My first BRRRR property!

[Erik Stewart]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $105,000
Cash invested: $55,000

My first attempt at a BRRRR. It is in a neighborhood where the high home prices don't justify the Value:Rent ratio and thus it might be more effective use of the equity to deploy it elsewhere. Current Value ~212,000 and Rent is 1450/mo tenant pays all utilities. I could always leave the equity in this property and keep the house as a low-cashflow property but have appreciation in mind for the long term. Plenty of time to mull it over as I have a 2 year lease signed with amazing tenants!

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

The BRRRR strategy is amazing at utilizing high velocity when investing your money. I suppose the REPEAT portion of the BRRRR is where your imagination can really get going. If you can accomplish a BRRRR Deal on a SFR scale, who is to say you cannot do it on a commercial scale? If you are a dreamer, like me, this gives you all kinds of ideas to put into action!

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

I found this deal by door knocking and following up with the sellers for a year until they were ready to sell. My "negotiations" were basically just me backing into a purchase price. Big numbers to consider: ARV, Market rent After Repairs, Cost of Repairs. When I made my offer, I was only a little off from where the sellers wanted to be and we came to terms from there!

How did you finance this deal?

I sought out private money to finance the purchase and half the rehab, used 10k of my own money as a down payment and paid for the remaining rehab, after we inevitably went over budget :). Long term financing using a commercial loan was successfully implemented after the repairs were done and a lease was in place.

How did you add value to the deal?

I added value by providing a fast and headache free sale for the sellers and by making 55k in repairs!

What was the outcome?

Pretty good outcome! I have about 60k in equity in the proeprty (~15k my own money). I learned a ton about the BRRRR process and it's repeatability. I made a lot of great connections, including my private money lender, commercial lender, a few new contractors, and more!

Lessons learned? Challenges?

Lessons Learned:
1. Be open to change and suggestions from others.
2. Don't be afraid to fail or to have setbacks, expect them. They are good, they mean you are making moves!
3. Sweat equity is great, leveraging other peoples time is better!
4. There is no right or wrong, just your goals and your decisions.

Challenges:
The mental grind of a long rehab and constant problems that need attention.
Leaking roof after lots of rehab has been done
Old pipes, old foundations, old windows
Scammers CL

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

I worked with many real estate professionals on this and other deals that I would recommend to others.