Case Study Of A Successful BRRRR

[Eddie T.]

Hello all i hope to provide some value and inspiration to all of you searching for your next deal. The property was bought on the court house steps at the foreclosure auction for 26k. I was not able to view the inside of the property beyond looking in thru some of the windows which showed some wall damage but I could not tell the extent. On the exterior we knew we needed a new roof.

So what I had at this point was a 4/2 1492 sq ft built in 1996 in a sub division where I already own 3 other of these models so I could calculate in general numbers what the house would need being they were all built with similar layouts and finishes.

Upon closing here is what the house needed to get back into rentable condition:

While vacant home was broken into and all the copper plumbing stolen

New Flooring 1200 sq ft

Two bathrooms needed renovation since holes were made to steal plumbing

New water lines thru-out the house

New light fixtures

Paint interior

Replaced all the outlets

New Hot Water Tank

Fix heart runs in the basement

Minor cosmetic fixes

New roof I choose to go with metal roofs for the longevity and I am able to get them at the same cost as shingle

Purchase Price 26k

Renovation was 20k

All In 46k

After 6 months I went to my banker to refi the property and it appraised for 86k they gave me a 80% LTV cash out refi

20yr term 10 years fixed at 5.5%

Cash Out Refi          $68,000

Cash in the deal      $46,000

As you can see I was able to pull out more cash then what I invested by creating value I was able to pull an extra $22,800 

Now I have had this property rented for over 12 months so I can give you my year 1 numbers:

Gross Rents: $12,000

Insurance             576

Repairs                  138.77

Supplies                136.22

Taxes                   2517.47

NOI before Debt  $8,633

Debt Service         $5,616

Cash flow              $3,017

Now remember i have no cash left into this deal and I used the extra 22k of the cash out refi to purchase two more properties so my COC return is actually higher but for simplicity sake I am giving you simply numbers.

Before Photos:

After Photos:

[Matt Beech]

What source did you utilize to fund the purchase and reno? Did you go with a hard money lender, partner or other private lender? Great looking before and after pictures. Looks like a great rental.