Roscoe Village BRRR (House Hack) - Deal Diary
Client is from BiggerPockets but wanted to keep name private. Happy to share a bit of what they did though and the process to hopefully help others looking to do BRRR's/House Hack.
Property: 3 unit bought off MLS for $590k using a 10% down loan option through a local credit union. After credits the loan ammount was for $531,000. Bought Nov 2020. Oddly the property had been sitting for months and was just very dated inside with low rents ($1200 for 2br units in that neighborhood, crazy right?). Had no major issues, we weren't sure why no one else had bought it but the numbers were great using market rents in our anaylsis so moved forward.
New appraisal: $875,000 which allowed client to have new mortgage up to $656,000 so fully covered cashing out the down payment/rehab expenses. I put together a sheet with highest comparable sales in area which helped appraiser get to our target. There were many comps even higher so we potentially could of gone higher but didn't need to.
Rehab: The rehab was very light mainly cosmetics. Cabinets, refinishing floors, paint, tile, etc. No moving walls, adding bathrooms, etc. kept it simple. Exact cost: Confidential in case decide to flip.
Strategies: I see a lot of people on BP thinking they need to do a gut or major rehab to do a BRRR. I always tell people to keep it simple KISS haha. The bigger the rehab the more things that can go wrong. You can get pretty close to top level rents by doing cosmetics... white quartz in kitchen, $1200 white shakur cabinets from lowes, $200 of white tile, refinish old wood flooring a dark color, new $300 bathroom vanity w/white tile and new paint throughout. By keeping the rehab budget low it makes it a lot easier to have enough margin left for the cash out vs doing six figure major rehabs. I like the class A/B neighborhoods as it is easier to create enough equity for BRRR to work.
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