Brrrr in mid-west

BRRRR - Buy, Rehab, Rent, Refinance, Repeat
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Brrrr in mid-west

Sushree Mohanty
Member since 2023 · 38 posts · 29 votes

Hi everyone - My husband and I are looking to invest in brrrr and scale REI over next few years. Doing some early research - any investors in recent years who can recommend areas in mid-west states for Brrrr? This will be an out of state investment so looking for advice.
We have many more questions but I am going to create separate threads/questions. 

9Reply
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Most Popular Reply

Drew SygitBusiness Member
Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
1y

@Sushree Mohanty

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

Why is Property Class so important for investors to understand and apply in their investing strategies?

Because the Property Class dictates the Class of the tenant pool that the property will attract.

The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.

If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?

Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.

We use the following to rank Property Classes, in order of importance:

  • Property Tenant Pool: closely linked to location, but not always.
  • Property Location: closely linked to tenant pool, but not always.
  • Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”

Key metrics for each Property Class:

Class A Properties:
Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
Tenant Default: 0-5% probability of eviction or early lease termination.
Section 8: Class A rents are too high and won’t be approved.
Vacancies: 5-10%, depending on market conditions.
Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

Class B Properties:
Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
Tenant Default: 5-10% probability of eviction or early lease termination.
Vacancies: 10-15%, depending on market conditions.
Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
Section 8: Class B rents are usually too high for the Section 8 program.

Class C Properties:
Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
Tenant Default: 10-20% probability of eviction or early lease termination.
Section 8: Class C rents usually meet program requirements, proper screening still recommended.
Vacancies: 10-20%, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.

Class D Properties:
Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
Tenant Default: 20-30% probability of eviction or early lease termination.

Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
Vacancies: 20%+, depending on market conditions and tenant screening.
Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

Where did we get our FICO credit score information from?

Check out this chart:

FICO Score

Pct of Population

Default Probability

800 or more

13.00%

1.00%

750-799

27.00%

1.00%

700-749

18.00%

4.40%

650-699

15.00%

8.90%

600-649

12.00%

15.80%

550-599

8.00%

22.50%

500-549

5.00%

28.40%

Less than 499

2.00%

41.00%

Source: Fair Isaac Company

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

Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.

We can also share numerous examples of properties & portfolios we’ve assisted investors with!

DM us if you’d like to discuss this logical approach in greater detail!

[email protected]248-209-6824
Logical Property Management4.9459 Reviews
WebsiteView Page
6Reply
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  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1y

    @Sushree Mohanty

    i know what you're going to say but i'll ask anyway.

    can you invest closer to where you live?

    OOS BRRRR is really, really tough unless you plan to spend time there in person building your team...

    1Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      @Nicholas L. Hi Nicholas - I live in silicon valley and so this doesn't work out here with the numbers. I understand its very tough but I do think it will be a learning experience. I will have to get a property management and once I do decide on a location, I can start asking for referrals for PMs, contractors, lenders etc. 

      0Reply
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    1y

    @Sushree Mohanty

    yes, I figured you'd say California.  =)  I'd still encourage you to stay within a couple hours if at all possible - CA, NV, AZ - rather than thousands of miles away in a random market in the midwest.  success is not guaranteed just because the prices look so much lower than they are in California.  

    the reason there is so much cheap-looking inventory for sale in PA and OH is because the housing stock is so old, and the rehabs are so gnarly.  in Pittsburgh for example you can buy a house for $25K, spend $100K on the rehab, and end up with a house worth: $100-125K.  that's a great favor to the neighborhood it's in, but also a terrible investment.

    i wish you good luck and hope that you find a great team.  OOS is much more difficult than advertised though.

    5Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      @Nicholas L. Thanks for the tips! Helpful !!

      0Reply
    • Jay HinrichsBusiness Member
      Real Estate Consultant · Summerlin, NV · Member since 2014 · 45k+ posts · 66k+ votes
      1y
      Quote from @Nicholas L.:

      @Sushree Mohanty

      yes, I figured you'd say California.  =)  I'd still encourage you to stay within a couple hours if at all possible - CA, NV, AZ - rather than thousands of miles away in a random market in the midwest.  success is not guaranteed just because the prices look so much lower than they are in California.  

      the reason there is so much cheap-looking inventory for sale in PA and OH is because the housing stock is so old, and the rehabs are so gnarly.  in Pittsburgh for example you can buy a house for $25K, spend $100K on the rehab, and end up with a house worth: $100-125K.  that's a great favor to the neighborhood it's in, but also a terrible investment.

      i wish you good luck and hope that you find a great team.  OOS is much more difficult than advertised though.

      I grew up in Silicon Valley ( Cupertino) and lived in Milpitas and Palo Alto when I could buy a house there ( milpitas I paid 80k for a new build Shapel home) and sold that and moved to Palo Alto and bought an older home for 185k  of course that was mid 80s LOL wish I still owned them.

      But that all said I dont understand why Bay Area folks need to think they have to go so far afield for BRRR.. you can buy homes for 100 to 200k in the counties just north of the BAy  Like Lake Co.. Colusa County and in the gold country  .. Redding area  as well. so 2 to 4 hour drive instead of taking 2 to 3 days to go visit and being totally at the mercy of locals.. 
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      1Reply
  • Kerlous TadresBusiness Member
    Realtor · Columbus, OH · Member since 2023 · 1k+ posts · 1k+ votes
    1y

    Absolutely! For BRRRR in the Midwest, look for markets with affordable entry prices, strong rental demand, and room for value-add improvements. Focus on neighborhoods with solid comps and a track record of stable or growing populations. Since you'll be investing out-of-state, having a reliable local team: agent, contractor, lender, and property manager, is essential. Make sure to run conservative numbers, especially on rehab budgets and refinance appraisals, to protect your upside and scale sustainably.

    [email protected]614-490-1163
    Kerlous Tadres | Reafco Real Estate540 Reviews
    WebsiteView Page
    0Reply
  • Scott AllenBusiness Member
    Real Estate Agent · Columbus, OH · Member since 2020 · 449 posts · 471 votes
    1y

    @Sushree Mohanty Columbus, OH is pretty popular because you can get the multi-family properties to cashflow when they're completed and they'll appreciate in value simultaneously. Other markets in Ohio will be better for cashflow properties 

    [email protected]614-698-1227
    Reafco - Columbus, OH
    WebsiteView Page
    1Reply
  • Drew SygitBusiness Member
    Property Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
    1y

    @Sushree Mohanty

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

    Why is Property Class so important for investors to understand and apply in their investing strategies?

    Because the Property Class dictates the Class of the tenant pool that the property will attract.

    The Tenant Class greatly impacts rental income stability and property maintenance/damage by tenants.

    Both Property Class and Tenant Class affect what type of contractors, handymen and property management companies will work on a property.

    If you buy & renovate a property in Class D area to Class A standards, what Tenant Class will rent it?

    Or, if you put several Class D tenants in a Class A four-plex, what do you think will happen to the property?

    So, if you fail to apply the correct assumptions to a property, your expectations won’t be met and it may even be a financial disaster.

    We use the following to rank Property Classes, in order of importance:

    • Property Tenant Pool: closely linked to location, but not always.
    • Property Location: closely linked to tenant pool, but not always.
    • Property Condition & Amenities: it’s important to, “Maintain to the Neighborhood.”

    Key metrics for each Property Class:

    Class A Properties:
    Tenant Pool: Majority of FICO scores 680+, no convictions/evictions in last 7 years.
    Tenant Default: 0-5% probability of eviction or early lease termination.
    Section 8: Class A rents are too high and won’t be approved.
    Vacancies: 5-10%, depending on market conditions.
    Cashflow vs Appreciation: Typically, 3-5 years for positive cashflow, but you get highest relative rent & value appreciation.

    Class B Properties:
    Tenant Pool: Majority of FICO scores 620-680, some blemishes, no convictions/evictions in last 5 years.
    Tenant Default    : 5-10% probability of eviction or early lease termination.
    Vacancies    : 10-15%, depending on market conditions.
    Cashflow vs Appreciation: Typically, 1-3 years for positive cashflow, balanced amounts of relative rent & value appreciation.
    Section 8: Class B rents are usually too high for the Section 8 program.

    Class C Properties:
    Tenant Pool: Majority of FICO scores 560-620, many blemishes, but should have no convictions/evictions in last 3 years. Verifying recent 2-years of rental history very important! Same for 2-years of job/income stability.
    Tenant Default: 10-20% probability of eviction or early lease termination.
    Section 8: Class C rents usually meet program requirements, proper screening still recommended.
    Vacancies: 10-20%, depending on market conditions and tenant screening.
    Cashflow vs Appreciation: Should cashflow immediately, at the lower end of relative rent & value appreciation.

    Class D Properties:
    Tenant Pool: Majority of FICO scores under 560, little to no good tradelines, lots of collections & chargeoffs, but should have no convictions/evictions in last 12 months. Verifying last 2-years of rental history and income/employment extremely important to find the “best of the worst”.
    Tenant Default: 20-30% probability of eviction or early lease termination.

    Section 8: Class D rents meet program requirements, often challenges to pass Section 8 inspection.
    Vacancies: 20%+, depending on market conditions and tenant screening.
    Cashflow vs Appreciation: Typically, all cashflow with little, maybe even negative, relative rent & value appreciation.

    Where did we get our FICO credit score information from?

    Check out this chart:

    FICO Score

    Pct of Population

    Default Probability

    800 or more

    13.00%

    1.00%

    750-799

    27.00%

    1.00%

    700-749

    18.00%

    4.40%

    650-699

    15.00%

    8.90%

    600-649

    12.00%

    15.80%

    550-599

    8.00%

    22.50%

    500-549

    5.00%

    28.40%

    Less than 499

    2.00%

    41.00%

    Source: Fair Isaac Company

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

    Metro Detroit has 132 cities, the City of Detroit 183 Neighborhoods, which we’re analyzing and classifying. Check out the map on our website where we’ve made this all easy to follow.

    We can also share numerous examples of properties & portfolios we’ve assisted investors with!

    DM us if you’d like to discuss this logical approach in greater detail!

    [email protected]248-209-6824
    Logical Property Management4.9459 Reviews
    WebsiteView Page
    6Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      I will PM for more information. This is helpful 

      0Reply
  • Alex BekezaBusiness Member
    Lender · Los Angeles, CA · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    @Sushree Mohanty I live in California too and I've personally been scaling a BRRRR portfolio in St. Louis Missouri where I still see a lot of opportunities. However, I originate DSCR loans (specifically short seasoning cash out refinances) all over the country in your typical popular midwest markets so feel free to reach out anytime. I may have some good contacts in whichever market you're honing in on.

    [email protected]818-606-8823
    Investor Property Loan5306 Reviews
    WebsiteView Page
    1Reply
  • Andrew SyriosPro Member
    Moderator
    Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes
    1y

    I would focus on relatively big cities with diversified economies. Although I would stay out of the crime-riddled areas in those places. It's important to be able to easily travel there and particularly small towns are risky as they often rely on one or two key employers and almost always on one or two key industries.

    Kansas City (where I am), Tulsa, Indianapolis, Des Moines and Nashville are all good markets I think. Oklahoma City, St. Louis and Memphis less so, but still OK if you invest in the right areas.

    Podcast Guest on Show #121
    5Reply
  • Marc RiceBusiness Member
    Real Estate Agent · Columbus Cleveland Dayton, OH · Member since 2018 · 2k+ posts · 1k+ votes
    1y

    Hi Sushree, I would strongly recommend Columbus as your target market. Steady appreciation of 3-5% yearly. I've lived in Columbus since 2015 and own 50+ units here. On my BP profile you can learn more about my experience in Ohio and resources I have in the local area. Please let me know if you have any questions about Columbus or if I can help with anything.

    [email protected]614-363-2787
    Marc Rice | Investor Friendly Agent at Reafco Tailwind Team574 Reviews
    WebsiteView Page
    1Reply
  • Jaycee GreenePro Member
    Real Estate Consultant · St. Louis MSA · Member since 2024 · 3k+ posts · 727 votes
    1y
    Quote from @Sushree Mohanty:

    Hi everyone - My husband and I are looking to invest in brrrr and scale REI over next few years. Doing some early research - any investors in recent years who can recommend areas in mid-west states for Brrrr? This will be an out of state investment so looking for advice.
    We have many more questions but I am going to create separate threads/questions. 

    Hi @Sushree Mohanty. 3 questions: What type of property are you most interested in, Single Family, 2-4 Multi-Family, or 5+ Commercial? What price point are you targeting? And do you have any friends or family that live in the Midwest?

    [email protected]
    1Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      @Jaycee Greene hi - We are looking to start with single family and slowly expand to multi family. Initial investments will be $100-$150k range 

      0Reply
  • Caleb Brown
    Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes
    1y

    Happy to connect on Kansas City. BRRRs are doable. Harder but can be found. 

    1Reply
  • Travis Biziorek
    Investor · Arroyo Grande, CA · Member since 2014 · 1k+ posts · 1k+ votes
    1y

    Hey Sushree,

    Detroit's a great market for BRRRR, especially with the right team on the ground. I started investing in Detroit while living there and built up a 12-door portfolio in just a couple of years. I now live in California, but I've been able to maintain and grow my portfolio remotely.

    There's a lot of potential in Detroit, especially when you're targeting the right areas. The market is still affordable, and properties can generate strong cash flow, especially for value-add BRRRR deals. While it comes with its challenges (e.g., high tenant turnover, occasional rehab headaches), I've seen great returns—both in cash flow and appreciation—by being strategic about property selection and staying on top of the rehab process.

    A lot of people will tell you that you can't be successful investing out of state. Most of these people either worked with the wrong people and/or simply gave up when it got tough. 

    Feel free to reach out if you want to dive deeper into Detroit or need advice about getting started in the market!

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

    Hi everyone - My husband and I are looking to invest in brrrr and scale REI over next few years. Doing some early research - any investors in recent years who can recommend areas in mid-west states for Brrrr? This will be an out of state investment so looking for advice.
    We have many more questions but I am going to create separate threads/questions. 

    Hi Sushree, I just recently helped a client wrap up a clean BRRRR here in Columbus Ohio! They purchased a 3/2 single family house for $185k, put $25k into renovations (i helped manage/consult the entire rehab process), and they were able to do refinance at an ARV of $264k (which means they did a clean BRRRR). Personally, I'd definitely recommend looking at Columbus Ohio! It's a super affordable real estate market where you can still find deals that hit the 1% rule anywhere from $120-180k purchase price. It's one of the hottest markets in the US right now with so much population growth, job growth, and companies moving/developing here (26B Intel headquarters being built here, 68K+ enrollment in Ohio State University, Amazon, FB, Google, Honda, Microsoft, LG, Nationwide, Anduril, etc.). You can still find positive cash flow (aka the 1% rule) and amazing appreciation potential. Happy to connect and answer any questions you have

    [email protected]614-300-7535
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    1Reply
  • Dan Waters
    Member since 2025 · 3 posts · 4 votes
    1y

    Cleveland- huge growing market, prices are rising 7-10% per year. But there are $25k renovators delights that are inhabitable and worth $45k ARV

    1Reply
  • Nick Perret Efferson
    Real Estate Agent · Greater Milwaukee Area · Member since 2025 · 54 posts · 27 votes
    1y

    Milwaukee has seen 11% YoY growth 2024-2025, with certain neighborhoods at 15%. Rents continue to rise. 

    How do you intend to acquire your properties?

    1Reply
  • Ethan HaiglerBusiness Member
    Real Estate Agent · Charlotte, NC · Member since 2019 · 111 posts · 58 votes
    1y

    Ohio cities (Columbus, Dayton, Cleveland) have been great for me on cash flow…I have several where purchase price + rehab cost is less than ARV … market rent can still go over 1% to purchase price. North Carolina properties are great on appreciation (I realize NC is outside of your focal areas, but I wanted to list a solid appreciation market)

    [email protected]704-607-2078
    3 Little Pigs Rental Management
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    Ethan Haigler Realty
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    1Reply
  • Bernice RetzloffPro Member
    Memphis, TN · Member since 2024 · 234 posts · 100 votes
    1y

    Hey @Sushree Mohanty!

    Love that you're starting with BRRRR and thinking long-term! It's a great way to scale. For Midwest out-of-state BRRRR investing, definitely check out Memphis. It's not only affordable (you can still find value-add properties in the $100K–$150K range), but the rental demand is strong thanks to big employers like FedEx and St. Jude. What makes it BRRRR-friendly is the ability to force equity through smart rehabs, rent to solid long-term tenants, and then refinance into a stable cash-flowing asset. Plus, with the right team on the ground (acquisition, rehab, and property management all under one roof), the process is much smoother, especially if you're investing remotely. Happy to share how investors are running the BRRRR playbook here if you want to dive deeper!

    901-664-1949
    1Reply
  • Rene HosmanPro Member
    Rental Property Investor · Denver, CO · Member since 2024 · 583 posts · 653 votes
    1y
    Quote from @Sushree Mohanty:

    Hi everyone - My husband and I are looking to invest in brrrr and scale REI over next few years. Doing some early research - any investors in recent years who can recommend areas in mid-west states for Brrrr? This will be an out of state investment so looking for advice.
    We have many more questions but I am going to create separate threads/questions. 


     Have you looked at the BiggerPockets Market Finder? BiggerPockets has a ton of great resources to help you find the best market to fit your goals. Here's a couple of these tools:

    BiggerPockets Market Finder     - shows you real estate investor related statistics about different markets so you can compare

    Pick your market Webinar by Dave Meyer - host of the BiggerPockets podcast Dave Meyer reviews how to analyze markets to find a location for your first or next deal.

    Picking a market worksheet - A free downloadable worksheet to help you choose a market

    BiggerPockets
    1Reply
  • Marcus Auerbach
    Investor · Milwaukee - Mequon, WI · Member since 2010 · 5k+ posts · 7k+ votes
    1y

    So I've been BRRRR-ing for almost 15 years in Milwaukee and while I think the concept is fantastic, it's a lot easier said and done. I have screwed up more than once, despite being local and having rehab experience.

    I have great respect for anyone who has successfully completed a rehab OOS, let alone multiple. If you can get your feet wet in your home market, learn it there, before you go OOS. And then narrow the OOS gap as much as you can, maybe even temporarily move there or work remote if you can. The biggest mistake IMO would be to start BRRRR in 3 different States. It's all about contractor connections, job management, local market knowledge.

    1Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      @Marcus Auerbach thanks, Marcus. I don't intend to do it all three states. I will do it one state, start slow, form a team and grow. Understand the need for forming a strong team in this case. Thank you for your insights. 

      0Reply
  • Corby GoadeBusiness Member
    Investor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
    1y

    BRRRRS will work anywhere- least the first few "r's."

    The first part of a BRRRR is all about building equity through value add. You can do that in any market at any time on many differet types of properties.

    The challenge right now is the refi piece- with investment loans in the mid 7's, making a property cash flow positive after refinance can be a challenge, but you'll have that exact same challenge in every town. 

    I'd BRRRR in your own market, where you live. You can mitigate risks substantially that way. If you can't refi to make the numbers work, you simply have a profitable flip and you can roll the profits in to your next deal.

    Best of luck!

    1Reply
    • Sushree Mohanty
      OP
      Member since 2023 · 38 posts · 29 votes
      1y

      @Corby Goade thanks, Corby. I have almost the same thought process i.e build equity initially/slowly as it ll be harder to get cashow initially. 

      0Reply
  • Ko KashiwagiPro Member
    Lender · Los Angeles, CA · Member since 2022 · 967 posts · 445 votes
    1y

    Hi Sushree,

    What is your budget for purchase price? I would recommend landlord friendly states as a start for out of state investors. I personally like Tuscaloosa & Huntsville but I know a lot of investors doing OH (Columbus, Cleveland), AL (Birmingham, Montgomery), WI (Milwaukee) and LA (Lafayette, St. Louis).

    310-848-9776
    2Reply
  • Henry ClarkPro Member
    Developer · Member since 2020 · 4k+ posts · 4k+ votes
    1y

    OP.   What is your family and lifestyle?  You will be far far ahead doing House Hacks where you live than doing BRRRRs several states away.  From a risk, return and taxes.  Especially being in Cal with a high cost environment.  You would need to do say 30 BRRRRs in Ohio to have the same after tax impact as a Househack in Cal from a monthly cash flow and appreciation.  With way less risk.  

    3Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    @Sushree Mohanty I see investor fall for this trap all of the time....Desire to grow a portfolio and look to the BRRRR method as the solution. They then conclude their markets or even markets in close proximity aren't viable markets to pursue this strategy and then turn to more distant lower cost markets where there's an abundance of distressed inventory and a lack of stabilized sales/home ownership which lead to favorable "as complete" appraisals and paper equity that's rarely realized but may lead to better BRRRR outcomes. There's a lot more to real estate investing than simply achiving a favorable return of capital through a refinanc but that seems to be where most attention is given.

    Then there's the management aspect to grapple with. How are you going to manage the low value properties in a distant market? These properties are already disproportionately impacted by operating expenses and cap ex, then layer on the need for every aspect of the property to be handled by a 3rd party. I can assure you the cash flow will not be as your spreadsheet suggests. Perhaps not in year 1 but cap ex and operating expenses will inevitably catch up to you. If you believe you will avoid this because your property is renovated to "turn key" condition, think again. It's nearly impossible to complete a proper renovation withiout using short cuts in the price point proprties many are suggesting.

    I am all for buying real estate that is purchased at a deep discount and where a value add strategy can yield a favorable refinance, but focus on the fundamentlas of the real estate first and foremost, and not whether the market is good for BRRRR'S. I am now making some assumptions but given where you live in the SilIcon Valley you likely have the opportunity to buy less real estate, devote less of your time to real estate and economically achieve better results, even if it means leaving some capital in your deals. Your objective should be to generate realized gains, not merely acquire houses.

    [email protected]
    0Reply
  • Stuart UdisPro Member
    Attorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
    1y

    @Sushree Mohanty I see investor fall for this trap all of the time....Desire to grow a portfolio and look to the BRRRR method as the solution. They then conclude their markets or even markets in close proximity aren't viable markets to pursue this strategy and then turn to more distant lower cost markets where there's an abundance of distressed inventory and a lack of stabilized sales/home ownership which lead to favorable "as complete" appraisals and paper equity that's rarely realized but may lead to better BRRRR outcomes. There's a lot more to real estate investing than simply achiving a favorable return of capital through a refinanc but that seems to be where most attention is given.

    Then there's the management aspect to grapple with. How are you going to manage the low value properties in a distant market? These properties are already disproportionately impacted by operating expenses and cap ex, then layer on the need for every aspect of the property to be handled by a 3rd party. I can assure you the cash flow will not be as your spreadsheet suggests. Perhaps not in year 1 but cap ex and operating expenses will inevitably catch up to you. If you believe you will avoid this because your property is renovated to "turn key" condition, think again. It's nearly impossible to complete a proper renovation withiout using short cuts in the price point proprties many are suggesting.

    I am all for buying real estate that is purchased at a deep discount and where a value add strategy can yield a favorable refinance, but focus on the fundamentlas of the real estate first and foremost, and not whether the market is good for BRRRR'S. I am now making some assumptions but given where you live in the SilIcon Valley you likely have the opportunity to buy less real estate, devote less of your time to real estate and economically achieve better results, even if it means leaving some capital in your deals. Your objective should be to generate realized gains, not merely acquire houses. I am concerned you're too focused on the wrong things.

    [email protected]
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  • Charles ClarkBusiness Member
    Real Estate Broker · Milwaukee, WI · Member since 2020 · 306 posts · 209 votes
    1y

    Hey @Sushree Mohanty


    Welcome to the community! The Midwest is full of solid BRRRR markets—places like Indianapolis, Cleveland, and Kansas City are worth a look. Happy to share insights from my own journey—excited to see your REI plans take off!

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  • Taz Zettergren
    Real Estate Agent · Memphis, TN · Member since 2019 · 365 posts · 264 votes
    1y

    @Sushree Mohanty

    Great to hear you and your husband are looking to scale with the BRRRR strategy. When it comes to Midwest markets, I'd recommend looking into areas like Memphis, TN and Little Rock, AR. Both offer favorable entry prices, solid rental demand, and are known for being landlord friendly states.

    That said, the market is only part of the equation your success is really going to depend on who you partner with. Whether it’s your agent, property manager, or general contractor, having a reliable, experienced team on the ground is critical, especially for out of state investing. A good team not only helps mitigate risk but also keeps your project on timeline and budget.

    If you ever want to chat more about investing in these areas or how to evaluate potential partners, feel free to reach out. Happy to help however I can!

    Best of luck as you begin your journey!

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