BRRRR SUCCESS! LESSONS LEARNED.

[Patrick Kendrick]

A triumph right out the gate! ..of sorts.

POS Triplex 

BUY: $105,000 Costs: $7,900 Rents: $1,100 mo Financing: Hard Money 12% interest only for 9 mo (stings)

REHAB:

Repair costs: $9500 Misc: Includes "cash for keys" to remove inherited tenants

RENT: 

$1900 Misc: Fully performing with professional management in place at 8%

REFINANCE:

Appraisal: $200,000 Great news! aaaand not so fast Field Review to: $185,000 Financing: Conventional at 4.6% Loan: 129,500.00 Mortgage: $897 per mo

After closing costs I pulled out $14,000 to put towards the next deal

Expenses monthy: $1,493 Rents: $1900

**Cash Flow: $407.00 per month with roughly $3,400 into the deal**

[Disclaimer: These are rough numbers as this is my first deal. Tracking the numbers thoroughly is absolutely essential but will obviously get better with experience]

REPEAT:

I am in the process of BRRRR'ing a comparable 4 plex in the same area as the Triplex. Similar acquisition, rents, and condition. The Triplex mentioned here appraised (initially) at 200k and the 4 plex appraised at $128,500! Pardon!? Clearly there are some issues with the appraisal process which I won't get into cause I would prefer to keep as much of my hair as possible but it is something to pay particularly close attention to. With refinancing out a Hard Money loan you are looking at a 75% Loan To Value if you want to walk away with out any down/out of pocket at the closing table.

I feel like this is something that is brought up very little on BP (at least from what I have seen/heard).

Your ARV needs to be solid, with much more room than one might expect. In order to "pull your money back out" you'll need to clear that 75% LTV significantly, depending on your situation of course.

Just a heads up from a new guy making some moves. 

See you out there!

:)pk