New York City, NY · Member since 2016 · 470 posts · 348 votes
I'm curious if BRRRR ("fix & rent") works in the Jax metro area. Essentially, the ability to have your purchase price + rehab costs less than 70% of the ARV, so after you rehab you can find tenants & then refinance to get all of your cash back. I'm sure there must be some areas / neighborhoods where this works? Of course, the other requirement is that the rental income is enough to cover your mortgage + expenses on the back-end. So this tends to work best in middle class neighborhoods.
Are there any licensed real estate brokers / agents who can help me find such properties? Not interested in Turnkey btw - I'd rather buy pre-renovation (not post-renovation) to capture the equity myself.
I'm a buy and hold investor with 11 rental units in the Jacksonville area, and also a licensed realtor. I've used the "BRRR" strategy to acquire the majority of my properties.
To answer your questions - the Jax market is pretty hot right now, but every once in a while a good deal will come along. One benefit of the market being "up" right now is it makes the BRRR strategy easier in that you can usually get a higher appraisal in future months - making it easier to pull out the cash you need.
Do you own any properties currently? Any investment properties? One thing most people don't realize with the "BRRR" strategy is your current income and current debt load are a huge factor in whether you will be able to qualify for future cash-out refinance loans.
With an investment property the bank will usually only credit 70% of your rental income towards your debt to income ratio - so the property needs to be SERIOUSLY cash-flow positive for you to qualify for the cash-out refinance. Alternatively you would need to have a high enough income from your "day job" to qualify to take on the additional debt load, without including the rental income.
I agree that the best opportunities (generally) pop up in "B" and "C" class neighborhoods - but reality is, there is no neighborhood where every house is automatically going to be a profitable rental property. So what I do - I keep an eye on a handful of neighborhoods across the city where I'm able to identify what a good deal is, price-wise. Then I'll go look at the properties near that price point to see what renovations are needed. Once I know the renovation costs I can then determine what the actual ROI would be.
Personally, I think turnkey is for suckers, because renovating properties gives you the highest rate of return in the long-run, and that's what has worked for me!
Investor · Las Vegas. Jacksonville, Bay Area Ca, Nv, Ca, Fl · Member since 2015 · 511 posts · 220 votes
9y
Jacksonville has a lot of inventory that fits your needs. You will definitely need boots on the ground for the hunt. Which markets do you plan on investing in, A,B,C or D ?
New York City, NY · Member since 2016 · 470 posts · 348 votes
9y
From my experience in other markets, class A is usually poor cashflow and low returns, while class D is a no-go. Usually class B & C locations seem to make the most sense to me
I'm a buy and hold investor with 11 rental units in the Jacksonville area, and also a licensed realtor. I've used the "BRRR" strategy to acquire the majority of my properties.
To answer your questions - the Jax market is pretty hot right now, but every once in a while a good deal will come along. One benefit of the market being "up" right now is it makes the BRRR strategy easier in that you can usually get a higher appraisal in future months - making it easier to pull out the cash you need.
Do you own any properties currently? Any investment properties? One thing most people don't realize with the "BRRR" strategy is your current income and current debt load are a huge factor in whether you will be able to qualify for future cash-out refinance loans.
With an investment property the bank will usually only credit 70% of your rental income towards your debt to income ratio - so the property needs to be SERIOUSLY cash-flow positive for you to qualify for the cash-out refinance. Alternatively you would need to have a high enough income from your "day job" to qualify to take on the additional debt load, without including the rental income.
I agree that the best opportunities (generally) pop up in "B" and "C" class neighborhoods - but reality is, there is no neighborhood where every house is automatically going to be a profitable rental property. So what I do - I keep an eye on a handful of neighborhoods across the city where I'm able to identify what a good deal is, price-wise. Then I'll go look at the properties near that price point to see what renovations are needed. Once I know the renovation costs I can then determine what the actual ROI would be.
Personally, I think turnkey is for suckers, because renovating properties gives you the highest rate of return in the long-run, and that's what has worked for me!
Investor · Jacksonville Beach, FL · Member since 2012 · 80 posts · 18 votes
9y
Sarah,
What kind of mix do you have for your 11 doors? I am looking for multis but it seems that every other REI out there is doing the same. Despite a LOT of effort I can't find deals with any meat left on the bone (SFR or multi) to allow for forced equity and the potential to refi and pull out money. This being said, I don't look closely at anything west of the river except San Marco (east of Cassat), Riverside, and parts of Murray Hill. Have you acquired any of your properties in the last 12 months?
Just looking for the perspective of another active REI. Thanks in advance for your time.
I have a duplex, a triplex and a quad in Riverside; two houses in Murray Hill, and a house in Avondale. (I live in one of the houses so 11 rental units.)
So far this year I've only seen a handful of deals on multi-family properties that had the potential to be profitable buy and hold investments. Inventory is low and prices are high, so good deals are hard to come by. Also in riverside, avondale and springfield it is a popular thing to buy a multi to convert to a single family to flip.
With that being said, even in this market good opportunities still pop up every so often, and the constant vigilance pays off. I was SHOCKED to see THREE murray hill houses hit the market under $60k in the last two months (on the good side of MH), and actually were in pretty decent shape for their age. Heck I would have listed them at $90k since murray hill is so hot these days.
I bought my riverside duplex last winter, and am closing next week on a 3-unit in avondale. Ironically both of those properties I found on craigslist. I am a licensed Realtor so I did the paperwork but don't feel the need to pay myself a commission. The sellers were so excited about selling off-market and avoiding realtor fees, they didn't realize how much of a higher sales price they could have gotten listing on the MLS in a hot market. I'm fairly certain the "off-market discount" exceeded 6%.
It sounds like you're a fan of the same neighborhoods I love :)
Jacksonville, FL · Member since 2016 · 23 posts · 2 votes
9y
I am a beginning investor born and raised in Jax., joined the Corps after high school and will be coming home to retire in about 18 months. Where should I look to acquire some rentals? Is there a whole seller you recommend? What guidance/information/recommendations do you have for me?
Thats outstanding Sarah. Craigslist?...outstanding. I look and look and your kinds of deals seem to allude me. If you find one of those multis or a SFR you can't commit to send it my way and I would be more than happy to send you a finders fee/commission.
Rental Property Investor · Jacksonville, FL · Member since 2012 · 114 posts · 98 votes
9y
Hi @Blair G. - send me a private message with your criteria and contact info. I'd be happy to send some good deals your way, especially these days. I won't be able to buy anything for myself for several months until my current project is renovated and rented, so I'd love to see someone else take advantage of what comes along.
Investor · Jacksonville, FL · Member since 2012 · 122 posts · 46 votes
9y
I agree with Sarah. The Jacksonville market is on FIRE right now. There are some deals still but there are far and few. Most of what I found to be the best deals are the off market deals. I learned from an old timer when I first started to talk about real estate with everyone I come in contact with. That has worked great for me and have had several deals come by word of mouth. We have a lot of outside investors looking to work the Jacksonville area. I am active in our local Reia and we have seen influx of not only out of state investors but also out of country investors coming to look at the Jacksonville market.
How do you plan to manage a rehab project in FL from NY? Do you think you can just look in the yellow pages, find a contractor, and they are going to do good job for a fair price? LOL
Are you going to buy a property, sight unseen? Take an agent's word for it that the ARV will be accurate? LOL
Do you know what market rents are in the Jacksonville area? Property management company?
I predict that you will lose a lot more than pre-hab equity. You can't trust other people to make good decisions with YOUR money.