BRRRR in Seattle, Washington (with before/after pics and numbers)
I just finished a BRRRR just outside of Seattle, Washington. This deal had all sorts of complexity. It was an out of state deal (I live in the SF Bay Area), where I 50/50 partnered with a contractor, and got a private money loan before the cash-out refi. I'll walk through details (including pictures and numbers) below....
Purchased a short-sale property on 3/3/2017 for $218k.
I had been flying up to seattle 3 weekends in a row looking at properties without luck, then this place came online on the MLS on a thursday with listing notes saying offers must be in by end of day friday to be reviewed on Saturday. We had under 36hrs to put in an offer so I had my agent swing by and we did a facetime video tour. That was good enough for me so we submitted a cash offer. List price was $169k, we offered $190k cash no contingencies. Saturday morning comes around and we were 1 of 11 cash offers. Selling agent kicked offers back 3 rounds, we came up and up and eventually got the deal. Its a 3br,1ba small, single story, SFH. We estimated $40k rehab and a $320k ARV.
Partner and loan structure:
- Private money loan for 90% of purchase price
- Contractor partner and I each paid another 5% of the purchase
- Contractor partner and I split rehab costs 50/50
- I handle project management / design / financing / finding the deal/etc; contractor partner handles doing most of the rehab work (we subbed out plumbing/electrical and hired day labor for help with roof/paint/landscape/etc) (this is the 4th deal my contractor and I have worked together on, but first time being partners)
We spent
- $218,000 purchase
- $41,500 on the rehab
- total gut + permitted electrical service change, plumbing, roof, landscaping/etc
- $4,000 on holding costs
- All in at $263,500
- Estimated sale price if we were to list would be $330,000
- So we would net around $306,900 (7% to sell) minus $263,500 = $43,400
- Divide the above by 2 since my contractor and I partnered, we'd each net about $21,700
I went back and forth about selling vs BRRRR'ing and settled on the BRRRR since my long term goal is to get to 10 cash flowing properties, so I offered to buy out my partner from the deal, he was happy with that, so adding that to my costs, my total investment comes out to $285,200
I got an 80% loan on the new $330k ARV which allowed me to get back $265k, which means I net net DID NOT get all my money back out (very hard to do in seattle), and thus end up leaving about $20k of my own capital in the deal. So I have 20k invested in a $330k property with a $265k loan at 4%.
We're expecting it to rent for $2,200/mo. My holding costs (including maintenance/insurance/tax/etc) is right around $1800/mo
Here are some before pics; place was a dump! We had to wear masks for the first couple weeks
We spent 2 weeks simply on the demolition. Total project end to end took 14 weeks. I got the team custom T-shirts for moral!
goodbye kitchen!
Had to mop the grease off the ceilings before we could prime! Ended up replacing a lot of drywall.
bathroom in progress
Laser perfect
322sq ft deck!
And here are the final pictures....
My business partner and I on the last day!