Light BRRRR with No Cash Left in the Deal

[Jon Lester]

Investment Info:

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

Purchase price: $140,000

I purchased this duplex with cash. It had existing tenants who were grossly under market rent and both units needed some TLC. We got one unit up to market rent within 3 months with no additional out-of-pocket costs for the section 8 tenant. The other unit the tenant was ready to move out, so we helped him find a new place for him and his family, then renovated the unit and rented it out at market rent. Now it's refinanced and cash flows, and we have a strong asset that we were able to pull 100% of our initial cash out.

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

I like the neighborhood and saw this as a great opportunity to own a strong asset in it.

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

This deal was brought to me through another wholesaler.

How did you finance this deal?

We used cash for the purchase and repairs, then refinanced to pull 100% of our cash out.

How did you add value to the deal?

We worked with section 8 to increase rents in one unit, did some light renovations in that unit, and some additional renovations to the other.

What was the outcome?

Both units rented at market rent and zero dollars cash left in the deal.

Lessons learned? Challenges?

I would probably be more likely to buy vacant properties going forward, but if I find a strong deal with existing tenants, I would discuss rent increases prior to closing.