How Can I Find Good BRRRR Deals....Frustrated!

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How Can I Find Good BRRRR Deals....Frustrated!

Joseph Sanchez
Lender · Central Florida, FL · Member since 2010 · 67 posts · 12 votes

I have been on a quest to find good BRRRR deals in my area. It seems that everything I look at and run through the BRRRR calculator is overpriced. Is anyone having the same issues? If so, I like to know how you are finding better deals? Thank you. P.S. I am a Realtor and am searching MLS every day. Everything seems overpriced!

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Dean Letfus
Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
7y

@John Matthew Johnston.  I'm sure every city will be different. In Memphis I troll Craigslist looking for homes for sale that have been put in the wrong category. I've bought some of my best deals this way.

I cultivate relationships with title attorneys, accountants, property managers, bank managers and make sure they know I am always looking for homes where the owner/landlord wants out but doesn't want to advertise and doesn't want to disturb the tenants.

I also find a lot of good deals by looking through FSBO sites.

In other words I avoid the MLS and realtors pretty much completely and I don't look for houses needing rehabbing. The other thing that works well for me in Memphis is buying using seller financing. There is a lot fo old money in memphis so elderly people downsizing or moving often don't need the money but they are very price proud about their house. So I buy them at asking price if they leave the money in at 1% over cash deposit rate. I have bought some gorgeous homes in East Memphis this way. With the low interest rate they cashflow just like a normal rental!

There are more channels I have used but I'm semi retired these days!!

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  • Ashley KehrPro Member
    Rental Property Investor · Buffalo, NY · Member since 2017 · 206 posts · 185 votes
    7y

    Hi Joseph are you able to change the structure of your financing to better suit the deals? For example I have done interest only seller financing for a year while I did some rehab and that kept my holding costs low until I refinanced at the new appraised value.

    1Reply
  • Alexander FelicePro Member
    Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
    7y

    Is anyone in your market doing it? 

    It doesn't' work everywhere, you need to find out if it's not a process that fits your market or you're just not finding great deals yet. MLS isn't always a viable option either.

    Are you networking with local people who have done BRRRR or those who have access to better inventory?

    and yes, prices are increasing nationally, and in some cities it's driving costs beyond profitability. 

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  • Mitchell Jaworski
    Rental Property Investor · Boynton Beach, FL · Member since 2014 · 273 posts · 197 votes
    7y

    @Joseph Sanchez welcome to South Florida investing, guess it has seeped up to Central Florida now as well. Kidding aside though, Florida market is tough as price appreciation has all but wiped out cash flow opportunities. Finding something on the MLS is very very rare in my area of Florida.

    Though I still look in FL (mainly off market stuff), I shifted my focus to out of state (which I wrote a blog post about on my site) as I saw the writing on the wall.  Currently investing in more rural MA.

    As for FL, off market deals are the only thing I see working.  These give you an opportunity for value add.  I have investor associates that are working probate and pre-auction foreclosure properties to find deals.  It is alot of work but pays off when a deal is found.

    Funny thing is I considered looking up in the Kissimmee and Lakeland area on MLS being that it doesn't work down here anymore. I ran some numbers, they were tight but seemed possibly doable.

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  • Jason L.
    Rental Property Investor · Delray Beach, FL · Member since 2014 · 224 posts · 169 votes
    7y

    Widen your time horizon. Most markets won't support instant refis for all of your capital (at least not for the majority). If you can afford to leave money in a deal for 3-5 years, then there are still plenty of opportunities in Florida. By the time you go to refi in a few years you would have benefited from all of the cash flows collected (which returns a higher rate since you are on the cheaper mortgage) and possible price appreciation (if the home appreciates at 3.5% per year, then in 3 years the house will be worth around 10% more, all of which is equity to you available to refi).

    0Reply
  • Shavar G.
    Rental Property Investor · Norfolk, VA · Member since 2013 · 44 posts · 67 votes
    7y

    @Joseph Sanchez - why not market directly to owners of distressed properties in your area?

    2Reply
  • Joseph Sanchez
    OP
    Lender · Central Florida, FL · Member since 2010 · 67 posts · 12 votes
    7y

    Hi Shavar, absolutely. How do you market to those owners? What does your process look like? I love to learn more about how to effectively and consistently market to distressed owners. 

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  • Account Closed
    Rental Property Investor · Windermere, FL · Member since 2019 · 16 posts · 2 votes
    7y

    @Joseph Sanchez What area in central FL are you looking at? We just finished up a project that we found off-market. I do browse MLS listings but personally do not have any luck with that route.

    0Reply
  • Joseph Sanchez
    OP
    Lender · Central Florida, FL · Member since 2010 · 67 posts · 12 votes
    7y

    Hello BP Family, thank you all for giving me great advice and different ways to look at finding potential deals. I started writing a response to each post and somehow when I got to the end it erased? So let me try to summarize my responses.

    Ashley-Changing the structure of my financing is great advice. The concern I have is when I apply the BRRRR strategy it would preclude me from the refinancing and repeat process. My goal is to purchase at least 4 properties. I will certainly keep this option in my arsenal. Great advice!

    Alexander-I agree the process may not fit my market and changing my market or asset class is something I may need to do. I have recently joined the Central Florida Real Estate Investment Group and plan on attending my first meeting in early July 2019. Great points; thank you for your wisdom.

    Mitchell-I agree, its not only seeped up its has overflowed...lol. You have a valid point-doing some long distance BRRRR deals is something David Greene talks about in his book Buy, Rehab, Rent, Refinance, Repeat. I purchased his book on BP and got the bonus content on how to do long distance BRRRR deals. I am a little bit hesitant because I don't have my core 4, Agent, Lender, Contractor, and Property Manager. You recommended seeking off market deals either in probate or pre-auction. I completely agree with you strategy. I will certainly look into those market segements. I love to learn what looks like? Thank you. Oh, there are deals in Kissimmee as well as Lakeland. I am find more in Lakeland. They are very hard to find in Kissimmee, but they surface periodically.

    Jason-Love your advice. Widen my time horizon. Time is something that alot of investors don't really think about if they are flipping properties or utilizing the BRRRR method. My goal is to acquire at least 4 properties by the end of the year. The only way I can meet that goal is utilizing the BRRRR method. Well, that's the only strategy I know of. But you are right. With a 3-5 year time horizon; with the cash flows collected through renting and the appreciation on value over time it's a no brainer! Thanks.

    Shavar, I kind of responded to your advice. The only thing I left out is that there is also Personal, Market, and Property distressed segments. Dissecting each one and figuring out the process involved to find those segements is something I am trying to figure out. Thank you again.

    0Reply
  • Ehsan Rishat
    Specialist · Carlsbad, CA · Member since 2018 · 1k+ posts · 638 votes
    7y

    @Joseph Sanchez If the MLS isn't working for you don't fret because this market is very saturated with buyers and so the prices go up due to the insane competition. You could try using list brokers or other sites like Zillow or ListSource. I personally recommend Listsource because of its competitive pricing structure. After you pull up your list of leads you need to market to these leads. Attend local REIA meetings or try other outlets of networking to find out what marketing works best in your locale. You could try direct mail, cold calling, text messaging etc. As long as you are consistent in your marketing efforts you will find a good deal in no time.

    Good Luck!

    0Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Alexander Felice:

    Is anyone in your market doing it? 

    It doesn't' work everywhere, you need to find out if it's not a process that fits your market or you're just not finding great deals yet. MLS isn't always a viable option either.

    Are you networking with local people who have done BRRRR or those who have access to better inventory?

    and yes, prices are increasing nationally, and in some cities it's driving costs beyond profitability. 

    exactly in most areas it does not work.. IE you can buy rehab refi and get 100% of our capital back all within 6 months or so.. its works best in C class lower value higher risk assets.. or you need to conversely find Smokin deals which can be had but usually not at any great velocity.. like picking off burnt out landlord houses in areas that are dominated by landlords.

    so to make the BRRR work or at least how I did a few thousand of them as the HML putting the investor into title so they could partake in the no cash in the deal or actually my clietns got cash back at refi.. but I brought them rentals that all in including my fee and the wholesalers fee and the rehabbers fee and refi closing cost.. they had to be in those properties 65% of ARV.

    this is a tall order in todays market..  when I did the bulk of this business from 02 to 08  I was funding about 400 of them a year in 7 different markets we could do it because I had my vendors all in place.

    were I am seeing the real weak part of BRRR as its being talked about today.. is that before I even did my HML to put the LA investor into title I had them fully approved for the take out and a ARV appraisal in HAND before we even bought the property this is how a True BRRR team works.. then once I funded the deal controlled the rehab taking all that risk away from the out of state investor ( remote rehab super risky as we know for beginners) all we needed was a 442 final docs went out I got paid off.. buyer got usually 3 to 8k back in refi proceeds.. and that's how it went..

    fast forward to today.  everyone just jumps in and they risk the refi not happening or rehab being butchered etc.. for the average investors buying something already rehabbed is much safer.. although it does defeat the forced appreciation part of it.

    I am toying with firing back up my BRRR funding arm.. I think end of the day I can provide a MUCH safer product for most investors.. they wont end up in bad situations with ARV values and or bad contractors.

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  • Harry H copeland
    Investor · Member since 2019 · 11 posts · 2 votes
    7y

    @Joseph Sanchez

    There are a lot of ********ters

    In real estate investment clubs

    I am a member there also

    Lots at how most of them are dressed

    And then decide on their advice

    Just a heads up

    Good luck

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    Just to give you something else to consider @Joseph Sanchez, don't get hung up on 1 strategy as it means you miss too many deals. I get contacted almost weekly by newbies trying to find BRRRR deals in Memphis for example. I tell them I've bought hundreds of homes and have never done a BRRR. Instead I find performing assets that are heavily discounted instead. Then I go to the bank and they lend against appraisal so I get all my money out on the day I buy it. Strategies where you do as little as possible, ideally nothing, are always the least risk!!

    6Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    7y
    Originally posted by @Dean Letfus:

    Just to give you something else to consider @Joseph Sanchez, don't get hung up on 1 strategy as it means you miss too many deals. I get contacted almost weekly by newbies trying to find BRRRR deals in Memphis for example. I tell them I've bought hundreds of homes and have never done a BRRR. Instead I find performing assets that are heavily discounted instead. Then I go to the bank and they lend against appraisal so I get all my money out on the day I buy it. Strategies where you do as little as possible, ideally nothing, are always the least risk!!

     Dean can you imagine the carnage that would happen with out of state investors trying to rehab C class in Memphis  which is what the wholesaler told them but its really D class.. its just a train wreck waiting to happen..  you put some one with NO experience in rehab they read a book.. think all these super people are going to for next to no pay protect their interest.. its like leading the lambs to slaughter.. 

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  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Jay Hinrichs, amen brother. I'm mopping them up multiple times a year. I watched one guy hand over 50K for a 20K property. Ended up in court that time but usually people just move on through shame.

    Even Hedge funds who have resources to burn, get burnt in Memphis.  I just avoid it as much as possible because it's so unnecessary.  My last 2 purchases were 59K rented at $950, appraised at 97K and 83K rented at $1095 appraised at 115K.  Learn to find deals others aren't looking for is my mantra!!

    5Reply
  • John Matthew Johnston
    Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
    7y

    @Dean Letfus Hi Dean , could you give examples of performing assets that no one else is looking for? How do do you find these deals?

    0Reply
  • Kevin Manz
    HVAC Tech · Fort Wayne, IN · Member since 2015 · 423 posts · 223 votes
    7y

    @John Matthew Johnston, try turning your avatar sideways. That might be the trick.

    0Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @John Matthew Johnston.  I'm sure every city will be different. In Memphis I troll Craigslist looking for homes for sale that have been put in the wrong category. I've bought some of my best deals this way.

    I cultivate relationships with title attorneys, accountants, property managers, bank managers and make sure they know I am always looking for homes where the owner/landlord wants out but doesn't want to advertise and doesn't want to disturb the tenants.

    I also find a lot of good deals by looking through FSBO sites.

    In other words I avoid the MLS and realtors pretty much completely and I don't look for houses needing rehabbing. The other thing that works well for me in Memphis is buying using seller financing. There is a lot fo old money in memphis so elderly people downsizing or moving often don't need the money but they are very price proud about their house. So I buy them at asking price if they leave the money in at 1% over cash deposit rate. I have bought some gorgeous homes in East Memphis this way. With the low interest rate they cashflow just like a normal rental!

    There are more channels I have used but I'm semi retired these days!!

    8Reply
  • John Matthew Johnston
    Investor · Beaver Falls, PA · Member since 2015 · 275 posts · 82 votes
    7y

    @Dean Letfus Thanks for taking time to reply Dean, it’s much appreciated!

    0Reply
  • Kraig Kujawa
    Investor · Orlando · Member since 2016 · 151 posts · 72 votes
    7y
    Hi , @Dean awesome stuff. Can you clarify a bit on the Craigslist 'wrong category' thing?

    Originally posted by @Dean Letfus:

    @John Matthew Johnston.  I'm sure every city will be different. In Memphis I troll Craigslist looking for homes for sale that have been put in the wrong category. I've bought some of my best deals this way.

    I cultivate relationships with title attorneys, accountants, property managers, bank managers and make sure they know I am always looking for homes where the owner/landlord wants out but doesn't want to advertise and doesn't want to disturb the tenants.

    I also find a lot of good deals by looking through FSBO sites.

    In other words I avoid the MLS and realtors pretty much completely and I don't look for houses needing rehabbing. The other thing that works well for me in Memphis is buying using seller financing. There is a lot fo old money in memphis so elderly people downsizing or moving often don't need the money but they are very price proud about their house. So I buy them at asking price if they leave the money in at 1% over cash deposit rate. I have bought some gorgeous homes in East Memphis this way. With the low interest rate they cashflow just like a normal rental!

    There are more channels I have used but I'm semi retired these days!!

    1Reply
  • Dean Letfus
    Specialist · Memphis, TN · Member since 2012 · 1k+ posts · 1k+ votes
    7y

    @Kraig Kujawa, often people list their house for sale under general items for sale, or garage sales or even pets!!  So no one looking for houses has seen the advert. I have bought a lot of houses this way. I just check CL in my city and there are 3 properties for sale not listed under houses for sale. If I was actively buying one of them was a deal!

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