Bought, Rehabbed, Rented... and waiting with fingers crossed for Appraisal

[Helen Lowery]

Hello BP community,

I am waiting with anticipation to see if my investment property turns out to be the unicorn that I have I been chasing after... the magical BRRR-R!

I live and invest in Williamsburg, Virginia.  Last November, I bought a tiny 816 square foot property in a great location.  Situated just behind Williamsburg's transportation center, it is within a mile of the College of William and Mary and historic Colonial Williamsburg. 

We bought it for $125,000 "cash".... from a HELOC on which we pay 6% interest. (Hurdle 1-BUY)

We spent $50,000 on rehab (converted from oil to new HVAC, repaired water damage to subfloors and joists in kitchen and bath, new kitchen cabinets and countertops, new LVP flooring throughout, paint, and we converted the covered porch into a laundry room that is heated and cooled (adding an additional 140 sqft to the living space). (Hurdle 2- Rehab)

At 6 months, we had a year long lease with 3 college students (and their co-signers) for $2200.  (I LOVE my property management company!) (Hurdle 3-Rent)

After a ton of time researching lenders, we decided to go with Finance of America for the refinance. We have worked with them before on a fix and flip and had mixed feelings, but ultimately, after interviewing other lenders, we decided to go back to them with our rental and applied for the DSCR. They quoted us a rate of 7.5% and 75% loan to value.

Friday, I met the appraiser at the property with a list of comps and a list of the improvements that we have made to the property.  He asked what the property is renting for and if it is a year long lease (to which I happily replied $2200 and yes!).  

I run numbers pretty conservatively, so I know that I will likely be leaving some money in the deal. ... however, with comps ranging from $235-355 per square foot AND the additional square footage added during rehab it is plausible that this will be a perfect BRRR! Stay tuned...