Just Completed BRRRR On Ten Property Package Deal
Last week I finally completed the final step in a BRRRR purchase of ten properties at once from a single seller, the refinance (I guess that's technically the second to last step, now I have to "repeat"). It was a crazy deal that I was able to do without ever putting a single dollar of my own money into. Since so many people here ask how they can get started in real estate with no money down I figured I would share the details here.
The deal was a purchase of ten properties, 13 total units, from a single seller without putting any of my own money into the deal. I got a non-collateralized personal loan from Light Stream for $45,000, put $30,000 of that down on the purchase (kept the rest in the business account to cover expenses, etc) and convinced the seller to finance the rest. They cash flowed enough to make several major improvements during the last year using only cash flow. I also had a toilet explode while a tenant was on vacation which caused the bathroom and kitchen the flood. Insurance then bought me a brand new kitchen and bathroom. I painted three exteriors and put on two new roofs. I put in two new kitchens, new flooring in several and a few other minor changes in several more. And again, all of this was done using cash flow from the properties. As part of the financing, the seller agreed to wait one month for first payment and then do interest only for the first two actual payments. So that gave me time to build up a very large cash cushion to do all this.
It was a very long process, over a year from the time I purchased and at times felt like the refinance would never happen. Here's how the final numbers worked out (keep in mind this is rural Ohio, prices are probably much lower than most here are used to!):
Purchase Price For 10 Properties: $341,000 Appraised Value as of Last Week: $550,000 Refinanced amount: $347,000 Monthly Rent: $7,000 Mortgage Payment: $2,503 Insurance and Property Taxes Monthly: About $900 Cash Flow Before Repairs: About $3,600
At the time of refinance I owed the seller about $286,000 and Light Stream about $36,000 and paid about $8,000 in closing costs for a total of $330,000, which meant I got to cash out $17,000 into my pocket. Plus the other $15,000 from the Light Stream loan I never had to use. So total cash in my pocket from the deal was about $33,000.
Bigger Pockets was absolutely HUGE in my ability to complete this deal. The only reason I was able to talk the seller into the terms I wanted was because of the due diligence I was able to do using the BP calculators and other resources. I used the forums to get answers to my questions along the way, such as if a land contract would even allow me to do a cash out refi. I honestly can't think this site and community enough for helping me get this done.
If you are looking to get started with little or none of your own money, I can definitely attest that it is possible. But it will take a lot of creativity, homework and finding the right seller in the right market!