1st Out of State BRRRR in 2020
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $62,000
Cash invested: $99,000
BRRRR deal, out of state during the pandemic with a newborn at home. It was a wild ride with many challenges!
Bought for $62K cash
Rehabbed and paid a crappy PM $37K
Low Appraisal at $110k
Got about $77k back with the Cash Out Refi
Rented for $1100/month
Just raised the rent in 2021 to $1185/month
$1185 rental income
-$598 Mortgage PITI
-$118 10% property manager (Self managed now)
-$118 10% Cap Ex
-$118 10% Maintenance
-$94 8% vacancy
=$139 Pure Cash Flow per month
What made you interested in investing in this type of deal?
David Greene's books Long Distance and BRRRR.
How did you find this deal and how did you negotiate it?
I found an agent through a coaching network I'm a part of. The home was a VA foreclosure listed on the MLS.
How did you finance this deal?
All Cash.
How did you add value to the deal?
I flew out there 7.5 months pregnant, interviewed 3 contractors and went with the cheapest (rookie mistake!). We painted, fixed ceiling cracks, replaced the floor with laminate and new carpet, replaced ceiling fans and light fixtures, bath vanity and toilet. We painted the kitchen counters, replaced the countertops with new formica (did not over build!) and bought new appliances. We ended up needing to do more once the tenant moved in, including installing a new sump pump and replacing the roof.
What was the outcome?
So stressful. But I feel more confident now. Lots of things didn't go to plan: w/pandemic had no income & I spent ALL of our savings on this investment AND I just gave birth to our 1st kid AND the fires in CA displaced us for 2 months. The contractor was delayed, I couldn't get anyone out because of corona fear, the property manager that I hired took advantage of us & charged us for things they didn't fix, the tenant called the city and they revoked our rental permit, & we had a low appraisal.
Lessons learned? Challenges?
1. Don't hire the cheapest contractor.
2. Don't pay the contractor the final payment until the job is done, even if he gives you a sob story and pinky promises to come back and finish. He won't.
3. Do not just find a property manager on google. It's better to go without one until you get a quality referral.
4. Keep your unsupportive spouse on a need-to-know basis.
5. Do not trust google street view when choosing the color of your new roof.
