Swiss Army Knife BRRRR

[John Steffen]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $85,000
Cash invested: $150,000

Contributors:
Hannah Holland

BRRRR in a small pocket of SFHs that is surrounded by commercial near downtown, therefore our lot is zoned commercial, not ideal for pulling out as much cash as possible, BUT due to Weatherford STR regulations, I am now eligible to STR this "commercial" property. So, I am capitalizing on its highest and best use. I am one of the very few STR's in a town surrounded by 10+ wedding venues, university, businesses, mass construction, etc. You have to love the simplicity of supply and demand!

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

My wife and I's goal is to own a "bullet proof" portfolio in our hometown on the DFW outskirt. To be "bullet proof," diversity is key ESPECIALLY when investing in one sub-market. Here, we were after an asset we could pay off quick & cash flow aggressively. Yes, it's surrounded by commercial, our appreciation & resale value will take a calculated hit...but, that's ok, the goal was cash flow! Now, the aggressive cash flow can go toward accelerated debt paydown of our equity focused assets.

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

Direct mail. We were after a very specific product within a tight radius, so we were able to mail almost all the houses that met our criteria without breaking the bank. We put a lot of shots on goal and stuck to our numbers when interested sellers called. Our number just happened to work perfectly for this seller's situation.

How did you finance this deal?

Hard money.

How did you add value to the deal?

Full gut remodel.

Lessons learned? Challenges?

Hard money stinks, but sometimes it's the best option and it can absolutely get your foot in the door when starting out. Do what you can with what you have to earn a profit. Reinvest the profit into the business. Repeat and trust the compound effect. This one property we landed with a hard money loan and only $10k out of pocket will soon be a paid off $260k asset cash flowing $2,000/mo with which we will use to help pay-off a $500k 30 yr loan..in 8 years.

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

Can't go wrong with the Steffen Realty Network!