BRRRR possible for MidTerm rentals in Central Florida?

[Louis Alumbaugh]

Hello everyone, I am curious if anyone has had recent success with midterm rentals utilizing the BRRRR method, and if so, would you be kind enough share some of the details.

Thank you so much!

[Jake Baker]

@Louis Alumbaugh

One thing to watch out for is that most lenders will only only at long term lease market data on the refinance. 

[Tyler Gibson]

Quote from @Louis Alumbaugh:

Hello everyone, I am curious if anyone has had recent success with midterm rentals utilizing the BRRRR method, and if so, would you be kind enough share some of the details.

Thank you so much!

 The biggest challenge with any Brrrr project is buying the property at the right price. If you can buy the property for the right price it'll always work out. You'll need to find the right lender that can accept revenue projections for short-term or midterm rentals. This is likely going to be a dscr product. The interest rates and fees on this kind of loan product might be higher.

[Robin Simon]

Quote from @Jake Baker:

@Louis Alumbaugh

One thing to watch out for is that most lenders will only only at long term lease market data on the refinance. 

A good point - important to find lenders that are AirBnBRRRR / MTR friendly, especially in the current rate environment when its hard to cash flow on LTR leases 

[Louis Alumbaugh]

Thank you everyone for this helpful information, has anyone pulled off a successful BRRRR, in the past six months, or have you assisted someone with a BRRRR, in the Central Florida area?

[Andrew Galloway]

I am also wondering if anyone has had success recently in CFL with BRRR. One would think Orlando would be a good short-term market but I've been told my an agent that the STR market is saturated and difficult to operate in.

[Shawn McCormick]

Quote from @Andrew Galloway:

I am also wondering if anyone has had success recently in CFL with BRRR. One would think Orlando would be a good short-term market but I've been told my an agent that the STR market is saturated and difficult to operate in.

 @Andrew Galloway The STR market is very competitive here with over 40k units. If you are going to dive into that either be in a resort community near Disney (there are about 10 really good ones and dozens of okay ones) or be in a smaller town that may not necessarily be for Theme park goers. It can't be in Orange County (most of Orlando) as they do not allow STR. O

Orlando is really well build to operate STR in due to the theme parks and the shear number of visitors we have each year, bu there are nuances to operating a successful one and the learning curve can be steep, but rewards can also be lucrative if you are a good operator.

Best of luck

[Adrian Lammersdorf-Scioll]

Hi Louis, I have had success myself with the BRRR method in Orlando, and am currently working with an investor that uses it as well. You may have to be okay with just breaking even in the beginning or only getting a small amount of cash flow for the first couple years. It's hard work, but the appreciation you can get and depreciation is a huge bonus.

I haven't done the MTR yet, but plan to on the place I fixed up since its next to the hospital.  I connected with another investor that owns one (MTR) next to mine and they said they do really good you just have to make sure the property looks very nice.

Another option could be looking into doing a padsplit.  I have a good resource if you need.

[River Sava]

Hi Louis, 

As others have mentioned it is doable considering the numbers make sense and your lender can support the BRRRR into a mid term.

Also, is this going to be your first time investing in Orlando?

[John O'Leary]

Hey Louis, 

I'm in Orlando/Central Florida and there are a few things to remember. 

1. Purchase Discount: It's crucial to buy properties at a deep discount if you plan to BRRRR and get cash back. Most investors don't do the refinance calculations at the time of the purchase and they find themselves stuck.
2. Bridge Loan: Most lenders on BiggerPockets will offer 85-90% of the purchase price plus 100% of the rehab costs. The goal is to buy, rehab, and refinance as quickly as possible.
3. Loan Term: While most investors aim to rehab within 6 months, issues often arise. I recommend taking a 12-month term to avoid extension fees. Avoid escrowing payments and opt for the longer term, even if you don't think you'll need it.
4. Seasoning Period: Many lenders have a seasoning period of 3 months on the platform, while others might require 6 months. Some have no seasoning period at all. This is important to ask about.
5. Pricing: Think of a chart with X and Y axes—X is your credit score, and Y is your LTV. The more cash you pull out, the higher the LTV, which increases the interest rate. Ensure the DSCR calculations work with the high LTV and your credit score, especially if the lender won't use MTR or STR income.
6. Lender Criteria: Some lenders won't work with new operators, some only use market rent, and others will use STR estimates or income statements from property managers with similar properties.

I hop the bullet points make it easier to understand. Best of luck!!

[Giuseppe Pavone]

I did a few BRRR's last year in Central Florida. I think a good rule of thumb is that if all of your preffered exit strategies fail to maximize profits (mid-term, AirBNB, Padsplit, etc.), you're able to make it work as a long-term rental at the very least and maybe you can go back to one of those preferred strategies in the future.

[Tanner Lewis]

Quote from @Jake Baker:

@Louis Alumbaugh

One thing to watch out for is that most lenders will only only at long term lease market data on the refinance. 

If you're doing an MTR, it depends on how the booking history looks. Sometimes, it makes more sense to look at it as an LTR and use LTR market rents, but I prefer to use 12-month booking history or booking history + AirDNA projections.