First Investment Using BRRR
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $19,000
Cash invested: $33,100
SFR home bought in St Louis with intent of using BRRR method. House is a 3 bed/2 bath about 930 sq ft. House needs significant renovations, but mostly cosmetic. Purchase and rehab funded using a HELOC.
What made you interested in investing in this type of deal?
I have been targeting deals that work with the BRRR method, and my criteria is the following:
- Purchase and rehab must be less than HELOC credit of $65000.
- 75% of ARV of property must be greater than purchase, closing costs and rehab. This is so I can refinance to a 30 year loan and pay off the entire HELOC.
- Properties must cash flow at least $50 a month after refinance using conservative numbers for expenses.
- Property located in a C or greater neighborhood
How did you find this deal and how did you negotiate it?
I have an agent in St Louis who understands my criteria and sends me properties he thinks will work. This was a REO that we got for well under their asking. Not much negotiation, we just put in a low offer that was accepted. We asked for a $3500 price reduction after the sewer inspection due to sewer repairs, but we only got $1000. Anything is better than nothing in my book!
How did you finance this deal?
HELOC
How did you add value to the deal?
REHAB!!! Major rehab working including new floors everywhere, new paint interior and exterior, updated bathrooms, new appliances, etc.
What was the outcome?
TBD, this project is still in work! Hopefully I can give a successful update instead of a "don't do what Derrick did"
Lessons learned? Challenges?
Always get a sewer inspection! Would not have known sewer needed repairs.