4 Unit BRRRR

[Christian Ehlers]

Investment Info:

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

Purchase price: $720,000
Cash invested: $60,000

Househack/BRRRRR.
Taking advantage of low 5% down Owner occupied conventional loan, then fixing up the units 1 or 2 at a time, raising the rents, and then refinancing to lower the monthly payment and increase cashflow.

1 full gut unit and others were more cosmetic turnovers. There were two section 8 tenants here as well, navigating those programs can be a great way to increase cashflow if you tenant screen properly.

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

Great househack opportunity being one of the few 4 units for sale around the seacoast area, less than 30 second walk to the beach. It had some value add components to it so there was plenty of meat on the bone.

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

This deal was on market but was overlooked by most investors who either didn't understand section 8 programs, landlord tenants laws, or underestimated the current market rents because the rents in place were so low.

How did you finance this deal?

5% Down conventional owner occupied financing.

How did you add value to the deal?

Raising section 8 rents by using my industry knowledge and connections to the section 8 offices.
Renovating several apartments that hadn't been updated in 15+ years.
Removing problem tenants and re-renting to new market rate and respectful tenants.
Raising rents on existing tenants while maintaining good relationships with them and fixing deferred maintenance items.

What was the outcome?

Increased market value to appraisal above $900K in value, removing PMI from the loan, increasing cashflow and being ready for the next deal!

Lessons learned? Challenges?

Construction is almost always tricky to understand the costs upfront because of the unknowns, also really dialing in your renovation plan before purchasing makes things simpler and quicker. For some reason because I was going to be living there I was a bit more relaxed than I usually am, still turned out great though from buying a good deal.

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

My lender who I've personally worked with for over 5+ years now.
Title company for the same length of time.
Several great and cheaper contractors that helped me get the work done!