My First-Time BRRRR Strategy [Critique Me!]

[Caleb Bryant]

Hey there!

My name's Caleb and I'm a local investor here in Knoxville, Tennessee. After many years of listening to the BP podcast and with one single-family long-term rental under my belt already, it is finally time for me to take on my first BRRRR.

I want to share my strategy with you today in hopes of gathering some feedback and generating some conversation. If you have anything to add to the conversation, I'd love to hear it, and if you'd like to connect with me or partner as a private-money lender, wholesaler, or general business partner I'd be happy to block off some time to chat.

Let's dive in:

Lead Generation

One of the interesting things about the Knoxville market is that although we're in a hot market, it is still possible to find properties that hit the 1% rule on the MLS. In fact, I was able to secure my first and only investment property in South Knox (SoKno) for $100k + $3k in seller credits and have been able to secure $400 a bedroom in rent (I'm renting per-bedroom to UT grad students). As such, I have my RE agent sending me regular MLS blasters which include properties listed between 50-120k in my target neighborhoods (Most of which are within a 3-mile radius of downtown as these areas are seeing lots of new development and renovations).

That said, I'm particularly interested in purchasing an off-market property for both the higher potential for ROI and for the experience. I'm planning on executing the following direct mail marketing campaign:

1. Use ListSource and local resources to generate a list of probates and absentee owner properties valued between 50-170k OR generate my own list of distressed properties using the driving-for-dollars method in my target neighborhoods

2. Send out 300 small, handwritten, short and sweet letters that read:

[insert name/greeting]

I would like to buy your house at [insert address]!

Please text or call me at [insert phone]

Caleb Bryant

[Leave business card in envelope]

3. Send follow-up mailers every month for 3 months - track results for analysis

I'm also interested in buying from a wholesaler, but I have not had much luck connecting with one through my current business partners.

Financing

After saving up $20,000 for a down payment, I was able to network through Linkedin, BP, and word of mouth to find a private-money lender who is willing to finance my BRRRR. My strategy is to take out a 12-month bubble loan to purchase and rehab the property, finish the rehab ASAP and place a renter, then refinance the property into a 15 or 30-year mortgage to pull all of my money out of the deal and repay the private money lender. This particular lender has offered me a 30-year mortgage at 5-6%, but I am still considering options for the refi. Here are some details on my loan options if you'd like to know more:

• 12-Month Bubble Loan: This is a loan product specifically targeted towards flippers. In my case, the lender will loan me 80% of the purchase price + all money for rehab at a 9% interest rate. This is an expensive, interest-only loan that is due back in the full amount + interest at the end of the 12-month term.
• Business LOC: I've also been offered a business line-of-credit at 0% interest for 18 months which I could use as a down payment on a more expensive property. I haven't looked far into this, as I don't see it as necessary currently, but I figure the risk here is that the APR jumps to 25%+ if the line of credit is still open after that 18-month period.

The Rehab

So, funny story.. The last apartment that I lived in was NOT ready for move in when it was supposed to be.. So I found myself homeless for a quick second at the ripe age of 23. As much as it sucked, I was able to stick it out and couch surf for a couple of weeks and actually ended up grabbing lunch with one of the developers after the dust had settled. We ended up having a nice chat and the guy was nice enough to give me a list of his best contractors. I'm pretty handy and I do have this list of contractors, but I am a newbie to the rehab process and would much appreciate any advice you guys have on this piece of the equation!

So.. What are your thoughts?