BRRRR Success Detail Deal Analysis

[Alex Babayev]

Bought Oct 2020 today Feb 2021 (4 Months Total)completed a successful BRRRR

What’s that?! Read below

I paid $78,000 for it. Property was outdated and distressed. It needed a full revamp to bring it to 2021 standards.

New: Roof, kitchen, bathroom, flooring, appliances, HVAC, plumbing, electrical etc.

Originally the property was a 2BR 1BA however I stole some space from the living room to add an additional bedroom.

I knew I would need that additional bedroom when I went to do a refinance and the appraisal would boost my value if it was a 3BR instead of a 2BR

Total renovations cost me $40K

I got the property rented out for $1,285/month

Let’s Recap $78K purchase + $40K renovation = $118K Total all in cost + private lender costs

oh by the way I didn’t use any of my own money 💰 a private lender funded the entire purchase price for me! Oh and He agreed for me not to pay him any interest until after I refinanced the property so I had no expenses while I was in renovation mode except for the renovation costs labor and materials.

Private Lender $80,000 Loan at 10% annual interest = $666/monthly payment x 4 months I used the money = $2,666 interest I paid back to my mender so now my all in cost is $118K + $2.6K = $120,600 all in

I did a cash out refinance property appraised for $185,000 ( wow that’s $55K in instant equity 🤩)

Lender offered me up to 75% LTV $138,750 I could pull out but in order to get maximum monthly Cashflow I decided to only borrow $127,500 against the property

Now remember I am all in $120,600 and now at the closing table I am getting back $127,500

Wait a minute! I am walking away with $6900 in my pocket!! I am getting paid to own a house!! Yes ladies and gentlemen that is possible

Research BRRRR method

Buy, Repair, Rent Out, Refinance, Repeat

This is how you create infinite returns and how you own houses with $0 of your own money 💵

To summarize

Mortgage Balance $127,500

30YR Mortgage 4.37% interest

Monthly payment including Taxes & Insurance = $750

Rent $1,285 - $750 = $535 Net Cashflow in my pocket monthly

Remember I have $0 of my own money invested in the deal!

Time to go look for my next BRRRR deal! Talk soon ✌️ 🙏

[Shanell Law]

@Manda Gouvion

Welcome to BP! Just keep reading and listening to others share their experiences. In additional start analyzing deals (crank the numbers) to help you build and define your strategy. No LLC right now in my opinion. It's a start up and annual expense that you don't need at the moment... if ever. You'll see as you go along and read. Best of luck to you.

[Louie Masters]

@Alex Babayev GREAT JOB! Just one question. Who is your contractor because he’s totally underpaid. Roof, kitchen, bath, added a 3rd bedroom all for $40k? Unbelievable!!

[Alex Babayev]

Originally posted by @Louie Masters:

@Alex Babayev GREAT JOB! Just one question. Who is your contractor because he’s totally underpaid. Roof, kitchen, bath, added a 3rd bedroom all for $40k? Unbelievable!!

I GC my own projects some of the guys work directly for my company. I have a managed Home Depot account for around 20% off retail pricing which helps as well. I know discount wholesalers who sell me materials at fraction of pricing etc.  

[Steve Vaughan]

Originally posted by @Alex Babayev:

Originally posted by @Patrick McGrath:

@Alex Babayev

Nice work! Awesome that you used OPM to fund the entire deal and walked away with total control of a cash flowing asset with $7k.

Way to go!

 Thank you! Other Benefits include, tax depreciation, tax free cash out, my net worth went up by the value of the property, etc. 

Awesome job, Alex.

Can you share some of the terms of your portfolio loan? Interest rate fixed?  Length of term?  Balloon or early termination at all? 

I appreciate your sharing all the details.  A deal like this takes years of relationship building and focused marketing. 

People be like how do I find a deal like this? You create it. Boom. Def not cruising the MLS or internet in your jammies.

[Benjamin Quaye]

Well done. The key take away is finding a good deal were the numbers make sense again well done

[Manda Gouvion]

@Shanell Law

Thank you!! I'm on here everyday and listening to the podcasts and reading their book every chance I can. I skipped the finance section of the "How to Invest" book and am reading the types of investments portion first because it said earlier in the book that whatever type of investment you do will kind of determine what you do. BUT the little I did read in the beginning about LLC's... I'm a little wary to not have one! I need more information but right now I definitely don't want my family on the line for some bad deal.

[Gerardo Azpeitia]

@Alex Babayev congrats, what was your monthly cash flow before and after the refinance? And your mortgage before and after?

[Craig Blancato]

Hey Alex,

I currently have a few rental properties and I am looking into doing my first BRRRR. Can you tell me which private lender you ended up using for this deal?

Thank you,

Craig

[Scott McCray]

@AlexBabayev, Question, Did you use your own money for the rehab or did the hard money lender also fund that as well?

[Noreen R.]

@Alex Babayev Amazing! Congrats and thank you for sharing your breakdown. Looking forward to hearing about more deals you close!