Successful BRRRR in Boston w/ Before & After Pic's
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.