Investment Info: 3br / 1ba Condo in Boston
Purchase price: $225,000
Cash invested: $98,250
The downpayment totaled $56,250 which I paid for using a HELOC on my primary residence. The line of credit amounted to $80,000. The remaining funds, $23,750 plus an additional $19,250 was used for the rehab budget ($43k total). Our all-in cash invested came to $98,250.
What made you interested in investing in this type of deal?
The BRRRR strategy was first introduced to me on the BiggerPockets Podcast AFTER I had completed my first deal. I wish I had known about the strategy then. This particular method was great for me now because I do not have a large arsenal of cash to deploy and am in the early stages of my investing career, so it was crucial to find a good enough deal where I could cash flow at the end AND retain most if not all of my initial money.
How did you find this deal and how did you negotiate it?
This was found on the MLS. The person selling it was unloading a handful of other properties too. Their agent was kind of Old School Boston and talked mostly with my RE agent. Initially listed for $250k and we got them down to $225k.
How did you finance this deal?
Conventional mortgage. Used money from a HELOC on primary residence for the down payment, and then a combination of leftover HELOC funds and cash-on-hand for the rehab.
How did you add value to the deal?
We gutted the kitchen and bathroom, brand new cabinetry, quartz countertops, replaced the washer / dryer, all new appliances, new flooring throughout the entire unit, and fresh coat of primer & paint on everything. Previous owner had a cat which smelled like… yes, piss. Long process of scrubbing every surface multiple times with an enzyme cleaner and priming every square inch with Kilz.
What was the outcome?
Currently going through the cash-out refinance stages now. Initial note was for $166k at 5.375% and our new loan will be in the amount of $284k at 4.75%, appraised at $378,000. At the end of the day, we're walking away with $118,000 which we'll use to pay off the HELOC of $80k, re-coup our out-of-pocket costs of $19k, & after closing costs we'll be left with a cash flowing property and an additional $15,000 in our pocket!
The monthly payment on the property is roughly $1875 including the condo fee, and insurance. We have a 9 month lease beginning 12/1 at $2200/mo. This could’ve been higher, around $2400/mo if we had finished sooner closer to September, but the rental market dries up once you reach November.
Lessons learned? Challenges?
Biggest lesson I learned is to over-budget on time. Initially I thought we could be wrapped up by September, but a couple of things slowed me down. The previous tenants took about a month too long to move out, I couldn’t spend as much time working on the unit as I wanted because I was balancing a full time job on top of this. We also went a bit over our initial estimate mostly because the furnace ended up dying which put us out $4500, plus we decided to replace the water heater as it was over 12 years old and I didn’t want to have to deal with it after it was rented.
Super cool!! Are you using a local bank for the refi?
Hey thanks @Justin Rank I’m actually using Guaranteed Rate. I’ve got a guy there I been working with for a couple years and they’re great. Fairly quick and REAL good at problem solving for me when I need it.
This is an amazing example of how to BRRRR in a hot hot hot market such as Boston. Congratulations on your big win! Looking forward to hearing more success stories from you!
Lights out job. Looks great.
This was a great BRRRR deal! I want to go for a BRRRR next I think after I close on a 4-plex in a couple weeks. I love how the investment capital is recycled with this strategy. Not yet sure if I should try it in Denver or in my normal long-distance investment market.
Thanks @Lien Vuong very much appreciate it!
Great writeup and great results @Christian Nachtrieb !
As you know, that 9 month lease is also key in the Boston market so that the unit will be ready for a 9/1 tenant.
Your cat experience begs the question if it's every worth renting to a tenant with pets in a hot market like Boston?
@Dan K. Hey man thanks so much for the kind words I really appreciate that. And yea, psyched about the 9/1 start date for next year. I'm thinking these tenants will stay put, two of them are from out of state and they seem content here. Who knows though. As for the cat, I wasn't the one who allowed the cat initially, they were inherited tenants, haha. I feel very torn on this subject matter as I personally am an animal lover.. but I'm a CLEAN animal lover and the amount of people who neglect their pets emotionally and physically sickens me. I'll say I'm OPEN to the idea of a good pet but I would want to meet the animal first. If that costs me a potential tenant, I say so be it.
In this area tenant turnover is both a curse and a blessing. If rents are under market, it's nice to raise them substantially. However, of course great tenants are also very important!
I feel the same way you do about pets -- animal lover here who has a dog. And roughly 50% of renters have a pet (although that percentage is much lower within a city). I still remember viewing an apartment as a prospective renter nearly 15 years ago -- beautiful apartment but the stink from cat urine was awful.
Awesome stuff, man! Good to hear that deals like this are available out there in our area. On to the next one! Good luck
Thank you @Evan Jacobs , certainly difficult to find but they're there somewhere :)
@Ian Martin This post might interest you
Awesome job. Definitely a successful BRRRR and then some. Love the dark hardware in the kitchen with that color scheme. Good work.
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