My first BRRRR completed with $50,000+ in excess cash

[Matthew Nicklin]

I have been investing in Real Estate for the past 10 years. I started out with a very small amount of private money($20K) and my own cash. I used private money and my own cash until I was able to secure a primary residence with a lot of equity. As soon as I was able to secure a primary residences with a sizable amount of equity I obtained a HELOC. I continued to buy the next few rentals cash(From the HELOC) and worked to pay down the HELOC as quickly as I could.

I was able to continue this because I had great cash flow from my other rentals, w2 income, and my commissions from being a Real Estate Agent. I now have 5 rental properties and they are all occupied and cash flowing nicely.

I never used the BRRRR(an acronym that stands for "buy, rehab, rent, refinance, repeat.") method until recently when I purchased my 4th rental due to the amount of equity I had from this property. This property is a great 3 bedroom/2 bath home in a nice part of town. I got the opportunity to bid on this property at auction and I was lucky enough to win it for $67,200…To this day it still shocks me that I was able to purchase the property for that price, as I knew it was worth at least $175,000.

Once I had possession of the property I had one of the contractors that I work with go in and do a full rehab. They painted the entire interior, re-floored, fixed damage, etc. I spent around $13,000 on the clean up and rehab. The place looked great and I listed it for lease for $1,375. My phone rang off the hook and I got it leased quickly.

I started calling around to see what I could do about a cash out refinance on the property. Some lenders I spoke to required 1 year of seasoning, others required 6 months. I did some additional research and found that Fannie Mae’s requirements were 6 months. As soon as I got close to the 6 month mark I did some shopping and decided on a lender, ordered the appraisal and moved forward. The appraisal came in at $183,000! My numbers were confirmed!

ARV $183,000

Initial Purchase $67,200

Rehab costs ~$13,000

Total cost in the property with purchase and rehab $80,200

Allowable cash out with 75% LTV $137,250

Closing costs were around $5,000

Cash at refi closing was around $132,250

Excess cash above what was initially invested($132,500-$80,000)= $52,250!

All that and I am still cash flowing a little over $300 per month! I am off to go find my next deal.

I posted this to give back to the community. I received a lot of help from my Father who has been investing in Real Estate for a while. I have also read and received a lot of great advise and inspiration on this site so I wanted to post to add another inspirational story.