BRRR with 3 R’s - Looking for feedback

[Josh Walker]

Hello Bigger Pocketers! Please chime in with feedback and experiences of your own. I am a home builder and currently build spec and custom homes. No investment excites me more than real estate. My “paycheck” is building new homes, but the long term goal is wealth through rental properties. I do not currently have a rental property and have a plan to get the ball rolling, so please feel free to provide feedback. 

The plan is BRRR (Build, Rent, Refinance, Repeat). My plan is to utilize this plan initially with four plex properties to maximize the potential return and utilize the opportunity to refinance with conventional mortgages. The construction would be financed by a construction loan with my current lender or by a private investor. This would allow coverage of construction and lot costs to be covered 100% and zero money out of pocket. Construction costs would equate to approximately 72% of the appraised value. This is higher margin than a typical build and is accomplished by higher density with a comparable lot cost as well as economy of scale in the construction process. The plan from there is to then maximize occupancy and repeat the process.

Here are a few questions I have...

1. Thoughts on BRRR (my thoughts above) vs. traditional BRRRR with rehab on existing properties?

2. What LTV, rates, terms are you all seeing for multi family four plex properties?

3. What KPI’s do you all look at for investment properties.

Thank you for taking the time to think through this with me!

Josh