I'm so excited to FINALLY be able to share the news about our first deal, a BRRRR! I've been (im)patiently awaiting this day, seeing as the project took a BIT longer than we had planned. Here's our story--my husband and I had been talking about flipping homes for a good 10 years now. Yup, 10 years ago I bought my first "how to flip" book, and though it took us a long time to feel like we were in the position to go for it, we finally took the plunge. We spent the first 7 months of 2017 scouring Zillow daily (thank goodness we both enjoy doing this as a pastime). We live South of Atlanta, Georgia, where home prices are pretty darned good, but we were having a fairly tough time finding our ideal property--a foreclosure, no basement, newer than 1990, in at least a B neighborhood, primarily cosmetic fixes. This was our ideal because we felt that this was what the two of us could handle, as we planned to do just about all the work ourselves (we had some experience with tiling, laying hardwood floors, some plumbing and electrical in our own home, and we're good at picking up new skills, which we knew we'd need to do. Finally, we found it: 3 bd/ 2 ba, foreclosure, built in 2005, single story, about 15 minutes from our home. We had saved up a chunk of money, so we were able to make an all cash offer. While this started out as a flip, after listening to the Bigger Pockets Podcast, day-in and day-out while working on the house, we realized that it made more sense to keep this one as a rental, and apply the BRRRR strategy. Here are the numbers:
Purchase Price: $89,000 (paid cash)
Renovations: $16,000 (we had estimated $15,000, so we were pretty pleased with the final number, and we paid this out of pocket as well)
All in: $105,000
ARV: $138,000 (this appraisal was awesome, as our guess was that it would come in at $125K-$130K)
Rent: $1200/mo
We were able to get 75% cash out when we refinanced, which meant that after closing costs, we were able to put $101,500 right back into our bank account. So, we're only in at around $4000 of our own cash. Of course, the first three months of rent, we didn't have a mortgage payment yet. So, we have made $3600 gross to date. PITI (starting August 1) will be about $660/month, which gives us gross cash flow of $540/mo.
I can't tell you how excited we are that things went relatively smoothly. Granted, it took us WAY longer than we had planned. We thought we'd spend about 3 months renovating (again, we did all the work ourselves, aside from installing a couple windows and a new AC/Heater). It took us just about 7 months, but we were ok with that, since holding costs were low, as we purchased in cash. We treated this as a huge learning process, and we did learn quite a bit. We were juggling work, our son, and free time, and we don't like to stress ourselves out too much. I'm pleased to say that we got along WAY better than we thought we would throughout the process--turns out we both excel at different areas, so there wasn't much room for disagreement :)
I think the most stressful part of the process was actually picking tenants. We got a lot of interested renters, and we really liked a few of them. But, no one was perfectly fitting into our (fairly) strict requirements. I know that we have to learn to be a bit less emotional about the "picking tenant" process, as we let our emotions guide us a bit. But we trusted our guts and found some great tenants in the end. We had considered using a management company, but hated the thought of paying them to do what we could do (at the very least, we wanted to give it a shot). The management company I talked to said we'd be lucky to get $1100/mo rent in that area (they hadn't seen the property). I'm so glad we chose to do it ourselves and get $1200/mo. We probably could've gotten more, after seeing how many people were interested.
Here are some pics:
We can't wait to BRRRR it up again. But first, we're making an AirBnB. Wish us luck...
