BRRR method -what about purchasing land and building on it?

[Mariama R.]

What about buying a cheap piece of land for around $15000 in a good neighborhood, and building a house on it? Is this considered a variation of BRRR and advisable in terms of building equity and wealth and perhaps for cashflow? Or is it more advisable to buy the worst house in a good neighborhood, for around $15000 or $20000 that is need of cosmetic rehab and rehabbing it and BRRRing it?

[Kevin M.]

Brent,

Build at roughly 75% of final appraisal value.  Finance construction, convert to permanent financing with a traditional 20% down using the equity gained during construction.  Result...20% equity in a hold property and initial cash back out for a repeat performance. 

The above is obviously simplified and of course doesn't work on every deal or locale, but when you can get it to work, beats rehabs hands down even from the cheap seats.