My First BRRR

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I showed a house to a young couple today. They are looking to rent this house and are ready to move ASAP.  After the showing, I talked with my agent and we agreed on terms for an offer on the property. The future renters are aware that this deal is not gaurenteed.

Tomorrow I am going to the bank to secure financing. 

I did get financing. It took 36 hours of phone calls, emails and trips to the bank(s).

The renters are settled in to there new home.

Insurance company sent me a cancellation notice stating that "the roof is in need of replacement"

Estimates 40% higher than I was anticipating needs to be re decked with new sheeting. That will cost an extra 30% above the over budget roof cost.

So, we are looking into raising the sidewalks on the second level, new trusses, new roof and siding. This will add an extra bedroom, aWalk in closet and a bathroom to the upstairs. That turns a two bed one bath into a three bedroom two bath and adds about 600 square feet to the upstairs. 

I think I can get it all done for about $40,000 (including the new roof)

I'll be in it for 120,000. Similar homes in the area are selling for 150,00-180,000. I plan to keep it but won't be able to raise the rent for at least a year. So, how do I pay back the 40,000?

I did some sketches and figured out how to make a duplex out of this house by raising the roof! 

2 bed 1 bath upstairs and then remodel the downstairs into a large one bedroom.