Buying 1st rental through a 3rd party BRRR Company

Buying & Selling Real Estate
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Buying 1st rental through a 3rd party BRRR Company

Kevin Broome
Kansas City, KS · Member since 2017 · 1 post · 0 votes

Hi BP Community!

Maybe there's another forum question dedicated to this, but I couldn't find it...  

I'm in my early 30s, new to real estate, and want to purchase my first rental property.  I have a very demanding job, BIG family and it's hard to imagine having the time to navigate the process start to finish.  I have lots of internet and BP podcast knowledge, but no real experience.  A friend of mine who I trust has acquired around 25 properties through a 3rd party company that finds foreclosed properties, bids, rehabs, rents and manages (on their clients behalf, the homes are purchased in your name).  My friend has positive cash flow on all properties and puts about 5-10 hours per month total into this and highly recommends the company.

I'm honestly not trying to skip out on the hard work and understand that I would be paying this company to help navigate the process on my behalf.   I know that some may see this as a slap in the face to the DIY real estate culture.  Ideally, I would like to learn and run the process all on my own, but with my busy schedule I thought this would be a good way to ease in and learn the ropes (with my first few properties).  The name of the company is SBD Housing out of Kansas City and I'm sure there are other companies like this as well.

Could I do all of this on my own? Yes.  But I also only have about 10% of the knowledge and time that I feel I would need to do this well.

Any experience with companies like this?  Good? Bad? 

I really appreciate any perspective and wisdom on this topic.

-KB

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Travis Dawson
Investor · Moscow, ID · Member since 2017 · 107 posts · 76 votes
9y

I haven't done this myself, but there are a lot of companies like this. Some good, some bad.

Key things to keep in mind: 

1. Your cash flow will be lower than if you did it yourself.

2. It will be hard to sell for a profit in the short term if you need to get out because you won't have much equity built in due to buying it for an inflated price.

3. They will put their profits above yours. Do your diligence. 

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  • Travis Dawson
    Investor · Moscow, ID · Member since 2017 · 107 posts · 76 votes
    9y

    I haven't done this myself, but there are a lot of companies like this. Some good, some bad.

    Key things to keep in mind: 

    1. Your cash flow will be lower than if you did it yourself.

    2. It will be hard to sell for a profit in the short term if you need to get out because you won't have much equity built in due to buying it for an inflated price.

    3. They will put their profits above yours. Do your diligence. 

    1Reply
  • Alex D.
    Rental Property Investor · Honolulu, HI · Member since 2015 · 143 posts · 61 votes
    9y

    I personally don't have any experience with this company although i've talked to a few in the area when I couldn't decide between going a turn key route or DIY. I don't think it's an issue as long as it aligns with your goals. It would be too costly to completely go this route especially juggling work and a family however I feel this could be a great first step into learning the ropes and getting your feet wet. Do things on your own time, do what your comfortable with and above all us, treat these companies as if they are lying about everything haha. If they say it's a good area, figure out why on your own. If they run the numbers for you, run them again but using realistic variables. Figure out all the things you need to do, to feel comfortable that enough due  diligence was done. I agree with travis on what he's said as well. Best of luck! You got this

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  • Jared K.
    Liberty, MO · Member since 2017 · 55 posts · 51 votes
    9y

    Meet and know the people. You need to get an idea of their model and their values. If you still like them after that, try with small amount or single purchase. Then be diligent and pay attention to every detail. Don't be a pest, but protect your investment. Spend some of the time you will save from doing it yourself to make sure they are the people you want. Once you know you have the real deal, in terms of the company, then you can really be passive. 

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