BRRRR in Seattle, Washington (with before/after pics and numbers)

[Christian Wathne]

I just finished a BRRRR just outside of Seattle, Washington. This deal had all sorts of complexity. It was an out of state deal (I live in the SF Bay Area), where I 50/50 partnered with a contractor, and got a private money loan before the cash-out refi. I'll walk through details (including pictures and numbers) below....

Purchased a short-sale property on 3/3/2017 for $218k. 

I had been flying up to seattle 3 weekends in a row looking at properties without luck, then this place came online on the MLS on a thursday with listing notes saying offers must be in by end of day friday to be reviewed on Saturday. We had under 36hrs to put in an offer so I had my agent swing by and we did a facetime video tour. That was good enough for me so we submitted a cash offer. List price was $169k, we offered $190k cash no contingencies. Saturday morning comes around and we were 1 of 11 cash offers. Selling agent kicked offers back 3 rounds, we came up and up and eventually got the deal. Its a 3br,1ba small, single story, SFH. We estimated $40k rehab and a $320k ARV.

Partner and loan structure: 

• Private money loan for 90% of purchase price
• Contractor partner and I each paid another 5% of the purchase
• Contractor partner and I split rehab costs 50/50
• I handle project management / design / financing / finding the deal/etc; contractor partner handles doing most of the rehab work (we subbed out plumbing/electrical and hired day labor for help with roof/paint/landscape/etc) (this is the 4th deal my contractor and I have worked together on, but first time being partners)

We spent 

• $218,000 purchase
• $41,500 on the rehab 
  
  • total gut + permitted electrical service change, plumbing, roof, landscaping/etc
• $4,000 on holding costs
• All in at $263,500
• Estimated sale price if we were to list would be $330,000 
• So we would net around $306,900 (7% to sell) minus  $263,500 = $43,400
• Divide the above by 2 since my contractor and I partnered, we'd each net about $21,700

I went back and forth about selling vs BRRRR'ing and settled on the BRRRR since my long term goal is to get to 10 cash flowing properties, so I offered to buy out my partner from the deal, he was happy with that, so adding that to my costs, my total investment comes out to $285,200

I got an 80% loan on the new $330k ARV which allowed me to get back $265k, which means I net net DID NOT get all my money back out (very hard to do in seattle), and thus end up leaving about $20k of my own capital in the deal. So I have 20k invested in a $330k property with a $265k loan at 4%.

We're expecting it to rent for $2,200/mo. My holding costs (including maintenance/insurance/tax/etc) is right around $1800/mo

Here are some before pics; place was a dump! We had to wear masks for the first couple weeks

We spent 2 weeks simply on the demolition. Total project end to end took 14 weeks. I got the team custom T-shirts for moral! 

goodbye kitchen!

Had to mop the grease off the ceilings before we could prime! Ended up replacing a lot of drywall. 

bathroom in progress

Laser perfect

322sq ft deck!

And here are the final pictures....

My business partner and I on the last day!

[Antoine Martel]

Christian. I grew up in the Bay Area. Love your story and what you have done up in Seattle. I have been doing BRRR's for the last year in Memphis and Cleveland. Would love to connect and learn more about what you are doing and see if we can maybe do something together in the future. Great work!