I'm curious if BRRRR ("fix & rent") works in the Fargo metro area. Essentially, the ability to have your purchase price + rehab costs <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.
Updated over 4 years ago
That should read: "your purchase price + rehab costs < 70% of the ARV"
I'm not an agent or a broker, or particularly experienced in this field, but as a Fargo native of 22 years, I know that there are few middle-class neighborhoods with houses that need rehab. The vast majority of Fargo's middle-upper class citizens live on the south side, where construction is booming and virtually everything is <5 years old. You may have some luck on the north side, however, I'm not as familiar with all of the neighborhoods in the north. There's a ton of opportunity for rehab within a mile of NDSU's campus, but since you're looking for middle-class and not college students that may be out of the picture. You may find some luck closer to downtown Fargo, but few neighborhoods I've driven through close to downtown come off as middle-class. Perhaps one area of opportunity would be in the neighborhoods right below 13th Ave S to the west of University St. It's a nice community with some humble houses, but I know several middle-class families in that neighborhood so I figure the rest of the neighborhood follows suit.
In conclusion, as far as rehab goes, my $0.02 would be to not waste a lot of time looking for property south of Main Avenue, or, at least, 13th Ave S. Hope this helps!
@Eric P. There are a few local wholesalers here that could potentially help you with your situation. Fargo is a slightly different market than most expect in my opinion. @Matt Finneseth is correct about the tons of new construction but those are being sold at a price point that is just outside the comfort zone for a lot of first time home buyers. Those buyers can be found buying up properties just outside the student rental area of NDSU in N. Fargo. With all the new construction its looking great for the market and they are selling well but are generally for the second home buyer. If you can find a flip that would be sold at a slightly lower value than these new construction homes you'd likely have a number of first time home buyers lined up.
I would beg to differ with Matt in that you could find some good properties in S. Fargo but keep in mind it will be a little trickier. There are some neighborhoods that are desirable, some not so much. Thankfully, the market is turning a bit away from being a sellers market as prices have been dropping a bit over the last few months but its still competitive.
There is a local real estate meetup group where you may be able to voice your questions or meet people with the same questions if you're already in the area.
Shoot me some more questions if you're curious more about the market.