New investor’s first run at BRRRR

[Joy Hughey]

Hi! I just purchased my first property in Texarkana, TX. I have family that are also investors in the area and they help me find a good deal from an investor selling single- family properties to get into multi-family.

Property details:

Purchase price: $80,000

Appraisal price: $107,000

Yes, I am excited about the $27,000in equity!

The plan is a BRRRR strategy. I have questions about how much should invest in the rehab. I know I should focus on the kitchen and bathrooms but what about the flooring. The house has inconsistent vinyl flooring throughout and is fairly good shape. I am think about replacing with laminate flooring. How should evaluate if I should move forward?

[Andrew Postell]

@Joy Hugheythanks for posting! Always great to hear from a fellow Texan. Bigger Pockets does have some good state specific forums and Texas is their most active forum. Feel free to post there if you ever need some more "local" advice about things.

Now, analyzing a BRRRR deal - Generally speaking you will need several things to successfully complete a BRRRR here:

1. ARV - being able to calculate the Value on your own (meaning, without the wholesaler telling you the value) is really important. I see the appraisal price...is that the AFTER Repair Value?  If so, then you need to fully repair the property to get that value.
2. Repairs - You will likely need to know how to budget the repairs as well. Getting a contractor can be extremely frustrating especially if you need to make an offer without even looking at the property. How do you calculate repairs without a contractor? You may need to lean on other local real estate investors in the beginning. Or maybe even just focus on properties with a very light rehab?  And it seems that you already know the rehab costs...but some do seem low...but let's assume those are accurate for now.
3. Lenders - You will need a lender on your BUY step and on your REFINANCE step. And I would HIGHLY recommend to read this article I wrote for Bigger Pockets on how to find good lenders that you can find HERE. If they are good, they should be absolutely definitive on rate, terms, costs, etc. Trust me, many lenders will tell you they can do this...but it's very rare to find. When I first started BRRRR'ing my properties lenders would tell me "That's illegal"....it's not, then just didn't know anything about it. I cannot tell if you are using financing to buy this property or not. So some more details along those lines would be helpful.

Anyway, I hope those help in some way.  But feel free to ask anything additional if you need.  Thanks!