All Forum Posts by: Account Closed

@John Leavelle I want to thank you for taking the time out to look these numbers over. I used the calculator in addition to clicking on the question marks for more help. I've revised these numbers from the ARV down to see why the numbers didn't make sense and at this point... This just looks like a bad deal altogether.

I don't know... I know I'm not going to give up. Thanks again John.

Purchase Price 75k                                                                     

ARV 165k

Purchase Closing Cost 2500

Estimated Repair Cost 20k

Down payment on Purchase Price 20%

Loan Interest Rate 16%  

Points Charged By Lender 4

Wrap loan fees/ Points into loan (Yes)

Amortized Over How Many Years? 1

Refinance After How Many Months 12

Estimated Rehab Times Months 4

Enter Loan Amount 11,500

Loan Interest Rate 6

(pay Loan fees/points out of pocket)

Amortized over how many years 30

Total Monthly income 1150

Total Monthly Mortgage (P&I) Expense $6169.70

Total Monthly Fixed Income $950  

Electricity 150

Water & Sewer 100

PMI 100

Monthly Insurance 400

Property Taxes 150

Other Monthly Expenses 50

VARIABLE LANDLORD-PAID EXPENSES

Vacancy % 10 (115.00)

Repairs And Maintenance % 400 (4600.00)

FUTURE ASSUMPTIONS

Annual Income Growth 2

Annual PV Growth 3

Annual Expenses Growth 2 

75k Purchase Price

Purchase Closing costs 9,550

Estimated Repairs 20k

Total Project Cost 114.5k

ARV 165k

Acquisition 

Down Payment 17k

Loan Amount 70k

Loan Points/ Fees 2,720

Amortized Over 1 Year

Loan Interest Rate 16%

Monthly P&I 6,416.49

Total Cash Needed At purchase 46.5k

REFINANCE

Loan Amount 115k

Loan Fees 6

Amortized Over 30 years

Loan Interest Rate 6%

Monthly P&I 689.48

Total Cash invested 0

I was actually supposed to call a bank to see what the interest on refinancing would be to incorporate that in my analysis... Amongst other things. 

I’m going to keep trying until I get this right.

I’ve been playing with these numbers for 3 days on a real property.

$1,150.00MONTHLY INCOME

$6,254.48MONTHLY EXPENSES

-$5,104.48MONTHLY CASHFLOW

-32.11%PRO FORMA CAP

-$52,980.00NOI

12 monthsTIME TO REFINANCE

Inf%CASH ON CASH ROI

-62.33%PURCHASE CAP RATE

I’m upside down and I don’t understand how!!! 

@Kerry Boyle

Thanks for lending a helping hand. I’m definitely going to need it. I came too far to get stuck in analysis paralysis. With everybody that responded to my post, there’s absolutely no excuse for not being able to execute. 

I will be in contact with you shortly. 

Thanks for the good luck.

@John Leavelle I most certainly will!!! I want to truly thank you and everyone else who posted for your help. I’ll be right back!!! 

@John Leavelle

I had the 6 month seasoning period confused. I thought I would only have so much time to complete the rehab in order to pay the HML off or I wouldn't see a profit. I had that all wrong.

It all makes sense now. Man, I have a lot of work to do!!! When I say a lot, I mean A LOT!!! Thanks for the response. I’m about to go pro so that I can get this calculator and practice until I get it right John.

@Andrew Syrios If I’m looking for a no down payment loan, ideally I wouldn’t choose any private money where the payments start immediately. How does that work??? Would I have to find additional funding in order to make those monthly payments until the rehab is completed and the tenant is placed??? Additionally, while looking for a bank to refinance me, I have to be spot on with my numbers right??? There’s really no room for error at that point.

@John Leavelle what I gathered is within a six month period, all of my expenses should be factored in and I shouldn’t go a day beyond the six month mark to avoid any overspending. The holding costs and the rehab seem like the things I need to stay on top of the most. I also read that at closing, you never know how much the attorney or the title company will charge for their expenses and the lender has absolutely no control over that. Should that be something to watch out for as well???

@Jeff Copeland @Harjeet Bhatti @Jay Hinrichs

My apologies for the late response. I’ve been playing with numbers and using Jeff’s post as a spreadsheet. I revert to those examples in case I get hung up somewhere during the structuring of a deal.

Now I see what a deal should look like in terms of risk and profit using the BRRRR Method in its entirety. I really appreciate the feedback from the investor standpoint as well as from the hard money lenders view. Starting out, my interest rate on the HML is going to kill me even with numbers that make sense financially but, first I'm focused on thoroughly executing a deal and building solid relationships, so money doesn't matter right now. If at all possible, I'd like to come back and ask more questions...

@JeffCopeland 

Thank you for your response. You broke the Method down in its simplest form and step 2 was where I needed help. I see that there was more to the Method that I didn’t fully understand. 

 I would be using a Hard money Lender. I got snagged here... After the property is fully rehabbed and I have a tenant in the property paying rent, should I use the tenants rents to start paying back the Hard Money Loan while I’m waiting to refinance where I can pull that refi money out to pay the remaining amount of the loan.

I see that it depends on the terms of the loan. I have some more reading to do Jeff. Maybe I’m thinking too much into the scenario and that’s gonna stop me from making a move if I let it consume me. I’m gonna study what you wrote and do a little more reading. I’m sure I’ll have more questions though. I really appreciate your help. Thank you.

Thanks for Reading and any feedback... I have the BRRRR Method understood up to this point.

So, let’s say I found a property... Locked it up, got a loan and did the rehab. Once I find a tenant to occupy the property, with those rents from that tenant, should I start paying on the loan until the property is eligible for refi???