Question on analyzing properties

[Kiel Wahl]

Hi everyone, I am a new investor who does not yet own any investment properties. I have been reading a lot and have started practicing analyzing properties off the MLS, estimating expenses, and determining if they will cash flow. I feel fairly proficient at this.

I am thinking about making my first deal be a BRRRR. I feel a little confused on how to evaluate properties for a BRRRR and I suppose I'm thinking a little too hard about this. It feels like I should spend my time looking for below market deals, estimating rehab costs, and ensuring my all in costs are 75%ish of the ARV when I am analyzing properties, THEN estimate income and expenses to estimate my cash flow after I refi. Once I have determined I can be in for 75% ARV and I know it will cash flow I have something worth moving forward on. Is this the basic method I should be using or am I missing something? Sorry if this makes no sense, I feel I have thought about this too much and overcomplicated things.

[Matthew Irish-Jones]

@Kiel Wahl if you do not yet own any investment properties a BRRRR is a tough way to start.

You will need to know :

- how to value a house in very rough shape which is much harder than valuing a house in pristine condition.

-calculate ARV's

- Future rental amounts based on visualizing the finished product

- estimating a complex rehab

- managing a complex rehab or managing a contractor

When you don't know what you don't know the BRRRR is a great way to lose money quickly. If you can get set up with the right team it can work but it adds risk, and if you pick the wrong team, you are going to hate Real Estate investing.