Anyone doing Brrrr right now in Orlando and surrounding areas?
Member since 2020 · 34 posts · 22 votes
Anyone doing Brrrr right now in Orlando and surrounding areas?
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Real Estate Broker · Apopka, FL · Member since 2017 · 492 posts · 528 votes
6y@Mark Vivanco that PM you talked with sound's like he's aiming to steer you to the highest gross rent meaning the highest fee for him. I wouldn't be surprised if his idea of 'cash flow' is Gross rent minus the mortgage payment. That's not cash flow and you'll lose money annually if thinking it is. New construction from a build-to-rent perspective might be feasible with the right connections, but going to pluck off a builder home at a slight fear-based discount isn't going to get you cash flow.
I'm a Realtor in Apopka, Northwest of Orlando by about 20 mins. I have sold some Orlando properties, but the majority of buy and hold deals I have found have been in the areas 20-45 mins from Orlando to the North and Northwest. Commuting distance, but somewhat of 'bedroom communities' in a sense. It's a sweet spot of lower prices with enough employment to keep rents up higher. Forget BRRRR, it's hard to find a basic cash flowing rental in Orlando Proper. Stretch your search to places like Eustis, Mt. Dora, Apopka, Longwood, Winter Springs, and you start finding pockets of higher rent near hospitals, toll roads, SunRail stations, while homes are more affordable.
I'll be closing on an almost 'accidental BRRRR' with investor buyers in Eustis sometime next week. It's maybe 45 mins from Orlando, but only 15 mins from being on the 429 toll road, 10 mins from quaint Downtown Mt. Dora, plenty of employment within 5 miles. It's a 919sf 3/2 house in an improving C- neighborhood with a brand new roof and roof deck, water heater, and paint job. There's some public housing nearby, some run down houses, but overall most are decent, it's quiet, well kept, lower crime, working-class area. Not a great neighborhood, but it's not 'bad' or 'rough' either. Even the public housing nearby has trendy paint colors, new roofs, no smoking anywhere on property, and the place is almost empty on weekdays meaning they all likely work. A couple blocks to the south it gets into C+ and B class areas of larger historic homes in the $200k-500k range.
I say accidental BRRRR because it wasn't the primary goal on our search. I agree with Tyler that BRRRRs, at least ideal, full capital return BRRRRs are tough to find in this market. But good almost-perfect BRRRRs are out there, especially now that many flippers are sitting on the sidelines for a bit to see what things do. Many hard money folks have stricter guidelines and lower LTVs.
These buyers I'm closing with just bought a 3/2 house and 1/1 guest house nearby in Eustis for $196,500 that grosses $1900/mo. rented to solid and clean tenants. There's some room to raise rents in time, they'll add a water meter to split that bill and cut expense, and they got it for at least 10% less than full retail if the seller had cared to push it. He was an investor and Realtor and valued a smooth and quick sale over some messy offer that was a little higher. We closed that one 4/15 and started the hunt for deal #2. No capital-return planned on that two-unit right away, it's just a good solid rental property for a great price. With COVID fears around and a lack of good house/ADU properties (looked at several) we started making aggressive offers on little single family homes nearby.
Accepted offer price to close as soon as title can pull it off: $97,000 with a $970 credit to buyer closing costs. Cash deal
Rehab estimate based on contractor bid and materials estimates: $15,000 (New kitchen, new bathroom vanities, a little termite repair, new pre-hung interior doors, one new window, new driveway, fence repair, etc)
Time-line: 2-3 weeks
Market Rent (likely Section 8): $1150-1250/mo. Probably higher end of that, but being conservative.
ARV: $140-150k. Again, if this were February I'd say $150k all day, but even $140k would be fine.
My buyers were going to do this with a 20% down loan and pay rehab out of pocket to refi down the road sometime, but it would have been quite a bit tied up for the time being. They wish to keep buying properties but don't have unlimited funds to keep putting 20% down forever. So BRRRR was on our mind for now, but wasn't a necessity. However, seeing that they'd spend as much on closing costs as a large portion of rehab, say the Driveway for example, they opted to go cash to then only pay lending fees/costs once on the final refi. We're searching for leads to refi based on appraisal in under 6 months, but we have one that will do it at 6 months, not the worst thing.
If it appraises on the low end at $140,000 and they can only pull 75% instead of the ideal 80%, they'll pull $105k out minus closing costs one time. That'll leave about $7k of their capital in the deal, or about 5% of the total. They'll have a loan for $105k meaning there's $28k of 'free' equity they built by spending $15k on rehab and buying it at a great deal. Insurance is $650/yr, property tax, thanks to the low sale price, will be about $1800/yr. After refi, they'll have almost all capital back and a solid little cash flowing rental in a growing area.
Not every BRRRR will have numbers to return every dime of your capital, but that's ok. If after the final refi you've only left a small amount in the property, you're way ahead of buying full rent ready properties with 20-25% down.
11 Replies
- Flipper/Rehabber · Orlando, FL · Member since 2018 · 9 posts · 5 votes6y
I'm essentially born and raised in the Orlando area and lived in every corner of Central Florida. Like any other market there are parts of Orlando that will sell for $60 sq/ft and parts that are $300 +. Hard part may be a lot of homes near median of $260k don't even come close to 1% or 2% rules. However, I'd completely disagree that you can't do it. You buy the right deal with the right equity and have the relationships with financial institutions to be able to do a BRRRR it can be done. Comps lately have been a little wishy-washy because they're trying to factor in uncertainty. Not much of a concrete answer for ya but in my opinion you buy the right property for the right price in the right sub-market in Orlando, it's possible. Good places to look to be on the outskirt areas that are seeing a lot of growth due to Orlando expanding and people commuting in. Debary, Deltona, Winter Garden would be areas that come to mind. I know the market extremely well here I'd be more than happy to have a conversation. There's my two cents as a native. Happy deal hunting.
- 6yTyler GibsonBusiness MemberReal Estate Agent · Orlando, FL · Member since 2017 · 1k+ posts · 2k+ votes
@Mark Vivanco I'm not sure about the new construction advice but otherwise yeah BRRRR is really tight here in Orlando.
- Altamonte Springs, FL · Member since 2017 · 24 posts · 14 votes6y
I live in the Orlando area and I'm just about to close the refi on my first deal, which is in St. Pete. The Tampa /St. Pete area is a much better market. The properties in the working class neighborhoods are super cheap, in comparison to here, and the rents are higher. While I'd like to invest closer to home (St. Pete is 100 miles away), it was a no brainer. My unit is already rented and I never even advertised. In fact, she found me before the work was even complete.
- Real Estate Broker · Apopka, FL · Member since 2017 · 492 posts · 528 votes6y
@Mark Vivanco that PM you talked with sound's like he's aiming to steer you to the highest gross rent meaning the highest fee for him. I wouldn't be surprised if his idea of 'cash flow' is Gross rent minus the mortgage payment. That's not cash flow and you'll lose money annually if thinking it is. New construction from a build-to-rent perspective might be feasible with the right connections, but going to pluck off a builder home at a slight fear-based discount isn't going to get you cash flow.
I'm a Realtor in Apopka, Northwest of Orlando by about 20 mins. I have sold some Orlando properties, but the majority of buy and hold deals I have found have been in the areas 20-45 mins from Orlando to the North and Northwest. Commuting distance, but somewhat of 'bedroom communities' in a sense. It's a sweet spot of lower prices with enough employment to keep rents up higher. Forget BRRRR, it's hard to find a basic cash flowing rental in Orlando Proper. Stretch your search to places like Eustis, Mt. Dora, Apopka, Longwood, Winter Springs, and you start finding pockets of higher rent near hospitals, toll roads, SunRail stations, while homes are more affordable.
I'll be closing on an almost 'accidental BRRRR' with investor buyers in Eustis sometime next week. It's maybe 45 mins from Orlando, but only 15 mins from being on the 429 toll road, 10 mins from quaint Downtown Mt. Dora, plenty of employment within 5 miles. It's a 919sf 3/2 house in an improving C- neighborhood with a brand new roof and roof deck, water heater, and paint job. There's some public housing nearby, some run down houses, but overall most are decent, it's quiet, well kept, lower crime, working-class area. Not a great neighborhood, but it's not 'bad' or 'rough' either. Even the public housing nearby has trendy paint colors, new roofs, no smoking anywhere on property, and the place is almost empty on weekdays meaning they all likely work. A couple blocks to the south it gets into C+ and B class areas of larger historic homes in the $200k-500k range.
I say accidental BRRRR because it wasn't the primary goal on our search. I agree with Tyler that BRRRRs, at least ideal, full capital return BRRRRs are tough to find in this market. But good almost-perfect BRRRRs are out there, especially now that many flippers are sitting on the sidelines for a bit to see what things do. Many hard money folks have stricter guidelines and lower LTVs.
These buyers I'm closing with just bought a 3/2 house and 1/1 guest house nearby in Eustis for $196,500 that grosses $1900/mo. rented to solid and clean tenants. There's some room to raise rents in time, they'll add a water meter to split that bill and cut expense, and they got it for at least 10% less than full retail if the seller had cared to push it. He was an investor and Realtor and valued a smooth and quick sale over some messy offer that was a little higher. We closed that one 4/15 and started the hunt for deal #2. No capital-return planned on that two-unit right away, it's just a good solid rental property for a great price. With COVID fears around and a lack of good house/ADU properties (looked at several) we started making aggressive offers on little single family homes nearby.
Accepted offer price to close as soon as title can pull it off: $97,000 with a $970 credit to buyer closing costs. Cash deal
Rehab estimate based on contractor bid and materials estimates: $15,000 (New kitchen, new bathroom vanities, a little termite repair, new pre-hung interior doors, one new window, new driveway, fence repair, etc)
Time-line: 2-3 weeks
Market Rent (likely Section 8): $1150-1250/mo. Probably higher end of that, but being conservative.
ARV: $140-150k. Again, if this were February I'd say $150k all day, but even $140k would be fine.
My buyers were going to do this with a 20% down loan and pay rehab out of pocket to refi down the road sometime, but it would have been quite a bit tied up for the time being. They wish to keep buying properties but don't have unlimited funds to keep putting 20% down forever. So BRRRR was on our mind for now, but wasn't a necessity. However, seeing that they'd spend as much on closing costs as a large portion of rehab, say the Driveway for example, they opted to go cash to then only pay lending fees/costs once on the final refi. We're searching for leads to refi based on appraisal in under 6 months, but we have one that will do it at 6 months, not the worst thing.
If it appraises on the low end at $140,000 and they can only pull 75% instead of the ideal 80%, they'll pull $105k out minus closing costs one time. That'll leave about $7k of their capital in the deal, or about 5% of the total. They'll have a loan for $105k meaning there's $28k of 'free' equity they built by spending $15k on rehab and buying it at a great deal. Insurance is $650/yr, property tax, thanks to the low sale price, will be about $1800/yr. After refi, they'll have almost all capital back and a solid little cash flowing rental in a growing area.
Not every BRRRR will have numbers to return every dime of your capital, but that's ok. If after the final refi you've only left a small amount in the property, you're way ahead of buying full rent ready properties with 20-25% down.
- Member since 2020 · 34 posts · 22 votes6y
While ideal to get all the invested amount back after the BRRRR, I'm OK with leaving some in for the right deal. My goal is to get as much as I can with what I have to invest. I'm running all kinds of numbers on homes that are turnkey but have yet to really find something that is BRRRR ready. Not being local to the area, I have to kind of have faith someone is looking out for my best interest and realize we can all make money working together, instead of getting me for 1 investment this year, we can get 3-4 if the right deals are found.
- Member since 2020 · 34 posts · 22 votes6y
@Russell Holmes thanks for that post. Seeing #s really helps a lot when analyzing responses.
- Real Estate Broker · Apopka, FL · Member since 2017 · 492 posts · 528 votes6y
@Mark Vivanco you're welcome! And the deal that I mentioned is by no means a home run deal better than anything ever, but it's a good solid base hit showing the types of deals that can be made. That place was listed at $115k and several other similar homes rejected our lower offers, this one wanted to play ball and came back not much higher than we went in at.
- Member since 2018 · 37 posts · 15 votes6y
Originally posted by @Shawnette Pankey:
I live in the Orlando area and I'm just about to close the refi on my first deal, which is in St. Pete. The Tampa /St. Pete area is a much better market. The properties in the working class neighborhoods are super cheap, in comparison to here, and the rents are higher. While I'd like to invest closer to home (St. Pete is 100 miles away), it was a no brainer. My unit is already rented and I never even advertised. In fact, she found me before the work was even complete.
Which areas in Tampa/St Pete are you focusing on? I know there is a lot of cheap homes in St Pete, but it is difficult to know what they should/could be worth without the right information.
- Real Estate Agent · Winter Park, FL · Member since 2018 · 86 posts · 35 votes6y
@Mark Vivanco My husband and I are currently trying to re-finance our 1st long term buy and hold. It's a duplex in Orwin Manor which is just north of College park (2 mi north of downtown). We're hoping to "accidentally" BRRRR it as well as that was not the initial intention. We're living in the property but plan to buy another multi- soon in a similar central location that cash flows so, like you, having the extra cash on hand will be great for another rehab. Would love to connect and see how we can help each other more!
- New to Real Estate · Sarasota, FL · Member since 2020 · 10 posts · 0 votes6y
Originally posted by @Shawnette Pankey:
I live in the Orlando area and I'm just about to close the refi on my first deal, which is in St. Pete. The Tampa /St. Pete area is a much better market. The properties in the working class neighborhoods are super cheap, in comparison to here, and the rents are higher. While I'd like to invest closer to home (St. Pete is 100 miles away), it was a no brainer. My unit is already rented and I never even advertised. In fact, she found me before the work was even complete.
I, too, am interested in what areas you are looking into in the Tampa/St. Pete market. From a distance, I don't understand the market well enough.
- Altamonte Springs, FL · Member since 2017 · 24 posts · 14 votes6y
Originally posted by @Mike Miller:
Originally posted by @Shawnette Pankey:
I live in the Orlando area and I'm just about to close the refi on my first deal, which is in St. Pete. The Tampa /St. Pete area is a much better market. The properties in the working class neighborhoods are super cheap, in comparison to here, and the rents are higher. While I'd like to invest closer to home (St. Pete is 100 miles away), it was a no brainer. My unit is already rented and I never even advertised. In fact, she found me before the work was even complete.
Which areas in Tampa/St Pete are you focusing on? I know there is a lot of cheap homes in St Pete, but it is difficult to know what they should/could be worth without the right information.
I'm mostly looking at neighborhoods close to downtown St. Pete. They're C&D areas that are showing signs of gentrification / revitalization. You can also find houses in nicer neighborhoods for less than here, as well. I like the areas closer to downtown because the rental rates are higher.
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