A Chilly Househack: What happens when you combine BRRRR and HH

[Ryan Wydler]

I picked up this #BRRRR/househack project in THE FAN in Richmond, Va it was being advertised on Craigslist for sale by owner. It has a BUNCH of deferred maintenance and the previous owner smoked inside and had a cat but its a Solid piece of Real Estate in a great location. I'm posting weekly 90 second videos on my Facebook and Instragram to document the entire process, but I thought I'd share the numbers and 'investment strategy' here on BP with my fellow investor nerds.

First of all, its a 3 bed 2 bath 1,260 sq ft Row home (The far end with the black roof) with off street parking.

I'm using that sweet sweet owner occupied 5% down, 3.85% fixed 30 year interest rate to purchase the home for $200,000 (She was asking $289,000, but she was realistic in knowing how much updating it needs). So because I also plan to Househack the property (live in the downstairs bedroom and rent out the 2 upstairs bedrooms), I was able to purchase a BRRRR with bank financing on the front end (I know, I will pay closing costs twice) and have a kind of BRRRR on training wheels because I have a fixed rate payment so even if I mess up the rehab, there is no balloon note with a private lender that is coming due in 5 months. I just divert my high savings rate into paying down the 0% (introductory rate) credit cards I used for the rehab.

I really recommend if someone is looking to start with their first deal and its an option, try to combine 2 or more of the multiple strategies they talk about on the podcast and at BP: Househacking, BRRRR, live in flip, partnership, syndicate, wholesale, 1031 exchange. I think that's really where the magic happens when you can combine multiple strategies. Ok, end tangent. Back to the numbers.

5% down payment means only $10,000 down and call it another $10,000 for closing costs.

Upfront cash - $20,000 [For this I just pumped up my savings rate when I discovered BP and FI back in late 2017, and i took a loan from my 401k at work]

Projected rehab budget - $50,000 (Low end) - $ 70,000 (high end) [This I'm putting all on Credit Cards that I've opened with 12 months of 0% interest rate, and hopefully I refinance in 6-8 months]

Estimated ARV - $350,000 (I think I am being conservative..)

Estimated Refinance - (0.75*350,000) = $262,500

So I don't know if it will be a "Perfect BRRRR" but I'm learning so much and we are still so early in the process.

Projected Rent while HH – $550 (bed 1) + $750 (bed 2 + private bath) = $1,250

So I’m only out of pocket a couple hundred if you include utilities.

Estimated new PITI - $1,650

Estimated Rent after HH - $1,250 (upstairs beds) + $600 = $1,850

So Not a huge spread but since this is a BRRRR and I'm doing a bunch of capital improvements on the front end, and I think I'm being pretty conservative on the rent estimates, and this is a fantastic location: I'm happy to hold it through another cycle.

Love to meet and network with the local BP community, I attend the RING meeting here in Richmond So hopefully I’ll meet some of you all there or feel free to reach out with questions.

Go Get Some! *JOCKO voice

Peace

[Brian Beck]

Just getting started in my investing goals.  I love Fredericksburg area, it still has all the conveniences of Northern Virginia (unless you have to commute to DC daily) but at a slightly lower price point.   
I'm currently working on flipping in DC as this is what I'm most familiar with working for a flipper right out of college about 10 years back.   Once I have a little bit saved up from this a  more constant flow rolling with the flips I would like to transition to buy & hold in the Northern Virginia/Fxbg markets ideally but will likely venture closer to Richmond where I think it would be less cost prohibitive to scale up.