A perfect no money down BRRRR!! (Buy Rehab Rent Refinance Repeat)

This was my first deal and definitely solidified my love for real estate investing! It also allowed me to fully understand the power of providing value and building relationships. 

I networked with a colleague off of the BP forums, who ended up being my private lender on this deal. They funded 80% LTV, roughly ~70k, and I was to come up with the 20%. I had some cash and a HELOC on my personal property, but I also had a close friend who had been wanting to passively invest to get better returns than his savings account. He loaned me the 20% that I needed, which allowed me to use my funds on another project simultaneously. 

I knew the property was a good deal and under market value in its current condition, and the wholesaler wanted $88,000 for it. To make sure I was right, my lender and I both wanted to get the property appraised to that we knew it would work out for us, but obviously I didn't want to put down an EMD without knowing if the deal would even work. To demonstrate value while asking for value in return, I told the wholesaler I would pay them their full asking price if they let me get the property appraised first. 

A bit of hustle later, I got it appraised the NEXT MORNING and the report came back that evening and it appraised for $124,000. 

I refinanced at 75% LTV which was roughly 93k for the new loan, which covered the payoff for my lender, his interest and points, as well as my friend along with his interest too. 

Now I have a property cash flowing a little over $300 a month, about 30K in equity, and all my money stayed in my pocket!

UPDATE! - Fast forward a little over a year later, some things have changed. The Kannapolis market exploded and the home’s value drastically increased. Due to Covid-19’s effect on the market, inventory became extremely slim and buying demand was at an all time high due to historically low interest rates. I decided to capitalize on the market and sell the property for top dollar. After a fairly smooth listing period and working through escrow, it sold at $6,000 above asking price!

The Numbers:

Purchase: $88,000

Rehab: $1200 - Some paint, new water heater and very minor repairs and touch ups

Refinance: $124,000 ARV at 75% LTV = $93,000

Rent: $1,200 / Month

Cashflow: $280/month after P&I, taxes, insurance and 10% for repairs/vacancy

Additional Repairs Pre-listing: $2,475

Selling/Closing Costs: $10,260

Sold: $171,000

Lessons Learned:

  1. Always search for a win-win! Cooperate, be personable and be someone others want to work with.

  2. Line up your step 2 as your setting up step 1! This was a great deal, so step 1 was to fund and purchase it which was easy. The difficulty came in the refinance, as finding financing for manufactured homes is very difficult.

  3. Expect something to happen the SECOND you take ownership. This property was about as turn-key as I could ask for, but as soon as I had new tenants move in, the hot water heater went out and had to be replaced.

  4. Adapt and overcome. The market changed during my ownership, as did my goals and systems. I adjusted to respond to the market and capitalize on it as best I could and it paid off!

Before

After