BRRRR variation for foreclosed property

[Chenri Jano]

Investment Info:

Large multi-family (5+ units) commercial investment investment.

Purchase price: $87,000

A foreclosed property that I acquired with price of 60% of market value, I acquire it using a slight variation of BRRRR (Buy, Rehab, Rent, Refinance and Repeat).
- Buy using hard cash,
- Refinance my other properties to get the cash back + get the rehab fund,
- Rehab of $30,000 to increase it's value to around $230,000
- Rental units of 50 units with nett cashflow after expense and mortgage of $1200
- Repeat: finding another opportunities with the extra money that I got from refinance
Conclusion: I got the property with 0 cash invested (though short term cash is needed & using other property for refinancing), get $1200 / month (still in progress). Will be actively involved in the foreclosed properties to get and sell good deals

What made you interested in investing in this type of deal?

The price is very low

How did you find this deal and how did you negotiate it?

Through friend that know that I am in the rental business, negotiation focused on making sure that there are no surprises, like large outstanding bills, lawsuit, legal problem, due to foreclosed condition. I handled the outstanding bills after making sure the bills amount and get the sellers to also put in some money to cover around 40%.

How did you finance this deal?

Borrowing cash from my company and return them by refinancing my other properties.

How did you add value to the deal?

Rehab of $30,000 to increase it's value from $87,000 purchase price with $140,000 market price to $230,000 After Repair Value (ARV) and create 50 units rental in the property.

What was the outcome?

I got my money back with pluses, rehab is undergoing and if plans pull through, will got $1200 / month cashflow.

Lessons learned? Challenges?

Foreclosed property has very low price and I learned a lot about them and now cooperating with the seller for selling them, financing the flipping, finding investors and joint venture in setting up a food court spot.