BRRRR SFR in Indiana

[Caleb Drake]

Investment Info:

Single-family residence buy & hold investment in Terre Haute.

Purchase price: $25,500
Cash invested: $43,000

This is a BRRRR deal I'm working on right now. I think I may have bought it a little too high, but I'm going to make it work. This was my first deal with these contractors and I didn't take into account the holding costs for a longer than expected rehab.

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

The numbers made sense at the offer price. I had multiple exit strategies that I knew would work. I also had cheap money through my HELOC.

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

Off the MLS. I search for deals that have been sitting for a while. There is not a huge amount of wholesale deals in this market. Although, I do send out off-market mailers, this deal was sitting on the MLS. I made a lowball offer and they countered slightly. I knew we could make the numbers work and we did.

How did you finance this deal?

Entirely through a HELOC on my primary home. I have a $120k HELOC at 7.75% (averaged on the money in this deal since if fluctuates) and used it to purchase the home and fund the rehab. Total costs were around $68k.

How did you add value to the deal?

To add value to this one, we finished the unfinished upstairs attic and added around 200sqft of liveable space, an extra bedroom and half bath. We added a mini-split to give the area adequate HVAC and added around $10k in value to the home.

What was the outcome?

This house rents for $1050/mo. After refinancing this home, I left $4,500 in the deal and cashflow around $400/mo.

Lessons learned? Challenges?

Communication is key when working with contractors from across the country.

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

No