The BRRRR Metrics That Matter To Me

[Kenneth Garrett]

The best metrics for my BRRRR deals:

1. ARV - Determining the value of property after all repairs are done. It doesn't matter what a list property is. It only matters what the value will be. The deal is only a deal when the numbers work in your favor.
2. Rehab - you need actual rehab numbers. If you’re good at determining rehab numbers and what needs to be done your ahead of other people. Do not use percentages. Actual numbers are all that matters.
3. 
   Market Rent - research is the only way to determine market rent. It doesn't matter what happened a year ago. The market is ever changing. Use Zillow, rentometer, apartments.com, MLS and any other data. You are looking for the current trends.
4. Cash on cash return. Clearly this is my favorite. Every penny I put in how do I get it back. If a BRRRR project costs me $50K (rehab, holding cost, closing, taxes, utilities etc) this does not include the purchase where is my return on my money. I use private money on my BRRRR's. When I refinance and for example if I had $10,000 stuck in the deal. How quick can I get that back through cash flow. If the property cash flows $400 a month that's $4800 a year. That's a 48% cash on cash return. Basically a couple years to recoup your money. I like to get that back within 12-18 months. Hopefully I don't have any money stuck in for an infinite return of my money. It's just a math equation.
5. 
   Positive cash flow - needs to be enough to make a deal work to your satisfaction. $100 positive cash flow in my mind is not cash flow. Way too small for the effort. Can it work out. Of course, but I can find better deals with better cash flow. It's not the number of doors, but the amount of cash flow that meets your goal. 10 doors of $100 cash flow per month is $1000 a month. 5 doors of $350 a door is $1750, less work, less doors, better profit, less CapEx.
6. Appreciation - this is the bonus for me. I know it will appreciate. Over time it might double in value. Say 10 years or so. You can always tap into that equity if you desire. That is all based on your goal and where you are in your investing career. Some are at the end of their investing career and adding to their portfolio is not a goal. For others adding is the goal so tapping in makes sense.

Those are my thoughts on be BRRRR investing. How about you what is important to you?