1st BRRRR Completed!!! Who Says You Can’t BRRRR in CA?

[Wayne Yahnke]

I finally took a leap and completed my first BRRR!! I got one hell of an education in the process. Thank You @David Green

REO Foreclosure Purchase Price $75K! Cash purchase using HELOC funds

This was after calculating and making offers on multiple listings. I even did a small mail marketing campaign that I almost got a duplex from. 

Multiple issues: Shared water and septic with the neighbors. Un-permitted studio in the back garage and more. Due diligence was key in this project. I had numbers on remedies to these big issues before closing. 

My Vision!

Phase 1: Full gut renovation on the main home. Change the floor plan to open up the space. Bring a modern open feel design to the interior. 

Phase 2: Purchase the adjacent lot to create acccess to the Garage studio in the back of the main house. Remodel into a 900sq ft 1bd 1ba ADU

Main House Remodel.

$115k Rehab costs

Multiple challenges. 

-Delayed in closing from May to August 2019. 

-Remodel Over Budget by $25k

-Planned Remodel took longer than expected (5 months). Mostly due to the delay in closing.

-Brand new refrigerator didn’t get cold when I finally unpacked it the week before the new tenants moved in. Lessened learned here. Always test appliances within 30 days so you don’t have to deal with Manufacturers warranty. 

-Raccoons living under the house. Insert plug for BP Pod Cast Episode ?? here.

-Merging Properties is not easy.Its also very costly if not done correctly

-Refinance started during COVID (March 2020). This was challenging but I was able to eventually get a good loan. In house loan with a local credit union. 30 Yr fixed @ 4.5% with 75% Cash out.

What went well:

-I learned a ton!!!

-Splint the Electric into 2 meters. Planning ahead for phase 2.

-Qualified renters fell into my lap as I was finishing up.

-Rented the month after it was completed.

-The open space floor plan came together really well. 

-I was able to successfully negotiate and purchase the adjacent lot. thank You Chris Voss!! 

-I learned how to challenge appraisals. Thank you @Andresa Guidelli for the inspiration! Gained an additional $10k from the first appraiser. Took it a step further and started a loan with a local credit union. New Appraisal came in $51k higher than the first! I trusted my gut and listened to your interview on BP again. 

There’s so much more...

All in $205k

Appraisal $290k

Cashed out $203k

Cash flows $200/month (Main House only)

Phase 2 is underway and should be completed by August 2020! 

Rehab Budget: $70k

Projected Rent $1,000

Projected Cashflow $400/month

Before: