Ferguson Mo. Buy where everyone else is avoiding.

[Michael Zau]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $19,000
Cash invested: $8,000

purchased from wholesaler. Partnered with beginning investor to handle the phones with property manager. I fund, she does the light lifting and the heavy lifting is with the property manager. BRRR method, to get original investment, rehab money and and all money afterwards is "gravy." still cashflows after the original BRRR. listed cashflow is how much I net after everything, gross is over double that amount.

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

price

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

wholesaler that has good reputation with multiple properties.

How did you finance this deal?

cash, then refi

How did you add value to the deal?

fix and rent out

Lessons learned? Challenges?

out of state \ finding money to partner \ finding partner to work with.

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

unfortunately no. but True title in StLouis is amazing,

[Steve K.]

@Michael Zau Always curious how people allocate for maintenance, repairs, capex on a house like this. Doesn’t seem like enough gross rent to have enough money to maintain a home. I’ve seen 1-2% of the home value used for annual maintenance /repairs/ capex, but obviously on a $19k home that’s not nearly enough money to maintain a property. There are certain built-in costs to owning any home. Looking back at my P&L’s I don’t have any properties that cost less than $10k/yr to maintain, which is more than your gross rent amount of $9,600. Granted mine are MF properties but I would still be worried you’re coming up short on capex. The way I would do it would be to total up all the capex expenditures the home will need during your hold period and divide that number by the number of months you plan to own, plus a few hundred for general maintenance and repairs each month. If you’re planning to hold for many years that will include just about everything: windows, doors, roof, siding, furnace, deck, driveway, sewer line, water heater (several times), appliances (several times), flooring (several times) etc. you’re likely to come across about one or two of these big ticket items each year. If you’re only allocating a a few thousand a year to cover these costs I’d be worried about capex eating up profit and creating a negative return. Just curious how you’ve budgeted for this?