100% BRRRRR with a 9% fixed rate

[MIlton Monzon]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Vernon.

Purchase price: $196,080
Cash invested: $39,216

Expanded our CT reach. Seller needed more room to breathe so I negotiated and got him to 196k from 220k. Not a big drop but big enough to meet the expected 70% ARV criteria needed for hard money. ARV expected based on appraiser was 290k. Currently remodeled one unit and all mechanicals are updated. Last repair made is the deck but city is making it hard with permitting. What should have been a 3 month cash out refi is now looking like a 6-9 month. Luckily HML is 12 months. Either way exit strategy is cash out refi at 75%, Refi at 80% (no cash out), or sell and net approx 70-100k (but hate capital gains). Will update when that decision comes around. **** UPDATE **** Did not to the deck remodel. ARV with updates made came out to 320k. 3 month turnaround new loan 240k. 100% BRRRR and extra cash flow at 9% rate. Big win here when all I expected was to barely break even.

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

Wanted to close another deal before the end of the year and had experience with BRRRRs on multifamilies.

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

FB marketplace seller posted at a higher amount. After a few months followed up and negotiated using inspection and appraisal report.

How did you finance this deal?

RCN Capital. HML.

How did you add value to the deal?

LVP flooring in all units, updated mechanicals (plumbing, heating, electrical), new roof, new windows where needed, new paint. Increased rent roll.

What was the outcome?

Expected ARV of 270-290 to break even. Pulled a 320k ARV. All invested money pulled out plus another 20k.

Lessons learned? Challenges?

New deck would have been nice and maybe added another 5-10k in arv but in reality mechanicals, roof, and unit appeal made a bigger impact.

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

Completely off market direct to seller who had bought from foreclosure. Used RCN capital as a HML. 12 month loan done in 3 months.