The rental income will more than cover the mortgage and still provide positive cash flow, which is rare in the California market, making this a great opportunity for us.However, underwriting has expressed concerns about us moving from a presumably larger home worth $606,000 to a smaller one worth $376,000.

A contingency in this case means setting aside extra funds to cover any unexpected cost increases during construction.

Purpose & Use DSCR (Debt Service Coverage Ratio): Used by lenders to assess whether a property generates enough income to cover its debt payments (principal and interest).

Here are the variables you'll need:ARV (After Repair Value)Estimated Repairs (add a 10% contingency)Estimated RentPurchase PriceEstimated PITI (Principal, Interest, Taxes, and Insurance) on the refinance sideIf you know these values and ensure that your all-in cost (purchase price plus repairs) is 75% or less of the ARV, and that your rent will cover PITI + vacancy + maintenance + property management, then it's a deal worth pursuing.The BRRRR model is a fantastic way to build a portfolio and is still very feasible—even in 2024.If you're interested in more info, feel free to shoot me a DM—we can connect, and I'd be happy to assist you.

July 1 to Aug 15 STR revenue will cover the mortgage for the year provided that we spend that time staying with family and/or on a low-ish budget vacation.I'm not suggesting you move to this forgotten corner of the country, but look at a solid vacation rental market.

The lender assesses whether the rental income is sufficient to cover the loan payments.

We utilized our capital to cover the purchase cost, ensuring a smooth and expedited transaction.

We had major problems with Airbnb and VRBO not covering damages to the home after many phone calls and being on hold for hours switching back and forth to many different people.

ADUs can provide additional rental income, which can help offset mortgage payments or other expenses.Extend your homeowner's insurance to cover the ADU.Be prepared for potential increases in property taxes due to the added living space.Given that your property is not in a dense urban area, make sure to check specific local regulations as they may differ from city regulations.

Do you think you're going to be covered if the 3rd tenant starts a fire and burns the place down?