Another Awesome BRRR Project Completed!

[Benjamin Riehle]

Hey Bigger Pockets! Just wanted to share a recent remodel project we completed and how the numbers worked out for us!

The appraisal just came in for a recent BRRR we undertook. The property was valued at $138k.

We began this project back in March of this year, purchasing a run down home in Tucson’s Barrio Hollywood neighborhood for $60k cash. We poured $53k in the project, carrying out a 3-month remodel, and arrived at an updated 4B/2BA, 1296 sqft home. The place was rented out within the first week at $1,100/month! That comes out to a cap rate of nearly 8.2%.

And yet, as we know, with the BRRR strategy our primary concern is the ability to return our capital and minimize our total capital outlay and maximize our equity gains.The fact that we have such great rental return is just icing on the cake!

After rehabbing and renting, our next step is to refinance. We will refinance with a conventional mortgage at 80% LTV (loan to value), putting $110,500 back into our pocket.

Herein lies the compounding potential of the BRRR strategy. After putting $113k in, we are getting the $110.5k back, nearly negating the amount of capital tied up in the project. Now the property is cash-flowing, we have $25k equity in the property, and we have the refinanced sum of $110.5k to go repeat the process. Gotta love BRRR!

If you haven't already, go read Brandon Turner's comprehensive blog post on the BRRR strategy:

https://www.biggerpockets.com/renewsblog/2015/04/2...

Hope everyone has a great weekend!

[David Grabiner]

@Benjamin Riehle Are banks now doing conventional refinances at 80% LTV? I thought the limit was 75% LTV? If so I would be interested in getting the info of the bank. I currently have a BRRR project going on as well. Purchased at the end of april for 111K, rehab and finance cost 17K, it rented without marketing before we even finished the rehab for 1450 per month. Expected ARV to be at least 175K. All the banks I contacted said 75% LTV.