All Forum Posts by: Erich Henson

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $10,000
Cash invested: $40,000

Nobody wanted this property! I picked it up for $10,000, put $40,000 into it in repairs, and it appraised for $75,000. Took out mortgage for $60,000. That's a $10,000 cash-out BRRRR that cashflows $500/mo profit! Picture-perfect deal this time!

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

Low price, great cashflow potential.

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

On the MLS.

How did you finance this deal?

Used credit cards to pay cash and then refinanced with a mortgage after rehab completed.

How did you add value to the deal?

Painted exterior and interior, new flooring, new kitchen countertops, stainless steel appliances, new bathtub and surround, new light fixtures, and repairs as needed.

What was the outcome?

$10,000 cash-out and $500/mo positive cashflow.

Lessons learned? Challenges?

You can find diamonds in the MLS!

Hi Matt, I've tried to use Commerce Bank in the past but their underwriting seems to be a bit too strict for me to qualify in terms of their global income requirements.    Another one is US Bank, who offered me 3.875% but when they dug into my tax returns etc they declined me because my "global" income wasn't high enough for them in relation to my debt load.  I'm trying to get my cashflow higher so I can start qualifying with the larger banks who have the best rates.  With the smaller banks, I'm usually talking directly with the president or VP and I've found they make a decision based more on their own opinion of my situation.  

Yes, very awesome. I independently discovered the BRRR method a few years ago before I heard about BRRR on Bigger Pockets and have been doing it for a while. I'm not the best at it and usually end up with some out of pocket expenses but like you said, it can be recouped fast in most cases and in some cases it swings the other way and cash is put back in my pocket.

None of the small local banks I've worked with require a certain amount of seasoning.

 Thank you!

Thank you!

Hi Ray,

On most of my cash-out refi's, I got a rate of around 5.75% with a 75-80% LTV and 15-20 year amortization. Fixed for first 3 years, balloon in 5-7 years. I just started working with a bank that is going to refi all my loans at 5%. It's a small local bank with only two branches. I've found the most luck with the smaller banks. Banks like Bank of America are never able to help me for some reason...

Erich

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $23,750
Cash invested: $50,000
Sale price: $85,000

Tried to BRRR this house but didn't quite cover all my costs after the refinance because the appraisal came in quite a bit lower than expected. So at the end of the day I have about $6000 out of pocket on this project. Rented for $1200/mo section 8 so it cash-flows nicely and I'll make back that $6000 in less than a year.

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

I thought I'd have no problem recouping all of my investment using the BRRR strategy but the appraiser didn't like the layout of this house and hit me hard for it.

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

This one was on the MLS. Offered about $1200 under offer price.

How did you finance this deal?

Using my 0% interest credit cards and HELOC and then doing a cash-out refinance to pay off the short-term debt.

How did you add value to the deal?

Replaced nearly all the plumbing and cosmetic updates.

What was the outcome?

Didn't recoup about $6k of my out-of-pocket but with a $1200/mo section 8 lease, I'll recoup that money within a year.

Lessons learned? Challenges?

Be more conservative with the estimated after rehab appraised value!