First "kind of" BRRRR

[Garry Anthony]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $24,000
Cash invested: $37,000

Here is my first BRRRR property.... well kind of. I will explain that later on. The rehab of this house was no simple task, for me. This was my first project, and being the stubborn person that I am, I wanted to experience doing all the work myself. My previous construction experience consisted of painting, and working with an electrician for two months. Needless to say, a three month project took me six months, and a $6,000 rehab cost me $13,000. It's all part of learning though. The house needed some TLC on the outside, and every room between the attic and crawlspace. To sum up all that was done, we painted the outside, hung new gutters, replaced all the windows, rewired the whole house and garage, tore out the bathroom, tore out and rebuilt an exterior wall, put down new flooring, dug a sump pit in the crawlspace, and put up support beams down there as well. YouTube was my best friend during these times! I did get some help from friends from time to time, which was greatly appreciated, but most of the time I was torturing myself, trying to figure things out. Looking back on it now, it was an incredible lesson on patience and time management.

When I purchased this property, the plan was to fix it up and rent it. As the rehab was approaching the end and I was starting to talk to banks more about refinancing, I decided to move into the house myself. Loan options were much more favorable for an owner occupied refinance, when compared to an investment property refinance. The closing costs were about $1500 less, the interest rate was lower, and I was able to pull out 80% of the appraised value. With all that considered, it was an easy decision for me to make. I had a total of $37,000 invested into this house, so I needed the appraisal to be around $48,000 for it to cover the loan costs and the capital invested. To my surprise, the appraisal came back at $55,000. With that, I was able to clear a little under $5,000 after all expenses were paid. Not to mention, the mortgage payment, with tax and insurance included, was only $294 a month. That was something I could live with! The project as a whole, worked out really well. It didn't seem like it was going to during the rehab period, but that's where I had the hard lessons on patience.