresee this to be a good price indicator for this new deal, which for all intents and purposes is basically the same house. I actually want to refinance 4 months after acquisition, so how do I enter that into the calc? (thanks for pointing that out by the way). Also I thought the vacancy rate in the calc was the long term average, which would be 5%, and then it automatically accounted for 100% vacancy in the rehab stage? ...or am I missing something? Finally, my hard money lender does not require seasonality, and they don't care about debt to income ratio. I can refinance at any time after the rehab...but since I'm BRRRRing, I have the option to sell it as well.

After this clarification, what are your thoughts? My main concern was am I entering the acquisition loan details correctly?

View report

*This link comes directly from our calculators, based on information input by the member who posted.

I will be purchasing this property using a hard money loan that provides 90% of purchase +rehab cost. The cash flow using the 50% rule is negative but I am $0 out of pocket on this deal after the refinance. Am I calculating the acquisition correctly given that I will need $8,000 down plus $4,500closing cost? It's not clear because I am using the HML. Please advise!

Hi Ahmad. You should get the HML first. Talk to Lima One Capital. They offer 90% total project cost funding (10% down payment from you). My next advice would be that I also just put an offer in on an REO property, and they have stipulations that you can only negotiate 8% off the asking price, but don't let that discourage you from low-balling them. Offer only what makes sense financially for you. The all cash offer will make you a strong bidder.