Brrrr strategy on duplex with tenants, is this doable?

Question

Kenneth Garrett · Answer

@Jason Harris

The ARV sounds incredible.  Make sure it is correct for a duplex and not sfh.  Clarify if tenants are paying rent. Ask for rent roll even on a duplex.  Make sure they are actually paying rent.  Ask for a copy of the leases.  What condition are the units in?  Maybe the low purchase price is due to rough condition.  Based on your ARV looks like a win based on cash flow.  Due diligence is key.

Yes I have done the BRRRR strategy on 2 unit and 4 unit buildings.

Good Luck.

Diana Muresan · Answer

@Jason Harris let me know if you have questions in regards to the finances

Scott Steffek · Answer

Jason,

Yes, the BRRRR will work. But you might want to be extremely careful with a deal like this. Kenneth made a great point about the ARV. I've been doing this business a long time and right now the market is very tight. When I read your post and looked at the sell price and the ARV, I couldn't help but think somethings not right. Even if the ARV is for both units, it still raises a red flag. If you divide the ARV in 2, that would most likely mean that each unit is worth about $88k. You said you're buying for $49k. So even if the ARV of $88k per unit is correct, you're still buying at a very low price. You're at what.... 55% of ARV and that's only at the $88k ARV.  That tells me that the unit most likely needs a lot of work or that the ARV is not correct. If the ARV is actually $175k for the 1 unit, then that's even "worse." Most likely there's major issues with the apartment. Issues that could drain your bank account. Maybe the numbers are correct and you're getting a killer deal. I hope for your sake, that that's the case. But with the market the way it is today, I would take a long hard look at this deal before you move forward. Something just doesn't seem right. Best of luck to you.

Andrew Syrios · Answer

BRRRR with duplexes (or even larger multifamily) is certainly doable. Although those properties are often a bit trickier to value.

Theo Hicks · Answer

Of course. You can technically follow the BRRRR strategy on a 100 unit apartment complex if you wanted. Make sure you get your hands on the historical financials and a current rent roll and perform a rental comparable analysis to determine accurate, post-renovation rents.

Brrrr strategy on duplex with tenants, is this doable?

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