Finding BRRRR Deals
Finding BRRRR Deals
Deal sourcing is half the game. Success requires systems for monitoring MLS, cultivating off-market channels, and evaluating deal flow at scale.
Key takeaways
- MLS is the starting point: filter for distressed condition, price-to-appraisal gaps, and neighborhoods with strong rental demand.
- Off-market deals (wholesalers, probate, direct mail) typically offer better prices but require network-building and active sourcing.
- Wholesalers are deal scouts who contract properties, then assign to you for a fee; the best wholesalers develop specialization and long-term relationships.
- Public auctions (foreclosure, tax deed, probate) offer steep discounts but carry execution risk; bid only on properties you have inspected and analyzed pre-sale.
- Systems matter: successful BRRRR investors review 50–200 potential properties per deal acquired, supported by spreadsheets, property cameras, and notification alerts.
MLS and listed properties
The Multiple Listing Service (MLS) is the primary source for residential property sales in the United States. Every licensed agent has access; most MLS systems allow public access via portals like Zillow, Redfin, Trulia, or proprietary broker sites.
For BRRRR, you are looking for properties with specific signals: distressed condition (cosmetic issues, deferred maintenance), price below recent appraisals or comparables, and strong rental demand in the neighborhood. A property listed at $155,000 in a market where similar homes have sold for $200,000+ in the past year is a signal of distressed motivation.
MLS filtering workflow:
- Define target geographic areas (neighborhoods, zip codes, school districts with strong rental demand and population growth).
- Set price range: typically $120,000–$250,000 for single-family BRRRR (sweet spot for owner-occupied lending and cap rates).
- Filter for condition: MLS codes like "needs TLC," "fixer-upper," or condition ratings of "Fair" or "Poor."
- Sort by price-to-appraised-value ratio (if available) or price-to-recent-comparable-sales.
- Set automated alerts for new listings matching your criteria (most MLS sites offer email notification).
Once you have a pipeline of 10–20 properties per week, you screen for the 75% rule. Download property details, estimate rehab cost, validate ARV via comps, and calculate the investment ratio.
The advantage of MLS is transparency: you see the actual property, condition photos, tax records, and prior sales history. The disadvantage is that other investors see the same listings; you are competing on offer speed and terms, not information asymmetry. In hot markets, MLS deals that satisfy the 75% rule are rare.
Off-market deals and wholesalers
Off-market deals are properties not listed on the MLS—they are found through wholesalers, probate attorneys, direct mail campaigns, door knocking, and network relationships.
Wholesalers are the primary source for serious BRRRR investors. A wholesaler identifies a distressed property (usually from direct mail, probate leads, or pre-foreclosure calls), contracts to purchase it for, say, $135,000, then markets the contract to investors like you. They assign the contract to you for a fee (the "assignment fee" or "wholesale profit")—typically $3,000–8,000. You then close the purchase as the actual buyer, inheriting the wholesaler's contract price.
Wholesalers are valuable because they do the sourcing legwork. A good wholesaler maintains relationships with estate attorneys, probate receivers, lenders, and real estate agents, generating a steady feed of distressed deals. They also have refined estimates for rehab costs and ARV, making your underwriting faster.
Finding wholesalers: Ask other BRRRR investors in your market, search online for "real estate wholesalers near [city]," or join local real estate investor meetups. The best wholesalers are specialists—they focus on a specific market, property type, or condition profile. A wholesaler who specializes in $150,000–200,000 single-family homes in suburban Phoenix will have better intel than a generalist.
Evaluating a wholesaler's deal: You still do independent underwriting. Do not trust a wholesaler's ARV estimate blindly; run your own comps. A reputable wholesaler will welcome your questions and provide detailed information. A wholesaler who resists scrutiny is a red flag.
The assignment fee is negotiable and market-dependent. In competitive markets, wholesalers take large fees ($8,000–15,000) because demand is high. In softer markets, they accept $2,000–3,000. If a wholesaler's assignment fee is unreasonably high relative to the deal profit, the deal is overpriced for your underwriting and you decline.
Probate deals are properties from estates in probate (court-supervised property settlement after someone's death). Probate attorneys and estate executors sometimes solicit offers on residential properties. These are often distressed (elderly owner deferred maintenance, family in disagreement) and motivated (estate wants to settle, probate takes years). You find probate deals via probate attorney networks or by monitoring probate court filings in your county courthouse.
Direct mail campaigns target property owners: absentee landlords (own property but live elsewhere), elderly owners, or those with liens or tax delinquencies. You rent a mailing list, send a simple postcard ("We buy houses—call if interested"), and wait for inbound calls. Response rates are typically 0.5–2%, so a mailing of 5,000 cards yields 25–100 inbound inquiries. Many are not serious, but a few may be motivated sellers willing to negotiate.
Network relationships are invaluable over time. Real estate agents, contractors, property managers, and other investors all encounter distressed properties. If you build relationships and express a standing interest ("Let me know if you find off-market deals in Phoenix"), you become part of their mental Rolodex. Relationships generate occasional deal flow that is not available to the public.
Public auctions
Public auctions (foreclosure auctions, tax deed auctions, probate auctions) offer steep discounts but carry execution risk.
Foreclosure auctions happen when a mortgage lender forecloses on a delinquent borrower. The property is auctioned, typically to the highest bidder, with proceeds going to satisfy the mortgage and other liens. You bid for the property "as-is," winning the auction triggers a closing within days, and payment is typically in cash (certified funds).
Foreclosure auctions can yield 20–40% below market value, but the risk is high. You may not have interior access (inspection happens at open houses or is not allowed). The property condition is unknown. Liens might exist beyond the mortgage, meaning you inherit those debts upon purchase. The timeline is compressed—closing in 7–30 days is typical.
For BRRRR, foreclosure auctions make sense only if you have local expertise, can inspect the property beforehand, and have cash available to close quickly. Many successful BRRRR investors skip foreclosure auctions because the unknowns disrupt underwriting.
Tax deed auctions occur when a property owner fails to pay property taxes. The county holds an auction where investors can bid. The winning bidder pays back taxes and takes title. Tax deed properties are often deeply discounted because the owner abandoned the property or faced financial hardship.
Tax deed auctions are jurisdiction-specific; some states favor investors (clear title after auction), others are complex (redemption periods, clouded title). Before pursuing tax deeds, research your state's rules. A property purchased for $8,000 in back taxes might have $40,000 in liens, curing those could consume the deal margin.
Probate auctions are court-supervised sales of estate properties. These can offer value, but timelines are slow (court approval processes take months) and you may have limited inspection access.
For BRRRR, auctions are a supplemental source, not a primary one. They work well if you have capital available, strong local market knowledge, and willingness to close quickly. For most BRRRR investors, MLS and wholesalers are the workhorses.
Deal flow metrics
Successful BRRRR investors are volumetric. They look at dozens of properties to acquire one. The ratios are roughly:
- Review 30–50 MLS listings per week in your target market.
- Request information on 5–10.
- Make offers on 1–3.
- Go under contract on 1 per month.
- Close 1 every 4–8 weeks (overlapping with rehab phases of prior properties).
If you are closing only one deal per year, your sourcing is insufficient. The goal is a pipeline where deals are in overlapping phases: closing one, rehabbing another, leasing a third, refinancing a fourth.
Sourcing tools and systems
MLS alerts: Every major portal (Zillow, Redfin, Trulia) allows you to set alerts for new listings matching your criteria. Set alerts for 5–10 different geographic areas and condition profiles. Check daily.
Spreadsheet tracking: Create a simple spreadsheet: property address, list price, purchase estimate, rehab estimate, ARV, investment ratio, status (passed/passed-low-equity/no-offer/contracted/closed). This becomes your audit trail and helps you spot patterns (which wholesalers have good deals, which neighborhoods have strong math).
Property valuation tools: Zillow, Redfin, and Zillow Zestimate provide automated valuations, but they are approximations. Always validate with market-researched comps before relying on ARV.
Networking and relationships: Join local real estate investor clubs, attend meetups, and build relationships with agents, wholesalers, and contractors. Deal flow accelerates through relationships.
Decision framework for deal sourcing
Related concepts
Next
Once you have a deal under contract, you need financing. Hard money loans bridge the purchase and rehab phases, covering acquisition costs and improvement capital at high rates for short terms. The next article covers how hard money works and how to evaluate lenders and terms.