February 5, 2020

Property Number 3 – A Successful BRRRR

Property number 3, affectionately referred to as Little Pow, is officially complete! We finished renovations, welcomed a new tenant, and refinanced the property to pay back our lenders and pull out some cash for the next deal. This property was rough and we’re so excited with how it turned out. You can see all of the before pictures here.

So let’s dive into the details.

Financing

We bought and renovated the property with loans from two private lenders and put in about $15k of our own money.

Renovations

We closed on Little Pow at the end of July 2019 and wrapped up renovations in December. We typically do most of the renovations ourselves but decided to bring in some extra hands to quicken the process. Unfortunately, the two carpenters/handymen didn’t work out well and we reverted back to leading the renovation. Of course, we brought back our rockstar plumber, electrician, and roofer but mainly did everything else ourselves. This obviously lengthened the renovation timeline.

Our originally budget was $35,000 but of course, we went over. Items that sent us over were replacing kitchen cabinets instead of painting them and waterproofing the basement which consisted of parging the walls, painting with Drylock, and re-cementing the backyard. In the end, we were about $7k over coming in at $42,000. This includes all transactions costs, holding costs, and renovation costs.

Listing and Occupancy

We listed the unit in December and found a qualified tenant in just a few days. Unfortunately, we ran into some bumps when it came to the Certificate of Occupancy which caused significant delays. All in all, the tenant was able to move in mid February.

The Numbers

Everyone’s favorite part.
Purchase price: $25,000
Renovation/Transaction Costs: $42,000
ARV: $117,000 (Verified by appraisal)
Rent: $1,325/month plus utilities.
Cashflow: $208.52 AFTER accounting for all fixed expenses PLUS reserves and Property Management.
COC: Infinite. We have absolutely no money in this deal. Talk about a BRRR!

We just finished the refinance and although we could take out up to 80% LTV ($93,600) we chose to only do 70% ($81,900). This allowed us to pull out enough money to pay back our lenders, recoup the money we personally invested and then some, while still keeping equity in the property and cash flowing each month. It’s very important to us to not over leverage.