Would anyone share how their brrrr investment has gone?

Question

I would love to see how the numbers work out in various deals.

Brian Zaug · Answer

I just finished up another brrrr and this was a good one.

I purchased a duplex cash for 90K and rehabbed for 40K.

I'm All in at 130K.

Duplex gross monthly rents are now $2300 (util. seperate)

Appraisal came in at 205K!

I'm doing a 70% cashout refi so i'm getting back the 130K i put in, plus an additional 5K which i'm buying a sweet quad with!

Thanks to this house, I have about 1k a month cashflow coming in,  a new quad, and still have all my money.

Julian Orsuto · Answer

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.

Hope that helps!

Ryan Short · Answer

@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 😢

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

Nick Rutkowski · Answer

@Dillon Jackson

I got two deals.

1: Duplex. All cash for 32k, 10k rehab, 64k ARV.

2: Fourplex. No cash down for 85k, 50k conversion to commercial, 250k ARV.

If you want a more specific break down I can give it to you in a PM.

Nick Brown · Answer

@Julian Orsuto care to share one of your BRRR deals?

Dillon Jackson · Answer

@Brian Zaug that is amazing!

Ryan Short · Answer

@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.

Melissa Uppelschoten · Answer

@Ryan Short Impressive! Can I ask what class the property was?

Jesse S. · Answer

@Julian Orsuto Can you send me pictures of the finished product?

Todd Dexheimer · Answer

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.

Would anyone share how their brrrr investment has gone?

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