Completed My First BRRRR (With $0 Down) ! + Photos & Details

302 Replies

Hey BP Community!

First, I want to thank you all for the incredible amount of knowledge and support I’ve received from members of this community. I truly believe I would not have closed this deal without Bigger Pockets and all of the resources that it offers. I’m truly GRATEFUL for the relationships I’ve been able to build just by being a member.

I closed on my first investment property in the Fall of 2019 and want to share my experience with everyone. My goal is to show those of you on the sidelines that it truly is possible to get started!

Background:

I live in California but decided to invest out of state. I chose Shreveport, Louisiana because I had family in the area and after visiting and seeing the real estate prices, I decided it'd be a great market to get my feet wet.

I also found a bank in that market that was willing to lend 100% of the purchase price AND the rehab if I found a good enough deal (more on that later).

The Deal:

My realtor and I had been searching for about a month before we came across this deal. It was listed on the MLS for $130,000.

I knew that zip code pretty well, and after confirming with my realtor, we were confident that the house could appraise for at least $215,000 after being rehabbed.

I asked my realtor to put an offer in at $110,000, and she told me I should go lower to $100,000 (that's the kind of realtor that EVERY investor should be looking for!). I took her advice and made the offer at $100,000.

As my agent was prepping the offer, I asked my GC (who was referred by both my realtor and my mortgage officer at the bank) to swing by the property and draw up a bid based on some reference properties I sent him.


My agent got back to me, and lo and behold, they accepted the offer!

The Financing:

Here’s the best part of the story.

My bank in Shreveport, Aneca Federal Credit Union, offers an AMAZING loan program that allows me to fund 100% of the purchase price AND the rehab as long as the total is 72% or less of the ARV.

I was simultaneously talking with the bank while working with my GC and realtor. I let the bank know what the offer price was, the rehab bid amount, and what my realtor said the ARV should come out to.

They double-checked the numbers on their side, and then we were off to the races!

That’s a huge benefit of working with smaller, local banks. They know the market because they live there. And they typically have more flexibility than the larger, national banks.

The Rehab and Renting:

Once the deal closed, my GC got to work.

The house was built in the 50s, and the entire thing hadn’t been touched since then. There was this crazy parquet flooring throughout the house, all of the bathrooms had pink tile, there was this odd room right off the kitchen that no one could really tell what it was used for, exterior and interior paint was peeling and dated… to name a few.

Since I lived out of state, I would check in the GC on a weekly basis to see how things were coming along. One of the good things about having the bank fund the rehab was that they would send a bank representative to inspect all of the work being done before releasing a draw to the GC. So I had a built-in team member to validate that the work the GC said he was doing, was actually getting done.

The rehab was originally slated to last 8 weeks, and it ended up taking 12. But all in all, I was happy with the end result.

Once the rehab was completed, the keys were passed off to my Property Manager. We originally listed the property for $1,600, and it sat for over a week with little activity. We dropped it again to $1,550, and still not much activity after another week and a half.

We dropped the price one more time, and almost immediately found a family that wanted to sign a two-year lease! It took four weeks in total, but I was glad to find a great family that wanted to say long term.

The Result:

I feel this was a great first deal. I paid ZERO money out of pocket to close the deal and complete the rehab. My only costs were an inspection fee upfront of about $300 and the interest-only mortgage payments.

Purchase Price: $100,000

Rehab: $55,000

After Repair Value: $230,000

Rent: $1,500

Lessons Learned:

Review the Rehab Bid with Excruciating Detail: There were items in my rehab that we probably could've gone without and achieved the same ARV. The property came out great, but I left some money on the table here.

When You Think You’ve Got a Good Deal, Offer Less: I got a great deal at $100,000, but I missed my profit target. My property taxes shot up a bit more than I had planned. Had I started with a more aggressive offer price, I’d have more money left over at the end of each month. Your first offer should make you feel uncomfortable.

Find the Price Right for Your Rental: My property sat vacant for an entire month because we priced too aggressively. I had to make an extra mortgage payment out of my own pocket because I was pushing for an extra $100 in rent.

Time Your Refinance: I purchased this property using an interest-only construction loan at 6.0% interest. They told me I could either refinance as soon as the construction was complete (Month 3) or wait another three months to do a cash-out refinance. I chose to refinance immediately because I assumed (incorrectly) that a 30 year fixed mortgage at 4.75% would be cheaper than the 6.0% interest-only.

I was wrong.

The 30 year fixed mortgage was more expensive because it also includes escrow payments for my property taxes and home insurance, whereas the interest-only didn’t. For my next property, I made the decision to stick with the interest-only for the entire six month period, and then do a cash-out refinance.

Your First Deal is Mean to Teach!: I preach this all the time, but I truly believe that your first deal is meant to educate you. It’s meant to show you the ropes, and build a foundation that allows you to close on your second, third, fourth and fifth deals. Even if I only would’ve broken even on this deal, I would consider it a win because the true value came in the form of lessons learned.

Before and After:

Again, I’m truly grateful for this community and I’m happy to answer any questions that you have. I’ve learned a lot from this deal and I’m happy to share the good and the bad. I’m a normal guy, with a family and a full-time job. I had zero real estate experience prior to this deal, but I still got it done. So you can too!

Thank you so much for reading!



Updated 6 months ago

Update: Rent: $1,500 Management: $100 Vacancy: $45 Repairs: $45 CapExL $45 Insurance: $100 Property Taxes: $130 Mortgage: $860 Approximate Cashflow: $170

@Tony Robinson yes...just recently started with our first property under contract to close in two weeks. And, we're also a gc focusing on serving fellow investors. We can take care of your project quickly and ensure we will keep it within budget and provide you equity; providing free estimates for architectural design and comprehensive construction services with our team of licensed and insured professionals giving you the peace of mind knowing we saved you time and money through great quality and attention to details. All will be done in a timely manner so the property can be occupied and you can reap these rewards. We provide the project that is the standard by which other's are judged.

on time. on task. on target.

Man those are some awesome numbers! Congrats on that first deal...and what a deal. Those are some great before and afters

@Armand Ngassam thank you! And I’m glad to hear that you enjoyed the story brotha! That’s a big part of the reason why I’m sharing! Happy to answer any questions for you

Originally posted by @Tony Robinson :

Hey BP Community!

First, I want to thank you all for the incredible amount of knowledge and support I’ve received from members of this community. I truly believe I would not have closed this deal without Bigger Pockets and all of the resources that it offers. I’m truly GRATEFUL for the relationships I’ve been able to build just by being a member.

I closed on my first investment property in the Fall of 2019 and want to share my experience with everyone. My goal is to show those of you on the sidelines that it truly is possible to get started!

Background:

I live in California but decided to invest out of state. I chose Shreveport, Louisiana because I had family in the area and after visiting and seeing the real estate prices, I decided it'd be a great market to get my feet wet.

I also found a bank in that market that was willing to lend 100% of the purchase price AND the rehab if I found a good enough deal (more on that later).

The Deal:

My realtor and I had been searching for about a month before we came across this deal. It was listed on the MLS for $130,000.

I knew that zip code pretty well, and after confirming with my realtor, we were confident that the house could appraise for at least $215,000 after being rehabbed.

I asked my realtor to put an offer in at $110,000, and she told me I should go lower to $100,000 (that's the kind of realtor that EVERY investor should be looking for!). I took her advice and made the offer at $100,000.

As my agent was prepping the offer, I asked my GC (who was referred by both my realtor and my mortgage officer at the bank) to swing by the property and draw up a bid based on some reference properties I sent him.


My agent got back to me, and lo and behold, they accepted the offer!

The Financing:

Here’s the best part of the story.

My bank in Shreveport, Aneca Federal Credit Union, offers an AMAZING loan program that allows me to fund 100% of the purchase price AND the rehab as long as the total is 72% or less of the ARV.

I was simultaneously talking with the bank while working with my GC and realtor. I let the bank know what the offer price was, the rehab bid amount, and what my realtor said the ARV should come out to.

They double-checked the numbers on their side, and then we were off to the races!

That’s a huge benefit of working with smaller, local banks. They know the market because they live there. And they typically have more flexibility than the larger, national banks.

The Rehab and Renting:

Once the deal closed, my GC got to work.

The house was built in the 50s, and the entire thing hadn’t been touched since then. There was this crazy parquet flooring throughout the house, all of the bathrooms had pink tile, there was this odd room right off the kitchen that no one could really tell what it was used for, exterior and interior paint was peeling and dated… to name a few.

Since I lived out of state, I would check in the GC on a weekly basis to see how things were coming along. One of the good things about having the bank fund the rehab was that they would send a bank representative to inspect all of the work being done before releasing a draw to the GC. So I had a built-in team member to validate that the work the GC said he was doing, was actually getting done.

The rehab was originally slated to last 8 weeks, and it ended up taking 12. But all in all, I was happy with the end result.

Once the rehab was completed, the keys were passed off to my Property Manager. We originally listed the property for $1,600, and it sat for over a week with little activity. We dropped it again to $1,550, and still not much activity after another week and a half.

We dropped the price one more time, and almost immediately found a family that wanted to sign a two-year lease! It took four weeks in total, but I was glad to find a great family that wanted to say long term.

The Result:

I feel this was a great first deal. I paid ZERO money out of pocket to close the deal and complete the rehab. My only costs were an inspection fee upfront of about $300 and the interest-only mortgage payments.

Purchase Price: $100,000

Rehab: $55,000

After Repair Value: $230,000

Rent: $1,500

Lessons Learned:

Review the Rehab Bid with Excruciating Detail: There were items in my rehab that we probably could've gone without and achieved the same ARV. The property came out great, but I left some money on the table here.

When You Think You’ve Got a Good Deal, Offer Less: I got a great deal at $100,000, but I missed my profit target. My property taxes shot up a bit more than I had planned. Had I started with a more aggressive offer price, I’d have more money left over at the end of each month. Your first offer should make you feel uncomfortable.

Find the Price Right for Your Rental: My property sat vacant for an entire month because we priced too aggressively. I had to make an extra mortgage payment out of my own pocket because I was pushing for an extra $100 in rent.

Time Your Refinance: I purchased this property using an interest-only construction loan at 6.0% interest. They told me I could either refinance as soon as the construction was complete (Month 3) or wait another three months to do a cash-out refinance. I chose to refinance immediately because I assumed (incorrectly) that a 30 year fixed mortgage at 4.75% would be cheaper than the 6.0% interest-only.

I was wrong.

The 30 year fixed mortgage was more expensive because it also includes escrow payments for my property taxes and home insurance, whereas the interest-only didn’t. For my next property, I made the decision to stick with the interest-only for the entire six month period, and then do a cash-out refinance.

Your First Deal is Mean to Teach!: I preach this all the time, but I truly believe that your first deal is meant to educate you. It’s meant to show you the ropes, and build a foundation that allows you to close on your second, third, fourth and fifth deals. Even if I only would’ve broken even on this deal, I would consider it a win because the true value came in the form of lessons learned.

Before and After:

Again, I’m truly grateful for this community and I’m happy to answer any questions that you have. I’ve learned a lot from this deal and I’m happy to share the good and the bad. I’m a normal guy, with a family and a full-time job. I had zero real estate experience prior to this deal, but I still got it done. So you can too!

Thank you so much for reading!

Hi Tony, do you mind explaining how you calculated your monthly cash flow? I am still struggling with what costs should be taken into account. Thanks

 

Tony this is fantastic! I could listen, read, and talk to you all day about this stuff! haha. Great deal, great story, and great motivation. Keep it up man! Can't wait to see the details on all of the future deals you will do!

@Erwin Miciano absolutely! It wasn’t a super complicated process. I googled all of the banks and credit unions in that region and contacted the mortgage loan officers asking if they would be willing to fund 100% of the purchase and the rehab. I have THREE banks that have said yes so far.

Each bank has their own stipulations, but you basically have to find a really good deal, where there's a ton of equity left over after the rehab is complete.

Here’s a template that I used recently. Hope this helps! :

Hello NAME!

My name is Tony Robinson and my partner and I invest in property in Shreveport. In the past, we've worked with Home Federal and Aneca to help finance our investments, but we're looking to expand our network.

Both Home Federal and Aneca offer a loan program where they fund 100% of the purchase price and the rehab, if the total cost is less than 75% of what the property will appraise for once the repairs are completed. Do you offer something similar?

Between my partner and I, we have a combined annual income over $XXX,XXX and credit scores above XXX. We love the relationships we've built, but there's a limit to how many deals we can have open with them at once.

Looking forward to hearing from you!

@Armand Ngassam sure thing! My first suggestion is to use the BP BRRRR Calculator. It truly walks you through every expense you need to consider.

But it’s basically this formula:

Gross Rents - Principal Payment - Interest Payment - Taxes - Insurance - Property Management - Vacancy - CapEx - Maintenance = Cash Flow

@Joseph Breamer Thanks brother!! Again, you’re one of the folks I’m grateful to have meet. Glad to see all the success happening on your side too. Looking forward to connecting once things get back to normal.

Originally posted by @Tony Robinson :

@Armand Ngassam sure thing! My first suggestion is to use the BP BRRRR Calculator. It truly walks you through every expense you need to consider.

But it’s basically this formula:

Gross Rents - Principal Payment - Interest Payment - Taxes - Insurance - Property Management - Vacancy - CapEx - Maintenance = Cash Flow

Thanks Tony, I really appreciate your help. I will check the BP BRRRR calculator.

 

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