2nd Deal - BRRRR Strategy Using FHA On German Village Duplex

[Robert Ellis]

Hi All, I thought I'd talk about my 2nd deal this year. As many of you know I posted about my first deal this summer. I invest in real estate as a side project. I'm an agent with a team of 4 in that sells residential and multifamily properties in Central OH. Here are the details of my 2nd project.

I just completed the refinance of my second duplex and this time I decided to try the BRRRR strategy. I closed on this duplex for about $230,000 in an area of Columbus called German Village.

German Village is a historic neighborhood with the most expensive real estate in the State of Ohio. It is hovering around $250-$300 a square foot right now with many homes selling above $300 a foot to live in this neighborhood. It is an incorporated historic district. 

Always, I bought it for 3.5% down and decided to use my cash to renovate. Previous tenants were paying $600 a side. I bought one tenant out of their lease and moved in. Rehabbed this unit for around $4500 and leased it on a 22 month lease at $1300 per month.

Now, I bought the other tenant out of her lease and moved into her side. Hers was an absolute disaster. I had to bust up tile all over. I filled a complete dumpster from demo day. I rehabbed this unit for probably around $6500. Mostly lighting, flooring, and instead of buying granite we did painted and sealed the countertops with a super high gloss epoxy that they use in bars that I bought at Michael's. Much more affordable. 

I could have lived here for virtually rent free. My payment is around $1500 and the rental income is $1300. I'm in one of the best areas of Columbus with very popular restaurants, shops, etc. However, I wanted to move along and purchase a second one. I tried to refinance at the end of November and the appraisal was horrible. I jumped the gun and I hadn't completed the rehab and it appraised for not 25% equity that I needed to refinance. So I finished the rehab and got a 2nd appraisal. It appraised this time and I just finished the refinance yesterday. No cash out refinance within 120 days of purchase. I'll be moving onto my next duplex. I have this unit up on Airbnb right now and it brings in about $1000 a month in income but I want to rent it out obviously. I have it up for a staggering $1450. For a 1 bedroom. If I get that price I'd cashflow about $1000 after principal, interest, taxes, and insurance. 

I put it on the market today at $339,000. If someone pays me my dream price I'll take the cash and do a 1031 exchange and find another project to do. 

I posted this to let you guys know that everyone can do it! There are so many ways to make money in this business. I like to do flips where I would live in areas that I understand. I have the option to sell this or just keep it rented. It was a great 2nd project and I hope to continue. I have some pictures below of the finished product. 

[Kim Younkin]

@Robert Ellis, that is absolutely amazing! Great job! I hope you get either your dream offer or the perfect renter for your cash flow. I'm amazed you kept the rehab costs so low on each side. Good stuff! - Kim