Can the BRRRR method lead to true freedom?

Question

Hello smart people!

The BRRRR method seems like an amazing way to get involved in real estate. But before I commit to this I am curious about the exit strategy. If I decided to leave for 3 months (to sail the world for instance) could the cashflow continue? Would I be building true freedom or would it be an attention hungry venture forever?

Thank you in advance!

Kenneth Garrett · Answer

@Jared Feldman

The BRRRR method requires oversight.  The rehab portion needs to be managed.  After the building is rented and refinanced then it’s like any other rental property.  I self manage my 20 units.  I can leave but I’m not ready to walk away.  Put in the hard work for a few years and it will payoff. As with any business it takes effort.  I agree with others a pm will alleviate some issues but your paying for that alleviation.

Evan Polaski · Answer

@Jared Feldman, to layer on Whitney's response, owning rental properties is like owning any business.  You can setup systems that let you be much more removed, but at least for me, it is my money and my wealth, so I am not hands off.  With a good manager, your involvement can be very limited.  To be frank, I self manage my small portfolio and most months of the year, I cash a check and plug it into quickbooks.

With a manager, you are able to delegate more responsibility and pay them to handle it.  I would not plan on leaving for months, unreachable, without having a good track record with the manager though.

Finally, syndications are the most hands off option.  But there is a lot of work upfront to perform your due diligence on sponsors.  Once you send that sponsor your check, you generally have limited to no ability to liquidate your investment ahead of schedule, and little to no voting rights to aid in the direction of the asset, if it is underperforming.  So you are really assessing the risks of the sponsor up front, and project as it comes through. Again, this is more passive than direct ownership, but is moving some of that work to the front end.

Whitney Hutten · Answer

@Jared Feldman I'd encourage you to read Cashflow Quadrant (it's the follow up to Rich Dad, Poor Dad). There is handing over your money with no control, diligence, or knowledge of how things work (aka the stock market). Then there is investing in a professional team to run the asset for you.  Very big difference!

As far as time commitment, it depends on the strategy and how you want to scale.  I teach people how to put systems in place to bring down the time commitment without sacrificing returns.  There is an initial lift to this, so perhaps 5-10 hours a week?  Afterwards, if you use property management, then maybe just ~2 hours a week.  On my syndication deals, it's about 20 minutes a month :)

David M. · Answer

@Jared Feldman

The work comes in spurts.  I self manage everything except use a Realtor to list for tenants.  Early on, it was more crazy.  One year, all my units turned over and every month one tenant moved out and another moved — lucky to have zero effective vacancy.  But, I changed the locks myself and had to meet outgoing tenants the last weekend of the month and the incoming tenants the next weekend. Of course, there is all the attention required in between.

Then, there have been years where I just collected rent checks and paid my monthly bills....

Sometimes one unit is a “problem child” with constant turnover each year... until it settled out...

In the past couple years three of my long term tenants moved on.  They each had rented from me 10-12 years...

Back then, I had a full time job that was supposed to be 40 hours a week but was actually 100 hours a week — you see why I quit a couple of years ago.  I had specifically looked for newer units that required less potential upkeep and little problems.

Yup, being a landlord can be no fun at times.  My Realtor helped out with some stuff when I wasn’t around.  It’s good to have some sort of backup.  I wasn’t married early on and I’m not from here so I didn’t have anybody else to rely on.

Hope this perspective helps.  Good luck.

CJ M. · Answer

@Jared Feldman

If it helps you, I probably average 5 hours/week managing 24 doors.

Jared Feldman · Answer

@Kenneth Garrett

@Evan Polaski

@Whitney Hutten

Thank you all for taking the time to respond! I can absolutely appreciate the fact that this would be a business and not just a different form of stock market investing. I suppose I was mainly speaking from a place of fear and lack of knowledge regarding what life as a REI actually looks like. Especially in terms of the commitment. Getting a job is a defined 40 hours a week (or 50+ in my case), very known time requirement. A lot of the podcasts I have listened to seem to blurr over the actual continuing input required for REI.

I currently have no interest in syndications or handing over control of my wealth to a third party. Your responses have helped me keep my expectations in check.

Thank you!

Whitney Hutten · Answer

@Jared Feldman Owning any real estate property directly means you will have to make some sort of decisions at some point in time.  If you hire a property manager to manage the unit, you can be more hands-off.  But you still have to manage the manager.  If you want to be 100% hands off, then invest in syndications.

Can the BRRRR method lead to true freedom?

Most Popular Reply