SFH BRRRR Cashing Out Almost Everything

[Nick Macklin]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $65,000
Cash invested: $124,832

SFH in North FL that needed some foundation work and cosmetic rehab. Paid all cash and escrowed the rehab costs to try and delay finance the rehab.

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

I like the repeatability of this type rehabbing this type of property so that I don't deplete the capital available to me.

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

An agent I was working with brought me a pocket deal and after I ran my own amortization of their current loan I realized they were just trying to get rid of the property more or less. I offered slightly higher than their loan balance and covered all closing costs. They accepted and we closed 3 weeks later.

How did you finance this deal?

All cash interest only loan from a family member at 5.5%

How did you add value to the deal?

The foundation needed to be leveled and the roof replaced. Painted all of the interior, replaced the floors, added new countertops, refinished the bathrooms and concrete needed to be fixed in the garage.

What was the outcome?

Rehab is finished and I just started to refinance. Appraisal came back at $173,500 and I'll be wrapping in as much of the closing costs as I can and taking a total loan of $130,125. I might leave about $500 in the deal but I'm expecting a cashflow of around $280 per month!

Lessons learned? Challenges?

Finding a lender that is truly familiar with delayed financing is tough. Even if you bring a lender the Fannie Mae information they get scared or confused. Paying a little more in closing for someone that if familiar with it is worth it within reason. If you have to teach a lender how to do their job you should run and find another as soon as possible!