The Ultimate BRRRR - How I made $700k with $0 in the deal

[Jim Kittridge]

I don't want to brag, but I do want to break down how I made $700k BRRRR'ing 7 houses so you can copy it.

Just over a year ago, I purchased 7 properties from a landlord who was focusing his efforts on growing his new construction business. 

After a lot of negotiation, we agreed to a purchase price of $420,000 for the 7 houses with a rent roll of $3,700/mo. The cash flow was okay at best but the rents were +50% under market value so their was room to add significant value. The houses needed ~$100,000 in improvements to bring the rents up.

A local commercial bank was willing to lend 85% loan-to-cost (LTC) of the purchase and rehab which equated to $442,000 at 4.25% interest. A private lender loaned an additional $110,000 at 11% interest with a guarantee from the holding entity and a personal guarantee. 

After a year of turns and renovations, we were able to more than double rents and still keep them 20% below market.

We took it to our long term lender and ordered appraisals which came in at just over $1.2M which meant I created $700k in equity (current value - current debt).

The cash out refinance was $930,000 at 3.75% interest, fixed for 30 years. Our bank and private lender were paid back in full and I walked away with $400,000 in cash to invest in more deals and an additional $300,000+ in equity

And one of the most important things for those of you who made it this far: How did I find the deal?
I personally called and texted every landlord who owned 5+ properties in a few target counties. I reach out to each of them every 3-4 months to see if I can help with anything whether it's a plumber, a new flooring I'm using, or a deal that I saw from a wholesaler that might work for them. I had spoken with this owner 2 years beforehand and kept in contact with him until he said that he'd consider selling if he could get a fair price and not bother his tenants so he could focus on building his new construction business. 

Getting deals like this isn't that complicated or difficult, it just takes sustained time and effort.