Rental Property Investor 路 Ithaca, NY 路 Member since 2015 路 1k+ posts 路 1k+ votes
6y
@Brian Zaug
No, I鈥檓 doing AirBnB and my place is fully booked. Student housing is probably hurting because Cortland is shut down. There鈥檚 opportunity if you find the right seller.
Investor 路 Boston, MA 路 Member since 2016 路 77 posts 路 55 votes
6y
@Dillon Jackson Hi Dillon, I just finished up a BRRR deal on a 7 unit I purchased about 8 months ago.
Purchase Price: $545,000 at 20% DP,
Rents at Purchase: $5900
Rehab: $35,000
Total invested: $144,000
NOI raised by $23,400 a year= 7.75% Cap Rate=$302,000 of added value, appraiser did not give the full value because of the age and really bad comps for my 7 unit. He used the income approach but the comps hindered his decision 馃槩
Rents after rehab: $7850
Cash out Refi: Appraisal came in at $780,000 LTV 75%
Cash pulled: $145,000 and still have 25% equity in the property equaling $195,000
Rental Property Investor 路 Washington, DC 路 Member since 2018 路 24 posts 路 0 votes
6y
@Nick Rutkowski@Ryan Short can you tell me more about the rehab cost? I am looking in the DC area at 4 unit buildings, however I'm not sure what the cost will be to rehab the units.
These units are usually in pretty bad shape (3 out of 10). I would like to rent them with hopes of a low rehab cost, while meeting renter expectations by making it a (7 out of 10) so to speak. Unfortunatley, i'm not sure what a low cost rehab actually cost.
I will be living in one of the rental units for the initial year. Do you think it is better to rent and renovate or renovate and sale as separate units? If I renovate them and sale I would be looking to make them look like an 8 out of 10. I know personal/preference scales will vary, but I hope you get an idea of what I am trying to say. Any help would be greatly appreciated. I am currently working on a spreadsheet to quickly identify good buys from bad ones (cap rate, NOI, CASH ON CASH, etc.).
Jesse from Jersey (currently living in DC metro area)
Real Estate Agent 路 Philadelphia, PA 路 Member since 2015 路 19 posts 路 10 votes
6y
I've been doing BRRR investing for a few years now in Philadelphia as well as working with clients who have done the same. I see many people here on BP who share very low estimates on rehab and I believe that's where you can get caught in a bind. In the beginning, I tried having lower rehab budgets for deals and I wound up just putting band aids on things I should have completely redone in the beginning. On one property it ended up costing me around 10k the first year due to issues the tenant brought up to my property manager that were legitimate.
If you're going to keep a property for an extended period of time I'd look to do most of the major systems (HVAC, electric, plumbing, roof, etc) if you can off the bat.
When we redo properties like this we're generally around $60-70/sf and were finishing at a higher level than rental grade. This also helps when you're going to get the property appraised. The appraisers have been generous when we finish at a higher level (in line with flip properties) in Philadelphia. This translates into being able to pull more money out or allows you to buy maybe a few bucks higher.
**In light of the current worldwide pandemic, lenders have become really tough on cash out refis though so be careful. My lender who would always do 75% LTV is now only doing 65% so keep that in mind in the coming months.
Rental Property Investor 路 St. Paul, MN 路 Member since 2016 路 3k+ posts 路 3k+ votes
6y
I've done 60+. The method works well if you can create enough equity to refi and still cash flow well. I stopped doing them to focus on syndication, but it is a great strategy.
Investor 路 Boston, MA 路 Member since 2016 路 77 posts 路 55 votes
6y
@Melissa Uppelschoten thank you. This property is between a C+ and a B class, 7.5% cap rate. This property is cash flowing $2600 a month after all expenses. Value add deals are very profitable in this area and still appreciate at a decent rate.