Great BRRRR property in the lovely historical city of Salem, NJ

[Damon Redmond]

Investment Info:

Small multi-family (2-4 units) buy & hold investment.

Purchase price: $80,000
Cash invested: $2,000

This was an off-market property was purchased through a wholesaler that I met on a Facebook real estate investment group. The current rent roll is $2,400. It needed minor repairs as the property is currently fully occupied. I am looking at this project for at least 5 years to keep in my portfolio. I purchased this property with a hard money lender and a private investor, that is why my cash out of pocket was only $2,000. The property needs around $15,000 in repairs. The ARV is around $180,000.

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

The cash flow sparked my interest. The neighborhood is not the best but I am used to dealing with those types of properties. I also was interested because the property is located in NJ and the returns are good.

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

A wholesaler that I met on a Facebook real estate investment group.

How did you finance this deal?

I received a hard money loan with an 85% LTV, a 12% interest rate with 3 points, with a 2nd loan for the $15% and closing costs. This is a highly leveraged deal but my plan is to refinance in 6 months and pay off the hard money lender and my private investor AND put a little money in my pocket. The lender is also holding $46,000 of my money in reserve for repairs.

How did you add value to the deal?

I am adding value by fixing up the property and making it even better to live there. My presence alone has changed the fabric of the community, according to the super.

What was the outcome?

The current outcome is that I am in the process of fixing the property up, pulling from the renovation budget, stabilizing the tenants in the building and working on increasing the rents, and finally refinancing in 6 months. I already have a lender that will give me up to 75% LTV on a cash out refinance in my LLC's name.

Lessons learned? Challenges?

The only reason I was able to get this deal is because I moved quickly as soon as he posted it and made him a full price offer based on the photos and the rent roll. The challenge is that I did not know that it was a bad leak in the building that caused mold in one of the units and that I did not budget for, but I am working through it now. I found a local handyman that is doing most of the repairs.

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

Facebook is a good place right now to find off market deals. I have developed good, solid relationships with lenders if anyone needs them.