How many REIs are there anyways?

Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes

You know how once you decide to go all in and start doing something it feels like everyone is doing it? Maybe it's just because now I'm a part of this community and I'm completely absorbed and enamored by all of this, but it seems like the more I learn and the more I know what to look for it appears that there are thousands if not tens of thousands of investors in my market alone. Even just talking REI with colleagues and family now I'm shocked at how many of them are flipping, wholesaling, or landlording properties or at a minimum educating themselves and trying to find or make a good deal. In fact, I went door to door in my neighborhood "walking for dollars" and was shocked at how many of my neighbors said they get flyers, business cards, post cards, fake handwritten notes, etc…

Maybe I’m crazy and it’s not that high. How many small/independent real estate investors are there? Am I getting started too late? Maybe it’s just my market. We are willing to move if there are better markets with less competition anywhere in Texas or Nevada.

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Evan Polaski

Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes

@Joshua Amezcua, it is not your market. I would have to guess there are millions. Social media influencers selling courses, HGTV making it seem like a flip is a simple way to make $100k in 3 months with no risk. It gives the general public the optics that real estate is just quick money. The ability to market yourself and your masterclass, with some decent marketing knowhow is very easy in today's world.

Add in realtors, wholesalers, syndicators, office and hotel and retail owners, the guy down the street that owns 5 rentals around town.

This is a highly saturated, hard to penetrate business to be in. I mean look at the number of people you see posting on these forums, then probably multiple it by 100+ for those that just lurk. Or I went to meetup many years ago, about 40 people there. Of those, I would say maybe 15 were ACTUAL investors and had done something. Another 15+ were wholesalers just trying to find deals, 8-10 were agents that "cater to investors". But this was just one small meetup in Cincinnati. There are many others in my market alone.

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Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
Quote from @Josh Young:

@Joshua Amezcua there are lots of investors, but that doesn't mean you are in competition with all of us/them. I would focus more on the market and remember that high tide rises all ships. Also, it sounds like you have a strategy already, don't switch to BRRR or 30 day flips, just keep doing live in flips, so you can be patient doing the work yourself and get owner occupied financing.
Thanks Josh! I haven't locked in my strategy yet, but I am working on documenting or drawing out what I am tentatively referring to as the veteran "BORRRR" or Buy, Occupy, Renovate, Rent, Refinance, Repeat. I was also thinking about putting myself out there for partnerships on flips through sweat equity. I'm happy to go to a nasty house and make it pretty, but not necessarily front the cash or buy the supplies.
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Scott TrenchPro Member
Rental Property Investor · Denver, CO · Member since 2014 · 2k+ posts · 6k+ votes
3y
There are ~17M real estate investors in this country who own at least one property outside of their primary residence. So that's the "technical" answer.
More / interesting insights:
These investors are estimated to participate in the purchase ~960,000 transactions this year.

I’m not sure what percentage of these transactions are done by new, first time investors, but I’ll be surprised if it’s less than 30%. So, there's 300,000 new investors per year.

Of the ~28M structures (45M in rental UNITs) in this country that house rental units (most of which are single family rentals, duplexes, triplexes, and quadplexes), 90% are owned by “retail” (less than 10 properties) investors.

60% are owned by investors with just one or two properties.

We do not know how many owner occupied transactions involve “house hacking”, “live in flip”, or how many "second home purchases" are purchased with the intent to invest. But, I bet it's several hundred thousand incremental transactions per year.
On top of that, many people become "accidental" landlords when they inherit property or can't sell a primary for some reason when they need to move.
On top of that, there is a large, unknown, contingent of "investors" who are wholesalers, agents, or otherwise involved in the real estate industry but do not actually own property in a meaningful way.
On top of that, there are millions of households that invest in REITs, syndications, private placements, or invest through other similar partnership structures.
On top of that, up to 30% of the US adult population is "interested in" investing in real estate. That's 50M+.
So, on the low end, you have 300,000 new investors per year. More realistically, we have somewhere between 500,000 and 1M first time investors who are buying through a means other than a traditional investment purchase.
To answer your question in the most unhelpful way possible, I have thus concluded that there are between 300K and 50M people who are serious about real estate investing in this country and would thus classify themselves as investors.
The "right" answer to this question, of course, is 2.8M. That's the number of investors who have created a membership on BiggerPockets, establishing the legitimacy of their intent to invest :).
Podcast Guest on Show #223
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Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
Quote from @Scott Trench:

There are ~17M real estate investors in this country who own at least one property outside of their primary residence. So that's the "technical" answer.
More / interesting insights:
These investors are estimated to participate in the purchase ~960,000 transactions this year.

I’m not sure what percentage of these transactions are done by new, first time investors, but I’ll be surprised if it’s less than 30%. So, there's 300,000 new investors per year.

Of the ~28M structures (45M in rental UNITs) in this country that house rental units (most of which are single family rentals, duplexes, triplexes, and quadplexes), 90% are owned by “retail” (less than 10 properties) investors.

60% are owned by investors with just one or two properties.

We do not know how many owner occupied transactions involve “house hacking”, “live in flip”, or how many "second home purchases" are purchased with the intent to invest. But, I bet it's several hundred thousand incremental transactions per year.
On top of that, many people become "accidental" landlords when they inherit property or can't sell a primary for some reason when they need to move.
On top of that, there is a large, unknown, contingent of "investors" who are wholesalers, agents, or otherwise involved in the real estate industry but do not actually own property in a meaningful way.
On top of that, there are millions of households that invest in REITs, syndications, private placements, or invest through other similar partnership structures.
On top of that, up to 30% of the US adult population is "interested in" investing in real estate. That's 50M+.
So, on the low end, you have 300,000 new investors per year. More realistically, we have somewhere between 500,000 and 1M first time investors who are buying through a means other than a traditional investment purchase.
To answer your question in the most unhelpful way possible, I have thus concluded that there are between 300K and 50M people who are serious about real estate investing in this country and would thus classify themselves as investors.
The "right" answer to this question, of course, is 2.8M. That's the number of investors who have created a membership on BiggerPockets, establishing the legitimacy of their intent to invest :).

Scott - I've heard just how unhelpful you can be, your reputation precedes you!

Just kidding! But in all seriousness, these are some eye popping numbers. Thank you for sharing them. For the last 60 days I have read more financial/RE books and listened to more podcasts than I can count. My wife has likely had it up to ^here with David Green, Rob A, Ashley, and Tony's voices at this point I'm sure! This stuff is mesmerizing to me. It makes my brain go into overdrive. I fully understand now why so many people are drawn to the idea of financial freedom through real estate.

For me though, it feels different. In my 35 years on this planet I've only ever really been sure of 3 things: serving my country, marrying my wife, and real estate. My only regret is having not started sooner. I will continue to drink from the firehose, continue to invest in myself, and likely continue to ask a LOT of questions. Thank you again for sharing and for all that you do for BP.
2 Reply
Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
I also find it fascinating that so many How I Got Started stories are about how people stumble into or accidentally get into real estate investing. I missed a glaring opportunity when Covid hit. I sold our house for only about $20k profit when we really should have just kept it and rented it out, found a cheap house and house hacked. In Reno NV where we owned the house, we would have been making about $1000 /mo cashflow including the cost of a property manager. That should have been where we accidentally got into REI, but it wasn't until I read Rich Dad and David's BRRRR book that I realized what could have been.

Everything happens for a reason though.
1 Reply
Jake AndronicoBusiness Member
Realtor · Reno, NV · Member since 2019 · 1k+ posts · 938 votes
3y
@Joshua Amezcua
I'm based in Reno, NV there is definitely more rental stock coming online. But, the housing issue is certainly not solved. Not even close.
Bummer about the sale, but of course hindsight is 20/20. Like you said, everything happens for a reason.
Some perimeter markets nearby here are looking stronger and stronger. There are certainly more investors, but a lot seem to be holding off on the sidelines right now.
We're actually starting to see some of the best deals hiding in plain sight on MLS now - where in late 2020/21/early 22 there would be 10-25 offers.
Never too late to start - hope to see you in the forums more often!!
Once you get the bug, it's hard to stop :)
415-233-1796
2 Reply
Ruchit Patel
Bay area, CA · Member since 2021 · 383 posts · 306 votes
3y
Quote from @Joshua Amezcua:

Quote from @Ruchit Patel:

As long as you have money, and right network, don't worry about saturation. USA is too big and has too much money, everybody can win for now.
Thank you for the encouragement! What would you say is the most effective/efficient way of growing my network?
networking is different than getting deals. You can connect with enough people through here, but when it comes to deals, you just need one good provider that fits your preference. Most people go turnkey route at beginning.
1 Reply
Alecia LovelessPro Member
Member since 2019 · 3k+ posts · 2k+ votes
3y
@Joshua Amezcua I’m kind of a regional investor and my market is definitely busy and investors have different reasons for being here.
There’s a few local investors building their portfolios. Then there’s one family that’s got plenty of cash that is focused on one particular small town and over the past four years has just bought every piece of commercial property that has gone on the market there.
And then we have the investors from down south who have discovered the farthest northern towns where real estate is cheapest but traditionally there has been a lot of multi family properties and they’ve been buying those properties and renovating them either for LTR or as flips but by doubling the rents they are out pricing the market.
I wouldn’t say we’re totally saturated but to get a good property you definitely have to move very quickly and be competitive.
1 Reply
Jonathan R McLaughlin
Rental Property Investor · Boston, Massachusetts (MA) · Member since 2016 · 2k+ posts · 2k+ votes
3y
Quote from @Joshua Amezcua:

Quote from @Evan Polaski:

@Joshua Amezcua, it is not your market. I would have to guess there are millions. Social media influencers selling courses, HGTV making it seem like a flip is a simple way to make $100k in 3 months with no risk. It gives the general public the optics that real estate is just quick money. The ability to market yourself and your masterclass, with some decent marketing knowhow is very easy in today's world.

Add in realtors, wholesalers, syndicators, office and hotel and retail owners, the guy down the street that owns 5 rentals around town.

This is a highly saturated, hard to penetrate business to be in. I mean look at the number of people you see posting on these forums, then probably multiple it by 100+ for those that just lurk. Or I went to meetup many years ago, about 40 people there. Of those, I would say maybe 15 were ACTUAL investors and had done something. Another 15+ were wholesalers just trying to find deals, 8-10 were agents that "cater to investors". But this was just one small meetup in Cincinnati. There are many others in my market alone.
This is great information. It has actually blown my mind the number of people I speak to on a daily basis that, at some level, consider themselves a real estate investor. I listen to the Real Estate Rookie podcast, and am so inspired by what I see and hear. I am perfectly fine with a 'slow and steady' approach to this. I have a solid W2 and my wife is about to return to work in 12 months when our youngest starts school. I am doing my best to drink from the hose so to speak, and plan on buying my first investment property before the end of the year.

I am simply stunned by the number of houses in my market that were purchased late 2022 or early 2023 and are back on the market at a 40-50% markup. I've walked a bunch of these houses just to talk shop and see what I'm up against and the quality of work is pretty good. I do my own renovations as I grew up fixing and updating houses with my dad. I just feel like I am seeing things in slow motion and curious how anyone getting started stays ahead of the millions of other investors.

subtract many millions that don't have any money. Despite the hype, this is a capital intense business.
2 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Nicholas L.:

@Joshua Amezcua
just being honest - I don't think you 'need' a mentor. just keep reading, listening, etc. and ask any questions you have here in the forums.
go to REIA meetings and ask lots of questions and network and make friends.
i think RE investing takes time, money, and patience...

The last thing you need is mentor.
The first thing you need is Home Depot card.
1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Scott Trench:

There are ~17M real estate investors in this country who own at least one property outside of their primary residence. So that's the "technical" answer.
More / interesting insights:
These investors are estimated to participate in the purchase ~960,000 transactions this year.

I’m not sure what percentage of these transactions are done by new, first time investors, but I’ll be surprised if it’s less than 30%. So, there's 300,000 new investors per year.

Of the ~28M structures (45M in rental UNITs) in this country that house rental units (most of which are single family rentals, duplexes, triplexes, and quadplexes), 90% are owned by “retail” (less than 10 properties) investors.

60% are owned by investors with just one or two properties.

We do not know how many owner occupied transactions involve “house hacking”, “live in flip”, or how many "second home purchases" are purchased with the intent to invest. But, I bet it's several hundred thousand incremental transactions per year.
On top of that, many people become "accidental" landlords when they inherit property or can't sell a primary for some reason when they need to move.
On top of that, there is a large, unknown, contingent of "investors" who are wholesalers, agents, or otherwise involved in the real estate industry but do not actually own property in a meaningful way.
On top of that, there are millions of households that invest in REITs, syndications, private placements, or invest through other similar partnership structures.
On top of that, up to 30% of the US adult population is "interested in" investing in real estate. That's 50M+.
So, on the low end, you have 300,000 new investors per year. More realistically, we have somewhere between 500,000 and 1M first time investors who are buying through a means other than a traditional investment purchase.
To answer your question in the most unhelpful way possible, I have thus concluded that there are between 300K and 50M people who are serious about real estate investing in this country and would thus classify themselves as investors.
The "right" answer to this question, of course, is 2.8M. That's the number of investors who have created a membership on BiggerPockets, establishing the legitimacy of their intent to invest :).

These information is very accurate as straight coming from the master :)
2 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Ruchit Patel:

As long as you have money, and right network, don't worry about saturation. USA is too big and has too much money, everybody can win for now.

This is the best advice ever. Newbie folks here is always worry about competition,interest rate, cost of living,etc,etc....

So just the OP knows, the best opportunity is still for the house that has DOM > 60 days. The good thing about real estate is that, in comparison to stock equity investment, there are a lot of mispricing everywhere, either from the market or from the house itself. But yes, Real estate is 30 times more tricky than stock.
1 Reply
Noah CorwickPro Member
Realtor · Phoenix, AZ · Member since 2021 · 271 posts · 115 votes
3y
Quote from @Joshua Amezcua:

Quote from @Noah Corwick:

Quote from @Joshua Amezcua:

Quote from @Noah Corwick:

I'm in Phoenix as well, and it certainly has been feeling that way for at least the past 3-4 years. As others mentioned, AZ used to be this hidden west coast gem that you could get in at a low price and walk out pretty nicely deal wise. "If you can't afford to invest in Cali, invest in AZ" is how I sum it up.

I think the rates dropping to 3% brought additional awareness. I believe this made people stop and ask "why don't I just buy a house and then eventually rent it" without even knowing house hacking has been used for a while as a strategy.

Also AZ is a huge testing ground for new "innovations" in real estate. Tech companies test out real estate software and use Phoenix as a playground. Also from a real estate law standpoint, they use PHX to test the waters a lot as well.

Not to mention that people are flocking to get their real estate license left and right (and then most will leave in 1-2 after they struggle to find leads).

AZ is definitely a bit congested. We just need to let it run its course.

This is great information. I know I can't go back in time to get started when rates were 2-3%. My first VA home loan was 2.25%, current one is 3%. I am definitely happy to own a good property with a solid rate and a low payment. I don't plan on giving that up. I'm trying to devise a plan to put our equity to work in this current market. If I have to wait a bit longer, so be it. But man am I motivated and wanting to get started today!

Trust me, I shake my head once a week for waiting so long in my life to start investing myself haha.
You have a really solid foundation already in place with your two homes and the ability to utilize VA benefits. I agree in keeping your current homes and tapping into the equity you have. Assuming you have at least 20% equity in them, utilizing a HELOC might be a logical move to consider.
I'm curious, are you leaning towards a strategy in investing in rentals or flips?
Overall you are definitely ahead of the curve compared to most who are just starting out, so major kudos for that. The bones are there.
That is a great question, and one that I'm not entirely sure of the answer yet. When I show people before and after pictures of our first house and our current house, their initial response is typically "holy ****" followed by "you should flip houses". But the thing is, I did these renovations slow and steady, finding good deals on supplies and only working on one project at a time and only on the projects with the most ROI. Taking on a full gut, or even just a 30 day flip where I'm just swapping flooring, painting, cleaning up the landscaping, etc. feels very stressful to me. I easily become paralyzed when multi-tasking on our house projects. But strangely I have a very hard time letting go and letting someone else do the work. I also have been reading that investors are getting crushed financially in AZ right now due to the higher rates and people not necessarily wanting to buy. I haven't researched enough to fully understand the financial or legal implications of getting stuck with a property that won't sell at my expected ARV.

All of this is to say that BRRRR feels like the right strategy. At this time I would say I'm on the fence, but my feet are hanging over the BRRRR side. On the other hand, it may be foolish not to capitalize on our renovation skills to flip a few houses, raising capital for a few rental properties. Then we go back to the original question of, how many investors are there in this market and how likely am I to actually find a good deal or have one present itself to me.

^a lot of this is me thinking out loud :)
You definitely have a competitive advantage with your renovation skills regardless of the path you decide. This will undoubtedly come in handy at some point in your investing journey. One thing to note specific to Arizona is the Handyman Exception. Essentially you/a handyman can conduct unlicensed work (labor and materials) for anything up to $1,000 on a particular portion of the rehab. I would suggest looking more into this yourself, but the legal breakdown can be found at: https://www.azleg.gov/viewdocument/?docName=http://www.azleg...
BRRRR makes sense, but unfortunately you likely won't be able to pull it off as effectively as you could in a more normal/balanced market. As someone mentioned on this post, it's currently an equity play instead of both an equity & cashflow play. So if cashflow isn't as important for you at this exact moment, then you could be fine.
I also completely understand the time anxiety that would come with a flip. It's not for everyone and if you decide to do a lot of work yourself, it might suck all the fun and joy out of doing your own renovations.
The financial implications of getting stuck with a property that won't sell at your expected ARV is likely one of the following: 1) either understand why it's not hitting your price point and assess if it's worth continuing to add to the rehab 2) BRRRR it. Rent it out for 12 months to hopefully let the market work in your favor and assess the situation at that point 3) Sell it at a loss, claim the loss on your taxes, learn from it and keep on moving.
[email protected]602-834-4617
2 Reply
V.G JasonPro Member
Investor · Member since 2022 · 3k+ posts · 3k+ votes
3y
Are we talking amateur investors or large individual investors?
There are a lot of both nowadays, for sure. The amateur investors will not be able to hold on long.
2 Reply
Stephen KeigheryBusiness Member
Rental Property Investor · New Orleans, LA · Member since 2018 · 716 posts · 555 votes
3y
@Joshua Amezcua don't worry about everyone else. If you want to get into REI go for it. Find your niche and make it your own, there is plenty of room.
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Steve Vaughan
Rental Property Investor · East Wenatchee, WA · Member since 2014 · 10k+ posts · 16k+ votes
3y
There are also those of us that used to did, sold and grabbed a chair while the music still played.
There are 2.4 agents for each available house. More investors than that circling each skinny margin distressed seller.
RE isn't the only game around. I'd let the dust settle if I was just getting started.
2 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3y
Quote from @Joshua Amezcua:

Quote from @Ryan Thomson:

Look up the "frequency illusion"!
The Baader-Meinhof phenomenon, also known as the frequency illusion, is a cognitive bias that causes people to see something they've just noticed everywhere.

I didn't know this was a thing, but it's definitely something I understand and experience often in my life. I was a background actor in Hollywood for 6 months after graduating high school. That career has absolutely ruined movies for me. My brain notices a prop or a person, then magically watch those things teleport around the set in subsequent shots. I can't even watch movies normally anymore.

I have also experienced it in every side hustle I've ever had. Imagine me learning about Amazon arbitrage, thinking I'll just walk into Target, Kohls, or Home Depot finding items that are on sale in my store and selling for more money on Amazon, just to see 25 other people each day with their phones out on the same apps looking at the same products!

haha! What a bummer that movies are ruined for you. Sounds like a fun job though.
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Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
Quote from @Jake Andronico:

@Joshua Amezcua
I'm based in Reno, NV there is definitely more rental stock coming online. But, the housing issue is certainly not solved. Not even close.
Bummer about the sale, but of course hindsight is 20/20. Like you said, everything happens for a reason.
Some perimeter markets nearby here are looking stronger and stronger. There are certainly more investors, but a lot seem to be holding off on the sidelines right now.
We're actually starting to see some of the best deals hiding in plain sight on MLS now - where in late 2020/21/early 22 there would be 10-25 offers.
Never too late to start - hope to see you in the forums more often!!
Once you get the bug, it's hard to stop :)

I can definitely attest to that. I have the bug and I don't want to stop. I just want to keep learning, networking, and preparing to take action when an opportunity is in front of me.
Happy to hear things are looking up in Reno/Sparks. I would love to own a couple properties out there as I could easily manage from a distance knowing the city and being decently connected.
I appreciate the info and time!
1 Reply
Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
Quote from @Steve Vaughan:

There are also those of us that used to did, sold and grabbed a chair while the music still played.
There are 2.4 agents for each available house. More investors than that circling each skinny margin distressed seller.
RE isn't the only game around. I'd let the dust settle if I was just getting started.
I think I'm starting to realize that patience is going to be my best friend here. That isn't always my strongest quality, but if it helps me get started the right way then I am all about it. Thanks for the info!
1 Reply
Joshua Amezcua
OP
Investor · Mesa, AZ · Member since 2023 · 41 posts · 17 votes
3y
Quote from @Noah Corwick:

Quote from @Joshua Amezcua:

Quote from @Noah Corwick:

Quote from @Joshua Amezcua:

Quote from @Noah Corwick:

I'm in Phoenix as well, and it certainly has been feeling that way for at least the past 3-4 years. As others mentioned, AZ used to be this hidden west coast gem that you could get in at a low price and walk out pretty nicely deal wise. "If you can't afford to invest in Cali, invest in AZ" is how I sum it up.

I think the rates dropping to 3% brought additional awareness. I believe this made people stop and ask "why don't I just buy a house and then eventually rent it" without even knowing house hacking has been used for a while as a strategy.

Also AZ is a huge testing ground for new "innovations" in real estate. Tech companies test out real estate software and use Phoenix as a playground. Also from a real estate law standpoint, they use PHX to test the waters a lot as well.

Not to mention that people are flocking to get their real estate license left and right (and then most will leave in 1-2 after they struggle to find leads).

AZ is definitely a bit congested. We just need to let it run its course.

This is great information. I know I can't go back in time to get started when rates were 2-3%. My first VA home loan was 2.25%, current one is 3%. I am definitely happy to own a good property with a solid rate and a low payment. I don't plan on giving that up. I'm trying to devise a plan to put our equity to work in this current market. If I have to wait a bit longer, so be it. But man am I motivated and wanting to get started today!

Trust me, I shake my head once a week for waiting so long in my life to start investing myself haha.
You have a really solid foundation already in place with your two homes and the ability to utilize VA benefits. I agree in keeping your current homes and tapping into the equity you have. Assuming you have at least 20% equity in them, utilizing a HELOC might be a logical move to consider.
I'm curious, are you leaning towards a strategy in investing in rentals or flips?
Overall you are definitely ahead of the curve compared to most who are just starting out, so major kudos for that. The bones are there.
That is a great question, and one that I'm not entirely sure of the answer yet. When I show people before and after pictures of our first house and our current house, their initial response is typically "holy ****" followed by "you should flip houses". But the thing is, I did these renovations slow and steady, finding good deals on supplies and only working on one project at a time and only on the projects with the most ROI. Taking on a full gut, or even just a 30 day flip where I'm just swapping flooring, painting, cleaning up the landscaping, etc. feels very stressful to me. I easily become paralyzed when multi-tasking on our house projects. But strangely I have a very hard time letting go and letting someone else do the work. I also have been reading that investors are getting crushed financially in AZ right now due to the higher rates and people not necessarily wanting to buy. I haven't researched enough to fully understand the financial or legal implications of getting stuck with a property that won't sell at my expected ARV.

All of this is to say that BRRRR feels like the right strategy. At this time I would say I'm on the fence, but my feet are hanging over the BRRRR side. On the other hand, it may be foolish not to capitalize on our renovation skills to flip a few houses, raising capital for a few rental properties. Then we go back to the original question of, how many investors are there in this market and how likely am I to actually find a good deal or have one present itself to me.

^a lot of this is me thinking out loud :)
You definitely have a competitive advantage with your renovation skills regardless of the path you decide. This will undoubtedly come in handy at some point in your investing journey. One thing to note specific to Arizona is the Handyman Exception. Essentially you/a handyman can conduct unlicensed work (labor and materials) for anything up to $1,000 on a particular portion of the rehab. I would suggest looking more into this yourself, but the legal breakdown can be found at: https://www.azleg.gov/viewdocument/?docName=http://www.azleg...
BRRRR makes sense, but unfortunately you likely won't be able to pull it off as effectively as you could in a more normal/balanced market. As someone mentioned on this post, it's currently an equity play instead of both an equity & cashflow play. So if cashflow isn't as important for you at this exact moment, then you could be fine.
I also completely understand the time anxiety that would come with a flip. It's not for everyone and if you decide to do a lot of work yourself, it might suck all the fun and joy out of doing your own renovations.
The financial implications of getting stuck with a property that won't sell at your expected ARV is likely one of the following: 1) either understand why it's not hitting your price point and assess if it's worth continuing to add to the rehab 2) BRRRR it. Rent it out for 12 months to hopefully let the market work in your favor and assess the situation at that point 3) Sell it at a loss, claim the loss on your taxes, learn from it and keep on moving.
I appreciate the information and insight here. I think my strategy is going to be: Make sure the numbers make sense and be flexible. I think every deal and every property is going to be different and require a different approach. BRRRR speaks to me the most as I am a big fan of a long-term strategy and long term planning, but that shouldn't mean that I can't flip a property if the numbers make sense and/or there's another opportunity in front of me that requires additional cash on hand.

Thanks for sharing the legal information for the Handyman Exception. I have my reading and research for the evening now :)
0 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Ryan Thomson:

Quote from @Joshua Amezcua:

Quote from @Ryan Thomson:

Look up the "frequency illusion"!
The Baader-Meinhof phenomenon, also known as the frequency illusion, is a cognitive bias that causes people to see something they've just noticed everywhere.

I didn't know this was a thing, but it's definitely something I understand and experience often in my life. I was a background actor in Hollywood for 6 months after graduating high school. That career has absolutely ruined movies for me. My brain notices a prop or a person, then magically watch those things teleport around the set in subsequent shots. I can't even watch movies normally anymore.

I have also experienced it in every side hustle I've ever had. Imagine me learning about Amazon arbitrage, thinking I'll just walk into Target, Kohls, or Home Depot finding items that are on sale in my store and selling for more money on Amazon, just to see 25 other people each day with their phones out on the same apps looking at the same products!

haha! What a bummer that movies are ruined for you. Sounds like a fun job though.

I do understand "frequency illusion" but this is the first time I heard "Baader-Meinhof phenomenon". Not sure what's the correlation between the German T. thing with the illusion.

By the way, there're several ways to overcome the illusion :
1. Use data-driven decision.
So when you do something it's based on xyz data rather than what people says here (like they have to invest a STR cabin in Smokies blablabla).
2. Use analytics and being contrarian
Sometimes, not following the majority of the opinion of masses, could gain an unexpected result. Most of my profitable result is coming from DOM > 60 days
3. Use tools appropriately.
Learn from the Biggerpockeet to increase your knowledge and do more due diligence, but do NOT follow what people say in this forum blindly.

2 Reply
Ryan ThomsonBusiness Member
Real Estate Agent · Colorado Springs, CO · Member since 2018 · 1k+ posts · 1k+ votes
3y
Quote from @Carlos Ptriawan:

Quote from @Ryan Thomson:

Quote from @Joshua Amezcua:

Quote from @Ryan Thomson:

Look up the "frequency illusion"!
The Baader-Meinhof phenomenon, also known as the frequency illusion, is a cognitive bias that causes people to see something they've just noticed everywhere.

I didn't know this was a thing, but it's definitely something I understand and experience often in my life. I was a background actor in Hollywood for 6 months after graduating high school. That career has absolutely ruined movies for me. My brain notices a prop or a person, then magically watch those things teleport around the set in subsequent shots. I can't even watch movies normally anymore.

I have also experienced it in every side hustle I've ever had. Imagine me learning about Amazon arbitrage, thinking I'll just walk into Target, Kohls, or Home Depot finding items that are on sale in my store and selling for more money on Amazon, just to see 25 other people each day with their phones out on the same apps looking at the same products!

haha! What a bummer that movies are ruined for you. Sounds like a fun job though.

I do understand "frequency illusion" but this is the first time I heard "Baader-Meinhof phenomenon". Not sure what's the correlation between the German T. thing with the illusion.

By the way, there're several ways to overcome the illusion :
1. Use data-driven decision.
So when you do something it's based on xyz data rather than what people says here (like they have to invest a STR cabin in Smokies blablabla).
2. Use analytics and being contrarian
Sometimes, not following the majority of the opinion of masses, could gain an unexpected result. Most of my profitable result is coming from DOM > 60 days
3. Use tools appropriately.
Learn from the Biggerpockeet to increase your knowledge and do more due diligence, but do NOT follow what people say in this forum blindly.

Good word @Carlos Ptriawan
The Assumable Guy544 Reviews
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1 Reply
Carlos Ptriawan
Member since 2019 · 7k+ posts · 4k+ votes
3y
Quote from @Ryan Thomson:

Quote from @Carlos Ptriawan:

Quote from @Ryan Thomson:

Quote from @Joshua Amezcua:

Quote from @Ryan Thomson:

Look up the "frequency illusion"!
The Baader-Meinhof phenomenon, also known as the frequency illusion, is a cognitive bias that causes people to see something they've just noticed everywhere.

I didn't know this was a thing, but it's definitely something I understand and experience often in my life. I was a background actor in Hollywood for 6 months after graduating high school. That career has absolutely ruined movies for me. My brain notices a prop or a person, then magically watch those things teleport around the set in subsequent shots. I can't even watch movies normally anymore.

I have also experienced it in every side hustle I've ever had. Imagine me learning about Amazon arbitrage, thinking I'll just walk into Target, Kohls, or Home Depot finding items that are on sale in my store and selling for more money on Amazon, just to see 25 other people each day with their phones out on the same apps looking at the same products!

haha! What a bummer that movies are ruined for you. Sounds like a fun job though.

I do understand "frequency illusion" but this is the first time I heard "Baader-Meinhof phenomenon". Not sure what's the correlation between the German T. thing with the illusion.

By the way, there're several ways to overcome the illusion :
1. Use data-driven decision.
So when you do something it's based on xyz data rather than what people says here (like they have to invest a STR cabin in Smokies blablabla).
2. Use analytics and being contrarian
Sometimes, not following the majority of the opinion of masses, could gain an unexpected result. Most of my profitable result is coming from DOM > 60 days
3. Use tools appropriately.
Learn from the Biggerpockeet to increase your knowledge and do more due diligence, but do NOT follow what people say in this forum blindly.

Good word @Carlos Ptriawan

When I started in any forum, we have this bias to follow the majority opinion in the group. If we follow BP advice we have to invest LTR in Ohio and STR in Smokies, but I know from beginning if everyone is doing that it would create oversupply issue. This also happened in syndication investment, notes,etc,etc.....
Think BP like a school but how do we process all these information into our own decision making, is precisely our own freedom.

The OP question is really afraid of this fact, the number of REI does not really matter, this is just business anyway and we can exploit the opportunity using majority thesis or create our own creativity business skillset. There're always several alternative to the same problem.
So do not afraid.
1 Reply

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