First attempt of BRRR!

[Elizabeth Chang]

Investment Info:

Single-family residence buy & hold investment in Philadelphia.

Thank you Bigger Pockets community to inspire me to pursue my first BRRR deal. I structured this deal using the new Federal Opportunity Zone program, a Treasury tax incentive program for investors to re-invest their capital gains into qualified low income/distressed community.

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

I was fascinated by the idea of BRRR/Buy and Hold strategy to build financial freedom when I first heard about it on BP Podcast. So I thought I have to give it a try!

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

Through Bigger Pockets networking and forum. Found a turnkey provider, who was able to find me the right deal and work through the rehab process together.

How did you finance this deal?

My capital gain from the sale of my the other property, and I was able to structure the deal using federal opportunity zone program which allows me to deferred and reduce the capital gain tax by investing in qualified low income distressed zones.

How did you add value to the deal?

It is a SFH full rehab, $45K and 12 weeks job

What was the outcome?

Below is the number summary, based on the projection, I will lock up about 8% of my initial capital with 75% LTV cash out refinance. However, I am happy with the cash flow and have a kick start on the BRRR journey.

Purchase Price: $55K
Rehab Cost: $45K (12 weeks job)
Closing Cost: $2K

Estimate ARV: $125K
Cashflow: $200/Month assuming refi loan of 75% LTV with 5% interest rate.

Lessons learned? Challenges?

1. Educate yourself, knowledge is power
2. Keep networking
3. Change the mindset of no it's not possible to how can I make it happen
4. There were times that I get very discouraged, could not find any deals or things were just not moving forward. Talk to more investors and come back to BP read some more success stories! Success should not come easy. 

I hope this little story can also encourage some more new investors in the current real estate cycle! Good luck everyone.