BRRRR Strategy TIPS Episode #1

BRRRR Strategy TIPS

Episode 1

Today we’re going to focus on one of several components to the B (BUY) in the BRRRR Strategy.

BUY:

Price Point! Loan Amount! How comfortable are you with the deal!

It’s important to always work backwards when executing the BRRRR strategy and by that, I mean you need to have your A.R.V. (After Repair Value) very accurately figured out.

The price point needs to be on point every time. Just because a home is listed for 100K doesn’t mean that you need to spend 100k. Any good buyer’s agent will negotiate price points after a home inspection has been completed if it’s warranted. This will give you 2 feet to stand on when your counteroffer is now asking for a 95K and a 1% seller concession. This is just a basic example of how you can potentially get a discount on a fixer.

If your loan amount is less than 75K it’s still very possible to get a loan but you most likely will have to use a private lender that is local to the area the home is in or a local bank and lastly a Loan Officer that is local. Typically, in areas where home prices are lower and loan amounts are lower. The lenders and banks in these cities and counties will be use to lending 25K, 35k, 45K etc. This is when you’ll need to make phone calls and really find out which banks are doing what and what they’re lending requirements are.

The last thing that I’m going to touch on is a question that you need to ask yourself every time you’re ready to get a deal done. Are you comfortable with the loan amount and payment that needs to be made every month. Sure, the payment will be covered by the renter but what if something goes wrong. Do you have the reserves to pay that mortgage payment? Having reserves will make you much more comfortable with the deal. Having at least 6 months of reserves is a great idea and having 12 months will put you at ease.

In conclusion these are just the tip of the iceberg when it comes to the B or Buy in the BRRRR Strategy.

This spring I will be releasing an in depth course on how to execute the BRRRR strategy correctly, the first time. If you’re interested in learning more feel free to reach out to me.

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Take care and have a good one.