BRRRR with Seller finance & Private Money = Infinite return

[Rickey Rodriguez]

Investment Info:

Single-family residence private money loan investment.

Purchase price: $70,000
Cash invested: $20,000

This was my first investment property which I acquired via several strategies. I utilized seller finance, private money, and the BRRRR method.

Initial purchase price: $70,000
Seller note amount: $50,000 x 3.5% interest only = 145.83/mth
Down payment: $20,000
Private note: $20,000 x 7% interest only = 116.67/mth
Rehab costs: $15,000 - My own money

The Private note was used for the $20,000 down payment. BRRRR'd in 6 mth for an infinite return

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

Cash flow and the potential appreciation

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

I already had a previous relationship with the owner. I knew there was motivation to sell. We eventually worked out a deal that was a win-win for us both.

How did you finance this deal?

Initially, I used private money and seller finance. I eventually refinanced into a conventional loan.
Be sure to use a title company or lawyer to draft Promissory Notes and file the mortgage security docs with the local county to protect your investors.

How did you add value to the deal?

I updated the property to include new flooring throughout the home. Interior/exterior paint. Window treatments throughout. Updated two bathrooms. Fix a few plumbing issues. Moved one wall to open up the living room. Added landscaping, painted driveway.

What was the outcome?

The property was eventually refinanced. The initial ARV was $130,000. At a 70% LTV, I was able to get a $91k loan which allowed me to pay off the $50k seller finance note and the $20k private note plus recoup my $15k for the rehab costs and put $6K in my pockets.
$91k - $50k - $20k - $15k = $6k and an infinite return.
The property is now worth $200,000.

Lessons learned? Challenges?

Renovations always cost more than anticipated. I also learned about the Seasoning period, 6 months typically. Don't forget to factor this into your numbers and your overall plan.

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

I did not work with an agent. I did work with a great title company. Holden Title in Stuart, Fl. John and Suzanne are awesome individuals. I try to use them for all my deals --- my personal investment deals and when I'm representing my clients as a Realtor.

Holden Title & Escrow
850 NW Federal Hwy, Stuart, FL 34994
Phone: (772) 261-8565

If you do use them, please tell them that I sent you. Suzanne will get a kick out of that!