Didn't quite cover my costs on this BRRR.

[Erich Henson]

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $23,750
Cash invested: $50,000
Sale price: $85,000

Tried to BRRR this house but didn't quite cover all my costs after the refinance because the appraisal came in quite a bit lower than expected. So at the end of the day I have about $6000 out of pocket on this project. Rented for $1200/mo section 8 so it cash-flows nicely and I'll make back that $6000 in less than a year.

What made you interested in investing in this type of deal?

I thought I'd have no problem recouping all of my investment using the BRRR strategy but the appraiser didn't like the layout of this house and hit me hard for it.

How did you find this deal and how did you negotiate it?

This one was on the MLS. Offered about $1200 under offer price.

How did you finance this deal?

Using my 0% interest credit cards and HELOC and then doing a cash-out refinance to pay off the short-term debt.

How did you add value to the deal?

Replaced nearly all the plumbing and cosmetic updates.

What was the outcome?

Didn't recoup about $6k of my out-of-pocket but with a $1200/mo section 8 lease, I'll recoup that money within a year.

Lessons learned? Challenges?

Be more conservative with the estimated after rehab appraised value!

[Erich Henson]

Originally posted by @Matt M.:

Originally posted by @Erich Henson:

Hi Ray,

On most of my cash-out refi's, I got a rate of around 5.75% with a 75-80% LTV and 15-20 year amortization. Fixed for first 3 years, balloon in 5-7 years. I just started working with a bank that is going to refi all my loans at 5%. It's a small local bank with only two branches. I've found the most luck with the smaller banks. Banks like Bank of America are never able to help me for some reason...

Erich

Look at Commerce Bank out of KC. I was quoted 4% on a 10/1 arm here in Denver for investment. I can probably dig you up a contact if you want.

Hi Matt, I've tried to use Commerce Bank in the past but their underwriting seems to be a bit too strict for me to qualify in terms of their global income requirements.    Another one is US Bank, who offered me 3.875% but when they dug into my tax returns etc they declined me because my "global" income wasn't high enough for them in relation to my debt load.  I'm trying to get my cashflow higher so I can start qualifying with the larger banks who have the best rates.  With the smaller banks, I'm usually talking directly with the president or VP and I've found they make a decision based more on their own opinion of my situation.