BRRRR + nee construction + STR

[Mathieu Dumoulin]

Investment Info:

Single-family residence other investment.

Purchase price: $715,000
Cash invested: $530,000

The house has a mother in law unit, and a main house.
We built an ADU, 2 bedrooms + loft for $300k.
The downstairs mother in law unit makes about $17k a year (gross).
We live in the main house.
The new ADU makes about $65k a year (NOI) as a STR.
The mortgage is a $500k 30 years fix mortgage at 3% interest rates$2,500/mo.
Cash + Mortgage: $500k + $530k= $1,030,000
ppraised for $1,400,000
Cashflow: $5,000/month 10% cash on cash + live for free.
: $400k for $530k invested, so 75% return.

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

We live in a place where real estate is expensive. Rents are high as well. I's a highly desirable part of the world and STRs are doing really well. With this property we were able to leverage the STRs potential to the fullest, live in this area for free when finding a place to live and keep it affordable is a real challenge, and put our money in a location that is poised to appreciate: desirable, the property backs up to BLM (scarcity), and there is nowhere to build in this area.

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

I'm a local Realtor.

How did you finance this deal?

Sold a condo, and used cheap debt available back then.

How did you add value to the deal?

Renovation + construction of an ADU.

What was the outcome?

High cashflow, and great living situation.

Lessons learned? Challenges?

Despite the epic rate of return, cashflow can be a challenge on STRs during the slow months. For example this year we've had a slow start of the Winter due to a low snowfalls and it could have been a challenge if we didn't have reserves, or more debt to service.

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

Yes. Reach out to me if you need any contacts in the Glenwood Springs to Aspen area.