First BRRRR experience.

[Jose G Delvalle Bueno]

I wanted to share my first BRRRR experience, I say first BRRRR because I already own a 3 family, but consider myself a beginner.

So I purchased a 3 family home in the Bridgeport, CT area. It was distressed and needed work. The property had one tenant "paying" rent on a month to month basis. Asking price was 169k.

I did my due diligence along with my realtor and we came up with ARV of about 270k and rental comps of about 1,300 per unit. I had estimated about 40k in repairs, taxes were 6,900 and insurance 2k so the numbers made sense.

What actually happened: I offered 170k since it is a seller's market now in Bridgeport, I budgeted 40k, but went way over my budget and actually spent 62k in repairs. My closing costs were more than I expected, where were close to 8k, but it included 2 points since I used private money.

I am now in the process of refinancing and should close this week. The actual ARV was 285k so that helped out a bit with going over budget. Rentals are as follows: 1400, 1400, 1350 so I am getting more than I calculated.

Conclusion: it is really hard to find a deal where using the Brrrrr strategy you will be able to pull all your money out. In my case after everything is said and done I will have about 34k left in the deal, but month cash flow is about 2k a month (self managing the first year to recoup my investment faster), which amounts to 24k a year. I should be able to break even in about 1 1/2 years although probably sooner since I have already collected 5k in security deposits. At the end of the day it is still a decent return even though I was shooting for getting all of my money out

Lessons learned:

I am a bit more experienced at budgeting rehabs

Learned how to analyze rental comps better

Underestimated my closing and carrying cost, which I will now be able to accurately calculate

When taking a property with a tenant on a month to month lease that should be a red flag. Getting the tenants to leave cost me over 3k plus lost time.

[Jose G Delvalle Bueno]

@Jaysen Medhurstgood to know. That is something I wasn't aware of.