How to Analyze a Fix-and-Rent Property | BiggerPockets BRRRR Calc

In this video, Brandon walks you - step by step - through his analysis of his most-recent investment property, a fourplex that needs nearly $100,000 of rehab. Read the whole story on the BiggerPockets Blog - www.biggerpock...

[@jimjam3324]

How do you earn 2650/month while in the acquisition stage if you’re doing work on the units?

[@Shawk95]

Brandon, wish you could make a follow-up video, showing how this deal actually turned out. It would be educational to compare the numbers on paper and in practice. Thanks.

[@hman2912]

Ashfaq Sheikh I agree. Would be good to see actual vs budgeted with these types of properties and rentals too. That way we can see if budgets were overly optimistic or not

[@GlaciusDreams]

Seriously. Everyone sells investing on paper. Would love for real world information

[@Zytiko]

If you guys actually stayed until the end of the video you would see that he does actually tell you how that property ended up working for him.

[@elaprimo1]

i think now he has about a 1000 monthly cashflow on this 1

[@charlottebingham4103]

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[@StephanieZander]

Great video! I'm a bit confused about the acquisition details. It says you'd have a monthly income of $2645 during that first year before refinancing. How? You wouldn't be able to have tenants living there while you're rehabbing it. How quickly would you be able to rehab a property like that?

[@luisoliviergeralda4981]

I was thinking about the same!

[@joewatson7874]

​@@performance.marketingyes they are ok in fact I think they prefer it so they can get their money back and put it elsewhere

[@jamesongagne3996]

You're right about people wanting to turn it off when things get hard... 2 weeks ago I was listening to a podcast every day and then the following week I didn't do anything due to being overwhelmed with how to continue.

[@slokytheone]

i purchase 2 beat up mobile homes with land, 1st for 20k+3k repairs, 2nd 19.5k+ 7k repairs , tax,insurance and mortgage per month $565 rent collected $1,450

[@NohandleJ]

where did you do this at?

[@innovateandinvest]

Nice! Sometimes you can put 2 or 3 on the land depending on how much land

[@GBSheridan]

If the property needs that much rehab, how is it that you still have $2645 in rent coming in during the acquisition/reno period? Wouldn't the units be empty during that time? I would think your cash flow during the reno period would be way negative. ????

[@TheMasnart]

Good catch. You are definitely correct.

[@felipejose9909]

And you need to kick out all the tenants. Prepare for eviction fees. On paper (calculator) everything goes really smooth.

[@mikelamm732]

and a 0% down payment i find a little unrealistic

[@tuckerdeloach9604]

Would make sense if he added $2645x12 to the loan, but that would screw his roi.

[@taylors4243]

@@mikelamm732 you dont have down payments with private lenders. That's like if you borrowed 20 bucks from your mom but had to give her 2 bucks first. Never heard of that, lol

[@alenasadiyayeva6036]

Hi, how come it does not mention about the carrying costs during the rehab?

[@siddhantr.s.9774]

Dear Brandon While you get that repair work of a huge 80,000, done, you cannot rent the property, is it still a profitable deal (as the vacancy cost must have increased). Pls explain. Thanks PS: just noticed, it was posted on my bday!😄

[@edwardgradman9113]

I may have missed something but It doesn't appear this calculations factors in not having tenants during the rehab period. Does this factor in carrying costs?

[@Nancy-uc2px]

I was just about make the same comment Edward. There would be less or no rental income during the rehab phase (depending on how many units are rehabbed) so cashflow would definitely be negative or low before the refinance. I would want to know this before deciding on a purchase price and initial loan amount. Otherwise, the calculator looks like a good tool. Good job Brandon/Bigger Pockets!

[@Shawk95]

I guess during the rehab phase, the investor has to absorb the loss of no rental income and high interest rate. Hence, one should have some extra money handy. But in the end, it works out well.

[@GBSheridan]

Yes, the calculator does seem to account for that. The tab labeled "Rehab" shows a carrying cost figure (meaning the cost to you to have the property with no tenants in it). The impact of this also shows in the year-by-year figures. In Yr 1, the annual income figure is lower than it is in subsequent years.

[@ezekielvaldez5517]

GBSheridan if he had no renters there would be no monthly income

[@ezekielvaldez5517]

GBSheridan so there would be no income for the first year. It wouldn’t be “lower” it would be non existent.

[@lukeelliott5921]

Seems like a pretty sweet deal, but only if you have negative 700 dollars to spend.

[@76482]

I just watched a more recent video that shows the finished result and actually walks thru the property, he did a fantastic rehab but ended up under estimating the rehab cost. Actually it never made sense to me why he changed the rehab cost in his initial estimate just because purchased the property at a lower price.

[@Kaviles612]

Great video... quick question: How many months the rehab did take? Before it was rented...

[@austinnance3737]

I have a question about the BRRRR strategy that I have yet to figure out. Why do I need a private lender to buy an investment when I could just get a proposed appraisal on the property and just get a bank to loan me the money that way. Will the banks not loan on a property that needs significant rehab with a proposed appraisal or something? Plz help if anyone knows.

[@andreavent8865]

Mannnn this guy selling the 4plex must have been HIGHLY motivated to sell! Lol for $45k from $80k that’s damn near a 50% reduction in asking price

[@skyblue9991]

It was probably severely trashed considering it needed 80-100k in reno.

[@taylors4243]

He talks about the negotiations, and how they came to that amount. I would recommend watching and listening to the entire video

[@joey6608]

“Annual property tax,” yet you say you inserted the monthly property tax at 2:35

[@caincastor6266]

I’m gonna is it the day you get to work jlkg

[@JonSpohn]

40$ a month is a bit much just to use the calculators :(

[@grapedrink009]

Bet you wish you paid attention in algebra now. Just teasing

[@sirberhus6604]

Just code your own app

[@Rbdr1111]

If 40 dollars is a lot you are already thinking incorrectly

[@aspollocreed]

He also made a 4 square method

[@markshepard7606]

@@Rbdr1111 I would disagree, when your starting you have to watch and pinch every penny- at least i did. "$40 is nothing for education and tools" I would argue is incorrect methodology. working on my 12th door. never spent money on such tools. started 6 years ago with 40K (avg. purchase price in my area is 260K) not trying to call anyone out, just depends on who you are and where your mining from. happy hunting

[@monsterholics]

A fourplex for 45,000!! Come to vancouver island. You couldn't touch a fourplex for under $800,000. Would rent out for 4800 a month though

[@MA-db1el]

This is an extremely risky strategy and it is something you do not discuss. Financing with hard money at 0% down at 12% interest is a great way to go broke. This his how the Financial crisis of 2008 happened. I would not advise anyone to do this.

[@quantrials2357]

Does the Brrrr process works on foreclose/auction?

[@nickfleming3719]

How would that even work? Refinancing for 57k less than your original hard money loan. Isn't the point to pay off the hard money with the refinance?

[@kewleodobop]

Was wondering the same thing.

[@jameslong296]

Nick Fleming he said that was what showed that the original deal would be a bad one. He then offer a lower amount and reassessed the rehab amount and got it to numbers that worked.

[@disorderly06]

That's why the original deal said that he had 58k of his own money invested. He had to spend to close out with the HML when he got his new mortgage.

[@trebor44089]

Cody - I was thinking the same thing....but he never really said that I dont think

[@GBSheridan]

I agree with this question--You'd need to fully close out the expensive loan with the longer-term, less expensive loan--so how do you close that gap?

[@jayd5090]

What if, instead of getting the whole loan from a hard money lender, you paid the 20% down and we’re financed through a local bank but you had a hard money lender to pay for the renovation? How would you apply that to this calculator?

[@taylors4243]

They wont finance it. He discusses that throughout

[@sethhochberg9463]

Banks won't finance a distressed property. But if perhaps you're doing a very small amount of rehab, and could get it bank-financed, you would choose the "Amortized Loan" rather than "Interest only" loan

[@Rsn.Slippinfoot]

The catch is you need to be a bigger pockets pro member?

[@clairdesignable]

So lucky to be your daughter:) thanks for the video!!! Would you care to do one video in case you could not pay for the loan? worst case as possible as 2008-2009? How to deal with these kinds of worst case? Thanks a lot!

[@jsprowse]

How do you have monthly cashflow during the rehab phase if you have no tenants?

[@joe.luciano]

Bob is certainly a shrewd negotiator.

[@ronaldsnee6582]

Im confused on this first analysis. If the purchase of the property is 80K and the rehab is 100K thats a total of 180k. Then he gets it refinanced at 130k. How did he not lose 50k? thank you

[@ronaldsnee6582]

How is he pulling cash out to fund the next one?

[@yaseenbenjamin5197]

Hi. Awesome video. Very informative. Does this calculator only work for the US or internationally as well?

[@UTBaller22]

Is this considered a brrrr strategy or just a brrr strategy? It seems the repeat part will be difficult to do because you are not taking any additional cash out on the refinance, correct? I know you have other properties cash flowing enough to get another investment property, but would this property be a wise decision for someones first property considering you wouldn't be getting any cash out of the property on the refinance to purchase another property?

[@andrewcates3390]

The refinance just gets cash out to pay his HM and bank loans. He didn't put his cash into this investment. Only used cash to cover holding costs and HM interest payments. Then he gets a property with $50k equity and enough pure cash flow to reimburse his holding costs after 1.5 yrs or so.

[@evanparness9509]

Amazing how people could complain about paying $40 a month to have access to tools like this. $480 a year. If you got just ONE deal by using this tool, the return on investment is better than the actual deal itself 😂

[@duckduckgo358]

This video finally made me understand brrr

[@dooki3face]

how are you refinancing for lower than the original financed amount? i'm so confused

[@georgeknetzger]

BRANDON...I NEED TO SEE YOUR ENDORSEMENT OF TURNKEY COMPANIES...TX GEORGE FROM LAS VEGAS

[@FixItYerself]

how did you pay for financing without tenants?

[@jcr12388]

I still really don't understand the concept of re-financing 😔 ... can someone on here elaborate ?

[@lukeelliott5921]

Purely from this video, what I can tell is that a "refinanced loan" means a loan that is for 70% of the property value. Which explains why you can't purely use a refinanced loan to buy the property in the first place. Apparently loans for 100% of the property value have a higher interest rate than these loans. It's been 3 weeks since your comment. Hoping this makes it more likely that someone who knows what they're talking about will engage in helpful dialogue.

[@skymaster4ever]

How I understand it: you get a private loan for 70 % of the value of the unit. If after repair value is 100k they give you 70k. After you repair the unit you refinance the property from a bank. Let’s say the bank gives you 100% (100k), you then use that money to pay the 70k. The point is you have to get the unit for less than it is worth so you can build equity after it has been repaired. After you refinance and convert it to a “30” years mortgage, it becomes easier to pay. Hard money short term, refinance for long term. The bank will refinance something you already have easier than giving you a new loan. Also the bank will give you a better and lower interest.

[@D02rock]

Buy with cash or hard money and fix it up. After its fixed up its worth 100k. If you were to go find a rental property to buy on your own for 100k and had to put a 30% down payment then the bank would loan you 70k. this is why you try to buy and rehab and be in this deal for 70k or under. So you get a loan the same way if you were buying a finished house essentially. Except with the BRRR you are using the equity you would get if you sold it like a flip as your down payment without paying taxes on it.... If that doesn't make sense the keep watching videos... you have some learning to do.

[@brainzmusic622]

Jonathan Ruiz: The refi is going to bring the interest rate down from a 12% interest only loan to 5.5% conventional loan. In this case he does it after 1 year. This will decrease your monthly mortgage and save you money in the long run.

[@davidbalfe1967]

I'm not buying this Brandon. You say you got this deal for 45k when the seller was asking 80k to begin with. ??? Sorry Brandon, I'm not buying this story at all. You simply do not get that kind of discount on a 4 property deal.

[@IsaccLightbournELPASOREALTOR]

I’m sorry, did you put 0 percent down on the private lender ??

[@j.p.dgfstyle6099]

These videos are life changing.

[@amulsutaria7845]

You need to talk slower. But great video!

[@therealwillly5401]

You said the Property Taxes are $984 per month???

[@strongsportz]

Where are you getting back/refinancing the 180k to pay back the initial PML?

[@JOMOPressureWash]

Watching in 2021

[@ivanrubalcava08]

Anyone else feel like this is just a way to collect data from us for BP's long distance investing opportunities?

[@dcharlesjones]

This seems highly implausible to me or is it just my own market? Having a place for 45k that has a gross profit of $31.2k ($650/unit x 4 units/mo x 12 mo)?? Seriously, places like that exist? It doesn’t seem like anything who is even close to rational would have sold this quad for $45k if they were really making 2.3k per month in gross income.

[@D02rock]

It ended up needing 80 k in rehab he said.... still great numbers @ around 1.5% on the rents if he just went out and purchased a similar property. Even better @ 2% with the Brrr.

[@SessionCruz]

Shouldn't there be a field that estimates how many months you're paying in mortgage before you get actual tenants in there? Factoring in the time it takes to renovate and then find tenants. I would think that is overhead worth factoring into your estimates.

[@hellenomeri2098]

Brandon, does this theory also work for buying a an empty 1/4 acre and the doing the BRRR calculation?

[@joezarate9770]

I don’t see where you paid off the original private loan. Did I miss something?

[@SlaterCoaching]

Well done Brandon! You're a good teacher, showing a solid tool!

[@male88263]

People need to learn how to do this within mins or second other wise by the time you finish this form another investor will steal your deal!!

[@malcolmbrownson5205]

Why not consider your Tenant 2 be !! A Tenant Buyer..on a L.O.A.

[@lionheart93]

80 for a duplex. man money isn't in calfirona jk lol

[@briandarling2979]

Brendan, thanks for the video your calculators are great tools.

[@joerimoeyersons6375]

Hi Bradon, I dont get the idea of refinancing the property after you all ready payed off the loan after 18 years... I’m from Belgium. Maybe it’s an other system in America? Why should the bank loan you again if you allready payed your debt?

[@chachee15]

I cant buy a piece of dirt for 80k dollars here in MA. Can you do an example of this using real numbers like 200k or 300k

[@DarkmanXSincere]

chachee15 I'm in MA too, I've seen triplex fix ups for as low as 40k, we can't be scared to purchase something an hour or two away. From one end of ma to the other is only like 3-3 1/2 hours.. so I look everywhere in ma.

[@jovanivida]

Add a extra zero. Why does the number matter?

[@fishingtimeletsgo598]

Hello in the first scenario 180 k private lender payoff is part of the 58k total cash outlay refinance plus cash to pay it off correct you don’t really go over that

[@jacquelinekcarrillo]

Can someone explain to me how he exactly got paid $700 to purchase the property?

[@JustinCrediblename]

some dude gave him a bunch of cash. there was some left over.

[@paulsterman7169]

Hi Brandon. Not having the 20% down-payment for the Acquisition loan makes a huge difference here. Can you please explain how you get the Acquisition loan with no money down? Thanks!

[@ivarlosna6516]

Those would sell for $400k each where I live ($1.6 million total) and would get you a rent of about $2000 per unit. I can see why real estate seems to be the answer for Americans who wants to get started, but it is really not in more expensive countries.

[@cvzphotography]

Lol, I need to move. 45k for a 4 plex. All the Californians are moving to my area where a 4 plex is around 800k.

[@ajsemtb]

Why would you send your daughter to college... ? It seems it would be better to teach her real estate than waste 4 years on a degree that wouldn't pay a fraction of RE. ? Honest question.

[@jett4653]

$984 in annual property taxes oh my god. In New York state a 150k house has property taxes over 5k

[@Ethernet480]

How do you convince banks to pay for your rehab?

[@nicksmith8993]

I’m confused about something. How do you pay back the loans from the bank and private lender?

[@simonbaauw]

Does anyone know why the repairs went from 100k to 80k all of a sudden?

[@12Blackshirt]

its confusing that you like to have equity up front but its not your cash because it is the 30k from the LOC. Also that you can say that you only put 3k into the deal which makes your cash on cash awesome! I understand it is just something that got me thinking! AWESOME video tho!

[@8mjh8]

what about the vacancy factor and maintenance?

[@jakejohnson7714]

no f bank will give 100k loan this bs!

[@JayMarkMarcos]

can someone explain how he ends up with $58800 invested after refi?

[@erikrichardgregory]

I'm convinced--Brandon, you're working for me now! :)

[@mikedib0]

Why did the repair cost go down? Wouldn't that stay the same regardless of purchase price?

[@JessnT]

I was just trying to play with it to see if i can understand it a little better. I am going to just keep playing with it and tried to figure it out.. Quick question is the calculator still in beta testing if yes when is the estimated date to have it 100% accurate with no more testing? Curious , but will continue to try to get familiar with it.

[@RehabWithEhab]

Thanks for sharing your knowledge...very informative.

[@latestartinvestor2102]

This does not work for smaller rural areas. I live in harrison ar, and I get "not enough results in that location" every time.

[@jeffjayewilliams6667]

Thanks I love the video and Information. 😊😉💪💪💪🤝

[@koelg5858]

Brandon, are you borrowing a little more from the hard money lender than you really need in order to pay 12% interest payments during rehab? I bet you could fudge the numbers in that case.

[@justinwest3836]

How are you calculating the total cash invested on the Refinance portion? I’ve ran a few scenarios through the calculator and they don’t seem to add up.

[@moze]

Anyone doing this in or around Camarillo California? I want to shadow you during the deal and probably ultimately partner on a deal together.

[@bmack7762]

Yup. I'm gonna be wealthy. Thank you. Easy as 1 2 3

[@muhammedcaldran7959]

I sure do have negative $700. Wish I would have invested this house :)

[@ivarlosna6516]

$180.000 for all that? Damn, America is cheap! High interest rates though.

[@hillaryfox1208]

Brandon, Do you have a webinar on using this calculator. I learned the buy and hold rental calculator through a webinar and you went through it very thoroughly. I need more info than is in this video. I have read David Green's BRRRR book and am still left with questions on estimating rehab costs (working on that book) and figuring out ARV. Please advise if you can. Thank you!

[@k2sportsande.n.t501]

VERY DOPE BREAKDOWN...i am a human sponge

[@dumpsterfire6351]

The taxes will go off new sale price... Remember that!

[@marcduchamp5512]

The most difficult part of RE investing is getting the money in the correct way and be able to afford the payment. Moving around funds and getting financing from lenders is really the majority of the headache

[@kosha1195]

What if you buying with tenant under lease and you can't rehab ARV for refinance

[@carsonemery1846]

What happened to the 800,000 The highest number I saw was 180,000

[@robertfornwalt7653]

Question. Is he paying the hard money lender 10% per month or annual. He said it was a interest only and his payment was $1800 monthly.

[@D02rock]

annually silly

[@JustinCrediblename]

'gotta learn that math, man.

[@vergaoneverga]

why would you send your kid to colledge? ahah what a waste. why not give her 3 or 4 houses to maintain

[@tysoncrandell9726]

Brandon I like your stuff but struggle with how you talk to the audience like they are children. I’m new to this but it’s painful sometimes to stay on a video because of the constant repeating or explain actions that seem like they are just filling time.

[@Zytiko]

Have to make it so someone who knows virtually nothing about the topic can understand as well. You can put the speed to 1.75 as well.

[@dancaradonna1789]

You have to realize he is talking to people at all levels and I don't think at all he talked to us like children.

[@dumpsterfire6351]

Flood insurance 400 year

[@12Blackshirt]

So if the market goes up before the refi and it is valued at about $200k then you just made a huge income?

[@MarvFrio]

Watching this in 2021

[@Paragon_Reason]

Where can I go 'in the real world " to surround myself with people who are interested in this. I'd like to possibly start out in a job doing something exposing myself to these types of concepts in order to learn it in order to do it for myself. Does anyone have any advice for me

[@Kross.2k]

Look up local Real Estate Investor Associations or meet ups and depending on where you live. They typically have them in the major/smaller cities in the USA.

[@JessnT]

does this calculator allow you to use it to do the math on a home to see if it cashflows or is it specifically only for multi family and fix up property types? When I use the calculator it forces to make me do the refinancing it would be nice to have the option of not having to do the refinancing. love that the calculator does calculate with the refinance it would just also be nice to skip that part if your just trying to do the math on a house just to see if it cashflows right off the bat. Thank you sorry for so many questions.

[@c05eden273]

There is another calculator for strict buy and hold rental. This is specifically for refinance projects.

[@Funkafella01]

If you can pay it off in 18 years why would you refinance, is that just so you can draw from the equity? Would it be better to just bank the $544 over 18 years and have the $117k to use for collage and still have no mortgage payment? Just curious.

[@srserpicol]

that would be another strategy, but remember, you dont have to pay taxes on the equity you pulled out, vs, paying taxes on the interest earned.

[@arj1200ify]

Do you calculate carrying cost and how to you pay them until you refinance

[@primgee9772]

Hi, is this calculator also applicable in the Philippines?

[@koelg5858]

I need to become a pro member now. Thats a tax write off correct?

[@srserpicol]

Not any more, I believe the new tax law took that away

[@4656superman]

So much knowledge from this channel, i just wish i could find a deal in my area 😤

[@featheredserpentofthewest2049]

Stay motivated

[@josephbianchimano5672]

hello Brandon can you help me figure out my cap rate on my property i have a 4 unit property the gross income is 52,500 , the noi is 37,700 , the purchase price was 135,000 how do i figure out the cap rate ? thanks

[@NachozModz]

Where are you investing?

[@gman2896]

Great video! Thanks for the information