First and Best Small Town BRRRR

[Ivan Thomas]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $19,000
Cash invested: $29,000

This was a lower income class C- sfh buy and hold for 3.5 years. Then we came in and gutted it and rehabbed it. The new value is $82,000 and the cash-out refinancing is underway. After the refi, our monthly cashflow will be $295. Rents for $850 which is very top of rents for its neighborhood.

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

This deal was intriguing because it was rent ready as-is, but I knew that when we could afford it, the rehab would really pay off.

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

Found this one when a friend was first-time home shopping and he decided to pass. I had walked the property and told him he was crazy for not making an offer. Called my mom and said, "Someone NEEDS to buy this house! I just wish I had money because I know this is a great deal!" She told me I should call a family friend to ask for money--I almost puked at the thought.

How did you finance this deal?

Finally got the courage and called George. He understood the opportunity and said yes. He told me to make a cash offer for $17k. The house was listed for $34k... The sellers countered at $24k and I re-countered at $19k... I got lucky that my realtor just happened to be a rockstar and helped me negotiate a YES at $19k!

How did you add value to the deal?

First thing I did was move in 5 college guys and charge by the person. That went really well but didn't last long as this is a small town with a tiny college. Then I tried a HUD tenant. She turned this class C into a class D while I was looking the other way (I was a college student at the time). So then I went in and rehabbed the unit top to bottom and forced a 4x appreciation.

What was the outcome?

Best BRRRR ever for me.

Lessons learned? Challenges?

SO many lesson as this was my first Major rehab.

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

My realtor was a rockstar but she is about to retire :-(