{"id":113207,"date":"2019-07-19T14:30:39","date_gmt":"2019-07-19T20:30:39","guid":{"rendered":"https:\/\/www.biggerpockets.com\/blog\/?p=113207"},"modified":"2021-03-16T14:54:59","modified_gmt":"2021-03-16T20:54:59","slug":"brrrr-real-estate-big-city","status":"publish","type":"post","link":"https:\/\/www.biggerpockets.com\/blog\/brrrr-real-estate-big-city","title":{"rendered":"Behind the Scenes of a Big-City BRRRR (& Big Profits That Came With It!)"},"content":{"rendered":"

Previously, I discussed why it\u2019s a good practice to find profits in your own backyard rather than going far afield<\/a> hoping for that big end of the rainbow score.<\/p>\n

Well, just to show you that I\u2019m not blowing smoke (some BiggerPockets readers even suggested I was \u201cna\u00efve\u201d), I\u2019d like to share a recent deal with you that illustrates exactly how\u2014even in a high priced market like the greater Washington, D.C. area\u2014there are great deals to be had. It\u2019s also an opportunity for me to show how locating the little fish swimming around in the big pond is vital to success in any market.<\/p>\n

So often, I\u2019ve seen investors go the other way. They find the most prominent house in the neighborhood, fix it up, and add extra features. Then suddenly they\u2019ve got the most lavish property in the area and can\u2019t figure out why nobody will pay their asking price or settle for their ridiculously high rent.<\/p>\n

As the old saying goes, water finds its own level. So if you can, let the high quality of the neighborhood uplift your property rather than trying to lift everyone else\u2019s with yours, right?<\/p>\n

A Great Deal in a Competitive Market<\/h2>\n

123 BRRRR Street<\/h3>\n

This house was a great find on several levels. First, it\u2019s located very close to several shopping and recreation centers. Second, it’s walking distance from both bus and subway lines, which is a handy thing when you live in the D.C. area.<\/p>\n

The property is a row house (aka townhouse) located in a rapidly gentrifying neighborhood that\u2019s growing in quality and popularity. Originally, it was a 3-bed\/1-bath house that had been abandoned for quite a while and was in dire need of some real rehabilitation. The final piece of the puzzle was that the owner was highly motivated.<\/p>\n

The house is the perfect example of the little fish. It was far outdated and just not up to other homes in the neighborhood\u2014nor to today\u2019s more discerning buyers and renters. It was clear to me, though, that with some solid design work and proper TLC, we could turn this ugly duckling into a beautiful\u2014and profitable\u2014swan!<\/p>\n

(Please refer to the as-is photographs at the end of this article that show how the house looked when I first saw it. Believe me, it was in really bad shape.)<\/p>\n

After several rounds of negotiation, we were able to acquire 123 BRRRR Street for $350,000. I knew by examining other homes in the area that we could vastly improve the property both inside and out, and we estimated an after repair value (ARV) of $650,000. Of course, it would take somewhere in the area of $150,000 to get it there\u2014but that\u2019s still a built-in equity of $150,000 before we even talked to our first tenant!<\/p>\n

For readers who don\u2019t live in high priced markets, you may think these numbers are absolutely insane (especially after viewing the as-is photographs). Sadly, that\u2019s just the way it is in these parts of the country.<\/p>\n

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The Redesign<\/h3>\n

Now, 123 BRRRR Street wasn\u2019t just your typical new counters, new appliances, few coats of paint, and a flower bed fix and flip<\/a>. She needed a bit more than the standard to beef her up into a big fish worthy of the others in the neighborhood. One thing that we knew we could do right away was to totally redesign the interior and turn this modest 3\/1 into a 4\/3.5.<\/p>\n

Here\u2019s a quick list of the improvements we made:<\/strong><\/p>\n