What are your tips for starting out BRRRRing remotely?
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Taylor DaschBusiness Member
Real Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votesIn my opinion, it would be finding a market that you like / have visited - even if you visit for the sole reason of scoping out the market in person. And then find a realtor who is very familiar with the market. They should be able to connect you with contractors, wholesalers, etc.
Then I would become familiar with the market myself, analyzing at least one deal per day. Set High but realistic goals, form a criteria that will align with my goals, and let that real estate agent know. So long as I trust them, every deal that they bring me should be a pretty good deal.
Be sure to know the area that you dont like as well. I know in my market, I dont really like East Temple. A lot of "good deals" come up over there, so if I had a realtor send me something that met my criteria but I wasnt a fan of the location, they may think that I am not serious since I havent jumped on any of these.
A good Realtor can walk you through just about every step of the BRRRR so that you can be(almost) completely hands off. - Realized I totally skipped your starred questions lol!
*I would research crime rates, drive through when I visit, and ask the local investors.
* I wouldnt invest in an area that I dont feel safe at walking around after 8 PM.
* A rockstar agent will probably have investment propertys of their own. Fast communication, can give you a breakdown of the market as well as specific locations that could be good for buy and holds, flips, etc.
*If they have the trust of my realtor, that would be a good start. Then I would also call and interview at least 5. Also some PMs in my market will not manage older homes, so I ask: Do yall have an age limit, what do you charge, how do you advertise, do you have a team of contractors, and do they charge for using their conractors.
* I dont get screwed by making sure that I know the market that I am investing in.
* Red flags to me would be - high vacancy rates, low income, little job / population growth, no other investors are investing in the area.
Taylor Dasch | EG Realty560 Reviews
8 Replies
- 3yTaylor DaschBusiness MemberReal Estate Agent · Temple, TX · Member since 2022 · 1k+ posts · 700 votes
In my opinion, it would be finding a market that you like / have visited - even if you visit for the sole reason of scoping out the market in person. And then find a realtor who is very familiar with the market. They should be able to connect you with contractors, wholesalers, etc.
Then I would become familiar with the market myself, analyzing at least one deal per day. Set High but realistic goals, form a criteria that will align with my goals, and let that real estate agent know. So long as I trust them, every deal that they bring me should be a pretty good deal.
Be sure to know the area that you dont like as well. I know in my market, I dont really like East Temple. A lot of "good deals" come up over there, so if I had a realtor send me something that met my criteria but I wasnt a fan of the location, they may think that I am not serious since I havent jumped on any of these.
A good Realtor can walk you through just about every step of the BRRRR so that you can be(almost) completely hands off. - Realized I totally skipped your starred questions lol!
*I would research crime rates, drive through when I visit, and ask the local investors.
* I wouldnt invest in an area that I dont feel safe at walking around after 8 PM.
* A rockstar agent will probably have investment propertys of their own. Fast communication, can give you a breakdown of the market as well as specific locations that could be good for buy and holds, flips, etc.
*If they have the trust of my realtor, that would be a good start. Then I would also call and interview at least 5. Also some PMs in my market will not manage older homes, so I ask: Do yall have an age limit, what do you charge, how do you advertise, do you have a team of contractors, and do they charge for using their conractors.
* I dont get screwed by making sure that I know the market that I am investing in.
* Red flags to me would be - high vacancy rates, low income, little job / population growth, no other investors are investing in the area.
Taylor Dasch | EG Realty560 Reviews - Real Estate Broker · Cody, WY · Member since 2010 · 28k+ posts · 41k+ votes3y
Start with the State. You wanting something that has stable population/job growth, fair Landlord-Tenant laws, good government leadership, lower-than-average crime. Narrow it down to the city/cities with opportunity, good property management, economy, strong school systems, low crime, etc. Then narrow it down to specific neighborhoods, again looking at strong schools, low crime, strong median income, etc. I think B+ to C is the best investment, particularly in an economy where people are tightening their belt. Stay away from areas with high crime, low-scoring schools, homeless shelters, strip clubs, bars, pawn shops, etc. I definitely recommend "walking" the neighborhood with street view.
You need to research your team members. Look at reviews on Google, Zillow, facebook, etc. See how many transactions they've completed in the last year, how long they've been working, and maybe even chat with them on the phone to see if your personality meshes. If able, attend some local meetups, get to know local investors, and seek their recommendations.
How to vet a PM: Remember: cheaper doesn't mean you'll make more money.
Start by going to www.narpm.org to search their directory of managers. These are professionals with additional training and a stricter code of ethics. It's no guarantee but it's a good place to start. You can also search Google and read reviews. Regardless of how you find them, try to interview at least three managers.
1. Ask how many units they manage and how much experience they have. If it's a larger organization, feel free to inquire about their staff qualifications.
2. Review their management agreement. Make sure it explicitly explains the process for termination if you are unhappy with their services, but especially if they violate the terms of your agreement.
3. Understand the fees involved and calculate the total cost for an entire year of management so you can compare the different managers. It may sound nice to pay a 6% management fee but the extra fees can add up to be more than the other company that charges 10% with no additional fees. Fees should be clearly stated in writing, easy to understand, and justifiable. Common fees will include a set-up fee, leasing fee for each turnover or a lease renewal fee, marking up maintenance, retaining late fees, and more. If you ask the manager to justify a fee and he starts hemming and hawing, move on or require them to remove the fee. Don't be afraid to negotiate, particularly if you have a lot of rentals.
4. Review their lease agreement and addenda. Think of all the things that could go wrong and see if the lease addresses them: unauthorized pets or tenants, early termination, security deposit, lease violations, late rent, eviction, lawn maintenance, parking, etc.
5. Don't just read the lease! Ask the manager to explain their process for dealing with maintenance, late rent, evictions, turnover, etc. If they are professional, they can explain this quickly and easily. If they are VERY professional, they will have their processes in writing as verification that policies are enforced equally and fairly by their entire staff.
6. Ask to speak with some of their current owners and current/former tenants. You can also check their reviews online at Google, Facebook, or Yelp. Just remember: most negative reviews are written by problematic tenants. The fact that a tenant is complaining online might be an indication the property manager dealt with them properly so be sure to ask the manager for their side of the story.
7. Look at their marketing strategy. Are they doing everything they can to expose properties to the widest possible market? Are their listings detailed with good quality photos? Can they prove how long it takes to rent a vacant property?
This isn't inclusive but should give you a good start. If you have specific questions about property management, I'll be happy to help!
The DIY Landlord Book4.7248 Reviews - Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes3y
@Jeff G.
I would not do it unless you hire a qualified general contractor who is licensed insured and bonded. They will cost 2-3x the cost of mom and pops but will most likely save you $ in the end because of the issues you will be dealing with and not being onsite to manage people
Best way I look at it is try leaving your kids home alone and checking in on them via video call a few times a week and expect them to be doing their homework, chores and keeping house clean.
7e investments53 Reviews - 3yDrew SygitBusiness MemberProperty Manager · Royal Oak, MI · Member since 2012 · 12k+ posts · 9k+ votes
We think the Midwest is a GREAT place for OOS investors to consider!
YES, we may be a little biased, but check out our blog here on BP comparing Detroit to other cities and Deep Dives on Metro Detroit cities & neighborhoods: https://www.biggerpockets.com/... (links also available @ our website)
Your biggest question shouldn't be WHERE to invest, but HOW you will invest!
Many OOS investors set themselves up for failure because they don't truly take the time to understand:
1) The Class of the NEIGHBORHOOD they are buying in - which is relative to the overall area.
2) The Class of the PROPERTY they are buying - which is relative to the overall area.
3) The Class of the TENANT POOL the Neighborhood & Property will attract - which is relative to the overall area.
4) The Class of the CONTRACTORS that will work on their Property, given the Neighborhood location - which is relative to the overall area.
5) The Class of the PROPERTY MANAGEMENT COMPANIES (PMC) that will manage their Property, given the Neighborhood location and the Tenants it will attract - which is relative to the overall area.
6) That a Class X NEIGHBORHOOD will have mostly Class X PROPERTIES, which will only attract Class X TENANTS, CONTRACTORS AND PMCs and deliver Class X RESULTS.
7) That OOS property Class rankings are often different than the Class ranking of the local market they live.
8) Class A is relatively easy to manage, can even be DIY remote managed from another state. Can usually allot 5-10% vacancy factor and same for maintenance.
9) Class B usually also okay, but needs more attention from owner and/or PMC. Vacancy and maintenance factors should be higher than for Class A as homes will be older, have more deferred maintenance and tenants will be harder on them.
10) Class C can be relatively successful with a great PMC (do NOT hire the cheapest!), but very difficult to DIY remote manage. Vacancy and maintenance factors should be higher than for Class A or B. Homes will have even more deferred maintenance and tenants will be even harder on them.
11) Class D pretty much requires an OWNER to be on location and at the property 3-4 times/week. Most quality PMCs will not manage these properties as they understand most owners won’t pay them enough for the time required and even then it’s too difficult successfully manage them.
***Only exception is if an owner has plan & funds to reposition Class D to Class C or higher.Also, SERIOUSLY consider - do you really have the time to be a DIY landlord or should you hire a PMC?
Good luck with whatever you decide😊
Logical Property Management4.9458 Reviews - Investor · Austin, TX · Member since 2021 · 9k+ posts · 5k+ votes3y
You can get brutally honest feedback from a city just from talking to local businesses, and asking them their advice on where you should buy a home. Agents may not help due to steering, but locals can be honest. A real rockstar won't try to sell you, they have tons of clients and really don't need you. Too many ways to get screwed
- 3yLee RipmaPro MemberRental Property Investor · Prairie Village, KS · Member since 2015 · 2k+ posts · 2k+ votes
I started out BRRRing small MF remotely and then switched to stabilized value-add remotely. I talk about this on my podcast 373. Location matters and so does limiting your downside, hence my pivot away from BRRR and to stabilized value add. I vet locations first, then properties using VestMap.com. I look for stable or growing areas (not declining) that have incomes in the market consistent with C+ to B class areas. Schools matter depending on the unit size. VestMap.com pulls what I need to vet a location in 20 seconds. Then I dig in on the property.
- Investor · Costa Mesa, CA · Member since 2016 · 1k+ posts · 1k+ votes3y
My tip is to not do it in this market.
- Real Estate Agent · Columbus | Toledo · Member since 2019 · 607 posts · 768 votes3y
Quote from @Jeff G.:
What are your tips for starting out with the BRRRR strategy remotely? I'm likely going to BRRRR out-of-state. Yes, I'm aware the 1970's called and their interest rates are back — I'm factoring this into my numbers. Yes, I have David Greene's book on Out-of-State investing. I'm re-reading it now. But the book can't possibly cover everything, so I want to get a discussion going.
Assuming you're hundreds of miles away:
* How do you know what areas to avoid in a city? (Walk the area virtually with Google maps?)
* What is the line between "poor area" that will cash-flow vs. hellhole that will see your property destroyed? (No Flint, Michigan-like areas!)
* How do you know a *real* rock star agent from a pretender?
* How do you vet your PM?* In general, how do you not get screwed?
* What are red flags to look for?* How do you know what areas to avoid in a city? (Walk the area virtually with Google maps?)
* What is the line between "poor area" that will cash-flow vs. hellhole that will see your property destroyed? (No Flint, Michigan-like areas!)
Building your core 4 as mentioned in David's book will help alleviate any fear you have about remotely investing. Building rapport and feeling comfortable with your core 4 is important
Study the local housing voucher requirements and guidelines, the median income, renters vs owners, nearby places to work, how are they getting to work, affordability of homes compared to rents and so on.
* How do you know a *real* rock star agent from a pretender?
Connect with them, ask questions, and get referrals.
* How do you vet your PM?
What is their reputation in the area, how well do they communicate with you and tenants, and how transparent are they about their business are a few good questions to ask yourself* In general, how do you not get screwed?
Be omnipresent. But if that doesn't work you need to hire slowly and fire quickly. Deal with licensed and/or experienced professionals that are held to a higher standard.* What are red flags to look for?
Work the numbers and listen to yourself. Get referrals and have a wide range of questions to ask. Make sure everything is documented.Good Luck!
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