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BRRRR - Buy, Rehab, Rent, Refinance, Repeat

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Aris Spenjian
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How Do YOU Identify Top BRRRR Markets, and Where are They Today?

Aris Spenjian
Posted Jun 22 2022, 03:02

I'm wondering how different folks on here determine high opportunity markets for a BRRRR strategy? With so many housing markets in the U.S., you can't be everywhere all at once. Personally, I've been using housing data I get from Realtor/Zillow/FRED to identify the top markets with in the U.S. with a high Rent/Sale ratio AND a high Avg. Income to Rent ratio. What signals do you use, and where are do you believe those top markets are today for a BRRRR strategy?

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Corby Goade
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  • Boise, ID
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Corby Goade
  • Investor
  • Boise, ID
Replied Jun 22 2022, 04:30

The truth is there really aren't certain markets that BRRRR works better than others. Equity and the baseline costs to enter a market are all relative to that specific market across the board. In basic terms, if you buy a property at 50% of ARV and put another 25% in to rehab, you should be able to do a cash out and make it work as a true BRRRR, and those equity opportunities aren't location specific. However- doing that in LA might cost you $500k up front and doing it in Cleveland might cost you $60k.

Side note- there are markets where on the buy and hold side, your returns will vary regarding equity vs cash flow, but that is a different question. 

If you are new to this, my suggestion would be to find a market that is close enough to you that you could reasonably drive and check a property out and work on the rehab yourself if you like. There will be a baseline entry cost in any market, so start with your budget and resources and make a circle on a map, maybe 100 miles in circumference from where you live, and start analyzing those areas to see if you have the resources to start there. 

Best of luck!

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Andrew Postell
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  • Fort Worth, TX
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Andrew Postell
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  • Fort Worth, TX
Replied Jun 22 2022, 10:05

@Aris Spenjian you have some really good comments above.  I would also recommend using a local market.  However, I moved to Texas from New York City....so if you really do live there, that philosophy would be impossible.  But the other philosophies are still good.

I would certainly recommend leaning on your network of people that you know of where to invest in.  When you are an out of state investor you may NEVER see your property - you need an implicit amount of trust in the people you are working with.  When I lived in NYC, I invested in Jacksonville, Florida.  Not because Jacksonville had the best returns (and they were fine) but because I had people there that I knew and trusted.  I still own property there and it does very well.  Just one bad tenant, one bad property manager, one bad anything can set you back years on cash flow.  So lean on a trusted network more than the "most profitable market" and that will steer you in the right direction.  Hope all of that makes sense.

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