Just completed my 1st BRRRR in VA

Just completed my 1st BRRRR in VA

Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes

Hey BP! I just closed on the Refinance portion of my first ever deal, a BRRRR. I guess once I "Repeat" then I would have actually completed the BRRRR process. For reference, I've listened to the podcast for about a year. In Summer of 2018, my wife and I took out a HELOC on our primary home in Richmond, VA, as it had appreciated in value greatly in just our two years of ownership. We opened the HELOC and sat on it so we'd have it ready when the time came, and in January 2019, got a phone call from a mutual friend who is a wholesaler in the area. We had met a few months prior, and he called to let me know he had a house under contract that was in the ballpark of my HELOC amount, and thought it may be a perfect first deal for me.

The process actually went relatively smoothly, except for having to fire a contractor. Essentially, he oversold his ability to finish the attic, was doing a poor job on drywall, and I had to fire him and hire a new guy. This swap in contractors cost me an additional $4,000. The house was a 900 sq ft single family with 2 bed, 1 bath and a walk-up unfinished attic. The main work done: refinished the hardwood floors, painted throughout, and finished the attic. Now it's a 3 bed, 1 bath, and 1250 sq ft.

Here are some numbers:

Purchase Price: $61,000 (paid for using HELOC)

Rehab Cost: $17,000 (paid with personal savings)

All-in Price: $78,000

ARV: $105,000 (based on appraisal from refinance process)

Rent: $1,000/month (Lease signed mid-project)

At the end of it all, I had to leave about $4,000 in the deal. The ARV wasn't quite high enough to get all my money back out when I refinanced, the fire/re-hire of a contractor hurt me a little, and the closing costs were higher than anticipated. But, for my first deal I'm thrilled, just got my my money back out, and will be looking for deal #2!

Some before pics:

And some after pics:

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Real Estate Agent · Richmond, VA · Member since 2012 · 15 posts · 9 votes
7y

Very cool. Thanks for sharing your success. I'm looking for a lender to refinance a rental property. Who did you deal with and how did that process work? Congrats good luck with number 2.

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  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y

    Annnnd pictures are sideways...anyone know how to remedy that?

  • Real Estate Agent · Richmond, VA · Member since 2012 · 15 posts · 9 votes
    7y

    Very cool. Thanks for sharing your success. I'm looking for a lender to refinance a rental property. Who did you deal with and how did that process work? Congrats good luck with number 2.

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y

    @Ned Rennolds I used Rita at Tidewater Mortgage (at the suggestion of another friend). She was easy, is familiar with the process, and everything was completed via email. 

  • Flipper/Rehabber · 91103 · Member since 2017 · 56 posts · 35 votes
    7y

    @Brandon Spurlock, congratulations! That looks like a great success for your first BRRR (R still to come). Looking forward to seeing your next deal and how you apply your lessons to the next one.

  • Josh SimpsonPro Member
    Real Estate Agent · Richmond, VA · Member since 2017 · 9 posts · 4 votes
    7y

    Great work, congrats!

  • Flipper/Rehabber · Fredericksburg, VA · Member since 2018 · 96 posts · 58 votes
    7y

    @Brandon Spurlock Congrats!!  House looks nice.  What part of Richmond is it in if you don't mind me asking?

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y

    @Brian Beck thanks! It’s in Hopewell. 

  • Flipper/Rehabber · Fredericksburg, VA · Member since 2018 · 96 posts · 58 votes
    7y

    Thanks!   Good luck with the 'Repeat' portion.  Would you do another in Hopewell or would you be looking closer to the city?  I'm from the Fredericksburg area just starting to familiarize myself with Richmond and it's surrounding areas.

  • Real Estate Investor · San Francisco, CA · Member since 2014 · 104 posts · 21 votes
    7y

    Great!

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y

    @Brian Beck yes I would. For now it’s an area that I can afford, and I get the same kind of returns I’d get spending $250k closer to Richmond. There is plenty of opportunity, but for a lot of the areas, it depends on the block or subdivision. 

  • Rental Property Investor · Clarksville, TN · Member since 2018 · 21 posts · 8 votes
    7y

    @Brandon Spurlock congratulations!!! Picture look amazing. Was there a seasoning period for the refinancing?

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y
    Originally posted by @Roland Jerez:

    @Brandon Spurlock congratulations!!! Picture look amazing. Was there a seasoning period for the refinancing?

    Thanks! And yes, 6 months seasoning.  

  • Member since 2018 · 7 posts · 7 votes
    7y

    Looks great, congratulations @Brandon Spurlock! 

    I looked at a few properties in Hopewell and always seemed to never get the stars to align. Good prospect in a horrible location, bad prospect in a great location....etc. That area definitely has little pockets of potential and I am glad it worked out for you!

  • Charles HolderPro Member
    Lender · San Antonio, TX · Member since 2019 · 141 posts · 27 votes
    7y

    @Brandon Spurlock

    Cool stuff. 1k in rent whats the piti?

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y
    Originally posted by @Charles Holder:

    @Brandon Spurlock

    Cool stuff. 1k in rent whats the piti?

    $515 

  • Charles HolderPro Member
    Lender · San Antonio, TX · Member since 2019 · 141 posts · 27 votes
    7y

    @Brandon Spurlock

    Nice dude.. How much are you settinf aside for vacancy repairs capex etc.. Are you gonna cash flow or pay down?

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y
    Originally posted by @Charles Holder:

    @Brandon Spurlock

    Nice dude.. How much are you settinf aside for vacancy repairs capex etc.. Are you gonna cash flow or pay down?

    For now I’m just stashing it all to build up a repair fund. But I’m general, I’d consider about $250 set aside, and the rest as cash flow.

  • Rental Property Investor · Glen Allen, VA · Member since 2018 · 9 posts · 2 votes
    7y

    Congrats! Looks like a huge success for a first project!! I have also been studying the BRRRR process and am working to follow suit. Thanks for sharing.

  • Rental Property Investor · Raleigh, NC · Member since 2018 · 10 posts · 1 vote
    7y

    @Brandon Spurlock Good Job!!!

  • Rental Property Investor · Norwalk, CT · Member since 2017 · 171 posts · 138 votes
    7y

    @Brandon Spurlock congrats keep up the good work!

  • Bangor ME & Richmond, VA · Member since 2018 · 166 posts · 106 votes
    7y

    Awesome work! Looks like a really great project for a first-time deal. Can't be upset about $250 cashflow on only $4,000 left in a deal! I'm getting ready to do the rent and refinance portion, did you have to have the place rented before the refinance would be considered? 

  • Developer · Philadelphia, PA · Member since 2019 · 29 posts · 8 votes
    7y

    @Brandon Spurlock @Ley Nezifort check this out!

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y
    Originally posted by @Eddie Gonnella:

    Awesome work! Looks like a really great project for a first-time deal. Can't be upset about $250 cashflow on only $4,000 left in a deal! I'm getting ready to do the rent and refinance portion, did you have to have the place rented before the refinance would be considered? 

    I’m not sure if it had to be rented out first, but it was definitely in my plan. I had a lease signed within the first month and my tenant moved in the day after rehab was complete.

  • Rental Property Investor · Windsor, CO · Member since 2018 · 26 posts · 21 votes
    7y

    Great job and congratulations. A couple of quick questions:

    1) What was your expected ARV when you made the offer to buy, and how did you arrive at that number? I'm curious how it ended up comparing to the $105K appraisal the bank used.

    2) Did you refi with the same bank that did the HELOC? If so, I wonder if using a different bank would remove the 6-month seasoning period requirement?

  • Realtor · Richmond, VA · Member since 2017 · 118 posts · 113 votes
    7y
    Originally posted by @Darrin Taylor:

    1) What was your expected ARV when you made the offer to buy, and how did you arrive at that number? I'm curious how it ended up comparing to the $105K appraisal the bank used.

    2) Did you refi with the same bank that did the HELOC? If so, I wonder if using a different bank would remove the 6-month seasoning period requirement?

    Thanks Darrin! 

    1. My hoped-for ARV was $110,000, based on comps in the area over the previous few months.

    2. I did my refi with a different bank. I was referred to a local mortgage broker who helped me with the refinance, and the seasoning period was her requirement.

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