Trying to learn more about BRRR

[Steven Ragsdale]

Hello everyone this is my first post here on and I am looking for some advise or assistance from anyone willing to help me out. Currently I own a rental in Nampa, ID and have owned this property for a year. Just now closing on my second property in Lexington,KY. Current lease ends in April 2022 for my tenants at my Nampa property. Contemplating selling that property since I would currently come out with around 200k profit. Would then like to start BRRR in Lexington, KY. Am currently listening to David Greenes book on BRRR to further educate myself. So just wondering if anyone had any comments/advise for my next move.

[Andrés Uribe]

Hey Steven,

Long message here but I hope it helps! It's what I've done when trying to do BRRRR's.

First thing I would say is to work the deal backwards to know how much you'll need to break even or walk away with a little profit after BRRRR. What I do for a property of interest, is I have realtor go there with contractor and send me 1min - 1:30min long videos of the walk through, I tell contractor my plans for property if cosmetic rehab or more extensive, then he'll give me a timeline of how long it will take plus cost. I add 2-4 weeks to his timeline and $5-$10K more on rehab from what he said, I also add however long it would take to refi after rehab is complete and refi closing period.

Then I create a list of every possible expense out of pocket, monthly interest only payments or mortgage payments (times that by the amount of time it will rehab and work out refi), utilities, insurance, taxes, closing costs, down payment, I usually add $10K of unexpected costs as well. I take all that into account when looking at the property, if it checks out and asking price is close, I make a lower offer that will at least help me break even, also taking into account the 25% - 30% LTV lender might require for a refi. If contractor is on time and on budget, and there are no unexpected expenses, that $15K - $20K for me, if not I move on.
To know what I think the property can refi for, I run my own comps on very similar properties, same beds and baths or less. Then I use price per square foot instead of looking at the for sale price.

Hope this helps and its clear! Any questions just let me know.

Andres