BRRRR Purchase and Remodel in Farmville, Virginia
We're currently in closing on this property outside of Farmville, Virginia. We purchased this property from a friend that we have purchased from before. She has a HUGE portfolio (30+) of houses that are in significant disrepair.
Single family residence on well and septic
Vacant for four years
884 square feet
The house is in need of some structural repairs to the floor joists and main beam from a leaking water heater. We will upgrade the electrical service to 200A and review all of the plumbing and electrical work. We'll gut and remodel the kitchen, bathroom, and utility room. The rest of the house will receive cosmetic updates such as paint, drywall repair, new interior/exterior doors. We plan on replacing all of the windows for energy efficiency. The house has and oil furnace with no air conditioning so we'll be installing a new heat pump in addition to new insulation to keep the things comfortable inside. The roof will be evaluated for repair or replacement. Finally, we'll try and tame the yard by having a contractor bush hog and clean up the trash in the yard.
Property Purchase $20,000
Estimated Repair Costs $40,000
ARV $75-$80,000
Monthly Rent $925
@Ben Sears congrats! Be sure to keep us posted.
Wanted to update everybody on our progress. We're still waiting for the title search (which taking FOREVER because it's rural I guess), so we've been busy touring contractors and getting our price list down. There's plenty of goofy stuff going on wit this house but so far we appear to be under budget. I'm hopeful to start pushing dirt outside and tearing down walls inside in the next few weeks. I think we're developing a really great team to get this thing put back together and on the rental market.
Well we made it through closing (the quickest I've ever been through in under 10 minutes!) and the house is officially ours! We immediately got our landscape contractor to work clearing this jungle of trees and vegetation. The guys did an amazing job and even cleared an old shed and hauled trash for $700.
Here's what's on tap for this week:
-Exterior door installation and secure the property
-Roof bid (complete $3k)
-Window bid (complete $2200 installed)
-Meet engineer from the power company to have service upgraded from 100A to 200A
-Power wash the exterior to prep for paint
-Partial interior demo on Friday to repair structural and water damage
I hired a good friend as a project manager. He has some limited construction experience but is a self starter and doesn't take a lot of crap from people. He's jumped on getting most of the bids and started working on a schedule. He's extremely part time so our deal is that he'll be compensated 1% of the total project when we refinance (~$600). He's in this for the long haul with me and we'll continue to adjust his compensation based on project size and performance. So far this hasn't saved me a tremendous amount of time. For anyone contemplating hiring a PM, you should bite that bullet!
I get more and more excited about this property every time I visit. We're under budget and on schedule so far and I hope it stays that way!
A few updates on our little rental from the past two weeks. We dug into the sub-floor to replace 16 floor joists. Fortunately this was not a surprise as our contractor had already provided the material list and everything was on site for the repair. We removed the bathroom, kitchen, and laundry area in order to rebuild from the crawlspace up. Our contractor came back today to finish installing the subfloor and all of the windows. The weather is turning a little here in Virginia and it's time to start getting this project buttoned up!
On tap for next week is:
Exterior power wash (Friday)
Final construction debris removal
Exterior door install
Exterior paint and siding repairs
Interior wall framing getting started
Great job thus far Ben, good luck finishing it out!
Weekly update on our little rental. Pretty big "administrative" week:
- Powerwashing has been complete. Scheduling the painter for the exterior when we get a nice day
-Interior framing has been completed with our new floor plan. We identified some conflicts between the kitchen layout and the new walls so this changed our cabinet order slightly.
-Electrician has been in to plan the rough-in, service upgrade, and panel box location
-Visited the courthouse, still trying to locate septic field records (Huge pain in my a** thusfar) so that we can get power lines trenched in.
-Handyman is in to start patching drywall and trimming doors out in the parts of the house that aren't under heavy reno. He's slow over the holiday and needs the work so this puts us a little ahead of schedule!
Seems like the project is coming along well!
I’m looking forward to seeing it once it’s done.
What color are you painting the exterior?
First coat of paint is on. Gray exterior, red front door, with white window/door trim. We'll get on the shutters and meter base this week. Some touch ups left to do but it's a vast improvement from where it was! The next two weeks are heavy interior work including electrical/plumbing rough, starting some sheet rock work in the rooms that we didn't gut, starting the HVAC install.
Update for today...we started our rough plumbing this week which should be done by Monday. The electrician began our 200a service upgrade and new panel box installation as well. We found that our existing panel (located in the crawl) was completely rusted out...yikes! Our handyman crew is beginning to patch drywall in our unrenovated rooms. Things are progressing nicely! We’re still shooting for a January rental!
@Ben Sears looks awesome so far Ben!! I am a new buy and hold investor out of
Roanoke and I am looking for my first buy and hold investment property here. Looking to get in a duplex first using my VA loan then after a year move out and purchase another property with conventional financing. I eventually would like to do some flips here in Roanoke as well!!! Like your post and how you are showing the progress! Good luck and can't wait to see it fully finished! I am very familiar with Farmville, been there numerous times. My daughter just got accepted at Longwood this past week for
School!!
@William J. Morgan Congratulations on your daughter coming to Longwood. A lot has changed with the school since I graduated. It's really come a long way in a short period of time.
Good luck looking for your duplex. That's in our pipeline of properties to look for this year. Probably looking like it's third in line as we have another property lined up for after the first of the year. We've really enjoyed flipping and renting in Farmville. The market is fantastic up here right now with a huge market for rental property. If you ever have an interest in investing up this way, please reach out. I'd love to point you in the right direction!
Originally posted by @William J. Morgan:@Ben Sears looks awesome so far Ben!! I am a new buy and hold investor out of
Roanoke and I am looking for my first buy and hold investment property here. Looking to get in a duplex first using my VA loan then after a year move out and purchase another property with conventional financing. I eventually would like to do some flips here in Roanoke as well!!! Like your post and how you are showing the progress! Good luck and can't wait to see it fully finished! I am very familiar with Farmville, been there numerous times. My daughter just got accepted at Longwood this past week for
School!!
Sorry for my blank response, apparently I need to learn to internet...
My intention was to tell William Morgan that I also live in Roanoke and was curious if he was aware of any local REI groups. I'm also very new to this (in the learning/paying off a debt or two stage) and trying to learn as much as I can.
Great post! I enjoy looking at the progress you have made. I'm curious though when you say that the market is fantastic what exactly do you mean? I googled the population and it's only around 8,000... As a person that has plenty of experience in the area, I'm sure you have insight into why you think it's an ideal area to invest in. I only ask because I live in a similar area ( rural, small population ) and with the addition of the new college campus in our area combined with rising rental rates I also believe it's a fantastic area to invest in. What were some key factors that influenced your decision to invest in that area?
So I just realized that it's been a while since I've updated this thread and boy have we been slam busy! Over the past couple of weeks we have completed gutter installation, framing, plumbing and electrical rough-ins, begun HVAC install, and hung insulation in our gutted spaces/crawlspace. We had power trenched in yesterday and the electrician finished our final hook-ups today to get the panel ready for service. We're continuing to learn new lessons everyday (like don't leave a pile of trash in front of the meter because the power company won't hook up your power!) and we're excited to see this project done in just a few weeks. The best part of last week was actually getting a signed contract to rent with a $375-$400 cashflow per month!
Our preliminary numbers are as follows:
Purchase: $20,000
Rehab: $42,000
Investment $62,000 (possibly a few thousand more as we finish)
ARV: $78-80,000
Refinance at 85% LTV through a community bank at 5% on a 20 year fixed ($66,300-$68,000 loan)
Cash out return: $4-6,000
Monthly mortgage: ~$450 out the door
Monthly rent: $850 with a 12 month contract
@Anthony Hosea I'm sorry that I didn't get back to your message. Apparently BP isn't sending me notifications on all of my posts for some reason. To answer your question, we are a two college town which provides ample transient student and labor positions. Our student rental market is huge with companies buying up houses within walking distance to the schools and converting into multi-family. This isn't my niche per se so I won't comment further other than I know that some landlords are getting $550-600/month/room in a property with 6-8 rooms.
Outside of the college scene, we follow the national average of about 63% home ownership. Our average household income is $45,000 which I think make renting more attractive for many people. The funny part is most of our houses can be purchased for far less than the rent payment. I think this has to do with a combination of credit issues and socioeconomic status as our county population with the incorporated town removed is far closer to the poverty line.
On this property specifically, we talked with approximately 45 people but only received one application. This property is one the high side of rent for beds/baths and I knew this going in. For a list of $750-800 we would have had far greater applicants. Our next property is almost identical to this (built at the same time by the same builder) and we plan to list for $800/month as a type of "rent experiment".
@Ben Sears, I'm really enjoying reading along to this! If you ever get a chance, I'd love to see how your actual costs stack up against what you had budgeted and what you learned from that process. Estimating costs is the toughest part for me these days.
Thanks!!
@Eddie Gonnella it's tough I'll admit. I actually just sat down to plug in some receipts for this week so you caught me at a good time. At the moment we're $1945 over budget (original budget was $60k and I'm at $61,945) so I'm pretty happy with that. I have a fair amount of contracting experience so I'm fortunate to be a good estimator and have a good idea when my contractors are off the mark. My advice would be to talk to your contractors and get good estimates. Not only this, but show up when they're working and learn some things about the trade. Good contractors are happy to show you how they figured their price and what is involved in the job. I budget all of my projects in Excel. I've never been fond of the big fancy project management programs, etc. I have my spreadsheet set up exactly how I want it and I know how much I've spent to the penny. I break my jobs down into "estimates" at the initial walk through with "actual costs" to follow. We review all of these numbers to figure out where we were over/under and make adjustments for the next project. If you need some specific help feel free to PM me!
Small update today...Sheetrock is almost finished. They'll be in tonight and tomorrow finishing up second coats in a few places and a final sanding. Paint on our unrenovated rooms starts tomorrow. We're juggling a lot of different trades at the same time pushing to get this job finished up. Our tenant moves in on February 8th!
Well folks...we missed our move in deadline which has set off an avalanche of other issues. We're not stressing though. Here's the back story:
We put a tight deadline of February 1 on this property. Thinking that that would be plenty of time we went ahead and marketed the property, scoring a great tenant. As we got closer to the deadline, it became very clear that we just weren't going to have the property ready to rent in an acceptable condition (you know...like with drywall and paint...the deluxe amenities!). We contacted the tenant to put her off for a week (February 8th) and took deposit and first months rent while comping her a per diem rate for the missed days since February 1st.
Jump ahead to today, we found out that we have either a major leak in the pipe coming from the well or a bad well pump. We share a well with the property next door (vacant and on our short list to purchase) and ended up flooding that crawlspace with water. No wonder we couldn't figure out where the water was going! The plumber and our crew traveled next door, crawled in the muddy crawlspace and capped a broken water line which was causing our issue. We were then able to get water at our property, albeit with very little pressure.
At this point, our only real option is to replace the entire line and wiring from the well to the house so that we know for sure the problem has been corrected. While this is a set back, our tenant was understanding enough to STILL want to rent the property from us provided that we can get her in in a reasonable amount of time. We comped her rent for February and applied money paid previously to her March rent. We'll take a small hit in March but it's worth it to have a great renter.
I would really like to be stressed out and mad about this but I can't do that. I think anybody who has been at this long enough understands that no deal is going to go as expected. We've learned a ton of valuable lessons and gained a bunch of insight into systems improvement for our next project. I'll have some pictures up tomorrow hopefully. On the bright side, the house looks great!
We finally have a move in date! What a whirlwind week and a half this has been. The plumber got a new well water line put in today, moved the pump controller and pressure tank under the house like it's supposed to be, and we're good to go! As a bonus, we didn't need a new well pump which was a small blessing. I'll have some pictures up soon of the completed project as well as a final synopsis and lessons learned.
Here's some final numbers for everybody:
Purchase Price: $20,000
Rehab Costs: $46,300
Total Investment: $66,300
Appraised Value: $84,000
Mortgage Amount: $63,500
Monthly Mortgage: ~465 (Haven't gotten the closing docs yet)
Monthly Rent: $850 with a 12 month tenant that moved in this morning
Cash Flow: ~$375-400/Month
Total Cash Investment After Refinance: $2,800 (4%)
We'll make up the difference in cash by the end of the first year and be 100% out of the deal
This was our first true BRRRR and I'm really pleased with how it turned out. We had a lot of lessons learned and we'll hit our numbers a little closer next time to hopefully get some cash back out of the deal!
