New Market Troubles

Taking a leap in a new market with few connections is scary and necessary.

About the Property

Property type: Single family home
Beds: 4
Baths: 2
Sq. Ft: 1500

Why I liked it

I’d been trying to break into this new market for several months and was holding out for a property I could BRRRR and test out the new team.

This property came to me from one of my most trusted contacts in that area and seemed to be right up my alley.

Deal structure

Hard money loan with the plan to refinance into a non-conventional long-term loan in 3-6 months.

Deal outcome

Rehab estimates came in extremely high and took way too long to reduce to an acceptable amount (although still much higher than planned).

It took over two months from closing before work even started. Despite that, the property did appraise for much higher than planned, and rent also looks like it will land higher than planned, so we can swallow the higher rehab costs a little easier.

Projected Numbers

Purchase: $111,000
Rehab: $20,000
ARV: $155,000
Rent: $1,200

Actual numbers

Purchase: $110,000
Rehab: $34,000
ARV: $171,000
Rent: $1,350

Deal Outcome

TBD!

Lessons Learned

1. There can be a huge difference in rehab costs (both materials and labor) from one market to the next, no matter if they’re only a few hours from each other.

2. Bowstring desperately needed an enforcer to check in on all of our ground teams for all of our active efforts.

3. If you’re a small fish in somebody’s big pond, you need to make them believe that someday you’ll be a big fish, too. (Or find another way to make them care about you, even though you are a tiny piece of their portfolio.)