Our first Home and BRRR

[Bethany Olson]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $126,500
Cash invested: $15,000

We purchased this as a foreclosure with an FHA loan. We didn't have a ton of money and traded that for sweat equity. The home was originally 3bed1bath. We added a 1/2 bath and a garage (on CL a guy was tearing down a garage and said if anyone wanted it they could come take it.). We then refinanced it at $220,000. Our "cash flow" is a little lower because we upped our mortgage to reinvest the money into another property. The current value of the property is about $285,000 (as of 3/19).

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

We started running the numbers on renting vs buying. Once we realized how little cash we needed for entry, we were looking for anything in our price range! At the time our max price was $130,000. Which currently doesn't exist in our market! And in 2014 there were only 3 houses for sale at that price that we could buy. We ran the numbers between them and picked the best investment.

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

Through the MLS and my realtor at the time

How did you finance this deal?

We did FHA financing. That was crazy because we had to sign an agreement stating that we would replace the roof before September because it didn't pass inspection. That wouldn't be allowed now!

How did you add value to the deal?

We did cosmetic updates throughout the whole thing (new roof, floors, paint, trim, fixtures, bathtub). The house had been vacant for 7 years and smelled like dog and cat urine. It was bad! We brought the house back to it's "craftsman" roots and made it cute and liveable. We also added a 1/2 bath and 2 car detached garage.

What was the outcome?

It's probably the best purchase so far. I say that because it was our entry point. It was incredibly lucrative, while being manageable with repairs. We learned a LOT about living in a construction zone. And then were able to use the money to reinvest into other properties!

Lessons learned? Challenges?

Always have a space that is finished or not being worked on! Somewhere that you can retreat from the crazy of construction.

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

My realtor was my mother! I would recommend her time and time again. I am now a licensed realtor and own a team.