My BRRRR Horror Story! What could I have done differently?

[Jake Baker]

I wanted to share a horrible BRRRR experience with a property in Jacksonville, FL. What started as a promising BRRRR ended with us making the tough decision to sell at a loss after an unexpected disaster.

The Numbers:
Sold for: +$230K
Purchase Price: $115K
Closing Costs: $3K
Rehab Costs: $105K ($49K original rehab, $56K additional repairs due to the car crash)
Holding Costs: $31K (12 months)
Selling Costs: $16K
Insurance Claim Recovery: +$25K
Net Income: - $16K

What Happened:
This was supposed to be a BRRRR. The rehab was complete, and we were ready to refinance when disaster struck—a car crashed into the property the week we were scheduled to refinance. The crash caused significant structural damage, and the driver fled the scene, later reporting the vehicle stolen. This meant I couldn’t pursue the driver personally and had to rely on their car insurance, which settled for $25K—their maximum coverage.

Unfortunately, the crash added $77K in unexpected costs, including $41K in repairs and extended holding costs. Rising interest rates at the time created downward pressure on our ARV. Faced with mounting expenses, extended timelines, and diminishing returns, we ultimately decided to sell the property instead of continuing with the BRRRR strategy.

The Insurance Mistake:
The biggest lesson I learned was that I had the wrong type of insurance. I mistakenly had a rental policy instead of a builder’s risk policy. When I filed a claim, my insurance company denied it because the property was under rehab and not rented. I’ve done many flips and always had the correct insurance, so this foolish oversight proved costly.

The Silver Linings:
My Contractor: My contractor went above and beyond. He felt so bad about the situation that he did the additional repairs at cost, which was a huge relief and saved me from further losses.
My Agent: My real estate agent, who helped me purchase the property, was incredible. She spent countless hours on the phone—with me, the city, contractors, and other key players—to help find the best path forward when she didn't have to.

What I Learned:
Insurance is your safety net: Always double-check that you have the correct policy for your project type. 
Expect delays and unexpected expenses: No matter how straightforward the project seems, having a contingency fund for emergencies is essential.
Your Team matters. A reliable contractor and an exceptional agent can make all the difference when things go wrong.

The Outcome:
This was a humbling experience, and I still wonder if I could have done anything differently (besides the insurance). Sometimes, you have to walk away. Cutting our losses and selling was difficult, but it was the best option given our financial woes.

I’d love to hear from others—has anyone else faced something this unexpected during a BRRRR or flip? How did you handle it, and what would you do differently in hindsight?