Six-Figure Income part time - Will this work for Turnkey Property

[Steven Lam]

Newbie question here.

I got totally inspired yesterday during @Brandon Turner webinar on "How to Achieve Massive Success Using the BRRR Strategy over on BiggerPockets!"

Brandon has definitely taken the mystery out of figuring out the numbers like, monthly cashflow, cash on cash ROI %, estimated property value in 5 years, etc with the BP BRRRR calculator.

My question is "will this concept still work with turnkey investment property by selling 2 to 3 deals every 5 years (assuming it is positive cashflow and the numbers work using BP BRRRR calculator)?

Due to the nature of turnkey, I would not have the opportunity to buy low, rehab. But can I still refinance and pull out the equity and then sell in 5 years to follow Brandon's system of selling at least 2 deals every 5 years to generate close to $100k per year?

[David Faulkner]

Originally posted by @Victoria S.:

Hi @Account Closed

Thanks for the detail mechanistic sketch and I can somewhat see how that would work - certainly see how movement and agility is exponentially increased with a such RE portfolio. A comment on another thread by @Will Barnard in "BRRRR Strategy really works! Even in the Bay Area" struck me as appros in the sense that with the great deal that @Ori Skloot has in terms of immediate cash flow in the Bay area, the fact that its a home run flip is its "true" and perhaps more immediately desirable perspective, in the sense that you mention forced appreciation a MUST to recycle capital.

With my place in Oakland: It's unusual in many ways. I am not sure if I had invested in Multi-family "standard" fourplex in the C / D areas that I would see the gains and pleasures (wonderful tenants) that I have. I would like to repeat what I did again. The climate to do so has changed substaintially and the capital needed far more than in 1999. Through those years I wasn't poised to recycle capital, so time passing was not an issue or strategy and the gains produced an overall stability that has happily put me into todays position. It did take a long time, though there were a few peaks in there where I suppose I could have cashed out and chose not to.

When I consider repeating or doing a similar BRRR in our sizzling market, from the perspective of appreciation and not cash flow, there is strategy and expectation, demarcated with timelines much shorter than what I have lived, and debt service, which restricts the mobility and agility that appreciation portfolio will one day provide.

Conundrums.

 I bet if you cast your mind back to 1999 when you first purchased that property, it probably seemed crazy expensive to you back then too ... that is the thing about prime CA RE ... it always seems expensive. I'm reminded of a story my parents tell about how they got scared that the market was overheated some time back so they sold a triplex. They were right, they got out at the peak of that RE cycle ... they sold for $150k, it was a triplex a few blocks from the ocean in Redondo Beach, CA. You certainly could purchase another place retail so long as you are 100% sure you are willing and able to hold long term through thick and thin, and you would still likely do very very well in the bay area if you did that. However, what I think Minh is getting at and I agree, is that by buying distressed below retail market and then forcing appreciation gives you a margin of safety against any short term market volatility. It gives you multiple exit strategies (plan A hold for appreciation and cash flow, plan B sell for profit), it helps plan A and enables plan B at the same time. It is not easy for sure, but it is what gives you the investor edge on the market and tilts the odds dramatically in your favor ... heads you win big, and tails you win small, but the house always wins and you are the house. I believe this is a superior strategy and what tends to separate the professional investors from the amateur newbie wannabe investors ... it is important in any market, but getting back to the OP's original topic, it simply is not practically possible/probable to pull this type of strategy off as a novice investor going out of state to a market you are not familiar with and will be 100% dependent on the kindness of strangers acting in your best financial interest to make or break your investment for you. To those that agree and want to stay local, this is the prize to keep your eye on IMO ... stay focused, hungry, looking and learning, find somebody that knows how to stack the deck in their favor in this manner and watch closely how they shuffle, and be patient to not play the game until you find or create a winning hand where you can do this. It is not easy, but it can be done, and when it is it is the safest and most profitable way to invest in my opinion and experience. Good luck to all and happy investing!