My First BRRRR (attempt)

[Bobby Valcin]

Investment Info:

Single-family residence buy & hold investment in Leesburg.

Purchase price: $59,900

My first BRRRR!

This is a 3/2 that was converted into a 4/2. It was purchased through a hard money lender for $59,900 with a rehab budgeted at $41,000. I had to put 10% down on the total amount, plus the closing costs and lender fees. About 20k total.

The house needed a new roof, kitchen, flooring, bathrooms, water heater, etc. After completing the roof, I ended up parting ways with the original contractor. To make a long story short they were very slow and came up with some rather mysterious change orders. Once I had the second contractor in place, things went much smoother.

There were two things that I didn't do a thorough check on that ended up being costly. The sewer lines and the electrical. I ended up paying about 5k extra for those repairs. Add that to the exorbitant charged that I had to pay the original contractor and the result is a BRRR......R. The "Repeat" may have to wait a while since I left all of the money in the deal and then some.

The good news is that I was able to find a tenant within two weeks of listing the house for rent and I have a renovated house that cash flows over $500. Over time, God willing, I will recoup those "education" costs. There is also an opportunity to subdivide the lot and build 3-4 additional homes that I hope to explore.

All-in-all, this has been a good experience for me.

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

I generally like to invest in properties that need a total gut job. There is something about the process of remodeling a home that I really enjoy.

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

I found this deal through a wholesaler. The deal had recently been reduced by 10k, which made it the right price point for me.

How did you finance this deal?

I used a hard money lender and paid 10% down on the purchase and rehab.

How did you add value to the deal?

I added an extra bedroom.

What was the outcome?

I didn't end up pulling out the amount invested during the refinancing like I planned, however, I did end up cash-flowing well.

Lessons learned? Challenges?

I need to be more thorough with my due diligence. The original contractor was definitely the most challenging part of this. I ended up paying them an extra 10k, and they took way too long to complete the roof replacement.

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

Lima One Capital, Movement Mortgage