Advice needed on BRRR strategy in the midwest

[Chike Onyia]

Looking to do my first BRRR deal with a friend as my equity partner

OUR MAJOR GOAL: Get enough cash flow deals to replace our entire salaries (call it $300k+ combined before tax) within the next 4 years   

We have $100-150k for a down payment, maybe another for $100k for renovations

We've heard it's better to do 5+ units (commercial) for BRRR because of the cash-flow based valuation, can make more from rehab / improving rental cash flow and higher valuation when you cashout refi so we can rinse wash repeat

We primarily are looking in the Indianapolis market but have heard deal flow for this size is suboptimal especially in highly desirable areas, we're are also looking at Ohio (Dayton, Columbus, Cincinnati) where the prices are actually seemingly a bit lower (maybe more bang for our buck) but was a bit concerned about supply and the employer mix.

We'd also be interested in other states in the midwest and maybe we don't have to do 5+, could do smaller we're not sure

Any thoughts?

[Chris Barrett]

Have your exit financing worked out for each deal, including contingencies for a longer hold time or interest rate hikes (unlikely at this point). You can find commercial lenders who will value based on income, but that doesn't mean you'll get 100% back out. Finding a lender you can work with and who is on board with your plan of operations is crucial. 

4 years is an aggressive timeline, I'm on a 10 year timeline. Depends on how things go, but my strategy is fewer properties that cashflow more per door, to reach my replacement income.