Still Possible to BRRRR in This Market?

Question

Hello all! I'm fairly new to the real estate game and I've been networking and meeting lots of people along my journey. My goal is to BRRRR properties and build a portfolio in the fastest way possible. However, while talking to people to build my "Core Four" lots of them have been telling me that BRRRR'ing isnt very feasible right now. If I do find a good deal on a property I'm told that lots of cash offers will get the bid over mine, which is unfortunate to hear.

Just wanted to get some of your opinions on the subject matter!

Nathan Cross · Answer

Hi Phil. Are you buying these properties on or off market? Are you trying to get them financed, or are you using cash or hard money? Ask because its partially true that you may get out bid by cash buyers with how the market is right now and where you are investing in as well. Also I have seem a slight rise in rehab cost as well, but I think thats contracts getting a little greedy IMO. We just recently bought a property here in STL and we are going to BRRRR and hope to close another one next week. Just have to get them at the right price and find the right team to get the rehab done.

Kat He · Answer

Hi Phil, I used to be able to offer all cash, under asking, and at least be considered for a counter. Now I find I'm often losing to all cash, full ask within days of listing (investing in Indy btw). I don't aim for perfect BRRRRs to begin with, but do plan to adjust the returns I'm looking for if this trend continues. Some things to consider for a stronger offer: all cash, higher EMD, get offer in asap, have agent verbally let listing agent know an offer is coming in (esp if in different time zones or won't be able to sign the docs immediately).

Kenneth Garrett · Answer

@Phil Morin

If you buy the property correctly, the BRRRR still works.  Remember strategically it’s best with cash deals.  If your buying with 20% down and financing the balance then the property is only distressed slightly.  The better the distressed property the more opportunity to force equity through the rehab.  Find a private lender or HML.  I prefer private money, usually no points and interest rate will be a little better.

Phil Morin · Answer

@Nathan Cross

I’m currently looking to invest in the KC area using private/hard money. I haven’t had much luck with finding properties off market yet, but hopefully that’ll change soon as I meet more people. But I’ve noticed that contractors do seem to be charging a lot for their services and finding it difficult to rehab a property enough to refinance and stay under budget.

Still Possible to BRRRR in This Market?

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