Massive BRRRR Win in Cincinnati!

[Joseph Cornwell]

Investment Info:

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

Purchase price: $60,000
Cash invested: $75

This was a triplex that the City of Norwood (Cincinnati) made me convert to a duplex, it was a full gut renovation, everything was repaired besides the outside frame. Structural, electrical, plumbing, mechanicals, flooring, paint, trim, kitchens, bathrooms. It was finished as a 2/1 on the lower level and a 4/2 on the top 2 floors. We used high end finishes on this project.

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

It had sat on the market for several months so I could get a lower purchase price and do a full gut renovation for a BRRRR deal.

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

It was listed on the MLS for a few months, most investors would not touch it due to the massive rehab needed. I was able to get it for 60k.

How did you finance this deal?

Commercial construction financing with a local bank, 80% LTV, they loaned 80% of purchase and rehab funds.

How did you add value to the deal?

Full gut renovation, major structural repairs (replaced the main beam, lifting the center of the house over a foot to level it), all electrical and plumbing, we dug out the basement to add more heigh clearance, roof, siding, sidewalks, driveway, all cosmetics, drywall, insulation, paint, kitchens, bathrooms, etc. It was over a 150k rehab.

What was the outcome?

Cash out refi at 70% LTV, appraised at 455k, I cashed out 153k and netted 75k in profit, gross rents are $3200/mo and I cash flow about $800/month.

Lessons learned? Challenges?

It was a brutal renovation, we were working on several projects so it took over a year in total to complete, and about 6 months of actual work on site. Dealing with the building department, permits, supply issues, labor issues, etc. It was very challenging but paid off in the end.

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

I am an agent so I represented myself as the buyer, I also own a GC company here in Cincinnati, so we complete our renovations in house.