BRRRR | Buy

BRRRR First Step: Buy the property!

This is The Treehouse, it’s located in our target market, minutes from several large employers, a major university, restaurants & shops, etc.

• Purchase Price: $40,000

• Renovation: $49,000 (renovations, holding, and closing costs)

• Total Project Cost: $89,000

• Financing: Hard and Private Money

Total project cost: $89,000

We recently completed the refinance for this property, it appraised for $137,000.

Here are some things we consider in the buy phase of a BRRRR project!

1. Target Market

   • Availability of properties, cost to rent ratio, rental demand, any major upcoming market shifts (major employer moving in or out, college closing, increased new development, etc.), & landlord tenant laws.

2. Financing

   • What will you need to qualify for the loan, interest rate, origination points, prepayment penalty, amortized or interest only, balloon, term, fixed or arm, etc.

   • Will you be raising additional capital beyond the purchase cost for the holding costs, renovation, etc?

3. Project Cost

   • The total project cost needs to be no more than 75% of the after repair value to refinance the cost at the end. Total cost includes purchase price, closing costs, holding costs & rehab budget (+contingency for both) and refinance closing costs.

Once you determine what type of property you’re looking for and where you’re looking; you can look for properties on the market, through a wholesaler, auction, or by developing a direct to seller channel.

Leave me a tree in the comments and I’ll DM you why we call it the treehouse.