BRRRR in Raeford NC with Numbers
Investment Info:
Single-family residence buy & hold investment.
Purchase price: $46,000
Cash invested: $17,619
Contributors:
Bryant Tumbelekis
This was my first BRRRR property in the Fayetteville Market. In hindsight I may have overpaid for the property a little bit and definitely jumped at the opportunity to lock up a renter (rented in 10 days), but I am satisfied with the overall outcome. It was really important for me to prove BRRRR concept in this market & get comfortable with the team I was able to put in place. I was able to finance out the majority of my money. Unfortunately I left about $2000 in inspections/fees etc on the table, but they are negligible in the scope of things. I also paid an interest rate a quarter of a point higher then I should have. My fault for not shopping around more.
Purchase & Rehab - All in at $63,618.61
Appraisal - $115,000.00
Delicious Equity - $51381.39
Monthly #'s
Rent - 900.00
Vacancy 5% - (45.00)
Taxes - (90.00)
Insurance - (61.00)
CapEx - (90.00)
Property Mgt - (90.00)
P&I @ 5.5% - (361.00)
Cashflow - 163.00
What made you interested in investing in this type of deal?
I am always on the hunt for SFH investments. They really offer me the flexibility and risk tolerance I am looking for.
How did you find this deal and how did you negotiate it?
I have an awesome agent who brought this deal to me. He brought me the deal after another investor got cold feet and passed on it.
How did you finance this deal?
I purchased and rehabbed all cash.
How did you add value to the deal?
This home was beaten up. Usually I look for a value add like turning a half bathroom to a full, or adding an additional bedroom, but the comps were strong and I knew by cleaning the home up I could easily find the value.
What was the outcome?
50K+ in equity and a cash flowing asset!
Lessons learned? Challenges?
Sometimes you just have to take the plunge. Fear is natural, but you can overcome fear by removing as much risk as possible.
Did you work with any real estate professionals (agents, lenders, etc.) that you'd recommend to others?
Bryant Tumbelekis at EXP. This guy is a PRO!
Congrats on completing the dea @Dan Falconl! It looks like it turned out great!
@Benjamin Seibert thank you!
Congratulations! Were you able to refi and get the $63K back out? What were the big rehab items you had to deal with and how long did the rehab take? Any good GC recommendations for the Fayetteville area? Looks like a great property and strong numbers!
@Dan Allen Thank you! I was able to get out about $61k. I ended up absorbing about $2k in hard costs. The largest part of the rehab was 8 broken floor joists in one room. It had caused the floor to dip pretty bad. We ended up having to replace and fix the joist and jack the flooring back up. Its a lot scarier then it sounds and I think this probably turned away potential buyers, which worked in my favor. The rehab took about 45 days. We did it over the holidays so there was a solid week where nothing got done.
As far as GC recommendations, I would first find a great real estate agent that works with investors. @Bryant Tumbelekis is an excellent agent and I have used him on several purchases. Agents that work with a lot of investors have a solid Rolodex. He can steer you in the right direction =)
This one was a lot of fun. It's always a pleasure to work with you, @Dan Falcon! Looking forward to seeing some more of our success stories on here in the near future.
Congrats on this amazing deal. I'm current looking to invest out of state in NC in particular the Fayetteville area. Seeing your project become a success has me ever more ready to start building my team there.
Seems like your the man to connect with in Fayetteville. I've read a few of your post and you have been killing it in the areal, major Kudos.
Nice job. I should say though that this deal looks like a best-case scenario rather than what to expect on a typical BRRRR deal. I've done 2 in Fayetteville and have yet to come close to that kind of equity creation. Good job finding a deal too!
I've probably done about 15 of these this year and I would say these results are pretty typical for my delayed financing clients. We are leaving 20-25% in equity in the home and getting all of our money back to rinse and repeat. The only thing that I would say fluctuates is the cash flow.
Congrats, @Dan Falcon! The renovations came out great - I love the before and after photos.
Did you have any familiarity with Fayetteville before investing in the area? It sounds like you a had a great team in place, which ofcourse is key.
Congarats, again!
@Steven N. This result is pretty typical. I have taken down a handful of these. I did get a little lucky on the appraisal, but that comes from buying the crummiest house in a nice neighborhood =)
@David Acosta thank you david! I did not have a ton of familiarity, but this is not my first rodeo investing outside of my hometown (NYC). Its all about the team and acquiring as much knowledge as possible before pulling the trigger. Fayetteville from surface level is an excellent rental market.
I see you are interested in multifamily. Lets connect, I personally will be moving up in asset class soon!
Congrats, @Dan Falcon! Sounds like a nearly perfect BRRRR!
I'm most amazed by your rehab costs. Looks like you completely redid the kitchen (cabinets, counter, appliances, flooring), and paint and carpet in all the bedrooms for under $20k. Any work done in bathrooms?
I've been looking for a BRRRR deal in Richmond and working with a flipper coach to help me estimate costs and I've been finding even doing the basics winds up being over $40k with all the little things that need to be taken care of.
@Peter Jaglom thank you! I find the most important thing when going through the rehab is to make sure you are not over improving the property relative to the other rentals you will be competing against. The cabinets are actually original. 3k to replace them or $600 to remove them, sand them down, throw new hardware and some paint on them. You know what direction I took =). Bathrooms we just painted and cleaned up.
At the end of the day, a clean unit that can comfortably house a family is all I am looking for. If there is deferred maintenance and it does not impact safety or the aesthetic quality of the home, then I will continue to defer it! Another tip would be to find yourself a great property manager. The best ones have all of the basic rehab type people available for your disposal. You and your PM should have aligned interests, and keeping money in your pocket should be at the top of that list.