First out of state BRRR(R)
Investment Info:
Single-family residence buy & hold investment in Portsmouth, VA. First BRRRR, first out of state purchase, first purchase in my LLC.
Purchase price: $120,000
Appraised: $172,000
What made you interested in investing in this type of deal?
I had been on the lookout for a long-distance purchase of a SFH, being stationed in Hawaii and investing in Virginia. This one had a juicy BRRRR potential.
How did you find this deal and how did you negotiate it?
Zillow gives me alerts when new properties come up in my search area and this one popped up. Ran some quick comps and it was worth $50k more than asking price. It was listed as for sale by owner, so I gave him call. It was an owner/agent who had bought the property at a low price from previous clients who couldn't sell it and managed it himself, renting to section 8 tenants. He was moving out of the country and wanted to get the property off his hands. He said he got it for a good deal and wanted to let it go for a good deal. I got my agent to send him a contract 20 min later at asking price.
How did you finance this deal?
25yr/5yr balloon commercial loan at 3.75% apr through my LLC from a local credit union, with a 20% down payment from savings.
How did you add value to the deal?
The property required about $6k in rehab, which was given by the seller in credit at closing.
What was the outcome?
The property already had Section 8 tenants in place, so my property manager took over. The section 8 tenants are in until May 2021 at $1300/mo. Current cash flow is $250/mo after PITI/reserves/PM/vacancy. Market rent for the property is $1500/mo, so I will be increasing the rent in May, as well as refinancing in 6 months to pull all of my initial investment out, and some.
Lessons learned? Challenges?
I learned that the credit union I used will do an ‘as is' appraisal, and an after-repair value appraisal before any repairs are done. That second one gave me further assurance of an awesome BRRRR opportunity.
Chris Wheelus