Case Study Of A Successful BRRRR
Hello all i hope to provide some value and inspiration to all of you searching for your next deal. The property was bought on the court house steps at the foreclosure auction for 26k. I was not able to view the inside of the property beyond looking in thru some of the windows which showed some wall damage but I could not tell the extent. On the exterior we knew we needed a new roof.
So what I had at this point was a 4/2 1492 sq ft built in 1996 in a sub division where I already own 3 other of these models so I could calculate in general numbers what the house would need being they were all built with similar layouts and finishes.
Upon closing here is what the house needed to get back into rentable condition:
While vacant home was broken into and all the copper plumbing stolen
New Flooring 1200 sq ft
Two bathrooms needed renovation since holes were made to steal plumbing
New water lines thru-out the house
New light fixtures
Paint interior
Replaced all the outlets
New Hot Water Tank
Fix heart runs in the basement
Minor cosmetic fixes
New roof I choose to go with metal roofs for the longevity and I am able to get them at the same cost as shingle
Purchase Price 26k
Renovation was 20k
All In 46k
After 6 months I went to my banker to refi the property and it appraised for 86k they gave me a 80% LTV cash out refi
20yr term 10 years fixed at 5.5%
Cash Out Refi $68,000
Cash in the deal $46,000
As you can see I was able to pull out more cash then what I invested by creating value I was able to pull an extra $22,800
Now I have had this property rented for over 12 months so I can give you my year 1 numbers:
Gross Rents: $12,000
Insurance 576
Repairs 138.77
Supplies 136.22
Taxes 2517.47
NOI before Debt $8,633
Debt Service $5,616
Cash flow $3,017
Now remember i have no cash left into this deal and I used the extra 22k of the cash out refi to purchase two more properties so my COC return is actually higher but for simplicity sake I am giving you simply numbers.
Before Photos:
After Photos: