FIRST BRRRR PROPERTY! COME JOIN THE RIDE!

72 Replies

Hello BP members! I wanted to share with you my latest RE project. This is our 3rd RE transaction since jumping into RE in December of last year. First deal was a buy and hold 4 plex, then a flip which we are listing this week, and last month we purchased this SFH. It is a 1/1 home with 480 sq. ft.

I found this house through my daily Redfin emails. Home was listed for 50k with only a picture of the front of the home.I have learned when there is no interior pics it usually means its in bad shape. Since this was such a low price I knew it would not last. Its located in a C area but my initial thought was to turn this into a short term rental. 

We put an all cash offer of 56 with no contingencies and 500 earnest money. The worst that could happen is backing out and losing the 500 since I had no contingencies to negotiate with the seller. I asked my agent what he thought this place may go for fixed up and he mentioned 80-100K so it was too good to pass up. Just coming to the end of our first flip on a 1400 sq ft home I figured a complete rehab on a place this small would be 15K max with me doing a lot of the work. Ended up having two of us getting countered but we came out on top due to response rate to seller agent and we opened escrow. I drove to the property several days later and crawled under and over it. Everything looked good, and good bones! A lot of mice/rat activity in the home as well. Needed complete remodel on the inside though. Closed on it April 12.

The house sits on a 6750 sq ft lot! It is huge. Could fit another house on the property. Previous tenants turned it into a farming/greenhouse/animal raising operation. Went down last week for 3 days and raised hell with the place. In 12 hours I had the inside completely demoed and ready to start the rehab process. I started washing walls with TSP to get ready for primer and paint on day 2. Day 3 I hired 4 guys from Home Depot parking lot to help clean up the back yard. I hauled off 5 large dump trailers of garbage to the dump. There is most like still 1 trailer left of trash buried in the back yard. Pretty crazy.

Goal for this house is to use the BRRRR method, I may not get all my money back out and that's ok for me. Even if 10K stays in the deal I got a house for 10K out of pocket that's all fixed up. Rent should be between 700-800 when complete. I had 3 people stop and ask if it was for rent while I was working on it so I know people are looking. Since this is a rougher area in town I don't want to hold forever, plan is to hold for 2 years and 1031 into something bigger. Also, the lot is huge, its zoned R1 but I plan on reaching out to the city to see if they would allow it to be rezoned for multi. Contractor mentioned I should think about putting a small modular home in the back and double the rent if I can. Not a bad idea.

Anyways, check out the pictures and join me on my first BRRRR!

Listing Picture

Hey Kevin, looks like it's coming along nicely! As your first BRRRR investment what made you go with a full gut rehab? With it being your 3rd property there must be some challenges along the way you could not have foreseen without getting into it and starting the process. Would you mind sharing about some?

@Jillian Jones , thanks for the questions. When I walked the property the first time I realized that I could not salvage anything inside. Too much damage by water in bathroom and a lot of rodent damage in the kitchen to save anything. I was hoping it was in better shape since as I mentioned there were no interior pictures from the listing. 

However, my offer was based on needing a full interior rehab before even seeing the inside. I came up with 15K because my current flip will run about 50k for a home 3 times this size. I have already received an estimate for about 10k from 1 contractor and am waiting for a couple others. 

Regarding unforeseen challenges on this property there have not been many as I assumed total rehab going in. However as I was tearing the place up I have noticed quite a bit of termite damage. Recall I had no contingencies and I did not have a pest inspection going in. I should at least have gotten someone in for pest but seller wanted to close in 7 days. I may have to get the place tented if its the bad type of termite. 

Please let me know if I answered your questions or id you need more clarity! 

@Sam B. , thanks for the encouragement!

@Jillian Jones , Part of the money for this purchase came from personal funds and part of it came from a HELOC i pulled out last year on my primary. The HELOC is also funding the rehab on my flip property and will fund the rehab on this property as well. I used mostly personal funds so I don't pay interest on the HELOC loan. I know its small but if I need the money for personal items in a pinch I could use the HELOC account.

I just purchased the BRRRR book and package. I would like to start using private money from friends and family to finance future deals so I can keep personal funds as reserves in case things go astray.

I also am looking at out of state investing and using the BRRRR method in TX. I have not had much time to pursue this at the moment. I have folks to meet up with to learn more about TX areas.

I love to answer questions when possible. Let me know if you have more!

Where are you located? Where are you investing? What are you currently reading to gain some knowledge?

@Kevin Moules it’s funny your mention it I live in Texas! 

I'm working on making an offer today actually. I was just on FaceTime with my realtor because the place is an hour away and I didn't want to take time away from work to see every single house. I have read a few books on investing. Currently devouring the BRRRR book and I'm going to start on the book on property management next. The place I'm looking to buy is close to an Army base and it's a 4plex. For my first deal I'm looking to house hack because my lease is up in 2 months and I feel ready to get involved after spending a few months analyzing different markets close to me.

The place I’m looking at is great, fully rented, little to no repairs, wish me luck on my offer!

I know a few wholesalers sent me off market deals today for Houston, Dallas, and Fort Worth areas. I’m pretty comfortable running the numbers in those areas as well as Killeen, FT. Hood and Waco. If you want to, shoot me a PM with what kind of numbers you’re looking for. For me, I’ve seen some good deals but didn’t have the confidence or knowledge to move forward until now. Property taxes aren’t cheap but the rents I’m coming across are pretty strong.

@Kevin Moules that's great and I will definitely follow your thread to see the progress. I recently invested out of state in Killeen. @Jillian, I also bought a fourplex back in early March and it's been doing great. I've been listening to all the BiggerPockets Podcasts/Audible books on Real Estate including @David Greene 's book on BRRRR. I heard his remote investing book too. I also read @Brandon Turner 's book on managing rentals. 

I am convinced about BRRRR the problem I am having is finding the location in Killeen to try the BRRRR strategy. I would like to find a property figure out the comps (ARV) and go to work and BRRRR. I want to have a diversified portfolio of fourplexes and single family.

@Gaurav Bhasin , thanks for following along! Im just a new guy learning the ropes. I hope your searches for BRRRR property goes well. Although my first 4 plex was a good start I now think about how i have a lot of money tied up in that deal that could have potentially been used on a BRRRR deal and I would have that money back in my pocket. However, everyone needs a first property to get them rolling. If you follow my thread on the rental you will learn bringing my spouse on board was a huge hurtle in this process. But we are going now!

@Kevin Moules thanks for the encouragement will continue to look for opportunities, they are out there just have to find them. @Jillian Jones I mentioned I bought a fourplex out in South Killeen and if you have any questions that I can answer please let me know. Also let me know of any wholesalers since I'm out of state and any help in finding opportunities is appreciated. 

@Kevin Moules

Thank you for your inspiring post, Kevin! I am located in the same area as you in central CA. I started to want to invest in REI since mid last year. I have read books from BiggerPockets in the past few months. My latest fun read is the J Scott's rehab book and about to start David Greene's BRRR book. I have been learning to cold call and drive for dollars at the same time. It is very encouraging to see someone in my area is making things happen. I will definitely follow your post. Please update when you make progress!

@Sean Lambert , no problem. I like to document things as I go. Its the engineer mentality I have I guess. Being a farm kid I enjoy turning the wrench a lot so i always take pictures of stuff before I tear it apart so I know how it goes back together.

@Alyssa Dyer thank you! BTW awesome profile pic! Read your profile, looks like you jumped in and took off with RE. Good for you! Hopefully Ill be as cool as you someday soon :) 

@Jon Brown , thanks for checking it out. Read your profile as well. Looks like you are a man of many trades as myself. I had to google map your location since I have never heard of it. I don't get out much from the valley. I just love it here. thanks for joining the journey. adsf

@Jessica Vanderveen , my wife and I would like to find a live in flip in our area as you have done yourself. I am really trying to get my boys out in the country so a live in flip in that situation is harder to find for us. 

Thank you @Alice Tang and @Hollie Bendall !

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