What to watch out for in buying my first BRRR

[Arthur Leao]

After listening to lots of BP podcast, I've decided this is what I want to do, and I am interested in the BRRR method. I've started looking around for potential fixer-uppers and have come across several prospects. I need some pointers on what to look out for during my first tour of the place. What are clear red flags or deal breakers? I don't want to find a "great deal" just to end up having it be a massive money pit due to my inexperience.

Thanks!

Arthur

[Matt Vogt]

What are your strengths, what are your weaknesses? Whatever your weakness is, find someone to compensate for them. If you're not a designer/contractor/GC etc, then get somebody who is to help you know your approximate rehab costs prior to going under contract. A few extra dollars up front could save you tremendous amounts in the long run. 

Create a design/plan for the renovations and deviate as little as possible. Change orders will quickly increase your project costs and will kill the budget.

The unknown items will kill the deal, so do your due diligence to find potential issues before you close on the property and dig in. Also, find out what your ARV is going to be after all the renovations. From there, multiply out your re-fi amount (75-80% LTV of the ARV), then subtract your renovation expense to ensure you'll have enough equity to get all (or most) of your money back out.

Good luck