Help determining repair costs and thoughts on BRRR approach

Redmond, WA · Member since 2018 · 6 posts · 4 votes

I am looking at some potential properties in Tacoma, WA. I am new to REI. My background is in Finance so I am good with numbers, but don't have a lot of experience evaluating how much repair work a house needs to get it to rental material.

Here is the property I am looking at:

https://www.redfin.com/WA/Tacoma/506-S-38th-St-984...

Here are my questions:

- If you were a flipper, how would you structure your analysis of the repairs needed? Are there and "models" out there to help for beginners?

- If you were looking for help in the local market, which people would you reach out to to help build an estimate? Real estate agents? find local contractors? Flippers?

Thanks,

Adam

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Timothy Tooker

Real Estate Agent · Puyallup, WA · Member since 2012 · 240 posts · 95 votes

@Adam Beachnau

1. Find a Realtor/Agent

A. Who actually knows what is a good investment is (BRRRR or Flip).

B. Who actually knows what a legitimate construction cost are.

2. Find a good General Contractor (GC) that can handle the renovation for you. Make sure this GC is licensed and insured.

If you need help finding those type of professionals, feel free to email or call me. My contact info is in my profile.

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Abel CurielBusiness Member
Real Estate Agent · Queens, NY · Member since 2016 · 2k+ posts · 1k+ votes
8y
Hey Adam,
Contractors would be able to walk through the property and give you an estimate. Keep in mind that it'll be just that, an estimate. I'd ask local investors and investor-friendly agents for contractor recommendations to make sure you get someone reputable.
I think the BRRRR is a solid strategy to grow your portfolio and build wealth over time.
Lastly, J. Scott wrote The Book on Estimating Rehab Costs check it out in the BP bookstore... Very detailed and insightful!
Best of luck to you!
-Abel
REbuild Team - eXp Realty5234 Reviews
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Jim Y.
Real Estate Investor · Tacoma, WA · Member since 2013 · 87 posts · 55 votes
8y
Here’s a finished flip property a few blocks away from the one you’re looking at: https://www.redfin.com/WA/Tacoma/227-S-38th-St-98418/home/2962336
You could probably rent as-is, but would likely get lower rents and tenants.
I think the property you're looking at is priced too close to ARV. Any mistake or issues with the city or utilities and you can blow through the spread in a day.
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Carson Wilcox
Davis, CA · Member since 2016 · 595 posts · 344 votes
8y
if that 289 house is retail... and it is flipped to a retail buyer level vs a rental....
then yours is overpriced for BRRR.
remember, BRRR you have to get it at such a price, that once rehabbed, you can get all or most of your $ out when a bank lends you 70% of the appraised value. You need a good solid ARV #,and work backwards from there.
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Adam Beachnau
OP
Redmond, WA · Member since 2018 · 6 posts · 4 votes
8y
Thanks all for the input. Agree on the BRRR. I think its already too pricey. I was thinking potentially from a price per ft angle that it could work because I saw some listings in the area above $215 p/sq ft. But even at $220 with this house its at $340k which is a big number for the area. And cash flow at that high of a mortgage given the rents in the area, its not super attractive.
Good recommendation on the Rehab book. Just bought it going to read up this weekend.
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Timothy Tooker
Real Estate Agent · Puyallup, WA · Member since 2012 · 240 posts · 95 votes
8y
@Adam Beachnau
1. Find a Realtor/Agent
A. Who actually knows what is a good investment is (BRRRR or Flip).
B. Who actually knows what a legitimate construction cost are.
2. Find a good General Contractor (GC) that can handle the renovation for you. Make sure this GC is licensed and insured.
If you need help finding those type of professionals, feel free to email or call me. My contact info is in my profile.
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