Experience of OOS investing in Cleveland after 1.5 years.

[Luka Jozic]

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

[Eric Gerakos]

Quote from @Luka Jozic:

Quote from @Jay Hinrichs:

Quote from @Luka Jozic:

Quote from @Bob Stevens:

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

' 

 I TRIED to help you but you " know better". I get on avg 800 per month NET income 15- 20% NET (based on cash purchases) on SF, and more on my duplex's. My maintenance is little to nothing as we do the reno correctly. I also tried to help you with PM I'm aware of them all 99% are terrible and will charge you 3k to replace a furnace when the real cost is about 1600. I just got $900 for a 1 br in East Cleveland. I'm going to get 1500 for a 3 br in Lee Harvard, fully renovated all in 75k, do the math :) 

All the best 

Im not interested in buying turnkey and also not buying cash, I would run out of money real quick. I need to be doing BRRRR thats the only way to scale somewhat fast. Im glad you're doing good.

but if your negative cash flow your bleeding your money anyways.. instead of buying a property in a better local that is rehabbed better than you can do. And actually being cash positive instead of negative at least your post says your cash negative not making any money so you are eroding your cash by feeding these.. not to mention the incredible risk you take with remote rehab and the time involved .. If your paying cash to buy and rehab then refinancing I get that.. but your still paying for two closing costs. And if you finance the buy then you have money there.. just some things to think about.

Thats fair but Im assuming there is a little bit of a learning curve before you get it right? If I buy turnkey, Im putting 25% down on any property, which is like 30-45K in Cleveland, and Im still at risk of running into issues because we all know that most turnkey properties aren't actually turnkey, they're lipstick on a pig. Im more interested to learn what I can maybe change or improve to make BRRRR strategy work, not change strategy completely where I can buy maybe 1 property a year instead of 3-4. 

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

[Luka Jozic]

Quote from @Jay Hinrichs:

Quote from @Luka Jozic:

Quote from @Jack Krusinski:

Hi Luka, Cleveland has its pros and cons for sure. Where are your properties located? That will likely make the biggest difference on if it cash flows or not. I invest in Cleveland (BRRR and flip) and am a realtor. The sewer expense is a big hit. For deals I do, I try to write in under the inspection section in the purchase agreement, "any and all recommend by home inspector including but not limited to inspections checked no above." This will then allow me to do a sewer scope if/when the inspector finds a sign of a potential backup. Not bulletproof proof, but it helps!

My property locations are listed in a previous message.

Could you clarify, does that mean you can do the sewer inspection before closing, or after? Cause my biggest issue with finding BRRRR deals is like I mentioned above, if I put in inspection contingencies, my offer is not strong enough and the seller picks any of the other 5 buyers that have no inspection contingency.

 Dude.. most deposits in the mid west are 500 to 1k.. So you put that up and you can do your inspection ( sale is not subject to it) and then do your sewer scope if its bad retrade or walk away far cheaper to lose 1k than get stuck with a 15k sewer line repair just the cost of doing business.

That is true, I guess I could do that going forward. Thanks. 

[Becca F.]

@Luka Jozic

Thanks for sharing your experience. I didn't buy in Cleveland but bought in Indianapolis Class C in 2023. I've had similar experiences with a SFH I've owned for a year, repairs called in 7 times out of 9 months.

 I'm not buying anymore Class C properties in Indianapolis or anywhere. I put in 3% for appreciation (which is typical for Indy outside of 2018-2022) and 4% rent increases. I don't know anything about Cleveland. What did you put in for appreciation and rent increases per year when you ran your numbers? 

If I were you, I would pause and re-evaluate and not put any offers on Class C properties anymore, especially OOS. I think it's better to have fewer high quality properties than lots of inexpensive ones (all those cap ex, repairs, tenants, PM fees). Could selling off those properties and buying one or two properties in appreciating areas be an option?  What about buying near where you live?

[Luka Jozic]

Quote from @Becca F.:

@Luka Jozic

Thanks for sharing your experience. I didn't buy in Cleveland but bought in Indianapolis Class C in 2023. I've had similar experiences with a SFH I've owned for a year, repairs called in 7 times out of 9 months.

 I'm not buying anymore Class C properties in Indianapolis or anywhere. I put in 3% for appreciation (which is typical for Indy outside of 2018-2022) and 4% rent increases. I don't know anything about Cleveland. What did you put in for appreciation and rent increases per year when you ran your numbers? 

If I were you, I would pause and re-evaluate and not put any offers on Class C properties anymore, especially OOS. I think it's better to have fewer high quality properties than lots of inexpensive ones (all those cap ex, repairs, tenants, PM fees). Could selling off those properties and buying one or two properties in appreciating areas be an option?  What about buying near where you live?

Im sorry to hear that, I did consider Indianapolis as well. I don't really consider appreciation as I consider it just a bonus, especially in a cashflow market.

I am definitely going to pause and stabilize before I continue. Majority of my issues were with my prior PM and since switching it has been much better. Although I've still seen some unlucky major repairs, most of my houses are literally running out of things that could break. So like someone else said earlier, it might take 1-2 years for things to stabilize a little.

I live in Tampa so LTR just doesn't work here, some people do rent by room which could have its own issues, but at least this is a market with more qualified tenants where people actually want to live, so I'll consider it. As far as appreciation, and someone can correct me if Im wrong but looking at all the common markets over an 8 year span, its about the same for all of them. However, appreciation on a property in Tampa is of course more cash than a property in Cleveland, but also more to get into it. 

[Travis Timmons]

Agree with @Eric Gerakos you're just adding problem children. You don't need more properties. You need to develop a subject matter expertise and treat this like the hands on business that it is. 

Narrow your focus, stop buying properties, and figure out what you actually know really well rather than letting FOMO, spreadsheet calculations on faulty pro formas, and advice of strangers on the internet influence your investment decisions. 

I don't want to pile on...we've all made mistakes and figure things out as we go. Be kind to yourself and feel free to send me a DM if you think that I can be helpful resource.

[Ryan Arth]

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

[Dan H.]

Quote from @Michael P.:

Quote from @Dan H.:

I do not understand doing rehab value adds in cheap markets.  I just completed a rehab that adding half a bathroom added ~$50k in value.  Was adding this half bathroom way more work or way more costly than adding it in a cheap Market where it adds $10k?

Something to ponder as you ask for input on the BRRRR.

Good luck

 Not long ago you would do a true brrrr get all your money out and have a property with strong cashflow (low rates) for “free”. Low barrier to entry with cheap midwest prices. 

I understand the potential Infinite return of BRRRR, but if I spend x effort and y dollars on a value add, I want it to add as much value as possible.

This implication is if a successful Brrrr results in no Money invested in the property and non negative cash flow when allocating for all expenditures, then price of acquisition is not relevant (because you acquired it at no financial cost).  Under such conditions, you want the effort and expense of the value add to produce as much added value as possible and this virtually always will occur in the high cost market. 

Mid May I finished a rehab.  I have done many rehabs and had never gone way over budget (to be blunt I may have been cocky as I never thought I would significantly blow a budget).  I went way over budget on this one (but managed to almost meet the schedule target).  There were various reasons to go over budget.  However, because it is a market that it is significantly over $1k/ft, the value add was not a complete bust due to added value.   In a cheap market, the amount I was over budget would have caused the effort to lose money (rehab cost would have been greater than the added value).  It helps that in the area of this rehab a half bathroom is worth ~$50k. 

Let’s assume a property in lower cost area and a property in high cost area both have success brrrr such all money is extracted and it is at least cash neutral when allocating ford.  Both worked by good crew that can finish in 2 months at a cost of $40k but in cheap market it adds $80k of value but in expensive market it adds $120k of value.  Which value add would you do?

Value adds virtually always add more value in higher cost markets than low cost markets. 

Good luck

[Luka Jozic]

Quote from @Travis Timmons:

Agree with @Eric Gerakos you're just adding problem children. You don't need more properties. You need to develop a subject matter expertise and treat this like the hands on business that it is. 

Narrow your focus, stop buying properties, and figure out what you actually know really well rather than letting FOMO, spreadsheet calculations on faulty pro formas, and advice of strangers on the internet influence your investment decisions. 

I don't want to pile on...we've all made mistakes and figure things out as we go. Be kind to yourself and feel free to send me a DM if you think that I can be helpful resource.

That makes sense but yes I do have FOMO, house prices have historically increased faster than rents, thats a nation wide trend. That only means one thing and that is that soon, you won't be able to really cashflow anywhere, not even Cleveland. Thats why I've been taking on a strategy with buying as much as possible as fast as possible, and stop the bleeding later. Rather than buying one at a time at a much slower pace with no bleeding but then soon it won't make sense to buy at all, the ship has already sailed. The bleeding can always be stopped later on but it will mean not cash-flowing during that scaling phase, but buying once the price to rent ratio hits a certain point wont make sense, and then I will have wished I bought more when I could. Im not sure which way is best, but I hope that way of looking at it at least makes sense?

[Travis Timmons]

We all have FOMO; I totally get that. You have to run your own race, though. You're buying low quality assets that are not going to appreciate like you want them to. By your own admission, you are losing money. If you bought in an A-B area in a growing city/metro, there's an argument to be made for bleeding cash for a year or three. I can't make the case for C-D assets in Cleveland, though.

Some family friends of ours paid $18,000 for a property across the street from Washington Park in Denver a couple of generations ago. They, and all of their friends, talked about how that price was ridiculous, they'd never get their money back, how stupid they were for paying that much, etc. That place is now with several million dollars. 

The point is that real estate always seems expensive. It has always felt like you're going to miss the boat and lose money if you wait until next year to buy. That's just not the case. Good quality assets + leverage + time makes real estate worth the hassle - even if you can only buy 1 property every 2-3 years. 

[Jay Hinrichs]

Quote from @Travis Timmons:

We all have FOMO; I totally get that. You have to run your own race, though. You're buying low quality assets that are not going to appreciate like you want them to. By your own admission, you are losing money. If you bought in an A-B area in a growing city/metro, there's an argument to be made for bleeding cash for a year or three. I can't make the case for C-D assets in Cleveland, though.

Some family friends of ours paid $18,000 for a property across the street from Washington Park in Denver a couple of generations ago. They, and all of their friends, talked about how that price was ridiculous, they'd never get their money back, how stupid they were for paying that much, etc. That place is now with several million dollars. 

The point is that real estate always seems expensive. It has always felt like you're going to miss the boat and lose money if you wait until next year to buy. That's just not the case. Good quality assets + leverage + time makes real estate worth the hassle - even if you can only buy 1 property every 2-3 years. 

or like anyone paying 30k for homes in Cupertino in the 60s  sky hi sum.. or when i went to buy my first home in 78 Cupertino was 100k who could afford that. I had to go to Milpitas ( which was not a great area then) and pay 77k  

[William Dunn]

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

Which areas in the CLE metro would you consider impossible to cashflow? Im an investor in the area and would love to hear your opinion. 

[Ryan Arth]

Quote from @Luka Jozic:

Quote from @Travis Timmons:

Agree with @Eric Gerakos you're just adding problem children. You don't need more properties. You need to develop a subject matter expertise and treat this like the hands on business that it is. 

Narrow your focus, stop buying properties, and figure out what you actually know really well rather than letting FOMO, spreadsheet calculations on faulty pro formas, and advice of strangers on the internet influence your investment decisions. 

I don't want to pile on...we've all made mistakes and figure things out as we go. Be kind to yourself and feel free to send me a DM if you think that I can be helpful resource.

That makes sense but yes I do have FOMO, house prices have historically increased faster than rents, thats a nation wide trend. That only means one thing and that is that soon, you won't be able to really cashflow anywhere, not even Cleveland. Thats why I've been taking on a strategy with buying as much as possible as fast as possible, and stop the bleeding later. Rather than buying one at a time at a much slower pace with no bleeding but then soon it won't make sense to buy at all, the ship has already sailed. The bleeding can always be stopped later on but it will mean not cash-flowing during that scaling phase, but buying once the price to rent ratio hits a certain point wont make sense, and then I will have wished I bought more when I could. Im not sure which way is best, but I hope that way of looking at it at least makes sense?

 There is an old saying that might apply here. "The market can remain irrational longer than you can remain solvent."

Assuming that this market will rise to the level of "everywhere else" and not inflate in relative lockstep with other markets may turn out not to be an accurate assumption.  

[Engelo Rumora]

Quote from @Luka Jozic:

Hi everyone, I started investing in Cleveland about a year and a half ago and have acquired 6 LTRs (SFH and MFH) using mainly the BRRRR method in C areas. I've done fairly big renovations where in most cases, Im replacing almost everything in/on the house. First year has been tons of learning and despite all the research and preparation I did, I still did mistakes and learned things the hard way. I went with one of the biggest PMs that everybody vouched for, yet it took them forever to even place a tenant, and once they did, the tenants never paid on time. Additionally, despite the houses being newly renovated, every month there were new expenses and something breaking, almost as if they want me to not cashflow. The PM said they don't up-charge, but most repairs and expenses were ridiculously high. The result of this? No cashflow, in fact Im in the negative for almost every property so far, and yes I do put aside money for vacancies, capex, and repairs. I finally switched PMs recently and the new one seems much better but Im still getting pretty frequent repairs though much cheaper than the previous PM. The problem is that in this market, getting $2-300 a month cashflow is about as good as it gets, and one furnace, one turnover or whatever and that takes out the cashflow for that year, or even puts you in the negative.

Lets just say the experience hasn't been great, yet. Im trying to stay hopeful that it will turn around but I just keep receiving blow after blow. Just recently got hit with a 10K sewer line repair. I know, its my fault I didn't inspect the sewer line but in my defense, having such inspection contingencies makes it nearly impossible to find a viable BRRRR deal, as there are several investors lined up ready to pay more, in cash, and no contingencies. Im now starting to doubt wether or not Cleveland is actually a good market to invest in? Majority of the houses are old and require frequent repairs in addition to a poor tenant base that can't pay on time and don't care about their credit. On paper it looks good, but the reality is a different story. Im wondering if other markets might be better, with somewhat newer houses and higher quality tenants? But the thing with those markets are you'd be happy to break even, so even if repairs are less and tenant quality is better, I feel like it would end up being the same result.

For those of you that invest in Cleveland, do you have similar experiences? If not, what do you think you might be doing differently to make it work better?

G'Day Luka,

I'm not a fan of out of state BRRRR.

It's hard enough for us on the ground to get rehabs done on time and on budget and I don't even want to think how difficult, expensive and time consuming it would be for out of state investors.

And then include a high LTV and that can be a portfolio killer IMO.

Hat's off to you mate for grabbing the bull and jumping in.

You live, you make mistakes, you learn and you grow.

Such is life.

Building a large portfolio is an absolute must when investing in sub $100,000 properties in Ohio.

I "killed" my business by not wanting to sell to investors that are using leverage.

Our sales volume could increase by 70-80% but it is what it is.

I just don't believe in it or want the hassle associated with it lol

Reason is mostly two fold:

1) Not in the mood to deal with lenders for 2 months and hope the deal will go through.
2) I don't believe that investors should use high LTV when building the foundation of their portfolio.

My advice to you:

1) Pay them off as quickly as you can.
2) Build a larger portfolio.

The investors that $#@% the most on my name are the ones that buy 1 or 2 properties and expect miracles.

As you said, 1 furnace goes out or a sewer line needs repaired and bye bye cashflow for 2 years.

We get blamed although we can't predict to fix certain things and there are just many unknowns with all investments.

Our happiest investors are the ones that own 6-7 or even 10+ properties and all with cash and no leverage.

They aren't worried about turns or tenant issues that occur on 1 or 2 properties as it's just the nature of the beast.

Returns vary but across the board over the last 10 years I have seen 6-10% net ROI's year after year.

Building a large portfolio is a must to minimize risk and to get the best possible long term ROI.

Thanks 

[Engelo Rumora]

Quote from @William Dunn:

Quote from @Christian Styles:

Hey Luka, sorry you're not loving Cleveland at the moment, I'm interested to know specifically where your properties are located. We've found that there are neighborhoods in the Cleveland Metro where it's nearly impossible to cashflow, As Jay said tenant quality being one of the main motivators behind that.

Which areas in the CLE metro would you consider impossible to cashflow? Im an investor in the area and would love to hear your opinion. 

I've always believed in the saying that "there is nothing wrong with any deal, as long as the price is right" lol.

This might sound cliche but all of Cleveland can cashflow if you buy cheap enough and if you buy with cash.

And cashflow it can very well.

Just like all of Ohio.

You make money when you buy and not when you sell.

So make sure to buy dirt cheap.

Buying cheap also "acts" as a margin of safety for any mishaps that happen during rehab or issues like the OP had with the first property manager.

I see many folks nowadays buying off the MLS and overpaying, spending too much on rehab and then getting dimed to death by property management.

While I'm sitting on the sidelines as a turnkey provider watching it all un-fold and thinking how they just could have bought my "overpriced" turnkey property and would have been into the deal for at least 30% cheaper...

It's a shame but it's what the people want, so many give the people what they want.

Thanks 

[Chris Clothier]

@Luka Jozic

I was on a podcast recently and talked a little about what you are experiencing. I read this as someone using a short-term lens to focus on a long-term issue. In your thread, you are worried about short-term KPIs like monthly cash flow, yet you purchased the properties to follow the BRRRR method.

The social side of Biggerpockets, like newsletters, blogs, and SM sites, is part of the problem.  Cash flow is constantly promoted and pushed, and often, the personalities lack long-term experience, so they can't talk about the best reasons we should be investing.  

You purchased six properties, and we have to assume, based on your post, that you purchased and renovated them for below a current market value.  If done correctly, you can refinance most, if not all, of your initial funds back out of the properties.  You can eventually refinance all or most of your funds if not done correctly.  Your properties have needed constant work, making you negative for the first year.  In other words, your renters have covered a majority of your costs of ownership this year, including covering your debt, and you have to put some additional money in, which raises your cost basis. However, it doesn't read like that has been substantial.  

This is investment real estate.  You have to expect costs, headaches, and surprises.  Those things can and will hurt your monthly KPIs occasionally and sometimes for long periods.  However, over time, if a renter is covering a majority of your cost of ownership and even allowing you to get the added benefit of putting money away into a rainy day fund, you are winning the real estate game.  

You are controlling significant assets with little money and using the revenue they generate to pay for them.  Over the next 7-10 years, these properties will fluctuate up and down in value based on the current economy; however, real estate will move up and to the right over time.  At the same time, someone else reduces your debt, and you get to use the tax code to improve your tax situation legally.  

My advice is to be wise but continue.  Be smart and invest wisely, constantly learning from each transition.  Perhaps you do things differently with your subsequent purchase or your next management company.  Whatever you do, don't focus on the monthly KPIs.  You bought long-term rentals, so be a long-term investor.  You did it passively, so don't expect substantial short-term returns.  Be a long-term investor focusing on controlling as many assets as possible most safely.  I tip my hat to you because you are way ahead of many of your peers.  The ability to take action can be both brave and foolish.  You sound like the brave side of the coin in that you did due diligence and respected the process.  You also took quick action when things were not going as expected.  From what I read, I think you are on track for success.  You have to allow time to do its job.  Time is the #1 ingredient in a long-term investor's success.  Their success depends on how much initial action they take to build their portfolio.

[Chris Clothier]

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

[Engelo Rumora]

Quote from @Chris Clothier:

@Luka Jozic

I was on a podcast recently and talked a little about what you are experiencing. I read this as someone using a short-term lens to focus on a long-term issue. In your thread, you are worried about short-term KPIs like monthly cash flow, yet you purchased the properties to follow the BRRRR method.

The social side of Biggerpockets, like newsletters, blogs, and SM sites, is part of the problem.  Cash flow is constantly promoted and pushed, and often, the personalities lack long-term experience, so they can't talk about the best reasons we should be investing.  

You purchased six properties, and we have to assume, based on your post, that you purchased and renovated them for below a current market value.  If done correctly, you can refinance most, if not all, of your initial funds back out of the properties.  You can eventually refinance all or most of your funds if not done correctly.  Your properties have needed constant work, making you negative for the first year.  In other words, your renters have covered a majority of your costs of ownership this year, including covering your debt, and you have to put some additional money in, which raises your cost basis. However, it doesn't read like that has been substantial.  

This is investment real estate.  You have to expect costs, headaches, and surprises.  Those things can and will hurt your monthly KPIs occasionally and sometimes for long periods.  However, over time, if a renter is covering a majority of your cost of ownership and even allowing you to get the added benefit of putting money away into a rainy day fund, you are winning the real estate game.  

You are controlling significant assets with little money and using the revenue they generate to pay for them.  Over the next 7-10 years, these properties will fluctuate up and down in value based on the current economy; however, real estate will move up and to the right over time.  At the same time, someone else reduces your debt, and you get to use the tax code to improve your tax situation legally.  

My advice is to be wise but continue.  Be smart and invest wisely, constantly learning from each transition.  Perhaps you do things differently with your subsequent purchase or your next management company.  Whatever you do, don't focus on the monthly KPIs.  You bought long-term rentals, so be a long-term investor.  You did it passively, so don't expect substantial short-term returns.  Be a long-term investor focusing on controlling as many assets as possible most safely.  I tip my hat to you because you are way ahead of many of your peers.  The ability to take action can be both brave and foolish.  You sound like the brave side of the coin in that you did due diligence and respected the process.  You also took quick action when things were not going as expected.  From what I read, I think you are on track for success.  You have to allow time to do its job.  Time is the #1 ingredient in a long-term investor's success.  Their success depends on how much initial action they take to build their portfolio.

When Chris posts, everyone should read.

I know he doesn't like to be called the "Godfather" so I will just say he is the "Turnkey Stud" haha

100% agreed with this mate:

"I tip my hat to you because you are way ahead of many of your peers. The ability to take action can be both brave and foolish. You sound like the brave side of the coin in that you did due diligence and respected the process. You also took quick action when things were not going as expected. From what I read, I think you are on track for success. You have to allow time to do its job. Time is the #1 ingredient in a long-term investor's success. Their success depends on how much initial action they take to build their portfolio."

Just to add to Chris's post.

Time is the best friend of a good decision and the worst enemy of a bad decision.

Keep endeavoring to make good decisions and ask questions on the forum like you did if in doubt.

You will have a few bum jackers like myself that will happily share an opinion on the situation.

Your job is to syphon through all those opinions and as they should mold your decision making for the better 🙏

[Ryan Arth]

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

[Jay Hinrichs]

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

[Ryan Arth]

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Yes you were. You spoke on a panel about home building, and I asked you a question from the crowd. That discussion pushed me towards ground up construction, where I finally find myself today. So thank you.

[Jay Hinrichs]

Quote from @Ryan Arth:

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Yes you were. You spoke on a panel about home building, and I asked you a question from the crowd. That discussion pushed me towards ground up construction, where I finally find myself today. So thank you.

well glad someone got something out of one of my presentations.. your not related to Larry Arth are you.. from Florida I think he is. ?

[Ryan Arth]

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Yes you were. You spoke on a panel about home building, and I asked you a question from the crowd. That discussion pushed me towards ground up construction, where I finally find myself today. So thank you.

well glad someone got something out of one of my presentations.. your not related to Larry Arth are you.. from Florida I think he is. ?

 Well I was there with my antenna up, so just know that there may always be at least one in the crowd. And no, I do not have any relatives by that name in FL.

[Engelo Rumora]

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Lori and you picked me up in the Tesla and we almost ran over a homeless guy in Oakland hahaha

[Jay Hinrichs]

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Lori and you picked me up in the Tesla and we almost ran over a homeless guy in Oakland hahaha

I had forgotten that part.. I remember though you and I talking with Chris.. he invited me to visit his office in memphis which I did later in the year.. Boy his staff was first class all the way.

[Engelo Rumora]

Quote from @Jay Hinrichs:

Quote from @Engelo Rumora:

Quote from @Jay Hinrichs:

Quote from @Ryan Arth:

Quote from @Chris Clothier:

Quote from @Ryan Arth:

You’re right. Keep your focus on how many crappy properties you can buy each year, instead of buying fewer but better properties. Focus on “scaling quickly.” Collect properties instead of money. It’s a winning strategy…..

Way back when BP started, before we used our real names, a prominent guy on here named Mike in OH said "focus on your ROI, not your door count". You are investing for return on capital.

Someone had congratulated him for how many doors he had in Cbus and he pointed out that he was collecting rents in cash with a pistol and his day to day was anything but fun. 

 I am always on the look out for users who have been on the site longer than me.  I haven't found many still around.  I'm not sure there are any with joined dates older than yours still on the site!  The site has changed tremendously.  Glad to see there are still some original voices on here.

 Why thank you Sir. I originally found BP to help myself nagivate the waters of RE. Now I am here to help others, though I do still learn daily. 

I remember studying your business model early on through your posts and early podcast episodes. We also met at the speaker's dinner at J. Martin's RE Summit in Oakland in ~2018. If I remember you left your family in Vegas at a birthday celebration to come speak. Now that is service! Cheers to you.

I was at that J Martin event I miss his events  fun guy.

Lori and you picked me up in the Tesla and we almost ran over a homeless guy in Oakland hahaha

I had forgotten that part.. I remember though you and I talking with Chris.. he invited me to visit his office in memphis which I did later in the year.. Boy his staff was first class all the way.

Not me mate,

F@$# it tho.

I'll just show up one day and knock on his door haha

Teach him how to play football and not how you Yankee's call it "soccer" hahaha