Multifamily House-Hack BRRRR
Investment Info:
Small multi-family (2-4 units) buy & hold investment in Clarkston.
Purchase price: $130,000
Cash invested: $20,000
Awesome Fourplex House-hack BRRRR that just netted me all my invested cash back and is cashflowing even with an insane interest rate (plan to refinance to a traditional bank instead of credit union to fix this soon). Property in my hometown that will hopefully jump start my career in Real Estate Investing! HUGE THANK YOU to the team and Biggerpockets for all the resources they provide!!!
What made you interested in investing in this type of deal?
I saw it as the best way to take the money I had saved and turn it into:
- A Cashflowing Investment that Pays for itself
- Experience in Property Management with Hands-on Attention
- Greater Wealth to Invest in my next Deal
How did you find this deal and how did you negotiate it?
Found through Direct mail Marketing and when she offered the price, she priced to sell. It needed a lot of work and she was aware of that fact. I knew the deal was good at $150,000, so when she offered $130,000,I knew it was time to close.
How did you finance this deal?
I couldn't do traditional financing because the property needed too much renovation, so I found a local credit union that would get the deal done. They gave me a higher interest rate than is probably normal, but it was worth it to get the deal closed. Refinancing out of that high interest rate is always an option down the road.
How did you add value to the deal?
I painted every room, put new floors in, rebuilt the kitchen and bought new appliances. Replaced an old bathroom with new vanity, toilet and shower. Trim was also added to help spiff the place up :)
What was the outcome?
Invested $20,000 to acquire and fix up the deal ($13,000 to close and $7,000 rehab). Added $27,000 from the initial appraisal (the initial appraisal was already very high) and was able to refinance and pull out all my initial investment with another $45,000 on top of that. I plan to use some of that pulled out money to continue to fix up the property (new windows, paint the exterior, renovate an entire downstairs unit) and then refinance again to pull a "double BRRRR!"
Lessons learned? Challenges?
The cost of doing renovations, even when you do them yourself, is high and should not be underestimated. I also should probably have hired for some jobs to get professional finishes and better reliability, but the experience of learning all this new stuff was fun and exciting! I learned I love to rehab and would really enjoy getting better at it, and with the extra money I earned, I can!
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
If you're in the Inland Northwest (other side of Washington than Brandon Turner) I recommend working with my Lender, Freedom Northwest Credit Union. They are a small up and coming institution that is willing to work with investors on any kind of project and loves making deals happen! Shout out to Mariah for helping me get the Refinance done there :)
