Finally Found a BRRRR deal now what....?

6 Replies

Hey BP,

My names Jesse and this is my first post.

I finally after looking at countless properties, crunching numbers, have found a deal that is a BRRRR, at least I think so.

It's a SFH 4bd/3ba 2600 sqft

Good news:

nice part of town 

good schools

i think i can get the property for 150-160k

ARV is probably 300k based on other houses nearby but i have no experience so to be conservative lets say 250k ARV

rentometer says average rent for that is 2k, which is $800 over a refimortgage $1200: 75% LTV of 250k

great credit

Bad news:

I've only ever bought one house that i'm living in now, last April.

Very little funds currently
newbie panic

rehabs needed:

add back deck

replace water heater

inside drywall

inside paint

outside paint

replace kitchen appliances

paint kitchen cabinets

replace few interior doors

some bedrooms need carpet or Hardwood floor.

                wanted based on budget 

finish basement

driveway.

Now that I found the first BRRRR property that i've come across after 6 months because it seems like everyone does something to fix and flip and i haven't met my savings goal to get my skin in the game idk what to do. i don't want to let the deal just slide by, i don't have enough cash saved to get a hard money loan. i was planning on going to two local REIA at the end of the month but someone will probably snap it up by then. The only thing i can think of is to try and find a partner but haven't met anyone that is in the business yet other then people that i came into contact when buying my residence, banker and real estate agent.

I don't think finding the money is hard. i could ask to borrow some from family and pay them back to get the brrrr loan, from lending one.

as i'm writing this down things are getting more clear in my mind. I guess what i want to ask is what the normal order of operations?

Get money for a brrrr loan 

get the loan

talk to the seller get a good deal

call in contractors and get quotes for all the work

release the job to one of the contractor(s)

contractors finish

Find and screen a tenant (no real direction on that other then craiglist/zillow/redfin ads )

refi into a regular mortgage

setup payment receiving system

keep tenant happy

done? start breathing again?

Hi Jesse,

Congrats on landing a good deal!

I would question if it will cash flow or not. With high end properties like this, many times it's a negative cash flow situation. Do you need a positive cash flow? Why are you seeking out such high end properties for BRRRRR?

Sounds like a Mason or West Chester house to me.  Why not do a flip or wholesale if possible and use the profits for a rental in the 60-80k range which will more easily cash flow?

Just my thoughts.  

Thanks for your thoughts adam.

i do need a positive cash flow. It's not that I'm looking for high end, it's just one of the only ones that looks great enough that a brrrr would work. Many of the properties I find are already rehabbed or are too high to brrrr. I've seen a lot of 70k-80k houses that need a full remodel but would only be around the 125k ARV. 70-80k would be all in with rehab cost in it, now those numbers might work with a light rehab but to redo a kitchen and some other big items I haven't seen those work out.

Flipping that one might work out better.

@Jesse Jacobs

Would this be your first house?

Do you know the cost of what it's going to take to rehab? Without the basement and driveway(no idea on what those cost) your prob looking at 15-20k. That is a very rough estimate. havent seen the house, or if your going to do any of the work. Anyways 160k purchase plus 20k for rehab is 180, then when you refi it you'll have closing costs. You said something about a 75%ltv, which if it's worth 250k that is 187k. Numbers are kinda tight, just make sure your right.

Not trying to talk you out of it at all. Just if your on a budget I would start alittle smaller.

@Jesse Jacobs

I have multiple rentals and also wholesale (mainly rentals) and can provide some financing if you purchase one of my properties.  I know the Cincinnati market pretty well.  I'd be happy to look at your deal and the numbers and give you some additional insight.  Feel free to direct message me.  

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