FIRST BRRR Complete! Details + Pictures!

301 Replies

@James Gates I’m halfway through reading David Greene’s book and have had Huntsville on my mind while reading it.

It sounds like you really leveraged the power of relationships in this deal. How did you go about finding your wholesalers? Did you go to a meetup while on your trip or did you research contacts ahead of time and pre-set meetings with them?

I’m also curious how you estimated the rehab costs (before tacking on your contingencies). Did you have a guide you used or did the inspector help you form your opinion?

This inspired a lot of confidence and helped prove the proof in the pudding. Great job, looking forward to hearing about more of your future success stories!

What made you settle for Huntsville? I'm curious as to what research you did to make you settle for that area. What other areas were you looking for? Was there a criteria or was it just random areas that you were interested and started to just research into it? What were some variables you weighed that took priority over others?

Hey @James Gates ,

Thank you for sharing your story. As an OOS investor, on which occasions did you feel the need to fly out to Alabama? To meet the team/on closing the property? Any other reason why you may have flown out there?

Second question, it seems like a silly and simple logistical question, but what do you do with the keys if you close from afar? Do you trust a team member to hold onto them or do you get a combination lock with the keys inside and hang it on the door?

Thanks again.

@James Gates congratulations! I have 1 question. When you refinanced the house. How did you make sure that the mortgage wouldn’t be higher than the amount that you were renting it for?

@James

@James Gates Congrats! I have done the same thing in Birm and Montgomery- little different story- I  used a hard money lender on 1 and fully funded the other with my cash- (paid $18k and $10k for rehab)   I like the Huntsville market too-- but found good deals w/cashflow in Montgomery & Birm. I am waiting to refi my last one in Birm - but have a tenant in place now bringing in good rent. I am doing a low money down in Birm now- its like a hybrid Brrr, but has everyone in place. I am just waiting to finish and close on that one. Keep us updated on your next one, so great to hear success stories!

@James Gates You're an inspiration and a rock-star! Thanks for the detailed post that outlined a lot of important  aspects of real estate investing.  I just found out about FIRE a few months ago and same as you I found Bigger Pockets shortly after and it made sense.  I think I'm still in that nervous and naive state and I'm afraid that I will fall in analysis paralysis waiting for a market correction. 

How did you do your research on out of state investing and where you would invest?  I have read countless forums and every time I read something new I get discourage more and more until I read post like yours.  I'm currently living in Portland, OR with a crazy high market and recent rent control passed.  Washington state across the river is reaping the benefits of an Amazon and Microsoft HQ, driving housing cost really high.  We are planning to move back to San Diego in a couple of years but SD is another high housing market.  

What tools did you use to determine the out of state area that you chose?  Did you contacts with contractors and real estate agents already?  How was your experience managing a flip from out of state?  What would you have differently and any notable lessons learned? 

Thank you so much!

Lourexel

@James Gates - Congrats! and thank you for taking the time to inspire us. Wanted to ask how you were able to find a good wholesaler to work with ... I heard some can be shady. Curious to understand how you screened them to finalize your choice.

SERIOUSLY ... CONGRATS... It is so totally awesome to hear others have success stories.  Way to go investing in Huntsville. I have been talking to people especially friends from SOCAL about it and It's awesome to have another CA investor discover the awesomeness of investment opportunities over here. 

HI James, thank you for sharing your story! it's very inspiring to hear the successful long distance investing story. I appreciate that you shared every details of your investing journey ! IF you don't mind, I would like to ask you how did you found the wholesaler?you mentioned during your trip, did you attend any events? thanks a lot! Ashley 

Originally posted by @Patrick Clark :
Originally posted by @James Gates:
Originally posted by @Johan Yang:

@James Gates Congrat on your success!! and thank you for sharing. Do you happen to know if the lender you are using is also serving outside AL? My business partner and I have two rental properties in FL that we paid all cash (free and clear). Now, I wanted to do cash out refinance on both of them. I will private message you.

Question about your partnership where both name on the title ("some we are both on Title (if we both put up 50% of purchase + rehab costs)"). Did your partner contribute something else beside 50% capital which you also put up the same amount? It looks like you were the one who did all the work from finding the deals to managing the rehab, etc... And, do you self-managed all your properties?

Thanks.

 PM me if you are looking for a lender! This lender is based out of Cincinnati, and they lend in most states. 

For the first property I put in half the cash and did most of the work managing the rehab, but I needed a partner to come up with the rest of the cash. I didn't have any rental experience so a 50/50 equity split made sense at the time. 

We do not self manage any of the properties. We have a boots on the ground professional property management team (and would highly recommend it!)

Hi @James Gates,

Congrats on the success! I noticed that you mentioned your lender was based out of Cincinnati and it sounds like you had a good experience. I live in that area and was curious what company it was?

Thanks for taking the time to share your experience so we can all learn!

 Private Messaged!

Originally posted by @Jeffrey Grieshop :
@James Gates: you mentioned $3k in refinance fees, correct? It is astounding that it's that much. Basically, you pay someone $3k to walk into your property and assign it a new value, correct? I am curious why you didn't calculate the refinance charge in your original post somewhere, seeing that that is a pretty big fee.

thank you for the thread and fielding the questions.

 Hey Jeffrey,

3K total in refinance fees, which is on the low end of the standard. Most lenders I spoke to were closer to 4K. The refinance process includes a lot more than just assigning a new value. The lender needs to make their money (our lender had a flat fee, but most lenders have a % of the loan as an "origination fee"), you need to pay an appraiser $400-600 for his time, and you need to pay the title company to run title and file all the paperwork. Then there is pre-paying insurance, taxes, and filling up the escrow account if you choose to go that route. I didn't calculate the refinance charge due to simplicity, but I did mention that the 4 months of rent that we received on this property when we did not have a mortgage on it (before the seasoning period had completed) covered the refinance charge. Now that the property is "stable" (all repairs are done, tenant is in place, mortgage is 30-year fixed) the property is cash flowing nicely and we have all our capital back.

Originally posted by @Benjamin Gallant :

@James Gates I’m halfway through reading David Greene’s book and have had Huntsville on my mind while reading it.

It sounds like you really leveraged the power of relationships in this deal. How did you go about finding your wholesalers? Did you go to a meetup while on your trip or did you research contacts ahead of time and pre-set meetings with them?

I’m also curious how you estimated the rehab costs (before tacking on your contingencies). Did you have a guide you used or did the inspector help you form your opinion?

This inspired a lot of confidence and helped prove the proof in the pudding. Great job, looking forward to hearing about more of your future success stories!

 I went about finding wholesalers through networking with other BP members. I reached out to individuals who were active on the BP Huntsville forum, got some contacts, reached out to them, and flew out and met them.

For rehab costs I recommend becoming familiar with the basic costs of rehabbing a home (for example 10K for a minor kitchen rebab, 5K for a bathroom, just general numbers), Jay Scott's book on estimating Rehab costs is also a good read. Also, the internet is a powerful thing. For this property I knew I needed to have the pool removed and filled in, I went to thumbtack.com and searched pool removers in Madison County, and was able to get an estimate for that job (which was really almost 1/4 of the rehab) in just a few minutes.

Originally posted by @Mario Leon :

@James Gates

What advice would you give to a newbie looking for a first investment in a multi family unit? What to watch out for , things you learned, warnings.

Mario

I don't know too much about multi-family investing. We do have a duplex that we purchased from a wholesaler and are in the process of BRRRRing, I haven't seen that many opportunities for multi-family units in the areas I am looking at.  But my best advice is just to prepare for the mistakes you can prepare for (listen to other peoples stories, don't make those mistakes) and when you make your own mistakes learn from them and do better the 2nd time.

Originally posted by @Jeffery Lau :

What made you settle for Huntsville? I'm curious as to what research you did to make you settle for that area. What other areas were you looking for? Was there a criteria or was it just random areas that you were interested and started to just research into it? What were some variables you weighed that took priority over others?

Huntsville is a market that can still cash flow and have a shot at future appreciation with all the tech jobs moving there, the population is increasing, and there are new developments everywhere.

Originally posted by @Christopher Hernandez :

@James Gates that was a great read. As for the asking price did you and your partner pay cash?

Yes, generally a wholesaler will require cash as these deals move quickly. We bought the house on a Saturday and closed on the following Tuesday, so cash was the only option. My partner and I split it 50/50.

Originally posted by @Justin Dao :

Hey @James Gates,

Thank you for sharing your story. As an OOS investor, on which occasions did you feel the need to fly out to Alabama? To meet the team/on closing the property? Any other reason why you may have flown out there?

Second question, it seems like a silly and simple logistical question, but what do you do with the keys if you close from afar? Do you trust a team member to hold onto them or do you get a combination lock with the keys inside and hang it on the door?

Hey Justin, I did feel the need to fly out to the area the first time to meet the boots on the ground team face to face, but after that, I did not fly out again until after we had purchased and completed the rehab. I did a post inspection with the contractor, but looking forward I do not feel the need to do that again now that the team is in place.  

GREAT logistical question. This is where having a good team can save you so much headache on such a simple thing. My Property Management and contractor have been able to pick up keys from escrow on the properties, and place them in a lock-box at the property so that everyone on the team has access to the property.

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Originally posted by @Cam Jimmy :

@James Gates Congrats on your BRRRR! I was wondering how you did those stair treads? Did you use laminate planks for the vertical spots, and then what kind of tread did you use for the top?

 Hey Jimmy, good question. I wish I had an answer. We got lucky in that the materials for the stairs were actually hidden in the house. The previous owner had started working on them but then had to sell the house. I am not quite sure what kind of tread the contractor used for the stairs.

Originally posted by @Paul Mossa :

James,

Did you pay cash for the first house and then refinance your money out of it? Also on average how much cash flow are you getting from your 6 houses after you refinance?

All of the houses have been purchased in cash, and this is the only property we have been able to "pull money" out yet, as the other 5 units are all within the 6 month seasoning period. Because only one of the properties have a mortgage, the cash flow is high right now, but all that cash flow is being reinvested to stabilize the properties. Once the properties are stable and the money has been pulled out. Each property should cash flow between $100-$250 post all expenses, capex, maintainence, vacancy, etc. If the BRRRR is done right, you are able to cash flow AND pull all your money out, for an "infinite" return.

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