Looking at First BRRR

2 Replies

I'm ready to buy my first rental property, but I would like some advise from people who have actually done it. I'm afraid that I will make a mistake due to lack of experience. I am wanting to use the BRRR method.

I can buy the house for 14,000. Despite the price, It’s not a ghetto neighborhood. I’m buying in my small midwestern home town with a population around 4K people.

It is liveable but needs some work. I have the cash to buy it and do basic rehab. I should be able to get $500 per month rent. I would then want to take out a mortgage on the property. After rehab I was thinking I could probably cash out refinance what I had spent on the property and purchase another similar property and repeat.

I don’t know how to begin figuring rehab cost. I walked through house the first time last night and it just seems like paint, flooring, doors and stuff like that. 850 sq ft, 2 bed, 1 bath, attached carport, nice yard.

Im guessing a mortgage payment around $300 per month with taxes and insurance, which would give me a $200 per month cash flow with very little out of pocket.

What am I missing. What do I need to know about buying a house with cash. Will it be difficult to get a mortgage on a rental property that is that cheap?

Any advice is appreciated.

Thanks

Please post before and after pictures. A house for $14k that's livable?!

Understand your neighborhood/city and make sure $500/month rent is the market rent.  I would try to pay for the property and not get a mortgage on it.  I think it would be too difficult for that amount of a loan to get a mortgage on it.  

For repairs, take into account how long it will take you to make them and what the materials will cost.

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