Diary of my first BRRRR
I'm going to use this thread to chronicle my first BRRRR. All advice and suggestions are welcome!
The property is a 4/1.5/1 located in SE Dallas. It is currently tenanted on a month to month lease for $825. My offer of 69K was accepted on Monday 1/23, and we will be closing on Feb 1st.
Until that time, I am trying to figure out insurance, what my property management options are, and to begin researching cash out refis.
I'm considering doing a wraparound note on this. If I decide to go that route, I will probably not rehab, keep the tenant in place until the 6 month seasoning has passed, do the refi (the question is how much it will appraise for without any work), and then sell with owner financing. I know that is slightly risky as the bank can invoke the "due on sale" clause, but I will be able to get a hold of the money if I need to, so I'm comfortable taking that risk.
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@Rivy S., make sure you screen the tenant. Make sure they would meet any screens that you would do for a new tenant. Get a rent roll from the owner--does the tenant pay on time? How long have they been there? Would you want to keep them as a tenant or remove them? If you would prefer the tenant removed let the current owner handle that or make sure you are well compensated for taking on the task.
Get a copy of the current lease from the owner. Get an estoppel statement detailing the terms of the lease and the security deposit being held from the tenant. Do the documents agree? If not, find the truth before you close. Best wishes.