Any successful BRRRR in Jacksonville, Florida in the last 6-12 months?

Question

If yes, which neighborhoods is relevant?I have doubts because the rent is too low in relation to purchase price and other expenses?

River Sava · Answer

Hey Lilach -

I've seen some successful BRRRR deals in Jacksonville recently, particularly in areas like Riverside and Springfield. Those neighborhoods have been popular  because they offer a decent balance between purchase price and rent potential. While  rents can be on the lower side in some areas, the key is to find properties where you can add enough value through rehab to make the numbers work. It might take some digging, but with the right deal, it’s definitely possible to make it work in Jacksonville.

Katie Smith · Answer

Hi Lilach!

I wanted to follow along with this post. Most of my clients that invest in Jax are mainly doing fix and flips. I do have a few that have kept rentals - mostly near the hospital. Eager to hear what others have to say!

Calvin Drake · Answer

It's possible, but realistically you may be looking at keeping some in the deal and not pulling all of your cash back out. One of the awesome parts of the Jacksonville buy and hold market is the appreciation and the affordability. Not many coastal markets where you can buy a block home under 100k!

Lilach Holtzer · Answer

Hey Chris, good to hear from you, thank you for your detailed opinion that you brought here, you made me think about it deeply and to compare markets, I'll do some homework this week :)@Chris Grenzig

Chris Grenzig · Answer

@Lilach Holtzer hope your well after our chat a couple of weeks ago!

Maybe lenders do see some BRRR's but I think the amount that are happening in Jax are the rare case right now, and not probably deals you're finding on the MLS, probably direct to the seller. And if that's the case, I would be surprised if the cost to reach the sellers and the time as well is being factored into the deal costs so does that even really count?

I do think you would have to be very close to the 1% rule with your all-in cost to rent in order to refi out a bunch of money and even then you may not get it all.

$1,500 rent

40% expenses

$900 NOI per month

$10,800 NOI per year

at a 7% cap rate that's $154,285 cost per unit

$154,285 loan at 6% and a 30 amortization is $925 which is a 0.97 DSCR

For $900 a month NOI per unit, to get to a 1.25 DSCR you would need a monthly mortgage payment of $720 per unit. To get that you could only borrow $120,000 at 6% with a 30-year amortization.

So even if you could find a property or MF property where your all-in cost is $154k/unit you could only borrow $120k per unit which is a 78% loan-to-cost ratio so this isn't a BRRR.

And good luck finding multifamily in Riverside and Avondale for less than $120k a unit and if you do, your all-in cost isn't $120k per unit once you're done.

Want to do a single family house?

$2,000 rent for a 3x2 1500 SF house is pretty fair

$2,000 at a 30% expense ratio which is way too low is

$1,400 NOI per month

$16,800 NOI per year

a 7% cap rate is $240,000

$240,000 at a 6% interest rate and 30-year amortization is $1,428.92 per month or a 0.97 DSCR

To get to a 1.25 DSCR at these numbers you could only borrow $187,000 at a 6% interest rate with a 30-year amortization.

Find me a deal you can be all into for $187k that rents for $2,000 in Jacksonville and I'll find one of two things. The deal of a lifetime or a deal with incorrect numbers or problems that aren't being addressed.

If someone is actually doing a BRRR in Jacksonville I would actually love to see it because I just don't see how it can be done without spending a ton on direct marketing costs and then those costs should be added and I'd be curious if it's still an actual BRRR. I genuinely welcome someone to give me a real example with actual numbers showing how I'm wrong and I will fully admit it, but I just don't see how.

Lilach Holtzer · Answer

Hey River Sava, thank you for sharing your thoughts from what I saw in the last few weeks in Springfield, are properties that needs total rehab, I hoped to go for cosmetic rehab :) but to add value is something that really important for me. however, I'll dig deeper around those areas, thanks again

Lilach Holtzer · Answer

Hey, BasitIt can take 1-2 years to wait, isn't it?and can you share where do you see a good ratio between PP to rent? most of what I saw is not even the 1% rule, maybe 0.5%, that's what bring me to ask in the first place :)

Lilach Holtzer · Answer

Hey Katie, Yes It's a good market for fix and flip, back than in 2019-2021, it was also a good market for Brrrr, but I think nowadays it's hard to make a perfect Brrrr and to cash out all or most of the money back, but yes let's hear what people have to say :)

Any successful BRRRR in Jacksonville, Florida in the last 6-12 months?

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