First Rental Refinance - BRRR

[Arianne L.]

Just wanted to share the results of our first rental refinance / delayed financing. My husband and I are in our first year of our real estate investing career. Hope to encourage some of the newer people here. There are deals out there and some great returns to be had, just persevere!

The deal:

3/2 1200sqft SFR in a B neighborhood in Fort Walton Beach, FL. Bought this short sale for cash in February. This was listed at $104,000 on the MLS

Purchase price including closing costs - $73,257 

Property came with a tenant who signed a new 1 year lease for $975. No repairs were needed. Market rent is $1100-1200 but the old tenants were great so we decided to keep them at the previous rental rate.

Property Appraised at $134,000

Just closed on the delayed financing and got $70,600 cash back out, after closing costs. Total time from purchase to getting the cash back was 10 weeks. 

Income: $975

PITI: $522

Repairs and Capex reserves 10%: $97.50

Property management 10%: $97.50 

Vacancy 8%: $78 

Net monthly cashflow: $180

Cash on cash return: 81% 

Equity: $61,000

For $2,657 invested we are projected to average $180/month positive cashflow (though currently, we are getting $355/month since we are self-managing, and have no vacancy yet which would be 160% cash on cash return if we can keep it up - fingers crossed). 

Now, we can use that $70,600 in cash for the next deal we have lined up!

Thank you @Jerry Padilla and MB Financial for a quick and smooth transaction.

Thanks to @William Allen for posting about one of his BRRR deals which got us looking in the right direction

And of course @Brandon Turner and @Joshua Dorkin for bringing us BP which helped us get started in real estate!

[Wendell De Guzman]

Arianne,

Congratulations! You took action and not fell into analysis paralysis.

@Jerry Padilla is awesome. I referred a ton of people to him :-)

@Brandon Turner's BRRRR is an awesome strategy. We use it in our rent to own properties to buy virtually an unlimited number of properties because you can always pull the investment out and buy another one.

Depending on the location, Rent to Own can actually be a better strategy specially for newbie landlords. There's no maintenance and repairs and you get better tenants who have skin in the game.