All Forum Posts by: Nicholas L.

I don't think this is uncommon on lower priced properties.  And if you like the agent, I doubt it would make or break the deal.

@Dominic Lupe I am not sure I am fully following what the issue is, but have you looked into DSCR loans?  They don't require the same W2 / income verification as "conventional" financing.  You would need to certify that you are not going to live in the property, as DSCR loans are not for primary residences.

@Derek Johnson I may not be understanding your plan correctly, but increasing the rents only is not likely to increase the value of the property significantly.  Small multi is valued using comps and not income.

So, there is definitely risk in counting on the value going up so you can refinance and get more cash out.

Now, whether or not it's a "good" investment is a different question that will depend on your goals, desires, cash on hand, other opportunities, etc.  I just wanted to make that one point so it was out there.

@Laura Perrot you sure can.  This is just a very personal decision.  And, be aware that taking on debt to purchase a rental will factor into your DTI if and when you someday go to buy a primary residence.

@James Brewer do you own any rentals already? Trying for an out of state BRRRR comes with many different risks... and as you basically stated, buying in a tough area is just going to make a hard process even harder.

Have you listened to Spencer Cornelia's BP podcasts?  Great case study of how things can go.

@Nicholas Vandermolen

where are you located?

In my opinion, the best OOS market is not one you randomly pick in Iowa or Ohio or Florida, but one you have strong ties to (school, family, friends, lived there previously, etc.)

@Nadine O. do you have family or friends or strong connections anywhere?  That might help you narrow things down.  And, you don't have to pick the absolute cheapest market, especially if you're going to start with a house hack.

@Ashley D Moore 60k properties are going to be in tougher areas.

Do you already own a primary?

@Nick Coons good points! I totally agree that not every potential BRRRR is a potential flip, and vice versa. On a BRRRR you obviously need rent to cover the expenses, whereas on a flip how much it might rent for is irrelevant. I just finished a BRRRR myself and it didn't appraise for what I was hoping for, so I'm "leaving money in the deal." But it rented immediately at my target rent so I'm still fine with it.

It just seems to me that if it's tough to find a candidate property to BRRRR right now, it will also be tough to find a candidate property to flip.

Are you looking to invest right in the city of Phoenix, or can you expand your search area to more of the state?

@Nick Coons

As you may know, one of the features of a BRRRR is that, unlike a flip, you recoup your invested capital when you refinance without paying taxes or realtor fees.  So... if you can find, and buy, a property to flip, you have likely found a candidate property to BRRRR.  And if you buy right and increase the value, you'll get all of your invested cash out when you refinance.

If you want to flip, that's great. But flipping in order to generate cash to BRRRR seems like two competing goals. As you noted your flip profits are going to be greatly reduced by taxes, closing costs, etc.

I also think it's the easiest it's ever been to refinance a BRRRR - as an example, I haven't run into any of the seasoning period restrictions that used to be so common. The interest rate on the refinance loan may be a lot higher, but to me that's well worth it to pull your capital out.

Hope this helps.