First BRRRR complete

[Josh VanSetten]

Well we are not as fast as some, but we finished our first successful BRRRR property this September. Got it rented for 100$ more than I had planned in October, appraised higher than I thought, and turned out to be a great asset to hold for what I hope is a long time. Here are the details.

Found on MLS HUD foreclosure

3 bed 2 bath 2,000 sq ft

Purchase price: 75,400

Appraisal for purchase:. 107,000

Down payment:. 18,000

Rehab costs ( including holding) 26,000

ARV appraisal: 164,000

Refinanced: 123,000

Rent: 1,225

After tax cash flow:   After setting aside vacancy, repairs, cap ex is 115/month 

We used equity in two other properties to gat a line of credit for the down payment and rehab costs. We

paid that off and still had about 16,000 left.  10,000 of that will go into a reserve account for any repairs, vacancy, etc. (Even though we budgeted for that in our numbers).  We could have taken less out on the refinance and had better cash flow, but thought having a reserve would be better for us.

We are set up as an LLC, so the loans were all commercial loans. The rates and terms were not as good as a personal, but we had no seasoning and our local bank has been very good to our property company and construction company. The refinance was a 25 year ARM with a 2%cap adjusted every five years. 75%LTV

Take aways: we looked at a lot of places before we found this deal.  The rehab took longer than we thought, but since we are contractors for our day job we did it all sweat equity.  The project turned out better than I could have hoped, got a great renter and am very excited to start looking for a new investment.  

[Josh VanSetten]

@Vince Deangelo we refinanced at 123,000 which allowed us to pay off the first mortgage, which was about 56,000, our down payment of 18,000, our rehab cost of 26,000, and had about 16,000 left in cash we didn't have before.  Side note: we did not pay ourselves for labor costs on the rehab it was all sweat equity, but that 16,000 extra would have covered that.  We just absorbed the labor.