Lender · Knoxville, TN · Member since 2015 · 55 posts · 48 votes
Howdy all,
I thought I would share my property that I implemented the BRRRR strategy on. We purchased for 90k put about a 25k rehab budget into it with a hard money loan. Refinanced with an ARV at about 150k. It's currently cash flowing $400 a month with approx. 40k in equity in the house. Check out the before and after pictures. @Robbie Wyness
You can't always get every single penny back out of a deal. My last BRRRR, I left about $10,000 in the deal because the appraisal came in very low (rural, no comps). If the appraisal had been spot on I would have made $60,000 profit. The property still cash flows $1800/month (4-plex) so in my book it's a great deal. You basically paid $10,000 for a property that makes you $400 a month. Job well done!
Based on those numbers it looks like you have $5-10k of cash left in the deal after refinancing. Not bad for a property cash flowing $400/month. Congrats!
@Will Coleman great job! Just finished the rehab part of a BRRRR myself! Looks like an awesome property. Did you do the whole purchase and rehab with hard money?
Based on those numbers it looks like you have $5-10k of cash left in the deal after refinancing. Not bad for a property cash flowing $400/month. Congrats!
Looks like the deal is a little better then 'not bad.' I would say this is great! Congrats
Lol you clearly don't understand BRRRR. You going to keep trolling every post I've commented on?
Why don't you spend that time learning REI and maybe you'll become successful in life?
I would like to mention what @Brian Garrett brought up that $5-$10K was left in the deal. Ideally, a BRRRR deal would get you back 100% or more of the money put in, so that you can truly recycle the money instead of having to replenish the money. Correct?
I would like to mention what @Brian Garrett brought up that $5-$10K was left in the deal. Ideally, a BRRRR deal would get you back 100% or more of the money put in, so that you can truly recycle the money instead of having to replenish the money. Correct?
Yes that's correct but having only $5-10k left in the deal is still a win though!
You can't always get every single penny back out of a deal. My last BRRRR, I left about $10,000 in the deal because the appraisal came in very low (rural, no comps). If the appraisal had been spot on I would have made $60,000 profit. The property still cash flows $1800/month (4-plex) so in my book it's a great deal. You basically paid $10,000 for a property that makes you $400 a month. Job well done!
To evaluate this deal, the down payment amount is needed, right? On an all-cash purchase, this doesn't look so good. But, if it was purchased with 25% down ($22,500), it looks spectacular. Anyone know the acquisition, out-of-pocket cost?
@Account Closed A BRRRR deal is typically bought with cash (whether that be actual cash, HELOC, private money, hard money, etc). It is typically also rehabbed with cash. Then, after fix-up and it's rented out, it's refinanced and most/all of the cash that was put into the deal is "paid back" so you can repeat the process on another deal. So downpayment is not really something looked at in BRRRR.
Got it, thanks, @Nicole A. I'm new to the BRRRR strategy, and trying get an understanding of how it works. This makes more sense. He spent $90k in cash and pulled out about $105k + $400/ mo. That does look pretty good. Thanks for clarifying.
@Account Closed He spent $90K just to purchase. Then he spent another $25K to fix up, and however much in closing costs, and holding costs. Assuming his ARV of $150,000 is what the actual appraisal came in at, and say they offer 75% loan to value, then they gave him about $112,500, which is a little bit less than the total cash he put into the deal. ;-)
Well done...just was wondering I tried to refinance but the bank said they cant do untill 6 months or a year and they give 70% of the purchase price (if refinanced in less than a year / no appraisal) the problem Im having is Im buying from the auction and usually the property needs tons of rehab means the purchase price is low...I know how to get the deal, rehab since im a contractor just missing the refinance part.
@Devon Martin The renovations took about three months, longer than we were expecting but gotta love contractors.
@Dan Shelhamer Congratulations to you as well. I'd love to see your property! And yes the rehab was hard money but we refinanced to conventional.
@Nicole A. @Account Closed Yes the total cost was 115K (purchase and rehab) the hard money loan covered $107k. So I had to pay the difference plus closing costs, I have my realtors license so I didn't have to pay a realtor which helped. Total out of pocket was about 12k. So in summary 35K in equity, cashflowing $400 a month with 12k down. I hope this helps.
Thanks for sharing numbers too! For those of us that are nosy, would you mind sharing the numbers that break down to the 400/mo cash flow? That's pretty good for a 150K house right off bat!
@Rodney Sums Sure, the mortgage on the property is $950, and the rent is $1450. Yes in my opinion that is really good cash flow, keep in mind I take about $150 of that and put it into savings for cap ex and vacancy expenses in the future.