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!
nice work, nothing to be ashamed of leaving 10-15k in a deal. If I could buy houses that cash flow $400 a month for 10-15k each out of pocket I would buy 10 right now!
I've done a couple BRRRR's recently and did get 100% of my money out. I was able to do it by buying right and being conservative on ARV.
Mortgage amount seems a bit high, but rates have gone up since I did my last one. What is your rate if you don't mind?
Great job, the house looks really nice. Can you describe the foundation work you mentioned? Thank you so much for sharing your numbers, that really is an inspiring post!
....and this just follows the article from a few days ago saying "Don't do BRRRR....do BARRR Insstead"!!! Constantly mixed messages and conflicting articles on this site...
@Andrew Ziebro So, "BARRR" is practically the same thing as "BRRR", except it talks about timing when you advertise your rental to help for tax purposes. While the title alone seems to suggest it, the article isn't saying to not do BRRR deals. And to clarify, the place does need to be practically rent-ready. You can't put up a place for rent that is demo'd down to the studs. The thing about real estate is that there are tons of ways to get into it. There is a mountain of information and likely no one can or will use all possible methods and tactics in their lifetime.
@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. ;-)
So, the CF is not exactly $400/mo. M is $950 and R is $1450. You keep $150 for Capex (a little on the low side @10% of R). If you do 20% of R for Capex/Vac/Maint, you'd be at roughly $210/mo for CF. Still pretty solid double-digits C-o-C, so congrats.
Way to go stud! BRRRR executed as taught by BP. I'm a huge believer of the BRRRR strategy. Your math suggests you may have also successfully cashed out some refinancing funds as well. True? If so, an ultimate BRRRR success story. Big time Kudos my BRRRR friend! Keep growing.
@Will Coleman what I gather based on your comment is that BRRRR is essentially "flip to rent" so to speak (I read the original article but was still a bit confused)? You buy and flip the usual way, but instead of having to sell to pay off the hard money, you refi so you can keep it as a rental, correct?
Will Coleman so you said you cashflow $400 the mortgage is $950 and rent is $1450? Did you add property management capital expenses, taxes, repairs, insurance and all that?