First BRRRR - Triplex - Philadelphia, PA
This was the 'it actually works' moment for my partner (@Jon Sanborn) and me. I'm in California, but I was giving 'out of state investing' a try. An AMAZING journey, all sorts of ups/down, took 12 total months but it worked!
NEIGHBORHOOD: Allegheny West in Philadelphia - Triplex!
DEAL FIND: We found the deal on the MLS, but it was first posted on HubZu, which is linked to Philly's MLS. HubZu is an Auction Site, and the property was bank owned.
FINANCING: Crowd sourcing $ from a family friend. This was our first time ever asking for money (isn't as scary as you think once you try it!). We knew the neighborhood well, and knew this was a deal that we could BRRRR and repay the family friend.
TOTAL PROCESS: 12 months between the Full Rehab and Refinance. Both of these were huge learning experiences. Tip - find a good lender and make sure you review every single detail with them upfront before beginning any type of process (i.e. is the property owned under a personal name or LLC, how many members are in the LLC). Those details can affect if a lender will loan you a residential loan vs a commercial loan sometimes, which both comes with different interest rates/terms.
THE FINANCIALS - BRRRR:
Purchase Price: $130,924 + Renovation Costs: $61,025 + Holding Costs (12 months): $2,384 = Total Investment Costs: $194,333
*New Appraisal Price: $330,000*
Refinance (70% LTV): $231,000 - Closing Costs: $16,000 - Original Investment: $194,333 = Total BRRRR Profit: $20,667
CASH FLOW:
Mortgage: $1,349 + Insurance: $150 + Taxes: $23 + Miscellaneous: $100
Estimated Mo. Repairs: $137 (5%) + Cap Ex: $82 (3%) + Vacancy: $219 (8%) + Property Management $274 (10%)
Total Expenses: $2,333
Total Rental Income: $2,735
Total Cash Flow: $402
Result: sold on Real Estate forever.