Bungalow BRRRR in Auburn, Maine

[David Marshall]

Investment Info:

Single-family residence buy & hold investment in Auburn.

Purchase price: $80,250
Cash invested: $45,000

Completed a BRRRR and getting ready for the next one. Bought a single family bungalow from an auction website. Rehab included adding a full bathroom on the second floor, new kitchen base cabinets and sink, restored plaster walls, full interior paint job, repaired porches, new furnace, new flooring, hard wood floor restoration and electrical rewire. Rented it in January, 3.5 months after purchase. Refinanced it in February. Getting ready to repeat.

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

While I like the idea of doing a flip, I always want to hold onto properties after improvements are done. The BRRRR strategy has allowed me to flip it to myself and keep the cash flow. When I saw the bungalow on auction, I ran the numbers through the BP BRRRR Calculator and I saw a wide spread.

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

This was a purchase that I made from an auction website after looking at dozens of potential properties online. The purchase price was the minimum the bank would accept.

How did you finance this deal?

Cash and loans.

How did you add value to the deal?

Rehab included adding a full bathroom on the second floor, new kitchen base cabinets and sink, restored plaster walls, full interior paint job, repaired porches, new furnace, new flooring, hard wood floor restoration and electrical rewire.

What was the outcome?

Rented it 3.5 months after purchase in the middle of January. Refinanced it in February and got back $85,000. The property now cash flows at $765 monthly.

Lessons learned? Challenges?

The auction website would not allow interior viewings or inspections prior to closing. It was challenging to create a budget for the rehab without seeing the interior. The cost of the rehab exceeded the budget. The six month rule for the refi meant we could only get part of our investment back. The bonus is the cash flow better with a smaller loan amount. Also, there is potential for getting a line of credit.