Just completed our first rehab!

[Jonathan Bonck]

This is our first full rehab. We are trying to use the BRRRR strategy. So far we have bought, rehab, and its on the market for renting. Then we will refinance after 6 months and repeat!!

This is in the Southeast area of Houston, TX. 10 mins from where the Houston Texans play at NRG stadium and 10 mins from the University of Houston.

We found this property on the MLS and were able to make a low offer and negotiate further until we got the right purchase price.

We raised $75K from a close relative with a promissory note of 10% annualized interest, which will only be 5% after refinancing in 6 months.

It took 6.5 weeks to rehab. Everything was completely remodeled.

This was a 3 bed, 1 full, 1 half. We turned it into a 5 bed, 1 full, 1 bath. Turned formal dinning room into a bedroom because this market area is not a formal dining room market. Then the back room was massive and we split it into two rooms an added closets. 

Purchase Price: $40K

Rehab: $35K

ARV: $110K

Rent: $1400/month

Cash flow: $450/month

If we cash out refi at 6 months we should be able to pull out $82,500 to pay back the principal and interest on the private capital we raised. 

Cash flow is after saving for all expenses ( capex, maintenance, vacancy, insurance, etc.)

Pics below:

[Jonathan Bonck]

UPDATE

Hi Everyone,

Just wanted to give a quick update. We just closed on the cash out refinance. Learned a lot through this process. The appraiser that was assigned to our refinance gave an overly conservative appraisal. It came back at $103,000. I was frustrated. I ran comps again and showed it to the loan officer I was working with. He sent them over to the manager of the appraisal company. But the manager stood by his appraisers decision. Not sure if this is a trend going on in Houston. But the week before closing they did come up to $104,000. 

I was able to pull out $78,000. So this ended up making me come out of pocket around $3-5K. 

I would still call this a very successful rehab and refinance. Next time I will get better!