BRRR Method in the United States

[Stephen Darker]

Hey guys,

I am curious to see if I am dreaming or if my idea is actually plausible within the United States. I am from Canada and want to get into Real Estate Investing. My idea is to capitalize on the BRRR method to buy multiple homes without investing more money.

Is it possible to buy a home in a decent market (either a foreclosure or short sale or something) that has an after repair value of $100,000 for $50,000 before repairs? Invest maybe $15,000 and some TLC into the property and refinance at $100,000? Here are the numbers that I have been attempting to figure out and if it would work.

$25,000 Down Payment

$25,000 traditional mortgage

This makes up the purchase of the home for $50,000

$15,000 plus a couple of months for repairs to get it ready to rent.

Refinance the house leaving $25,000 of equity in the home and taking a mortgage for $75,000 from a third party financer and not a traditional mortgage. Since I am canadian I would typically need 50% equity in the home but finding a third party lender I could possibly have 25% equity in the home?

Get a check from the refinancing for $50,000 and roll that into doing the same thing with another property.

Now once the house is renovated and refinanced I figure rent being around $1,200 a month, $600 going towards cap ex. and the mortgage costing anywhere from $250-$400 per month and the property cash flowing anywhere from $200-$400 per month.

Am I way out of my league with this or does this sound plausible if not common in real estate investing?

I appreciate the advice!

Thanks

[Joe Bertolino]

You won't be able to get a loan on a $50k distressed house and you won't be able to refi out 100%... Other than that it is doable.

In my area it would look more like:

$75-90k purchase price (in cash, distressed C/D area)
$35k rehab (cash or credit)
$1500 holding while you get it rented
Approx $1200 a month rent
$150,000 ARV
6-12 months seasoning
Refi out 75-80% ($112-120k)