BRRRR: 8-Unit Apartment Building Analysis Case Study
Buying apartment buildings as is requires 25-30% down which you then must leave tied up in the deal. Instead, you should look for value-add opportunities where you can employ the BRRRR exit strategy (Buy, Rehab, Rent, Refi, Repeat). That way (ideally), you can get short-term financing to buy and pay for improvements, then get the property assessed much higher and refinance most or all of your cash out. This real estate BRRRR analysis training shows you exactly how to perform this analysis and make sure you don't overpay or get stuck in a “refi” trap! Watch carefully and take lots of notes! If you're interested in learning more, watch our interview with Tim Bratz on apartment real estate investing!
Next Videos
Commercial Rehab Purchase, Financing, and Deal Structure Training
How to Build Your F.U. Wall
Good information. You have a way of simplifying complex ideas. My question is about the cap rate. I got the impression from your video that most firms are buying at that asking price cap rate. Which is too low (i.e. overpriced purchase price). So if firms are overpaying for these properties and they should know that they are. Why are they doing that?
Great question, John! A firm may be in the position where they do not necessarily need a grand slam return, but they expect steady rent increases and an appreciating asset. This may be a strategic buy for them if the building is in a location that is likely to appreciate/hold its value over time. A firm may not be looking for a quick return, but banking on a long term asset and a reliable place to park funds. Another possible scenario is where they are buying at a low cap rate with an expectation to quickly increase rents/NOI.
Where do you get a contractor to build for 90 a square ft
Find builders first by asking for referrals inside your network. Ask people you trust about who they’ve used. I prefer to build in my backyard but if numbers don’t work then you have to go elsewhere. IT’s harder to control and monitor remote projects so your team becomes even more important. Everyone is going to Florida now. You may want to try there 🙂
Interested
Is this still an issue for you?
I’m interested in the NC area and have cash to invest.
Thank you Jose! We are happy to hear you find value in what we offer 🙂
Hi Nathan. That type of use and development is not something I have experience with. Sounds fun though! Invite me out to hunt when you do it! 🙂
$180 for residential? What market are you in? That’s insane. This video is only a year old. I can still build these duplexes for about $100/ft even with lumber skyrocketing.
Al – hire a good GC.
Hi Danill. Great presentation. I currently use RV premium edition (love it) and have only used for buy and hold single family projects. My process is to purchase newer or well maintained properties for the reasons that you spoke. My issue is that I don’t have any real construction management experience. Will that be a hinderance for me for these larger projects? How do I get through managing projects without making big mistakes.
This video you can’t put a value on. This is great information.
Hi Jeff. I think when you go to sell these eventually, what will make the most amount of difference to your buyers is the rent that these duplexes generate. So arguably, in that scenario, you’ll be better off with 3 bedrooms in each unit if they will generate more rent. When I build, the eventually resale for me is not the top priority so I focus more on what will give me the most smooth, headache-free hold experience. So 2 bedrooms win in that case – better tenants, less turnover, more attractive product.
What specifically beyond the hour+ training here would you like info on?
You’re welcome, Michael!
Hi Brenda. I only build in my home market, for now
Thanks, Joseph!
Then you’re watching the right video…
We do not. Sorry.
All my contractors, including GCs and subs have always come from local referrals. As for cost overruns, make sure you have a good contract that protects in any reasonable circumstances.
Banks are still lending on the right deals. Partners are out there if you know how to find them and how to establish credibility (hint: our software goes a long way towards that). There is a ton of money not only looking to get into real estate but looking for stable, long-term returns. Especially with interest rates being this low.
The video talks about this. Please watch it thoroughly. It’s not a good use of my time to answer questions which I’ve already spent a huge amount of effort addressing (this video) 🙂
That’s something on your end – maybe try playing this on a different browser or device? It should work great. This is the only format available
This video shows you how to run the numbers. The numbers won’t make sense in every area. So use what you’re learning here and then figure it out if it makes sense in your market to build. If not, find other markets.
Find partners. This whole video is “help you can get” 🙂
Go talk to your local community banks or credit unions. That’s how I finance all my new construction. And if you have no cash but need cash, then find a partner. Be creative.
Mark – I addressed it in the video. 4 plexes are commercial building code. Much more expensive than duplexes to build.
Why duplexes and not 4 plexes? Standard financing allows 1-4 family. 4 time the rent for one mortgage. Just curious
Great training
I have credit issues and I am concerned about the financing.
Is there any hhelp that I can get
I liked very much you presentation!
The number and dollars make sense.
The big question is…
How to determine areas?
you are in VA
I am in NY
the whole scenario changes dollar wise, way more expensive.
can we talk
Solomon
917.681.1945
Daniil
This BRRRR technique is really incredible, can’t wait to build some serious wealth!!! You make it so easy to understand and RV removes the fear of making investing mistakes. WOW and thanks!
It’s much harder to get equity when you buy something already stabilized. It’s less work for sure, but you’ll make less money. And you almost certainly won’t be able to refi and get your investment out quickly if you buy something already rehabbed and rented.
https://RehabValuator.com/pricing
“leaving money in the deal” means just that: leaving your own cash or your partner’s cash permanently tied up in the property (versus refinancing it all out)
Initial cash on cash is lower because construction costs are so high. Research cap rates and how they TRULY should be used. You shouldn’t make general assumptions about cap rates. In some areas, 10 cap is still normal because there is higher risk – these are Class C and D areas. Other areas, 5-cap is normal – Class A areas. It really varies.
Nothing wrong with making lowball offers as long as you’ve run your #s. You’ll get rejected most of the time but who cares? The one out of twenty that gets accepted will be a good deal!
Everyone says there’s no good deals on Loopnet. Would it make sense to make offers on Loopnet deals by plugging in the numbers that make the deal profitable? In other words could you submit”low ball” offers on Loopnet?
Yes, absolutely. You can use this same analysis for 2-4 units or 500 units and everything in between.
Really appreciate the feedback, Tyree!
John – that’s absolutely correct! You can do the same thing, increase value of the building and then sell it!
You’re welcome. Talk to local commercial brokers!
That’s exactly what the video shows
And yes, I am discounting some because no amenities. If there was a pool, gym, etc. I’d be ballparking $1400+
The units are massively under market and could rent as is higher, but after serious improvements, they’ll definitely fetch $1300. I know buildings personally in the same area getting $1400-1500 for 2 bedroom apartments
Hi Andres! Thanks for the feedback we are glad to hear you are making use of the software.
Great Analysis, and it is great that I found you because there is another company that wants to charge me 35K for this software and some coaching.
Hi Ricardo. We appreciate the kind words. We are glad you found us too!
Hi Yolanda,
Daniil Mostly purcahse vacant land/lots in his home state of Virginia.
Sincerly,
Hi Daniil,
Do you only purchase vacant land/lots in your state or do you also buy in other estates?
Yolanda
Would like more info
How can fine information you doing and phone number
Great value information on the video as always on all training videos.
I’m interested in 4 duplex rent to case study
1. It is a very useful information.
2. But where and how to find a reliable builder?
3. Do I always build on my backyard? my area in Seattle, land
are super expensive, I dont think
the numbers will work, so do i go
other area?
4. Which state you suggest?
thank you.
That’s great to hear – good luck!
This presentation has come at a perfect time! Friend of ours owns land and wants to develop it. My husband being an architect and contractor has ideas but we need to put things on paper and make it real. Thanks to Rehab Valuator Software we can do this!
Really looking for advice and leaning to you for knowledge.
I have an opportunity to purchase 5 acres rural land with no water or sewage but, septic tank and natural spring well is there. The price is very affordable. I want to build a hunting and fishing resort there. Is this something you would entertain for use of the land?
Northern Idaho, sale price for new sf is $320/SF for production level housing.1500 SF 3 bed 2 bath Single Story. Lot prices about $100k with water/sewer.
Danill how old is this video? we are $180+/SF for hard costs!!
Great credible approach.
Danill, great stuff, thanks so much, love the strategies. Question, bigger fewer bedrooms works great for holding, what is the tradeoff when it comes to selling units? Bedroom 2 Big Unit Count vs Bedroom 3 smaller Unit Count.
I like what im reading AN i think this might be my life changing moment THANK you is all i can say
Great information.
Hello, this is Brenda Paraiso, question: do you do construction other states or only where you live, and do you lend money too?
Another great job, Thanks
Hello Daniil
Training was awesome !
You already know I’m a big fan
Hey I’m trying to find out how to get into the four Du-Plex building of the homes
AWESOME….
Do you have a virtual assistant to help input data? If so, could you provide me their contact information?
Thanks in advance,
Marvin Walker
Great presentation and info. My question is how do you find a good builder and what if construction costs go up who pays for it?
Banks for financing is out of the question. Partners are hard to find. Everybody I spoke with was onboard UNTIL it was time for them to pony-up. I need TRUE BLUE PARTNERS.
You stated that you can help with financing, finding financing, etc.
Where do you find financing for the whole project?
Financing for land and construction.
Great info but I’m only able to view half screen of presentation could you send it to me via email. Thanks in advance
AWESOME, I GOT A LOT OF KNOWLEDGE OUT OF THE COMMENTS ALONE…I WILL BE YOUR FOLLOWER.. THANKS
Does the land value equation work for large parcels of land that can be subdivided too? Would I calculate how much to built for one lot then multiply by the rest to get the maximum land value?
I thank you a great deal for how to calculate land since as a wholesaler I have come across a lot of people who want to sell land and I have a hard calculating when there isn’t a ARV in site. So I thank you a great deal for this.
My problem is a duplex I bought for $8k that is tear down worthy but I want to build a new one and rent it out. My fear that is holding me back is money and being able come up with my part of the deal. Will it be hard to get the new construction loan? Or should I give up because of lack of finances and try to sell? I have question??
(919) 289-5311
Very informative. Thank you!
What about if you find a 8 unit property that is rent stabilized and you don’t want to make any upgrades. Would this type of deal be more attractive?
What do you mean when you say your leaving money in the deal?
Hello Daniil,
This was another incredible detailed thorough impressive presentation utilizing your Rehab Valuator software. Thank you.
From the time you first found the deal on Loopnet, to the research, then applying final updates on your analysis, just before you begin to negotiate with the seller, how much time did spend on this entire process?
Thank you, again, Daniil, for everything you provide to your students. All the Best!!!!! Michael
This seems more reasonable I understand commercial enough now.
Our plan was to go into these deals yet I notice the return on cash it seems really low in this circumstance. Although commercial funding does seem more abundant you would have to get your hands on these deals at rock bottom price.
We have about 4 more months of sweat equity to put into these deals here yet we will be set up with mammoth returns. Our revolving credit to debt ratio is huge yet its mostly zero percent interest. When that number goes down we will almost pure profit. And with our inventory almost paid off it took many years. These last two deals have been brutal yet the ROI is the largest ever. I look to pay each investment off in 3 years or less since our time is our most valueable asset. In commercial these ROIs seem virtually impossible.
It seems more like 10 cap is what people are looking for in commercial where as I want to own the entire building in 3 years. What are your thoughts on this?
Thanks for the response. i really appreciate that. Keep up the great work!
Can I use the same analysis for 2-4 units property? I’m in the San Diego market. thx
Can you send this to my email
This video was everything! I followed it step by step to analyze deals and it was great!
Daniil you’re the man, you make it look so easy.
I know that in the example you were looking at the BRRR method but this could easily be used to increase value and just flip, right?
62 yr old
carpenter 10 yrs
design builder 25 yrs
part time realtor 92- 97, 2008-2010
2008 we were 600k in debt.
Sold everything to survive. We have no equity. And renting ever since. Carrying 178k in Student loan debt and 4k truck loan. 4k credit card.
Do you have a program for me?
A bad floor suit force my wife and I to bankrupt could not afford to fight it.
Thanks Again good information, what is the best way to get the market cap rate for a area?
My brother and I own 5 acres (free and clear) in a desirable area of west Tennessee in which we are planning to develop as residential homes. Would consider a JV with established, experienced, developer. RehabValuator Premium subscriber.
How do you determine ARV step by step.
The flyer says the average rent was $750. How far away from the unit do you search to justify the new $1300 rent rate? Would you compare the rent rate for an apartment building that has lots of amenities? How much do you discount if my building has no amenties?
I would to in DC or Maryland
i just barey starting