How to spot a deal when it comes to the BRRRR method, or just general investing?

[Faiz Kanash]

Hello!

I'm sorry if this isn't the correct place to ask this, its been hard to find videos to kinda go into the basic details of how to spot a deal since most information I get is just explaining the BRRRR method. From my rough understanding, the idea is to buy a distressed property, fix it up, rent it out, and then refinance it to pull your money out and move onto the next one. However, i'm primarily looking in the chicago land area(suburbs such as cook and dupage county), and very rarely does a distressed multifamily come onto the market. Most of the properties I see usually have tenants that are paying far below market averages for rent with updating needed in their units (usually just a kitchen and bathroom update). The asking price is usually high too, which makes me question if I'd even be able to refinance after raising rents and get my money out to re-use onto the next one.

I've heard something about rules to follow, like a 1% rule? Im unsure as to how that works. Or, if someone could explain how the appraising process might work in the case that there aren't much relatable comps in the area?

 I can give a real world example of a property im looking at.. Its asking price is $650,000 for a 6 unit that has a cap rate of 7%. Tenants are month to month, fully occupied, each unit being 2 bed 1 bath and would require updating in the units. I've only been able to find 1 comparable 6 unit comp which was in a different nearby city for $895k, nothing within the past 5 years for the city i'm looking in. How would I go about figuring out if this is a good deal, something im able to pull money out after refinance and use it on the next one?

Thank you!