Just completed my 1st BRRRR in VA

103 Replies

Hey BP! I just closed on the Refinance portion of my first ever deal, a BRRRR. I guess once I "Repeat" then I would have actually completed the BRRRR process. For reference, I've listened to the podcast for about a year. In Summer of 2018, my wife and I took out a HELOC on our primary home in Richmond, VA, as it had appreciated in value greatly in just our two years of ownership. We opened the HELOC and sat on it so we'd have it ready when the time came, and in January 2019, got a phone call from a mutual friend who is a wholesaler in the area. We had met a few months prior, and he called to let me know he had a house under contract that was in the ballpark of my HELOC amount, and thought it may be a perfect first deal for me.

The process actually went relatively smoothly, except for having to fire a contractor. Essentially, he oversold his ability to finish the attic, was doing a poor job on drywall, and I had to fire him and hire a new guy. This swap in contractors cost me an additional $4,000. The house was a 900 sq ft single family with 2 bed, 1 bath and a walk-up unfinished attic. The main work done: refinished the hardwood floors, painted throughout, and finished the attic. Now it's a 3 bed, 1 bath, and 1250 sq ft.

Here are some numbers:

Purchase Price: $61,000 (paid for using HELOC)

Rehab Cost: $17,000 (paid with personal savings)

All-in Price: $78,000

ARV: $105,000 (based on appraisal from refinance process)

Rent: $1,000/month (Lease signed mid-project)

At the end of it all, I had to leave about $4,000 in the deal. The ARV wasn't quite high enough to get all my money back out when I refinanced, the fire/re-hire of a contractor hurt me a little, and the closing costs were higher than anticipated. But, for my first deal I'm thrilled, just got my my money back out, and will be looking for deal #2!

Some before pics:

And some after pics:

Very cool. Thanks for sharing your success. I'm looking for a lender to refinance a rental property. Who did you deal with and how did that process work? Congrats good luck with number 2.

Thanks!   Good luck with the 'Repeat' portion.  Would you do another in Hopewell or would you be looking closer to the city?  I'm from the Fredericksburg area just starting to familiarize myself with Richmond and it's surrounding areas.

@Brian Beck yes I would. For now it’s an area that I can afford, and I get the same kind of returns I’d get spending $250k closer to Richmond. There is plenty of opportunity, but for a lot of the areas, it depends on the block or subdivision. 

Looks great, congratulations @Brandon Spurlock

I looked at a few properties in Hopewell and always seemed to never get the stars to align. Good prospect in a horrible location, bad prospect in a great location....etc. That area definitely has little pockets of potential and I am glad it worked out for you!

Originally posted by @Charles Holder :

@Brandon Spurlock

Nice dude.. How much are you settinf aside for vacancy repairs capex etc.. Are you gonna cash flow or pay down?

For now I’m just stashing it all to build up a repair fund. But I’m general, I’d consider about $250 set aside, and the rest as cash flow.

 

Congrats! Looks like a huge success for a first project!! I have also been studying the BRRRR process and am working to follow suit. Thanks for sharing.

Awesome work! Looks like a really great project for a first-time deal. Can't be upset about $250 cashflow on only $4,000 left in a deal! I'm getting ready to do the rent and refinance portion, did you have to have the place rented before the refinance would be considered? 

Originally posted by @Eddie Gonnella :

Awesome work! Looks like a really great project for a first-time deal. Can't be upset about $250 cashflow on only $4,000 left in a deal! I'm getting ready to do the rent and refinance portion, did you have to have the place rented before the refinance would be considered? 

I’m not sure if it had to be rented out first, but it was definitely in my plan. I had a lease signed within the first month and my tenant moved in the day after rehab was complete.

 

Great job and congratulations. A couple of quick questions:

1) What was your expected ARV when you made the offer to buy, and how did you arrive at that number? I'm curious how it ended up comparing to the $105K appraisal the bank used.

2) Did you refi with the same bank that did the HELOC? If so, I wonder if using a different bank would remove the 6-month seasoning period requirement?

Free eBook from BiggerPockets!

Ultimate Beginner's Guide Book Cover

Join BiggerPockets and get The Ultimate Beginner's Guide to Real Estate Investing for FREE - read by more than 100,000 people - AND get exclusive real estate investing tips, tricks and techniques delivered straight to your inbox twice weekly!

  • Actionable advice for getting started,
  • Discover the 10 Most Lucrative Real Estate Niches,
  • Learn how to get started with or without money,
  • Explore Real-Life Strategies for Building Wealth,
  • And a LOT more.

We hate spam just as much as you

Create Lasting Wealth Through Real Estate

Join the millions of people achieving financial freedom through the power of real estate investing

Start here