Rental Property Investor · Los Angeles, CA · Member since 2019 · 13 posts · 3 votes
I am in the middle of my search for locking in my first OOS BRRRR deal and the idea of buying my very first cash flowing OOS investment the traditional way struck me just couple days ago. I think that would give me the chance to learn the market and find/get to know my OOS team members better before diving in with BRRRR strategy.
Having said that I am planning to buy something that does need some minor work so I can start building a relationship with a contractor and something cheaper that does not eat up all the cash I have been saving up for my first BRRRR. I know this is a step back and I will have some of my own money locked in my first deal but it makes me feel more comfortable with moving forward with my first OOS deal.
I want to know what your thoughts are and if you think this is unnecessary and I should just focus on doing a BRRRR.
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
7y
@Kaveh Jafari I don't think it's an awful idea. Why not develop some trust/experience with a smaller lower risk deal and then push harder once you've learned a bit?
So many first time investors come to me and want to do a big BRRRR. As much as I try to set appropriate expectations, the amount of risk they're taking never really sits in until there is a surprise and there is so often a surprise. Bids are exactly that.. bids. There are so often adjustments with timeline and price point that you've got to have a MUCH higher tolerance for risk as far as cash reserves and flexibility when doing bigger construction like that. I think a smaller project could be a good way to understand those things on a smaller scale!
Rental Property Investor · Los Angeles, CA · Member since 2019 · 13 posts · 3 votes
7y
@Alyssa Dyer thanks so much for the input and your thoughts. I agree 100% with what you said. I think sticking with BRRRR strategy and instead doing a smaller deal where I can learn the process sounds better than having 100% my cash stuck in a new rental that is purchased the traditional way.
I am in construction management so i totally understand and agree that costs do not often stay where you estimated them to be. I am planning to include at least a 10% contingency for any unforseen changed in my repair costs to make it just a bit safer.
Rental Property Investor · Oklahoma City, OK · Member since 2017 · 1k+ posts · 694 votes
7y
Sounds good! Things are so stable in OKC is tough to get properties that are a good fit for BRRRR. Here it's all buy and hold, solid stable cash flow even through downturns. When the market shifts, of course, BRRRR will make more sense! Where are you hoping to do it?
If you're in construction management I'm preaching to the choir! You understand the risk.
Rental Property Investor · Los Angeles, CA · Member since 2019 · 13 posts · 3 votes
7y
@Alyssa Dyer Stable market even in downturns is definitely a good problem to have. I am currently looking in Jacksonville Florida. Even though prices over there are already inflated but they are still affordable and, there are a lot of inventories that I could dream of where I currently live. It just takes the right person to lock in a good deal. I wish I was closer to Jacksonville as I would feel much more comfortable taking over properties that need major rehabs especially near DT. Have you thought about OOS investments? If BRRRR does not work in your market or does not make sense it definitely worth looking in to it somewhere else. where it is possible.
I'm not stuck on one way to make money, but I LOVE the OKC market so I just do whatever the market is offering here. I mean sure I could force BRRRR here right now, but it would take me 10x as long to find a deal when in the time I could have bought 3 great buy and holds that are cash flowing with no rehab. When the downturn happens I'll do BRRRR! I talk to a lot of investors who just want turn key or just want to BRRRR, but I think flexibility is key in really growing your portfolio quickly. Excited for you in the pursuit! Construction management and an understanding of real estate is a dangerous combo haha! I did project management for hundreds of flips in a previous position and it definitely gave me an edge. You can do it!
Investor · Jacksonville, FL · Member since 2015 · 504 posts · 217 votes
7y
@kaveh Jafari
I have been in Jacksomville area since 1975 and have 29 years USPS. I know all the zip codes and what they represent (30 residential not incuding po box section zips). Feel free to reach out.
Rental Property Investor · Los Angeles, CA · Member since 2019 · 13 posts · 3 votes
7y
@Alyssa Dyer I cannot argue with you on that one. I wish I had the luxury of being able to invest for cash flow where I live so did not have to look somewhere else. Being able to invest where you live has its own benefits and potential extra income if you are managing your properties yourself.
Thanks for your encouragement and yes having the construction management experience definitely helps with feeling much more comfortable doing just a $20-$40K rehab where I do not live.
All the best with your future investments in OKC :)
Rental Property Investor · Los Angeles, CA · Member since 2019 · 13 posts · 3 votes
7y
@Carolyn Morales Thanks for your post yes I would definitely be interested in that. I was actually going to make a cash offer for an off market deal in 32216 area yesterday that had just got on the list for less than an hour and it was taken before I could even make my offer. Apparently a very hot market there right now. I could barely just check the comps. It is hard to lock in the good deals in good areas.