Update on our 1st BRRR - Rockford, IL

[Erin McLellan-Dawe]

Investment Info:

Single-family residence buy & hold investment in Loves Park.

Purchase price: $58,000
Cash invested: $30,000

This is our first investment property we purchased and BRRR completed at finish line of 2020. Our first rental was a home we originally lived in and then rented. This is across from a school and in fairly good condition....our BIG value add to this property was building a new garage. This property did not have one. Since the value add was mostly outside the home. We secured renters early in the process and they moved in April 1, 2020 even during the Covid-19 pandemic. Our first contractor ran away from the job as the contract was written pre-pandemic and the costs of materials increased and he left the site. We subsequently had to hire two additional contractors to complete the job. The garage also took so long we discounted the rent for 3 months. We were eventually able to refinance our money out before 2020 came to a close. We ended up leaving about $7700 in the property. This difference would have been much less if the first contractor saw the job through. We learned a ton on this project with working with contractors and having good contracts up front.

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

It was newer construction and in good condition. Really only need some touchups and new paint, kitchen floor and appliances on the inside.

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

We found this on the MLS from our realtor

How did you finance this deal?

Home equity loan on our first SFH rental, that was previously our family home we lived in.

How did you add value to the deal?

We added a 1.5 car detached garage

What was the outcome?

The ARV was $108,000 and we left about $7,700 in the deal.

Lessons learned? Challenges?

Need to have better contractor contracts upfront. Apparently need lien waivers signed before final payment to contractor.