My First BURRR on a STVR: It's Possible
Just wanted to share a quick success story. I focus on short term vacation rentals in Hawaii. I enjoy self managing and have acquired several over the years. I purchased a 3 bed 2 bath about 2 1/2 years ago for $485,000 (30% down, $145,500) from an original owner and it needed a ton of work. I purchased it, with my intention being to remodel it and throw it in my rental portfolio. I spent roughly $80,000 and essentially did a full remodel. All in costs roughly $235k.
6 months ago I asked my local realtor his opinion on it's value. He said around 800k. I messaged my lender who i've made several deals with and she started the refi process. 3 months later we closed with the appraised value of 795k, allowing me to pull out close to 250k. Once the transaction completed I used the 250k to add an additional beautiful condo to my growing collection. I'll net 20+% CoC ROI on the new property (250k down), and i'm still at about 14% on the one I refi'd with the new higher payment.
There were a lot of hurdles, as it was classified as a condotel that I needed to have reclassified, and a few other weird hoops I had to jump through, but at the end of the day I actually pulled out more money than I put in to the first condo to pay for the second, and now I have two very high performing condos using my original 235k.
I've read in these forums that BRRRR won't work on STVRs (banks wont do it) and I just wanted to share this, so those who might have equity can consider doing it to.