BRRRR in Grand Rapids, MN?

Question

Thank you, everyone, for sharing your knowledge. I am brand new to this but obsessively researching daily. At this early stage, BRRRR stands out as the most attractive strategy and Grand Rapids MN the most attractive market. Would love to hear your opinion on that plan for that tiny market, if you have experience. The method and market seem to check all the boxes for our situation.

Nick Holty · Answer

Congrats David on looking to get into real estate!

Brrrr is a great strategy! Some downsides it takes lots of capital in cash to make it possible. That can be difficult in metro areas but in smaller community its easier to purchase the homes with cash.  ARV is very important when doing a BRRR deal so triple check your numbers and pad your numbers a bit to make sure have good margins. Cost overruns are very easy to happen when doing rehabs.

Travis Farleigh · Answer

David,

I've done the BRRRR in Northern MN (Cloquet/Duluth) and though I haven't specifically looked much in Grand Rapids, I can't imagine it would be too different there. Really, BRRRR can work anywhere as long as there is a need for rental units, as long as your purchase price is realistic to the work that needs to be done. A few things I'd watch out for having a couple under my belt... 1: If at all possible, do the work yourself. Some of it is not legally allowed for a rental property, but anything you can do, do it. That will be your number one savings. 2: Pay attention to the age of the house. Older homes pretty much never satisfy code. They're fine until you start messing with them, but once something needs to be repaired, your costs could end up being a lot more than you'd anticipate just looking at the surface problem. 3: Sometimes, replacing is better than patching. For instance, my first property had old galvanized piping in it, and when we tried to get the water running again, we replaced it section by section as we went, and ultimately had to do so much that I regret not just tearing it all out and starting over with Pex. It would have been cheaper and less time-consuming. That's not to say that you shouldn't ever just repair something... but in cases like that, where it's the age and design of the thing that causes problems in the first place, consider all options.

James Hamling · Answer

Grand Rapids, yes Brrrrrrrrrrrrrrrrr is first thing that comes to my mind also. (had to)

First thing to know is the #'s you can achieve in rural micro-markets will seem to good to be true in comparison to much of what you read, that is actually the standard your best served using, I call it "ludicrous math" (Spaceballz shout out).

Your competition will be a lot less than standard markets, but so will the deals. In the rural MN markets I work in I believe my "secret sauce" is all about my out-bound efforts be it cold calling, community networking or driving for dollars (yes, in that order).

Also financing may be a bit tougher at first but with work to connect into local banking for portfolio lenders the coin will flip and you should have a much easier time on the $ side than major markets. Make that an early priority to build that network.

Affordable housing is going to be a big market segment there, but be sure to get educated on all that comes with affordable housing such as maintenance, evictions, property managing, all that fun stuff.

BRRRR in Grand Rapids, MN?

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