BRRR or turnkey 5 unit for first investment?

Question

Been searching for my first real estate purchase for a few months.

Would you recommend a first time investor like myself go with more of a turnkey small multi family or try a BRRRR on my first property? Am I crazy to try a BRRRR on my first purchase? I don’t have a background in construction. The best way to learn something though is to do it. Thoughts? Advice?

James Wise · Answer

I wouldn't do either. I would do a 2-4 unit for my 1st several deals. Margin for error is so much higher as you can use a 30 year residential loan to finance a 2-4 unit. You've got to use a commercial loan to financing anything 5+. The commercial loan terms are nowhere near as forgiving as those resi loan terms.

Kevin Nisly · Answer

Appreciate the input @James Wise and @Brian Gerlach. Good thought on the 2-4 unit being residential vs the 5plex being commercial. Appreciate it!

Brian G. · Answer

@Kevin Nisly yes you are crazy but so are are most of us on BP! IF you are considering a BRRRR, I would network first with your local REIA and try to find a contractor/s and/or an experienced flipper/rehabber. Find out what they need help with in their business and see if you can provide that to them at no charge and add value to them in exchange for being close to the action so you can learn the ropes. This will speed up your learning curve, greatly reducing your risk and if/when you land those first few deals you will likely be able to partner with them which would almost ensure your success initially. The first few deals are the most dangerous as you are learning the ropes. After that, you can take the training wheels off and ride downhill!