All cash BRRRR - what steps to take?

Question

I am a complete newbie and considering an all cash deal with 1-2 trustworthy family members. We would purchase something that needs love, renovate it, then finance it, and then rent it out - most likely co-living / rent by the room model.

There are so many new things in this: 1) all cash deal so no bank checking for details, 2) renovation, 3) coliving, 4) refinancing, 5) partners. I know this is usually a no-go but I've got the time, commitment, and ability to learn. I would really appreciate any and all advice on steps to take, pitfalls to avoid, and what to learn.

Here are some questions for each of the 5 new areas to get your wheels turning:

1) all cash deal so no bank checking for details - what steps should I make sure I take that the bank might have like appraisal, requiring insurance, etc.? what else are cons of all cash / no bank to consider?

2) renovation - managing GCs? what might I DIY? Mistakes to avoid? how to balance renovating for best ARV vs. preparing for co-living?

3) co-living - i am debating between padsplit model with furniture for ease of filling rooms vs. community vibe with no furniture for longer memberships

4) refinancing - what can I do along the way to get best ARV? right investors? what makes refinancing go wrong?

5) partners - do we need a contract? what type? now or at financing or ? how should we structure it so it is best for legal, tax and financial reasons ( note: I am working towards my REP 750 hours but they will not meet that)?

If you've got knowledge on any of these 5 - or other categories I've missed, please share. Thank you so much in advance!

p.s. if you've done co-living, I'd love to speak with you. DM me if you are open to chatting further. I am happy to share everything I've learnt already, too!

Sweta Govani · Answer

Thank you so much for very helpful responses!!

Preston Dean · Answer

Hi @Sweta Govani

Sounds like you have an exciting journey ahead of you!

1. The biggest pro is you don't have the appraisal contingency

2. Work with a GC. Let them carry the load for you

3. up to you

4. increasing bedrooms/bathrooms/sqft is the best way to get a higher ARV. Don't waste your money on super high end product or finished. Mid grade are good enough to get a better ROI

5. Yes you should have a contract

Here to help

Lauren Robins · Answer

Hi there Sweta!

You're taking on an ambitious but highly rewarding strategy—buying a property all-cash with trusted family members, renovating it, refinancing, and then renting it out using a co-living model. While each piece of your plan introduces some complexity, your willingness to learn and plan carefully gives you a strong foundation. Let’s walk through each of the five key areas in more detail, in paragraph form, to help you approach this methodically.Starting with the all-cash purchase, one benefit is that you avoid the bank’s underwriting process, making your offer more competitive and your closing faster. However, you’ll also lose some built-in safeguards that lenders typically require—such as an appraisal, inspection, and property insurance verification. To protect yourself, it’s wise to do these things anyway. Order a title search and buy title insurance to ensure a clean transfer of ownership. Consider getting an appraisal or at least a broker’s price opinion to confirm value. Hire inspectors to check key systems like HVAC, plumbing, and foundation, and make sure you get insurance coverage before closing, especially since insurers handle vacant properties differently. The downside of using all cash is that you’ll tie up capital, and you won’t have a lender forcing you to set aside funds for taxes or insurance, so you’ll need to manage that proactively.The renovation phase introduces another layer of complexity. If the rehab is substantial or involves multiple trades, permits, or structural work, it’s usually better to hire a licensed general contractor. For cosmetic updates—painting, cleaning, fixture swaps—you can save money with DIY work or family help. Always begin with a detailed scope of work and budget, and track progress carefully. Prioritize critical systems first (like the roof or water heater), then move to finishes. When preparing for a co-living model, you’ll want durable materials (like LVP flooring or tile showers) that can stand up to higher wear. Avoid over-renovating for the neighborhood, and don’t pay contractors too much upfront—tie payments to clearly defined milestones. Renovating with resale value in mind (after-repair value, or ARV) while also making it functional for co-living tenants is a balancing act, but a focus on livable common areas, plenty of bathrooms, and smart layouts will help.When it comes to your co-living strategy, you’re debating between a Padsplit-style approach—fully furnished, possibly higher turnover—and a more community-based model with unfurnished rooms and longer-term tenants. Padsplit offers the advantage of easy tenant acquisition and possibly higher income per square foot, especially in urban working-class areas. But it may come with higher turnover, more management, and increased maintenance needs. A traditional community model, on the other hand, can cultivate a stronger, longer-term tenant base but might be harder to fill initially. One middle-ground option is furnishing only the common areas while leaving bedrooms lightly furnished or unfurnished, which gives tenants flexibility. Regardless of your model, you’ll need to comply with local zoning laws (especially important in Atlanta), set up secure access, and have a strong lease agreement that accounts for shared space rules.Refinancing is a key step for recouping your initial cash investment. To set yourself up for a successful refi, document everything along the way—before and after photos, receipts, contractor invoices, and rental income if available. These will support a higher appraised value and demonstrate the property’s improved condition. Try to find a local lender or credit union that understands investor-friendly refinancing, and ask if they require a seasoning period (often six months). Low appraisals are the biggest hurdle in this phase, so keep renovation quality high and show market comps. Be cautious not to over-leverage—maintain enough equity to keep monthly payments manageable and account for rising interest rates or vacancies. Also, clarify in advance who will be on the loan—your credit and income situation matter here if you're bringing in partners.Finally, partnering with family introduces a lot of nuance. Even with complete trust, it’s essential to have a written agreement before money changes hands. Ideally, you’ll form an LLC taxed as a partnership and create an Operating Agreement that spells out each person’s roles, contributions, profit splits, and exit strategies. Alternatively, a Joint Venture Agreement could work if you don't use an entity. You should define how expenses are handled, who manages what, and what happens if someone wants out early. It’s also helpful to outline how decisions are made—especially if there's a disagreement. From a tax perspective, since you're working toward Real Estate Professional (REP) status but won’t meet the 750-hour requirement this year, losses may be considered passive. A CPA can help you structure ownership or expense allocations to be as tax-efficient as possible for your role.Overall, your strategy is solid, and you’re asking all the right questions. Just make sure to build in structure early, track everything, and lean on professionals where needed.Note: This information is for educational and informational purposes only and does not constitute legal, tax, financial, or investment advice. No attorney-client, fiduciary, or professional relationship is established through this communication.