Completing my First BRRRR - Details Below!

[Derrick Deese]

Investment Info:

Single-family residence buy & hold investment in Columbus.

Purchase price: $50,600
Cash invested: $25,000

This was my first BRRRR. I found the property online at auction.com and won the bidding. The property was in foreclosure and had existing tenants who lived in the property. They were cooperative and moved out fairly quickly. I went in and repaired the property and did the following updates:

The property appraised for a little under than what I expected, but I gained a few insights from the initial BRRRR. The numbers worked out as follows:

Source of Funds: HELOC on primary residence
Acquisition: $50.6K
Rehab: ~$24.4K
All-in: $75K
Appraisal: $92K
Cash Out Refi @ 70% LTV (since the loan was slightly under their general guidelines): $64.4K
Less closing costs the amount back to me was $58.3K.
Total Cash in Deal: $16.7K ($75K - $58.3K)
Monthly cash flow on rental: $363
Annual Cash Flow: $4.4K
Estimated Cash on Cash Return: 26.3% ($4.4K / $75K)

1. I did not update windows on exterior, but likely should have. I am sure those would have added more value and also increase curb appeal on the unit.
2. Look for updating furnace and/or hot water heater. While furnace is expensive, having it completed will save issues down the road.
3. Look into further increasing curb appeal through updating fence, adding shrubbery.
4. I would have put a little more money into the bathroom, and added tile to the shower instead of a surround.
5. I would have likely replaced the exterior door with a new frame.

All in all, now that the first BRRRR is under the belt, I am looking forward to finding another and applying some of the points above. I am am overall happy as I have the property, paying tenants, and cash flow. While I did not recoup everything back from this first deal, I view it as a learning experience; I didn't think it was reasonable to think I would come out on top with the first BRRRR. I'm hopeful that some of the additions above will be able to add more value to a future property and get closer to no money in the deal for an infinite CoC return!

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

Based on reading bigger pockets forums and podcasts!

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

Auction.com bidding.

How did you finance this deal?

HELOC on primary residence

How did you add value to the deal?

Rehab.

What was the outcome?

Cash out refi on the property.

Lessons learned? Challenges?

See notes above.

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

Lending One on Refinance Loan.