Buying Portfolios and applying the BRRRR method?
I'm looking to buy portfolio's of investors holding small multi-family homes, 2-4 units withing 5 hours drive of Houston Texas (Beaumont, Corpus Christi, Conroe, College Station, Victoria are some major towns I'm looking at but open to investigate anything).
With my lender I have identified that currently I can buy 1-2 properties at a time, with each costing up to $200,000 inclusive of all costs (buy, hold, rehab) so long as this cost is up to 75% of ARV and the homes will cash flow. I can refinance them from a Hard money loan into a 30 year fixed long term with the same lender as soon as the rehabs are completed. Conceivably if I can keep rehabs at 2 months or less, with the dollars I have at hand I can take over 6 properties a year, with additional funding could do correspondingly more.
I thought about offering the current owner a remaining stake in the properties if they would meet a price I can work with/seller finance/mentor/some other value, percentage would vary based on the numbers but it would be at or less than 25% that way they could get the cash infusion to move up to larger units but also maintain a stake in the cash flow and appreciation of the units when sold. Would this work?
Would owners of these small MF's be willing to sell at a value that I could BRRRR and maintain cashflow?
How would you handle the conversation?
Anything I should watch out for/be aware of when working to buy portfolios?
I'm vary happy to talk about this.
Thank you!