Difficulty Finding BRRRR deals
Curious to touch on a subject that a lot of people bosses over BRRRR method. I find myself in a position when looking for BRRRR deals throughout the Atlanta market where rents are too low and ARV's are too high in addition to higher interest rates on refinance to find deals that are worth the cash flow if any. It feels like that entire segment of the market is gone. I presume you would have to look at more non conventional ways of renting such as Airbnb and more in order for the numbers to make any sense on a BRRRR type rental investment.
I think it just depends on the area. There are nicer parts of town where I am at that don't cashflow. Some people are okay with little or no cashflow for the longer term play. If you want to look more for cashflow I'd look into sub markets outside of Atlanta. A lot of investors are looking in similar cities like Atlanta so values are high and it's competitive. You could also look off market whether that's wholesalers or your own pipeline of direct to seller leads.
when you say people are ok with no cashflow... they are still making sure the rents at least cover PITI correct?
Quote from @Caleb Brown:Totally agree with you about people having to forego cash flow in more developed parts of town and some are okay with that. Majority of the submarkets that I have been looking at for off market deals has been in and around Forest Park, Union City, Fairburn and Riverdale to no avail. Im slowly Becoming more and more okay with less cash flow and banking on the longer term appreciation.
I think it just depends on the area. There are nicer parts of town where I am at that don't cashflow. Some people are okay with little or no cashflow for the longer term play. If you want to look more for cashflow I'd look into sub markets outside of Atlanta. A lot of investors are looking in similar cities like Atlanta so values are high and it's competitive. You could also look off market whether that's wholesalers or your own pipeline of direct to seller leads.
Quote from @Pierre E.:
when you say people are ok with no cashflow... they are still making sure the rents at least cover PITI correct?
I presume PITI is covered in the hypothetical. In most of the cases that I analyze it comes out to $50 in monthly cash flow which at the end of the day is more than no cashflow but seems insignificant to what we were seeing more commonly $300-$700 per month-- a year or 2 ago.
The market has tightened over a couple of years, but BRRRs continue to happen. I think you have to think bigger and push yourself on the "Rehab" to get the BRRR method to work. Light, cosmetic rehabs aren't available. However, I still see lots of deals where adding a bath to a 3BR/1BA would greatly boost the value and rents.
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Developer
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