BRRRR single family with before and after pics! Metro Detroit

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BRRRR single family with before and after pics! Metro Detroit

Keith Jourdan
Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes

Picked up this house in Redford Mi on a bankruptcy deal for $58k. Redford is 15 min west of Detroit. Decent area where homes sell for ARV of around 80-150k depending on size/location. Redford is in the Livonia/Westland/Garden City/Dearborn Heights/Plymouth area.

3 bed 1 bath 1000 sqft bungalow (we added a full bath in basement.)

New roof , all new plumbing, new paint, new garage siding, new countertops, refinished hardwood flooring, new plugs/switches, updated bathroom and put new full bath in basement. New carpet/vinyl etc.

In total  $21,000 remodel.

Put it up for rent for $1,200 yesterday and have already a ton of calls. Will rent at this price no problem. Here is the zillow link https://www.zillow.com/homes/for_rent/Redford-MI/h...

As soon as I have a signed lease I will do a cash out refi at 70% LTV. Appraisal should come in around 105-110k.

Before and After pics:

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Egan Lohman
Bozeman, MT · Member since 2017 · 40 posts · 25 votes
8y

@Keith Jourdan - Nicely done!

@Michael B. - Just wanted to chime in on your question:

"So you purchased for 58K and put 21K into rehab so your cost is at 79K. You'll refi at, let's call it 110K, 70% LTV. 70% of 110,000 is 77,000. So how do you get cash out when that's less than 79K? Or is it because the 21K is separate?"

Your numbers are all correct. He put 79k CASH into the project (plus closing/holding costs). He will refi at 70% LTV on the appraised value of 110k. That means the bank will cut him a check for 77k. Remember, he doesn't have an existing mortgage. He owns the house outright. He paid 79k for it :).

Once he re-finances, he will have a mortgage, but he will essentially only have the remaining 2k (79-77) of his own money in the house. That's the beauty of BRRRR.

He will own a property worth 110k, he will have 30% equity because he only owes 77k, and he put 2k as down payment!  Oh, and he now has significant residual cash flow from the rent!

Time for the last "R" which really should be two "R"s - Rinse and Repeat!

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  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    4Reply
  • Brian Garrett
    Real Estate Investor · Palm Beach County, FL · Member since 2017 · 3k+ posts · 2k+ votes
    8y

    Looks great so based on those numbers if my math is correct you'll have anywhere between $2-6k plus the closing costs left in the deal after the refinance depending on the appraisal. Also if you're getting that many calls at $1,200 maybe there's some room to raise the rent a little higher now since you see there's a clear demand. I don't know the comps in your area but it sounds like you could possibly fetch a little more. Regardless congrats on a nice BRRRR!

    13Reply
  • Keyonte SummersPro Member
    Harper Woods, MI · Member since 2017 · 384 posts · 311 votes
    8y

    Great job as always Keith hopefully one day we can work together or I can pick your brain on getting to the next level. It's hard find good contractors in the city that does the work right the first time let me know if you have go to crew or company. 

    2Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    Originally posted by @Keyonte Summers:

    Great job as always Keith hopefully one day we can work together or I can pick your brain on getting to the next level. It's hard find good contractors in the city that does the work right the first time let me know if you have go to crew or company. 

     Thanks Keyonte

    Yes finding and keeping good workers is a tough part of this business . Back in 2010-2014 contractors were begging for work , now investors are begging for contractors .

    1Reply
  • Michael B.
    Huntsville, AL · Member since 2017 · 44 posts · 31 votes
    8y

    @Keith Jourdan Thanks for posting this. If you don't mind, can you help me see if I'm starting to almost comprehend this?

    So you purchased for 58K and put 21K into rehab so your cost is at 79K. You'll refi at, let's call it 110K, 70% LTV. 70% of 110,000 is 77,000. So how do you get cash out when that's less than 79K? Or is it because the 21K is separate?

    See, I'm confused. One day when I do get it and am successful, I can tell beginners to go pull up some of my early posts and show them how there was a time when I didn't understand stuff either.

    6Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    I bought the house and did the rehab with cash. So I will be able to pull out 70% of whatever it appraises for . The trick with the BRRRR method is to buy one cash , refi out and buy another , keep repeating the process . A great way to build equity and cash flow . This method deters a lot of people due to the large cash outlay for your first property. But for those with cash it is a great method .
    8Reply
  • Jay HinrichsBusiness Member
    Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
    8y

    Looks great Keith keep up the good work... stack up those rentals I think thats the right play at present in that market

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    2Reply
  • David Schulwitz
    Rental Property Investor · Detroit, MI · Member since 2012 · 53 posts · 19 votes
    8y

    @Keith Jourdan - As both a fan of Detroit and the BRRRR strategy....awesome job!! Those photos look great and you can see the value you added to the place.

    I was born and raised in Saginaw - huge Detroit sports fan still today. Move all around the US the last 13 years, but I've settled in DFW, Texas (for now). Just submitted my first offer for a BRRRR property about 6 hours ago, so hopefully I find out tomorrow if my bid won it.

    Any advice or mistakes that you made the first time around doing BRRRR? I'll be using a HML because I don't have quite enough capital at the moment to go all cash.

    Anyways - great job!  I think I agree with above - maybe try to raise the rent slightly if you're being flooded with calls?  

    Dave

    0Reply
  • Donna Page
    Investor · League City, TX · Member since 2017 · 21 posts · 17 votes
    8y
    Great Job Keith! Those after pictures look fantastic for the amount of the rehab. Do you do your own work or do you have a team in place?
    1Reply
  • Stephen Meche
    Rental Property Investor · Flat Rock, MI · Member since 2017 · 18 posts · 8 votes
    8y

    @Keith Jourdan, it looks great.  I look forward to working with you in the future on investments in the detroit area.

    1Reply
  • Peter Hensoldt
    Farmington, MI · Member since 2015 · 2 posts · 2 votes
    8y

    Congrats Keith! 

    @Nathan W. check this post out! Great guy to follow. 

    1Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    Originally posted by @Jay Hinrichs:

    Looks great Keith keep up the good work... stack up those rentals I think thats the right play at present in that market

     Thanks Jay!

    1Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    Originally posted by @David Schulwitz:

    @Keith Jourdan - As both a fan of Detroit and the BRRRR strategy....awesome job!! Those photos look great and you can see the value you added to the place.

    I was born and raised in Saginaw - huge Detroit sports fan still today. Move all around the US the last 13 years, but I've settled in DFW, Texas (for now). Just submitted my first offer for a BRRRR property about 6 hours ago, so hopefully I find out tomorrow if my bid won it.

    Any advice or mistakes that you made the first time around doing BRRRR? I'll be using a HML because I don't have quite enough capital at the moment to go all cash.

    Anyways - great job!  I think I agree with above - maybe try to raise the rent slightly if you're being flooded with calls?  

    Dave

    My advice with all rentals is to go cheaper on materials. Tenants are hard on houses, some obviously better then others. I don't do tile floors in kitchens , too expensive for labor. Tenants will crack them. Use sheet vinyl, cheap and very sturdy. Also try to avoid carpet where you can. Most of the houses in my market were built in the 1950s and have original hardwoods, it is worth it to refinish, very tough for tenants to destroy hardwoods. Good luck!

    4Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    Originally posted by @Stephen Meche:

    @Keith Jourdan, it looks great.  I look forward to working with you in the future on investments in the detroit area.

     Thanks Stephen! Looking forward to helping you out.

    2Reply
  • Chris P.
    Beulah, MI · Member since 2018 · 46 posts · 16 votes
    8y

    Looks Amazing, I would love to work with you on any future deals.

    0Reply
  • Keith Jourdan
    OP
    Property Manager · Metro Detroit, MI · Member since 2008 · 305 posts · 362 votes
    8y
    Thanks Chris ! Yeah drop me a line
    0Reply
  • Andrew Lang
    Garden City, MI · Member since 2017 · 10 posts · 1 vote
    8y

    Great before and after photos. Would be great talk with you some time and maybe work together.

    0Reply
  • Diego Ortega
    Investor · Ferndale, MI · Member since 2016 · 50 posts · 19 votes
    8y

    @Keith Jourdan

    Very nice! My girlfriend and I are house hacking in oak park right now and got fairly high rent for the area making places look like yours! I would say raise the rent like everyone else said and you will probably get it!

    0Reply
  • Ahmed Hamza
    Investor · Saint Clair Shores, MI · Member since 2016 · 14 posts · 3 votes
    8y

    Excellent deal Keith! I'm in the Detroit area as well, would love to connect!

    0Reply
  • Brenda Schultz
    Hemlock, MI · Member since 2017 · 1 post · 5 votes
    8y

    You did all that including a roof for $21,000???? I am in the Saginaw area and can't believe you did so well with the costs. Where do you find a good contractor or did you do this? Do you have a property manager? I am new to your web site. It looks like a very good web site to learn alot.

    Thanks

    5Reply
  • Gerardo Lozano
    Residential Real Estate Broker · Schaumburg, IL · Member since 2015 · 28 posts · 8 votes
    8y

    Nice Job!
    Hope you BRRRR your way to success!!

    0Reply
  • Egan Lohman
    Bozeman, MT · Member since 2017 · 40 posts · 25 votes
    8y

    @Keith Jourdan - Nicely done!

    @Michael B. - Just wanted to chime in on your question:

    "So you purchased for 58K and put 21K into rehab so your cost is at 79K. You'll refi at, let's call it 110K, 70% LTV. 70% of 110,000 is 77,000. So how do you get cash out when that's less than 79K? Or is it because the 21K is separate?"

    Your numbers are all correct. He put 79k CASH into the project (plus closing/holding costs). He will refi at 70% LTV on the appraised value of 110k. That means the bank will cut him a check for 77k. Remember, he doesn't have an existing mortgage. He owns the house outright. He paid 79k for it :).

    Once he re-finances, he will have a mortgage, but he will essentially only have the remaining 2k (79-77) of his own money in the house. That's the beauty of BRRRR.

    He will own a property worth 110k, he will have 30% equity because he only owes 77k, and he put 2k as down payment!  Oh, and he now has significant residual cash flow from the rent!

    Time for the last "R" which really should be two "R"s - Rinse and Repeat!

    14Reply
  • Ron Fletcher
    Leclaire, IA · Member since 2016 · 161 posts · 130 votes
    8y

    Very nice! But it must have been hard to part with that sweet blue carpet.

    2Reply
  • Jason Carter
    Rental Property Investor · Culver City, CA · Member since 2012 · 403 posts · 246 votes
    8y

    I agree with @Brenda Schultz. You and your contractors did a nice job stretching that 21K. Great job!

    0Reply
  • Jenelle H.
    TX · Member since 2017 · 70 posts · 38 votes
    8y

    Following this thread. I am very curious about how your cash out refi goes, as that’s the thing that makes me nervous about purchasing in the Detroit area. Please do update on how that goes. 

    0Reply
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