HURRICANE HARVEY BRRRR SCENARIO

[Huy Thai]

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! 

[Huy Thai]

Hi @Lindsay Brake, I had the same issue but luckily the appraiser was able to find comparable homes that had sold nearby and appraised the home at 183K. I originally thought the home would appraise at or just above 200K and probably didn't due to some Harvey homes selling for much less than market skewing my numbers. Regardless, I was able to refi and pull out my initial investment (and then some). I've done a few more since with the same success and learned to adjust my anticipated ARV about 10% less than normal in my calculations to make sure and account for lower than normal comps.