All Forum Posts by: Zach Matson

I love this. This is exactly what I am doing for investors in Boise. (I do mid size developments myself). 

This is a great strategy that hardly anybody realizes is a HUGE opportunity. 

Yes, the red tape is the barrier to entry for most. No matter where you are at, the process to split the lot will seem like a nightmare to someone that's never gone through it. Even in the municipalities that have undergone recent zoning changes to make it easier to create housing, still have a significant amount of hoops to jump through. 

And you are right, kind of, on the carrying costs. But that's where our strategy comes in, where you are renting out the existing house to pay the holding costs. This is like any other rental in that regard. It can typically be underwritten like any other rental property, just with the expectation there are going to be extra costs involved to split the lot, but that's where you are creating value. 

 Most of the deals that we track (in Boise) take $200k-$350k cash over the life of the deal. That's assuming 25% down on the original purchase, paying entitlement costs and development costs out of pocket, and paying the construction loan interest out of pocket, plus if there is any shortfall in the difference between rental income and carry costs (most of the time minimal). But, I will say, most of these could take far less cash maximizing leverage, because you can typically fund the development costs in a loan, as well as have an interest reserve many times. And, once the lot is split you sell the original house and recoup most of the cash. (Then start the next one). 

I would agree it's not a strategy for the noob to take on on their own, unless they are working with an experienced team that can do all this for them. I know BP is full of a lot of DIY'ers and people starting out, but this is a strategy that requires working with a bigger team of professionals. Which also makes it more scalable from the investor's side. For example, in Boise, I've put together a system where we underwrite each potential deal, and we are a vertically integrated builder and developer so can handle every step from entitlement through occupancy. The investor is just deciding which deal to participate in, buying it, and hiring us to get it through completion. They are making decisions along the way that aligns with their goals, but other than that we do the heavy lifting. 

What's great for Realtors that learn this system and work with us, is that the Realtor has practically guaranteed multiple deals with one investor. The investor uses them to purchase, to list the original house when its split off, possibly the new lots/houses if their goal is the cash build up, and then on future deals. It's a win/win in that regard. We have about a dozen agents that went through our training that explains the process and these dozen agents definitely stand out in the marketplace for investors. 

And yeah, I was at a real estate conference where Thach Nguyen was explaining what he is doing in Seattle with ADU's and splits and making a killing. In some cases making $500k+ on one property.

The hold-up for most investors on BP is going to be the time it takes to complete these. Most people want a quick flip and quick return, so they'll buy a quick-flip and be happy with a $25k return maybe over 6 months(there are plenty of deals that do more than that, faster, but not usually if you're inexperienced), and completely overlook the deal where they can make $200k in 2 years, because it "takes too long". 

Anyway, super long reply to your comment, but I'm ging to be posting a lot more about these and showing breakdowns of the deals we are doing. We just started presenting these opportunities to investors in the past 2 months and are already starting to get traction with clients. I suspect we will continue to build that up and then I'll be creating a system that can be used in every market. 

In Boise at least (and most major markets), it's been nearly impossible to find BRRRR deals for years, even before high interest rates.

Enter BRRSSBRR. Not a new strategy, just an investor/developer/builder realizing there is a ton of opportunity in this market and almost any market that 99% of investors aren't even aware of. 

So, what does it stand for? 
Buy, Rehab, Rent, Split, Sell, Build, Rent/Resale, Repeat. 

One of the challenges of lot splits is zoning and the time it takes to accomplish. Enter the BRR method of lot splits. Buy the house that you can split the lot from. You shouldn't be paying any extra for the land. Fix up the house (if needed) and rent it, to ideally at least break even on your mortgage on the house while you're working through the steps of the lot split. 

The value here isn't usually in the house you're acquiring, its the value you're creating from the lot split. 

Once the split is approved, sell the original house. You can recoup a huge chunk of the cash put in, and, if it was a rehab, sometimes even make money on the flip. You now own the land free and clear with the equity of that land created. In Boise, for example, it's at least 6 figures no matter what part of town. Sometimes multiple six figures. Now, there is some cost to splitting it, but almost always the cost is much less than the new lot value. 

You can now either sell the lot for a profit, or, create even more value by building (with the right builder and cost), then using the equity you have created to have a cash-flowing rental, or sell it for profit and do it again. 

This works in any market that you can sell a building lot for over $100k.

🔥 INFILL DEAL OF THE WEEK 🔥

$2,555/MO CASH FLOW — From One Lot Using BRRSSBRR 🧱💰

Ever heard of turning one lot into EIGHT income streams AND six figures in equity? Or more?

This week’s featured deal used our BRRSSBRR strategy:
Buy. Rehab. Rent. Split. Sell. Build. Rent/Resale. Repeat.

💡 What we plan:
➡️ Buy an underused lot
➡️ Rehab the existing house (including an ADU conversion) & rent
➡️ Split the lot into TWO additional lots
➡️ Built new 4-bed duplex homes out back with ADU's
➡️ Rent all 3 properties! Create 8 rental doors from 1!

💸 Combined cash flow: $2,555/mo
📈 Plus over $1/2 Million in added equity!

👉 Want deals like this?
Join our next Deal of the Week Call and we’ll show you exactly how we did it — and how you can do it too.

📆 Today! Friday, August 1st @ 2PM MST
📍https://zoom.us/meeting/register/xAWM-Ep8Raey8XwGWTrxtw

I wanted to share a strategy we’ve been using successfully in our Boise-based infill development projects that’s producing serious returns for investors — we call it BRRSSBRR.

Yes, it’s a mouthful — but it works. Here's the breakdown:

I've recently developed a new BRRRR strategy/system. It's not new, but not many people are doing this and developers/builders certainly aren't doing it for everyday investors.

I'm going to coin it: BRRSSBRR - Buy, Rehab, Rent, Split, Sell, Build, Rent, Repeat

It's one of the few strategies that can actually work for cash flow or massive profit in Boise with the current market and interest rates. Here are the basic steps: 1. Buy a property that has split potential. 2. Rehab the property if necessary. 3. Rent out that property while splitting lot 4. Complete lot split. 5. Once lot is split, sell original house (unless it really was a good deal even without the land). 6. Build a new house or small multifamily on the new lot. 7. This new build now cash-flows with less money down than typical or, as a flip it makes six figures.

The reason why this works: In Boise, building lots are selling for minimum $150k to builders, and up to $350k+ depending on location. The cost to split the lot is a fraction of that cost usually. We target deals where that extra land is free (most are, because the land isn't worth that much until its split). There is typically also equity added on the build, which is rolled into the long term mortgage for the rental. You can get a mortgage on the original house, and break even on rents (typically requires 20-30% down to do so), while going through the split. You can also recoup most of the new build costs (entitlement, development, build, and sometimes interest even), in the loan on the new build. As an added bonus, if you are keeping the new house as a rental, new construction has significantly reduced capex expenses typically for at least the first 10 years. Here's an example of a property that is currently on our list:

Purchase price: $425k
Down Payment: $106k
Entitlement & Development costs: $95k
Renovation of existing house: $75k
Max required capital (depending on how loans are structured): $331k (could be far less if you use max leverage)
Total capital remaining in deal after selling original house (and making a profit): $115k or less depending on loan structures and leverage
Profit on new house if sold: $178k
Or $850 monthly cash flow as rental.

Would you do this deal? Has this strategy been on your radar? What would hold you back? 

I'm hosting a Zoom OPEN HOUSE today at 2pm MST to discuss this deal, as well as other infill deals we track. Zoom Open House June 27th or July 3rd, 2PM MST

The particular property we are going to deep dive on could be a LTR or STR, both would cash flow. It's right next to Boise State University. There is an existing house on the property that would remain as well, and you can break even with rents while getting the new property split and built.

I am a developer and builder in Boise, ID, with a specialty in infill development. Each week, I send out a deal of the week to my deal list members, as well as host a weekly zoom call reviewing the deals on the market. We typically add at least 1 deal a week to our list, but we need more buyers to take advantage of these!

We have a method that works in this market and interest rate environment, because most of our deals you are getting extra land for essentially free (plus the costs of splitting it). This creates 6 figures of equity on most deals, and that allows for cash flow on most deals. We also highlight deals to build and sell to capitalize on large chunks of profit.

 Thanks. This really is a no brainer deal, considering the land part is free and I'm developing and building at cost. The challenge is getting it in front of the right people that know what they are looking at. =)

 Yes, we tried that originally when we were getting it under contract. The seller is super motivated to move out and are in the process of buying another house. This is such a good deal that they were going to list it on the open market if we didn't agree to their terms. While I definitely understand your viewpoint, and agree, that it's an easier sell to a partner/investor if it's entitled, this is a no-brainer deal for us and should be for an investor as well, considering the high upside and low-risk. Worst case scenario we end up with less units, but we are still in the additional land for free. We have multiple exit strategies, all of which have huge upside.  

 Possibly... but most likely only with me as the custom builder.