My first SFR lease option, a no money BRRRR!!!

[Joseph Cornwell]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $55,000
Cash invested: $35,000

My first lease option, single family rental. I have an employee of mine who could not obtain the loan. He works for my construction business, so we worked out a deal on the purchase and renovations. I paid cash for the property and renovations, he did most of the work.

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

My employee asked if I would buy a house and provide a note for him.

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

This was sent to me off market by a wholesaler.

How did you finance this deal?

I will be using conventional financing on the REFI to pull my cash out.

How did you add value to the deal?

We did about 50k in renovations, I paid for materials, my tenant did the labor.

What was the outcome?

Should appraise 150k or higher on the REFI, I will pull out my capital plus 20k. It will then cash flow 400/mo during the lease option period.

Lessons learned? Challenges?

So far no major challenges. This was a cool deal that created a win, win. Its a no cash deal with great returns and cash flow, plus low to no maintenance for me. It allowed him to buy a property without bank financing, and start building equity instead of just renting. He has about 30k in built in equity day 1. His payment is also cheaper than his prior rent.