All Forum Posts by: Steven Goldman

@Kalp Mehta BRRRR is an acronym for Buy, rehab, rent, refinance and repeat. A turn key property is a property which you buy the property and it is either rented or rent ready. So you can not buy a turnkey property and BRRRR it. You can flip a turn key property that only needs painting and small repair. Good luck.

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Quote from @Cynthia Mene:

Hello BP Community - I'm a new investor looking to start my first fix and flip deal this month. I would appreciate recommendations for reputable GCs in DC to work with or how to find them. I love high quality - would like someone who is very exceptional, investor-friendly, reliable, and gets the job done on time. Thank you for your assistance.

@cynthia: I respect your desire to locate an exceptional, investor friendly, reliable contractor. When you find him or her share the name with BP community! I think that you should refine your search. exceptional and investor friendly does not exist in the same sentence. I would be looking for a reliable investor friendly contractor who understand the balance between the cost of the project and its profitability. I agree you should attend meet ups and meetings and ask around for a good contractor. If you have friends who are agents I would ask them who is active and dependable in the rehab business. Even though the personnel in the code office is not supposed to recommend contractors, they will suggest someone if you press them on it. I would not start out with a high end project. You must first walk before you can run. Grasshopper.

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Washington, DC

Quote from @Nicholas L.

@Jason Henry

your numbers are off. you're not factoring in closing costs on the buy, holding costs while you rehab, and then closing costs again when you refinance. and 80% cash out is really hard to find - do you have an actual quote for that from a lender? it's mostly 70-75% right now.

25K buy + 5K to close

80K rehab + 5K hold / buffer

97,500 out minus 7500 to close = 90K back

25K left in the deal

All of the comments are worth considering. Nicholas L is correct this deal does not have enough meat on the bone. Here are other challenges to consider: Fire damaged or smoke damaged properties are difficult to finance. I my ARV is 130k than these are the numbers I would want to see if I was going to consider this project. Purchase price 40k rehab 40k ARV 130k. I do not mind working in the lower price space but the same rules apply in all spaces. If the purchase price is more than the rehab. skip it. If their is not a minimum of 50 k between total costs and ARV forget it. Good luck.

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Quote from @Thomas Brown:

New investor here and I’m looking to pull the trigger on a flip however I’m having a hard time picking the right amount to spend on a purchase and rehab because I don’t have an idea of what a full gut should cost.

Market: Philly- surrounding job suburbs

Typical sq footage: 1000

Rehab quality- class B

I have been told to expect to spend about 100k for a full gut on a property that’s about 2000 sq ft. Not saying this info is wrong just looking for additional guidance and advice.

And also does this mean a 1000 square ft home should be half?

Hi Tom, I recommend reading J Scott on Estimating rehab costs a Bigger Pockets publication. It gives you some insight into how to calculate and also pay contractors in order to have a successful project. Every project is unique. Often what is referred to as a full gut rehab is a heavy rehab and not a full gut. As you due your due diligence you often find elements of the existing construction which can be preserved. I would obtain a scope of work sheet and estimate your rehab. by filling out the scope of work. If you are not sure what something costs you can either do the manual research or, access construction estimating software which will ball park your costs. By putting the scope of work together you will be learning both how to document and estimate your projects.

It was pointed out by other contributors that often the major expenses on a rehab are kitchens and bathrooms. In general I agree with that. Here are some other facets of a rehab which may be more expensive, roofing, windows, HVAC. electric service exterior and interior. If you discover foundation or structural issues these can also be expensive.

I would not use a per square foot figure like, $50.00 or $75.00 per square multiplied by the number of sq. feet. This can often produce misleading results.

You are already on the right track as you are seeking out the knowledge you will need to be successful. Do not forget first build out your team to allow you to lean on their knowledge when yours is inadequate. Building a strong team will result in a strong project and result. Good luck!

1 Vote

Philadelphia, Pennsylvania

Quote from @Jose Morales:

I’m on the verge of closing my first rental property (90k) in Ohio. It needs some exterior repair and parts of the roof as well.

Assuming it gets appraised minimum 100k after repairs.. will I be able to take out a cash out refinance ?

the equity in the property is 25% Miminum (that was the down payment).

thank you.!

newbie investor

Hi Jose, I believe your question is: Can I get any of my 25k down money out in a refinance? The maximum LTV on cash out refi's on investment properties is 75 percent. So if the property is worth 100k that would be 75K. If you current loan is 75k than a refi even after waiting the seasoning period will not result in you recovering a portion of your down money. If you notice the cost of the refinance would exceed any amount of money derived from a refinance unless the property is worth 115k. When I BRRRR, I am looking for a property which will substantially increase in value with a little elbow grease and cash. That is the only way you can get your initial down payment out without waiting for the normal appreciation curve or, return on investment, to make it possible. Good luck!

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Cleveland, Ohio

Quote from @Ruben Helo:

I am an agent out of Denver interested in BRRRRing in other markets, wondering what are the better markets to BRRRR in? And most effective ways to connect with Agents, Lenders and Contractors in those markets.

Hi Reuben, Ohio is a hot market right. The issue in all of Ohio is rents. Be careful as you search for your target market that you have an accurate idea of the Fair market rent for the property upon completion. When you BRRRR the debt service coverage will be determined by the lower of the fair market rent or the lease in place.
I assemble my teams by looking for an agent who works with investors in the market place that I feel comfortable and compatible with. I search for agents on Facebook groups of investors from the target market. Ohio off market deals etc. I than pick their brain for their connections. I also reach out to investors who are working the market. I take my time putting my team together so that I am confident that we will be able to execute all facets of the BRRRR. Before working out of State I recommend you first BRRRR in a market close to where you live. I would be prepared to personally visit the out of state project and meet your team members in order to better supervise and educate your team as to your expectations. Good luck!

1 Vote

Quote from @Kevin Sobilo:

@Griffin Malcolm, Before or after purchase, that is the question??? My answer would be NEITHER!!! lol. How about DURING the purchase!

I do my own estimating. I create a scope of work and then for each line item I make my own estimate. THEN I assign a confidence level for each line that I used to create a low estimate and high estimate. The more certain I am of my original estimate the tighter the range, the less confident I am the wider the range.

When I'm done, and I add everything up, I have 3 estimates. An original estimate, low and high estimates. The original estimate is my target and should look like a very good deal. The high estimate should never happen because everything would have to go wrong and I would have to manage the project poorly but if it still makes money or breaks even or close I feel secure. The low estimate will never happen.

Using good project management, you can manage the cost of the project as you go by adjusting the scope of work, negotiating better deals, or extending the time frame.

So, pre-purchase I use this estimate and then once I have the deal under contract I can use the time between then and closing to firm my plans up. To refine my scope of work and to begin getting estimates and lining up contractors.

Kevin is right on. I concur with his process. You should get a good scope of work form to use to do your own estimating. Bigger Pockets has a book about estimating rehab costs by Scott. If you are clueless that is a good place to start. If you work at it you can find a contractor who is eager enough to work wit you that he or she will walk the property and give you his thought. I will not even begin a project unless I have a good idea bout my team members including the contractor. Good luck.

1 Vote

Albany, New York

Quote from @Derek Fike:

Hey Everyone,

I know that there has been quite a bit of conflict as to whether an STR can be profitable or not, so I figured that coming to this community for perspective would be best. I keep hearing that STRs are dead and that Airbnb/Vrbo will be a bust, but I can't help but think that there are other factors that are somewhat contributing to this thought, such as people getting into the STR game not know what they are doing, defaults due to communities putting in heavy restrictions on STRs, etc. It seems like this could have been avoided if people did more research before purchasing a property for an STR.

I personally believe that this is still a sound business idea if executed properly, however, whenever I talk to family and friends about this, most of them "down" this idea saying that there is no money to be made. For example, I have a connection in Dallas, TX who purchased multiple STRs in Miramar Beach, FL and claims to only be breaking even, which I found extremely difficult to believe because I also have a connection who owns a one bed, one bath condo in Destin, FL who made $78K in rental income, including the lodging tax and cleaning fees, and was still able to net approximately $35K in 2023. Therefore, I can't help but think that my connection in Dallas executed their STR in the wrong manner, but at the same time, they are having others pay for their condos which isn't bad either!

I've been highly interested in investing in a condo to advertise as an STR in Gulf Shores/Orange Beach, AL, Pensacola, FL, Okaloosa, FL, or Destin, FL, but have been lacking internal support and confidence to pursue this. I know that this is a personal flaw and that I should go for it if it makes sense to me after doing my own research, however, I can't help but think that it may not work out the way I believe it could based on all of the negative sentiment I have received from family and friends. Therefore, I figured I would come here to engage with professionals who actually do have a good amount of experience and/or success/failures in this area for any guidance, advice, etc.

Thanks everyone and I look forward to engaging in a productive discussion!

STR's are still viable in good locations with friendly municipal governments. All of the general principles applying to other types of real estate are applicable to STRs. If the location is good, your purchase at the right price and are capable of properly managing the properties, you will be successful.

2 Votes

Quote from @Pierce Mooney:

I am also wondering about short term rental planning strategies. Is there an easy way to see where people are staying other than checking the prices on VRBO or paying for some subscription software? I want to understand the demand for various locations and home styles.

Check Airdna statistics they are usually a good guide and the benchmark that most STR lenders use to determine DSCR!

1 Vote

Quote from @Lataw Bawknaw:

7720 Rock Creek Way, Sacramento, CA 95824

Hi Lataw: No the property will not cash flow or support a 75 percent refinance. This is not a good investor property. The problem with this property is the initial purchase price is to high when the rent is only 2500.00 per month. I looked at previous pictures if this property is still in below average condition you will never rehab it for 45k. Keep moving forward.

1 Vote

Sacramento, California

All Forum Posts by: Steven Goldman

Steven Goldman has started 15 posts and replied 514 times.

Post: BRRRR Strategy on Turnkey Properties (Condo, Townhouse, and Apartment)

Post: Contractor recommendation Needed

Post: Need a fact check BRRRR

Post: Need estimate expectation guidance

Post: are there cash out refinances for 100K duplexes.

Post: Best BRRRR Markets out there?

Post: Getting Bids From Contractors

Post: Honest Discussion on STRs

Post: Honest Discussion on STRs

Post: BRRR. Will it cash flow..? or....