Investment Info:

Single-family residence hard money loan investment.

Purchase price: $65,000
Cash invested: $22,000

I completed my first out-of-state BRRR on a 3 bed, 1 bath single-family home in Jacksonville, Fl zip code 32254. I used hard money and bought it site-unseen off the MLS after making dozens of offers. It wasn't a "perfect" BRRR but not bad for the first one (especially out-of-state). Here are the cliff notes:

Purchase price $65,000
Rehab $55,000
Appraised for $145,000
Monthly payment (PITI) $600
Monthly rent $1200
5 year ARM @ 5.00% (interest only for the first 3 years)

Had it rented in two days and had the tenant move in within 5 days of posting the add.

The long story...

Interviewed 3 contractors I connected with through referrals. Got quotes for all of them. Ended up going with the highest bid based on reviews and referrals (from my lender, realtor, and the local REIA). He was great. Had the work mostly completed within 4 weeks (less bathroom tile, and punch list items) and I drove down there to "trust but verify" it was in good shape. Everything was as-represented and I dove home to NC. Unfortunately, a few days later (on Thanksgiving Day), the property was broken into by a disgruntled electrician the contractor had fired (electrician had done this at other sites the contractor had him work on). I say it was broken into but in reality, it wasn't necessary to break in since the contractor never changed the locks or anything so the electrician let himself in with the lockbox and key. Now, I am sure you are thinking "why didn't you have an alarm system" well, we did, but the electrician was fired before he completed the work so the house was left without electricity or wifi. The electrician stole the INSTALLED GRANITE COUNTERTOPS (destroying the brand new cabnits), the INSTALLED kitchen sink, electrical panel (meticulously taken apart), the interior doors, HVAC, and all materials the contractor had left in the home. That being said, we had to start over and the contractor almost didn't get it done as a result of growing his business too fast and one poorly managed project snowballing into the next (Word on the street is that he has since skipped town and there are over 10 pending lawsuits.)

Lastly, the contractor assumed that this property was on city sewer. Its not. Its on septic. So, he drove heavy equipment through the backyard to clear the debris on the lot and crushed the septic tank and drain field. Didn't realize this until after the tenant moved in and texted "tubs not draining, toilets, not flushing, sinks aren't draining"... We couldn't prove it was the contractor so had to come out of pocket to fix.

Because we had to replace the tank and fix the drain field, we had to covert the system to an above-ground system to bring the property up to code which meant we had to install a sump pump, upgrade the electrical and run a new electric line to the sump pump. We had to have the tank pumped every week until we could get on the septic so our tenant could live a normal life. Apprx. $10,000-12,000 later, the septic system was fixed. Our tenant was naturally super upset and rightfully so, however, she was understanding and we sent a $200 amazon gift card to keep the relationship on track. She's been great and in good spirits ever since (and even renewed her lease).

Since then, the property has been self-managed remotely and I have had virtually no issues due to proper vetting, only accepting online payment methods, quarterly virtual inspections, and treating the tenant like a customer and not a tenant. I sent flowers on mother's day ($30) and sent her kid a birthday present ($25). Not that its necessary but I think a $55 investment into a 12 month relationship is worth it. As a result, I have received several calls from people asking if I had any properties available and stating that my tenant had referred them.

My key takeaways:
1. I am never buying a house on a septic system again.
2. Immediately after the demo, I will have the electrical done and a security system installed.
3. I will sub out the big-ticket, straightforward items myself (electric, plumbing, roof, HVAC, hot water heater) and leave the kitchen and bathroom remodels and other cosmetic stuff to a contractor or handyman.
4. If feasible, I will self-fund the rehab and buy the property with a normal loan that has a short seasoning period for refinancing
5. I will always send flowers on mothers day