All Forum Posts by: Ben Sears

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!

So I'm a sucker for a dump. It drives my partner crazy walking through some of these places. In my opinion, a building is only a wash when the numbers don't work in your favor. If your property is worth 400k and you have to put 250k into it, that's a win in my book. If you have to put 500k into a 400k property then it's not obviously. The other question that comes into play on a project like this is your ability to manage it. Obviously I don't know your experience level but a complete gut job and reno on a 9 plex is a large project. If you go for it, I'd love to follow your progress!

Can you make a claim against your insurance? Obviously the right thing to do is pay for the damage one way or another. I would start with your insurance provider and see how it all shakes out. 

My advice would be to find a lender who will wrap both into portfolio loan. No way I would be paying for two closings. Check with your local community banks to see what they can offer you. I wouldn't go any further in the negotiation until you shop around. 

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. 

Contact an insurance provider who specializes in trade insurance. I personally use Erie and have found them to be competitive. I have a $1mm umbrella policy in addition to individually insuring any properties that we have in progress. My annual premium is around $700. 

@Tom Nellman I've made purchases both ways. For purchases without a realtor, I use the Virginia state realty contract and simply fill it out how the realtor does. You only need basic information that can be found at the local courthouse along with any stipulations. If you're not comfortable with this, any real estate attorney can draw up a contract for you for a fraction of the cost of a realty commission. You should have a good real estate attorney in your pocket anyways so why not give them a call and let them walk you through the first couple. 

@Louis Hamric I was just using that as a number for my example. Actually to be completely honest with you I just signed my latest refinance at an 85% LTV through the Bank of Charlotte County in Southside Virginia. They only serve our local area and I spoke directly to the loan officer/Vice President. It's been a great experience so far.

@Gerardo Gutierrez the bank won't need receipts. They will finance based on your loan to value. So In the example above the bank will loan you $88,000 regardless of what money you have invested in the property. The best way to maximize the BRRRR strategy is to have less than the amount the bank will finance. In this case you would receive all of your money back plus cash. In reality, we shoot to hit the loan amount to simply receive all of our investment back.

@Meryl McElwain how have you handled punch list and final finishing work such as towel rods, blinds, door hardware etc? We've been doing some of this ourselves and would love to streamline this process. We were thinking about a handyman but so many are unreliable and take forever. We have a Virginia Class A license and prefer to sub out all of our projects in house. Thanks1