BURRR Strategy Viable?

[Macklin Baldwin]

Good morning!

My SO and I have saved a good chunk of cash to start our next investment, we currently have one SFR rented out, we want to do a new strategy this time. A modified BRRRR, to me the word rehab has always meant a great deal of fixing and improving. Blame TV. The word may be interchangeable for most of you as explained before.

But for our market, and because we don’t have the desire too, we will be buying a house in good shape, but outdated.

We want to Buy UPGRADE Rent Refinance Repeat.

So my question: Is buying an outdated but perfectly usable home a financially usable approach? Will we be able to do maybe 5-10% of purchase price in upgrades and build enough equity in the house to do a cash out refinance in 10-12 months?

Thanks for your time!

[Randall Weatherall]

Seems tough and depends on the market/rents in that specific area. It would take a very outdated home in an area to be able to update it and then rent it for significantly more after without hitting that area's ceiling. If it's in a good enough area to do that, then likely the updates won't drag the rent up much because it's already renting for market or close. The reality is: buying a rundown, unlivable property to BRRRR is more sustainable and immediately profitable than buying a perfectly good unit and hoping that new tenants will pay more for updated living space (may or may not depending on your specific area, but unlikely).