Another BRRRR, Another "Free" Property

Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes

It's still a surreal feeling when you do your due diligence, research and run numbers correctly and get a check back for the exact amount you put in.

We found this one from a Wholesaler in the area and we jumped on it. Older individual owned it and let it go. We put in new flooring, paint, updated bathrooms, tore down the detached garage and installed a new carport.

St. Louis MO (2 Blocks from Carondelet Park)

Purchase Price - $55k

Rehab - $40k

Closing Costs (Including down payment) - $13,131

Appraised - $145k

All In - $95k

Rent - $1200

Refinanced and pulled out $13,200

Cash out of Pocket - $0

Cash Flow - $295/month

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Jay HinrichsBusiness Member

Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes

Originally posted by @Blake Edwards:

@Jay Hinrichs - Wow... Thanks Jay (Or should I say Mr. Hinrichs). I see you active on these forums a lot giving out great free advice. I look at it as an honor you saw & replied to my post. Thank you for the kind words.

We agree, a good relationship with your lender whether it be a bank, HML, or Vinny from down on the corner is key. That's how we were able to finance our $18k property as well ;)

We thought it was a cute house as well and in the back of our minds kept thinking we were missing something because it was such a good deal. Just We could have easily talked ourselves out of it. Goes to show you the power of taking action.

there are a whole new crop of investors.. however the BRRR strategy was invented in LA for out of area deals exactly like yours.

and my company played a prominent roll in it from 2001 to 2008 when it all came crashing down :) IE refi's FRoze like antartic.. its has taken a decade or so to get the banks to come back to this model IE cash out refi's.

In my day it went like this.

LA investor listening to a Saturday morning real estate radio show hosted by Mike Harris ( he is still on by the way) at least he was last year. it was called real estate round table.. he would talk about investing and mortgages and they created leads.. those leads would then go to providers in the mid west.. and those providers would rely on my HML company to make the loan to the LA client for purchase and rehab. Mike would have the buyer all approved up front for the take outs.. and we usually did 2 to 4 at one time.. So I required the solid underwriting Mike did and proof of take out.. and the LA buyer would have to put 1k down per house.. I would then lend the money to them and they would buy from one of my mid west vendors .. mid west turnkey vendor would then buy and rehab .. once rehab was done we already had the ARV appraisal done for the refi.. it was just a matter of getting a 442 reinspect and closing.. my average HML turn over in 91 days and I did about 60 of them a month for LA based and San deigo based investors with some in the Bay area and other parts of the country but SOCAL is 90% of the buyer base that's why all the marketing channels for turnkey are pretty much based in Socal and or CA.. its where the buyers come from you know the story... prices to high in CA need to go out east.

So now we put LA investor into 4 homes day one for 4k out of pocket.. they get rehabbed and refi goes through they get 5 to 10k cash back per home.. so they get their 4k back plus 16 to 30k in their jeans.. and in those days cash flow was 100.00 a house..

We were all printing money back them LOL.. But 08 hit and I got stuck with 450 loans on the books that could not refi because refi lenders Country wide Wells etc all pulled out of the market.. so I ended up foreclosing on about 200 LA investors and owing the homes. Only to have the values of rentals drop like a rock.. so we got hammered very hard.. but that was then and now is now.

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Denny Robert
Rental Property Investor · St. Louis, MO · Member since 2013 · 194 posts · 100 votes
7y
Awesome deal. Is this your first in St Louis?
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Yup thats how it worked pre 08 I funded at least 2000 just like it all over the mid west.. as long as you have your take out lender and good team up front this is how it works.. nice job. and super cute house.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
2 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Denny Robert - Thanks man. This is not our first one. I'm just now getting around to posting our past deals on here. I think it's great to read about and see what other people are doing.
2 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Jay Hinrichs - Wow... Thanks Jay (Or should I say Mr. Hinrichs). I see you active on these forums a lot giving out great free advice. I look at it as an honor you saw & replied to my post. Thank you for the kind words.
We agree, a good relationship with your lender whether it be a bank, HML, or Vinny from down on the corner is key. That's how we were able to finance our $18k property as well ;)
We thought it was a cute house as well and in the back of our minds kept thinking we were missing something because it was such a good deal. Just We could have easily talked ourselves out of it. Goes to show you the power of taking action.
6 Reply
Will Gates
Rental Property Investor · Maryville, TN · Member since 2018 · 80 posts · 53 votes
7y
Incredible!
0 Reply
Jay HinrichsBusiness Member
Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
7y
Originally posted by @Blake Edwards:

@Jay Hinrichs - Wow... Thanks Jay (Or should I say Mr. Hinrichs). I see you active on these forums a lot giving out great free advice. I look at it as an honor you saw & replied to my post. Thank you for the kind words.
We agree, a good relationship with your lender whether it be a bank, HML, or Vinny from down on the corner is key. That's how we were able to finance our $18k property as well ;)
We thought it was a cute house as well and in the back of our minds kept thinking we were missing something because it was such a good deal. Just We could have easily talked ourselves out of it. Goes to show you the power of taking action.
there are a whole new crop of investors.. however the BRRR strategy was invented in LA for out of area deals exactly like yours.
and my company played a prominent roll in it from 2001 to 2008 when it all came crashing down :) IE refi's FRoze like antartic.. its has taken a decade or so to get the banks to come back to this model IE cash out refi's.
In my day it went like this.
LA investor listening to a Saturday morning real estate radio show hosted by Mike Harris ( he is still on by the way) at least he was last year. it was called real estate round table.. he would talk about investing and mortgages and they created leads.. those leads would then go to providers in the mid west.. and those providers would rely on my HML company to make the loan to the LA client for purchase and rehab. Mike would have the buyer all approved up front for the take outs.. and we usually did 2 to 4 at one time.. So I required the solid underwriting Mike did and proof of take out.. and the LA buyer would have to put 1k down per house.. I would then lend the money to them and they would buy from one of my mid west vendors .. mid west turnkey vendor would then buy and rehab .. once rehab was done we already had the ARV appraisal done for the refi.. it was just a matter of getting a 442 reinspect and closing.. my average HML turn over in 91 days and I did about 60 of them a month for LA based and San deigo based investors with some in the Bay area and other parts of the country but SOCAL is 90% of the buyer base that's why all the marketing channels for turnkey are pretty much based in Socal and or CA.. its where the buyers come from you know the story... prices to high in CA need to go out east.
So now we put LA investor into 4 homes day one for 4k out of pocket.. they get rehabbed and refi goes through they get 5 to 10k cash back per home.. so they get their 4k back plus 16 to 30k in their jeans.. and in those days cash flow was 100.00 a house..
We were all printing money back them LOL.. But 08 hit and I got stuck with 450 loans on the books that could not refi because refi lenders Country wide Wells etc all pulled out of the market.. so I ended up foreclosing on about 200 LA investors and owing the homes. Only to have the values of rentals drop like a rock.. so we got hammered very hard.. but that was then and now is now.
Podcast Guest on Show #222
JLH Capital Partners51 Review
Website View Page
10 Reply
Lee Fjord
Rental Property Investor · Saint Louis, MO · Member since 2015 · 14 posts · 7 votes
7y
That's Awesome Blake!!! Time to find another house to BRRR. Lol
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Lee Fjord - Thanks Lee. Yep, we're always on the hunt. Let's put our heads together and find something!
0 Reply
Jian G.
Rental Property Investor · San Diego, CA · Member since 2019 · 102 posts · 43 votes
7y
@Blake Edwards I guess it works here in SoCal too you just need a much deeper pockets, adding a few zero to everything.
0 Reply
Michinori Kaneko
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
7y
@Blake Edwards congratulations! I started investing in real estate last year, have 4 properties now, but realized i've been doing it incorrectly after listening to multiple podcasts about BRRRR. i've been trying to look for deals that I can do a BRRRR, but it's difficult for me to assess what the rehab cost is and what the ARV would end up being, especially being out of state investor. What tools or methods do you use to get these numbers right (or at least close)?
Also, it's great to hear your success story, but how often does this actually work out, or are you consistently getting these to work out?
@Jay Hinrichs I actually listened to one of the older podcast that hosted you just yesterday (the land deals and the timber deals you did were very interesting)! since you've done BRRRR 2000 times, what are your tips about how to estimate rehab costs and ARVs? I know the market is a little different from back in the days, but I'm hoping to get a jump start on my real estate investing.
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Michinori Kaneko - For the rehab costs, we've done enough we have a decent idea on what to estimate. We still use our GC to walk the property to verify.
For ARV, we use comps through Redfin on rehabbed properties in the area. To me it's the most user friendly. We are very conservative in the ARV and over estimate on the rehab costs.
1 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Jian G. - Im in the Northern California Brentwood, but same thought still applies. If you add about 3 or 4 more zeros to everything that's pretty much the properties up here too.
0 Reply
Michinori Kaneko
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
7y
Redfin. i should check it out. Thanks Blake.
When you say you've done enough to be able to estimate rehab costs, do you actually look at the property or are you basing it off of pictures that your realtor is sending? How does your actual vs estimate workout usually?
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Michinori Kaneko - Sent you a PM. We go off the pics. If there's no pics, we ask our realtor and GC to hook up to gain access to look at it. Actual vs. estimate is usually pretty close. At this point we are looking for something that we may miss from the pics like a sagging floor, foundation issues, etc.
2 Reply
Michinori Kaneko
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
7y
ah! looks like i did checkout before, but the area I'm currently investing in (Fort Wayne, IN) wasn't available on redfin yet. Maybe i need to look into other markets too!
0 Reply
Victor S.
WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
7y
nice job! can we get a better picture of rehab scope and maybe some before/after pics? $40k sounds like a lot more than what you've described in the OP.
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@Victor S. - Yes sir. I am working on compiling the pics/details on all our properties. It may be a while but the goal is to show a lot more pics with a lot more line item details.
1 Reply
David Noh
San Francisco Bay Area · Member since 2019 · 24 posts · 6 votes
7y
@Blake Edwards
Looks great !
Always awesome to see OOS investing working out.
What is your team OOS made of?
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@David Noh - A bank was key. A good relationship with a bank was key.
1 Reply
David Noh
San Francisco Bay Area · Member since 2019 · 24 posts · 6 votes
7y
@Blake Edwards
Did you use big name banks like Chase/BofA or smaller ones?
0 Reply
Blake Edwards
OP
Real Estate Agent · Brentwood, CA · Member since 2018 · 285 posts · 225 votes
7y
@David Noh the big boys are outta the picture. No BofA Chase Wells Fargo or anyone like that. Small local to the area banks and credit unions will be your targets.
2 Reply
Shaun M Skeffington
Flipper/Rehabber · Northwest Indiana · Member since 2018 · 12 posts · 2 votes
7y
@Michinori Kaneko
0 Reply
Shaun M Skeffington
Flipper/Rehabber · Northwest Indiana · Member since 2018 · 12 posts · 2 votes
7y
@Michinori Kaneko I live in Northwest Indiana. Have you had good luck in Ft. Wayne?
0 Reply
Adam Batcheller
Property Manager · Roxbury, CT · Member since 2018 · 30 posts · 20 votes
7y
@Blake Edwards. Great story Blake. Congratulations. I’m new to this site and working on my first property rental.
What does "BRRRR"?
Best,
Adam Batcheller
0 Reply
Michinori Kaneko
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
7y
@Shaun M Skeffington define good luck lol it depends on what you are looking for i guess
@Adam Batcheller BRRRR stands for Buy Rehab rent refinance repeat. Its a very commonly discussed method in BP forums and podcasts, i encourage you to search for it. very educational and mind blowing.
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