BRRRR with a tweek in Memphis

[James Wachob]

I have found a great way to ramp up my BRRRRs in Memphis, TN

The seller of the property is willing to finance the purchase, for me = $50,000.

I am supplying the funds to renovate = $12,250. 

The subject property has been "pre-appraised" and the ARV = $82,500

My permanent lender has a program called Delayed Financing that will allow me to borrow up to 75% LTV. 80,500 x 75% = $61,875 which leaves a balance of $375 + closing cost of approximately $5000.

My initial cash out of pocket will be: 

• $6,125 1/2 of total renovation cost DEPOSIT to General Contractor 
• $2,000 loan origination to the seller
  
  • Total cash out of pocket = $8,125

At closing I will need:

• $6,125 1/2 of total renovation cost FINAL PAYMENT
• $1750 in interest paid to seller while I complete renovations
• $5000 in closing cost to my lender for taking permanent financing. (30 year fixed at 4.75%)
• $375 balance
  • Total cash needed at closing = $ 13,250

Total cash out of pocket will be: $21,375 AND I will have $20,250 in equity!

My favorite part about this deal is that it will allow me to do multiple deals at once. I also have multiple exit strategies. I could sell this to an investor as a TurnKey home instead of taking a mortgage, or perhaps a home owner.

This home is located in a County Only tax area which really helps my numbers!

I'll keep everyone posted on the results. Please let me know if you see anything I am missing! This seems too good to be true.

James 

[James Wachob]

@Alexander Price when you were in Memphis, we spoke about this deal. I was excited about it back then but now that it is happening, I am pumped.