Questions about BRRRR

[Conrad Pels]

Im new to real estate investing. Currently I’m in the information gathering and market research phase. I live in Traverse City in northern MI.

My wife and I currently own a large SF home which is our personal residence and a small cottage an hour away which we used for vacations (her family lives nearby) and plan to turn into a short-term vacation rental in the not-too-distant future.

I have been looking into different types of real-estate investment recently. I’ve listened to Brandon Turner’s books on rental property investing and managing rental properties. I’m also devouring BP podcasts almost every time I get in my car!

I am currently most interested in investing in multi-family homes for the extra cash flow, especially since TC is quite expensive (for Michigan) and it’s hard to find SF properties that meet even the 1% rule, let alone the 2% rule.

However, I do think that buy and hold investing in SF properties may work in TC using the BRRRR method. I have been listening to and learning more about BRRRR lately and have a few questions about strategy.

1) Is buying foreclosure properties a smart way to get properties cheaply in order to maximize the equity? Or am I better off sticking with regular homes for sale on the MLS with motivated sellers?

2) How big a risk is it to buy a home that needs a lot of work? I’ve been burned twice previously when buying homes that passed inspection without any major red flags, only to find out that serious and expensive problems exist in the house only after we took ownership. I am a little scared to buy a place thinking it’s a crackerjack deal only to find out there are tens of thousands of dollars worth of structural repairs needed after it’s too late to back out.

3) If BRRRR is such an amazing investment "hack", which it seems to be, then why isn't EVERYONE doing it?

I’d be especially interested to hear from other people investing in Northern MI. I plan to attend a real estate meeting in TC in the near future.

Thanks in advance. I’m glad to have found this community.