First BRRR by the numbers

[Rhonda McDaniel]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $34,999
Cash invested: $10,000

Did a delayed BRRR on this beauty! Sale price (2019) $24,999 + $10,000 construction loan +$10,000 additional improvements out of pocket to transform garage to 3rd bedroom. Original Appraisal in 2019 at purchase was $45,000 (2 bedroom) and in October, 2022 Appraised for $120,000, Refinanced at 87,0000 pulling 40K in cash out to put into other deals. Rents 995, Loan 750, Property Management 95.

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

This was a HUD property that I found through a Realtor. Negotiated down by $5,000. Bought as is with no inspections.

How did you finance this deal?

Construction loan with 6 months of interest only payments and holdback of $10,000 for fixes. I blew through my budget, but closed into investment loan at 5.5% interest $35,000.

How did you add value to the deal?

This had an attached garage and a detached garage. Changed attached garage to 3rd bedroom put hallway in to get to the garage through a current bedroom. New flooring, paint, all new kitchen and new bathroom. Actually waited to paint the outside for two years until I had more time and money and was ready to refinance.

Lessons learned? Challenges?

I learned that HUD has two bidding periods; the first is for home buyers who will use it as a primary home. 10 days to two weeks later, investors can bid. I also looked past the ugly and the smell so horrible you could hardly enter the home.... I learned what an OZONE machine can do, that you can seal a floor to get rid of cat urine smell by simply painting it, and that IT's ALL WORTH IT!!!!

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

I used a local property management company's construction crew. This worked perfect and was very cost efficient.