How many BRRRR properties are too many to acquire?

[Ryan Monty]

As I get educated on RE investing, I've been drawn to the BRRRR approach as it most closely suits my long-term goals. I keep hearing from enthusiastic people talking about how it's the way to go, how one can lock up SO MANY properties super quickly using this method. This all sounds great of course, but surely there must be some point at which you have to say your risk is too high now to continue locking up properties (and debt) at a break-neck pace. What is that point?

I understand that if applied correctly, you'll be pulling all your capital back out of the deals so you can repeat again and again.  But, with each deal comes a new mortgage, new units that need to be filled, and always the possibility of multiple cap ex expenditures hitting you all at once.  Obviously your ability to absorb these costs is directly tied to how much capital you have ready to use at any given time.  I know that a smart investor has always attempted to project and pro-rate all such costs, but there's always the possibility that too many unfavorable scenarios could play out at once any you'll run out of money and get into trouble?

Are there any BRRRR pros that have had to deal with reaching their property limit and how did you overcome that?

[Ryan Howell]

I assess my risk based on cash flow, reserves and equity. Equity is inherent with a good BRRRR deal since you need equity in order to get your money back. Cash flow is one of my requirements up front before I move forward....Reserves are generally your limitation. I'm personally slowing down right now because I want to ensure I have more reserves before going much further for exactly what you're talking about. I will say though the more properties you have the more you are "smoothing" out your monthly cash flow, so having big expenses is in some ways less impactful.