BRRR in SoCal

4 Replies

Hello everyone, I am new to BP and been truly amazed on the wealth of knowledge from this site as well as the podcast.

Just was wondering if anyone has had success with the "BRRR" technique in SoCal?

BRRRRs are going to be difficult to find in the greater Lost Angeles and San Diego areas. Possible perhaps, but the property values and rehab costs are so high, and the rental market doesn't support good cash flow to make for a good BRRRR. Your best bet for BRRRRs in SoCal would be in Bakersfield or maybe the Lancaster/Palmdale area.

Max Gradowitz, Attorney

@Carlos Espinoza I think BRRRR can work in SoCal if you did it as a house hack ( at least I hope so since that's what I'm currently doing). Also, for us it's more BRRrR with the small r being there because we will only pull out part of our initial investment to repeat.

@Carlos Espinoza Very unlikely to find something where you can pull out 100% of your purchase + rehab costs in metropolitan SoCal.  I've done two deals in the past two years where I've been able to pull out the entire purchase price, but none or a small (<20%) of the renovation capital ... and I consider that a success.  That looks something like:

Purchase for $350k

Renovate for $60k

Appraise for $500k

Refi for $350k (this is a 70% FNMA loan)

Obviously, if you can do better on any of those variables (including using a loan with higher leverage), you could improve the numbers.  More power to ya.

While this doesn't look good for executing a BRRR strategy, keep in mind that the properties you'd buy locally is probably 5x the price of what most people talk about with BRRR. So, it's arguably 1/5th the effort and time to reach a similar outcome. Be sure you're thinking relatively and not comparing numbers directly between markets.

What about BRRR in lower income neighborhoods like Panorama City, Van Nuys, Sylmar, San Fernando? There are some properties hat Ive been looking at that might work in those areas for BRRR. This is kind of wher I'm looking to start myself. But I've seen 2bd condos for sale for about 160-180k. Now I think that way overpriced, but if you can find a seller who doesnt care about the total price, but is desperate to sell for whatever reason, I would think getting those same properties for say 120k would be worth it no?

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