First BRRRR - Omaha, Nebraska using hard money

[Tony Cimino]

Investment Info:

Single-family residence buy & hold investment in Omaha.

Purchase price: $85,000
Cash invested: $40,051
Sale price: $155,000

First BRRRR house!
Will rent for $1250 (low end)

Will Refinance at the beginning of the year, and should appraise at $150,000

**Update With Final Numbers***
Bought for $85,000
Closing, Holding, Rehab - $40,051
All in: 130,051
January 2020 Appraisal: $155,000
80% Cashout Refi (5/30ARM) = 124,000
Own the house for: $6,051
But also added $31,000 in equity

Rent: 1250 + 15 (pet rent) + $25 nonrefundable pet deposit ($300/12 = 25) = $1,290 per month
Yearly Rent: 1290*12 = $15,480
Yearly Mortgage: $10,750
15480-10750 = $4730 Per year
5% CapEx: 236.50
Cash Flow Per Year: $4,493.50
Cash Flow Per Month: $375.46

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

Reading David Greene's BRRRR Book

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

Facebook Marketplace!

I figured it needed $20,000 in reno, and figured about $10,000 in holding/closing/Fees

How did you finance this deal?

Hard money lender. They would pay me 70% of the total ARV. They said the ARV was going to be $140,000 and only gave me $98,000, so I had to come with the rest. I bet on myself, and I won.

How did you add value to the deal?

Basement was unfinished, so we added drain tiles and a sump pump to keep it from flooding. Finished the basement to add about 550 sqft in the basement. Added a bathroom and bedroom in the basement and changed the house from a 2bd - 1bath, to a 3bd - 2bath. Tiled the upstairs bathroom, tiled the kitchen, new appliances, and refinished the wood floors.

What was the outcome?

I had to fire my first GC, which increased my holding costs by $5,000 and increased my reno by $5,000, and went $10,000 over budget. However; the appraisal came back higher than expected and I was able to cash out $124,000, while my all in costs were $130,051, and now own the house for $6,051 out of pocket, while increasing equity by $31,000

Lessons learned? Challenges?

Pay for a good GC upfront because it will cost you more money in the end.

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

Chad Blythe of Nebraska Reality really helped walk me through the process. This was a wholesale deal and so my agent did not get any money out of the deal, but I have bought 2 houses from Chad in the past, so we have a good relationship and he was a big asset.