I haven't posted in this section BP yet. Now seems like a good time!
This is the first investment property (Jan 2012) that my wife @Jamie Bounds & I bought in Houston. Without knowing the ridiculously long acronym at the time, we used the BRRRR (buy, rehab, rent, refinance, repeat) strategy. Since then the market has gone up dramatically (woohoo!) so we decided to cash out and use the proceeds to do more deals.
Here is a quick rundown on the details (numbers rounded):
Deal type: pre-foreclosure
PP: $85k (100% hard money)
Rehab: $35k ($27k was hard money)
Rent: $1395 - $1450
Rehab 2: $31k
List Price : $234,900
Profit: Depends on the final sales price, but it will be a nice check to deposit.
Here are a few pictures.
2012 Before (I wish I could attach the house smell to these)
2012 After (Clean & Basic remodel for a rental)
2015 After (Added the premium touches)
I wish we bought a lot more of these in 2012!
Looks good! Thanks for defining BRRRR.
Looks great @Chris Bounds ! What's the address? Is it listed on MLS?
@Waylon Themer , I'll PM you the address. It is on MLS, but since BP ranks high in Google searches (to BP's credit!) I don't want to make the address public before the sale finalizes.
@Chris Bounds Good Thinking. Having a potential buyer stumble upon the before pictures and original purchase price wouldn't help things. You did a great job. Best of luck on the sale.
I want to thank you for posting this. I recently stumbled upon the BRRRR formula and thought it was pretty neat but had a hard time conceptualizing it, in particular the refinance after rent. So the pictures and and price details have helped me understand the process a little more. Thanks and best of luck on your next project.
Thanks @Evans Wright ,
IMO, that strategy is the best long-term strategy for part-time investors. It works great for folks who have jobs and can get the best interest rates.
Great job, @Chris Bounds
The BRRRR strategy does seem to be an excellent wealth-building approach. It can be extremely tax efficient as well
Are you going to do a 1031 with the proceeds? Usually that isn't an option with a flip, but since you improved it after it was established as a rental/investment property it might be an option.
The BRRRR model would be much more conducive to completing a successful 1031 exchange than a more hasty flip n flip. The primary intent of the investor must be to hold for productive use. This model seems to indicate that the primary intent was to buy rent and hold. The decision to sell is after the fact. We've also seen the first two Rs reversed where the property value was in a rent as/is and then when ready to sell spruce it up so it shows the best.
I thought about doing a 1031, but I wanted to put the cash into several flips. So far, that has turned out to be a good decision in this case.
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