Could be a great candidate for the BRRRR strategy

Question

Hi all: I'm new here and not familiar with the etiquette, so I don't know if this is allowed, but I wanted to share this with everyone. If you're at all familiar with the eastern Colorado market, I'd love your feedback. It needs a quick interior and full exterior paint but is ready to go otherwise. Does this seem like a reasonable investment?

https://www.biggerpockets.com/...

Evan Rice · Answer

yea, 3% cap rate is a really, really hard sell. Good luck!

Tom Woolrich · Answer

Good stuff, thank you. I think that may be the conundrum I'm facing in marketing the property. The prep costs would be relatively minimal, and as for financing, I would think a lot of investors would just pay cash, or finance at like 50% down. A price point under 200 is normally super attractive. Trouble is,  the cap is around 3% as rents in the area are low, so unless one has a good sized portfolio of these kinds of properties already generating revenue, one might be concerned that the ROI may not be enough to make it sustainable. Equity growth wouldn't be the problem if data is to be believed, so if someone were patient, it could be a great investment.

Evan Rice · Answer

@Tom Woolrich - good question. It's all a numbers game. If you plan to BRRRR the property then you need to consider several aspects..

- how are you financing the deal

- how much will it cost to rehab

- how much can you realistically rent it for

- how quickly can you refinance the property and what is the seasoning period (if any) to pull your equity out

- what is the ARV (after repair value) if you have to sell it ***always good to have multiple options***