Pros and cons of BRRRR on a REO? Fort Worth TX

[Courtland Kilpatrick]

Hello All, first time poster and longtime occasional browser of BP. Any advice or comments are appreciated!

Quick intro: My wife and I both have day jobs but a fairly flexible schedule despite them. We just had our second child and have recently been discussing a one-year exit strategy from my wife's day job to focus on real estate and family after. We've landed on the BRRRR strategy (with the possibility of flipping) as our desired focus.

What limited experience and resources we have to work with:

We accidentally got into real estate when our neighbors decided to retire and move out of town. They had their home on the market for some time, but the house was soooo outdated that people kept passing it by. Long story short, they came and asked us to make an offer (we were expecting our first child) because they loved the idea of us raising our child in the house that they raised their son in. We came to terms and used my VA benefits to purchase and gutted / renovate the home. We were able to keep the original home, put it into an LLC and now rent it to my mother in law at a "break even" rate for the past two years ($1,800 per month). We're looking to do a cash out refi on the rental that we think will net us around $125k to start our journey.

So, what we are working with are 1) contractors we trust that did our home gutting and remodel 2) Aprox $125k to use 3) Availability to use my VA if need be due to refinancing the current home out of it recently

We happened upon a REO owned by the bank we use that we're getting interested in. All that for my question…Is there anything I'm missing (regulatory or other) that would hinder the BRRRR strategy with a cash buy REO?

Sorry for the long post and thank you for your time. If anyone is in the Fort Worth area and wants to connect, I'd be more than happy to do so. 

CK