@Xiang J. First of all, there is absolutely no correlation between transacting with or even being a wholesaler and successfully completing a BRRRR, but that's besides the point I hope to get across. Let me share a hypothetical as a cautionary tale for those who are solely focused on completing BRRRR strategy acquisitions:
Investor A has $100K to invest and decides to purchase the "B" neighborhood value add triplex and upon stabilization is able to refinance out $50K of his initial investment but $50K is still tied up in the property.
Investor B has the same $100K to invest and decides to purchase two "C" neighborhood single family homes and successfully completes the BRRRR process and then takes the same $100k completing the process a second time and in total has 4 single family homes in a "C" neighborhood with the initial $100K back in their bank account.
Who is the most successful if the hypothetical ends here? Most would point to Investor B who has acquired four homes and has 1000% of their initial capital returned. What if I were to tell you the Investor A triplex was sold two years later for a $100K profit whereas Investor B is run down and exhausted from managing their four "C" neighborhood single family homes and when investor B goes to sell, they can only attract break even offers because the only buyers who would step to the plate were investors who were not willing to pay retail with so much distressed opportunity available in the "C" neighborhood due to limited barriers of entry. In the interim, the Investor B BRRRR strategist spent 3X as much time managing the acquisition, construction and management of their assets comparted to the Investor A strategist. Now which investor would you rather be?
Now applying this to Philadelphia, you can easily go into areas of North Philadelphia or areas of SW Philadelphia just as examples and find properties that pencil as BRRRR's as easily as it is to pick produce out at a grocery store. However, in many cases, these properties operate like those acquired by the Investor B in the scenario I shared above. I share this because too many investors focus on number of doors and turning over their equity but make bad purchases and/or purchase in neighborhoods with poor fundamentals. The objective is to make a profit, not merely own real estate and this is often forgotten.
By no means should this be interpreted as an anti-BRRRR post. I believe that is a great way to scale as an investor. However, don't prioritize return of capital over return ON capital.
