All Forum Posts by: Eyal Goren

For many investors, your example is an excellent buy-and-hold strategy. Buying one every few years could lead to significant wealth over time

For a BRRRR strategy, consider Lower price points and older homes with more substantial rehabs and higher risk.

Example:

Purchase: $110k
Rehab: $30k
ARV: $170k
Rent: $1,450/month
Refinancing at 75% LTV:
  Cash-out refinance: $127.5k
  Funds left in the deal: $13k
Monthly PITI: $1,258
  You have $192 for maintenance and vacancy cost

It's not a perfect BRRRR but way less than the 20% ($34k) you'd put down on a turn-key investment. In this example, we invested $13k to create $30k in equity plus you own a break-even, renovated rental property while growing your net worth.

Some markets just don't pencil. But it's also heavily property dependent. If the property won't work for that amount, offer less. Or look elsewhere. I'm in Seattle and there haven't been real BRRRRs here in years haha

You're applying a BRRRR strategy to a turn-key rental house. There's no meat on the bone here. Heck, the a/c is brand new. The house in your example is prime for someone to put 25% down, have a $2000 month mortgage, and make $2400 in rent. That extra $400 covers maintenance, capex and vacancy.

So to answer your question, YES you are wrong. You can still BRRRR in this market but not when you're looking at a class A house that could rent for $2400 tomorrow.

It depends on WHY there’s no rentals. What’s the typical income in the area? If it’s a stable population with good roads, restaurants, schools, hospitals, etc…it’s very likely there is low turnover due to high tenant retention rate. Which is good from an investing position as you know you’ll have long term tenants. You can get top dollar likely, but it still needs to be reasonable and comparable. 
if it’s a declining town with not many attractions or amenities, then it’s likely there’s no rentals available because nobody wants to live there. 
mot sounds like you may be describing more situation #1, in which case it’s a ripe opportunity if you can get a deal on a property

Eyal,

I guess I'm the odd one in the group, but I have never paid for an interior designer on my flips. From my perspective, if you know your market well you should know what buyers like and are looking for. As far as colors go we always try to stay fairly neutral. In my experience if you have three people picking a color you will have at least two different opinions. The chance of me picking a color that every potential buyer would like is slim at best. 

Having said all of that I have no idea what an interior designer cost so maybe by hiring one it would increase the bottom line, but someone would have to show me the numbers. I have a couple ladies on my team that pick our colors, cabinets, countertops and so on. They are not interior designers, but they seem to have a pretty good gauge on what looks good.