Updated about 2 hours ago on . Most recent reply
Rental Property #7 - My first BRRR
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $153,000
Cash invested: $14,000
This house needed some TLC when I bought it. It also had a big magnolia tree in front of it that added too much shade for the grass to grow under it. The roots are exposed and it makes the elevation give off more of a run down house appearance. But it's all good, I have always been blessed to lease it out. I paid off the mortgage on this one from the proceeds of the sales I had in 2020.
What made you interested in investing in this type of deal?
It had just learned about BRRR from bigger pockets and wanted to try out the method. My goal was to get it to appraise higher to reduce my required 20% down payment I would need as an investor. It straight up didn't work, but all good. Time heals all rental property investing wounds and it worked out.
How did you find this deal and how did you negotiate it?
This was a rental property I bought as a hip pocket from one of my real estate agent's friend's who was an elderly real estate agent who only sold things hip pocket. Honestly I think it was only because they didn't know how to use the internet to list property.
How did you finance this deal?
I originally paid $138,000 cash, put in $14,000 into to as a rehab and refinanced it and pulled back out $109,000. Over the years, I have replaced two roofs, both insurance claims, and just changed the fence. I tried to split the cost of one of the sides with my neighbor, but they denied the request. So I just paid for it and moved on. My tenants just renewed their lease for 2 more years for $50 more a month making 2026 rent $2200 a month. I was leasing it for approx $1450 in 2014.
How did you add value to the deal?
I only did one small rehab of paint and carpet when my tenant from 2014 moved out in 2020. It cost about $6,000 and was done before Covid Hyper inflation began.
What was the outcome?
I got another tenant in 2020 thru 2023 and then my latest tenant moved in 2023 at $2095 and is renewed through 2028 for $2200 a month. I had to replace the water heater, do some hvac repair and had the $4,000 fence replacement cost over the last few years, but all in all nothing major praise the Lord!
Lessons learned? Challenges?
I am not sure on the BRRR...I did end up trying it again years later in 2018...well sort of. But same thing there I don't think I did it right and overpaid a little just like I did on this house. Actually I have probably overpaid on almost all of my properties except the $25,000 condo I bought from my client. But with the Time Value of Money, it always works out. I just play the long game.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
I was my own realtor and maybe if I had a realtor I would have been able to look at it more objectively and just do the one closing taking a loan from the beginning. They way I did it, I had to pay some of my closing costs twice and spent along time working through the proformas only to learn that I would have pretty much come out the same way if I just did traditional financing from the beginning.