First BRRRR! Triplex - Philadelphia, PA (2017)

3 Replies

Investment Info:

Small multi-family (2-4 units) buy & hold investment in Philadelphia.

Purchase price: $133,500
Cash invested: $61,000

Contributors:
@Jon Sanborn

Our first BRRRR! An amazing learning experiences, lots of ups and downs, made mistakes and made money.

Lessons learned? Challenges?

Contractors ... are the worst. Set proper expectations, and put everything in writing!

NEIGHBORHOOD: Allegheny West in Philadelphia - Triplex!

DEAL FIND: We found the deal on the MLS, but it was first posted on HubZu, which is linked to Philly's MLS. HubZu is an Auction Site, and the property was bank owned.

FINANCING: Crowd sourcing $ from a family friend. This was our first time ever asking for money (isn't as scary as you think once you try it!). We knew the neighborhood well, and knew this was a deal that we could BRRRR and repay the family friend.

TOTAL PROCESS: 12 months between the Full Rehab and Refinance. Both of these were huge learning experiences. Tip - find a good lender and make sure you review every single detail with them upfront before beginning any type of process (i.e. is the property owned under a personal name or LLC, how many members are in the LLC). Those details can affect if a lender will loan you a residential loan vs a commercial loan sometimes, which both comes with different interest rates/terms.

THE FINANCIALS - BRRRR:

Purchase Price: $130,924

Renovation Costs: $61,025

Holding Costs (12 months): $2,384

Total Investment Costs: $194,333

New Appraisal Price: $330,000

Refinance (70% LTV): $231,000

Closing Costs: $16,000

Total BRRRR Profit: $20,667

CASH FLOW:

Mortgage: $1,349

Insurance: $150

Taxes: $23

Estimated Mo. Repairs: $137 (5%)

Cap Ex: $82 (3%)

Vacancy: $219 (8%)

Property Management $274 (10%)

Miscellaneous: $100

Total Expenses: $2,333

Total Rental Income: $2,735

Total Cash Flow: $402

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