BRRRR during Covid-19 Homerun!
Wanted to share my BRRRR during this unique time with all these uncertainties roaming around. I purchased a home in February 2020 right before the pandemic and murder hornets started. I was about 80% complete with the rehab when businesses started closing their doors and everything was becoming doom and gloom. I kept my nose to the grind and tried to get the project completed as quickly as possible. Luckily it doesn't look like we're headed towards economic failure anymore, but it sure seemed that way for a while.
I purchased a 4 bedroom 2 bath foreclosure for roughly 30K and put another 30K in rehab cost. The house was absolutely disguising! There was such a smell of dog and cat urine I literally started getting headaches after a hour of being on site.
Today I got the appraisal back and it came back at exactly $100K. My bank can refinance at 70% of appraised value, so at $70k less closing cost, I'll have enough coin to take the kids to Chucky Cheeses (if it ever opens) and have an income producing asset for ZERO out of pocket cost. The property rents at $1200 mo. and should cashflow roughly $500 mo.
What's interesting about this deal is that there were multiple function of the deal set in place prior to covid-19. I had a portfolio lender that would do 70% LTV. Appraiser's were going into occupied houses. County officials were processing permits. Home prices weren't in question.
Then bam! Covid-19 shows up and starts shutting everything down. Can't even get a haircut and I'm bald! Because the water was not turned on for over a year, it required an inspection by code enforcement to get water turned on. There was a weeks where it was I wasn't sure I couldn't get a permit or an inspection anytime soon. I did shortly after, but then I was being told appraiser's weren't going into homes unless they were unoccupied. Now this wasn't too big a deal seeing I had a foreclosure on my hands, but it did mean that I couldn't put a tenant in without it being appraised. Luckily things started taking a turn in the right direction a few weeks ago and I was able to place a tenant before the appraisal was finalized.
Now the most important piece of the puzzle was financing. Was my bank still going to loan on 70% LTV or loan at all? I had some serious concerns running rampant in my head. I'm pretty sure I lost my sanity for a second there. In reality, I don't think the bank skipped a beat in the mortgage department, but it was certainly questionable.
So I think what I've learned is that generally speaking.... if the numbers make sense, just do it. Take a leap. The only good day to get into real estate is yesterday. Don't let anything hold you back. Grab success by horns and don't look back!