BRRRR Quadplex in Indiana

[Caleb Drake]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Terre Haute.

Purchase price: $60,000
Cash invested: $7,500

This is my first buy and hold BRRRR property. It is unique for me because it is both an out-of-state purchase/rehab and my first multifamily. We bought the property in poor shape on a bank financed note with the intent to rehab and hold it. We expected to gross $2100 after repairs and budgeted around $20k for the repairs. All in, we had $50k invested in this property ($25k DP/CC and $25k rehab) with an ARV of $102k once we finished the roof replacement (we got lucky and had an insurance claim).

The units rent for $2350 total and we cashflow over $850/mo after PITI ($937/mo), CAPEX, 8% management fees and the water/sewer/trash bills paid by us.

We completed the BRRRR refinance into a commercial loan on a 5/1 ARM with a plan to either exit this investment or refinance again in 5-years. Post (not perfect) BRRRR, we have $7500 locked up in the property and cashflow of $850/mo after expenses.

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

The potential to add four doors to my portfolio with little money locked in.

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

MLS

How did you finance this deal?

Initially, conventional in my name. Post rehab, commercial in my LLC.

How did you add value to the deal?

Rehab

What was the outcome?

Not perfect, but decent BRRRR with $7500 remaining in the property.

Lessons learned? Challenges?

Evaluate your ARV without bias towards your goals. Check the comps and estimate low to make sure the numbers work. We expected a $125k ARV based on comps from our agent. This was an out-of-state deal and came in low at $102k.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

No.