What would you have done differently with your first BRRRR?

[Zachariah Hays]

Just like the topic says! What would you have done differently or wish you would have done in hindsight?

Preparing to take on my first BRRRR and appreciate all insight! Time to reminisce for you seasoned vets....

[Evan Polaski]

@Zachariah Hays understand what and how much reserves are truly appropriate.  I went in using the % rule, since I had a good understanding of rehab costs and enough cash to carry me through even if the rehab cost double.

If you truly reserve for everything, i.e. a roof has a 25 year life and will cost about $7,500, that's $25/mo each month if you have a new roof.  If you roof is 15 yrs old, that's $62.50/mo for the next 10 years to build up a reserve just for that.  HVAC is 20 yrs, Water heater 15, kitchen's typically need a complete remodel every 10-15 yrs and cost about $10k, flooring, exterior paint, interior paint, tub surrounds, toilets, vanities, light fixtures, etc etc etc.  They all go out and they all cost money.  I take the approach that I would rather save a little each month, then a lot is it gets close, or worse: not reserve money and have to figure out how to pay for that new roof when it fails.

Additionally, if you are going to be passive, everyone talks about management fees: 10%, but no one talks about leasing commissions.  1/2 to 1 month rent for new leases and 1/4 to 1/2 month for renewals.  That means about 4-8%/mo reserved for leasing commissions.  Call it 15% for management and leasing.