In Episode 26 of An Investors Journey, we go over Our Most Recent Rental Using BRRRR Step-By-Step!
As a small business, banks are not lining up to lend to us. Maybe they have something against lending money to people that ACTUALLY know how to make money, who knows.
So, in order for us to acquire what we love which is rentals, we must get creative. We went ahead and decided to partner with an investor/friend of ours that we REALLY trust. I can't emphasize "REALLY TRUST", enough. What we're doing is actually going into a partnership with this investor. If at any time in their life they have any type of financial troubles they may try to force the sale of the house. You want to make sure you're not put in a situation that will hurt your business.
Scope of work was small. Tile in the laundry, paint the whole interior, EXTREME deep clean to get all the stuff left behind and the smell out, landscaping, shelves in the laundry, and some other miscellaneous stuff.
The whole house has tile and granite countertops.
That being said, here is how the numbers broke down:
House is a 3/2/2 1578sqft Blt in 1999
Purchase $130K + closing cost (We bought from a wholesaler who walked away with $12K)
Borrowed $144K (The reason we borrowed more was that we were projecting the house appraising for $180K which 20% of that is $144K. We also knew we would have more fees when we refinanced so we wanted to be out of pocket ZERO)
Hold time 2 months at 10% interest only ($2,400 interest payments)
Refi terms 5% 30-year mortgage
We did split prepays which were $1600ea (This pretty much makes up your escrow. 5mo homeowners insurance and 6mo of property taxes)
PITI $1195 (Principle, Interest, Taxes, and Insurance)
Rented for $1425/mo
Cash flow $230/mo
Equity: $36K more or less.
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Why Flippers and Wholesalers Are Not Real Investors
How We Do More Deals Through Partnering AIJ007
What is BRRRR? And How Can You Do it? AIJ008
How to Buy Rentals While Having A Full-Time Job AIJ009
The Ugly Truth About Passive Income AIJ011
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