No luck with BRRRRing....

[Katrina B.]

BIGGER POCKETERS - 

New investor here 👋🏽...I'd like to hear experiences from those that have built their portfolios the traditional way - finding a good deal, putting the required 15-20% down and renting it. I've had no success in finding good BRRRR deals or flips as most experienced investors have gotten first dibs. Although it will take a longer time to build my portfolio this way, I'm fine with going this route for my first few properties.

I read a post yesterday where a lady indicated that was her process because of the competition in her city. People on the post frowned upon it because “it would take years” to recoup her down payment. I understand the trend now is BRRRRs and not paying your own money but that may be the only way to get some skin in the game. 

Please share your experiences of going this way. How long did it take to build your portfolio and how long did it take to gain profit? 

[Kenneth Garrett]

@Katrina B.

Buying rentals traditionally at 20% down and renting them versus going the BRRRR route are long term investment strategies. It's methodical and some might say it's boring, but this what builds wealth. You don't see HGTV shows on rentals it's not sexy. You in general only see the big flips. Big check at the end.

I've been BRRRR'g for a few years now. When I started it was after the 2008 crash. It was easy to buy houses at $60K-$80K. Now there worth $140K-180K. Put in 25K-30K each. Refinanced most of my money out. Within 12 months I was able to recoup 100% of my funds. It worked great. Today is much more difficult. Prices are very high for properties. It's difficult to get the numbers to work.

I've bought some properties direct from banks (shadow inventory); they were just sitting on them. No competition. Today investors need to be creative with off market deals. The MLS is way to competitive and prices are high.

There is nothing wrong with the traditional method.  Buying properties that don’t need much work and will cash flow is still a challenge, but they can be found.  I think if it cash flows to your criteria then you should go for it.  Ignore the naysayers.  I like to look at how long it takes to get my money back.  I like 20% and up.  Everyone is different.  One property a year or one every other year and you get to take advantage of all the tax advantages.  Your return is probably much higher then you think when you add in the tax advantages.  Pick a great CPA.

Good Luck.