Would you buy this BRRRR? $87.5K purchase / ~$30K rehab / $1,300 rent — Aiken, SC

Question

I’m under contract on a property in Aiken, SC (near the mall/ retail) and would appreciate some perspective from investors who have done BRRRRs or owned rentals in smaller Southern markets.

Purchase: $87,500

Appraisal: $110,000Seller credit: 2%Expected rehab: ~$25K–$30KExpected rent: ~$1,300/monthEstimated ARV: ~$140K–$150KRefi assumption: 70% LTVPlan: Long-term hold

The house itself is a 3/1 on a slab. Rehab is primarily updating/repairing the property rather than trying to completely reposition it. The roof will probably need replacement within the next 1–2 years, so I'm accounting for that as future CapEx rather than pretending it isn't coming.

There is also a fallen-tree issue that has to be corrected before closing, along with a lender-required structural/roof inspection related specifically to the tree. (This is a $1200 project all in)

There is broken glass/ window repair needed before I close.

There is also deferred maintenance, but mainly cosmetic

The part I’m struggling with is the neighborhood.

The immediate street is mixed. There are some decent homes, but also some deferred maintenance/vacancy nearby and a small group of trailers toward the dead-end portion of the area. They’re not really visible from the property, but they’re close enough that a tenant or future buyer could easily notice them.

My concern isn’t necessarily whether I can rent the house today. It’s whether I’m buying an asset whose appreciation and tenant pool will always be somewhat limited by its surroundings.

At ~$1,300 rent, I believe the property can still cash flow after stabilization. But once I account for acquisition, rehab, carrying costs and the eventual roof, this isn’t a home run if the ARV or rent comes in lower than expected.

For experienced BRRRR investors:

1. How much discount do you require to compensate for a mediocre/mixed neighborhood?

2. Would you rather own an average house in a better neighborhood at thinner cash flow, or take stronger cash flow in a location like this?

3. At ~$117K–$120K all-in against a $140K–$150K ARV, do you think there is enough margin here?  If not what should be my target?

4. If the property rents reliably for ~$1,300 but I can’t pull all of my capital back out at refinance, how much money left in the deal would you consider acceptable?

5. What would make you WALK from this deal before closing?

I’m less interested in making the spreadsheet work on paper and more interested in whether experienced investors think this is an asset worth owning for 10+ years.

Appreciate anyone willing to pressure-test it.

Dan H. · Answer

My view is maintenance/cap ex will consume too much of the rent.

At this rent point, the 50% rule is aggressive on a sustained basis.

$150k, 70% LTV, 7% APR has P&i of $699/month.

So …

$1300 (rent) * 0.5 (50% rule which is very aggressive at this rent point) - $699 (P&I) = negative $49/month.   I expect far worse, likely over $150/month negative sustained.

Note higher appraised value, if still financing at 70%, would make it more negative cash flow.

It is too lean for a flip.

I fear this has too much risk for way too little reward.

good luck

Joshua Hicks · Answer

Where I'm coming from: three duplexes, a triplex and a quad, all self-managed. I've flipped one single family house. That wasn't an accident.  I don't think a single house works well as a rental for most investors, and that guides everything below.

Why I don't buy SFH's

Two smaller units bring in more than one larger one. If a 3-bedroom house rents for $1,300, two 2-bedroom units in the same size building rent for maybe $900 to $950 apiece. That's $1,900 a month off the same roof, the same lot, the same foundation.

Six hundred dollars more. Every single month. Not once...every month you own it. That's $7,200 a year, and over fifteen years it's more than the purchase price of the house.

Rent doesn't drop in proportion to size. Half the space doesn't rent for half the price, it rents for closer to three quarters. That gap is the entire thing that makes this an investment worth having. And a lot more people can afford $950 than $1,300, so you get a much bigger pool of applicants, the place sits empty less, and you can be picky about who you take.

Consider what happens when something goes wrong. One house, tenant leaves, income is zero. And the roof, furnace, water heater and sewer line all get paid out of that one check. My rule is the first unit covers all the bills and the second one is my profit. That's how I sleep at night.

Somebody may point out that two units means two kitchens, two heating sources, two turnovers. True, the net isn't better by as much as the gross. But that second rent is exactly what pays for the surprises, which is the point.

This argument assumes you can go buy a duplex instead. Around here they're everywhere. May not be an option where you are.

1. Discount for a rough neighborhood? On a house I don't have a number, because the street decides the value. The appraiser is looking at what sold nearby. You can put $30K in and it doesn't change what the house down the block sold for. You can't fix your way out of a neighborhood...Unless you know it is on the rise.  But on the rise has to mean something you can point to, not a feeling. Other people renovating on the same block. Sale prices climbing year over year, not just listing prices. Owner-occupants buying in instead of investors. Money going into the area — a hospital expansion, an employer, road or infrastructure work. Vacancies filling instead of growing.

2. Better area or better cash flow? For a single house, better area. On a SFH you're really buying the appreciation and the exit.  The monthly profit was never going to be the return.

3. Enough room at $117–120K into $140–150K? You assumed 70%, but many lenders will go 80% on a rate-and-term refinance, so run both. At 70% of $145K you get about $101K back and roughly $19K of your money stays in. At 80% you pull about $116K and you're basically out.  That's a clean BRRRR. Big difference, so nail down what your lender actually does before you build a plan around it.

The roof is still the problem either way. Your $1,200 is the tree work and the inspection the bank is requiring — that's not the roof, that's finding out about the roof. Replacement is coming in a year or two, call it $12K on that house. At 70% you'd be $132K into something worth $145K with $19K tied up and no reserve built. At 80% you'd have your cash back but be refinanced to the hilt with a five-figure expense inside 24 months and nothing set aside for it.

And all of it rests on $145K. Appraise at $140K and 80% is $112K, 70% is $98K. Rehab runs $32K instead of $27K and you're at $125K in. That's where the room disappears, not in the refinance percentage. I'd want to be under $105K all in. Price comes down or scope comes down.

That roof you're setting money aside for? On a duplex the extra $600 a month covers it in under two years and keeps coming after that. On a SFH it comes out of the same single check that's already paying everything else.

4. Acceptable money left in? Depends what's coming. $19K in a house with a new roof and decent furnace, I'd look at it. $19K when you already know there's a $12K roof coming is really $31K, out of one rent check.

5. What makes me walk? I'll buy ugly, the inside can be a disaster. I do my own work, though, and I can fix pretty much anything to high standards beside roofs (too high) and anything that involves wading in raw sewage (I just refuse).  The roof needs to have years left and the framing has to be solid, because those are the two things you can't fix with sweat.  You've got a roof on a two-year timeline and a structural inspection pending because a tree hit the house. That's a no for me before neighborhood even enters into it. If that inspection turns up truss or framing damage, $1,200 stops being the "right now" number.  I'd take a deep dive into the structural report before I consider this place.

DC Dobbs · Answer

Chima,

I like the way you're asking this.

You're not asking, “Can I make the spreadsheet work?” You're asking, “Do I actually want to own this for ten years?” That's the better question.

Based on what you've given us, I wouldn't automatically walk because of the neighborhood. But I wouldn't close because the spreadsheet says $1,300 rent and $150K ARV, either.

There are really two investments here: the house and the neighborhood.

The house can be renovated. The neighborhood can't.

So I'd spend more time figuring out where that neighborhood is going than deciding whether the kitchen needs another $800 of countertops.

The mixed housing, vacancies and nearby trailers don't automatically kill the deal. What matters is whether you're looking at an imperfect neighborhood that is stable, improving, or deteriorating.

I'd want to know:

Are houses being renovated?

What are they actually selling for?

Who is buying them—owner-occupants or investors?

How long are they sitting?

And what does the surrounding area look like five years from now?

You don't need a perfect neighborhood. You need one whose trajectory you're comfortable owning.

Now the numbers.

Your $117K–$120K all-in figure isn't really $117K–$120K until you've accounted for closing costs, financing, carrying costs, insurance, utilities, the tree, windows and the other little surprises that tend to accompany houses purchased for $87,500.

And I'd put the roof into the underwriting now. If you already believe you'll replace it in one or two years, that's not really future CapEx. It's a bill with an appointment.

Then run the deal at three ARVs:

$150K.

$140K.

And one that makes you uncomfortable.

I don't care nearly as much whether the deal works at your best case. I want to know whether it survives a reasonable bad case.

And I'd challenge one other thing: don't let the refinance make the rental look better than it actually is.

If it's a good rental at $1,300 even when the appraisal comes in low and you can't recover all your capital, you've got an investment.

If the deal becomes attractive only because you get a 70% LTV refinance against a $150K appraisal, you're underwriting an appraisal rather than a rental.

Those are two different investments.

I'd ask myself:

If the appraisal comes back at $135K, rehab runs $5K over budget, the roof arrives early, and rent is $1,200 instead of $1,300—do I still want this property?

If the answer is yes, I'm interested.

If the answer is no, figure out which assumption killed it.

That's your load-bearing assumption.

As for your second question, for a ten-year hold I'd generally favor the better location over the stronger initial cash flow—assuming the difference isn't enormous.

Cash flow pays you today.

Location influences who wants the property tomorrow.

Your tenant only has to like the house. Your eventual buyer has to like the house and the neighborhood.

That's a higher bar.

I also wouldn't establish an arbitrary dollar amount for how much capital you're willing to leave in the deal after refinancing.

Ask what that trapped capital is earning.

$20K left in a strong rental may be perfectly reasonable.

$40K trapped in a mediocre property that barely cash-flows and needs appreciation to make the numbers attractive is a different story.

As for your walk-away triggers, mine would be fairly simple:

Materially worse structural or roof findings.

A rehab budget that isn't supported by actual bids.

$1,300 rent based primarily on optimism rather than comparable achieved rents.

Or a $140K–$150K ARV that depends on unusually generous comps.

And I'd spend a lot of time answering one question:

Who is actually buying this house for $150K?

Find those comparable sales. Look at the houses. Look at the streets. Look at what's around them. Then decide whether your renovated property really belongs in that group.

An ARV isn't $150K because three numbers on a spreadsheet agreed to be optimistic.

It's $150K when a real buyer with real money is likely to pay something close to it.

So I wouldn't be fearful of the neighborhood.

I'd be curious about it.

Fear says, “Get out.”

Curiosity says, “Show me the evidence.”

If the deal still works after you remove the assumptions you most want to be true, you've probably got something worth owning.

If it doesn't, you didn't lose a deal.

You avoided buying a spreadsheet with a house attached to it.

-DC Dobbs

Gulf Coast Emerald, LLC

Joshua Hicks · Answer

One more note. If you've got other properties cash flowing well, you can probably absorb this one. But go in knowing what it is. This is a long term hold, not a BRRRR. You're not pulling your money back out and rolling it into the next deal, you're paying this one down slow and selling it in ten or fifteen years having done fine. That's a legitimate path to this making sense. It just doesn't fit the plan you were describing.

Joshua Hicks · Answer

The structural report is good!  The toughest thing for me now is that it's 2 hours away.  That is an instant deal breaker for me.  The flip I did was 40 minutes one way and it was exhausting.  I keep all properties 10 minutes or less from my house now.  If you are using a manager to handle showings, and repair people for issues that the renters experience when in the unit, then that negates the 2 hour drive, but if YOU have to handle that, it will be really tough on you.  If you do pay people for these things, your margin becomes nonexistent or negative.I also think your profit margin is so slim on this that the refi overleverages you.  I definitely agree that the plan to roll into other places is smart, but I think you might get trapped in this one for many years waiting for it to gain you enough equity to roll it into the next place and get the ball rolling.

You've been running this on basis and ARV, but the number that decides it is the monthly. Take $1,300, subtract the payment, taxes, insurance, then reserve honestly for vacancy, maintenance, CapEx and 10% management. Say that leaves you $150. One month vacant costs you $1,300, which is eight months of cash flow gone to a single turnover, on a property two hours away that's going to be slower to turn than anything you own nearby. That's not a rental at that point, it's something you're funding and hoping nothing breaks. And the whole plan rests on a $140-150K ARV you haven't verified yet. If it appraises at $135K your refi shrinks, more of your cash stays trapped, and the stepping stone never gets you to the next deal.

Chima Ikwuezunma · Answer

Thanks Joshua — this is a useful framework.

I understand that your portfolio strategy is built around small multifamily, and I actually agree with a lot of your reasoning. I like multifamily and ultimately want to get into it, but the acquisition cost for multifamily(esp  in my market) is considerably higher.

Part of my thinking with SFHs has been using them as a stepping stone — build equity, recycle capital where possible, and eventually use that capital to move into larger multifamily properties.

Your vacancy point and having one rent stream supporting the entire structure definitely make sense, though. That is a weakness of this deal that I can’t really engineer away.

A couple updates/clarifications: the structural inspection required because of the fallen tree has now come back clean, so fortunately there doesn’t appear to be truss or framing damage from the tree. The actual tree removal is also only costing me $600.

The roof remains the bigger future CapEx item and I agree with your point that I shouldn’t mentally separate it just because the check may not be written for another 1-2 years.

I also do a fair amount of renovation work myself and normally that would help my numbers considerably. The problem here is the property is about two hours from me, so I’m intentionally not underwriting any DIY labor savings. If I can do some of the work myself, great, but I want the deal to work while paying others to complete the rehab.

Where I’m still weighing the deal differently is the basis. I’m buying at $87,500 versus a $110K as-is appraisal.  If I leave $15K-$20K in the property after refinancing and already know another roughly $10K-$12K may eventually be needed for the roof, I need to evaluate the return against that total capital commitment rather than pretending the roof is a separate future problem.

So I think my real question is whether the low acquisition basis and potential equity creation are enough to compensate for the weaker SFH cash-flow profile you’re describing.

Now that the structural inspection is clean, tree removal is only $600, and assuming I can keep the initial rehab around $25K-$30K without relying on DIY labor, does that change your view at all? Or would the roof timeline and single-family economics still make this a pass for you?

Gregory Acs · Answer

I like that you're focusing on whether it's an asset you'd want to own for the next 10 years instead of just whether the spreadsheet works today. I'd also be conservative with your refinance assumptions and make sure the deal still makes sense if the appraisal comes in lower or you don't get all of your capital back. If you're comfortable leaving some money in the deal and the property still cash flows with realistic reserves and future CapEx, that usually puts you in a much stronger position than relying on a perfect refinance.

Mike Klarman · Answer

In the appraisal did you get an as-is and an ARV?  The ARV should be in the appraisal with comps to back it up.  For Bridge scenarios you always order the as-is and ARV.

What concerns me is if you are working with real numbers.  Who confirmed this 25k/30k?  Usually houses under 100k are older with outdated mechanicals, and need usually a whole new interior.  30k is like floors, paint, and maybe a kitchen. No roof, no plumbing, HVAC, electrical, no new interior doors, no new bathrooms, tubs, sinks, etc.

And then if your top exit is a 150k value then you can refi out for 112, 500.  That's around the cost of the whole project (with no overages or contingencies) so no money at the refi and your mortgage on 112,000 will be 1k - 1100 including taxes and insurance so all that risk for 200/month at most.  I'd pass.

Drew Sygit · Answer

The NEIGHBORHOOD is ignore too often when investors purchase a rental.

Everyone, erroneously automatically assumes that it'll be like the neighborhood they live in.

You should get as much data as you can about other rentals & sales in the area. Days On Market data vs Asking Price/Rent compared to final Price/Rent is really what you want to analyze.

How are the neighborhood issues affecting pricing and how long it takes to rent out or sell?How much is the final rental/sales price as a percentage of original?

Also, research what type of tenants are interested in the area. Do they have 680+ credit scores or how low?

You may need to run a "fake" rental ad to generate calls you can screen with basic questions to better understand.

Or you can try contacting local PMC's to ask them what they've experienced there.

Chima Ikwuezunma · Answer

Thanks for the input!

I actually have some of that neighborhood-level sales data, and your point about separating the house from the neighborhood is helpful.

I had my agent pull recent closed sales in the immediate area rather than relying solely on broader Aiken comps. There are seven relevant nearby closed sales in the set.

A few examples:

Nearby renovated comp — $199,500Nearby same-street comp — $155,000Sharyn area comp — $168,600Monterey area comp — $170,000Mockingbird area comp — $146,000Sharyn area comp — $141,000Sharyn area comp — $139,000

The one that has my attention is the $199,500 sale. It is essentially two doors down from the subject, was renovated, and actually closed at that price. Another property on the same street closed at $155,000. So there is evidence of buyers paying $150K+ in the immediate pocket, not just in a nicer part of the larger market.

Looking at the seven sales as a group, the prices range from $139K to $199.5K, with six of the seven between $139K and $170K. That makes my $150K ARV assumption look less aggressive to me than it might have sounded in the original post. I’m deliberately not underwriting anywhere close to the $199.5K sale.

I also have a current as-is appraisal of $110K on the subject while I’m under contract at $87,500. The structural inspection required because of the tree came back clean, and the tree removal itself is $600.

On rent, I pulled actual closed rental comps rather than relying on asking rents. Ten relevant closed rentals averaged $1,345/month with a $1,400 median and averaged about 24 days on market. There is a close comp at $1,150, which is one reason I’ve continued underwriting the subject at $1,300 rather than assuming I can get the top of the range.

Where I think your comment changes how I’m looking at the deal is the roof and the distinction between value creation and owning a good rental. I agree that if I believe the roof is likely within 1-2 years, I should effectively treat that as committed capital today rather than something conveniently outside the rehab budget.

The other concern I’m weighing heavily is distance. The property is about two hours from me. I normally self-manage and do a fair amount of work myself, but I’m intentionally underwriting this one without assuming DIY labor savings and need to account for having local help available.

So I think the evidence gives me more confidence that $150K is defensible as a stabilized value, but I’m less convinced that proving a $150K ARV automatically means I should buy it.

Your question about what the trapped capital is actually earning is probably the better way for me to make the final decision. I’m going back through the deal assuming paid/remote management, the roof is part of my effective basis, and that I don’t necessarily recover all of my capital through the refinance.

At this point, the question I’m trying to answer isn’t “Can I BRRRR this?”

It’s “Even if I can create the equity, is the stabilized rental return good enough to justify leaving my capital in this particular house and neighborhood for the next 10 years?”

Would you buy this BRRRR? $87.5K purchase / ~$30K rehab / $1,300 rent — Aiken, SC

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