Best way to start BRRR?

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@Xiang J. First of all, there is absolutely no correlation between transacting with or even being a wholesaler and successfully completing a BRRRR, but that's besides the point I hope to get across. Let me share a hypothetical as a cautionary tale for those who are solely focused on completing BRRRR strategy acquisitions: Investor A has $100K to invest and decides to purchase the "B" neighborhood value add triplex and upon stabilization is able to refinance out $50K of his initial investment but $50K is still tied up in the property. Investor B has the same $100K to invest and decides to purchase two "C" neighborhood single family homes and successfully completes the BRRRR process and then takes the same $100k completing the process a second time and in total has 4 single family homes in a "C" neighborhood with the initial $100K back in their bank account. Who is the most successful if the hypothetical ends here? Most would point to Investor B who has acquired four homes and has 1000% of their initial capital returned. What if I were to tell you the Investor A triplex was sold two years later for a $100K profit whereas Investor B is run down and exhausted from managing their four "C" neighborhood single family homes and when investor B goes to sell, they can only attract break even offers because the only buyers who would step to the plate were investors who were not willing to pay retail with so much distressed opportunity available in the "C" neighborhood due to limited barriers of entry. In the interim, the Investor B BRRRR strategist spent 3X as much time managing the acquisition, construction and management of their assets comparted to the Investor A strategist. Now which investor would you rather be? Now applying this to Philadelphia, you can easily go into areas of North Philadelphia or areas of SW Philadelphia just as examples and find properties that pencil as BRRRR's as easily as it is to pick produce out at a grocery store. However, in many cases, these properties operate like those acquired by the Investor B in the scenario I shared above. I share this because too many investors focus on number of doors and turning over their equity but make bad purchases and/or purchase in neighborhoods with poor fundamentals. The objective is to make a profit, not merely own real estate and this is often forgotten. By no means should this be interpreted as an anti-BRRRR post. I believe that is a great way to scale as an investor. However, don't prioritize return of capital over return ON capital.

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Focusing on strong rental areas, high quality tenants, solid property upkeep and long term gains will keep you alive in this business longer.

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I personally like doing BRRRs on multi-family homes that need work but not extensive remodeling. It has worked out well for me twice in the past.

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I'm not in that area so I don't any particular Facebook groups but you should be able to find the most popular just by looking around on FB. I should note, I think that law for wholesalers is for the whole state of Pennsylvania, not just Philadelphia.

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Thanks! I am more focused in Chester county and Montgomery county but this is great to know. Make sense to use Google map view than blindly drive for $, I guess? Is there any good Facebook groups you recommend as a start for these two areas?

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Unfortunately not much because most are out of states and renter occupied. Not sure how would make sense to “add” value that pay off in refinance. Did you mean major renovation or ADUs? Managing out of state Reno could be a problem. Thanks

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Very detailed analysis. I always do B neighborhoods and it seems makes more sense now. Is there a specific place to look for distressed properties other than Zillow Redfin etc? Thanks!

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Lots of wholesalers put their homes up for sale on site like Zillow so you can look for properties being sold their and try to get on their lists. You should also go to your local REIA as a lot of wholesalers will go there. And of course local Facebook real estate investor groups (and here on BP) will be swarming with them. It should be noted that wholesaling has been regulated pretty strictly in Pennsylvania and wholesalers have to have a real estate license now among other things so there's likely less wholesaling going on in Philadelphia as in other places. https://consolematison.com/2024/06/12/new-legislation-on-res...

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Hi Xiang,Dp any of your LTR have space to value add? That would be the easiest start. Add value to your current property, refinance out.Whether you want to source your own deals or use agents/wholesalers depends on your availability. It would take a lot of your time to source your own off market pipeline.