After Countless Hours Listening/Reading - 1st BRRRR Home Bought

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After Countless Hours Listening/Reading - 1st BRRRR Home Bought

Brian Eilering
Real Estate Agent · Woodstock, GA · Member since 2017 · 58 posts · 28 votes

I'm posting in RE Success Stories but I really only have the first part done.

Like many others around here, I had a hard time choosing what path of RE investing to go down. I ended up choosing the BRRRR strategy.

My next problem was location.  The area I live in Atlanta is HOT.  There are no 2% deals here in Metro Atlanta.  Hell, you'd be lucky to find a 1% deal.  Most homes rent for less than 1% of purchase price in our market.

As Brandon and Josh constantly say on the podcast, if you drive a couple hours from your home city, you will find a good opportunity.

We then focussed on some surrounding areas only to be less than excited about what we found and the prices remained higher than we were willing to pay.

As I started to slow the search down, we found an emerging market about 3 hours from our house...Augusta, Ga.  This little city is ready to grow.  Job growth is there along with city planning willing and able to accommodate the upcoming expansion.

Like other cities, Augusta has some good and bad areas.  We were lucky enough to find an older home in need of some work listed for $80K in one of the good areas.  We offered $57K and with a counter of $60K, we gladly accepted their terms.

The home, without repairs and before closing, appraised for $75K.  I already have $15K in equity without swinging a hammer!  After repairs, I anticipate the home to appraise in the $120-$140 range.

Here is the kicker, the home actually has a secondary home on the property we call the cottage.  We plan on turning the cottage into an Airbnb hoping to hit a HR during Masters Week in Augusta while having a permanent tenant in the main house.  I should be able to get 2% on the main house allowing the cottage to just be icing on the cake.  There are hospitals, an army base, a university, amongst other things helping support the Airbnb theory.

There is some work to be done on the home.  I know finding contractors can be a task.  Any suggestions on finding contractors would be great!  

I really appreciate the podcast and countless articles/blogs/forums on the site. Without all of the great ideas, I would be nowhere closer to passive income and financial freedom! My wife and are quite excited and just about ready to start shopping for investment home #2 and rounding out the last R in the BRRRR strategy!

Thanks again

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John Leavelle
Investor · La Vernia, TX · Member since 2015 · 1k+ posts · 865 votes
9y

Howdy @Brian Eilering

Congrats on your progress.

First, let me answer your question about tagging people with the "@" symbol.  Type the @ then immediately type the first four letters of their first name (no spaces).  A list of people (with their picture) will appear near the top left of your current post.  Just scroll over the name you want and left click on it.  Bingo!  That person is now tagged in your text.

As far as the Refi Lender goes I strongly recommend you get pre-qualified for the Refi loan prior to purchasing the property.  Obviously, that will not work for you in this deal.  The reason is I want to have a good idea what my rate and terms are going to be in order to better analyze my projected Cash Flow with the new loan.  It also makes the whole process less stressful.  That being said I like using small local banks and credit unions for the Refi.  But, shop around for the best deals.  Even some larger lenders may provide what you need.

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  • Kevin Rhoden
    Real Estate Agent · Yonkers, NY · Member since 2018 · 37 posts · 28 votes
    8y
    @brian_eilering hey bro, Congrats on your property find. Im new to real estate investing and I was wondering what the BRRRR method is, can you please elaborate?
    0Reply
  • Brian Eilering
    OP
    Real Estate Agent · Woodstock, GA · Member since 2017 · 58 posts · 28 votes
    7y

    I thought I would update this thread with some updates on what has taken place with our cottage.  

    It took longer than anticipated to complete the project for various reasons, many were contractor related.

    We ended up deciding to get it on Airbnb.  Our goal was to get it online before Masters Week 2019 rolled around.  We wanted a couple of reviews in the hopper before Masters Week.  It was a success.  I reduced my pricing, allowed one-day stays, and didn't charge a cleaning fee.   

    The cottage was quickly booked for many nights leading up to Masters Week resulting in several 5-star reviews.  As a result, we ended up getting booked for six of the seven nights for Masters Week.  That one week alone paid for 1/3 of the furnishings needed for getting the cottage Airbnb ready.

    Since then, we have been 80% booked with two confirmed 30+ day stays.  While the longer stays are discounted, we are clearing more for our 500 SF cottage monthly than our 1500 SF house which has full-time tenants in place.

    If we were to rent out the cottage as a full-time annual rental, we would expect $700/month.  As an Airbnb, we are averaging $1200/month.   So far so good.

    Since then, we have purchased two more units in the Augusta area.  Both are duplexes.  We will definitely be putting one of them on Airbnb.  It is a cute home which should draw a lot of attention.   The other duplex may be more suited for full-time annual tenants simply due to the location and it isn't quite as cute as the other.

    @Kevin Rhoden

    @Kevin Rhoden

    @Kevin Rhodensorry for the delayed response, I am sure you have since answered your question but I would be more than willing to share the theory with you.  Please feel free to DM me.

    1Reply
  • Winn MerwinPro Member
    Rental Property Investor · Augusta, GA · Member since 2016 · 90 posts · 32 votes
    7y

    That is awesome. I am quite glad that you are seeing that kind of success with your AirBnB cottage. We may do something similar with one of the 4 units we recently purchased in your area. 

    My concern with AirBnB is the time associated with managing it. Are you managing it yourself? Who takes all the emails? Who does the cleaning and turnover?

    I know you are at a distance so you have to have some systems in place, how does that work? 

    Do you find it to be more of a headache than your long term rentals in the area?

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  • Brian Eilering
    OP
    Real Estate Agent · Woodstock, GA · Member since 2017 · 58 posts · 28 votes
    7y

    Hey @Winn Merwin , 

    Yes, there is a lot more time associated with managing it though the benefits seem to be outweighing the pains associated with it.  At first, I told myself the daily work was simply too much to keep up with.  Now that we are a couple of months into it, I have changed my stance.

    1.  Whot takes the emails?  All of the correspondence is handled through the Airbnb app.  I handle them all as they come in.  So far, I am keeping up.  Adding another two units to Airbnb should still be manageable with a full time job.

    2.  Who does the cleaning/turnover?  I have a local guy I have met handling it all for me.  He has been reliable and I simply pay him through Venmo.  Checkout is at 11:00.  He shows up at 11:00 and is out by 1:00 with check in at 3:00.

    3.  What systems do I have in place?  We use a digital keypad so guests check themselves in at their leisure.  With the maintenance guy in place and guests checking themselves in, that's about it.

    Most do not know, I live in a suburb north of Atlanta.  Augusta is about a three hour drive for us.  I go to Sam's/Coscto and purchase things in bulk.  I bring most everything we need when I come into town.  For the other items, I simply order them off of Amazon and send them to my maintenance/cleaning guy.  He brings them to our cottage when he goes to clean.  

    Is it more of a headache?  At times, yes.  As with anything, headaches come.  Most of the time, the headaches are associated with first time users not understanding how Airbnb works.  The seasoned users far outweigh the new users.  The good news is, Airbnb offers really good support, especially for the hosts.  Any issue I may have had, someone from their support team has been more than willing to offer assistance.

    Things I like:  

    Get paid guaranteed through Airbnb.  There isn't any waiting for a tenant to give me an excuse as to why they are late.  It is simply paid and paid every time.

    No evictions.  The people stay their stay, it's paid, and they are gone.  I am not worried about time and money consuming evictions.

    High turnover means we see our property constantly.  Each guest checks in/checks out and our maintenance/cleaning guy is there.  He tells me what he sees, doesn't see, and anything noteworthy.  Takes pictures as needed and he's on his way.  We have eyes on the property once every few days.  I love that feeling.

    Higher ROI.  We are able to charge a much higher rate than a long term tenant.  As previously mentioned, the going rate for our unit would be about $700-$725/month for a long term tenant.  With the short term tenant, we use a base of $65/night and adjust it from there.  For the first two full months (April and May), we have averaged $2000/month.  More than double what a long terms tenant would have been.

    What I don't like:

    More responsibilities.  I had to put all of the utilities back in my name.  I now pay water, electric, internet, and lawn care.  While my expenses are higher each month, the return is more than making up for it.

    Adjusting the pricing.  If you simply set your pricing and walk away, you might be missing out on some opportunities.  I adjust my pricing constantly.  Example:  I had a three day opening this month.  I chose to drop my price to $50/night for that duration BUT I also adjusted it to a three day minimum stay (an additional $150 for May when it would have otherwise been vacant).  It worked, it got booked and now May is closer to 90% booked than 80%.

    I am sure I have left some things out, please let me know if there are further questions.  I am glad to answer them.  

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  • Winn MerwinPro Member
    Rental Property Investor · Augusta, GA · Member since 2016 · 90 posts · 32 votes
    7y

    @Brian Eilering 

    Great info thanks! I am sure I will have more questions as we get closer to deciding to AirBnB or not.

    Are you familiar with anyone hosting an AirBnB for you? Maybe that is an option as you increase units, if the time becomes too much. Glad you are getting the experience now though.

    Good Luck!

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