New to Real Estate · Ridgway, CO · Member since 2019 · 46 posts · 12 votes
I understand the fix n flip strat is to find the worst house in the best neighborhood. And that's strict...that's how you get the biggest return and make it worth while.
Is this is the same strategy for BRRRR? Atleast, for the Rehab step. Are you still scouting for the worst house in the best neighborhood, or there's more wiggle room? I mean, obviously finding the best deal is important...but I feel like BRRRR's gold mine is in the long term investment n cashflow.
What if you bought a house for 200k and only put 20-30k into it fixing up a bathroom n some other things that add value - then rent it out and refinance after 6-12 months - does this mean i'll get a smaller % of proceeds, but still be able to pay off the loan, get my original investment (DP, CC, SC, etc) have tenants, and maybe just not profit as much off the refinance?
It doesn't have to the worst house in the best neighborhood.
You just have to know the market (having a RE agent on you team will help) and know what the rehab will cost (having a contractor on your team will help) you have to run the numbers thoroughly (BP Calc are awesome).
If you buy a house for 70% of the ARV minus the rehab cost its (almost always) a home run.
In order for your example to work, buying a house for $200k plus $30k rehab the house needs to get appraised at least $307k for a successful BRRRR, a bank will lend you up to 75% LTV, that way you pull out all your money.