Building to BRRRR

[Robert Ellis]

This is a new concept we are talking about with a lot of out of state investors looking in our market but the idea is to build to BRRRR. Basically building at a low enough price based on floorplan design, etc for SFR or Multifamily that you can refinance at a 25% equity position and keep recycling cash. I think the numbers work much better for stacked infill 3-4 units and we are trying to get someone locally to invest in the plans where we can continue to build the same floorplan over and over. Has anyone looked at doing this or talked about it? Our market is specifically Columbus OH. I attached an example of one of the stacked triplex's I've been using to get the idea out. New construction three story suburban walk up style apartments in our market trade at $150-$160k per door for brand new construction that is 1-2 bedrooms mostly for experienced developers so our build cost target is $112,500 per door for newly built multifamily. The majority of the best selling units are 600-800 sq ft. Even the new construction multifamily is selling at $220 per square foot once built when the build cost is typically $150 a square foot or less.

[Wayne Kerr]

So you're saying that you can build for 112k per door - so 336k for a triplex. 

I'm getting lost on the refinancing part - refinancing at a 25% equity stake...is this equivalent to putting 25% down and getting a loan at 75% LTV? If so, it's not recycling cash - 25% is still tied up in the property.

Or are you saying the triplex is going to appraise for 448k and when I refi at 75% LTV (25% down or 112k) I'll get my initial money out of the deal?