Long distance BRRRR inside IRA

[John Erlandson]

Investment Info:

Single-family residence buy & hold investment in Alamogordo.

Purchase price: $97,000
Cash invested: $25,000

Foreclosed home sat empty for over a year. Did not know about BRRRR before purchasing, so purchased inside IRA with non-recourse loan, and then started rehab.
Update April 2020--finished the rehab inside and out. Took much longer than expected. I am pretty happy with the end results, but the process has been a learning experience. Not the best turn-around time.
Update: Renters finalized and moved in June. Rent $1150/month...$150 more than I hoped for and on a 2 year lease!

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

Wanted a property I could rehab and increase the value when refinancing. Plan to hold for 20 years and have it provide retirement income inside IRA.

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

Found the deal on Zillow

How did you finance this deal?

Inside my IRA I originally purchased with non-recourse loan, needing 50% down payment. It was a VA foreclosure, and they would only come down slightly in price. After the house was rehabbed I was able to refinance with a different bank and they did 60% financing on the non-recourse loan. Able to recoup some of my rehab and holding costs, since it took almost a year to get it rehabbed and rented.

How did you add value to the deal?

The home was listed as 2 br/2bath....but was originally a 3 br/2bath. The third bedroom had been partitioned to create large master closet and a small office. During rehab we turned it back into 3/2. Also updated the look inside with LVT flooring and paint, added granite counters, painted cabinetry and trim, replaced non-functioning AC, landscaped backyard full of weeds into desert style landscape, painted exterior brick to updated colors.

What was the outcome?

First renters loved it and signed 2 year lease for more than I had hoped.

Lessons learned? Challenges?

Need to find reliable contractor that will do work in timely manner.
Better estimate at repairs needed.
VA does not negotiate much on price....so avoid.

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

Rachel Connelly of Coldwell Banker in Alamogordo NM