What is too much for a beginner in the BRRRR strategy?

[Jake Parsons]

I am a beginner in real estate and have a good amount of cash ready to BRRRR. I am currently looking at a property in Detroit Michigan for $7k because it obviously needs repair, the seller says it should be about $25-30k in repairs and if that were the case I would still have a solid amount in reserves in case of emergency.

I have a rule that if it has foundational issues it’s not worth it. Assuming there is no foundational issues would you advise a beginner to stay away from a repair of this size, or go for it?

Any feedback would be greatly appreciated!

[Theresa Harris]

First do not trust the seller to tell you how much it would cost in repairs. A property selling for $7K is going to need a lot of work and will probably be in a not so great area. A lot of the cheap houses may cash flow on paper, but in reality you will have higher turnover and more damage. Also if you want to do the refinance part of the BRRR, most banks will not lend you money on houses under $100K.