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.

It's all about the rent, income stability and potential tenant damage costs. If I felt comfortable that I could get a long-term tenant that wouldn't generate a lot of damage costs, I might not worry as much about every last dollar of the rent amount. Alternatively, if I anticipate tenants only staying 1-2 years and potential above-average damage costs, then I'd be very concerned about the rent amount. Boils down to WHY the rent differences and the potential lower tenant pool quality. Difficult to interpret this from just MLS or Zillow data.Again, recommend speaking with some local PMCs.

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

Drew SygitBusiness Member

Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes

2w

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.

[email protected]248-209-6824

Logical Property Management4.9450 Reviews

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2 Reply

Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Thanks Drew — this is helpful. I actually pulled a rental CMA with 10 closed MLS leases for comparable 3-bedroom homes, so I have some of this data already.
The comps averaged $1,345/month with 24 DOM, and on average leased at 100% of the final asking rent. My underwriting is at $1,300, so I feel fairly comfortable that I’m not stretching the rent.
The interesting part is the closest comp — a renovated 3/1 about 0.24 miles away leased for $1,150 in 13 days, while other 3/1 comps roughly 1–1.5 miles away leased around $1,250–$1,450. That makes me think there may be a measurable neighborhood/pocket discount even though rental demand itself appears healthy.
I think the piece I’m missing is the sales side: DOM, list-to-sale price and resale values in the immediate pocket versus the better surrounding neighborhoods.
If the rental demand is there but the neighborhood consistently carries a resale/value discount, how do you personally decide whether the purchase price adequately compensates you for that location risk? Is there a particular margin, yield or discount you’d want before buying it as a 10+ year hold?
0 Reply
Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
2w
It's all about the rent, income stability and potential tenant damage costs.
If I felt comfortable that I could get a long-term tenant that wouldn't generate a lot of damage costs, I might not worry as much about every last dollar of the rent amount.
Alternatively, if I anticipate tenants only staying 1-2 years and potential above-average damage costs, then I'd be very concerned about the rent amount.
Boils down to WHY the rent differences and the potential lower tenant pool quality.
Difficult to interpret this from just MLS or Zillow data.
Again, recommend speaking with some local PMCs.
[email protected]248-209-6824
Logical Property Management4.9450 Reviews
Website View Page
1 Reply

Mike Klarman

Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes

2w

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.

1 Reply

Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Appreciate the feedback. A few clarifications because I probably didn’t provide enough detail in the original post.
The purchase price is $87,500 with a 2% seller credit. The current as-is appraisal came in at $110K. I don't have an appraisal-supported ARV because this is conventional financing rather than a bridge/rehab loan.
I’m using $150K as my conservative post-rehab value for underwriting. There is a similar fully renovated property two doors down that sold for just under $200K, so I’m intentionally not underwriting anywhere close to the top end of what a renovated property on the street has achieved.
The $25K-$30K rehab is based on the actual scope and estimates, not just a generic allowance. It’s a roughly 1,150 sf 3/1 on a slab. HVAC is functional, and the inspection did not identify plumbing or electrical systems that need wholesale replacement. The work is primarily flooring, paint, kitchen/bath updates, repairs and general turnover. I’m treating the roof separately because I expect it will need replacement within the next 1-2 years.
I agree that the amount left in the deal is important. I'm underwriting the refinance at 70% LTV, not 75%. At a $150K valuation that's only $105K, so I'm going into this assuming I won't get all of my cash back.
On the rental side, I'm using $1,300. I pulled 10 closed 3-bedroom MLS leases that averaged $1,345 with 24 DOM, so I'm trying to stay conservative there as well.
Given an $87,500 purchase, $110K as-is appraisal, ~$25K-$30K rehab, $150K conservative ARV assumption and $1,300 rent, would you still pass? If so, I'd be interested in what number you think needs to change — purchase price, rehab, ARV or rent — to create enough margin for the risk.
0 Reply

Mike Klarman

Specialist · NJ · Member since 2022 · 1k+ posts · 649 votes

2w

So, how much money do you have for the deal? Remember, the deal will not provide you with your money back, so that is staying in and given the DSCR is barely 1.1.

I look at the scenario and think the margin for error that I'd like to have is not there. If your ARV is 200k and the rehab is really 30k and you can get it fir 87, 500 maybe. I'd be concerned that I can find myself in for more than the 117,500 if that is 20k - 30 more then I might get trapped and need to bring more money in to refi.

Think about what the appraisal is telling you. Yes it is worth 110k but if you put in 30k you get only 10k added in value.

What terms do you have with the lender? How much capital are you allocating for the deal?

0 Reply

Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
The $110K appraisal is the current as-is value, not an ARV. My $150K number is my conservative post-renovation underwriting assumption. A similar fully renovated property two doors down sold at $199k, but I don't want to base the deal on achieving anything close to that.
On financing, I'm using conventional financing for the acquisition with 20% down at 7%. I'm funding the rehab separately, primarily through a HELOC. I have roughly $50K available there, with a 4.99% promotional rate for six months on a one-time draw, after which it goes to 10.3%. I also have access to additional capital/OPM outside of that if the project requires it, so I would have cushion if the Reno goes over budget or I need to leave capital in the deal.
I’m targeting roughly $25K-$30K for the initial rehab, but I agree that I need enough liquidity to absorb an overrun without the refi bailing me out.
Part of what makes the deal interesting to me is the financing structure. I can comfortably afford the 20% down payment, improve the property, and hold it as a rental without needing a perfect BRRRR outcome. I'm underwriting the eventual refinance at only 70% LTV. At a $150K appraisal that would be $105K, so I already expect some capital to remain in the deal.
Where I see the potential upside is that if the renovation pushes the appraisal above my conservative $150K assumption, I could recover more of my original capital and theoretically recycle that cash into the next deal. I’m viewing that as upside rather than something the deal has to achieve in order to work.
The question I’m working through is exactly what you’re getting at: how much total capital should I be willing to leave tied up in this property before the return no longer compensates me for the risk?
When you say you'd be more comfortable with a $200K ARV, are you primarily looking for the ability to recover most or all of the invested capital at refi, or would you be comfortable leaving money in the property if the return on the remaining equity was strong enough?
0 Reply

Gregory AcsPro Member

Lender · MD · Member since 2025 · 137 posts · 52 votes

2w

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.

1 Reply

Joshua Hicks

Rental Property Investor · Central PA · Member since 2026 · 20 posts · 11 votes

2w

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.

3 Reply

Chima Ikwuezunma

OP

Atlanta, GA · Member since 2019 · 12 posts · 3 votes

2w

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?

1 Reply

Dan H.Pro Member

Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes

2w

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

3 Reply

Joshua Hicks

Rental Property Investor · Central PA · Member since 2026 · 20 posts · 11 votes

2w

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.

1 Reply

Joshua Hicks

Rental Property Investor · Central PA · Member since 2026 · 20 posts · 11 votes

2w

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.

1 Reply

Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Yes, I probably could have framed it better, but your point makes sense. I don’t have to buy this property; I initially thought it was a good deal that made sense at the price.
I would prefer to own properties closer to home since I typically self-manage. Price have just gotten a little out of control in metro Atlanta. That said, I do have experience managing rentals remotely, and in some ways I appreciate that it forces you to think more like an operator—building reliable systems and relationships rather than relying on being able to personally handle every issue.
Ultimately, though, the numbers still have to justify the added distance and complexity. Based on the feedback I’m going to hold off on the tree work until I decide if I should terminate.
0 Reply

DC Dobbs

Real Estate Consultant · Destin, FL · Member since 2026 · 14 posts · 12 votes

2w

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

2 Reply

Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
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 — $199,500
Nearby same-street comp — $155,000
Sharyn area comp — $168,600
Monterey area comp — $170,000
Mockingbird area comp — $146,000
Sharyn area comp — $141,000
Sharyn 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?”
0 Reply

Stuart UdisPro Member

Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes

2w

Why not address the roof immediately if you know it will need to be replaced within the next few years? Is it being delayed because the cost impacts the return-of-capital analysis? In the meantime, what happens if the roof causes additional damage, mold or leaks, all of which could affect occupancy?

Are the other major building systems new, or do they have substantial useful life remaining? What about the windows, plumbing, HVAC, electrical and appliances? If not, can a $100,000 home reasonably absorb those costs?

As for ongoing operations, you indicate that you can collect $1,300 per month in rent. What is the profile of the tenant paying $1,300 per month? Does that rent cover the realities of operating a property in 2026, where operating expenses disproportionately impact lower-cost real estate?

You say you want to hold the property long term, but what if you choose to sell? What is the exit? You mention there is distress on the block, so there are clearly no barriers to entry.

Do homeowners purchase in this n neighborhood? If so, expect FHA financing, broker fees, a 5% to 6% seller assist and a repair addendum that reads like a novel. In total, the settlement and selling costs could approach 15% of the property's value.

The alternative is selling to another investor, but why would an investor pay a premium when they can purchase the property in worse condition right down the street, which you already acknowledged exists?

I raise these questions because the BRRRR model too often fails to account for the realities of owning and operating real estate. The focus is instead placed on buying a property where the spreadsheet shows that your capital can be recycled but what happens next?

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Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Those are fair points, and I think you’re getting at what has become my biggest concern with the deal.
I initially viewed the roof as future CapEx because it isn't currently leaking or failing, but I agree that if I proactively expect to replace it within 1–2 years, I should effectively underwrite that cost today.
The $1,300 rent and $150K ARV are supported by closed comps, so I'm reasonably comfortable with those assumptions. Where my thinking has changed is what happens after the BRRRR.
Even if I successfully create and recycle equity, I'm still left with a lower-rent property two hours away, older but stable systems, future CapEx, and a neighborhood that could limit the quality of my eventual exit even if I plan to hold for an extended period.
Sure deals could be had if someone goes door knocking or finds an off market opportunity in the neighborhood, but based on sales over the last 12-18 there is value at my purchase price.
That being said, i’m just becoming less convinced that a good price makes it the right asset for me to own long term.
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Kate Sanchez

Member since 2025 · 240 posts · 97 votes

2w

@Chima Ikwuezunma Great job laying out the details on this Aiken BRRRR deal! The numbers on paper look attractive with strong cash flow potential at $1,300 rent, but as experienced Southern investors know, location and micro-pockets dictate true long-term performance. A mixed neighborhood with nearby trailers and deferred maintenance can cap appreciation and increase tenant turnover costs. My main advice is to double check your ARV against immediate block comps, renegotiate the tree and structural inspection costs with the seller, and build a dedicated CapEx reserve for that roof. If your all-in basis stays under $118K and ARV hits $145K+, leaving ~$12K trapped is reasonable. Overall, it's a solid C+ cash-flow play if executed cautiously!

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Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Thanks Kate — I feel like you nailed it. C+ is probably exactly how I view the deal in the short term.

I do think Aiken has a compelling long-term story with SRS, golf and equestrian tourism, and the broader growth in the area. But even if this particular pocket cash flows when properly executed, the current neighborhood condition may limit my exposure to some of those broader growth drivers and the buyer/tenant pool I ultimately want.

The price is what initially made the deal attractive, and I still think there is value there. But the more I look at it, the bigger question is opportunity cost. This would require me to learn, build relationships, renovate, and manage in a market two hours away that I’m not necessarily convinced I want to scale in long term.

At the end of the day, this may very well be a good use of my time and money, but I’m starting to think it may not be the best use of my time and money.
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Dan HandfordPro Member

Investor · Lexington, SC · Member since 2018 · 779 posts · 501 votes

2w

Chima, I would separate the hold decision from the refinance goal. At roughly $117,000 to $120,000 all-in, a $140,000 ARV at 70% LTV produces only about $98,000 before closing costs, so the lower end of the valuation leaves meaningful capital in the deal. That can still be acceptable if the stabilized cash flow provides a strong return on the equity that remains, but it should be intentional. The neighborhood concern deserves more weight than cosmetic rehab because it affects rent growth, vacancy, resale liquidity, and the appraisal comp set. I would verify actual nearby rents, insurance, taxes after purchase, roof timing, and sales velocity within the immediate micro-location. My walk-away triggers would include weak tenant demand at the supported rent, structural uncertainty from the tree issue, or a downside appraisal that leaves more equity trapped than the cash flow justifies.

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Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Thanks Dan. I think separating the hold decision from the refinance is exactly right.
The structural inspection has come back clean, so that concern has been removed. I also have closed rental comps supporting the $1,300 range and immediate-area sales supporting a $140K–$150K+ valuation, including a renovated sale essentially two doors away at just under $200K. Not to mention the appraisal in current condition is $110k.
Where I’m becoming more cautious is exactly what you mentioned: whether the cash flow justifies the capital that remains. The roof likely needs replacement within 1–2 years(even if it doesn’t it would give me peace of mind), the property is two hours away, and I need to underwrite the potential risk and increased cost of using local/remote management in a smaller market rather than relying on my own labor.
At this point I'm less concerned about whether I can execute the BRRRR and more focused on whether the stabilized return and long-term location justify owning the asset.
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Quy HuynhBusiness Member

Lender · Huntington Beach · Member since 2023 · 10 posts · 6 votes

2w

Chima,

It's nice meeting you and I'm in SoCal and licensed in CA along with multiple other states but South Carolina is not one of them. I'm just chiming in to help bring up a few things and give my opinion on what has already been said along with some of my own take on it. The deal side of this thread has been covered very well, so I will stay on the financing side since that is where I think the numbers are going to help clarify some things and possibly move on you.

Joshua's post was very good and most of it holds up (nothing against him, possibly oversight or maybe I'm wrong) but one piece does not, and it is the piece your capital recovery plan sits on. A rate and term refinance, what the agencies call a limited cash out, does not allow you pull all of your money back out. The cash you can receive on one is capped at the greater of one percent of the new loan amount or two thousand dollars. On a loan around $116K that is about $2,000. So the 80 percent rate and term scenario would not put $116K in your pocket, it would put roughly two thousand there and pay off your existing first. Recovering a $30K rehab is a cash out transaction, full stop. (Fannie Mae)

The LTV does not hold either, on a 1 unit investment property the agency caps are 75% on both the limited cash out and the cash out. There is no 80% lane on this property in either direction. Your own 70% assumption was closer to right than the correction. Third is timing, and I think it is the one that most overlook, not wrong just not seeing. Conventional cash out requires at least one borrower on title for six months before the new loan disburses, and lenders routinely layer more seasoning on top. Your HELOC is six months at 4.99% on a one time draw and then 10.3% those two things start at roughly the same moment, and the refi timing does not begin until you close, with rehab, lease up and processing still in front of you. So the realistic picture is carrying up to $50K at 10.3% for a stretch while you wait to become eligible. You gave both of those numbers yourself in two different replies and I do not think anyone put them side by side.

That is the case for looking at a DSCR loan as the exit instead. DSCR qualifies on whether the property's rent covers the payment rather than on your personal income and debt ratio. You give the lender a lease or a market rent schedule (appraiser's rental survey) instead of tax returns. Three things change if you go that route. Seasoning is often shorter than conventional and many DSCR lenders will use the appraised value sooner, which is the whole problem above. It does not consume your personal debt ratio or count against your financed property limit, which matters if this is property 1 out of of 10 rather than the only one. And it could closes in an entity (LLC etc), which several people upthread were already circling. The trade is real. DSCR prices above conventional and almost always carries a prepayment penalty, commonly three to five years. On a ten year hold that is less painful than it sounds, but it does take a cheap refinance off the table if pricing improves.

Two things to watch on the DSCR side specifically. The ratio has to clear, and it is gross rent against the full payment including taxes and insurance, not just principal and interest (HOA if applies) along with most DSCR programs carry a minimum loan amount, often somewhere around $75K to $100K. At 70 percent of $150K you are near $105K and fine. If the appraisal lands at $130K, 70 percent is $91K, and on some programs you fall through the floor entirely. Small balance is where these deals die and it rarely comes up until underwriting.

One more thing that affects every cash flow number posted in this thread, mine included.

South Carolina assesses an owner occupied legal residence at 4% of fair market value and exempts it from school operating millage. A rental is assessed at 6% and gets no such exemption. Rent it more than seventy two days in a year and the 4% classification is gone. So if your tax figure came off the listing, the county site or the seller's current bill, and the seller lived there, you are underwriting a rental with an owner occupant's tax number. That flows straight into your DSCR ratio and into Dan's cash flow math.

3 things to look for / at:

Which transaction your exit is underwritten as, cash out or limited cash out, and the cash back cap that comes with it

The lender's actual seasoning requirement, not the agency minimum, and which value they use if you come in under it

Whether the loan size clears their floor at a disappointing appraisal, not just at your target

I hope the above helps with your current scenario or any of them in future. Thank you and investment hunting out there!

West Group Capital, LLC powered by NEXA Lending, LLC

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Chima Ikwuezunma
OP
Atlanta, GA · Member since 2019 · 12 posts · 3 votes
2w
Quy, this is extremely helpful. Thank you for taking the time to lay it out.
The distinction between limited cash-out and true cash-out is important, and I agree that I need to confirm the actual cash-out product, seasoning requirement, LTV and valuation method directly with the lender rather than assuming the refinance mechanics.
One clarification on the HELOC: I initially underwrote the deal assuming roughly 11% for the cost of that capital. I only recently learned that I qualify for a 4.99% promotional rate for the first six months, with the actual rate currently around 10.3% afterward. So the blended borrowing cost actually gives me some upside versus my original underwriting rather than creating a cost I hadn't accounted for. That said, your point about lining up the refinance timeline with the promotional period is a good one.
I’m also familiar with SC’s 4% owner-occupied versus 6% investment-property assessment structure. The property was previously a rental, but I still need to verify my tax assumptions and make sure the post-purchase tax burden is properly accounted for. A new transaction and assessed value could change the actual tax bill, so I don’t want to simply carry the existing number forward.
DSCR is also worth pricing as an alternative exit. Your post gives me a much better framework for the specific questions I need to take to both conventional and DSCR lenders before deciding whether the capital-recycling portion of this deal actually works.
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Ali Najjar

Lender · NJ · Member since 2025 · 50 posts · 23 votes

1w

From a lender perspective, I'd be most interested in how supportable that $140K to $150K ARV is and what the comparable sales look like. At 70% LTV, the difference between a $140K and $150K appraisal changes the refinance proceeds quite a bit.

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

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

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