EXTREMELY SUCCESSFUL COMMERCIAL BRRRR!!!!

[Kyle Simmons]

Investment Info:

Office Space buy & hold investment in Murrysville.

Purchase price: $105,000
Cash invested: $45,000
Sale price: $260,000

Extremely successfull Commercial BRRRR!!!

This is my first commercial purchase and my first purchase in my LLC rental portfolio. I purchased 105k with two private lenders simple interest 11%. I got one additional private lender at 15% for 15k to help fund renovations. The additional renovation cost came out of pocket and some personal credit cards. After all closing cost, interest, renovations, and additional holding cost, I was ALL IN around 150k on the nose. My intention as always was to do a cash out refi ASAP to pay back private investors (no prepayment penalty on our 2 year contract) and recoup most if not all of my investment. The building appraised at 260k on comparable sales approach and 265k on the income approach! I split this old bakery into small office space for small business owners and I was fully rented out before Feb 1st which is when my tenants all moved in! $2750 in total rents monthly. My cash out refi allowed me to get a loan for 208k which allowed me to pay back all of my investors, pay off every ounce of CC debt (all accumulated in the last 2.5 years due to renovating 3 properties) and STILL WALK away with a 47k check payable to my real estate entity! My new mortgage is $1160. Extremely pleased with how this turned out to say the least!

Some before and after photos below!

____________ Original Post from November 2020_______
This is my first purchase in my rental portfolio LLC. I also am an insurance agent so I will be the anchor in the building. I have two additional leases signed for $500 each totaling $2100/month. I will have one additional space that I anticipate getting $400/month for totaling $2500/month in rent. I found private money investors to purchase building cash and fund about half of the renovation. The remainder will come from me personally. I just purchased mid October and should be up and running first couple weeks of January! Photos to come.

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

I own an insurance agency and always wanted to own my own office and didn't need/want a lot of space. I found this and it was on the market for nearly 2 years. Negotiated a great price and knew my worst case scenario was that I was going to anchor the office and my agency's rent would cover any mortgage. So relatively low risk. With great upside potential with how I visualized the space after repairs.

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

It was on the market for nearly 2 years. I looked at it about a year prior to buying but also was looking at a different property. Ended up coming back to this one after the other fell through (Thank God) and found out who the owner was through a friend of a friend and got the owner on the phone to negotiate.

How did you finance this deal?

Originally had it under an owner financing 'verbal' contract and after going back and forth with the attorneys, the owner got cold feet on owner financing. So I got creative and spoke with a few friends who I knew loved and invested in real estate and asked them to lend me the money to acquire the building. Interest only financing at 11%. No prepayment penalty with a 24 month contract balloon payment. With a contingency of increasing interest to 18% up to an additional 24 months

How did you add value to the deal?

Building was outdated and needed updates. Split the building into 4 units. Complete gut job. Exterior paint, new windows, new concrete ADA pad for 2nd entrance. High end interior wood doors with glass panels. new carpet, all new electrical. new bathrooms. breakroom for all tenants. New high quality LED light fixtures. The whole 9.

What was the outcome?

Cash out refi appraised at 260k, 208k loan. Paid back 125k to investors, paid off every ounce of CC debt with the closing (accumulated 35k over past 2.5 years due to acquiring and renovating 3 properties) and walked with 47k in cash. Paid off some other things, and left with 25k cash and consumer debt free.

Lessons learned? Challenges?

this was my third renovation in the last 2.5 years. I've personally did majority of the renovation with A TON OF HELP from friends and my DAD. I've learned what I'm good at, what I like to do and what can save me a ton of money doing. Otherwise, I found out how beneficial paying licensed professionals to do work is. I've learned a little more and a little more each renovation.