A BRRRR Auction House Success

[Jeffrey Richardson]

Investment Info:

Single-family residence buy & hold investment in Oklahoma.

Purchase price: $33,000

Cash invested: $10,000

I bought this house at auction, with no inspection, other than a drive by & look in windows. The timeframe between me finding this house, through bidding and winning the auction was 2 hours. The home had a lot of "weekend warrior" style work- so a lot of out-of-code wiring, which we fixed. I priced it $50 below market, and it rented in a week. I then refinanced; the appraisel came in at $69,000. I refi'd at 80% LTV, paid off the $43,000, pulled $10,000 out, and it's cash flowing well.

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

I need to find properties that are way under average prices, in order to BRRRR them.

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

I was perusing auction sites, and stumbled on it.

How did you finance this deal?

I used my line of credit, since it's the same as cash, which was required for this type of "No Inspection" transaction.

How did you add value to the deal?

We fixed some concrete drainage issues in front of the house, painted the interior, fixed some minor siding issues, redid the stair steps, and 2nd floor hardwoods. We also fixed some incorrect electrical work(Think burn marks behind drywall, at improper electrical junctions), and got everything back in decent order.

What was the outcome?

The house rented in a week, and cash flowing well.

Lessons learned? Challenges?

Planning for the worst, and hoping for the best, is pretty solid advice. Pay for the property accordingly.
I found that this property had previously gone to sheriff's auction, and had been won back by the lender for exactly $10,000 more than I ended up paying the bank for it. That gave me a new outlook on the value, or lack of, at Sheriff's auctions.

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

Not often. I finally got my own license about a year ago- it wasn't relevant to this purchase, since it was a zero commission deal. I mainly use my license to offset some of my property manager's fees.