BRRR and flipping in portland metro area
Hi all, I'm new to real estate investment but I'm excited to get started. I have one rental so far, and soon the home I'm living in now will become my second. I'm interested in trying my hand at a few things, like flipping or BRRR or even hard money lending.
specifically, with flipping and BRRR -- I struggle to understand how the math on those works here. I've now remodeled two homes, one in SW Portland and one in camas, washington. The Washington remodel was done in 2018. Purchase price 600k. Remodel was superficial, and cost around $150k for 3000 sqft, which is $50/sqft, for mid-high end finishes (that was not the most expensive bid I got). After the remodel we approached our realtor about selling, and she thought we'd lose 100k if we sold! The bank agreed. when we refinanced, they thought we had only raised the value by $50k. We decided not to sell and are renting it out now for $3200/mo. Not a very successful flip or successful BRRR. 😥
Second house, just this year, wound up costing closer to $100/sqft. It was more mid range quality finishes. But the remodel was also *mostly* superficial but some other issues came up (moving wall, plumbing, electrical).
im wondering what a good "successful" flip or BRRR looks like here. I have seen a few flips come on the market, some seem to do really well, others seem to lose money. And I can't make any rhyme or reason of what the right formula looks like.
know an interior designer who just flipped his gorgeous 2500-ish sqft NE portland home for 1.5million. don't know what he put into it. it's a beautiful home, but was surprised he got so much for it, since it was a smaller home and half the square footage was in the basement!
I watched a bigger pockets video where the guy says he bought a home for 200k, put 40k into it, refinanced 280k back out and rents for 2500/mo. Those numbers sound wayyy too good to be true! Anyone have #s like that in Portland??
I also hear a lot that you have to buy a home for the right price, but everything is so expensive. Even the "fixer uppers" are discounted maybe $30/sqft. What am I missing?
any advice is welcome!!!
IN Portland, good luck. THink your biggest issues:
1) Getting in at a reasonable price. Anything in Portland Proper seems over-priced to me already leaving you little margin
2) You need to sit down with a knowledgeable residential RE person and ask for the ROI on improvements. Stuff like kitchens and baths can be bottomless pits to throw money into relative to payback. Also, anything requiring a permit can open up a can of worms by requiring you to fix a lot of other stuff.
Hey Tris, my brother and I have successfully BRRRed about 35 houses and 10 apartments in Portland.
Our first house we bought in 2009 for $125,000 added a master bathroom, remodeled kitchen, and installed new floors, for roughly $25,000. It appraised for $225,000 and we pulled cash out and moved on to the next property.
In 2017 I purchased the home that I am living in now for $310,000 and invested $180,000 into it. We recently put it on the market and got it into contract at $550,000. What is great is that we qualify for taxfree gains through section 121. This project was a big value add and was fairly complicated. It would have been better to do a more straightforward value add project.
In 2018 I purchased a 4 plex in Milwaukie for $540,000 and invested $50,000 into it. I took rents from $800 to $1195. The mortgage is $2800 per month and rents are about $4800. I did do a 1031 exchange into this property so I am not super upset that I have roughly $150,000 of capital into the property.
Today we are purchasing a condo right now in SW Portland for $175,000 and I think that we are just going to relist it at a higher price without doing any repairs... I think the wholesaler is going to make more money than we are, but it should provide us a small return.
We are about to close on our 2nd Syndication deal for a 12 unit apartment complex in SW Portland as well. We got about 10 investors together to buy a 1.8m property and we have a small value add project lined up for it and we will be waiting for the SW Corridor MAX Line to be constructed and then we will sell.
In the current market landscape, we are focusing more on Apartments than we are on single-family homes. Home prices are incredibly inflated due to the lack of inventory. Flips and BRRRs are possible but as investors, we are extremely selective.
I'm happy to chat about the local market here... that's what we do every day!
Cheers,
Chris Shepard
Uptown Properties LLC
Hey @Tris Wils, try working backward. Look at the ARV of the property and make sure it fits in with the rest of the neighborhood. Your final sales price is only as good as the local comps. That will also give you an idea as to what type of finishes to use.
