First BRRRR project Atlanta, Georgia

[Paul C.]

Okay, so here is my first "real" deal. It is a duplex (2/2.5 on both sides) in Marietta, Ga in a multifamily neighborhood surrounded by pretty nice single family subdivisions. My wife and I are planning on living in one side for a yearish as we plan to quickly renovate one side and slowly renovate the other and then eventually refinance to start the BRRRR process. It is not a great deal, but I think it is decent for my strategy which is long term buy & hold using the BRRRR process. Any constructive advice is much appreciate, but please don't be too hard on me :) . Posting a before picture now and will update as progress is made.

Sale Price: $245,000

Down Payment: $50,000

Rehab Budget: $80,000

ARV: $355,000 (This is the hard part as there are very few multifamily comps if any that have been fixed up). Sfh's in this area that are in good shape could get this price for sure if not more.

Cash left in deal after refinance: $44,000

Mortgage + Expenses + HELOC payment = $2500

Rental Income = $3,000

Cashflow = $500/month

[Julie Kern]

@Paul C. not trying to discourage you - I wasn't sure if you were still in DD on this property or if you had already closed.  

Given that you've already closed, of course you need to make the best of it.  But I think everyone on here was a little unclear as to whether or not you had finalized the purchase or not, and if not, encouraging you to rethink the deal.

But... since you're in it, if you've gotten someone to agree to $1500/mo, that's great.  I'm a little surprised based on what $1500/mo can get you in Marietta, but if you've got it already lined up, then awesome!

I would recommend not over-rehabbing it, though.  What is the breakdown of your $80K?  $40K (per unit) is a healthy rehab budget for a 2/2.5 rental unless it's completely distressed, but if that were the case, I'm not sure that it would have been listed at $245K? Maybe you can post here what you're planning to do and get some input on ways to bring that rehab down? I would be shooting for no more than $20K per side, less if possible.  Sweat equity since you're going to be living in one side for a year would definitely help bring those costs down.  I see minimizing your rehab (and still being able to command that $1500/mo rent you're expecting) as the best way to make sure you're keep your cash in the deal as low as possible and not going upside down.

At the end of the day, if it all plays out the way you had expected, then you can come back and tell us we're all wrong :)  I hope that's the case.  But it's a long-term hold, so in 20 years or so, even if you did overpay a bit to get in the game and get started, it shouldn't matter, as long as you keep learning and improving on each deal.  Lots of folks have done that and gone on to have great success (just listen to this week's BP podcast, as one example). 

If I can ever answer any questions or help, let me know.  I have good vendors in this area and I'm happy to share (plumber, electrician, HVAC, etc.). They're reasonable and responsive.  

Best wishes to you for future success!