My first BRRRR.... From purchase to refinance

[Jason D.]

Hello everyone! I want to chronicle my first BRRRR investment and hope to share a success story with all of you. My main purpose is to help new investors, that are thinking about jumping into real estate investing, get a real life picture of what to expect. This isn't HGTV and I am not some Guru, I am a 40 year old dad with two kids that is tired of working 50 hours a week so someone else can get rich. I want the freedom that real estate has the potential to give, and I want something that I can share with my daughters when they get older. I have never chronicled anything like this before, so bear with me.

Now, about me. I have some experience in real estate investing, but not much. I bought my first rental, a SFH in Cincinnati Ohio, in 2010. It was pretty turnkey and has cash-flowed well for me over the years. I moved to the Philly suburbs in 2013 and decided to keep that rental because of its low maintenance and good cash-flow. I also fix and flipped a house last year, just to do it, and made a little money but nothing to write home about. That's it, so I don't have a ton of experience and consider myself still very green in all of this.

So lets talk about the property.... I am scheduled to close next Thursday. 

It is a SFH in central NJ that was a VA forclosure, that I purchased for $55,000. It is a 3 bed, 1.5 bath that needs a complete rehab. I toured at least 20 homes and offered on 5 before landing this one. I utilized the BP calculators to analyze deals and this seemed like a winner. It's not a homerun deal, but will cash flow nicely and is in a good rental area. So here are the numbers....

Purchase price $55,000

Closing costs $3500

Renovations (my initial estimate) $35,000

Taxes $5000/yr

ARV $130,000

Target rent $1600/month

I am purchasing using a hard money lender, then refinancing through my credit union after 6 months "seasoning". The terms of the hard money are as follows.... 9 month, interest only loan at 10.5%, with 20% down payment and 4 points. The points are rolled into the loan so they are paid at refinance. So I will be putting out $22,500 of my own money to fund this deal. I'm going to use real numbers because I think too many people talk about "real estate with no money down", "get loans with 100% funding". For a new investor with no experience, It's going to be difficult to invest in real estate without money. So my suggestion for new guys and gals out there looking to invest, the first step is to SAVE MONEY! Very few people invest starting with nothing. It's much easier if you have something to invest.

Here are pictures of the property as it sits today.... And thanks for reading, I hope it gives newer investors the confidence they need to jump in and take the risk!!