BRRR project to cash out (maybe)

[Oscar Castillo Rangel]

Investment Info:

Single-family residence hard money loan investment.

Purchase price: $70,000
Cash invested: $25,000
Sale price: $130,000

Single family residence 4 beds, 2 baths in downtown Mission, Tx.

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

This property was offered at less than half the average price per sqft in the area. I was listed as a 3/2 but when I went to see it, it could easily be converted to a 4/2. It was a lot of maintenance and repairs deferred.

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

Through the MLS. It was already way low to market value and price was just dropped so I didn't do much negotiating.

How did you finance this deal?

Through a hard money lender used in a previous deal. Because we already had history, this time they lend the 100% of the price so I could use a private loan to rehab the property. So I put barely anything in this deal.

How did you add value to the deal?

Splitting a room to make two. Replacing roof, flooring, bathrooms and painting.

What was the outcome?

After the repairs I handed the property to my property manager. They put a tenant and now property is cash flowing a little. After a year I will refinance or sell, depending how the appraisal comes and what makes more sense.

Lessons learned? Challenges?

I was dedicated to stay within the budget. I learn to see possibilities in the properties that could potentially increase the value of the house or put a type of property in the market that is not very common. I know I have two exits strategies. I can either sell it, pay my lenders and still have some cash out or I can refinance, get money back to pay lenders and keep it as a rental.

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