Where to start your first BRRRR

Question

I know this question has been beat to death, but I'm having trouble finding a market to settle in. I'd like to BRRRR a single family, $150,000 all in. Any suggestions on where to buy? I've read long term real estate and BRRRR but still stuck.

Thanks for the help!

Cole Raiford · Answer

@Eric Kulling pretty much any market in the southeast or Midwest will work. The key to brrrr is to find steeply discounted houses. The “B” (buy) is the key. If you don’t get the property cheap enough it will not work as a true brrrr. Pick a market with houses that ARV around $100K and find wholesalers that can get you these houses cheap enough to allow for the purchase and the rehab to complete around $75K. You can scale these prices up or down, just keep the spread between the all-in cost and ARV at 25%. This will allow you to brrrr.

Cole Raiford · Answer

@Eric Kulling I think the main thing is knowing the market well and being able to verify all information for yourself (ARV, rehab cost, rent rate, etc). Don’t just trust what they tell you, verify it yourself. If you know the market and have a good deal analysis spreadsheet (or use BP calculators) you can figure out if the deal is good numbers wise.

As far as trusting them, just get to know them and make sure nothing feels out of place. Also I suggest not giving big non-refundable earnest money deposits to them. Some markets may require this but mine doesn’t. I don’t even give them an earnest money. Gentleman’s agreements have worked for us so far. And if you do give them earnest money, I would advise that you put a contingency that it is refundable in the event that they can’t produce a clear title.

Get involved at the local REIA and make connections here on BP for the market you choose and you will be able to figure out what wholesalers are actually doing volume. You just need to be ready to buy from them with cash (your own, LOC, private/hard money, etc).

Eric Kulling · Answer

@Cole Raiford

Beautiful stuff. Thanks Cole! Time to drill down and find a market!

Eric Kulling · Answer

@Cole Raiford

Very helpful. As far as due diligence when finding an honest wholesaler. Any suggestions?