My First BRRRR - Newark Delaware

[Brandon Ropp]

Investment Info:

Single-family residence other investment in Newark.

Purchase price: $155,000
Cash invested: $220,000

Purchased this distressed home right outside of University of Delaware and renovated the entire property: new roof, new windows, new siding, filled in an in ground pool, demoed flooded basement and added 4th bedroom, converted half bath to full, refinished kitchen, refinished hardwood flooring, installed LVF throughout home, new plumbing, new electrical, etc. Purchase price : $155k, Rehab : $65k, Comps: $280k.

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

My business partner and I researched all aspects of realestate investing and based on our funding and lack of experience it seemed like the safest option to go after a basic single family in need of a renovation in a neighborhood with great comps, then turn it into a rental and refinance it.

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

We found this deal on the MLS for $170k; previous investor purchased it at sheriffs sale and decided that it was too big of a project to take on so they tried to sell it as is. The property sat on market for a few weeks before we made an offer, the first 2 offers were rejected and we settled at $155k.

How did you finance this deal?

Private lender.

How did you add value to the deal?

We added a 4th bedroom in the basement along with converting the half bath to a full bath.

What was the outcome?

Screening tenants to rent out property at this time, moving slowly due to Pandemic. Planning on financing out of the property using the signed lease into a 30 year fixed.

Lessons learned? Challenges?

We learned that cheap contractors are not worth saving a few hundred dollars if it means they take 10x as long as they expect to finish the work. Similarly, we learned that just because a contractor has a higher price and a big business does not mean they will be professional or reliable in unexpected situations such as our local permitting process and sending in the proper forms to pass inspections.

Only higher contractors that are references from trusted sources.

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

Nope

[Brandon Ropp]

Originally posted by @Vincent Garman:

BRRR Numbers are solid. In terms of UD Rentals this is more than likely outside of the UD Student Zone. $2,900 is steep for a family neighborhood. Would anticipate getting closer to $1,600-1,800 in rent to a family. Timing is tough with the pandemic bs going on but may be worth your while to look to sell it. Best of luck!

 Hey Vincent, you are correct we are outside of walking distance from main campus but we are across the street from the UD stadiums and our neighbor has been renting out rooms in her house to college students for $700 a room which is where the idea originally came from. $2900 may be wishful thinking, I guess we will see. Thank you for the feedback.