My First BRRRR [Just purchased - renovation in progress]
A few years after graduating from college I purchased my first rental property. This first investment, bought in 2017, is a buy and hold single family house that I bought 50/50 with my brother. Ever since, I have read and learned more and more about other ways of building cash flow and equity. All signs pointed to BRRRR being a great option for building my real estate investments. Based on that, I have been working toward completing a BRRRR as my next investment.
After 10 months of running numbers on over 75 properties, making 12 offers, and getting to best and final negotiations on 4 properties, I have recently completed the purchase of my first BRRRR property! My target was to buy my first BRRRR property in 2019, and I made it with a few months to spare.
Before the real work [renovating and renting out the property] begins I wanted to post about my journey to purchasing my first BRRRR investment. The process of buying a property that needs extension renovation can be daunting, so I hope the details of my journey will help others.
The Property:
The property is a duplex, built in 1900, and located in Cincinnati, OH. Each unit of the duplex has 1 bedroom and 1 bathroom, and each unit is about 700 sq. ft. This property was found on the MLS.
Side note: I live in Dallas, Texas but grew up in the Cincinnati area, so I know that market well and, unlink Dallas, I am able to find properties in my cash buying price range.
Financials:
- The listing price for the property was $60,000.
- I completed the purchase for $51,250.
- I am currently estimating $35,000 in renovation costs.
- I am covering the $86,250 budget [purchase and rehab budget] with cash I have saved over the past few years.
- Buying the property with cash allowed me to move very quickly [about 20 days from acceptance to close] and to get a better price on the property.
- The ARV [calculated based on price/sq. foot of similar small multi families in the area] is $135,000. Since this is my first BRRRR and I don't know what all to expect, I have been a bit safe in my ARV calculation, subtracting 10% from the actual ARV [$150,000].
Renovations [Currently Underway!]:
The property needs a lot of cosmetic work. While renovations have not yet been completed, the link below is a video walk through of the property where I talk about the renovations that are planned.
https://www.youtube.com/watch?v=S39DN331DaA&t=2s
Check out the video and let me know what you think! I plan to post more update videos, and plan to do a full walk through of the financials and result once I get to the refinance stage.
Rent
Once renovated I should be able to rent out both units for $750 - $800.
Refinance
My hope is to refinance via the same local bank used for my first buy and hold property, but I have a few other local banks as backup options. Still a few months and a lot of work away from this step.
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I will continue to post updates and videos as I go through the BRRRR process. I hope this helps others who are new to the BRRRR investing process.
Feel free to comment or message me with with your thoughts, recommendations and/or stories!
Jake