I've been listening to Bigger Pockets podcast on Youtube for a while and finally took the plunge!!!!
Scared, nervous and everything in between, but did what was necessary. I’ve been a dreamer of real estate investing for a while now, but life got in the way a few times. Let's start with a break down in marriage which led to divorce. Then came an accountant that became a real estate investor partner that pretended to be a very good friend all the while fudging the numbers. We completed one flip together that resulted in profit. The second deal went all the way south. With all that said...... it's not for pity but to show that with resilience you pick yourself up and keep going!!!!
Now the good news.... After my past experiences I decided slow and solo would be a good restart for me while I piece my life back together. I've heard so much about BRRR at Biggerpockets that I took the step of faith although to be totally honest, living in a house while it's been fixed is not exactly my thing! But heck, with a single income, that was my only option.
My intension is to use my first BRRR to launch and do more deals, with the goal of building a rental portfolio of long term passive income.
I'm excited to show you the numbers and photos.
Phase 1: BRRR House 1 Purchase
Purchase Price: $76,888
Closing Costs: $ 4,690
Total Initial Investment: $81,578
Phase 2: Renovations
Reno Budget: $25,000
Phase 3: Refinance
After 1.5 years of slow renovations the house was appraised at $175,000.
Existing mortgage balance before refinance $61,5000
Refinance Mortgage New Amount: $105,000
Cash Out In Hand: $39,700
Phase 4: Purchase Another House - BRRR2
Purchase Price: $120,000
Down Payment: $24,000
Closing Cost: $5,500
Total Initial Investment: $29,500
Phase 5: Rent BRRR House #1
Total Cost: $732
Monthly Rental Income: $1,450
Monthly Passive Cashflow: $718
**** I was really lucky with getting $1,450 as the monthly rent, was really expecting $1,300. As it turns out, not much rentals available, so the prices have gone up a bit.....
A Few Lessons Under The Belt:
1.Not ever bank like financing fixer uppers.
2. Some banks have a minimum mortgage amount e.g $100K, $150K, $200K. So a $61,500 mortgage amount will be an automatic decline.
3. You don't need to be connected to borrow private money, you just need to know where to look. Don't aim at finding a lender, look for who service the lenders and they'll make the calls for you.
4. Working with contractors require lots of flexibility. In some areas contractors are in demand, make good income and will not negotiate on price:)
5. Do your research and put together a resource guide. (I now have my mortgage finance guide with different lender requirements and areas to invest based on return on investment)
Now For The Before Pictures......
Congrats on the BRRRR deal Danna and I love the tips.
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