Second BRRRR! 23.99% CoC ROI with minimal rehab...

[Paul Beets]

Investment Info:

Single-family residence buy & hold investment in Indianapolis.

Purchase price: $43,000
Cash invested: $7,084

Small 3 bed 1 bath rental property. Four walls and a roof. Nothing special.

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

This arrived in my e-mail from a wholesaler as essentially a "turn-key" opportunity that was rent ready. That was the biggest interest I had in the property. The area is pretty good rental area as well.

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

Wholesaler e-mail blast. No negotiation.

How did you finance this deal?

I had a private lender that was willing to do 10% for up to 12 months with 1 point. Relatively attractive "cash deal" financing.

How did you add value to the deal?

We put about $6000 working to get it rent ready. Had to move a furnace due to code issues. A few HVAC repairs.

What was the outcome?

It rented out very quickly with pretty stable tenants.

Lessons learned? Challenges?

"Rent Ready" or "Turnkey" wholesale deals are rarely that. Always get an inspection prior to purchase. 80% LTV on a cash-out helps the cash-on-cash ROI!!!

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

This was my first BRRRR with a local credit union that does commercial portolio cash-out refis with zero seasoning 80% LTV . However ... we ran into title issues that drug the whole thing out to 8 months. VERY glad to get it cashed out!

[Paul Beets]

@Gregg Benningfield:     Don't dispair!    They do exist and they are out there.    They are just very few.   Like a white tiger in the wild.     Here is my advice to you:

Whatever market that you are in - do a Google search to find everything single bank, credit union, lending instituion you can.   Make a spreadsheet to document their name, contact info, location, restrictions, and terms of non-owner occupied purchases and cash-out refis.       I did this in the Indianapolis area and out of 40 different lending institutions only 5 met my criteria (see below).     And out of those 5 I ended up only being able to work with 2 of them.    

The white tiger you are looking for:

80% LTV on a cash-out refi. This is the most rare. Typically commerical loans. Typical 5 year ARMs with <25 year amortizations which can increase the monthly payment and decrease cashflow. So run your numbers!

Zero seasoning.   This is a big one.   Depending on how you aquired these properties ... you could be eaten alive in holding costs before you are able to get it refi'd into a stable long-term debt service.

No limit on number of loans.    Not as big of a deal ... because you could play some tricks to rotate refis with you and your wife as an example.    But it sure is nice to get a smooth refi process and not worry about hitting a limit and having to start all over with a new strategy.

Best of luck!!!

Paul