Nightmare on Blayton

[Randy Smith]

Investment Info:

Single-family residence buy & hold investment in Atlanta.

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

3/1 SFR BRRRR strategy that took 13 months to complete.

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

My wife and I like the BRRR strategy because it allows you to create instant equity and some nominal monthly cash flow. In addition, the tax benefits of the added construction costs help to add more savings in the first year.

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

We are located in Phoenix, AZ and investing in Atlanta, GA due to the price to rent ratios. Since I work a traditional W-2 and has been able to transition from her 9-5, she networked with local real estate agents and found one that she felt particularly comfortable working with. Our realtor found this property on the MLS, suggested we look at it, and we made an offer that was accepted.

How did you finance this deal?

My wife and I practiced Dave Ramsey's Baby Steps which allowed to us create some financials success so we had the money to pay cash for this property.

How did you add value to the deal?

This was a full gut rehab with many surprises along the way. First we had to overcome some flood zone issues which threatened the whole deal. Then we had to work through permitting in Atlanta, GA which proved to be extremely difficult, and then we ran into COVID. Ultimately, this will be nearly a brand new home with new flooring, drywall, kitchen, bathrooms, fixtures, roof, and everything else you can imagine for a full gut rehab.

What was the outcome?

We are now coming up to 12 months of rehab, and we hope to have the property rented for $1200+ in July or August at the latest. Our hopes is that the property will appraise for about $150,000 so we can pull all of our money out and move on to the next property.

Lessons learned? Challenges?

Lessons learned are very lengthy, but here's the short list: Always check flood zones, work with a contractor that is used to working with the city and pulling permits, work with a contractor that is used to working with residential properties versus commercial, schedule regular meetings with your contractor to check on status and hold accountable, be sure to consider permitting time when calculating holding costs, and lastly, be sure to have reserves in case of natural disasters (i.e COVID)