2nd Commercial Deal. Minnesota

[Rashad K.]

Case Study 📚 This property currently stands as a condemned furniture store. Going to rebuild into 10 units. 8 residential and 2 retail.

Purchase Price: 💲350, 000

Renovation Budget: 💲1,062,000

ARV (After Repair Value): 💲2,070,000

How the deal was found: Made a post on LinkedIn, A Realtor ®️ sent me a list of properties.

Financing type: Hard Money Loan 💰Purchase Price and Construction Cost. I followed the "70% Rule", which is ARV x 70% - Rehab Cost= Purchase Price.

Exit Strategy: BRRRR 🥶 Buy, Rehab, Rent, Refinance, Repeat 🔁 I have relationships with other local banks that will do a cash out refinance with a permanent loan up to 80% of the new appraisal value. 80% of 2,070,000 = 1,656,000 which is enough to pay off hard money lender while still leaving 20% of equity in the property.

Take Away: This project will be my largest renovation to date. As I reflect on my very first renovation project I remember how difficult the construction process was for me.

From dealing with the city, finding contractors 👷🏽‍♂️, managing contractors, and not having any prior construction experience or any understanding of the process other than reading a book 📕 (“The Book on Estimating Rehab Cost”, By Jason Scott).

I doubted if I should continue with rehabs because of how difficult the learning curve was. Fast forward a few years and I’m capable of not only successfully running my own projects but we also help homeowners and other investors with their own renovation projects. So the most important lesson is that If you don’t give up, you can’t fail‼️