Long distance BRRRR inside IRA

[John Erlandson]

Investment Info:

Single-family residence buy & hold investment in Alamogordo.

Purchase price: $140,000
Cash invested: $60,000

First investment property purchase. Inside IRA so it is using pre-tax monies. Needed 50% ($70k) down for non-recourse loan. Then invested $15,000 in updates and holding costs. First person to look at it leased it for 2 years. Once occupied I refinanced with different bank. Needed only 40% down. New appraisal was $152,000. New loan is $84k. Will hold for 20 years. Am paying down mortgage to be done in 7 years.

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

Want to have a long term property for retirement income.

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

Found on Zillow, and worked thru realtor. Able to lower price by $5k.

How did you finance this deal?

Inside IRA using pre-tax dollars. Financed with non-recourse loan requiring 50% down. Refinanced a year later for 40% down to recoup some rehab costs and get better terms.

How did you add value to the deal?

Painted walls, trim and cupboards inside with updated colors.

What was the outcome?

Appraisal value on refinance had increased $15k. And have 2 year lease renter.

Lessons learned? Challenges?

Need to look for cheaper properties to BRRRR.