Investing out of state doing BRRRRs

Real Estate Consultant · Madison, NJ · Member since 2016 · 6k+ posts · 7k+ votes

The BRRRR strategy was great a couple of years ago, but it's much harder to do now because of the high interest rates. It can be done in smaller towns, but the margins are still very tight. All of the BRRRR propaganda was from when rates were very low. Where do you plan to find your deals? Unless you are finding off-market opportunities direct to seller, I can't imagine the deals working on BRRRR.

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Caleb Brown

Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes

1y

I can share a go to one for the area

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Anthony Angotti

Real Estate Agent · Pittsburgh, PA · Member since 2015 · 1k+ posts · 846 votes

1y

Quote from @Kevin G.:

Hey everyone,

I’m diving into the world of out-of-state real estate investing and couldn’t be more excited (and maybe a little nervous). I currently live in the Bay Area, but I’ve decided to start investing in the Jackson County/MO area. Why? My sister lives in Lee’s Summit, so I’ll have family nearby to help navigate the local scene. I am not preticuarly brand new to real estate as I've done 1 house flip before and 1 brrrr here locally to me.

To begin, I'm aiming to tackle two single-family BRRRR projects in the Jackson County, MO area. My main goals with these initial projects are:

1. Gaining valuable insights into the local market.

2. Getting hands-on experience with out-of-state investing, particularly when it comes to remodels and managing from afar.

3. Testing the entire BRRRR process to see if it's the right strategy for me long-term.

If all goes well, I’d love to scale up and explore multi-family projects. However, if single-family homes prove financially viable, I’m happy to continue building in that niche.

Since these homes and projects are significantly cheaper than my market, the risk is relatively lower for me and can do at least two at a time.

The Challenge

One of the biggest hurdles is finding reliable contractors and subcontractors in the area. My brother-in-law, who owns a landscaping company in Lee’s Summit, works with a lot of local builders and has been a huge help. While most of his experience is with new construction rather than remodels, he’s already given me a few pointers and is looking into potential referrals for me. I am wondering if anyone invests in this area can provide me with some referrals?

If you’ve worked with trustworthy contractors or subcontractors in the Jackson County/MO area (especially those familiar with investment properties), I’d love your recommendations. Bonus points if they’re used to working with investors or can help keep costs in check while maintaining quality.

Cheers,

Kevin

I would say this about BRRRRR, especially as a newer investor.

If you expect to get every penny out of every deal you are going to be disappointed. As @Jonathan Greene mentioned this is kind of a dated strategy in the new price/interest rate environment. You can still achieve it, but finding deals that actually pencil out on all criteria (low enough purchase price, low enough renovation cost, cash flows on the backend, all cash out at refinance) is pretty hard. And usually you have to be self sourcing them or doing some serious turnover.

If you move your expectations to keeping some money in, but refinancing out as much as you can then you'll be set up to not be let down from the jump. It will still be hard, but you'll likely be able to find deals.

When I see newer people expecting to find full cash out deals from out of state sourced from a wholesaler or agent I know they are setting themselves up to fail 99.5% of the time. OR they are investing in areas they think are good, but that usually aren't. So shift your expectations to most of the cash out and you'll be good and you'll actually start buying deals, versus people who wait for the perfect deal, spin their wheels for 6 months terminating contracts/analyzing hundreds of places, and then eventually burn out and give up.

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Kevin G.

OP

Investor · Bay Area, CA · Member since 2020 · 72 posts · 43 votes

1y

Thanks for sharing this perspective—it's super helpful, and I totally agree that the "perfect BRRRR" is incredibly rare these days. I'm fully aware that getting all of my cash out isn't always realistic, especially in the current market with higher prices and interest rates. My expectation is to keep some cash in each deal, but still aim to maximize how much I can refinance out to make the numbers work.

I’ve been cautious about setting my expectations too high, and I appreciate the reminder to focus on deals that work rather than chasing perfection. The deals I’ve found so far (and to be fair, it’s not a huge sample size yet) seem to make sense and pencil out under this mindset. I’m sourcing carefully and trying to approach it methodically, especially with the added layer of investing out of state.

It’s good to hear advice from someone with experience. The last thing I want is to fall into analysis paralysis or burn out chasing something unattainable. Thanks again for the reality check—it’s grounding and motivating at the same time!

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Kevin G.

OP

Investor · Bay Area, CA · Member since 2020 · 72 posts · 43 votes

1y

Quote from @Jonathan Greene:

The BRRRR strategy was great a couple of years ago, but it's much harder to do now because of the high interest rates. It can be done in smaller towns, but the margins are still very tight. All of the BRRRR propaganda was from when rates were very low. Where do you plan to find your deals? Unless you are finding off-market opportunities direct to seller, I can't imagine the deals working on BRRRR.

I completely agree that the current market makes BRRRR a much tougher strategy to execute, especially with higher interest rates and tighter margins. A lot of the success stories and content we've seen in the past came from a very different rate environment, so I'm definitely factoring that into my approach.

For now, I’m planning to focus on the Jackson County/MO area, specifically around Lee’s Summit where I have some local support from family. I’ve been looking at on-market deals as a starting point, but I know the importance of sourcing off-market opportunities. That’s something I’m actively exploring—whether it’s through direct-to-seller marketing, networking with local wholesalers, or even tapping into connections through my brother-in-law, who works with builders and contractors in the area.

I’m not expecting slam-dunk deals or easy wins, but the numbers on a few potential projects I’ve run so far seem to work under the assumption that I’ll leave some cash in the deals. I know it’s going to take a lot of digging and possibly building my own pipeline for off-market leads to make this strategy viable long-term. Definitely open to any tips or strategies you’ve used to find deals that work in today’s market!

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Alex BekezaBusiness Member

Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes

1y

@Brian Glasser is a solid agent/project manager in KC and has done dozens of BRRRS himself there.

[email protected]818-606-8823

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Alex Olson

Real Estate Broker · Kansas City Metro · Member since 2015 · 2k+ posts · 1k+ votes

1y

If you are looking at multifamily in Kansas City, I can help with that.

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Sam Howell

Member since 2023 · 3 posts · 2 votes

1y

Congrats on taking the plunge into out-of-state investing! It's exciting to see you planning BRRRR projects, especially with family nearby in Lee's Summit to help you navigate the local scene. Having some prior experience with a flip and a BRRRR locally will definitely come in handy.

As someone who’s also from the Bay Area and has done rehabs on my long-term rentals, I wanted to share a bit from my own experience. While rehabs can be rewarding, I’ve often ended up paying much more than I anticipated or would have liked—especially when managing from afar. Out-of-state projects add another layer of complexity. Contractors, especially when they know you’re not local, can overcharge and underdeliver. Project managers, while helpful, often upcharge, and their incentives don’t always align with keeping costs in check.

Since you have your brother-in-law as a resource, that’s a huge plus. His referrals could be a great starting point. Still, I’d recommend vetting contractors thoroughly, getting multiple bids, and setting clear expectations upfront. It’s also helpful to build a small network of trusted vendors and tradespeople you can rely on for future projects.

The BRRRR strategy can be a great way to scale, but I'd advise budgeting some extra cushion for unexpected costs or delays—it's almost inevitable. If you're able to stay flexible and learn as you go, I'm sure you'll gain valuable insights and make progress toward your goals.

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Varun Chawla

Member since 2020 · 14 posts · 10 votes

1y

Quote from @Kevin G.:

Hey everyone,

I’m diving into the world of out-of-state real estate investing and couldn’t be more excited (and maybe a little nervous). I currently live in the Bay Area, but I’ve decided to start investing in the Jackson County/MO area. Why? My sister lives in Lee’s Summit, so I’ll have family nearby to help navigate the local scene. I am not preticuarly brand new to real estate as I've done 1 house flip before and 1 brrrr here locally to me.

To begin, I'm aiming to tackle two single-family BRRRR projects in the Jackson County, MO area. My main goals with these initial projects are:

1. Gaining valuable insights into the local market.

2. Getting hands-on experience with out-of-state investing, particularly when it comes to remodels and managing from afar.

3. Testing the entire BRRRR process to see if it's the right strategy for me long-term.

If all goes well, I’d love to scale up and explore multi-family projects. However, if single-family homes prove financially viable, I’m happy to continue building in that niche.

Since these homes and projects are significantly cheaper than my market, the risk is relatively lower for me and can do at least two at a time.

The Challenge

One of the biggest hurdles is finding reliable contractors and subcontractors in the area. My brother-in-law, who owns a landscaping company in Lee’s Summit, works with a lot of local builders and has been a huge help. While most of his experience is with new construction rather than remodels, he’s already given me a few pointers and is looking into potential referrals for me. I am wondering if anyone invests in this area can provide me with some referrals?

If you’ve worked with trustworthy contractors or subcontractors in the Jackson County/MO area (especially those familiar with investment properties), I’d love your recommendations. Bonus points if they’re used to working with investors or can help keep costs in check while maintaining quality.

Cheers,

Kevin

Hi Kevin,

Welcome to the Kansas City investing scene! As an out-of-state investor in Kansas City myself, I'd love to hear how your BRRRR projects turn out. I've done two rehabs from out of state so far, and I can relate to the challenges you mentioned.

One thing I learned the hard way is that managing rehabs remotely can be tough. Not being on the ground makes it difficult to monitor progress and judge the quality of work. I thought I was overcharged for my rehabs, especially because I didn’t have a solid process for oversight in place initially.

I ended up having my property manager oversee the rehab projects, which helped but came at an extra cost—around 10% of the total rehab budget. It was a good learning experience, but it made me realize that staying away from major rehabs (for now) might be the best move until I have a more reliable system in place.

That said, having family in the area like your sister and brother-in-law is a huge advantage! If they can help with boots-on-the-ground oversight or even just vetting contractors, that’ll make a world of difference.

Best of luck with your BRRRR projects—keep us posted on your progress!

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Milton ChamberlainPro Member

Real Estate Agent · Kansas City, MO · Member since 2019 · 236 posts · 107 votes

1y

To begin, I'm aiming to tackle two single-family BRRRR projects in the Jackson County, MO area. My main goals with these initial projects are:

1. Gaining valuable insights into the local market.

Always consider that Jackson County has a LOT of variability in KC proper and then uniques submarkets of LS, BS, Independence, Raytown, Grandview, etc all with their own local city governments, rules and regulations, each with their own uniques submarkets of their own...Happy to chat and share my knowledge and experience.

2. Getting hands-on experience with out-of-state investing, particularly when it comes to remodels and managing from afar.

I have assisted OOS investors with repairman/handmany/GC references. IMO how you treat the BRRRR project regarding who you hire and what you spend and timeline depends on the region and SOW

3. Testing the entire BRRRR process to see if it's the right strategy for me long-term.

building equity through rehab and build out will be best achieved with a lower priced cash purchase---typically wholesale. or word of mouth. depends on the region though. lots of ways to hunt for good BRRRR candidates, but hunting on the MLS typically wont get you low enough prices to make sense.

...My brother-in-law, who owns a landscaping company in Lee’s Summit, works with a lot of local builders and has been a huge help...

This sounds like a great resource for finding subs that will do the work for you independently. most subs can do other types of work as well.

If you’ve worked with trustworthy contractors or subcontractors in the Jackson County/MO area (especially those familiar with investment properties), I’d love your recommendations. Bonus points if they’re used to working with investors or can help keep costs in check while maintaining quality.

I have a few references I can give you. I'll message you

[email protected]573-356-1607

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Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

1y

@Kevin G. go hang out at your local Home Depot between 6-9am on a Saturday.

They contractors there at that time are the hard-working ones.

Then, you just have to figure out how to screen them so you don't get ripped off.
- First Rule: you buy the materials, so they don't need 50% down!

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Investing out of state doing BRRRRs

Investing out of state doing BRRRRs

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