BRRR with Multi's

4 Replies

Having to flip two kitchens instead of one, double the bathrooms and appliances... Things really add up quick. Is it possible to add enough value with multi's to do a cash out refi with a BRRR like you would with a single family?

Hey Vincent

I tried to avoid posting when I don't have much value to add. At the risk of violating that rule, I think the real answer to your question is in the deal. If you buy low enough you should have the equity to either fix and flip or BRRR. There should be roughly the same margin for error on each. If you buy at 50% ARV and put 20% back into it for rehab youre sitting at 70% ARV. If you're selling you should have enough margin to make a decent profit, if you're refinancing you should be able to get 70% out without too much hassle. If you start investing more than that you're going to have trouble with either strategy.

@Vincent Crane

It certainly seems doable. I did it with one two-unit. It was a house on the front of the lot and a cottage in the back. It also had a detached garage. I realized only after buying it (I was very new) that three roofs are more expensive than one. I have been looking for multi's under one roof to apply the BRRR strategy to, but I keep ending up with single-families. I have done 11 single-families in the last 12 months after that 2-unit.

The key (like @Joe Kling said) is knowing your numbers. You need to have your renovation costs and your ARV correct. Then the BRRR strategy should work with a single family or a multifamily.

Mike

I am in the middle of doing it for the 1st time (about to start the refinance portion), and have seen it done multiple times here see (@Michael Noto who documented some his experience in a diary here). It is just like any other asset- buy it right and make sure you know the ARV. Right now I am also making offers to start this on a second house.

As @William Collins mentioned we have successfully done the BRRR 4 times now with multi-families. Up here in Connecticut it is really only viable to do so with multi-family houses. So far we have done 2-4 unit properties.

The numbers don't work out up here with single families using BRRR. The taxes usually kill any cash flow associated with a SFR in a decent area.

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