First unintentional BRRR project

[Oscar Castillo Rangel]

Investment Info:

Small multi-family (2-4 units) hard money loan investment in Mission.

Purchase price: $113,000
Cash invested: $50,000
Sale price: $180,000

This was a property that I couldn't get a regular mortgage because the property was in a very bad shape with really very low rents. Roof, flooring, walls, plumbing, windows, etc. Found a hard money lender that helped me get the deal and used own money to fix it. Now all 4 units are rented to market rents and cashing.

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

It had 4 units in half an acre lot. Property was in very bad shape and and low rents but in a good area, close to city offices, good school district, mayor avenues.

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

Through the MLS and after checking the property and estimating rehab costs we made an offer. Good and bad thing, appraisal came even lower but because of the condition of the property it didn't pass underwriting so couldn't get a conventional mortgage.

How did you finance this deal?

With a hard money lender at a high interest rate. I'm new investing and this was my first experience with a hard money lender. They were really helpful and quick to approve me (I was pre-approved with the mortgage company so it helped).

How did you add value to the deal?

Replacing roof, electrical, plumbing, windows, flooring, tape and float, painting. The whole thing, basically.

What was the outcome?

After rehabbing the property I handed it to a property managing company and they put tenants. After 9 months I refinanced the property with the mortgage company and now I have a lower interest rate and cash flow.

Lessons learned? Challenges?

Rehab went a lot over the budget as well as the rehab time. But even when this didn't start as a BRRR project, I could adapt to the circumstance and learn. I was "lucky" to have the correct people beside me. The hard money lender was recommended to me by the mortgage guy through someone he knew. Because we already had some history, we was confident to put me in contact with them.

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

Arlen Gracia, real estate agent
Edgar Hernandez, the mortgage guy.