New to Real Estate · Woodcrest, CA · Member since 2020 · 4 posts · 1 vote
Hey Guys!
New here and currently in a position to purchase my first BRRRR investment (looking into the Central California area) but I ran into a question I have yet to find the answer to. When looking for a BRRRR property should I only be focusing on vacant properties since I'd be rehabbing it or can this be done with tenants? If it's been done with tenants how would you approach raising rent after or remodeling? Thanks
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jesbran Silva I would highly suggest your first BRRRR be vacant. One less piece to handle. However, moving forward, taking over a BRRRR property with a tenant in place could lead to a good deal especially if the landlord is needed out... and you can take that issue of his/her hands, move the tenant out, then BRRRR. I've actually picked up 3 in a package deal that way (the tenants were performing... so that was a plus), and then gradually BRRRR'd them over the next few months as leases renewed. Essentially, I had my holding costs paid for as I worked through the projects.
Omaha, NE · Member since 2020 · 612 posts · 665 votes
6y
Is it your first investment property or just your first BRRRR?
Either way, I can't imagine a rehab with a tenant in the home. To the level you'll likely want to take the rehab, a tenant couldn't comfortably live in the property.
Since the purpose of the BRRRR is to refinance all your money out of the home after the rehab, you don't have to worry about holding costs (as long as you stay on schedule), and so long as you're in position financially, buying vacant properties is always, always preferable. Why inherit someone else's mistakes?
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jesbran Silva I would highly suggest your first BRRRR be vacant. One less piece to handle. However, moving forward, taking over a BRRRR property with a tenant in place could lead to a good deal especially if the landlord is needed out... and you can take that issue of his/her hands, move the tenant out, then BRRRR. I've actually picked up 3 in a package deal that way (the tenants were performing... so that was a plus), and then gradually BRRRR'd them over the next few months as leases renewed. Essentially, I had my holding costs paid for as I worked through the projects.
Is it your first investment property or just your first BRRRR?
Either way, I can't imagine a rehab with a tenant in the home. To the level you'll likely want to take the rehab, a tenant couldn't comfortably live in the property.
Since the purpose of the BRRRR is to refinance all your money out of the home after the rehab, you don't have to worry about holding costs (as long as you stay on schedule), and so long as you're in position financially, buying vacant properties is always, always preferable. Why inherit someone else's mistakes?
Best of luck!
Thanks Jody, this will be my first investment. I'll have to keep searching for vacant properties, all the ones I've seen so far in Central California come with tenants.
@Jesbran Silva I would highly suggest your first BRRRR be vacant. One less piece to handle. However, moving forward, taking over a BRRRR property with a tenant in place could lead to a good deal especially if the landlord is needed out... and you can take that issue of his/her hands, move the tenant out, then BRRRR. I've actually picked up 3 in a package deal that way (the tenants were performing... so that was a plus), and then gradually BRRRR'd them over the next few months as leases renewed. Essentially, I had my holding costs paid for as I worked through the projects.
Thanks Whitney, If I cant find a solid vacant property I might go this route. I guess knowing when the lease is up on each tenant is crucial when taking this approach. Did you begin rehabbing the exterior and finished the interior once the leases were up? or did you begin as soon as the tenants moved out?
Investor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
6y
@Jesbran Silva The leases I took over stated when I could come on the property. In this case, it was easier to wait until a turn and have it look fresh for the new tenant. No one really likes living in a construction zone.