Adapting to The Current Market

Adapting to The Current Market

Investor · Bridgeville, PA · Member since 2017 · 27 posts · 16 votes

I have spent the last five years building a real estate portfolio with BRRRR being my primary method for growing. Prices have gone up. Interest rates are climbing again. Worst of all, inflation continues to burn hot. The property I am currently renovating has been a nightmare and set me back significantly in being able to do future deals, but not because it wasn't a great opportunity, but rather the cost and time commitment to renovate the property has changed substantially over the last 12-18 months.

The cost to have a contractors / professionals complete projects has skyrocketed in last year. This has led to quotes of $35k-$50k to rewire one half of a duplex (walls were already open, so no cutting or fishing wires needed). A $15K quote to replace a single duct run in a wall. Finally, my personal favorite, a $13K quote to replace 14 feet of sewage stack from the second floor to an elevated sewage stack in the basement (quote included only $350 in materials).

I ended up completing all of the above for ~$15K combined, but the point is, there are less skilled laborers to complete these tasks, resulting in ridiculous quotes to have work completed.

I don't have a crystal ball, but the market currently seems to be propped up by AI companies that have yet to operate in the black and consumers that are seemingly stretched further than they've been in nearly 20 years.

For those of you that were investing through the 07-08 downturn, how does the current market compare and how are you positioning yourselves for the next 12-24 months?

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  • Accountant · Netcong, NJ · Member since 2026 · 14 posts · 6 votes
    1w

    I had the same experience with quotes for my BRRRR! My favorite was $25k for cabinets for one unit of my duplex, ended up buying Ready-To-Assemble ones from Home Depot for $5k for both units! It's super frustrating not being able to just hire out to get things done without getting a million quotes but I guess we just have to adapt like that.

    I didn't experience investing through the 08 downturn (I was only 13 lol) but it seems like the people that got burned most were the ones chasing, so I plan on just settling in and seeing what happens. Being extra picky about deals and any that I do go in on, make sure that I have enough capital to handle any surprises. Obviously that means that I'll have less deals done, but right now I think it's best to stay risk averse and see where the dust settles with AI and the economy. Only once prices/cost have either dropped significantly, or been stable for a few years will I become much more "risk on".

  • Matthew MorrowBusiness Member
    Investor · PA - NY - NJ · Member since 2019 · 823 posts · 284 votes
    19h

    @David Graham sorry you're in the middle of a tough one. Most of what I own came through BRRRR too, and the rehab number is what's moved the most for us lately. What's helped a little: more than one bid on the big trades, trying new contractors on a small job before giving them anything big, and being a lot tighter on the purchase price since that's the one number we really control. I'd rather pass on more deals right now than buy one where the rehab eats the refi. Pawel's cabinet move is a good example of getting creative too. Hope this one turns the corner soon.

    CORE Team | Realty ONE Group Supreme548 Reviews
  • Nicholas L.Pro Member
    Flipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
    18h

    @David Graham

    agree, it's rough right now. i'm doing BRRRRs too. my solace is that I can force equity with the rehab. can't do that with stocks or gold or NFTs.

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