First BRRRR - A base hit, but many lessons learned!

[Anthony Venezia]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $70,000
Cash invested: $102,000

This property is my first BRRRR. It's a 3-bed row home that I have rented out for $1,200/month. I am currently in the middle of the refinance to pull most of my cash back out.

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

I am looking to invest efficiently for cash flow right now. This deal is a base hit, but a great first deal where I learned a lot and I'll cash flow well with a good ROI, about 20%.

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

Found it on the MLS. I went to the open house where the seller was sitting there with the agent, kind of strange.. But anyway, the seller did a lot of talking and revealed her motivation to sell quickly. She was asking for 83k and it had been sitting for a few weeks. I offered 67k cash, she countered at 70k and we had a deal.

How did you finance this deal?

Cash purchase

How did you add value to the deal?

-Gutted and remodeled the kitchen
-Full new interior paint
-New light fixtures and ceiling fans
-Refinished hardwood floors
-New carpet upstairs

What was the outcome?

I am currently in the middle of the refinance. I am targeting an interest-only line of credit against my equity (100%) in the property. It just appraised for 105k. If I am able to do the LOC, my cash flow will be around $850/month. If I cannot secure a LOC and I do a cash-out refi, my cash flow (after principle & interest) will be around $450/month. These two separate outcomes will determine my ROI to be 20% or 38%.

Lessons learned? Challenges?

Have a better, more efficient plan going into the rehab. That was my biggest downfall that I did not plan the rehab so it dragged out longer than it should have and I ended up wasting some money.

I also learned the important in backing into my numbers so I can hopefully pull out as much of my money as possible in the refinance.

Use the inspection report to further negotiate!!!