My first BRRRR turned Flip

[Dan Milinazzo]

Investment Info:

Small multi-family (2-4 units) fix & flip investment.

Purchase price: $109,900
Cash invested: $104,100
Sale price: $250,000

Small 2 family property that was in the same family for over 140yrs (with the personal belongings left behind to prove it). The property maintenance became too much for the seller that inherited it. The original play was to BRRRR the property, but due to some delays with the city that pushed holding costs a bit and with the heat of the market the better play quickly became a disposition and reinvestment of capital into marketing for the next opportunity. It was mostly a clean up job with some heavy cosmetics and a full rewire of old knob & tube wiring. It was a great little renovation project.

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

I was interested in this type of deal because the velocity of money in a good BRRRR model was appealing. Being able to recycle the same money numerous times to generate more capital seemed like a slam dunk plan. I was actively looking for good BRRRR opportunities and this fit the criteria in a market that was turning a corner and starting to appreciate quickly.

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

I found this deal through networking with great Investor focused Real Estate Agents! An agent that I had a great relationship with brought it to my attention after seeing it hit MLS and we put an offer in right away sight unseen. We didn't have to "negotiate" it really. Based on my agents knowledge of that market we knew it was a good deal so the strategy was to lock it up quickly with a strong all "cash" offer no contingencies.

How did you finance this deal?

I financed this deal using an Equity Line from another investment property.

How did you add value to the deal?

I added value by clearing the house out of decades (maybe even a centuries worth) of personal property left behind by the seller.
Once I could see the entire floor plan and where the issues truly were we replaced all of the outdated/hazardous knob & tube electrical wiring, updated all lighting to LED, performed some heavy cosmetic repairs to walls and ceilings, added a new soft paver roof top deck off the top floor unit, and modified the use of space within the units.

What was the outcome?

The outcome was that I decided NOT to refinance and hold it even though the numbers would have worked for a BRRRR. Instead it became a great FHA first time homebuyer/househack deal at a time where the market was flooded with that buyer and new investor. Market values continued to climb and while I did not squeeze every dollar possible out of the rehab/upgrade bucket there was still some room on the property for the new owner to force a little more appreciation if they chose.

Lessons learned? Challenges?

Lessons learned and challenges were plentiful. Even though I am a handy guy and a DIY type of person, that is NOT the best use of my time or my families time. I lost precious time with my kids trying to get this across the finish line because of another lesson learned. That lesson is, for a project of this size, its best to have a really good team LOCAL to the deal and not local to you personally handling the rehab. Travel time like that over a few months can burn a crew out in winter.

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

I absolutely worked with numerous professionals on this deal and would hands down recommend any/all of them to anyone considering this type of project. They are not all on BP, but I know if you look up Jon Bombaci you will find one of the most important professionals involved in this deal coming to life along with the rockstar agent that brought it to my attention, Matt Perimian! All other professionals involved basically stemmed off that central/core team with Candor Realty out of Lowell!