BRRRR on Out of State Properties?

Question

Hi BP Community,

I am sure this a strategy that some have had success with but how difficult of a strategy is it to BRRRR on out of state rentals? Additionally, would you still look for properties that need significant rehab work or more aim for properties that just need cosmetic rehabs?

I am based in Chicago but also looking at Indiana and Ohio markets since I am starting off, don't have as much capital available and those markets tend to be a bit cheaper. I also see the value of the BRRRR method in that you are able to scale at a faster pace but the idea of doing rehabs on a property that I can't visit often doesn't sound ideal. For situations like this, are there specific notes or ideas that you that you would recommend for this type of investing?

Nicholas L. · Answer

@Christian Artuso

yes - short answer: don't start with a long distance BRRRR.

the more hands-on you can be, the more likely your BRRRR is to be successful.  no one is going to QB or PM it like you will - there is no such position as "BRRRR manager."  folks have tried to cobble this together among agent, property manager and contractor, and it's always frustrating and higher risk.  just to repeat myself: the buck stops with you, not with anyone else.

and, if you don't have enough capital for a BRRRR close by... you're going to have to save up more.  no one wants to hear that but it's true.

i have done a few, i did one an hour away and even that was painful.

happy to answer any questions you have

not trying to be discouraging, just realistic

Christian Artuso · Answer

@Jimmy Lieu Thanks for the insight. Always great to hear about where investors have had successful and found difficulties to get a clearer picture. Sounds like from everyone here that a strong vetting of your contractors is an ever more important part given how much the project depends on them and the rehab costs/time. Glad to hear there are opportunities in Columbus

Eudith Vacio · Answer

Thanks for the shoutout @Jonathan Klemm

I live in Chicago but definitely a pretty big fan of Northwest Indiana. Cristian & I connected last week so hopefully he will make a move in Gary, Indiana - that's one of my favorite places to invest right now. 😃

Travis Biziorek · Answer

Christian, BRRRR can absolutely work out of state, but it’s not easy—especially if you’re dealing with full rehabs. It all comes down to having the right team and knowing your market inside and out.

For context, I built a 12-property portfolio in Detroit that now brings in $16K/month in gross rents. I was on the ground when I did it, but I live in CA now, and my team helps out-of-state investors execute the same strategy. We source off-market deals, manage rehabs, and handle property management so investors don’t have to be local to make it work.

If you’re thinking about BRRRR remotely, the key is getting your team dialed in before you buy. A lot of investors think they’ll figure it out as they go, but that’s where they run into problems. If you want to chat more, feel free to DM me. Happy to share insights.

Jonathan Klemm · Answer

What's @Christian Artuso!   By far the most important part of investing out of state is building a solid team with boots on the ground.  Highly recommend going in person to meet and build your team.

If you are looking in Indiana you should connect with @Eudith Vacio. Shee is a realtor and investor in that area.

Also, if you are looking in Columbus Ohio connect with @Michael K Gallagher who only works with investors as an agent.

I am personally I am a big fan of Chicago still, how much capital do you have?  You might be surprised what you can find if you are looking for the right places here.

Bryce Renicker · Answer

Hey Christian, I have a Chicago property that would make an excellent BRRRR. I’ll likely take it down myself but would be happy to connect with you to see if it may be a good fit for you instead.

Numbers are the following - purchase price $120,000, rehab $75,000, ARV $250-265,000. Will perform very well with a good Section 8 tenant. Section 8 housing done right is the way of the future for real estate investors in my opinion.

Drew Sygit · Answer

@Christian Artuso Hey don't forget about Detroit!

Regarding BRRRing OOS - it can be very dangerous:(

Too many newbies take contractors and agents at their word, when "trust, but verify" is extremely important.

Given you're in Chicago, would recommend you plan 2 trips for a BRRRR:

1) Initial walk-thru with contractor(s), which you should video for documentation & accountability.

2) Final walk-thru BEFORE paying out final amounts to contractor(s).

The good contractors won't have an issue with this setup.

The bad ones will want 50% upfront, you'll have to plead for update pics, they'll find reasons to increase their initial bids (multiple times) and will want final payment before meeting you for final walk-thru.

Many investor-friendly agents have NEVER owned a rental, so you can't really rely on their advice. You still have to be careful with the experienced ones as some like to sugarcoat everything - just spoke with an investor 2 days ago that has a property under contract here and the agent was underestimating rehab costs and overestimating the rents.

To succeed, you'll need to ask a lot of questions, screen everyone very well and monitor everything.

Christian Artuso · Answer

@Drew Sygit well said and I appreciate that! Fortunately, I have found investors and contractors that are active investors and do try to see it from my perspective on how to make money in the deals but I agree with the extra opinions and "trust, but verify"

Christian Artuso · Answer

@Bryce Renicker Thanks for bringing this up. Unfortunately, I don't think I'll be able to take it so I'd say it's all yours but if there's anything I can do to help, let me know!

Christian Artuso · Answer

@Mo Li I agree. There are opportunities in any market but I would need more capital to invest in and around Chicago. Part of why I am looking at possibly investing in out of state markets.

BRRRR on Out of State Properties?

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