Deal Diary 1st BRRRR, 2nd house hack

[Tj Floros]

Investment Info:

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

Purchase price: $300,000
Cash invested: $150,000

My 2nd deal, but my 1st. BRRRR.

Off-market legal 3 unit in the Bridgeport neighborhood of Chicago, comprising of a brick 2 flat with (2) 3 bed 1 bath units, and rear frame coach house with 3 bed 2 bath.
Each unit needed all new plumbing, electrical, duct work and HVAC, 4 new bathrooms, 1 new kitchen, paint, finishes, flooring, etc.

The coach house was a complete gut down to the studs, while the 2 front brick building units I was able to save both kitchens and reuse them.

Purchase price $300k with an initial bank ARV of $640k Estimated rehab budget $260K with a $30K reserve fund with an estimated 7-month rehab timeline.

Actual numbers: Rehab budget $320k, actual timeline of 11 months, mainly due to permitting and city issues. Final ARV $893k.

Cash out refi i was able to pull just about 65% of my total cash invested while still cashing flowing $300 a month post move-out. I plan to refi again when rates drop further but I think for my 2nd deal in 18 months and first BRRRR in a high interest rate market, it was definitely a win in my book. Maybe not a text book "home run" but still a good deal.

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

Had an opportunity to try my hand at the BRRRR process

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

This was off-market deal that a family member of mine owned.

How did you finance this deal?

I used the 5% home-style loan to fund the purchase and rehab and then refinanced into a conventional loan. Would have loved to refi into a FHA loan but the building could not pass the self-efficiency test due to high property taxes, which is very common here in Chicago.

How did you add value to the deal?

Since this was a BRRRR everything is the property is brand new

What was the outcome?

65% cash out of total money invested, (ie purchase price, holding cost, exta funding needed) with $300 a month cash flow and about $230k in equity.

Lessons learned? Challenges?

A ton! Especially when it comes to underwriting deals, holding cost, construction cost, permit issues, all in Chicago which can be a challenge all by itself.

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

My lender and contractor who I'm happy to provide on request.