Almost Perfect Pandemic BRRRR Deal

[Jennifer Turner]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $112,500
Cash invested: $5,428

3 bed, 1.5 bath SFR. This was an off-market purchase from a distressed homeowner who needed to sell quickly, as-is. We used a PML so we could close quickly for cash. The home had solid bones and was fairly close to rent-ready, so clean out and rehab took only a few weeks and costed us $4291. We were able to refi into a conventional loan at exactly the 6 month mark, pulling almost all of our cash out of the deal, for a 79% Cash on Cash Return.

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

We liked the neighborhood and really wanted to be able to help the homeowner out.

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

Seller reached out to me because he'd heard that I buy houses. We worked it out so seller would have enough cash after closing to pay off his debts with just enough left over to move his vehicles and boat out of state.

How did you finance this deal?

Private money loan. 80% LTV at 10% interest. Did a cash-out refi after 6 months of seasoning into a conventional loan at a 3.875% rate.

How did you add value to the deal?

Spent several days cleaning out the house (hoarding situation), did extensive odor remediation (cigarette smoke), and did some minor cosmetic updates.

What was the outcome?

$40K of instant equity plus an additional $40-60K of equity from appreciation since then
A great cash-flowing, low-maintenance rental, with virtually no money left in the deal

Lessons learned? Challenges?

Find a good deal and the money will find you.