BRRRR Investing Strategy

[James Hughes]

Hey guys, I'm new to Real Estate investing but I've really narrowed down my strategy to the BRRRR method and I'm looking in the Memphis, TN market to invest. I was wondering if there was anyone who could give me any insight on great Realtors/property managers/lenders in the area.

Also, I was wondering if it would be smart finance the purchase instead of using hard money to acquire my first property. Thanks guys!

[Sean Tagge]

Hey @James Hughes, 

Ya so my first deal in Memphis was when I was buying out of state (currently I was living in Salt Lake city Utah). it was in 2016. I bought a house in Memphis in zip code 38118 typical 3 bed 2 bath 1200 sqft home 1 car carport fenced back yard. 

Purchase $40k

Repairs $15k

ARV $75k

Holding / Closing / Interest costs: $5000

All In: $60,000

Rent $850/mo

I purchased it through a wholesaler that I found through a Facebook group. 

I go the money for the initial purchase from a guy I met at a local REIA in SLC. He lent me the $40k purchase price and the $15k reno for a 20% annualized interest rate (no points) (so basically a hard money loan high interest but I didn't have to put any money into the deal except the $5k holding costs)

I got a contractor to rehab it for me and he sent me pictures weekly on the reno update took about 5 weeks. 

Once I got it renovated and rented I got it refinanced through a traditional fannie mae refinance mortgage 75% LTV 30 year am 5.125% interest rate fixed. It appraised for $75k so the loan was 75% of that = $56,250 My all in was $60k so I had to leave in $3,750 into the deal after the whole BRRRR was finished. The whole process took about 3.5 months.

It has cashflowed about $175/mo so annual = $2,100

So Cash on Cash ROI has been about = $2,100 / $3,750 = 56%

Then it has appreciated to about being worth $80k now.