Implementing the BRRRR

[Creshana Barrett]

After months of searching for a multi-family deal, last year I took a leap of faith (and some money from my retirement account) and put an offer in on a 2 family property that has potential to be converted to 3 family (up-down style house). It was listed for $99k and with some negotiation I managed to secure the deal for $75k. I was beyond excited and a little nervous – but excited nonetheless. Closed on this property in January of 2016 with $18,750 down payment, and a little over $7,500 in closing cost and fees. Totaling $26,250 out of pocket.Luckily the tenant on the first floor wanted to stay in the property so I inherited a tenant. Rental income already coming in right after closing- yesss!  I ended up spending just a little over $10k in renovations to the second & third floors shortly after closing.I kept the property as a 2 family (it was the least expensive route on my end), but this made the second unit pretty large since it’s combined with the 3r floor.

So now, my total out of pocket is around $36,500 (rounded). By now, I have done months of research on the rental market in the area and read articles every day from BP. I proceeded to I list the property for rent (even before the renovations were complete) to feel out the rental market. Luckily, I had lots of inquiries and secured a tenant to take the entire 2nd unit starting March 1st! You can imagine my excitement!!  Closed in Jan, renovated, and have tenants moving in for March --- I was thrilled! I could finally sleep. Oh I forgot to mention that the rental income from my first floor tenant was sufficient to cover my mortgage, so with a tenant taking the 2nd floor that money was almost all profit coming in. Can you say overjoyed?!! Fast forward to early December 2016 just a little over 10 months after closing, I was able to refinance my mortgage and cash out my equity. The bank appraised my property for $140,000 and I walked away with a check for $36,000 after closing cost & fees. I am happy to say that I got my money back that I invested and still collecting rental income from my property. Buy, Rehab, Rent, Refinance, …. And now I’m ready to "Repeat" the process.