We recently accomplished something new. As of November we successfully completed our first out of state BRRRR investment property. If you are unfamiliar with the BRRRR method, check out Bigger Pockets. (Have fun going down the rabbit hole!) BRRRR stands for Buy, Rehab, Rent Refinance, Repeat.
We bought an investment property in Louisiana, rehabbed it, rented it to a tenant, and refinanced it all while living in Tennessee. We still have never seen the house in person. It is currently cash flowing as a rental. This month we completed the cash out refinance which allowed us to pull out all the cash we had invested plus about $5,000. Now, we can take this money and put it towards another property to do the same thing all over again. It’s like the bank paid us to buy a rental property!
This all happened right smack in the middle of the COVID pandemic and the large majority of all the credit for making this happen goes to 3 Rockstar members of my “team” on the ground in Louisiana. I have a Realtor/Property Manager who did the most work. He brought us the deal, negotiated the purchase price, oversaw the rehab, placed a tenant, and connected us with a great local banker that funded the deal. The local bank was able to fund 80% of the purchase price and 100% of the rehab costs. The last Rockstar of the group is another local banker who is refinanced the loan at 75% of the appraised value and an incredible rate for an investment property of 3.25%.
The biggest lesson we learned in this whole process is that putting together a stellar team makes us much better investors than trying to do as much as we can all on our own. Being out of state, we didn’t have much of a choice but to rely on other people to make the deal happen. Honestly, if it was a local deal we would have probably been more hands on and it would not have gone as smoothly. We will be taking this experience and putting the lessons learned into how we invest locally as well. We are much more successful when we focus on finding people who are better than us in their areas of expertise and relying on that team to get the deal done. No one succeeds alone. Surround yourself with people who are smarter than you. It will only make you better!
Cheers to a better financial future! Feel free to reach out or comment.
-Erik & Jessie
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I love this
Thank you!
Y’all do the dang thang!
#hustlelife 🙂
Awesome!!
I live in Salt Lake City and am looking at doing brrrr in St Louis because it’s drastically cheaper. I only have 10k to put down. How do you recommend I go about finding a property? I figure an agent might be too big an expense.
Also, do I need to wait for a contractor to get out there until I can find out what the ARV will be?
Meagan
Hi Meagan! A lot of that depends on your particular situation. I always suggest house hacking as a great first step into real estate if you haven’t done that already. Even if you live in a more expensive market, having to only put 3.5% down with an FHA loan can still be easier than 20% down on an investment property in another less expensive market. Have you looked into what kind of financing you are going to use? What % of the purchase price does that lender require for a down payment? How are you planning on funding the renovations? In this example, I found a lender who needed 20% of the purchase price plus renovation costs but then funded the rest of the purchase and renovation expenses. Figure out your financing and then that will help you come up with a price range you can afford. Unless you’ve already done several deals and have experience, I would still suggest using a realtor. A good realtor can help you avoid making mistakes, especially if it’s an out of state market that you don’t know very well. The realtor can also help you by pulling comps to get an ARV. They may also be able to connect you with a good contractor who can estimate rehab costs for you. Make a list of everything you don’t know how to do or can’t do on your own and then start finding people to fill those gaps for you. Preparation is key!!! Get that team in place and have a good strategy before pulling the trigger on a property.