BRRRR Vs Turnkey with a Full Time job

16 Replies

Good morning,

I have been planning and preparing to build real estate income and am very close to begining.  As I have been pulling together capital to get started, I have also been researching markets, podcast listening and reading every book I can get my hands on to get a foundational education.

In my mind, with my capital limitations to get started I love the BRRRR strategy, I think I can make it through the Buy, Rehab, Rent, once before chasing loans if I stay in certain markets. One of my main concerns is that I have a full time job which takes up all my available time and brain most days.

So then the other options seems to be Turnkey but my big concern with this plan is that I will deploy all my capital and then need to slowly build up again using the cashflow before I will be able and ready to reinvest...

As I am writing this out it sounds very impatient but I am eager to break from the coporate world in a reasonable 5  to 7 years and I'd like to bridge into real estate to do so.

I am looking for feed back to know what other people have done considering Tunrkey Vs BRRRR?

-and what they would do differetly if they could?

@Roland Brown Unless you have an immense amount of capital living solely off of your rental income in 5-7 years is not a likely scenario. The amount of property one would need to own to replace all of their income & live a comfortable lifestyle is immense. I own hundreds of properties & still do not derive the majority of my income from them. Rental properties are a great way to quadruple your net worth using OPM over the course of ones career.

My suggestion would be to keep funding as many 25% down loans as possible with your W2 income & aim towards a great retirement. If the thought of that is unbearable & a career in Real Estate is your dream you will need to look into more active aspects of the business such as becoming an agent or doing flips. If doing flips understand it's an incredibly competitive business. If you are to compete against others what are your competitive advantages to allow you to flourish in the space? 

Originally posted by @Roland Brown :

Good morning,

I have been planning and preparing to build real estate income and am very close to begining.  As I have been pulling together capital to get started, I have also been researching markets, podcast listening and reading every book I can get my hands on to get a foundational education.

In my mind, with my capital limitations to get started I love the BRRRR strategy, I think I can make it through the Buy, Rehab, Rent, once before chasing loans if I stay in certain markets. One of my main concerns is that I have a full time job which takes up all my available time and brain most days.

So then the other options seems to be Turnkey but my big concern with this plan is that I will deploy all my capital and then need to slowly build up again using the cashflow before I will be able and ready to reinvest...

As I am writing this out it sounds very impatient but I am eager to break from the coporate world in a reasonable 5  to 7 years and I'd like to bridge into real estate to do so.

I am looking for feed back to know what other people have done considering Tunrkey Vs BRRRR?

-and what they would do differetly if they could?

That is a very common concern. Turnkey investing is almost 100% passive and is normally easiest for investors who work a 9-5. BRRRR can keep you very busy and may take longer. It really just depends on what you can handle. I meet investors who started with TK just to get into the game and then did BRRRR when they had a nest egg of a portfolio.

Good luck!

Howdy @Roland Brown

Wow. Two different perspectives. Here's a third. Someone in your similar situation. I have a W2 job that I average 60 - 70 hours a week at. I did not have lots of money to invest. However, I too want out of the grind. I have been pursuing the BRRRR strategy almost two years now. I have 4 properties using this method. I have been fortunate so far. All were distressed needing a lot of work. I knew I would not have the time to do it myself. Therefore, I put together a good team to make it work. I use Contractors to do the work. They consistently send me updates so I know whats going on. My wife or I will stop by as often as possible to make sure things are going right. I use a Property Manager to run things after the properties are rent ready. It takes effort to maintain control of the whole process. But I think it will be beneficial in the end. For me I want to retire from my W2 job within 5 years. My current goal is 50 units with an average of $200 Cash Flow per unit. So far I'm averaging over $250 per month on 11 units. I will need to upgrade to small apartments eventually to really meet my goals.

Do give up on your dream.

Updated 11 months ago

Sorry Roland ... Big typo. Should read "Don't give up on your dream".

I wrote an article that compares both options-

https://www.biggerpockets.com/renewsblog/buy-rehab...

Hope that helps. It sounds like you are thinking of buying in non-local markets to where you live? Just asking because a lot of Texas people keep with buying local. So if you're talking BRRRR vs turnkeys locally, I'll throw some extra thoughts in there. But if you're thinking of outside your market, then the article applies.

@Roland Brown there are many strategies to making money in REI, but "sweat equity" has high rewards in an good market. McKinney is in the path of growth along the 75. I have a small factory that has moved from Richardson, to Plano and now in Allen over the past 10 years. Even though I don't invest in Texas, I like the market growth. If you are looking to go "turnkey" out of State, that is one way of doing things. But if you go "turnkey" in your own backyard, you are seriously making a mistake. That is just my opinion, and you know what they say about opinions... But my opinion is based upon my own experience.

In my mid forties, I decided to get into REI and I followed the DIY path. Youtube was my best friend. I taught myself everything from running copper pipes to cutting granite onsite. My cost of renovation was literally 20% of what was quoted by contractors.

Many people will say that you should get others to do the work.  However, I was "cash poor" and I was not about to get hard money or partners to complete the work.  I don't know what you do as a full time job, but saying it takes up all of your available time sounds like a excuse.  I don't mean to be rude, but that is the same excuse people use to get out of exercising...  At the time of my renovations, I was running 3 factories; in California, Texas and the Philippines.  I had two kids in elementary school, with several after school and weekend sports activities.  

Every minute that was not spent for work or family was spent on the rehabs.  That meant buying materials needed for that night during my lunch hour, and eating dinner in the car on the way to the rental.  It also meant changing out of my W2 clothes, into construction clothes at the job site and working for at least a few hours every night.  After working on the units, I would head home to do homework with the kids.  It meant no TV or going out with friends and no vacations for nearly 18 months (I rehabbed 7 units).  

But it also meant saving about $280k in renovation costs (based on contractor quotes).  It also meant I got a good feel for what a renovation should really take and how the work should be done.  Since completing the work, the rents have gone up 2.5x and the property value, based on recent appraisal, has gone up at total of $2M.

Everybody has time, it is just a matter of how you prioritize it...  Evaluate how much time you burn a day because you "deserve" to relax?  My opinion is that everybody has a few hours a day that is just wasted on TV, the internet, social media or pretending to be busy...  but again that is just an opinion ;-)

Good luck to you and let us know what you end up doing.

@Roland Brown , I'm sure we've all heard it, but... I think firstly is to think about building a team: so, network and find people that you trust their integrity and competency and you'd enjoy working with. Then you can contribute things like W-2 income and the other person maybe more on the time or other skills. Perhaps you're better at analysis, for example. Real Estate is a team business any way you cut it, so think about how you can develop relationships with brokers, lawyers, etc. The less time you have, the more relationships and partnerships will be vital to you. 

I am currently entertaining both ideas as I am in a similar (albeit different) situation.

Thanks Roland for staring the thread. I will stay tuned.

 @Whit Ewen :

@Roland Brown, I'm sure we've all heard it, but... 

 Thanks for your comment, building a team is exactly what I am working on now.  The team is extremely important as you pointed out. I took a few days off work so I spent the day meeting people and  a few phone calls to out of state folks.  I've got the same lined up tomorrow and next week.

I am really wanting to make a purchase in the next 3 months and plan on doing my best to network and develop local relationships, and at the same time interviewing as many out of state turnkey providers as possible.  My preference is as I said before to start my rehabbing and build up equity as the funds rotate, but the fall back is to slow my plans and take the hands off route. If I go turnkey I would likely postpone buying and rehabbing for a years or more to get more funds together.  This is ultimately why I asked the question.

Originally posted by @Arlen Chou :

@Roland Brown there are many strategies to making money in REI, but "sweat equity" has high rewards in an good market. McKinney is in the path of growth along the 75. I have a small factory that has moved from Richardson, to Plano and now in Allen over the past 10 years. Even though I don't invest in Texas, I like the market growth. If you are looking to go "turnkey" out of State, that is one way of doing things. But if you go "turnkey" in your own backyard, you are seriously making a mistake.

Thanks for your comments, I wouldn't dream of turnkey in my backyard, working locally its hard to find good deals that have Cash Flow.  Buying for long term equity I think there is a lot of value here but not Cash Flow. I do like some of the outlying area that are not inside of the DFW  metroplex.  I have even seen some multifamily in Fort Worth that are good potential for Cash Flow.

I know I can find good deals but they are around an hour to 2 hours drive both ways, but I don't feel like that drive to work a few hours is my best use of time.  I have started interviewing contractors and real estate agents to get a  feel for people and how we could work together.  This is the point of asking the question about what other people have done in the same situation.  I applaud your story and honestly appreciate anyone who has worked as hard as you have  to develop business.

I just did a BRRRR completely remotely across the country. 90% through text alone.

Learn to build relationships and systems and you can have the passive benefits and still keep the bulk of the money.

Originally posted by @Ali Boone :

I wrote an article that compares both options-

https://www.biggerpockets.com/renewsblog/buy-rehab...

Hope that helps. It sounds like you are thinking of buying in non-local markets to where you live? Just asking because a lot of Texas people keep with buying local. So if you're talking BRRRR vs turnkeys locally, I'll throw some extra thoughts in there. But if you're thinking of outside your market, then the article applies.

Thanks for your article.  I would like to get the forced equity as you pointed out, but I would also like to develop a long term cash flow that grows over time.

My personal decision is to answer is should I first focus on cash flow through turnkey, then build a team to rehab and get that mighty 'Forced Equity' (trumpets sounding off in the background). Or first grow the funds through flipping and BRRRR.

I like the idea of stable cash flow and building up the business entity on its own.  But the plan seems very slow, hence my question post.

I would not dream of Turnkey locally however I think there are some markets within 2 hours that are not over saturated with inventors that are worth a shot for a newb.

I bought a Turnkey property earlier this year and think there’s some benefit to that model. That being said it would be a slow process to replace all your income. You’d probably need to get to 10 loans as fast as possible and then eventually move to buying all cash, for you to replace your Income.

Well, and there are BRRRR+turnkey options out there too that mix the benefits of both. I'm working with a turnkey provider right now that offers that structure (there are quite a few who offer it but it's riskier so I'm careful who to trust) and it's working out well...the investor stays hands-off [other than due diligence] while someone else does all the work, but then they see immediate forced appreciation as well that they can take advantage of.

So, there are definitely options! At the end of the day, I say go with what makes the most sense and you can always go a different route down the road if you want!

Reach out anytime if I can be of any help.

Roland, I have used the BRRR method to cover our living expenses with a total of about $100,000 invested and then reinvested in the DFW and Houston markets over the course of 4 years, it requires very little time. Let me know if you have any questions.

@Roland Brown As someone who has done both turnkey and BRRRR at a distance, I can tell you that the latter is much more capital intensive, riskier, and stressful. So it really comes down to what you want to do. I will also point out that these are not the only two options toward passive REI, and I have written a BP article Three Key Routes for Passive Real Estate Investing that you might find interesting.

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