Monster 3 unit BRRRR complete!

123 Replies

Originally posted by @Albert David Penney :

@Kyle M. Thanks for sharing your inspiring success! If you don't mind sharing, are you doing this under an LLC or individual? I'm just about to get into my first brrr and still on the fence about the pro/cons. One of my concerns is the cash out refinance under an LLC will be tough unless with a portfolio lender and that is something I'm just getting familiar with.

I'm doing an LLC, but only because I found an outstanding portfolio lender who will lend to LLC's!

Originally posted by @Shaun Weekes :

@Kyle M.

Great job, who did you use to get 80% cash out on a 3 unit investment property? Also, what type of rate and terms did you secure if you don't mind me asking?

 In the interest of not bombarding the lender with emails, I'm not posting their name on public forum.  I am gladly sharing their name to anyone who PM's me.  They are a regional bank (but as far as I know they only do this in Central PA) and I found them by asking around on Bigger Pockets!

4.25% fixed for 10 years, then adjustable. 30 year amortization. No seasoning period. They lend to LLC's. 80% LTV.

Awesome job Kyle!  You really cleaned the property up and gave it an opportunity to flourish in this market. Keep acquiring the properties that make the most sense with your overall goal and your portfolio will do great. 

@Kyle M. the rehab looks great! I'm just about to start on my 2nd BRRRR property and struggling with the appraisal portion. The comps for my house are anywhere from $70-120/sf, so I'm trying to keep my estimate for the ARV on the lower end. I see that you still had $34k in the deal. How do you plan on paying that balance off? Do you still consider it successful when you have money left in the deal (you do have nice cashflow!)? I have been reading the BP book about BRRRR and @David Greene usually gets all of his money back. I'm still trying to wrap my head around that one. The project I'm working on will have about $7-10k left in the deal and I'm thinking of doing a refi on another property to get the equity to pay off the balance. I'll be carrying that $7-10K balance on my HELOC until I can pay it off. Would love your thoughts! Thank you!

How long did your project take to complete - start of construction to completion? You mentioned 'scaring off' a few contractors, so I would imagine that delayed things a bit.

I'm about to start a brrrr of nearly your same size and rehab level. It's my first purchase ever, so I'm trying to mentally prepare how much Tylenol I'll need lol.

Originally posted by @Kirsten Braddock :

@Kyle M. the rehab looks great! I'm just about to start on my 2nd BRRRR property and struggling with the appraisal portion. The comps for my house are anywhere from $70-120/sf, so I'm trying to keep my estimate for the ARV on the lower end. I see that you still had $34k in the deal. How do you plan on paying that balance off? Do you still consider it successful when you have money left in the deal (you do have nice cashflow!)? I have been reading the BP book about BRRRR and @David Greene usually gets all of his money back. I'm still trying to wrap my head around that one. The project I'm working on will have about $7-10k left in the deal and I'm thinking of doing a refi on another property to get the equity to pay off the balance. I'll be carrying that $7-10K balance on my HELOC until I can pay it off. Would love your thoughts! Thank you!

I never finance the entire purchase and rehab costs.  I always try to put a significant amount of my own cold hard cash in the deal.  In this case I put in about $70k of my own cash then used private money and lines of credit for the rest.  The $70k acts as a buffer - if everything goes wrong (low appraisal, high rehab costs, can't refi immediately, etc.) then I feel I can still pay back my private lenders.  So worst case I don't get some of my own money back.  I NEVER want to be in a situation where my private lenders don't get their money back.

My preference and target is always to get all of my money back, but it just doesn't always work out that way.

Originally posted by @Michelle Tresino :

@Kyle M.

Congrats! Looks great. Quick question- what is the

‘Cap Ex/vacancy’ cost that you listed as one of your payments? Thx!

Cap Ex is capital expenditures.  Since I replaced most of the HVAC, plumbing, electric, etc.  I used $100/month for this.  This is in addition to maintenance costs, which I use 5% of gross rents.  This is a common benchmark but I have actual data from the rest of my portfolio to back it up.

Vacancy - accounts for when a unit is not rented.  For multi-family properties (and smaller, cheaper units) I use 5%.  For single family, I use 1/12 (which I think works out to 7.8% or something like that).  Again, I have real data to back up those assumptions.

Thank you for taking the time to educate us with your experience, Kyle. Your answers to the follow-on questions are super-helpful as I strategize my first house hack in the KC Metro. Is it possible to get your eval list for estimating rehab costs? Continued success to you!

Amazing, congrats on a job well done Kyle! Hopefully this inspires you to do it over and over again :)

Quick question: what was the time horizon on this? From bid, to close, to rehab, to rent, to refinance?

Thanks,

Kristian

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