Running the BRRRR Equation Numbers and No Properties Seem to Work

[Mitch Casey]

Hi all,

Currently looking into getting our first BRRRR property here in Utah. I have been looking for properties that fit the script. Have found some pretty beat up properties that need a lot of TLC.

However, when I place them into the pre-purchase equation of (ARV *0.7) - repairs = Max purchase price none of them are even coming close to where they would need to be.

Even with adding bedrooms, bathrooms, cosmetics, etc. it doesn't seem that any of those renovations would even get us close to the price we would need the new value to be.

Obviously, the Utah market is booming and the current sell price of these homes are too high. But, I am looking into the bottom-of-the-barrel properties that have the ability to be improved and they still don't work.

I have been looking on AllUtahHomes.com, AllUtahListings.com, KSL.com, etc.

Does anyone have any advice here? Do I need to be looking elsewhere on different listings? If so, where could I look for the proper properties?

Is it just a matter of the Utah market being too inflated and I need to look elsewhere? Out of state? More remote locations in Utah? (I have been looking between Sandy to Spanish Fork.) 

I don't think going out of state at this point would be wise because I am just starting and need to get experience in areas am more familiar with here.

Any and all advice would be much appreciated.

Thanks!

[Frank Wong]

Originally posted by @Mark Fries:

@Mitch Casey

Talk of how fantastic BRRRR is a tactic to sell books and increase Pro memberships on BP.

Example: you are out there trying to find a deal to make it work right now....its 99% harder than they make it seem.

Starting out I would recommend avoiding BRRRR, mortgages, refinances...etc.. and try finding an off market deal for cash, sheriff's sales or owner financing deals, maybe even a land deal.

Maybe try BRRRR on deal number 8 or something...

 Yup, well said Mark. In the beginning especially your first deal.  Look for something easy. The most you want to deal with is new floors and paint.  Buy it make some minor changes and get it rented out.  Don't try to hit a home run your first swing. 

1. The deals are very hard to find. Not like these BRRRR deals show up every day. Maybe 1 every 3-5 months that I would be interested in.

2. If you find it, doesn't guarantee you will get the deal.  Unless you know how to acquire it and close it. You probably won't get it and have wasted the 5 months of searching.

3. It's not easy. Gotta know what you are doing and it takes a lot of time. Most think I hire a GC and a PM and they will do everything. Nope, not the case. 

There are some great stories here on BP about people hitting some home runs but you never hear about the stories of everyone striking out or quitting bc they can't find and close a deal.  Swing for a base hit, get on base, get some experience and try for the double next time. You can make a lot of money just getting on base.