Does BRRR method works in Hamilton?

Question

I am quite new to the BRRR method.

I watched a couple of videos on Youtube and understand the 'general' idea of how it works.

However, I am struggling to apply it in the real world.

So I am looking to buy my first investment property in Hamilton.

Please correct me if I am wrong, here is what I understand so far

1. Renovate / Refinancing
"The property needs to be cheap enough so that after renovation, I can refinance it at a much higher price" - Maybe I am searching the wrong way on MLS, but most properties in Hamilton is around +/-$550K (the ones close to McMaster). Here is an example;https://bit.ly/2wrXYTD

And this property doesn't seem that bad. So even if I purchase and renovate it, I am not sure if I can bring much value to bump the price up for refinancing? There is another property not far from this one, sold 612k just a few weeks ago and that one seems to be more furnished.

2. Rental
Then here comes to the rental. Using the '1% rule', this means the rental needs to be $5500 for me to be cash-flow positive. I am not sure how this unit can rent out for anywhere close to $5500. I checked and it seems like the rent in the area is around $2200 at max.

Any advice would be much appreciated. Thank you!

Melissa Vass Scott · Answer

I agree to what James said.  I’m a long time investor and there are always properties coming up.  As a real estate agent I pay close attention to DOM and listings that have been cancelled.  Quite often a property will have a stigma attached to it for no reason, just length of time on market.

Kim Wu · Answer

I am planning to do a BRRR soon, and was wondering if I would still be able to refinance my property in today's situation?

Kim Wu · Answer

Thanks, I will check out that book!

Does this mean the KEY is the buy a distressed property for BRRRR method?I am not sure if I am searching the wrong way but a lot of properties seems to be furnished already on MLS.And the ones that are NOT furnished, their prices aren't specifically low neither.Can you please elaborate on this? Thanks again!

Thanks! What would you do if you noticed the listing has been cancelled? Would you reach out to the seller agent directly or something?

Do you find Hamilton more challenging to find a good deal than others?Do you feel that other cities such as St. Catherines or Niagara would be easier?Can you elaborate on how I can be cash flow positive without meeting the 1% rule?

PM'ed you. Thanks Jacob.

Melissa Vass Scott · Answer

I would love to do a group chat if anyone else is interested.  Brainstorm, exchange ideas or even a JV.

Jacob Perez · Answer

@Kim Wu Feel free to DM & we can get on a call to discuss Hamilton.

Yes you can BRRR in this market but hard to find the good deals as everyone is going after similar asset class. With that said, you don't need to hit 1% rule in order to be cash flow positive. Happy to review some BRRRs i've done recently to provide some context.

James Wise · Answer

BRRRR isn't about the market. BRRRR is about you and your ability to do the following.

• Raise / acquire funds
• Market to distressed sellers
• Estimate rehab costs
• Estimate the ARV of properties in your target market
• Manage contractors
• Hit timelines & manage large projects / employees

If you can master all of the above the market is going to be irrelevant. Note that I would assume your best shot at mastering all of the above is going to be in the market you live in.

Ronnie Ortiz · Answer

I highly recommend "Buy, Rehab, Rent, Refinance, Repeat" by David Greene in the BiggerPockets library. He does an excellent job explaining each step with real world examples.

You will likely be able to refinance your property at 75% of After Repair Value (ARV). So you need to find a property where the purchase price and rehab costs are under 75% or just a little over. This is what allows you to pull your capital out and use it again in your next property, which is the whole point of BRRRR. At the same time, you need to use the BP calculators to insure that after the refinance your property will still be cash flow positive. BRRRR works best with properties that need major repairs. Basic cosmetic fixes are not going to drive the value high enough for you to successfully BRRRR.

BP has tons of resources for more in depth info on this topic and I highly recommend you check out as much of it as possible before buying a property. David Greene's book is a must read if you're just getting started. Good luck!

Does BRRR method works in Hamilton?

Most Popular Reply