Analyzing a BRRRR deal

[Hillary Fox]

How do you analyze a BRRRR deal online without seeing the property? Specially, how to you estimate the rehab costs without line by line items. How do you know if a deal you see online is worth pursuing further. I understand how to do it for a buy and hold that is move in ready, but not for a rehab. Anything helps. Thanks!

[Brandon Sturgill]

@Hillary Fox Very intuitive post. Truth is it takes experience and systems. So, step 1 is to develop a formula for a first filter to make a decision about moving to offer and entering due diligence...common logic says that properties in worse areas have more deferred maintenance, rougher tenants, and are in generally worse condition than higher-end properties. The metric to use is per-square foot renovation costs for a move-in renovation...that means move in ready for the asset class. Your scale would be something like D-class= $10/sq.ft.; C-class= $8 sq. ft.....and so on...these costs need to be specific for your location...and in all honesty, materials cost about the same all over the country. So, I can renovate any property in the US to move in condition by doing a cosmetic upgrade for $XX depending on the size of the property.

This is just step one to get to an offer stage...you'll need to bust *** in due diligence to confirm your assumptions...a great agent can be your best asset here...or your contractor network.

Unfortunately, the real solution is a wildly complex algorithm that will only get you marginally better results...remember, acquire properties by going through phases...phase 1 is getting comfortable with an offer based on what you know after the first filter...entering due diligence is where the real work starts.