Investor · Hayden, ID · Member since 2020 · 29 posts · 36 votes
I have an $82k HELOC and wanting to start out of state BRRRR. What are some good markets for this? I was thinking Ohio, Texas, or Florida, but I've been warned that Florida might be too expensive right now. Thanks in advance!!!
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
6y
There are several markets in the midwest where you could do this. The bigger question is, where do you have the connections to complete and manage this of investment?
I just completed a BRRRR on Friday in Omaha where we bought a SFR for $68K, put $5K into it by adding a couple closets, painting and replacing a stove. It rented for $995, it appraised for $100K, and we did an 85% LTV cash out refi.
Rental Property Investor · Jacksonville FL · Member since 2019 · 20 posts · 12 votes
6y
I'm about to move to Jacksonville FL in a short bit and will be doing tons of marketing in that area. I'd love to JV with you in that area if you'd be interested? I'm providing the marketing and the property, but I would need a capital partner to provide for back payments, repairs, etc.
Investor · North Bay, Ontario · Member since 2015 · 709 posts · 262 votes
6y
I love Ohio we do a lot of work in the Dayton area and have successful Brrrr projects there We have wonderful teams on the ground More then willing to chat if you wish
Investor · Springfield, OH · Member since 2017 · 202 posts · 150 votes
6y
@Jordan Rhoads Ohio has some good opportunities for BRRRR deals for sure. I can't speak personally for cities in Ohio outside of Dayton and Springfield where we invest, but the other major markets are great (Cincy, Columbus, Cleveland etc), too.
Rental Property Investor · Reading, PA · Member since 2019 · 76 posts · 43 votes
6y
@Michael Craven I also like reading pa cost to entry is really low with positive job growth and a local university staking their Claim purchase a large part of real estate in the area
Rental Property Investor · Columbus, OH · Member since 2019 · 131 posts · 183 votes
6y
@Michael Craven I'd be curious to hear about your experiences doing deals in Springfield. My wife is from the area originally and it's a place we've considered branching out to at some point in the future due to her familiarity with the area (currently doing our first BRRRR in Columbus). Will reach out with PM.
Lender · Omaha, NE · Member since 2008 · 1k+ posts · 1k+ votes
6y
There are several markets in the midwest where you could do this. The bigger question is, where do you have the connections to complete and manage this of investment?
I just completed a BRRRR on Friday in Omaha where we bought a SFR for $68K, put $5K into it by adding a couple closets, painting and replacing a stove. It rented for $995, it appraised for $100K, and we did an 85% LTV cash out refi.
Investor · Hayden, ID · Member since 2020 · 29 posts · 36 votes
6y
Update: since this post I've gravitated toward Kansas City and have already made many connections through BP and have an idea of which zip codes I'd like to invest in. I'm learning more every day and getting a lot of opposition and support (which I value equally). Every day I feel a little more confident than the day before as I meet more people and learn more about the market. Considering partnering as well. I made an offer yesterday on a below market turnkey property which I think would be a good start. We'll see if I get it but I'm still looking to start my first BRRRR.
Wholesaler · Fayetteville, NC · Member since 2017 · 121 posts · 145 votes
6y
@Jordan Rhoads I'm an active duty Soldier in Fayetteville, NC and most of my deals come from direct to seller marketing. The perfect BRRRR deal found on the MLS is difficult but not impossible. If you're looking to do some long distance investing, Fayetteville is a great place to start because our market is stable and forgiving. Great place to learn. 
Bronx, NY · Member since 2020 · 94 posts · 27 votes
6y
@Robert Shortsleeves I was also considering Fayetteville for my first brrrr. My son is currently stationed there. We visited and drove some areas there. I also was considering Detroit and PA. Still undecided.
Wholesaler · Fayetteville, NC · Member since 2017 · 121 posts · 145 votes
6y
@Steven Jefferson I’d add that having a good team in your market is more important than the location itself. Fayetteville is full of great teams and within a few calls you can have your core-4 lined up and ready to go. Tell your son to reach out. :)
Rental Property Investor · Denver, CO · Member since 2016 · 1 post · 1 vote
6y
@Jordan Rhoads I'm also looking for my first out of state BRRRR deal. Kansas City is where I've also started making connections. I'll be sure to let you know if I find anybody that could help you out.
Rental Property Investor · Fishers, IN · Member since 2016 · 337 posts · 470 votes
6y
There are a lot of rust belt cities where you could have success. For larger metros, you'd be looking at C class properties, but could start to break into B class with $80K for purchase/rehab. The B class will be harder to find. Think Indianapolis, Cleveland, Detroit, etc.
Tertiary markets are another place to look in the same region with less competition and more B class properties, depending on what you're looking for. Think Toledo, Dayton, Evansville, Fort Wayne, etc.
Rental Property Investor · NY · Member since 2018 · 571 posts · 332 votes
6y
just a note, 82k heloc is great, but when you refi out and your HELOC is maxed out, expect your credit score to be much lower than your normal score and thus your rates are much higher so keep that in mind. I went from 800 credit score to under 740 by taking out about 90k out of 140k HELOC (also depends on how much other credit lines you have too, i think i'm around $250k including the HELOC).
Lender · Santa Rosa, CA · Member since 2017 · 283 posts · 255 votes
6y
@Michinori Kaneko great feedback on this. Although your credit is very high so it still shouldn't cause an issue - it is a worthwhile concern for people intending to BRRRR. @Jordan Rhoads I think your three priorities should be as follows.
1. Reserves (I call it the hidden R in the BRRRR method)- you need enough cash to pay at least 6mo of holding costs (interest, utilities, insurance, taxes, etc.) PLUS a 50% cushion on your renovation budget if you are inexperienced 2. Long term refinance (3rd R)- if you can take advantage of traditional mortgages, that will help. If you have to use non QM (investor loans) - that is a VERY challenging market with COVID uncertainty. Either way, talk with banker/mortgage broker NOW and understand your strength and position for a long term refinance and what you might do to improve your position 3. Renovation team (1st R) - this is critical and the most common stumbling block for financially strong investors. I put it 3rd because the other 2 can cause failure even with a good renovation team ...
Investor · Hayden, ID · Member since 2020 · 29 posts · 36 votes
6y
@Michinori Kaneko and @Dave DeMarinis. Thanks for the advice! I hadn't thought about the HELOC affecting my credit score. Starting out I feel I'd rather do very small deals if possible so I could have the reserves and I wouldn't have to max out my HELOC. But even then I'll definitely be more cautious and talk to lenders about my exit strategy before I leap into a deal. I'll still look into Kansas City but I'm also going to check out Cleveland and Dayton Ohio because of their lower prices.
Well, but here's the problem on the flip side. most banks/credit unions don't lend for properties worth less than $50k (or some banks loans under $50k) so you still need the property to appraise at least around $70k-$75k or so. Which means you need to find a property that you can buy and rehab for around $50k so you can pull out all the cash and do a successful BRRRR. But hey, what if you spent $60k and it only appraised for $70k? effectively, you've still purchased the property with 0 money down since you used heloc to fund the $60k. It may take you few months to pay off the heloc because your cashout out refi won't cover the entire heloc payment, but you can pay off the remaining over few months using the property's cashflow, and after the HELOC is completely paid off now you can truly cashflow after paying off your bills like mortgage/taxes/insurance, etc. It just delays your start date of cashflow, but you are still buying the property without using your own money. You are 100% financing the deal.
BRRRR is great when you have cash. If you have HELOC its better because you aren't using ANY of your cash to buy these cashflowing properties. You can always 1) cashout refi after rehab is done, 2) pay off HELOC as much as possible using the cash, 3) refi again after few months since now you have lower HELOC balance and thus you can get better rates. Yes it will cost you double closing costs, but you will get access to cash faster to look for next investment and hopefully you will get even more cashflow from that 2nd property to cover all your expenses/mortgages.
i will say it can also work against you though. things CAN go wrong and you CAN lose money. you want to make sure you have enough reserve if things do go wrong you won't be left with a worthless property and a lot of debt you can't pay off. Like @Dave DeMarinis said, having the reserve is essential, especially in the current environment with lots of uncertainty. As much as you hear all the success stories here on BP, i'm sure there are 20x more landlords who've failed and given up in the real world. invest smart, do a lot of due diligence, and when the numbers are right don't be afraid to jump into the deal.
Rental Property Investor · Canton, OH · Member since 2017 · 1k+ posts · 1k+ votes
6y
@Jordan Rhoads
There is so much risk in this business already, that I will never understand why people want to do their 1st BRRRR out of state! Heck, you say in your profile you have 4 kids and want 8? You must have a very understanding wife to take on this risk. I'm not trying to shy you away if that's what you need to do, but why not cut your teeth on at least 1 property in your area where you can visit it, and learn hands-on?
Prices are much higher in my area. I feel that spending 60k out of state is less risky than spending 150k in my area. Also, I don't have 150k.
There has been so much great advice and wisdom in this thread thank you for posting the question first and foremost Jordan. I want to echo one of the lesser recommendations about starting in your area. Not to shy you away from going outside of state but just to get you to say "How can I...?" Because right now it seems like you are saying no and that just puts a wall around so many possibilities. So if you're willing to do out of state that should mean a 5-hour radius shouldn't be an issue either for example. Or at least setup notifications for what you are specifically looking for and at least keep the door cracked. I'm just learn that on this journey our speech and mental have enormous affects on our outcomes and I just want you to do great 😊
I love Ohio we do a lot of work in the Dayton area and have successful Brrrr projects there We have wonderful teams on the ground More then willing to chat if you wish
Linda thank you so much for sharing. I'm starting out in the Dayton area and would love to learn more and connect with more people. I have my first property, a duplex, under contract scheduled to close in 2 weeks and trying to figure out plans for my next deal. Would you be open to chatting?
Rental Property Investor · Greenville, SC · Member since 2019 · 30 posts · 13 votes
6y
@Justin Tahilramani I’ve just started looking in Fayetteville. Lots of inexpensive properties there. Anything I should look out for? Good or bad? Thanks!
Investor · Hayden, ID · Member since 2020 · 29 posts · 36 votes
6y
@April Littleton thanks for the advice. I actually have a realtor in my area and I've had notifications for months in my area and even in Washington which is close to me. It's hard to get a property to cash flow positively in my area and nearly impossible to BRRRR. It would pain me to not be able to use the BRRRR strategy because I believe it's superior to most others.
Another reason I want to do out of state is that I don't want to have to physically leave my family to check on properties and rehabs. I want to be available to help my wife with the little ones at home. I'd rather spend twice as much time managing from my laptop than having to leave the house constantly leaving my wife alone with 4 screaming children. Lol. To each his own but I still think for us personally that out of state is a better option. Thank goodness there's an excellent book by David Greene which tells you exactly how to invest out of state or I'd never feel comfortable doing it.