Lack of BRRRR opportunities in my <150K budget

[Brandon Shim]

I'm looking for BRRRR opportunities and am finding that I can't find any on Zillow that meet my criteria. Are opportunities scarce right now in my price range? Is my method/criteria flawed? Should I expect significantly better properties if I had an agent in the area?

Criteria/Method:

1. Cost of property + Estimated Rehab costs < 150K, I'm ball parking rehab costs at 25% of Cost of Property

2. Estimated ARV * 75% > Cost of Property + Estimated Rehab costs (Cash out Refi)

3. Somewhere around 1% rule. If Zillow is near it, I'll use Rentometer

4. Not in a red crime area according to CrimeGrade.org

Am I just looking for the needle in the haystack that everyone else is looking for/grabbing? I've spent time looking at a lot of areas in the Midwest and South so far.

Edit: I'm doing all of the above to see if which area I should target

[Evan Polaski]

@Brandon Shim, the general answer is yes, the market is extremely hot right now, and appreciation in values is far outpacing rent growth in most all markets.  As such, the likelihood of finding a property that you can refi 100% of your capital out is much harder to come buy, and/or takes a significant amount rehab (read: 1-2x your purchase price).  

That being said, you will have to give somewhere.  First Zillow is probably the least likely place to find a deal.  Not that buying something "off market", by definition means it is a good deal, but you are competing against few potential buyers. 

Second, I know you need to have a filler in somewhere, but 25% of purchase price for rehab barely gets you anything done these days. 

Third, if you are willing to NOT get all your capital out at refi, or at least take the risk you won't, you will find more opportunities.  In this market, to see a 30% increase in value is hard to achieve without taking on major renovations.  I can still get that on flips, but my flips these days are full guts with new electric, plumbing, drywall, rework layouts, all new everything...

1% rule is hard to achieve today. Again, you can find these, but with so much investor AND retail demand, prices are way up. For reference, that 1% rule was the 2% rule about 6 years ago, until prices kept climbing and now you can't find anything outside of a war zone that gets close to 2% on SFR

Last point, you could probably use Zillow to find a light rehab that hits the 75% and 1% rules, but you will most likely be in a red zone.  

All told, deals are hard, and you need take risk to make money.  In today's market (which I personally don't see coming down much anytime soon) that risk is higher because you either need to accept less return or accept increased area and tenant risk...