Anyone have experience with a BRRRR in the Raleigh/Durham/Triangle?

Question

Hi all,

Background: I’m a rookie investor, moved to Durham NC for work 3 years ago and looking to purchase my first property in the coming 9-12 months. I’m in the phase of saving for a down payment/ rehab costs while heavily researching to find the right strategy that will work for me and my market. I’d like to start off in my local market (Triangle area) since it’s been growing and projected to continue to appreciate, and will hopefully give me the confidence after doing a few deals here to potentially branch out to other markets.

Question: Has anyone had success with a BRRRR in the Triangle area in the last couple of years? If so would you mind sharing the details of your deal(s), including any pain points and decisions made that resulted in success or anything you'd change for next time.

Happy to chat offline too - feel free to DM me.

Thanks in advance.

Pat Lulewicz · Answer

Hi @Nandini Abburi- I have done a form of this through live-in BRRRs (think BRRR but combine it with a live-in "flip" that I keep and rent out). In the Triangle, I've converted these to AirBnbs....this acronym would get crazy: "Live-in BrrrStr"?), Obviously that's a tremendous life sacrifice to live in construction zones, so not for everyone however the concept of a BRRR-STR still holds. Its rare you'll find something on market that will be a "successful" (everyone's metrics are different for successful) BRRRR; all of my purchases have been off-market through wholesalers.

To @Patrick Knapp point, LTR cash flow is not there. If you BRRR and try and refi all of the equity out you'll just have a high mortgage that makes it tough to cash flow. If you self-manage, you may break even if no repairs are needed. So 2 ways to think about it:
1) Don't pull all your money out (70% LTV for example) for a lower mortgage and likely lower rate...more cash flow...then its an ROI goal metric convo
2) Pull out all the equity you can to max your cash-out refi...deal with "negative cash flow" realizing that your cash-out and W-2 are the emergency fund to cover your L while you appreciate, rent increases, tax benefits and equity paydown your way to growth.
(Extra credit) - you could consider an interest-only ARM loan to decrease your monthly cash flow OUT because you aren't paying the equity portion. The just artificially increases your cash flow but can leave breathing room. ONLY do this if you know the property will hold value so that you don't find yourself underwater when you have to re-up the loan in 3-5 years when the ARM adjusts or balloons.

Pat Lulewicz · Answer

Alternatively - to @Patrick Knapp point, Build, Rent, Refi and Repeat...I am the co-host of the monthly Pints & Properties networking event here in the Triangle. Thursday, March 20 @ 6:30p this month, our topic is exactly this: New Build Investment Property v Rehabbing a home as an investment property. Here is the link if you'd like to come out and see this presentation. I'd love to chat in person on my above response of Live-In BRRR-STRs or anything else you'd like to spitball.

https://www.biggerpockets.com/forums/521/topics/1233568-pint...

Clay Newell · Answer

@Nandini Abburi What type of property are you looking to purchase?

@Kathie Russell I would love to connect, I'm just getting started in the area and will be closing on my first flip property on the 30th. Your extensive experience in investing and real estate law would be of immense value!

Robert Ellis · Answer

finally the new BRRR is starting to catch on. Lowest entry point is land highest exit price is new construction. control every decision inside of the home. Build Rent Refinance Repeat. I hope you aren't pushing people into single family homes for this. SFR rentals are garbage. Three story walk up design will work in any market if land prices are within control. In Miami where I live now you can't find land to do it efficiently but in Columbus Ohio you can. Are you finding land affordable? What do the numbers look like in your market? I'd love to see some additional commentary on this strategy for ground up construction / new build

Kathie Russell · Answer

Hi Nandini, I have done many successful BRRR transactions and helped many others do theirs as well. I would be more than happy to speak with you any time.

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Kathie Russell

Kalibi Properties

North Carolina Real Estate Investors Association, Executive Board

Patrick Knapp · Answer

@Nandini Abburi

Welcome, I’m a full time investor and I have BRRRR a bit and can tell you Raleigh is a tough market to make any cashflow in. Sadly housing and rents aren’t close to comparison in the way we should see them.

I suggest Build,Rent, refinance, repeat. I’m a builder here in the area as well and this seems to be the best was to maximize your chances of cash flow if you build an ADU with you new build.

Why not just buy and fix up? The deals are harder to find now and it seems to always go over budget.

Your welcome to message me if you have more questions

Anyone have experience with a BRRRR in the Raleigh/Durham/Triangle?

Anyone have experience with a BRRRR in the Raleigh/Durham/Triangle?

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