My first BRRRR....HELP!

4 Replies

The house is in a non appreciating area....section 8 renters will be my tenants. Not sure if the numbers will allow me to refinance enough cash out for another project. At 10,500 purchase price cash from my pocket....30k estimate not contractors. CoreVest will give me the 30k for repairs, If the ARV comes in at 50k or higher. So l will wait to see what repair estimates are....if it's feasible to add 1 bedroom making it a 3/1....the ARV of course will be higher allowing me to have enough to pull question is....when l pull the money out....l pay CoreVest back 30k....which leaves me nothing for another project....??....l need CLARITY on the BRRRR.

I think l need to step up in property calibre ....please advise.....Tyrone

If the ARV is $50k and you stick to the 30k budget you should be able to get $7500 of your $10.5k back. You will be all in at $3k, so no too bad. Can't you save up another $3k quickly and do it again? Of course it might be hard to get a loan for $37k. I would assume you already have the financing worked out?

Hi Craig....thanks for your input. Yes at 75% LTV refi on 50k...l would have 7500.00 or less minus any refi fees after l pay the 30k back. All depends on what the contractor estimates are on the repairs. Will know on Monday. Can't say l will be lucky enough to get another pocket listing for 10k...l just feel there is a much higher ARV deal out there in a better neighborhood. Really need a 3/2 or a 4/2 for higher value. And yes a lot of banks won't drop to below 50k on a refi....but l can find one....the smaller community banks are best. You would think "how can you go wrong" with a house you can get for 10k ?...location!! That's how!!....but section 8 is the only option "if" l don't walk away from the deal after rehab report comes in on Monday.

@Tyrone Upshaw - do you really need to put 30K in rehab into a SFR that will only be worth 50K when you're done? Generally, when you rehab to rent you spend less than rehab to flip because you don't need to do all new kitchen cabinets, appliances, new fixtures etc. Repair what's broken, add lipstick and rent.

Thanks Salvatore! That certainly makes sense!!...l will walk away from this deal if repair cost to bring property up to section 8 rental code is too high...l am over estimating with the 30k....and l have not slaid eyes on a single interior pic of the property. So all of this guessing will come to an end once the contractor visits the property on Monday. Note: l am in is in Birmingham Alabama. I will be going there next month to look at other properties. Will definitely update you. Thanks goal is of course to build a profitable rental portfolio...and my first property should be a very good buy!!.....this deal doesn't appear that strong however....lets wait on the repair costs....thanks.....Ty