Recnet BRRRR Transaction

[Jesse Byrer]

Investment Info:

Single-family residence buy & hold investment in Downers Grove.

Purchase price: $135,750
Cash invested: $75,000

This was my recent BRRRR Transaction. Bought it in Feb. of 2020 for $135,500 and put about $65k-$70K in rehab costs with another $5K-$6K in carrying costs. I had the deal financed for $200K so my out of pocket is around $10K. I was able to rent it out immediately and it cash flows $750 a month. When I closed on the refinance and it appraised for $275k so now have $65k of instant equity. Working on my next rehab now!

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

I feel its the best way to invest unless you have a bunch of extra cash you can afford to leave it the deal. When done right you have little to no money in the deal (or recoup it within the first year) and you have instant equity. This affords you the flexibility to you need as a real estate investor.

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

I find most of my own deals.... it was a foreclosure deal I found on the MLS. Financing had fell through on a prior deal so I was able to jump in an get it.

How did you finance this deal?

I have a long standing relationship with a commercial lender that knows me and the types of deals I do so they are willing to fund these types of properties as long as I set up everything up properly.

How did you add value to the deal?

All new basement... prior owner had done as a DIY and the village made me start all over. I got rid of the water tank and added a tank-less water heater. Brand New Kitchen, all new plumbing (entire house) and new electrical (basement) and new A/C. It was a single land driveway and my property is on a 4 lane road so I added an extension to the front so cars can better maneuver. Lastly, I painted throughout and sanded an poly'd the wood floors on the 1st floor. Biggest rehab to date!

What was the outcome?

$65K instant equity ad $750/mo. cash flow (not factoring vacancy and expenditures).

Lessons learned? Challenges?

Things never happen as quickly as you like and the village will always cause delays. Knowing that and expecting it will bring stress levels down.

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

The key is knowing how to analyse the data so you are buying right a know your budget. I went over, but it was on items that add value and will minimize my maintenance calls for years to come.