Anyone doing active BRRRR in seattle?

[Azu Lee]

Is anyone actively doing BRRRR in Seattle area? I haven't done any real estate investing and would like to learn (or maybe become partial partner) and learn from you! I think getting questions answered is one thing but want to see if I can have mentor who is active (don't mind paying a reasonable fee for it).

[Michael Haas]

@Bradley Dosch thanks for the BRRRR mention! Yes, BRRRR & variations of BRRRR are have been our primary investment strategy in Seattle over the last few years, and I'm happy to coach people on the strategy.

A couple things to look out for when BRRRR-ing in 2022:

1. BRRRR is a much riskier strategy in an increasing rate environment (which we are in now) than in a decreasing rate, or equilibrium rate market. Delayed Financing BRRRR (a variation on traditional BRRRR) allows you to refinance in less than 6 months, but for most traditional BRRRR investors they'll be looking to refinance at least 6 months after purchasing the property... and on a big project it might be 12 -18 months before you refinance. In an environment where interest rates are going up this can be risky, because you don't know what the market will look like when you complete the project. Rates are 6-7% right now, but if they rise to 10% after you complete your BRRRR will the deal still work for you?

2. Agent, Lender & Property manager relationships are key. The best & cheapest contractors don't need new business, so they may not respond or answer your calls if you haven't worked with them before. BUT, if you work through a agent or property manager that has spent between $100,000 and $1,000,000 on various projects with that contractor they'll be much more responsive! Everyone wants to work with clients and vendors that have been vouched for, and working with a experienced team gives you that credibility.

3. (usually) to BRRRR successfully you need to pay below retail price for the property, the renovation work, or both. That means that you can't use the first contractor that comes up on a google search, and that you can't buy the properties that everyone else is looking at and paying market value for. Diamond in the rough contractors & properties are a key component of the strategy.

4. Capital - aim to have 20% of the ARV in cash available for a BRRRR. That means if you're targeting a $1M exit, try to have $200,000 in cash available. Some hard money lenders will loan to you with less, but as a beginner you want to make sure you have lots of reserves in case your first project doesn't go according to plan. If that sounds like more money than you can afford no worries, there are lots of A+ investing strategies that require less capital, pivot to those and do BRRRR's later when you have more cash.

DM me anytime, good luck and don't wait to long to jump in- experience is the best teacher :).