The Top BRRRR Markets in the US
Rental Property Investor · Fort Worth, TX · Member since 2019 · 34 posts · 13 votes
The Top BRRRR Markets in the US
Most Popular Reply
Robert ShortsleevesPro Member
Wholesaler · Fayetteville, NC · Member since 2017 · 121 posts · 145 votesHey @Cody Brookes! Have you considered Fayetteville, NC? Fortune Magazine wrote an article in July of 2020 titled "The best and wort places in the US to invest in real estate during the pandemic" and Fayetteville is considered 2nd best.
25 Replies
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Markets in the Midwest (Oklahoma City, Kansas City, Tulsa, Omaha, etc.) and the Southeast (Raleigh, Charleston, Orlando, Nashville, etc.) are probably the best. Relatively low priced so the cash flow is good and many (not all) are pretty stable. Certainly stronger than the Rust Belt and not as expensive or up and down as the coasts. That being said, 1) You need to be careful not to buy in bad areas as many of these cities have them and they can cost you a lot if you don't know what you're doing and 2) now is probably a time to be cautious with BRRRR as the whole Covid-19 lockdown makes things very dicey. That doesn't mean not to buy, but you should be more cautious and look for a bigger discount.
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
- 6yWhitney HuttenPro MemberInvestor · Boulder, CO · Member since 2016 · 1k+ posts · 1k+ votes
@Cody Brookes You can technically BRRRR anywhere. Like Andrew said, the type of property you want is one where you can get it for a low price, force the equity, and rent it fairly well (1% rent to value tends to be a good rule of thumb for cashflow). For the market, you want to look at markets where the population is growing, jobs are growing (and diversified), industries are diversified, incomes are growing, values are growing, crime and vacancy are coming down, and laws are landlord-friendly. Essentially stack the investing cards in your favor. Here are a few other ideas on how to pick markets.
- Realtor · Nashville, TN · Member since 2020 · 9 posts · 3 votes6y
I agree with @Andrew Syrios - I'm in the Nashville market and even with the COVID it's still a pretty stable market. Wherever you go, make sure to find a good real estate agent who will give you informative comps and not just hand selected comps to make you want to buy.
- Rental Property Investor · Ridley Park, PA · Member since 2014 · 24 posts · 8 votes6y
@Cody Brookes I have done 5 of these in the last 18 months. The biggest problem now is the refinance part as lenders have not been willing to refinance and those that are lowered the amount they are giving out on the ltv. Some big lenders have put these long term rentals on hold. If anyone knows some that are still lending like normal let me know!
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Originally posted by @Caroline Keenan:
I agree with @Andrew Syrios - I'm in the Nashville market and even with the COVID it's still a pretty stable market. Wherever you go, make sure to find a good real estate agent who will give you informative comps and not just hand selected comps to make you want to buy.
Absolutely. It's probably worth talking to more than one real estate agent as well.
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
- Investor · Palo Alto, CA · Member since 2020 · 14 posts · 11 votes6y
In addition to the equity you should be adding to your property with BRRR, when considering which markets to invest in, you should also do some due diligence on the appreciation or growth potential there. Neal Bawa has some good information on what indicators and data points you should be looking for in a market to determine whether you think it will be a high-growth market or low-growth market. Long-term, your appreciation potential is a significant factor in your total investment returns! Track metrics like population growth, income growth, job growth, and median rent growth. You can use demographic & economic data from reicitydata.com, US Census, or other data sources on the internet to help you make those decisions. :) Good luck!
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
I agree with you to a point. My primary goal is for the BRRRR deal to be refinanced out and get me all the money I invested back so I have a "property for free" so to speak. But I think BRRRR deals also need to (or at least should almost always) cash flow after that, even if only a little. Otherwise you're dipping into your cash reserves each month to cover the cost of the property and while it will appreciate and the loan will pay down, that equity isn't really realizable. Given you put money into it each month, are you really getting all the money investing back?
There are instances when I would do this (it's a bad market to sell, huge potential for appreciation, etc.), but not usually. Our criteria is that other than in exceptional circumstances, we "BRRRR out" (or get close) and the property cash flows with the long term financing on it.
- 6yTroy GandeeBusiness MemberReal Estate Broker · Charleston, SC · Member since 2013 · 795 posts · 454 votes
@Cody Brookes I'm in the Charleston market. This is a good market to BRRR in, but I think it's overrated for BRRRs. Our market is hyper competitive, even during COVID, so getting a deep enough discount is hard. I BRRR, many of my clients BRRR and some of my agents BRRR. It's rare to get out of a deal with $0 or money back on a property here. You'll usually have to bring some money to the table (or rather, not get some back), but it's usually WAYYY less than flat out buying a turn key property. I just finished one and I'm about halfway through another right now. They're renting incredibly quickly and for a nice amount, but lenders are hard to find right now for the refi. I'm going to have to go conventional and can't refi till 6 months after initial purchase.
- 6yCameron TopePro MemberProperty Manager · Katy, TX · Member since 2015 · 1k+ posts · 1k+ votes
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
I agree with you to a point. My primary goal is for the BRRRR deal to be refinanced out and get me all the money I invested back so I have a "property for free" so to speak. But I think BRRRR deals also need to (or at least should almost always) cash flow after that, even if only a little. Otherwise you're dipping into your cash reserves each month to cover the cost of the property and while it will appreciate and the loan will pay down, that equity isn't really realizable. Given you put money into it each month, are you really getting all the money investing back?
There are instances when I would do this (it's a bad market to sell, huge potential for appreciation, etc.), but not usually. Our criteria is that other than in exceptional circumstances, we "BRRRR out" (or get close) and the property cash flows with the long term financing on it.
We have very similar criteria - the property has to cash flow, which isn't hard in Ohio and Houston. But investor in California, New York or Miami may have a successful BRRRR without cash flowing. You know?
I appreciate the great conversation Andrew!
- Real Estate Agent · Kansas City · Member since 2018 · 4k+ posts · 3k+ votes6y
Kansas City ;)
- Real Estate Agent · Columbus, OH · Member since 2018 · 1k+ posts · 1k+ votes6y
Hi @Cody Brookes, Columbus, OH is a great market for the BRRR strategy.
- 6yRemington LymanBusiness MemberReal Estate Agent · Columbus, OH · Member since 2017 · 6k+ posts · 7k+ votes
Originally posted by @Cody Brookes:
Hello BP,
Im looking for a market to do a bit of research on, to try and start doing the brrrr method. Anyone have any suggestions? Also what brrrr markets do you think have been the least effected by covid?
Thanks
Columbus, Ohio
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
I agree with you to a point. My primary goal is for the BRRRR deal to be refinanced out and get me all the money I invested back so I have a "property for free" so to speak. But I think BRRRR deals also need to (or at least should almost always) cash flow after that, even if only a little. Otherwise you're dipping into your cash reserves each month to cover the cost of the property and while it will appreciate and the loan will pay down, that equity isn't really realizable. Given you put money into it each month, are you really getting all the money investing back?
There are instances when I would do this (it's a bad market to sell, huge potential for appreciation, etc.), but not usually. Our criteria is that other than in exceptional circumstances, we "BRRRR out" (or get close) and the property cash flows with the long term financing on it.
We have very similar criteria - the property has to cash flow, which isn't hard in Ohio and Houston. But investor in California, New York or Miami may have a successful BRRRR without cash flowing. You know?
I appreciate the great conversation Andrew!
I definitely understand how hard it is to get something to cash flow in California or New York. In many ways, that's one reason I don't think those are particularly good markets for buy and hold investors, at least buy and hold investors who want to use debt. Probably better for big institutions and the like. That being said, if we are in the middle of a big correction, those markets tend to fall further and rise faster. It may be worth buying some there at the trough. But I would never have more than a small percent of my portfolio in non-cash flowing properties.
- Member since 2019 · 24 posts · 6 votes6y
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
I agree with you to a point. My primary goal is for the BRRRR deal to be refinanced out and get me all the money I invested back so I have a "property for free" so to speak. But I think BRRRR deals also need to (or at least should almost always) cash flow after that, even if only a little. Otherwise you're dipping into your cash reserves each month to cover the cost of the property and while it will appreciate and the loan will pay down, that equity isn't really realizable. Given you put money into it each month, are you really getting all the money investing back?
There are instances when I would do this (it's a bad market to sell, huge potential for appreciation, etc.), but not usually. Our criteria is that other than in exceptional circumstances, we "BRRRR out" (or get close) and the property cash flows with the long term financing on it.
We have very similar criteria - the property has to cash flow, which isn't hard in Ohio and Houston. But investor in California, New York or Miami may have a successful BRRRR without cash flowing. You know?
I appreciate the great conversation Andrew!
I definitely understand how hard it is to get something to cash flow in California or New York. In many ways, that's one reason I don't think those are particularly good markets for buy and hold investors, at least buy and hold investors who want to use debt. Probably better for big institutions and the like. That being said, if we are in the middle of a big correction, those markets tend to fall further and rise faster. It may be worth buying some there at the trough. But I would never have more than a small percent of my portfolio in non-cash flowing properties.
I was able to rent a house for 4500 in the Oakland hills 40m from SF and get it up to 12k/m average in Airbnb revenue, which was roughly 5k/m net, but it took pouring my heart into it and it was def the labor intensive path. After covid hit I reset the house to 'by the room' and it was able to generate about 2k above costs, which aint bad for less than 1h/week of attention required. Alas, landlord decided to sell so Im back to the drawing board.
- Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes6y
Originally posted by @Jonathan H.:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Originally posted by @Andrew Syrios:
Originally posted by @Cameron Tope:
Cody,
While I agree with the cautions @Andrew Syrios expressed above, I don't think there is a "better/best market for BRRRR". The main factor that allows BRRRR to be executed successfully is buying the property at a discount. Where can you buy properties at a discount? Anywhere.
Have you thought about starting in your backyard?
There are many places on the coasts, particularly the likes of San Francisco and New York, where's basically no way to cash flow with a loan because the properties are so expensive. Cash flow is key for the BRRRR method so higher cash flow markets tend to BRRRR in.
I agree you'll almost never cash flow on the coasts but I would disagree that cash flow is key for BRRRR. My main reason for using BRRRR isn't how much I'm going to cash flow afterwards (obviously I would like to have a lot of cash flow) but getting my money invested on the original purchase back out of the property.
Do you use BRRRR for a different purpose?
I agree with you to a point. My primary goal is for the BRRRR deal to be refinanced out and get me all the money I invested back so I have a "property for free" so to speak. But I think BRRRR deals also need to (or at least should almost always) cash flow after that, even if only a little. Otherwise you're dipping into your cash reserves each month to cover the cost of the property and while it will appreciate and the loan will pay down, that equity isn't really realizable. Given you put money into it each month, are you really getting all the money investing back?
There are instances when I would do this (it's a bad market to sell, huge potential for appreciation, etc.), but not usually. Our criteria is that other than in exceptional circumstances, we "BRRRR out" (or get close) and the property cash flows with the long term financing on it.
We have very similar criteria - the property has to cash flow, which isn't hard in Ohio and Houston. But investor in California, New York or Miami may have a successful BRRRR without cash flowing. You know?
I appreciate the great conversation Andrew!
I definitely understand how hard it is to get something to cash flow in California or New York. In many ways, that's one reason I don't think those are particularly good markets for buy and hold investors, at least buy and hold investors who want to use debt. Probably better for big institutions and the like. That being said, if we are in the middle of a big correction, those markets tend to fall further and rise faster. It may be worth buying some there at the trough. But I would never have more than a small percent of my portfolio in non-cash flowing properties.
I was able to rent a house for 4500 in the Oakland hills 40m from SF and get it up to 12k/m average in Airbnb revenue, which was roughly 5k/m net, but it took pouring my heart into it and it was def the labor intensive path. After covid hit I reset the house to 'by the room' and it was able to generate about 2k above costs, which aint bad for less than 1h/week of attention required. Alas, landlord decided to sell so Im back to the drawing board.
Airbnb is a definite exception to the "coastal cities don't cash flow" concept. But of course, as you said, it's fragile and should be done cautiously as many Airbnb investors are finding out with this whole Coronavirus thing.
- Member since 2016 · 9 posts · 0 votes6y
What exactly do you all mean when you say they need to "cash flow". Is this after PITI is paid, or after all expenses are paid. Are you actually referring to net cash flow, which is obviously very different.
- Lender · Asheville NC · Member since 2016 · 470 posts · 317 votes6y
@Brandon Ross, Cashflow is after all expenses. After PITI, Maintenance, Capex, Vacancy.
- 6yCorby GoadeBusiness MemberInvestor · Boise, ID · Member since 2014 · 3k+ posts · 3k+ votes
Boise, Idaho, highest appreciating metropolitan market for the last few years. Just the appreciation during rehab can match the forced equity. I've been doing lots of deals that ended up with $0 left in the deal after cash out.
- Real Estate Broker · Cleveland Dayton Cincinnati Toledo Columbus & Akron, OH · Member since 2013 · 31k+ posts · 20k+ votes6y
Originally posted by @Cody Brookes:
Hello BP,
Im looking for a market to do a bit of research on, to try and start doing the brrrr method. Anyone have any suggestions? Also what brrrr markets do you think have been the least effected by covid?
Thanks
BRRRR isn't about the market. BRRRR is about you and your ability to do the following.
- Raise / acquire funds
- Market to distressed sellers
- Estimate rehab costs
- Estimate the ARV of properties in your target market
- Manage contractors
- Hit timelines & manage large projects / employees
If you can master all of the above the market is going to be irrelevant. Note that I would assume your best shot at mastering all of the above is going to be in the market you live in.
- Rental Property Investor · New York City · Member since 2019 · 90 posts · 122 votes6y
I don't believe the market is as important as the discount you get on the property, as we all know the profit is in the purchase. Obviously you want to cashflow, regular analyzing should make sense and give you that. Being close to the market is important due to contractor management, but I do believe it can be done virtually anywhere.
- 5yRobert ShortsleevesPro MemberWholesaler · Fayetteville, NC · Member since 2017 · 121 posts · 145 votes
Hey @Cody Brookes! Have you considered Fayetteville, NC? Fortune Magazine wrote an article in July of 2020 titled "The best and wort places in the US to invest in real estate during the pandemic" and Fayetteville is considered 2nd best.
- Rental Property Investor · San Francisco, CA · Member since 2018 · 24 posts · 11 votes4y
@Cody Brookes I’ve been BRRRRing in Indianapolis for 2+ years now, happy to help if you have any questions.
I’ve also started documenting some of my thoughts here if it’s helpful to get you started.
https://docs.google.com/document/d/1S0MV9p4KUv7Dz7xUC6jpAbjvVhpVEMlqKOfJf_mol6o/edit
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