Is it still a market for BRRRR?

Question

Hi guys! I recently got off the phone with a lender, and told me he wasn't accepting clients for flip and fix. He told me that many were backing out from this strategy due to the extreme prices we're seeing now and it was honestly a bit discouraging. He then proceed to tell me that I should look into short-term rentals instead. Any insight?

Account Closed · Answer

People are still buying bacon even though it's going up. It's a great time to get into real estate, if you know what you are doing. Don't second guess yourself. Find a good deal. And . . . Find another lender.

Jonathan Greene · Answer

You can do a BRRRR in any market if it suits what you want to do and you are comfortable with the rehab part of the process. If you buy right and you know the ARV and the repair costs, you won't fail, but it really depends on your market how viable the BRRRR will be. In just one snippet you talked about flipping, BRRRR, and STR. I would say you need to sit down and really think about what you want to do as an investor and not be swayed by others pushing you in one direction. It's better to plan on a niche at first instead of being a generalist as a new investor.

Marcus Auerbach · Answer

Banks are not good sources of real estate advice. They can't even manage their own REO. And that's okay - there is so much more to banking and lending than RE they have to know and deal with.So, don't listen to a banker about your startegy. BRRRR has been known beforhand as value-add and thats what you do - you add value in the process. This makes it probably the most honest earned money in RE - because you actually made things better for society by improving a property that needed it, paying contractors and suppliers and providing needed housing to the public. Go for it!

Michael Noto · Answer

This answer is very market specific. As a whole flip/BRRRR opportunities are still there in my market here in CT they are just a lot more far and few between than they have been in the last decade. One thing for sure is the days of getting the numbers to work on a flip or BRRRR that require light cosmetic fixes only are not really there anymore. Any BRRRR or flip I've seen in my market has needed rehabs north of 40-50k.

Justin Vogelgesang · Answer

Hey Angelica, I'm a real estate agent in Nashville and it's still a great market for the BRRR method. There is going to be restrictions for STR permits in this area by the end of the year, so I wouldn't personally pursue that route very much. As for flips and buy & hold properties, they are still selling at impressive speeds and investors are definitely taking advantage of the market. Nashville is predicted to be the hottest housing market in 2022

Angelica Garcia · Answer

Thank you! @Jonathan Greene I completely agree, and you reaffirmed an article I read earlier this week on not being swayed by distractions, and setting a specific goal. Now looking into the planning process because I truly believe there's a lot of potential in the BRRRR method. Thank you

Angelica Garcia · Answer

Account Closed Thank you so much for your reply! This thread has been very helpful, and I'm eternally grateful for all the insight. AND i will definitely be looking into another lender who is willing to share the vision with me! Thank you

John Majoris · Answer

Sure. Depends on your goals. STR’s are great but require more pre-buy research and more work once they are up and running. LTR’s are easier to manage but they generally cash flow a lot less than a STRBRRRR can work in either short or long term just as long as you know what you’re doing. Not rocket science, but a basic understanding of rehabbing goes a long wayFind a new lender!Don’t be discouraged, you’re in a great place where folks share their re experiences to help fellow investors. Someday you’ll be giving back ;-)Good luck, and keep us updated.

Angelica Garcia · Answer

@Bruce Woodruff Thank you so much for your reply! This has definitely been a learning moment to grow thick skin, and to trust the process, create a plan, and execute. I have been reading into STRs and a buddy of mine has finally opened his very STR in Tennessee, I 100% see all the reason why investors are choosing this route

Bruce Woodruff · Answer

The lender is just a person, We all have our own opinions.....ignore him and go do what you want to do. Obviously a BRRR will work in any market at any time, it's all about the numbers!But take a close look at STRs as well, there is a reason they are the rage right now. And likely to be for quite a while as they are redefining the vacation lodging game.