My first BRRRR!

18 Replies

All private money from 1 investor.

I get 10% equity plus 5% of monthly rents as manager.

Bought it bank owned for 79k. It is a 2 bd 1.5 bath in the fishtown neighborhood of philadelphia.

Rehab budget was 16k. Spend that fixing plumbing, electrical, roof, hvac, ceiling issues and appliances.

Had a lot of interest with it listed at 1225/month.

Then some of the new appliances got delivered and mold was discovered in the kitchen floor.

Now it's back off the market until that gets fixed. Going back to the boss man tomorrow for another 3k.

I'll keep you posted!

Wow, your investor is getting some of the most favorable terms I've ever even heard of, maybe I should try that in my area.

Out of curiosity, what's the ARV?

@Max T. Congrats on getting started.  There are always gotchas--an important lesson.  Good luck!

Originally posted by @Max T. :

All private money from 1 investor.

I get 10% equity plus 5% of monthly rents as manager.

Bought it bank owned for 79k. It is a 2 bd 1.5 bath in the fishtown neighborhood of philadelphia.

Rehab budget was 16k. Spend that fixing plumbing, electrical, roof, hvac, ceiling issues and appliances.

Had a lot of interest with it listed at 1225/month.

Then some of the new appliances got delivered and mold was discovered in the kitchen floor.

Now it's back off the market until that gets fixed. Going back to the boss man tomorrow for another 3k.

I'll keep you posted!

 Sounds good! Was your private investor family or friend? I need that person's number! Haha, good luck with it, i hope it does you well!

@Jeremy Pace - There are 3 homes on the block currently for sale. Same bed/bath/sq footage count. They are upgraded with top of the line finishes and are listed between 199k and 229k. The rehab I am doing is much more basic, not as fancy. We are looking to hold this property as a rental for ~5 years. When the time comes to sell we will do a much nicer renovation that what I'm doing now. Realistically we would only get around 150k if we sold it now.

@Mark Redmann - I do not know the investor personally. I have been connected to him through a friend of mine, who earns his equity share by bringing people together for deals like this. The investor is one of the top fertility doctors in the Philadelphia area. The friend of mine is one of his patients. Hooray for networking!

@Max T.

 you're only going to make $60 a month for five years?  Did I read that correctly?  If that's the case, your long game is STRONG.

Originally posted by @Jeremy Pace :

@Max Tanenbaum

 you're only going to make $60 a month for five years?  Did I read that correctly?  If that's the case, your long game is STRONG.

Absolutely! As rents go up so will my fee, and with any refinance or sale my equity will pay me.

Its a good bit of work up front but if done right then the rest is easy. Management of class A involves little more than cashing checks and answering the phone. And with multiple properties like this to manage, those fees add up.

I'm sorry but I don't understand what the 10% equity Means?  Does that mean you get 10% of the profit when you sell it?  In the interum what do you get out of the positive cash flow?

@Jeremy Pace

It's just the first deal.  Getting the first deal under the belt (make sure not losing the shirt) is much more critical.  Would you agree?

Congrats to @Max T. !

Originally posted by :

It's just the first deal.  Getting the first deal under the belt (make sure not losing the shirt) is much more critical.  Would you agree?

------------------------------------------------------------------------------------------------You are completly right.  Its the First Deal.  You are't paying any money for a "course" Thank God for that.  This is a top wonderful First experience and you are making some money and you are learning about everything all rolled into one deal.

Good Luck 

Good job! Great example of hustle and doing something without personal funds. hope you documented the work you have done so you can have a professional presentation for your next investor and ask for a bigger piece of the pie. even if not you got to learn on someone else's money. 

Originally posted by @Barbara G. :

I'm sorry but I don't understand what the 10% equity Means?  Does that mean you get 10% of the profit when you sell it?  In the interum what do you get out of the positive cash flow?

 10% equity means I own that percentage of the llc that holds title to the property. So yes, I get 10% of the sale price (or refinance) and 10% of the distributions from rent profits in the mean time. That is separate from the 5% of gross rents I collect for property management. I'm happy with that considering I put $0 of my own into the deal. 

But this thread was supposed to be about my project, not the terms of the business agreement I have with the investor!

Originally posted by @John Powell :

Good job! Great example of hustle and doing something without personal funds. hope you documented the work you have done so you can have a professional presentation for your next investor and ask for a bigger piece of the pie. even if not you got to learn on someone else's money. 

 Don't forget to pitch your first investor (with different payout) if your deal goes well too!

@Max T. mold in the floor? Isn't mold usually on the surface? Wood floor? 

Originally posted by @Che Chiu Wong :
Originally posted by @John Powell:

Good job! Great example of hustle and doing something without personal funds. hope you documented the work you have done so you can have a professional presentation for your next investor and ask for a bigger piece of the pie. even if not you got to learn on someone else's money. 

 Don't forget to pitch your first investor (with different payout) if your deal goes well too!

 Max this is excellent advise from Che.  I think this presentation can be given to a hard money lender to finance your next buy so you can be 100% in on your next buy,  BUT you are definitly on your way.  I hope you have calling cards made up that say you are a managment firm and are giving them out at the Real Estate Clubs and Real Estate Meet ups that I hope you are attending.  What else do you do for a living?

@Rob Beland the mold was in between the laminate and the subfloor below it, as well as the sink base cabinet. The floor was some type of cheap particle tongue and groove stuff.

@Barbara G. I am a high school math teacher and wrestling coach by day. I have a few rental properties of my own. Summers off from teaching go toward renovations.

Hey that's fabulous for a deal using OPM!
This is my goal, good on you for workin it
All the best with ur floors :)

@Max T. - Wow! Nicely done. I've been trying to figure out how to structure a deal with someone else's money and none of my own for a bit and this was helpful. Thanks!  And yeah, I'm sure there are plenty of posts on how to structure a deal using other people's money... but maybe I'm just terrible at searching the forums.


Question - who's on the mortgage? The LLC? Or the private lender? Did the bank care that it wasn't your money, if there's a mortgage on the property?


Thanks! Inspiring!

we refied at 130k. The loan is held by the LLC. Rents are up to 1325.

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