BRRRR Strategy w/ $250k private money & $55k cash in Phoenix, AZ

[Brady McClendon]

Hi BiggerPockets! I’m brand new to real-estate investing.  I want to buy my first rental property this summer, with a goal of making $200k/year in net cash flow within the next 4 – 6 years.

I'm currently looking to buy a cash flowing rental property (ideally 2 – 4 plex, but SFH is ok) in or around Phoenix, AZ. Would like to see $200 per door, but even if I'm under $100 per door, I would be ok with it. I really just need to get started, learn some lessons and use that experience to constantly improve with each investment. My hope would also be that the expected rise in rents would improve my cash-flow on this property in the future (and that the Phoenix area appreciates like many expect – icing on the cake).

I have access to a $250k private money loan at 8%. Interest-only is due monthly from the time I borrow the funds (have not borrowed them yet). I also have $55k in cash. Using the 70% rule (if still possible in this market), that would mean that if I put $20 - $30k into a rehab, I should be looking to buy a distressed property for $250k with an ARV of around $385k to $400k ( $385k * 70% = $250k purchase price + $20k rehab ).

My goal would be to cash-out refi with a 30 year conventional after the remodel, then repeat as many times as I can. I have near perfect credit and great W-2 income, with a low debt-to-income ratio, so I’m confident that I would be able to qualify for a conventional loan (although, not sure what the rate would be). I live in San Diego and have the ability to work remotely for 2 – 3 weeks at a time, if necessary. Phoenix is about a 5.5 hour drive (part of the reason I picked that market – it’s fairly close).

My questions to the community are:

1. Is this feasible in the current market? If not, what is a more reasonable estimate (purchase price, rehab costs, ARV, etc.)?
2.  If so, are there any recommendations for an investor-friendly realtor in the Phoenix area?
3.  Has anyone done this recently in the Phoenix market? Are you able to share any details of your deal?
4.  Are there better strategies available to me in the current market, that would help me reach my $200k goal faster, more efficiently or with less risk?
5.  Any other tips, tricks or advice would also be greatly appreciated.

Thank you in advance for your time! Looking forward to joining the REI community!

- Brady