Purchasing Small Portfolio On Land Contract to BRRRR

[Stephen Sokolow]

Need advise.

The deal: Location South Bend, In

13 properties

All priced below assessed value. 

Condition of all properties is rough and all are in need of extensive renovations to bring to rent readiness state. 

All properties are single family homes and all are located in C to D areas of the city. 

Sec 8 rents run $700-$900 for similiar homes.

Market rent is comparable

Strategy:

Purchase on land contract at 12% for 6 years. 

I would be responsible for all renovations.

I would rent out the properties and then refinance at better rate.

Does this deal make sense and has anyone every done BRRRR on land contract?

[Account Closed]

@Stephen Sokolow

I was involved in a bulk refinance about 2 years ago that had properties in a couple cities in about 2-4 States. Locally, we had a couple properties in South Bend and probably one or two in Mishawaka. The one thing we ran into both locally and from the big boys like B2R was that lenders were unwilling to lend on properties that appraised under $40K-$50K. 

Things may have changed and there may be private hard money lenders that may be open to <$40K appraisals now or 6 years down the road when you may be looking to refinance.

I would look into this before jumping in on the deal and make sure that your exit is sound.