BRRR Method Lincoln Nebraska

[Taija Walkowiak]

Investment Info:

Single-family residence buy & hold investment in Lincoln.

Purchase price: $42,500
Cash invested: $1

Contributors:
Mark Golden

This house was abandoned for 9 years, it was severely distressed. There was stuff and trash everywhere, at some point it had squatters living in it, there was graffiti on the exterior, and all the copper pipes and wiring had been stolen out of the house. It took me 9 months to track the owner down, even after tracking him down I never met him in person. We did a full renovation to this house, we also added a 4th bedroom and an additional bathroom making the home a 4 bed 3 bath. We purchased this house for $42,500 after the renovation we are all in at $125,000, the house appraised for $200,000 and we rented the house for $1700 per month. We have $0 cash into the property, we used our line of credit to get the house bought, then we got a construction loan for the renovations and once we were finished we refinanced the home. Overall this was a great purchase and the biggest thing we learned was that you should never give up on a property. I had been told multiple times by the owners father that he wouldn't sell it but I had seen the house and knew it was vacant and the back door had been kicked in for some time, so I kept on them calling and sending letter. Eventually the owner called me out of the blue.

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

We have done the BRRR method before and it has worked out very well for us. I was interested in this property specifically because it is in a great neighborhood and therefore would have a high appraisal and would rent for a lot as well.

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

Our friends nephew lives in a house next door to this house however since it was vacant for over 9 years almost every RE investor in town had this house on their list, but getting in touch with the owner was next to impossible. After hitting a dead end looking for the owner I started looking for his family. I found his parents and spoke to his dad who basically told me to F off a few times. Eventually his mom answered and I told her what shape the house was in. 2 weeks later the owner called!

How did you finance this deal?

We purchased the house using our line of credit, then we got a construction loan, and once construction was finished we refinanced that loan into a fixed 30 year note.

How did you add value to the deal?

We did some of the work ourselves to the property, also we added a 4th legal bedroom and a bathroom in the basement.

What was the outcome?

The outcome was $75,000 in equity and $500 per month cash flow.

Lessons learned? Challenges?

The biggest lesson we learned was that you cannot give up chasing a property especially when you know the property is vacant and distressed. The challenges we faced in the beginning was learning how to juggle 2 rehabs at once and then throughout the project we had to learn how to start hiring more things out instead of doing them ourselves.

Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?

We worked with Lincoln Federal Savings Bank for the financing and we have worked with them on other projects as well and they were fantastic!