BRRRR #1 - to furnished rental

[Ryan Thomson]

Investment Info:

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

Purchase price: $270,000
Cash invested: $60,000

A duplex that needed a LOT of work. It was an expired MLS listing. I wrote one letter (and my only mailed letter to this date) and the seller responded and we negotiated a price that worked for our numbers.

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

It was eligible for an STR permit in Colorado Springs.

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

It needed a LOT of work and we negotiated a good price. We remodeled and fixed:
-sewer line
-total replumb of both units
-jacked up central floor beam to level floors
-new water line from the city tap
-landscaping
-new LVP floors everywhere
-walls insulated

How did you finance this deal?

Hard money for 330k. This allowed us to buy the property for 270k and have 60k for remodel and fixes. My business partner and I both put in 30k of our own money as the total rehab and furnishings cost 120k.

How did you add value to the deal?

We fixed all the things listed above. We landscaped the property and added a fire pit slab, hot tub pad, and electrical.

What was the outcome?

We paid designers to design the home. We fully furnished, decorated, and added a fire pit and hot tub. We then had the appraiser over to see our great work. It appraised for 425k! We were able to pull all of our money out except 60k. Pretty good for a cashflowing property and 100k of equity.

Lessons learned? Challenges?

BRRRR is a lot of work but awesome. Again double the time a contractor will say it takes to get a job done.

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

I brokered and managed this off-market deal.