Second Investment Property: BRRRRepeat!!!

[Kyle Hendrix]

Investment Info:

Small multi-family (2-4 units) hard money loan investment in Campbell.

Purchase price: $165,000
Cash invested: $49,000
Sale price: $165,000

Purchased this 4-Plex for $165,000 using a Hard Money Bridge Loan which required 25% down . Property was found on the MLS & had immediate cash flow. I was 1 of 2 financial investors in the deal, & the 3rd business partner had found and operated the deal. Cash Flow will pay for expenses while we BRRRR this property. Hard Money lender will fund the rehab, and after refinance we hope to be able to pull all of our money out and repeat the process again. Man don't you love Real Estate!!!

What made you interested in investing in this type of deal?

Before reading David Greene's book,"The BRRRR Rental Property Investment Strategy Made Simple" I always wondered how people could scale their Real Estate Investments so quickly. I thought you would have to save up for a down payment with every property, but after reading the book I found that if you buy and manage the rehab right, there is a way to pull out all of the money you invested in the deal! Therefore this is the 1st attempt at doing a BRRRR and very excited for the end result!

How did you find this deal and how did you negotiate it?

We found this deal on the MLS and negotiated it using our trusted Real Estate Agent. There was 3 different owners of the property who were all across the US, and they were very eager to sell and were very responsive to our offer.

How did you finance this deal?

We used a Hard Money Lender who offered a Bridge Loan, which allowed us to put no money down towards the rehab. They did require 25% down but with two financial partners we were able to fund the deal fairly easy.

How did you add value to the deal?

We are going to rehab 2 units at a time throughout 2022, and update mostly everything. Our rehab budget is currently at $21,000 and each unit should require $5,000 in work. Once done, all units will be new and we will be able to get market rent for each.

What was the outcome?

Outcome is yet to be determined, but we hope to get an appraisal of above $205,000 which would allow us to pull most or all of our money out and repeat the BRRR process again! We will hold on to this unit and use the Cash Flow to build reserves into the next deal.

Lessons learned? Challenges?

Lots of lessons learned! Initially was only going to be myself funding the deal, however the lender threw a curve ball as they raised the money down from 10% to 25%. Also, they had guaranteed a 10-14 day close since we were using Hard Money, but the property closed 2 months later. Thankfully, we had another investor who gladly helped financed half the deal, but in the future I would caution against jumping into a deal you are not fully prepared for financially. Also, patience is essential.