Build to rent (BRRRR with new construction)

[David Maldonado]

Hey y'all,

Anyone utilizing the build to rent strategy in or around the fresno area? I am interested in pursuing this strategy, but I don't have any experience with new construction, besides ADUs.

My plan would be to build traditional 3 bed 2 bath single family homes with detached ADUs. I know the permitting and building process is way easier with ADUs, but I would assume that it's much more difficult with single familys.

I will be acting as my own general contractor (currently waiting to be issued my remodeling contractors license). I have experience building ADUs on my properties, but haven't tackled a new construction project for a single family with unimproved land.

I'd be using the BRRRR strategy, cash out, and do it over and over again.

I would love to connect with anyone doing this!

[David Maldonado]

Quote from @Jaron Walling:

@David Maldonado How much equity are you going to leave in this property? I'd be asking myself that question. I can't see the numbers penciling otherwise but I'd love see how it could. 

New construction and BRRRR don't work like it does when you buy distressed properties below market and rehab them back to market value. There's no value add component. New construction doesn't benefit from the spread of value add vs ARV.

Hi Jaron,

I won't know until I find out what the total costs are from the city to build (permits, school fees, impact fees, required improvements etc.) and the cost to run utilities. This is the part where I need guidance in from experienced build to rent investors.

I've built one of my 745 sq detached adus for an all in price of about 70k (plans, permits, fees, construction costs etc.) That is currently renting for $2300 per month. This was during covid when lumber prices skyrocketed.

I think new construction deals are hard to BRRRR, if its hands off construction (unless you get the land at a very good price). I will be performing most of the work on the new builds, so I'd save quite a bit on labor.