Our first BRRRR home - Excited to do our next one!
Investment Info:
Single-family residence buy & hold investment in Findlay.
Purchase price: $50,000
Cash invested: $27,000
Rehab property. It was a bank short-sale. Turned a 2 bedroom into a 3 bedroom SFR. Basement, detached garage, fenced in back yard, quiet neighborhood. It is only a 900 square feet house, plus basement.
What made you interested in investing in this type of deal?
It fit the BRRRR strategy. Our plan B was to flip the property. Plan C is/was to rent to college students since it is close to the university. The HVAC unit worked and was less than 10 years old. Hot water heater worked, roof didn't leak, and I loved having a garage to work out of and store my tools.
How did you find this deal and how did you negotiate it?
I found it on Zillow and my realtor helped me navigate the process. We thought the deal slipped away, then it was back on the market after about a month of "pending". Our realtor said a cash offer would probably sway the bank into our favor. I wanted to offer $46K. But we calculated the estimated mortgage balance based off the original loan date to be +/- $65K. We knew $50K was low, well below the calculated amount. At closing, we found they owed $62K. Our calculations were right.
How did you finance this deal?
100% cash savings. Barrowing $50K was way too much trouble to do as a conventional loan. We started down that path and it became a hassle. We have great credit, but only $50K was not attractive for any lenders to really deal with. It may have been different if we asked for $300K, but then that is not our niche. We want to stay in the
How did you add value to the deal?
Sweat equity, and the location is close to home. The property had "good bones" but looked horrible. We decided to gut the property, add bedrooms, closets, new kitchen, moved laundry to first floor up from the basement. This also allowed me to upgrade the electric, add cable inside the walls instead of on the outside of the house, put insulation in the walls (it had none), and replace the old sash/storm windows. Removed wall between kitchen and LR creating open floor plan. New roof.
What was the outcome?
We basically have a new home to rent. This allowed us to get the most rent, finance the most cash back, and have little to no future repair costs anytime soon. ARV is about $110K which means we will be able to get all of our cash back out of the deal.
Lessons learned? Challenges?
Tons of knowledge gained about the rehab process, getting permits, getting estimates for the work. There's no way we could have hired everything done that we did ourselves. We wrote down what we wanted, what we could do, and what we would need to hire done. The list changed every day. In the end, we are much more knowledgeable on what we are looking for and willing to accept in the next deal.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Nicole Hartschuh from Danberry Realty. Super go-getter, extremely helpful/personable. I'm working on getting her to see more of the "investment" side. Really, by the time they make it to the MLS, it's not a great deal to be had. This home we purchased was a leftover from the other investors in town. The original investor backed out and allowed us to jump on it, getting into the game. Local lenders were always the best at listening and understanding the BRRRR methods. We chose to stay local.