Unreal Numbers on a BRRRR Duplex, Out of State Investor!

[Chris Niemeyer]

Investment Info:

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

Purchase price: $82,000
Cash invested: $10,000

This ended up being a great BRRRR deal! Purchased this duplex from wholesaler. Worst house on the block in a great neighborhood. Used HML putting 10% down, then they covered full $40k rehab budget. All-in about $125k including acquisition, closing, holding costs.

Immediately rented for $2100 upon completion, then did a cash out refi. Appraised for $190k, so pulled out $152k at 3.75% for 15yr fixed, to pay off all owed and put $25k back in my pocket tax free. I love these deals!

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

I saw two great exit strategies on this one. Desirable neighborhood, horrible house with lots of value-add potential. We knew market rent was ~$2000/mo and that it should ARV around $180-200k. With a target of $125k all-in, it seemed this would be a great opportunity to BRRRR.

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

Wholesaler who found me through database records. Negotiated down about $5k from initial offer.

How did you finance this deal?

HML

How did you add value to the deal?

Took the project nearly down to the studs throughout. Improved every room, upgraded all, added downstairs bathroom and upstairs laundry. Beautiful kitchen and bathrooms.

What was the outcome?

The numbers speak for themselves - $125k in, cash-out refi for $190k to put a good chunk of change back in my pocket for the next deal.

Lessons learned? Challenges?

Only hiccup was the timeline with contractor. We were aiming for 10-12 week turnaround and it took nearly 16 instead. Fortunately, after this contractor had similar delays in past, I put in a provision for "carrot and stick" on completion. If he finished on time or early there was a sliding scale bonus structure. If he finished late, a deduction from final bill. So while he wasn't happy about that, we were very clear up front and it was on him for being so late. I'm doing this in future deals.