How often do you come across a great BRRR deal?
New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes
How often do you come across a great BRRR deal?
Most Popular Reply
Andrew PostellPro Member
Lender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes@Gurjot Grewal you have some good responses above but I want to hit one something you mentioned - cash flowing. Right now it is extraordinarily difficult to cash flow. Keep in mind we make income 3 ways with rental properties - cash flow, appreciation, and principle buy down. So if I lose one of those income sources I still have the other two. When the market doesn't support cashflowing (which is does from time to time) that should mean we can pickup properties at a lower price point. So if you are expecting to cash flow $300 per month, that equates to $3,600 per year. So reduce your offer by $5,000 or so to compensate. So if I pickup a property with $50,000 of equity...that would take me 12 years to equal that in cash flow. Also keep in mind you will increase your rents next year, and the year after, and so forth. Real estate is a long term play.
I make about 100 offers per year to do 2-3 properties per year.
Hope all of that makes sense.
26 Replies
- Investor & Agent · Tulsa, OK · Member since 2016 · 1k+ posts · 1k+ votes3y
I find them fairly often, more off market than on, and after spending time and money targeting sellers and networking with wholesalers etc. I also self manage my remodels and my rentals. So in a sense I’m less picky, and I don’t tend to do all that for forever but it is a way to make it work.
- Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
A lot more in this market
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Eliott Elias:
A lot more in this market
Im not sure why but i cannot find a deal that makes sense. Often the ARV works but the rents wont be high enough.
- 3yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
@Gurjot Grewal
The higher you can force equity up the better the deal. I've done many BRRRR projects unfortunately they require new kitchens, new bathrooms and at time I can add a bedroom. I like to find 2 bedroom SFH that have enough square footage to remodel to create a 3rd bedroom. Those are $20K to $50K rehabs almost flip style.
As far as getting them to cash flow it’s market dependent. I’ve bought a lot of foreclosures. They are in pretty rough shape usually but once in a while I get a small remodel and it works out great. The more rehab the project takes, the less capex and maintenance I have to calculate. Don’t just throw a random percent at each analysis really analyze per deal. You will probably start to see more deals become reality.
When I first started I was way to conservative with my numbers and could never find a deal that worked. I got better at rehab numbers, ARV and the rental market. I will say refinance rates are high now so it does create a challenge, but you can still find deals.
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Kenneth Garrett:
@Gurjot Grewal
The higher you can force equity up the better the deal. I've done many BRRRR projects unfortunately they require new kitchens, new bathrooms and at time I can add a bedroom. I like to find 2 bedroom SFH that have enough square footage to remodel to create a 3rd bedroom. Those are $20K to $50K rehabs almost flip style.
As far as getting them to cash flow it’s market dependent. I’ve bought a lot of foreclosures. They are in pretty rough shape usually but once in a while I get a small remodel and it works out great. The more rehab the project takes, the less capex and maintenance I have to calculate. Don’t just throw a random percent at each analysis really analyze per deal. You will probably start to see more deals become reality.
When I first started I was way to conservative with my numbers and could never find a deal that worked. I got better at rehab numbers, ARV and the rental market. I will say refinance rates are high now so it does create a challenge, but you can still find deals.
@Kenneth GarrettThanks for the reply! Are you adding additional bathrooms in some cases ? I have found in my market a second bathroom can get a few hundred extra in rent.
For the analysis for SFH some times the rents are 1800-2000 range, this puts my maintenance at 250-300/month. I feel this might be too high but figure better to be conservative. Do you have any tips for getting a more realistic number ? Are you breaking down the age of all cap ex items ?
Do you avoid older homes ?
Do you take on renos where you have to re do major things like plumbing/electrical ? - 3yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Gurjot Grewal you have some good responses above but I want to hit one something you mentioned - cash flowing. Right now it is extraordinarily difficult to cash flow. Keep in mind we make income 3 ways with rental properties - cash flow, appreciation, and principle buy down. So if I lose one of those income sources I still have the other two. When the market doesn't support cashflowing (which is does from time to time) that should mean we can pickup properties at a lower price point. So if you are expecting to cash flow $300 per month, that equates to $3,600 per year. So reduce your offer by $5,000 or so to compensate. So if I pickup a property with $50,000 of equity...that would take me 12 years to equal that in cash flow. Also keep in mind you will increase your rents next year, and the year after, and so forth. Real estate is a long term play.
I make about 100 offers per year to do 2-3 properties per year.
Hope all of that makes sense.
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Andrew Postell:
@Gurjot Grewal you have some good responses above but I want to hit one something you mentioned - cash flowing. Right now it is extraordinarily difficult to cash flow. Keep in mind we make income 3 ways with rental properties - cash flow, appreciation, and principle buy down. So if I lose one of those income sources I still have the other two. When the market doesn't support cashflowing (which is does from time to time) that should mean we can pickup properties at a lower price point. So if you are expecting to cash flow $300 per month, that equates to $3,600 per year. So reduce your offer by $5,000 or so to compensate. So if I pickup a property with $50,000 of equity...that would take me 12 years to equal that in cash flow. Also keep in mind you will increase your rents next year, and the year after, and so forth. Real estate is a long term play.
I make about 100 offers per year to do 2-3 properties per year.
Hope all of that makes sense.
@Andrew Postell Thank you for the reply! Yes that makes alot of sense. I have found in my market going from 1 to 2 bathrooms adds 200-400 in rent depending on neighbourhood. From reading other posts Im making a very rough estimate of 10k for a bathroom in a basement right under the one on the main floor.
Im thinking this might be a good strategy to make up for the cash flow difficulty. Could you offer any insight on this? Have you ever successfully added a bathroom in this manner before ?
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Gurjot Grewal:
Last 3 weeks I have analyzed properties 2h daily. Some days more. Have made a few offers. I know I still have a ways to go. Nothing accepted yet. Got a great team in place, investing at a distance.
How often do you find these great deals?
I feel I might be being too picky. Should I be more flexible with my criteria ?
- post 1950 build
- In a C+ or above neighbourhood
- Cash flow positive
- single or multifamily
-5% vacancy, 10%pm, 15%(cap ex, regular maintenance)
- would prefer a quicker turnover not a full gut rehab
Been looking on market, and my agent brings me some off market deals as well. Looking for any tips to help me secure this first property. Or is this just the process and I just need to stick to it.How often, as many as I want. I got 4 last month, all well below ARV,, All in 60k, rents for 1400, ARV About 125k, All in 55k, rent 1200, ARV about 75k, All in 70k, arv about 120k rented for 1200. ALL IN 350k, rent about 90k, arv about 450k,,,,, I can get as many as I want in my market
All the best
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Last 3 weeks I have analyzed properties 2h daily. Some days more. Have made a few offers. I know I still have a ways to go. Nothing accepted yet. Got a great team in place, investing at a distance.
How often do you find these great deals?
I feel I might be being too picky. Should I be more flexible with my criteria ?
- post 1950 build
- In a C+ or above neighbourhood
- Cash flow positive
- single or multifamily
-5% vacancy, 10%pm, 15%(cap ex, regular maintenance)
- would prefer a quicker turnover not a full gut rehab
Been looking on market, and my agent brings me some off market deals as well. Looking for any tips to help me secure this first property. Or is this just the process and I just need to stick to it.How often, as many as I want. I got 4 last month, all well below ARV,, All in 60k, rents for 1400, ARV About 125k, All in 55k, rent 1200, ARV about 75k, All in 70k, arv about 120k rented for 1200. ALL IN 350k, rent about 90k, arv about 450k,,,,, I can get as many as I want in my market
All the best
Those are some great numbers. Im looking to get some experience in Columbus and then expand into Cleveland. Nice to know these opportunities are more available.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Gurjot Grewal:
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Last 3 weeks I have analyzed properties 2h daily. Some days more. Have made a few offers. I know I still have a ways to go. Nothing accepted yet. Got a great team in place, investing at a distance.
How often do you find these great deals?
I feel I might be being too picky. Should I be more flexible with my criteria ?
- post 1950 build
- In a C+ or above neighbourhood
- Cash flow positive
- single or multifamily
-5% vacancy, 10%pm, 15%(cap ex, regular maintenance)
- would prefer a quicker turnover not a full gut rehab
Been looking on market, and my agent brings me some off market deals as well. Looking for any tips to help me secure this first property. Or is this just the process and I just need to stick to it.How often, as many as I want. I got 4 last month, all well below ARV,, All in 60k, rents for 1400, ARV About 125k, All in 55k, rent 1200, ARV about 75k, All in 70k, arv about 120k rented for 1200. ALL IN 350k, rent about 90k, arv about 450k,,,,, I can get as many as I want in my market
All the best
Those are some great numbers. Im looking to get some experience in Columbus and then expand into Cleveland. Nice to know these opportunities are more available.
Why start in Columbus, BTW my numbers are based on cash buys ,
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Last 3 weeks I have analyzed properties 2h daily. Some days more. Have made a few offers. I know I still have a ways to go. Nothing accepted yet. Got a great team in place, investing at a distance.
How often do you find these great deals?
I feel I might be being too picky. Should I be more flexible with my criteria ?
- post 1950 build
- In a C+ or above neighbourhood
- Cash flow positive
- single or multifamily
-5% vacancy, 10%pm, 15%(cap ex, regular maintenance)
- would prefer a quicker turnover not a full gut rehab
Been looking on market, and my agent brings me some off market deals as well. Looking for any tips to help me secure this first property. Or is this just the process and I just need to stick to it.How often, as many as I want. I got 4 last month, all well below ARV,, All in 60k, rents for 1400, ARV About 125k, All in 55k, rent 1200, ARV about 75k, All in 70k, arv about 120k rented for 1200. ALL IN 350k, rent about 90k, arv about 450k,,,,, I can get as many as I want in my market
All the best
Those are some great numbers. Im looking to get some experience in Columbus and then expand into Cleveland. Nice to know these opportunities are more available.
Why start in Columbus, BTW my numbers are based on cash buys ,
Iv already got my team in place. I like the population growth. And with companies like intel investing into the city seems like some solid growth over the next decade.
But I like the numbers in Cleveland. Eventually id like to be active in both areas.
- Real Estate Consultant · Cleveland · Member since 2020 · 6k+ posts · 3k+ votes3y
Quote from @Gurjot Grewal:
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Quote from @Bob S.:
Quote from @Gurjot Grewal:
Last 3 weeks I have analyzed properties 2h daily. Some days more. Have made a few offers. I know I still have a ways to go. Nothing accepted yet. Got a great team in place, investing at a distance.
How often do you find these great deals?
I feel I might be being too picky. Should I be more flexible with my criteria ?
- post 1950 build
- In a C+ or above neighbourhood
- Cash flow positive
- single or multifamily
-5% vacancy, 10%pm, 15%(cap ex, regular maintenance)
- would prefer a quicker turnover not a full gut rehab
Been looking on market, and my agent brings me some off market deals as well. Looking for any tips to help me secure this first property. Or is this just the process and I just need to stick to it.How often, as many as I want. I got 4 last month, all well below ARV,, All in 60k, rents for 1400, ARV About 125k, All in 55k, rent 1200, ARV about 75k, All in 70k, arv about 120k rented for 1200. ALL IN 350k, rent about 90k, arv about 450k,,,,, I can get as many as I want in my market
All the best
Those are some great numbers. Im looking to get some experience in Columbus and then expand into Cleveland. Nice to know these opportunities are more available.
Why start in Columbus, BTW my numbers are based on cash buys ,
Iv already got my team in place. I like the population growth. And with companies like intel investing into the city seems like some solid growth over the next decade.
But I like the numbers in Cleveland. Eventually id like to be active in both areas.
Well you missed the boat so to speak. You could have purchased all in 50k or so with 1200 in rent, Now 100kish, MF about 10k per unit , now 40 - 60k, Also Amazon took about 2 mill sq ft a few years back plus so much more.
All the best
- Real Estate Broker · Hyde Park Tampa, FL · Member since 2019 · 2k+ posts · 3k+ votes3y
Never...it isn't possible in all markets. High-priced markets with low inventory and high demand just aren't the place for it. Stay away from those and know it won't be an easy hunt anywhere but worth it as long as you stay within valuation when completed. Best.
- 3yKenneth GarrettPro MemberInvestor · Florida Panhandle/Illinois · Member since 2016 · 4k+ posts · 3k+ votes
Quote from @Gurjot Grewal:
Quote from @Kenneth Garrett:
@Gurjot Grewal
The higher you can force equity up the better the deal. I've done many BRRRR projects unfortunately they require new kitchens, new bathrooms and at time I can add a bedroom. I like to find 2 bedroom SFH that have enough square footage to remodel to create a 3rd bedroom. Those are $20K to $50K rehabs almost flip style.
As far as getting them to cash flow it’s market dependent. I’ve bought a lot of foreclosures. They are in pretty rough shape usually but once in a while I get a small remodel and it works out great. The more rehab the project takes, the less capex and maintenance I have to calculate. Don’t just throw a random percent at each analysis really analyze per deal. You will probably start to see more deals become reality.
When I first started I was way to conservative with my numbers and could never find a deal that worked. I got better at rehab numbers, ARV and the rental market. I will say refinance rates are high now so it does create a challenge, but you can still find deals.
@Kenneth GarrettThanks for the reply! Are you adding additional bathrooms in some cases ? I have found in my market a second bathroom can get a few hundred extra in rent.
For the analysis for SFH some times the rents are 1800-2000 range, this puts my maintenance at 250-300/month. I feel this might be too high but figure better to be conservative. Do you have any tips for getting a more realistic number ? Are you breaking down the age of all cap ex items ?
Do you avoid older homes ?
Do you take on renos where you have to re do major things like plumbing/electrical ?I will add a second bathroom if I can get a return high enough on the ARV. In my area there are plenty of 2/1 and 3/1 so the second bathroom is not that big of a deal. When I do my rehabs I do a pretty high level almost flip style so then maintenance and capex is very small. I don't worry about those items. I generally just bank the cash flow so there is always money to take care of things. Most rehabs include; carpentry, electrical, plumbing and mechanical.
- 3yJared HottleBusiness MemberReal Estate Agent · Cedar falls IA Waterloo, IA · Member since 2020 · 902 posts · 549 votes
Stick to the process. That is pretty similar to my buy-box. I have not made a ton of mistakes but have seen crippling mistakes made when you stray from your "buy-box" or competitive advantages. I firmly believe success comes from what you do consistently each day. If you are truly driving for dollars then pounding the phones for 2 hours every single day I cannot imagine you not having success but make sure whatever you decide you do it everyday.
Jared Hottle Real Estate59 Reviews - Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes3y
I'll be the one to acknowledge the obvious: the great days of BRRRR are gone. The compression of inventory over the last 10 years has gradually restricted the discounts on the buying side. If inventory is low and competition is high, properties in poor condition will sell for almost as much as properties in great condition. For a good BRRRR you need at least half off, which is just not realistic anymore.
I am lucky to live and invest in some of the best markets in the country, but even in Milwaukee good BRRRR deals (by text book standards) have gone from almost everywhere to unicorns.The period of "free" real estate is just over. Even with an absurd amount of digging and negotiating you will only come up with very few and "deals". You can cheat yourself by patching the roof instead of replacing it, installing a new kitchen, but not the plumbing, to save on expenses, but you are only taking money from your future self. Or you go into D neighborhoods and tell yourself it is a class C.
If you are trying to BRRRR in 2022 you are basically sailing up against a strong wind instead of sailing with it. Can it be done? Yes, but it's slow and difficult. So what can you do?
I propose to work with the market and not against it. We have higher interest rates, so raising private capital has become easier. We have inflation, so debt devaluates and assets increase nominally, this creates equity out of thin air just by waiting instead of a huge remodel project. The rental market is tight, so finding properties with below market rent is often the equivalent of finding a deal.
When you look at your cash flow analysis, plugging in a low purchase price or low interest rates is just not a realistic option any more. So if you want to solve the equation with positive cash flow you have to find a way to tweak the other variables.
- 3yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Gurjot Grewal
In the Columbus market, your criteria seem reasonable except for the age of the property. Almost everything was built in the 1920-1940 timeframe. If you are only looking at properties built after 1950 you are really going to miss out on a lot of good opportunities. - Investor · Denver, CO · Member since 2022 · 184 posts · 78 votes3y
"BRRR" is just a term that describes real estate investing. No matter what one calls it, we buy, rehab, rent, refinance, and (hopefully), repeat transacting in real estate. So, BRRR is not a unique strategy and just generally describes what most real estate investors do - Buying, doing upgrades to the property, and refinancing their debt if rates are lower since the time they took out their loan(s).
How often does a deal show the ability to be bought, rehabbed, refinanced, rented? All the time.
This, to me, is like asking how often there is a real estate deal out there that will make cash flow and be rentable.
- New to Real Estate · Vancouver, British Columbia · Member since 2022 · 157 posts · 86 votes3y
Quote from @Patrick Drury:
@Gurjot Grewal
In the Columbus market, your criteria seem reasonable except for the age of the property. Almost everything was built in the 1920-1940 timeframe. If you are only looking at properties built after 1950 you are really going to miss out on a lot of good opportunities.Thanks for the reply! Do you find these older properties have much more monthly upkeep?
- 3yJordan MoorheadBusiness MemberReal Estate Agent · Austin, TX · Member since 2015 · 5k+ posts · 3k+ votes
@Gurjot Grewal 3 weeks and a few offers isn't a lot. If you've made 50 offers and not gotten anything maybe time to change things up.
The Moorhead Team5140 Reviews - Real Estate Agent · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes3y
I have one under contract (although I need to renegotiate the price). It probably won't be a full BRRR but enough to make me happy and get to my goals.
I know you mentioned that you don't want anything major, but that's kind of the point. You buy properties that aren't traditionally financed so you can leverage over other buyers. Even the simplest things like missing hot water heaters means no traditional financing. I found mine on the MLS and was sitting on the market for a minute.
- Rental Property Investor · Clarksville, TN · Member since 2016 · 1k+ posts · 1k+ votes3y
You need to stick with it. Having a tolerance for a bigger rehab will result in a better likelihood of finding a BRRRR project, however your expense projections appear aggressive already. I would definitely not lower your cash flow requirements because of this.
Ask an experienced REI what kind of REI they are. Chances are they will not give you one answer. This is because if you are only using one template, only one type of property will fit. Bad BRRR's can be great flips; don't limit yourself to one approach.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes3y
They seem to come in waves. Although it depends a lot on your source. If it's from wholesalers or the MLS, they're fairly rare but they do come. (And they come a lot more from wholesalers if you get to the top of their list so they call you first.)
- 3yPatrick DruryBusiness MemberReal Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
@Gurjot Grewal
It would depend on the condition of the mechanicals when you buy the property. Properties built after 1950 can have more monthly upkeep than a property built prior if all the mechanicals are outdated and need to be replaced. It really boils down to the condition of the mechanicals over age of the property. - 3yAndrew PostellPro MemberLender · Fort Worth, TX · Member since 2016 · 8k+ posts · 6k+ votes
@Gurjot Grewal yes, added several bathrooms through the years and while we don't have many upstairs/downstairs combinations here have put them close to an existing bathroom. Keeping it close to an existing bathroom helps with plumbing costs.
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