Common mistakes for a first time BRRR

[Nicholas Minich]

Hello all!

Analyzing my first properties to utilize the BRRR method. Was seeing what errors that some experienced buyers made, and how they fixed - looking to minimize any issues as I start my journey here… also, any feedback or recommendations for a first timer would be great ! Figuring this out as I go! Thanks all!

[Brian Teeter]

I work with a lot of BRRR buyers in Little Rock, Arkansas. Here, the most common mistakes I see DIY BRRR investors make are underestimating ARV and repairs. ARV typically comes back to bite the buyer when they go to refinance the property after renovations and learn that the actual appraisal fell short of the ARV they originally predicted. To get around this, I suggest hiring an appraiser on the from end of you purchase. Ask them for a "drive by appraisal" and present them with a list or scope of work for your intended repairs. Request a future value. Typically, they will provide you a partial appraisal at a reduced cost from standard. The appraisal will typically identify all the same comps as a full appraisal. That way you are looking at a more accurate value, through the eyes of an appraiser.

With regard to underestimating repairs, I often see DIY BRRR investors more focussed on cosmetics. I recommend having a professional home inspector inspect the home on the front end. Start creating your SOW from the inspection. Because they are focussed on cosmetics, I see a lot of DIY BRRR buyers blowing their budget because they missed important details like electrical, HVAC, plumbing, structural, foundation.