Single Family House Hack BRRRR

[Craig Jones]

Investment Info

Small single family home (1139 sq. ft) buy & hold in Lynnwood, WA

Purchase Price: $236,500

Cash Invested: $43,000

This was a great investment with good bones to the deal but trashed just enough to scare most people away. This was a great rental area with a good size lot for only growth and opportunity down the road.

What made you interested in investing in this type of deal?

This seemed like the best way to invest our money and finally get into the game of our money making us money. This was more of a " Jump out of the plane then figure out how to open our shoot " type of investment. The knowledge and skills of repair work and dedication was there but the knowledge of real estate investing needs attention now.

How did you find this deal and how was in negotiated?

This deal actually popped up right in our back yard, literally! The house went on the market with the for sale sign right on our shared driveway. After a month the house dropped almost 100k in asking price with many "pending inspection & relisted" posts. Being curious about the deal and snooping around the property we called an agent off the redfin app and she turned out to be amazing. After our inspection we put in an offer 30k below and closed the deal at 15k below asking. Also not knowing anything about ARV at the time.

How to you finance this deal?

We reached out to our realtor recommended broker and was told a conventional would be just fine. Two days before closing turns out that the house is deemed un-livable. Which we told him in the first place... So a hard money route was set into motion. A 6 month hard money loan at 12% interest with 10% down our hard money loan was $213,000.

How did you add value?

The day we got into the house we gutted 90% of it. Tearing everything to the studs and sub floors to find tons of rotten sub-floor and roof trusses. Rebuilt the trusses & sub-floor. Moved a few walls around making a 2nd bathroom and added a laundry room. Re-did all the plumbing. Water lines and septic lines. All new electrical and panel. Got to re-use most of the ducting and put in a new furnace and heat pump. Whole new kitchen layout with new cabinets and put luxury vinyl flooring throughout the whole house.

What was the outcome?

Invested $23,000 to get into the house. Added another $20,000 to rehab the property and used the equity for the 2nd closing costs and 10% to not have the PMI. The property was just appraised at $410,000 leaving us with a little over 100k in equity that we put in a Home Equity Line Of Credit. Still waiting to find out exactly how much we can use after the 10% and closing cost. (We are new to this!)

Lessons learned? Challenges?

The biggest lesson we learned was TIME. While working full time jobs my girlfriend and I basically did not sleep and went a bit crazy trying to rebuild a whole house in what turned out to be 4 and a half months. We hired out the Electrical and tape and mudding for the drywall to help with the time crunch. One of the biggest challenges was working under the house (plumbing & water lines) during one of the biggest snow storms we have experienced and leaving  multiple pipes and fitting to be covered by the snow and searching for those was not fun. We learned a ton with this house and are very excited to start using our new found skills on the next one.

Did you work with any real estate professionals that you would recommend to use?

Our real estate agent was so amazing we are using her again and will recommend her to any one who reaches out. She is located in the PNW area and is an amazing worker! We actually closed our deal on Christmas eve not realizing and she was still working away for us. Our lender will not be recommend and wont be used by us again so when we find one that we worked well with we will share that information as well. 

Here is a a picture of day one before tear down. Will be posting more picture but after our open house. Any BP members in the PNW looking to come check it out and meet up we are having open house and then bbq and drinks at the other house. Message for details.