First BRRRR - Indianapolis
Investment Info:
Single family BRRRR
Appraised Value: $95,000
Cash invested: $50,000
SFH in Indianapolis that needed cosmetic rehab.
What made you interested in investing in this type of deal?
We had purchased several rentals using conventional financing, but were attracted to the scalability of BRRRR.
How did you find this deal and how did you negotiate it?
Through a wholesaler - Mainstay Property Group.
How did you finance this deal?
$17k of the $35k PP was a PM loan, the rest was our own capital
How did you add value to the deal?
BR #1 – Existing walls were unfinished drywall, sand/mud/paint finished it out. New carpet flooring. New interior & closet door.
BR #2 – Walls were also unfinished drywall, but the floor was concrete (weird, I know). Walls finished out, new closet framed and installed, new carpet flooring, installed ceiling fan
Living room – new window and flooring, paint
Kitchen – replaced cracked floor tiles, new countertop, remove wallpaper & paint
Laundry – reframe door & trim, paint
Bathroom – caulk tub, new shower surround
Exterior – paint trim, new siding on shed, power wash, added roof vents, gutter work, front landscaping
What was the outcome?
Rehab was finished in 2 months, a tenant placed shortly after. Cash out refinance at 6 months following an appraisal of $95k (a creation of $45k in equity)!
Lessons learned? Challenges?
Let me start off by saying this deal went far better than we could've guessed. The rehab went on longer than expected, and was higher than our original estimate. Always remember to have your contractor fully scope your deals. Because the success of the BRRRR method depends so highly on the appraisal, we went through great lengths to make sure we'd be making the appraiser's job as easy as possible. This included physically being present during the appraisal, having a pre-printed packet of comps, list of repairs, the tenant lease, and improving curb appeal through quality landscaping. The most important thing was, however, buying right and buying with equity built in.