Great Deals Do Exist - Fayetteville, NC

[Peyton Holtz]

Investment Info:

Single-family residence other investment in Fayetteville.

Purchase price: $60,000
Cash invested: $33,549

Contributors:
Shelby Osborne

BRRRR in Fayetteville, NC. Brought to my agent by a wholesaler. Purchased with a commercial loan and renovated with a commercial line of credit. A local lender will lend 85% LTV for the refi in March 2020. I expect the property to appraise at ~98K, so will leave ~$2800 in the deal which provides a 54% CoC ROI and $40K in profit after sale in 5 years, which can be exchanged into another asset.

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

Limited initial capital makes the BRRRR strategy the most accessible for me. Also, I think that BRRRR investing is a smart way to mitigate risk in otherwise unpredictable economic times.

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

A wholesaler brought the deal. My broker/agent has built a robust lead generation network and caters to investors.

How did you finance this deal?

I used a commercial loan. A local bank offers no-financials on <100K. The note note is a 15yr FRM at 3.9% with a 7 yr ballon, and requires 10% down.

How did you add value to the deal?

My property management team and contracting team conducted a renovation to allow us to seek top-of-market rents. I used a commercial LOC for the repairs.

What was the outcome?

Repairs were completed in 5 weeks, and the property is currently rented on a 1 yr lease at $1100. Plan is to refi in march, using the same commercial lender who will lend at 85% LTV. Should leave ~2800 or so in the deal, which results in a 54% CoC ROI and could yield a 40K profit after a 5yr sale.

Lessons learned? Challenges?

(1.) I put the wholesaler in a bad spot when private money fell through and I had to switch to a bank mortgage--I should have been better prepared and communicated better at the start. (2.) Though I lived in Fayetteville for years, I've never seen this home. I should have teamed-up my property manager and contractor for the initial estimate from day 1...I didn't, and after the contractor-only renovations which cost $15K, my PM went in and said we needed $5K more work to get top rents.

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

Five Pillars Realty is an awesome investor-focused firm in Fayetteville--Shelby, Dan and Mike are rockstars. Lindsey at Nest Managers in Fayetteville is the best PM I have ever spoken with--they also offer all real-estate services and can help with acquisition, project management, and PM. Tina at First Citizens bank was is master at providing financing solutions.