What "never fails" BRRRR ops system have you masterminded?

Question

Hi BP community!

First post here and super excited to learn the tricks of the trade from all you real estate all-stars. Your breath of knowledge never ceases to amaze me!

My husband and I are getting into the BRRRR game in central Wisconsin, currently rehabbing our first project. We also have our sights set on a second - a Fannie Mae foreclosure on which we can put an offer in in 16 more days - this is one we would run as an Airbnb (a BRRRRnb if you will, clever credit to Shelby Osborne).

We're three months into our entrepreneurial journey and I'm starting to develop the checklists and systems that we'll rely upon to scale our business quickly and create true wealth.

Tell me, if you'd be so kind, what is the "never fails" BRRRR ops system that you've masterminded or is worth the money to purchase as an app/package? Maybe it's for the purchase process, rehabbing process, renting (short and/or long term), financing or refinancing, or for property management. Any system or checklist you'd be willing to share would be greatly appreciated!

Thanks for being a real estate rockstar and paving the path for us rookies. : )

Marcus Auerbach · Answer

Looking back at 10+ years of Milwaukee BRRRs my biggest flops all had one thing in common: too much work. It's a little bit like buying groceries and you wander how you just spent $200: you look on the receipt and there is nothing on there over $10, but the list is just so loang and it adds up. Same thing with BRRRR. You have to keep the list short.

The other issue is big capex items like roof, siding and windows. For easy math let's call it $15,000 each on average (roof less, siding more). That's $45,000 you will likely not be able to recoup, so for a BRRRR to work perfectly don't do them. However that menas you have just kicked the can down the road, maybe you can get another couple years out of it, but it will catch up eventually.

I prefer to do these things right away, which is probably the reason why we typically spend more than 75% of ARV, often 90%, sometimes more.

Jay Hinrichs · Answer

there is no such thing as NEVER FAILS when it comes to rehab  construction  real estate.. bottom line..

Kenneth Garrett · Answer

@Jordan Pupols

When considering a BRRRR I try to stay away from deals that require new roof and siding.  If your $15K-20K before you ever get inside it’s probably going to be tough to make the numbers work.  I’ve always been pretty good at rehab budgets, but like anything once you start, the ideas start flowing.  Ideas cost money.  First and foremost you want to rehab items that will give you a 150% return or better.  A kitchen rehab that cost $7000, but under the ARV will get you $15,000 I’ll do all day.  Same with bathrooms put in $1500-$2000 to get $3K-4K.  I look at two parameters; what will the ARV be when I’m done and what are the rental numbers.  If I can refi at 75% and the rental numbers generate $300 of monthly cash flow, it’s a good deal. I’ll need to recoup 100% of money in 18-24 months or less.

Jordan P. · Answer

@Jay Hinrichs, thanks for your insight. I was just trying to get folks to share their thoughts on checklists and systems they've developed or used that work well for them in moving through BRRRR deals. I used the words "never fails" to try and get the discussion going, nothing more - I'm not so naive to believe there's a real estate panacea. I'll be more careful with my wording next time.

Ari Hadar · Answer

It's seems another paid checklist that you can make on yourself like other checklist like how to hire and deal with constructors etc...

I tend to do things by heart and not write it down but it might be changed... There are a lot of good tips that might be forgotten in the way.

Jordan P. · Answer

@Kenneth Garrett, great, thanks so much!

I read in a book that kitchens, bathrooms, and landscaping are the rehab areas you’ll see the greatest return, which sounds in line with what you’re saying. Thanks for sharing!

Jordan P. · Answer

@Ari Hadar, I'm currently using Google Sheets in Drive to keep track of everything, but I don't feel like it's the best system or app to minimize effort. I recently came across this: https://brrrrinvest.com/produc.... Has anyone used this? This general concept is what I'm looking to develop and use for our business.

Ari Hadar · Answer

Do you write all the system and procedures in a word file or excel? How do you keep track of it and modify it?

Jordan P. · Answer

@Marcus Auerbach, thanks for the insight. I'm in the boat of putting in "too much work" right now, which is why I'm reaching out and trying to develop the best systems/checklists for getting a BRRRR done from the pros on this site! I want to simplify and streamline our processes so we can move through these quickly and flawlessly (barring extenuating circumstances).

Appreciate the thoughts on cap ex as well. We're starting out under a "do it right, do it now" type of mentality, so it's good to hear from someone that's familiar with this process that we're on the right path!

What "never fails" BRRRR ops system have you masterminded?

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