The BRRRRfect next deal!

[Erik Stewart]

Investment Info:

Single-family residence buy & hold investment in West Fargo.

Purchase price: $22,000

Great Fixer-Upper house that will make a great candidate for either a BRRRR deal or a Flip. It needs foundation repair and extensive exterior/interior work. My overall plan is to BRRRR houses and add to the portfolio until I reach the freedom number. The purchase price is so low on this property that I am also considering a knock-down and build-new but need to do further research into the viability of going this route.

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

This type of deal is in line with my overall investment strategy: Continue adding Fixer Upper BRRRR deals to my portfolio until I hit ~ 20 income properties that cashflow and have equity.

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

I found this deal using the "Driving for Deals" strategy, mailing yellow letters, and dealing directly with motivated sellers.

How did you finance this deal?

Financing of this deal is essentially a construction loan. The idea is to get the same end result as a BRRRR but only having to close once, which saves money. I pay 20% of the purchase and repairs, then once the project is complete, reimbursing my out of pocket expenses up to a total loan amount of 80% of the Tax assessed (less than true ARV but no appraisal). The loan will end up being ~75k which will be less than my all in costs, leaving me with $0 into the deal.

How did you add value to the deal?

The way I added value was to purchase a home in need of major repairs and bringing it back to functionality. This added value to the neighborhood as well. Dealing directly with the seller, I gave him the option of a fast close without the normal appraisals, inspections, and contingencies. I also offered great flexibility and a great experience to the seller.

What was the outcome?

I close on this deal tomorrow morning, but I expect the outcome to be similar to my other fixer upper deals. The goal is always a perfect BRRRR :)

Lessons learned? Challenges?

Every deal presents its own challenges and lessons you can take away. The more deals I do, the more the lesson becomes: "There are solutions to every problem, and it is my job to find them and implement them in the best way I am able to." This deal specifically, the rehab cost estimates and repairs timeline is a little tricky. Also, exploring the option of a knock-down, re-build is an interesting wrinkle.

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

You cannot do a deal without working with great team members! My wife is my ultimate teammate! Next up, I worked with a great lender to get this deal done! This is our 4th deal together, so it is great to continue building that relationship.