1st BRRRR Deal Recap - Medford, MA

[Tyler Munroe]

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Medford.

Purchase price: $510,000
Cash invested: $35,000

On market property bought off MLS! BRRRR investment, needed knob and tube replacement, cosmetic upgrades done myself. Appraised Nov. 2019 @ $860K with more room for upside (Green Line subway extension coming within 10 min walk in 2021/2022). Bought the week of Christmas so not many people were looking for homes, diamond in the rough! On market deals are possible (although this was 2015)...

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

Got started house hacking a two family down the road and realized the value of that.

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

On MLS, believe it or not! Offered asking at $550K and negotiated down to $510K after inspection with no counter from seller.

How did you finance this deal?

Traditional bank financing, 30yr fixed, 20% down.

How did you add value to the deal?

The house needed full electrical and we worked with our electrician to structure an affordable way to remove and replace the knob and tube wiring. Outside of that, no major renovations were needed, just heavy cosmetic work. Had both the bathrooms retiled and put in new vanities, new kitchen floors, all carpets ripped up and hardwood underneath refinished, painted place myself.

What was the outcome?

Rents adjusted to market rates (with still a bit more room, I have great tenants and give them a little break) with the first floor (2BR) renting for $2,375 and the top floor (4BR) at $2,850. Able to refinance in Nov. 2019 with an appraisal value of $860,000. All in costs after refi are about $4,000/month and rents are at $5,225, so still maintained positive cashflow and was able to take significant cash out via refi.

Lessons learned? Challenges?

Deals can be found on MLS! I enjoy looking in the off season as there's much less competition and a lot of times the owners listing HAVE to sell for some reason. If not, they would wait until the market is busier in spring/summer.

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

I am an agent myself and have some great knowledge about what renters look for when taking an apartment. Was able to work some affordable but effective ideas into this house.