Let me ask you a question, how would you like to spend tens of thousands of
dollars
fixing a property, get it rented out and then realize it doesn't actually make
you any money? Doesn't sound too fun, does it? Well, my name is Brandon author
of the book on rental property investing and today i'm excited to give you a tour
of the brand new
BRRRR calculator from biggerpockets. This incredible tool will allow you to
analyze a fixer-upper rental property including cash flow, cash on cash, return
your total investment and more in under five minutes. Sounds too good to be true?
Well stay tuned and I'll show you how easy it can be. So before I show you the
calculator, let's all get on the same page of exactly what it means to BRRRR
property.
No, I'm not talking about buying a house in the middle of winter. I'm talking
about buying a property
usually with a short-term funds like cash, private money, hard money or
partnership. Rehabbing that property. Renting that property out. Refinancing
that property to pay off the original loan and then repeating the process over
and over as you build your portfolio. If you want to learn more about the
fantastic brrrr strategy,
read our free ebook on the subject at bigger pockets . com /b RR RR
Okay, so let's get to the tour. The BRRRR calculator is similar to the bigger
pockets rental property calculator, the flipping calculator, the whole sign
calculator in that it contains three pages followed by a final result page.
Page 1 includes some of the basic information about the properties such as
the address, the sales description,
the annual property taxes, although only the field with the little red asterisks
are required
I would recommend filling in as much as possible to make your final report
complete and if you plan to show the final report to others be sure to upload
as many photos as you like
here on page one but make your report look even better later and keep an eye.
Out for these small little white question marks next to most of the
fields when you hover over these icons
you'll find additional information that will help you learn how to fill out the
calculator more thoroughly
so when you get stuck don't give up and go back to watching TV so hover over the
question marks and learn how to find the information needed the second page
includes the financial information related to buying the property at the top
you'll enter information such as the purchase price
the after repair value the closing costs and the repair costs
again if you aren't sure how to find out any of this information simply hover
over the question mark icon that will help you out next down the page you're
going to enter information about the initial purchase loan
as mentioned earlier the brrrr strategy involves buying the property using
short-term funding
like maybe private money or hard money and later on refinancing out into
longer-term money
this is the information for the initial purchase this top section for example I
might buy the property using a hundred thousand dollar loan from a private
lender at ten percent interest and i'll enter that information here as well as
the time I expect to have the initial loan before refinancing below that i'm
going to enter the information for the refinance loan that i'll be getting
later
that's pretty much it for page two - so let's move on to page three
this page contains all the financial information for the rental side of your
investment including income and expenses and just be sure that you're using a
dollar figure where needed and the percentage where needed and not mixing
those up at the bottom of page three you'll have the option to enter in some
estimates for future assumptions as well like how much the income the property
value and the expenses will climb year-over-year if you don't want to
enter that in don't make predictions don't worry about it you don't have to
you can always leave them blank
finally I want to point out the very last field here on the page page 3 that
is and that is the sales expenses
see although you might hold on this property forever chances are you'll end
up selling it someday
and you buy something else and so of course it costs money when you sell a
property such as closing costs and realtor fees so you can enter in what
percentage of the future sales price that you'll probably end up losing to
these fees
personally I usually estimate between eight and ten percent but talk with a
local real estate agent to get a more accurate percentage for your area
we've entered in all this data you can now click the calculate results button
and see all the numbers that you need to make a good decision here on the results
page we can see a summary of all the data you entered and some pretty amazing
estimates including the monthly cash flow
the cash on cash return the total cash needed when you purchase the property
the total cash you'll leave in the deal after the refinance
and much much more also keep in mind that because you are potentially
obtaining two different loans for this brrrr deal
you can click between acquisition and the refinance tab to see your estimates
before and after you refinance
you might find that during the initial acquisition page your cash flow is small
or even negative but after the refinance that might tell a whole different story
finally I just scroll down the results page you'll see a lot more really
awesome data including a breakdown of your income and expenses
how your property compares to the infamous two percent rule and a chart
that helps you estimate what your future might hold for your property with some
colored graphs to drive the point home
the last thing i want to show you before I complete this video is this the more
actions button here you'll find some really cool
other things you can do with your final report including the ability to generate
a PDF report the ability to send the report to a lender a partner your spouse
or whoever you want to see the deal
you can also copy your calculation to another bigger pockets user or reanalyze
your entire deal using one of the other calculators without needing to enter in
all the information again you know
brrrr investing can be one of the best ways to experience both cash flow and
equity growth in an investment while minimizing the competition that you face
however you got to do the math right luckily thanks to the new bigger pockets
brrrr calculator
you have everything you need to analyze your next brrrr deal in under five
minutes to try it out today yourself a bigger pockets . com/ analysis
and i will see you around bigger pockets for a biggerpockets.com , my
name is Brandon signing off