My most successful BRRRR to date

[Jeff Hornberger]

Investment Info:

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

Purchase price: $580,000
Cash invested: $160,000

This was a fun project and my biggest project so far. I bought two 4 plexes. The pictures only show one here but there is another identical next door. I did the BRRRR strategy with these and now have cash back from the refi and have furnished 5 of the 8 units and cash flowing strong.

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

Location of the 4 plexes is high density and the future building potential and cash flow projections were great.

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

I have been eyeing these two for years. I was able to find out the owner was a property manager's mom I knew in town. As he got older and wanted to retire I helped him transition out of his business and it eventually led to selling these two 4 plexes to me. I bought both for $290K a piece on a seller Wrap.

How did you finance this deal?

I paid 290K per 4 plex. Put 25K down/4 plex. I asked the seller to pay my closing costs to preserve rehab money. I wrapped the sellers mortgage of 80K/4 plex. He carried 180K or so on an interest only contract with a balloon payment in 2 years. I prepaid the interest only loan payments 1 year in advance so that while I was rehabbing the property it would cash flow better.

How did you add value to the deal?

We force appreciated the property with 80K per 4 plex. This included full exterior rehabs, removing unwanted tenants and rehabbing each unit completely.

What was the outcome?

At this point I have 5 of the 8 units rehabbed, 2 units have original long term tenants in them and 1 unit is currently being rehabbed. We have since furnished 5 of the rehabbed units and have used furnishfinder.com (to find midterm 1-3 month traveling nurses) and airbnb to fill those units. Each 4 plex has two 2 bedroom units and two 1 bedroom units. From starting in March 2022 we have been grossing each month $2500-$3000 for the 2 bedrooms and $2000 for the 1 bedroom unit.

Lessons learned? Challenges?

By doing the managing of the projects myself I think it cost me a lot of lost time. It took a year and a half to complete the evictions/ rehabs. Had I put a guy on this, or let our PM company handle things I think I could have been cash flowing 6 months ago or better.

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

I worked this one with my amazing wife who offered a ton of support and understanding while I was out working late nights on this.