BRRRR SFR (originally a planned flip) in Indiana

[Caleb Drake]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $21,675
Cash invested: $52,000

I deleted the last pose and I am reposting this with more detail since I got a lot of questions I left unanswered in the previous post.

This is a BRRRR deal I took down off a direct-to-seller mailer. I bought it for about $5k too much, but the seller financing helped pad that mistake. Here are the numbers that matter:

PP- $21,675
DP- $2,500
CC- $1,700 (10% Interest Only ... 6-months interest paid up front)
Rehab- Private Money at 10% Interest Only
Exit Strategy- Originally a flip but we realized it was going to break even or only make $5-7k total. So we elected to transition to the BRRRR strategy half way through the rehab. The PML and I decided to create a partnership LLC and any money left in the deal after the BRRRR, he would hold. I would pay all utilities and honor his interest on this deal. This became a new strategy we are using and are currently remodeling our second deal. He's never been in this market, nor does he have any involvement besides writing the check. It's a completely passive investment for him (minus a couple of emails he has to reply to for insurance, etc).

This house is rented at $975/mo. After expenses, we will be looking at around $400/mo in cashflow. The new roof and recent updates should keep our CAPEX low for the next decade.

I get a lot of questions about this market--I have a personal attachment to this market and I do not think it's a great market to invest in if you are not familiar with it. The numbers look lucrative, but the appreciation in some parts of the city are minimal. Also, contractors are unreliable and hard to find. If I hadn't grown up here, I wouldn't even consider it. I invest here to make the lives of others better--it's both personal and financial for me.

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

This was a transition from a flip to a BRRRR due to the market shift. Always have a backup exit strategy.

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

Off-Market, Direct-to-seller mailer.

How did you finance this deal?

Seller Financing - 10% interest only / no points.

How did you add value to the deal?

Complete remodel with private money.

What was the outcome?

~$400/mo cashflow and no personal money left in the deal.

Lessons learned? Challenges?

Manage timelines and rehabs better.

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

No.