1st BRRR Completed - All my money out Plus some - Thank you BP!

41 Replies

I recently completed the process on my 1st BRRR - still working on the Repeat to earn the last R. Wouldn't have been able to do so without the Podcasts and these forums where I gained advice from others. Wanted to share the story in case it helps anyone else.

The property is in Jacksonville, FL, I bought it off market through my realtor who had a contact looking to sell the home.  I purchased it in November of 2019 for $130,000, 3 bed 2 bathroom home, approx 1300 square feet.

We did seller financing on the deal, my realtor was huge helping to get this done.  I put 25k down and paid her 5%, all interest each month - $525/month - our contract stated the balance - $105,000 - would be paid at the end of 2020.  With everything 2020 has had to offer, this has been a shining deal for us.

The home needed new floors, paint, electrical wiring to be put to code and some plumbing.  All that costed $13,000 for me to get it rent ready.  I live in North Carolina right now, Jacksonville, FL is like home for us, so I hired a property manager to find a tenant and manage.  We got 20+ applications immediately.  We ended up turning them down or having them not respond or turn us down in the end.  We saw poor or no credit, everything in between but ended up finding solid tenants - a  Grandma, Mom & older son.  Critical to get this part right as so many of us have learned with everything 2020 has thrown at all of us.  The Grandma is on social security which has kept income their way, they have never missed a payment.  Over the summer, I went to the house to meet them and see what I could do for them.  They had transformed the landscaping - made it nicer than before - pride in their home! I came away from that meeting and had little things fixed - dripping on the patio they loved sitting on, glazed the bathrooms bright white to give them a brand new feel, little things that I was happy to do seeing how well they took care of the home.  I also wanted them to know they are not just tenants to me, they have lives, they need a nice home and we now can put faces to names.  

Next to the refinance. I started out with local credit unions - 5% on investment properties - I knew I could do better. I started talking to Quicken Loans - they quoted me at 4% - love it! The fees were really high so when a friend of mine recommended his guy, I called and got low fees for 3.5%! I did have to, as I mentioned before, put the property into my name and out of the LLC to get this done. We started this process in July and finished about 45 days later.

I was expecting the property to appraise for around 185-190k.  It appraised for 218k.  My cash out refinance was for 75% on 218,000 - $163,000 check.  105k to pay of my seller financing and then after all my costs I cashed a check for just over 52k.  Now I have all my money out plus some gained and still cash flow $400 per month.  

This has been a great learning experience.  I am still reading Bigger Pockets books and what ever I can get my hands on as well as listening to pod casts.  I have a family and a demanding job so time is scarce but having resources like Bigger Pockets gave me the confidence to go through with the deal and how to find ways to make it better as it went.  Like others have posted - you will create your great deals through action! Their is always a way.  At one point I posted on here because I thought I wasn't going to get the deal done, I even thought of whole sailing the property - glad I did not get that done - I was turned down by 2 people!

I am new to this and hope that this experience can inspire you to take the steps to make a deal happen and grind your way to making it a great deal.  Please reach out if I can help or if you have any questions. 

Best,

Jake



@Jake Peetz

Great success story. When you pulled all that money out was there enough for the property to cash flow. I've had some similar success on some of my BRRRR's, but I generally don't pull that much out since it hurt the cash flow and the lender would have a hard time approving the loan.

WOW! Incredible story! Congrats sir! I have recently begun flipping this year and am interested in expanding to the Jacksonville market.

Out of curiosity, was refinancing a challenge in any way due to the seller financing?

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Nice job Jake! I'm currently in the process of closing on two SFRs that are priced similarly. Not looking to rehab right away, but definitely at some point. Thanks for sharing your process; it is very helpful!

@Kenneth Garrett , I am still netting $400 a month so I’m happy with the cash flow. This deal it worked to pull it all out and I want to deploy it on another one. Like you said depending on the deal cash flow might be less. I had no issues getting 75% out with my lender.

@Jake Peetz   Very inspirational story.  Taking action is always the harder road to take but the more enjoyable one in the end

Congrats,

Glen

@Brian Nunez , I should have included that. Yes, it was more work for the lady I purchased from and myself. Didn’t help that she is older and just went through a knee replacement surgery. It is harder and I will be more prepared but it will not deter me from doing a seller financing deal again.

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@Jake Peetz

Thanks for sharing!

Just to clarify, did you BUY or acquire the rental(Florida property) through LLC first? Then after you REHAB and RENT you took it out from LLC and REFINANCE ?

And if you did BUY it through LLC, what kind of financing did you use to acquire it.

Thank you again!

Originally posted by @Jake Peetz :

I recently completed the process on my 1st BRRR - We did seller financing on the deal, my realtor was huge helping to get this done.  I put 25k down and paid her 5%, all interest

Nicely done ! When you refinanced how long had you owned it?  What were the seasoning retirements?  

Very nice off-market deal with seller financing. Found by your agent? Whoa. Keep that one. How did you compensate your agent on this?

Awesome job, Jake!