BRRRR in a competitive market while renting, still feasible?

Question

If house hacking a BRRRR is not feasible in an expensive market, should I just rent an apartment and rent the BRRRR?

I live in Austin, TX and currently working with a wholesaler to find deals under market value. Struggling to make numbers work for a house hack, but i can cash flow a small amount each month if I just rent out the entire brrrr. Any cons with living/renting in an apartment complex and keeping the brrrr rented? Has anyone else gone through something like this? i need to get started in real estate and since I cant find a house hack my other option is stay in my apt and rent the BRRRR.

Any questions send them my way! Advice as well.

Thanks!

Corby Goade · Answer

Property values are relative to every market and there are always deals to be had in that regard. I find the biggest challenges that newer investors face when the market is competitive are:

-Recognizing a deal when they see it

-Being prepared to act immediately

-Analysis paralysis

Newer investors often want their first deal to be a grand slam, when the reality is that the really good deals are done in back rooms and most of us will never know about them unless we are involved. In the meantime, there are plenty of good deals that go to other investors because newer investors are over analyzing the numbers.

I think $300 cash flow in a solid market like Austin would be a really nice deal.

Jordan Moorhead · Answer

@Andres Ayala be patient and make plenty of offers! I find properties that work for househacking all the time. You may not live in one unit completely for free but I'd take living for $500 a month and building equity any day, especially when you have a rental when you move out.

Kurt Pauley · Answer

Find your own deal. :-P  I think with cold calling and hard work you can find your own deal and "beat the market" where ever you live. It just depends on if people are willing to work hard enough and long enough. Good luck on your journey!

Andrew Postell · Answer

@Andres Ayala I think there's a couple of important items to understand about House Hacking and the BRRRR if you don't mind.

• House Hacking - the default postition when house hacking is that you will never "cash flow" as effectively if you did NOT house hack.  Meaning, you live in one of the income producing units.  So if you have a duplex for example, and you rent both sides...you will cash flow much better than if you lived in one of the units.  Since you live in one of the income producing properties, NOT living there will cash flow on that property better.  Keep in mind though that OWNING your own home comes with other advantages that may not be measurable in money.
• BRRRR - the main benefit to us using the BRRRR method is to avoid the larger downpayment requirements that traditional lending requires us to have.  So if I can find a property that's in disrepair, then I can fix it up and build equity into it.  That will allow us to SKIP needing 15%, 20%, or even 25% down that is sometimes required.  However, if you are buying your primary home...you likely won't need anything close to that amount down.  AND your interest rate will be lower.  AND you can buy whatever property you want (in a sense).  Often times when using the BRRRR method we have to select a property that's in a certain area of town....that may not fit our PERSONAL needs with a primary home....but does fit our needs as an investor.

The point I would encourage you to consider is that house hacking works AGAINST cash flow.  And BRRRR usually works AGAINST my needs when selecting my primary home.  Imagine selecting a property, in whatever location you want, in great condition, with the lowest cash out of pocket possible, with the best rate as possible - that's what a non-BRRRR transaction would be.  I hope all of this makes sense.

Danny Webber · Answer

If it is your first investment and you want to save money then renting is a good idea if the rental will cash flow or break even at best. Look outside the Austin market for deals as well. Go 30 miles in every direction to look. There are still deals out there.

Andres Ayala · Answer

@Corby Goade I agree. I guess the way I see it is I still need a place to live if my house hack doesn’t work. What would be a good alternative to me owning a BRRR if I am not house hacking?

Andres Ayala · Answer

@Jordan Moorhead I haven’t found a property to make the house hacking numbers work. The way I look at it if my rent now is $1,000 and I can get the BRRR to cash flow about 300 bucks, if I live in my BRRR I would be paying about the same like 600 bucks to live there... if I stay in my apartments it would be like 650 ish... I just was wondering if anyone else is going through something like this.

Jordan Moorhead · Answer

@Andres Ayala why can’t you just house hack, save a ton of money and then also look for other investment properties?

BRRRR in a competitive market while renting, still feasible?

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