Updated about 6 years ago on . Most recent reply
Looking to start the BRRRR process
I would like to start investing in real estate, but right now I have about $40k. I just finished the BRRRR book so that's how I'm looking to start. I've looked at San Antonio, Indianapolis and Columbus on Zillow, but it seems like any anything I can afford is in a bad neighborhood. Should I just keep saving? I haven't actually spoken to any agents yet. Any suggestions for getting my first deal?
Most Popular Reply
HI @Oscar Rivera, welcome to the Bigger Pockets forums! I take it that you are looking to purchase something at $40k or below and pay cash . . . is that the case?
Here's what I do that has had good results and might be a good process for you, too:
- Purchase a property using a construction loan with a local bank. I put 15% down for the purchase and the bank funds the rest of the purchase price and 100% of the rehab costs up to 75% of the appraised value. So, I put together my Scope of Work, give it to the appraiser, and then they tell me what the value should be.
- Once I complete the renovations I'll find a tenant, start the lease, and then begin the refinance process. Since I had a good understanding of the After Repair Value from the get-go (thanks to the initial appraisal and my process) I have a good idea of what the refinance appraisal will come back at.
- Go to closing, bring little or no money OR receive a check for the "Cashed out" amount if it is a cash-out refinance, and then do it again.
So, you'd be looking at some purchase power of around $250k and that should put you in the zone of some much better prospects. If not, it's probably time to look elsewhere :)