First completed BRRRR - Base Hit

[Graham Northrup]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $78,000
Cash invested: $20,000

HUD auction, 5/2 SFR. Updated with paint throughout, tile in kitchen/baths, painted kitchen cabinets, repaired rotting deck, new roof and repaired carport, new fence

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

The numbers looked good, and it seemed like a fairly light rehab.

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

It was a HUD auction, and we were the high bid

How did you finance this deal?

Cash from our own sources, as well as a private money loan.

How did you add value to the deal?

We spruced it up with new paint, replaced cracked linoleum in kitchen with tile, repaired rotted carport roof and replaced whole house roof, repaired deck, replaced corroded water heater, painted kitchen cabinets, repaired faulty appliances, and a few other smaller things

What was the outcome?

House looks great, got it rented to a nice family at our planned-for rate. It appraised for 130k, which is the number we calculated on, but of course were hoping for 140-150k.
Unfortunately, our rehab expenses were significantly more than we planned for. Budgeted for around 30, ended up being 42, which made us leave about 20k in the property at refinance. Took out 104k to pay back lender and reinvest in future properties.

Lessons learned? Challenges?

We needed to keep a close eye on our contractor, because the expenses seemed to explode, cutting into our ROI.

All told, we are getting a moderate return, have a nice asset, and a lot of experience gained!