Good markets for BRRRR

[Gil Segev]

Hi all, I am sure this question has been asked many times before but I am struggling finding a satisfactory answer.. What makes one market more suitable for BRRRR investing than another?

I understand that this is an all-cash investment so obviously you are limited by your cash/financing reserves but I dont think that's the whole story.

I've been analyzing deals in AZ lately where the market is pretty hot and no matter how many wholesalers I work with and how rough the state of the property is, I can't seem to get even close to making the BRRRR math work. Wholesale properties get sold 50-70k under ARV on a 250-300k house which is just not a big enough spread.

So my question: how does one identify a market with a higher potential to support BRRRR with B/C class properties?

[Shiloh Lundahl]

@Gil Segev It all depends on your strategy as to what properties you want to buy. If you are looking for B+ or A- properties they will be hard to BRRRR in Arizona and you will likely need to leave 20k - 50k into them. But you can rent them out and ride the appreciation wave for as long as you possibly can and you can have your tenants pay off your mortgages over 20 - 30 years. Of course you will be fixing up the house a number of times over that time period but the house will likely appreciate a lot over 20 - 30 years and then you will have an asset that you can sell and use to retire.

If you want to turn your capital over more quickly, there are a lot of properties in Phoenix that you can get from wholesalers for between 140k and 170k that you could BRRRR in Phoenix but they may not be in the neighborhoods that you like. Probably more like C or C- neighborhoods. If you were to lease option these properties then you would like make 60k over a 3 year period of time. Then you can roll the profits into other properties and snowball the profits.