HURRICANE HARVEY BRRRR SCENARIO

2 Replies

Hello BP investors,

First off, let me say that this website has been an amazing resource for someone like myself that is new to REI. I am working my 4th buy-and-hold and it happens to be my first BRRRR. I live in the Houston, Texas area and have picked up a hurricane Harvey damaged home.

here are the rough numbers

paid 100K

rehab 30K

ARV 200K

Rent $1750 in the area

My offer was accepted sight unseen last night. I visited the property today and while it is a great neighborhood, about 70% of the homes on the street are vacant and damaged. In a typical BRRRR scenario, the comps in the area help to support the cashout refi, but in this situation, I'm assuming it will have a negative impact on me getting a top dollar appraisal. I know appraisals and comps are different things but doesn't the appraisal take into consideration the comp values?

In order to maximize forced appreciation, do I:

rehab as quick as I can, (in less than 60 days) and try to refi hoping the appraisers use comps PRE-Harvey 

or

do I rehab and wait it out a year+ before refinancing so that all the homes are rehabbed and values go back to where they were before the storm. (the drawback with this option is I am borrowing some money from a hard money lender)

Your input is greatly appreciated! 

Find a LOCAL investor friendly lender and ask them, they'd be best able to give you a realistic answer.

I am very new to REI and I am looking to make my first purchase very soon, but I think the second strategy of buy and hold and lease the property out for 18 months and see where the market is. If the market is up, then sell, if not then you have passive income from the tenant.

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