This BRRRR thing really does work, with pictures

250 Replies

First a little bit of background on the house: it is a 3 bed 1.5 bath cape cod, in an older neighborhood of a class A suburb outside of Milwaukee. It was listed on the MLS, had been bank owned for about 5 years and was tenant occupied. The exterior looked good but the tenant was very difficult and I couldn't get a look inside. I made an offer under the assumption that everything inside needed to be replaced. The bank accepted my offer but refused to deliver the house vacant and after closing it quickly became apparent why. The tenant was a nightmare and after many lies and stories I was forced to evict them and then the rehab began.

Aside from the plumbing and electrical I did all of the work myself. I’m not a contractor but I have a lot of renovation experience and own all the necessary tools.

Basically everything inside both cosmetic and mechanical is now brand new. The windows, exterior doors, siding and roof were all replaced in 2010.

Now to the numbers:

I purchased it with a conventional 20% down loan and conservatively budgeted $35k for rehab. Being conservative I originally planned for a $200k ARV and expected to leave $15-20k in the deal post refinance. In total the rehab itself took 3 months plus 1 month to get it rented.

Purchase price: $132,700

Closing costs: $0 (seller closing cost credit of $2k)

Holding costs: $3k

Rehab costs: $30k

The following was replaced:

  • All plumbing (supply and drain), including water heater ($4050)
  • Furnace and Air Conditioning unit ($3045)
  • Electrical in kitchen and bath ($1800)
  • LVP Flooring throughout ($2697)
  • Stair carpeting ($410)
  • Bathrooms ($1820)
  • Kitchen ($5095)
  • Appliances ($1738)
  • Garage doors and openers ($806)
  • All new trim and doors ($2168)
  • Paint ($876)
  • Remaining costs were miscellaneous supplies, dumpster and permits

The total cash outlay on my part was $57k. The appraisal post rehab came in at $229k so with a new loan of $172k my net cash at the refinance closing will be $64k. Aside from time and labor I now have nothing invested, even will get $7k additional back and retain $57k in equity.

I'm not going to throw out cashflow numbers since everyone tends to calculate vacancy, repairs, capex differently and I don't want to get off track. PITI after the refi is $1160 and it is rented out for $1700. Tenants pay all utilities and handle snow removal as well as lawn mowing. I do self-manage being that it is only a few minutes from my house.

Before Pictures:

 

  

  

During Pictures:

  

  

After Pictures:

  

  

  

  

Hopefully my story can inspire someone. I know some will say that the rent to value ratio isn’t high enough and I’d be better of selling the house. Others will say you have to hire contractors and shouldn’t ever do your own work but I have the time and actually enjoy doing the work (most days at least, lol). It was a ton of work and I sometimes questioned my sanity but in the end this is a deal that works for me and it was definitely worth it.

I’m more than happy to answer any questions or provide additional details.

"Time to find another house to fli"………. Uh BRRRR.

Congrats on a great example of a perfectly executed BRRRR now it's time to do it again!

Congratulations!!! Great job on getting it done.

Congrats on the win! Everything looks super smooth.

Congrats and nice work Nicholas. I am shopping for a similar BRRRR investment in Mass. It was helpful to see how this played out. Good luck on the next one!

Thanks for sharing, Looks great! 

Howdy @Nicholas W.

Nice job.  Don't worry about what others think regarding cash flow.  As long as it meets your goals and you successfully got all your cash out.  Win - Win.  Again, congratulations.

Thanks everyone, I really appreciate the positive comments!

Looks awesome! Very inspirational!

Great Job!! Looks awesome.

Holy crap that is SO INSPIRING!!!! Thanks for sharing!!

Great deal and thanks for the information! On the the next !!

Very nice after pictures. I am learning from it. Congrats! Keep doing the great job!

@Nicholas W. dude, great job! I feel like we are very similar in the fact that we both like to do all the work. Looks like you care about quality as well and not just the numbers. Im working on one right now that seems to have very similar numbers! Bought for $134k needs about $30ishk doing all myself and should be worth around $250k. Only difference is that i dont think i could get more then $1300 a month in my area. Iv allways sold my houses after i rehabbed them, only for the reason that i cant rent them for enough to make it worth it. If all goes well i should be able to Net around $60k on the flip, but if i refinanced $170k, my payment would be around $1250 and only rent for $1300 maybeeee $1400. So flipping it is... How many rentals do you own?

Great job. Looks amazing and everything worked out well. Just finished our first, have tenants in and now just need to refinance then will be all finished with my first BRRRR too. Your project is an inspiration to us all.

I don't like the oven being next to the stove. It should be on the L side.

Also, shower ledge and tower bar seem awfully high... almost unusable. Maybe it's the pictures

Rest is fine

Love it! My wife and I want to do our first few ourselves as well... I have a construction background.

Inspiration, check!

Awesome post

Good to hear you say that the deal works for you. Remember that always.

This is a good example of dealing with an issue no one else wanted to deal with and landing a deal because of if. Most people just crossed this place off once they found out there was a problem tenant. You looked it as a way to get a deal in a good neighborhood and  realized dealing with the tenant was the compromise you needed to make. 

Congrats @Nicholas W.

Originally posted by @Clancy Catelli :

@Nicholas W. dude, great job! I feel like we are very similar in the fact that we both like to do all the work. Looks like you care about quality as well and not just the numbers. Im working on one right now that seems to have very similar numbers! Bought for $134k needs about $30ishk doing all myself and should be worth around $250k. Only difference is that i dont think i could get more then $1300 a month in my area. Iv allways sold my houses after i rehabbed them, only for the reason that i cant rent them for enough to make it worth it. If all goes well i should be able to Net around $60k on the flip, but if i refinanced $170k, my payment would be around $1250 and only rent for $1300 maybeeee $1400. So flipping it is... How many rentals do you own?

 Clancy, Thanks for the kind words. This is only my second rental, both are in the same town and only a few minutes from my house. The first required very little rehab and was close to a retail deal but has still performed well. I agree at $1300-1400 per month rent you are definitely better off flipping than selling. Congratulations on the deal!

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