Choosing the right market to start

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Choosing the right market to start

Account Closed
Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes

Hello,

I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

Thank you


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Marc RiceBusiness Member
Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
2y
Quote from @Account Closed:

Hello,

I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

Thank you



 If you're more than 2hrs away it essentially is the same thing. It can be better to force yourself to not visit the properties so you can create your systems accordingly. 

Ohio has great markets of Columbus, Dayton, Cleveland, Cincinnati where you can find cash flow and appreciation. Columbus OH fits your requests of 200-300k pp.

[email protected]614-363-2787
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  • Glen Wiley
    Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes
    2y

    I would rethink how you are setting up your "buy box". Set up purchase criteria that will define success for you, an arbitrary minimum purchase price is not a great criteria, instead I would use something like proximity to good schools, neighborhood improvement trends, etc.

    Finding good deals is really tough right now so it is important to have criteria that are solidly grounded and based on reasons that will steer you toward profits.

    1Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y
    Quote from @Glen Wiley:

    I would rethink how you are setting up your "buy box". Set up purchase criteria that will define success for you, an arbitrary minimum purchase price is not a great criteria, instead I would use something like proximity to good schools, neighborhood improvement trends, etc.

    Finding good deals is really tough right now so it is important to have criteria that are solidly grounded and based on reasons that will steer you toward profits.


     Obviously I wouldn't get anything that isn't near good schools, a good neighborhood, etc.

    But I am setting the minimum because I'm not interested in areas that homes sell for $200K

    0Reply
  • Glen Wiley
    Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes
    2y
    Quote from @Account Closed:

    But I am setting the minimum because I'm not interested in areas that homes sell for $200K


     In the interest of helping you think through this...why? It sounds like you may have a reason for citing that number, I'd recommend that you work on articulating what the real underlying reason is.

    I have found that entry level housing, the type that attracts families that are moving up from apartments, leads to great long term tenants. In some areas that might be in that range.

    0Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y
    Quote from @Glen Wiley:
    Quote from @Account Closed:

    But I am setting the minimum because I'm not interested in areas that homes sell for $200K


     In the interest of helping you think through this...why? It sounds like you may have a reason for citing that number, I'd recommend that you work on articulating what the real underlying reason is.

    I have found that entry level housing, the type that attracts families that are moving up from apartments, leads to great long term tenants. In some areas that might be in that range.


    Sure so the first reason is a simple math answer. If I am spending my time to learn and build a team in a new market, spending time to rehab on average of let's say 3-6 months, I would want to upside of the renovation to be 50-100K or else it wouldn't be worth my time. 

    0Reply
  • Glen Wiley
    Investor · Richmond, VA · Member since 2023 · 459 posts · 474 votes
    2y

    Is there a reason that sub-200k can't meet that criteria?

    Sounds like the real criteria is "must provide an after-rehab equity of at least $50k".

    1Reply
  • Jimmy LieuBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2019 · 3k+ posts · 2k+ votes
    2y
    Quote from @Account Closed:

    Hello,

    I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

    I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

    I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

    Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

    Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

    So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

    Thank you


    Hey Daniel, totally can relate with you being from an expensive real estate market - I moved to Columbus a few years ago (from Portland, Oregon which was super expensive) to become a full time real estate investor, and ever since, I've completed quite a lot of BRRRRs, flips, and own a successful rental portfolio here in Columbus Ohio. There's so many catalysts for population and job growth (Intel, Honda, Amazon, Nationwide Hospital, etc). I can definitely tell you there's still a lot of positive cash flowing and 1% rule deals and you get amazing appreciation. As an investor and agent here in Columbus Ohio, if you have any questions or want to connect, definitely reach out!

    [email protected]614-300-7535
    Jimmy Lieu, Red 1 Realty4.9120 Reviews
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  • Remington LymanBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
    2y
    Quote from @Account Closed:

    Hello,

    I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

    I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

    I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

    Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

    Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

    So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

    Thank you



     It does not matter where you start as long as you develop your Core 4. The core 4 is David Greene’s long-distance investing strategy and consists of a realtor, contractor, property manager, and lender. Once you have this team in place, you should be able to invest in any market confidently.

    As for picking a specific market - I would go after one with an increasing job and population growth. I invest and work in Columbus, Ohio. I am also looking to invest in Cincinnati and Cleveland.

    [email protected]614-541-8475Podcast Guest on Show My Job Laid Me Off, So I Replaced My Salary with Rentals
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Account Closed

    wherever you can personally supervise everything.

    so if you'll be in California... then California.  or Nevada or Arizona, maybe, if that allows your to go to your projects in person.

    there's no such position as "BRRRR COO" that works for you - that's you until you get a team or business set up.

    1Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    https://www.biggerpockets.com/forums/853/topics/1170783-10-u...

    "I actually moved to Dayton from SoCal to monitor the renovation. Now that the property is refinanced and stable, I'll be heading back home."

    0Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y
    Quote from @Nicholas L.:

    @Account Closed

    wherever you can personally supervise everything.

    so if you'll be in California... then California.  or Nevada or Arizona, maybe, if that allows your to go to your projects in person.

    there's no such position as "BRRRR COO" that works for you - that's you until you get a team or business set up.


    Where in California/Nevada/Arizona can I do BRRRR?

    0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Account Closed

    Where in California will you be?  As close to there as you can while staying in your price point.

    0Reply
  • Bruce Lynn
    Real Estate Broker · Coppell, TX · Member since 2011 · 5k+ posts · 4k+ votes
    2y

    I think in DFW area in today's market BRRR is pretty tough. Maybe not impossible, but not easy.

    #1 Not super easy to find the discounted properties.  When you do and do the rehab it doesn't really add value.  Do the $50K-75K on a $250,000 house, you just end up with a nicer home at $300K-$325,000 if you know what I mean.  It doesn't make the house worth $350K-$400K.   Maybe 5-10 years ago you could do it, but don't see as much spread to make that happen any more.

    #2 Too many weekend warriors can do it cheaper than you can do it long distance.  Long distance you will probably want to use a GC that will add 20% to your rehab budget.   Lots of rehabbers here work day job and go do their work nights and weekends when city inspectors are sleeping.

    #3 I'm guessing if your friend did it, it was when prices were going up faster.  At one point we were seeing 10-15% jumps per year, that has slowed for now.  My prediction was flat for the year, but I think we may see 3-5%.  Dynamics are good, but you may not be able to be in and out in 6months for your second project.  Might take 3-4 years.

    Take the long term. While some people got lucky for a few years with the AirBnB runup and BRRR, real estate for the most part is a get wealthy slowly game, not get rich quick.

    Dallas is as good as any place in the country I expect.  One difference vs Ohio is that you'll get a newer nicer product with likely a more professional workforce renter, vs Ohio.  In DFW area I would expect the homes that work best are probably 15-20 years old, vs Ohio I'm guessing most investors are buying 100 year old houses.  Depending on where you buy, you might even get new homes with no value add, that you can buy and hold.  If you are long term investor with 20-30 year hold, do you want 100 year old homes or newer homes?

    Stay out of investing in CA...just way too many deterrents.  Not landlord friendly with either rent control or talks of rent control.  Also seems like they like to stick on wealth taxes for rich greedy landlords and investors.

    4Reply
  • Michael SmytheBusiness Member
    Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes
    2y

    @Account Closed

    Recommend you first figure out the property Class you want to invest in, THEN figure out the corresponding location to invest in.

    When investing in areas they don’t really know, investors should research the different property Class submarkets. If you apply Class A assumptions to a Class B or C purchase, your expectations won’t be met and it may be a financial disaster.

    Here’s our OPINION for the Metro Detroit market (always verify each area for yourself!) that we’ve learned in our 24 years, managing almost 700 doors across the Metro Detroit area, including almost 100 S8 leases.:

    Class A Properties:
    Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% the more recent norm.
    Tenant Pool: Majority will have FICO scores of 680+, zero evictions in last 7 years.

    Class B Properties:
    Cashflow vs Appreciation: Typically, decent amount of relative rent & value appreciation.
    Vacancy Est: Historically 10%, 5% should be applied only if proper research done to support.
    Tenant Pool: Majority will have FICO scores of 620-680, some blemishes, but should have no evictions in last 5 years

    Class C Properties:
    Cashflow vs Appreciation: Typically, high cashflow and at the lower end of relative rent & value appreciation. Can try to reposition to Class B, but neighborhood may impede these efforts.
    Vacancy Est: Historically 10%, but 15-20% should be used to also cover tenant nonpayment, eviction costs & damages.
    Tenant Pool: majority will have FICO scores of 560-620, many blemishes, but should have no evictions in last 2 years. Verifying last 2 years of rental history very important! Also, focus on 2 years of job/income stability.

    Class D Properties:
    Cashflow vs Appreciation: Typically, all cashflow with zero or negative relative rent & value appreciation
    Vacancy Est: 20%+ should be used to cover nonpayment, evictions & damages.
    Tenant Pool: majority will have FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, recent evictions. Verifying last 2 years of rental history and income extremely important to find the “best of the worst”.

    Make sure you understand the Class of properties you are looking at and the corresponding results to expect.

    What else can we assist you with?

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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    2y

    @Bruce Lynn

    good post and great perspective. i think people underestimate the level of distress they need to engage with to truly BRRRR.

    to your point - if you can a 250K house, put 50K in, and end up with a 350K house - that's GREAT.  it's something to be proud of and it's great for the neighborhood!  It's just not a BRRRR.

    2Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    2y
    Quote from @Account Closed:

    Hello,

    I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

    I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

    I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

    Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

    Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

    So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

    Thank you



     If you're more than 2hrs away it essentially is the same thing. It can be better to force yourself to not visit the properties so you can create your systems accordingly. 

    Ohio has great markets of Columbus, Dayton, Cleveland, Cincinnati where you can find cash flow and appreciation. Columbus OH fits your requests of 200-300k pp.

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
    WebsiteView Page
    4Reply
  • Dave KushPro Member
    Frankfort, IL · Member since 2022 · 204 posts · 132 votes
    2y

    Just saying, David Meyer has a webinar on choosing the right market.

    I'm already investing, but going to check it out. Here's the link.

    https://biggerpockets.zoom.us/webinar/register/7717078553365/WN_YF22_Lu5SGScrKzwY20DlQ#/registration

    0Reply
  • Blake Choisnet
    Investor · Tyler, TX · Member since 2021 · 33 posts · 31 votes
    2y

    Top markets I'm seeing for remote BRRRR right now are:
    - Dayton OH
    - Birmingham AL
    - Macon GA

    All have a market rent-to-price ratio well above 1.0% which will give you a better shot at cashflow. 
    Price of entry is much more friendly as well. 
    Landlord friendly state? Check. 

    Hope this helps. 

    3Reply
  • Carlos Valencia
    Lender · 92703 · Member since 2022 · 326 posts · 538 votes
    2y

    Hi Daniel, 

    If your budget is around 250-300k definitely stay away from California. Unless your looking to live in the outskirts of all the California major cities then yes you can most definitely find properties in that range but not many people will want to live out in those outskirts. Its really hard to do BRRR in this market in California. I would go more for Midwest areas or Dallas which is not that close to California but it depends what your definition of close is to you. Are you looking to use cash to buy your future properties or using borrowed money like mortgages?

    @Albert Bui @Matthew Kwan

    2Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y
    Quote from @Carlos Valencia:

    Hi Daniel, 

    If your budget is around 250-300k definitely stay away from California. Unless your looking to live in the outskirts of all the California major cities then yes you can most definitely find properties in that range but not many people will want to live out in those outskirts. Its really hard to do BRRR in this market in California. I would go more for Midwest areas or Dallas which is not that close to California but it depends what your definition of close is to you. Are you looking to use cash to buy your future properties or using borrowed money like mortgages?

    @Albert Bui @Matthew Kwan


     Cash

    0Reply
  • Taz Zettergren
    Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes
    2y

    @Account Closed at those price points Dallas would be a great market for you. It is a little more challenging to break even on a BRRR in TX because of the property taxes and insurance so you might not be able to pull all your money out of the deal but I wouldn't let that turn you away. TX is one of the fast growing markets in the US so if you have to leave more money in to break even so be it, your generational wealth is growing at a quicker pace.

    If you are ever interested in units that provide more cash flow, Memphis would be a great place to look. Best of luck on the search! Let us know how the journey goes 

    0Reply
  • Patrick DruryBusiness Member
    Real Estate Agent · Columbus, OH & Cleveland OH · Member since 2021 · 1k+ posts · 2k+ votes
    2y

    @Account Closed
    Ohio can be a great state to check out. I would recommend looking into the Columbus market. A new study released by the Bank of America Institute states Columbus is the fastest-growing city in the US - https://www.nbc4i.com/news/local-news/columbus/study-names-c...

    [email protected]614-412-4565
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  • Zeke Liston
    Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes
    2y
    Quote from @Account Closed:

    Hello,

    I am looking to choose a market to start diving into. As I know it takes quite a lot of work to set up a BRRRR operation I would like to start by picking one market to work on.

    I will be working out of California so it would be ideal if it was closer to California so I can easily go out to the area as much as possible.

    I have been reading a lot of people talking about Ohio, but I also know someone who has found a lot of success in the outskirts of Dallas (which is a bit closer to California). The person working out of Dallas has been able to actually do full BRRR with a full cash out refinance on his deals.

    Would like to get honest opinions on where I should get myself looking- as specific as possible as far as towns. 

    Important: I am looking to get into houses in the budget of at least 200-300K. I wouldn't want to get involved in anything cheaper. 

    So an ideal would be to get something for $250-300K put 50-75K in rehab and get a house thats 350-500K.

    Thank you


    That's great Daniel. If you can invest locally and be happy with the return, I would go with that option. If you need to go out of state to get a better return, I would suggest Columbus, OH. It's a very approachable market and very landlord friendly. Best of luck! 
    1Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y

    While I appreciate all the brokers pushing their market here, it would be nice to get some investor opinion on the matter as well.

    A lot of people are saying the Columbus and Ohio are over saturated and over harvested already and it's nearly impossible to find good deals. 

    Open to hear investor insight, thanks!

    1Reply
  • Account Closed
    OP
    Investor · Miami, FL · Member since 2023 · 120 posts · 46 votes
    2y
    Quote from @Dave Kush:

    Just saying, David Meyer has a webinar on choosing the right market.

    I'm already investing, but going to check it out. Here's the link.

    https://biggerpockets.zoom.us/webinar/register/7717078553365/WN_YF22_Lu5SGScrKzwY20DlQ#/registration


     Awesome, will check it out!

    0Reply
  • Dean HarrisBusiness Member
    Real Estate Agent · Memphis, TN · Member since 2015 · 1k+ posts · 1k+ votes
    2y

    I'm finding cash flow and appreciation in Memphis, TN! I typically work the BRRRR strategy myself

    Good Luck!

    CrestCore Realty4.713 Reviews
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