How to Scale without rehabbing (BRRRR)... starting with 400k

[Quinn Dudek]

Me and a few other partners have 400k and are trying to get started with SFH. We are thinking about buying a few 300kish houses next year probably using DSCR loans. We would preferably not rehab and BRRRR as it causes complications and we are new. How would we scale this or potentially 1031 exchange into a larger deal (commercial)? Waiting for equity build up and appreciation and then cash out refi to buy a few more homes is a possibility but that may take quite a while. And I believe we may be over leveraged with something like 7 300k+ homes where a few possible vacancies and/or large unexpected payments could make it all come crashing down. What would you do if you had 400k and were looking to get into SFHs?

[John Clark]

Quote from @Quinn Dudek:

We would preferably not rehab and BRRRR as it causes complications and we are new. How would we scale this or potentially 1031 exchange into a larger deal (commercial)? Waiting for equity build up and appreciation and then cash out refi to buy a few more homes is a possibility but that may take quite a while.

Increases in value come from only two sources: passive market forces (appreciation), and; changes to the dwelling that you actively make that then allow market forces to affect the property differently than doing nothing would have done.

You do not want to take active steps (rehabbing is an active step). Therefore you are left with the effects of passive market changes leading to appreciation. You do not, however, appear to want to wait for ordinary market appreciation.

You are left with buying properties under market price. That leads to your answer: What are you doing to find owners who are willing to sell under market?

Don’t look for distressed properties, look for distressed owners. That’s the only strategy that fits the limits you have imposed on yourself.