First BRRRR was a homerun - how do I stay grounded?

Question

First - this community gave me the confidence to jump in on my first investment property. Thank you all for the generosity in sharing information and giving advice.

I know this post will likely seem like a brag post. I am sorry if that is the case, we're just very excited about the results of our first investment property! It was a successful BRRRR of a single family home in Worcester, MA.

We had about $50K into the deal, and we were hoping to remove all $50K to jump into our second property. We are scheduled to close on an 80% LTV cash out loan on the 15th of October and we should be handed a check for about $90K on that day! We now have a property appraised at $315K, with 20% equity still in it, positive monthly cashflow, and $0 left on the deal. On top of that, we're getting an extra $40K over our initial investment after all out of pocket costs are factored in (including closing costs for the cash out loan).

We are thrilled about this, but we are very much still rookies and I want to make sure we avoid over-confidence issues for property #2. The results have left me elated and wanting to do this again ASAP. I don't gamble at all, but the feeling is reminiscent to what one may feel after hitting a "jackpot." How do I stay grounded and focused to avoid making a mistake with property #2? I'd love to hear from more experience folks about handling emotions after a successful deal.

FYI - our strategy is very simple: Buy single family properties in Worcester, MA that need rehab, find quality tenants for them, and hold them forever.

Brian J Allen · Answer

Congratulations!  You are not alone in Worcester.  Due to the older housing stock there is huge upside if you buy right.  The key is finding things with upside and having the plan in place.  Currently the vacancy rate in Worcester is about 2% so you will ultimately have tenants.  I think my advice would be to find something where you can add a 1/2 or a 3/4 bath and laundry , as there are so few multiple bath rentals in Worcester that you can command top dollar and get great tenants willing to overpay to have that.  Good luck on the next one.

Joe Villeneuve · Answer

First, "... it ain't bragging if it's true", I think that was a Casey Stengel quote.

Second, just do what you did to find the first deal except nothing less than what you got in that first deal, and keep going until you rung out of loans you can qualify for.  Then get in touch with me, and I'll show you where to go from there.

Oh, and if I failed to mention it,..."Congratulations!!!"

Paul Ireland · Answer

Great Job Doug. Been buying multis in Worcester, just got the first SF.

Oluwatimilehin Fagade · Answer

Hi Doug, Congrats on a successful Brrrr. You did really well for your first investment, and I would take the same approach when doing the next deal. Good luck!

Michael H. · Answer

Congrats on your successful deal! Just bought in Worcester as well, great city. Happy to connect with anyone in the area. Young professional with a W2 at a CRE developer

Martin Lindsay · Answer

Several of the classics lol.

- Underestimating rehab costs and timelines. It's best to be as detailed as possible when breaking down rehab costs and knowing the correct order things should be completed. This will help with the timeliness of the rehab.

- Not doing good enough due diligence. When walking a property before making an offer or while under contract a good contractor will do a good job pointing out things that need to be repaired, but its literally the job of a home inspector to find EVERYTHING they can. A few hundred bucks for peace of mind can save you thousands (trust me.)

- Hiring the appropriate team to handle your workload. I have a good relationship with a contractor but its only him. He does great work at great prices, but it takes twice as long as someone who has other workers. After the extended time that goes to waste, plus additional carrying costs, this can eventually stop being worth it. It's better to pay someone that has the appropriate labor force to handle the capacity of the job.

- Stay active and in control but at a distance. I've made the mistake of doing some of the work myself and I always regret it. Yes it saves me a bit of money but I'm not a handyman or contractor by trade so I take longer, but most importantly it takes my time, focus and energy away from doing tasks to grow my business as the investor/owner. I can't focus on marketing, networking, building systems etc. when I have a paintbrush in my hand all day for a week. The goal is the work ON your business not IN your business.

I'm sure if you ask me again in a year I'll probably have a ton of other lessons learned lol but these are what come to mind. Hope it helps!

Doug Dias · Answer

Thank you very much, Whitney!

Doug Dias · Answer

Hi Sam - another Worcester house hacker who is interested in BRRRRs sent me a DM. I'd love to start a group at some point of "newbies" trying to break into the Worcester market. It would be great to be able to share information about the city as well as reliable vendors in that area.

I'd be happy to answer any questions you may have about my specific BRRRR experience.

Doug Dias · Answer

Thank you, Martin! What missteps (if any) did you take on your next deals that would be worth noting? I know mistakes will happen, but I would love to be more prepared to avoid them.

Zac Ballin · Answer

@Doug Dias just hold tight and only buy another that fits the same framework.

First BRRRR was a homerun - how do I stay grounded?

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