Why has David Greene moved on from BRRRRing?

22 Replies

I've been investing for 8+ years now. Just read David Greene's BRRRR book. It really has me sold on a shift in mindset (to date I have been saving up, putting down 25% to buy properties at retail. It's been a slow process, and the book really opened my eyes to how I can speed things up).

In fact, the book has me sold SO much on the process, that I'm curious why David's not doing it anymore. Maybe I'm missing something, but listening to most of the recent podcast episodes and looking at his profile, it seems his focus has really shifted to being an agent + his mortgage company + Bigger Pockets.

Not trying to troll here, but I guess you could say I've drank the koolaid and am true believer in how wonderful BRRRRing could be, and I wonder why the guy who literally wrote the book on it is focussing in other areas. Or maybe he has it so systematized that it's running for him in the background and there's not much for him to think about/mention on his profile and the podcast?

I can't seem to tag @davidgreen, but I'm sure he'd have some great thoughts on this. And of course, also curious what others think as well!

@Jacob Pritchard

Don't know David Greene and his book... but just guessing he is tired of it or would like a different income stream. From what you described, it sounds like he has what I am going to call "little to no maintenance" income. Being a landlord might be passive income, but there is still work and headaches.

You say he is doing real estate agent and loans? I know lots of agents who don't do investing but service many investors clients. At first I didn't get it, but then realized that they can make their commissions without all the headache of doing the "investment."

Let’s face it. For many people, goals and priorities in life change over time. I know it has for me

Thanks for your thoughts, definitely some good points, @David M.

To put it bluntly: A big part of my interest is the cash flow/net worth thing.

He never gets too much into specifics of his own portfolio, but if he was doing the kind of deals and at the kind of volume that the book suggests, I'd expect his cash flow and net worth to be quite substantial....

The implied question for me is: If I can master this and do the kind of deals and volume that David Greene is in the book, will I be in a place of financial independence in a decade? Or will I still be working a "day job"? 

@Jacob Pritchard

I anticipate that what happened is that at some point, he didn't want to go through the effort of BRRRRing his 268th house and decided to move to a new challenge and let his portfolio generate income and equity.

@Jacob Pritchard 3 comments: 

1. How do you know he's moved on from BRRRRing? He's the co-host of the podcast, so if BRRRing isn't relevant to the conversation then you may not hear about it. I don't know if this is true, but my guess is his BRRRs look a little different than they were originally. Originally, he may have purchased a $75K property, adding $25K in repairs that ARVs for $150K, allowing him to pull out $112K. Now maybe he's moved on to a $5M property ($1.25M down, $3.75M loan) with $1M in value add renovations that appraises for $8M and allows him and team to refinance with a $6M ($2M remaining in equity) loan and after paying down his original loan of $3.75M he gets all of his cash back + $2M in equity!

2. BRRRing is a very good method, but it's especially effective for those starting out or those without access to a lot of funds. You only need enough funds to start your first BRRRR. If you do if effectively, you use the same funds in BRRRR #1 for BRRRR #2.

3. Seems like you're sold on the idea and see the potential value. Don't try to find ways NOT to do it. 

of course no first hand knowledge.

but I think i recall some of the props his team worked on or the realtor team he suggested was in Jacksonville FLA and they were working low end rentals. 

So he might have just like many before him realize low end rentals are a lot of work ?? maybe thats the case and like other said moved up in asset class. 

But do keep in mind even a very well run BRRR is going to usually take at least 6 months to go full circle so if your have capital to do just one.. your going scale at 1 to maybe 2 units per year.. and choosing the asset class is critical.. Even if you have no cash into these things that means your pretty much fully leveraged and maybe making 200 a month cash flow .. so any way you slice it rental game is a long long game unless you can start out in MF and roll up like what was suggested above.

My guess is simple math. He is making more money for less effort or less risk being a realtor and lender. California real estate is high dollar. He is able to add some agents underneath to scale and use BP fame to attract clients. Compare that to long distance investing in low cost midwest markets. That would be time consuming, risky and there is limited upside.

Most investors start one place and end up someplace else. Evolving your strategy to leverage the best use of your time for the most gain is just logical.

Whether he is or isn't still doing BRRRR deals doesn't mean the strategy isn't right for other people.

The question one has to consider about BRRRR.. is why a tenant would be happy paying rent on a property they could just purchase for a very low price.. which are the properties that cash flow.

The properties that do not cash flow are usually in areas where there is strong appreciation, and actually it could make sense renting in those areas instead of purchasing. Markets work in cycles and the real estate market is no exception. At some point prices drop and properties lose value.

@Juan Pardo

I ask the same question here, why would any one lease a car and give GM or Ford hundreds of dollars a month, when I can just make my own car........that's right! I can't make my own car and my tenants paying me rent with cashflow can't make or buy their own home either, also if you ask them they will tell you that they would never buy a home, they like to be free!!! Move around from city to city or state to state what ever that means. And the best part they are my longest term tenants looks like their adventure of being free is a dream or blowing smoke.

You have to think business I offer a product which in this case a place to live and a person to pay the rent.

GM and Ford offer cars and you or me pay a monthly fee weather it’s a purchase or lease, you would be surprised on how much it costs GM to build a brand new Tahoe 3-4 times less then what you or me are paying. 


Originally posted by @Arsen Atanasovski :

@Juan Pardo

I ask the same question here, why would any one lease a car and give GM or Ford hundreds of dollars a month, when I can just make my own car........that’s right! I can’t make my own car and my tenants paying me rent with cashflow can’t make or buy their own home either, also if you ask them they will tell you that they would never buy a home, they like to be free!!! Move around from city to city or state to state what ever that means. And the best part they are my longest term tenants looks like their adventure of being free is a dream or blowing smoke. 

You have to think business I offer a product which in this case a place to live and a person to pay the rent. 

GM and Ford offer cars and you or me pay a monthly fee weather it’s a purchase or lease, you would be surprised on how much it costs GM to build a brand new Tahoe 3-4 times less then what you or me are paying. 

Renting a cash flowing property (as a tenant) would be more similar to renting a car indefinitely and in the end, in 10 years, that person who rents has paid 3 cars already. Most people dont do that.

 

@Jacob Pritchard I think he's still doing those deals. But he is also selling dozens of million dollar houses in the Bay Area, as an agent.

So each one of those deals is a $20-30,000 realtor commission check (assuming he only gets 1 side).

With that much money coming from 0 risk deals, and so many other investors trying to BRRRR cheap rentals, its smart to focus on optimising that realtor side of his business.

Check out my article about the Cons of BRRR.

https://www.biggerpockets.com/...

Note this is coming from an Accredited investors POV who used to do turnkey rentals.

I personally would not do Remote BRRR as there is just a lot of risk with 1) risk of embezzlement with contractors 2) change orders and 3) bank doing bait and switch doing a lower appraisal and/or LTV on the refinance.

This is especially true for high paid professional or those with a net worth of over $300,000.


BRRRR is great for when you're starting out and don't have much money. With someone like David's net worth and income, I would assume that doing smaller houses just isn't worth the time/effort anymore. Basically, if you make a million a year in income, what good does an additional $250 a month do? He'd have to go after much larger scale things to make it worth his while. Law of larger numbers. His time would be much better spent making even more being a realtor.

Maybe if we get enough posts we can get David to answer for us :)

I can say that I was doing the BRRRR method for 3 years while working a corporate job and looking for a transition plan. I decided also to become an agent. Now I'm working 70hr/wk trying to grow my business. The strategy got me enough of a financial foundation where I could transition to something I enjoyed more. I still plan on BRRRRing more, but at the moment, my focus has shifted.

There are different ways to build wealth, of which being an entrepreneur and buying real estate are the two greatest in my opinion.  While I love investing, the challenge of growing a business gives me something new and challenging to push myself to grow, develop leadership skills, different system, etc.  There is a lot of personal satisfaction that comes from that.  I can't speak for David, but perhaps its similar.

I came here via David's post. I think what he's also trying to say (but in polite words) is that once you have a large enough net worth, investing your time into BRRR is less appealing. I own a number of regular residential properties but for many of the same reasons listed by David, I've moved onto apartment syndications as an accredited investor.

Let's say you BRRR fifty houses right before a pandemic and five are in process. By the time the pandemic hits, your financing alternatives are gone. Let's say that town is Orlando or another tourist-dependent city where 10% of your tenants stop paying rent. Every renter not paying rent eats up the cash flow of five houses ($1000/mo = 5 houses x $200). That's 20 houses of stop cash flowing.

I love the strategy, but when financing slows down it's difficult. BRRR should be like 'dollar cost averaging' -- a slow, steady pace over years will lead to fantastic results. Go too fast and you increase your risks.

Alternatively, David has built a reputation and can leverage his brand to buy multi-family/commercial deals with other people's money -- a great complement to his existing portfolio.