All Forum Posts by: Allen Ramirez

Hey Allen,

BRRRRing in So Cal is tough high prices, low cash flow, and tighter margins, making it hard to pull off. You can find deals, but they’re rare.

If you're open to out-of-state investing, Ohio is a prime BRRRR market with affordable properties ($50K-$150K), strong rent-to-price ratios, and solid rental demand. Cities like Columbus, Cincinnati, and Cleveland offer great opportunities to buy distressed properties, add value, and refinance with equity left in the deal. Plus, Ohio is landlord-friendly, making management smoother.

Next steps: pick a market, build a local team, and start analyzing deals.

@Allen Ramirez I'd say it depends on your cash position and the numbers of your local market. If you can't find a market with very good rent/price ratios near you then you will need a lot more money in order to refinance out of them since you won't be able to rely on the property itself to cover the debt needed to get your money back out. Cheaper areas with better rent/price ratios could help with this but then you have the downside of it not being in your backyard which comes with additional risk/expenses. I tend to prefer multi family since the rent/price ratios are better if you can find any of those nearby to you. Pros and cons to each. Depends on your timeline too just might take longer to achieve your cash flow goals if you are doing it in a more expensive market. 

@Allen Ramirez you're asking great questions and you've gotten some spot-on advice from seasoned investors like @Dan H. who know your market very well. One particularly salient point he makes is "I want a market where my value add adds the most value." This is absolutely critical with a BRRRR and I say that from the perspective of a lender and an investor experienced with this model. It's true that it was MUCH easier to pull off the ultimate BRRRR strategy even 2-3 years ago. But between bloated asking prices, the increase of rehab costs and higher interest rates, it's much harder to do. That does not mean it's impossible, just harder. I've had to shift my thinking in 2 ways. 1) the "infinite return" whereby you get all your money back, plus cash flow, is less likely. But at the end of the day, I'm ok with that and here's why. I don't mind leaving 10-15% in a deal. I look at it like paying 10-15% down on an investment property and I can stomach that. 2) I have to force significant value into the property to ensure I get as much of my cash back as possible. It might seem this is easier to do in a cheap market, but as Dan points out, that's not always the case. You need to buy it right (almost never the listing price), you need to be confident in your rehab pricing and ARV, and you need to use the right financing tool that won't eat up your profits. These are the things that will safeguard your investment and allow your strategy to work for you.

Don't overlook the importance of having the right financing product to achieve your goals. When you build out your team, make sure you've got a lender on your roster. I say that both as a lender and an experienced investor. It's never too soon to create a relationship with a lender so that when the time comes to buy, you know you have a trusted partner in your lender. If you run across a lender who only wants to talk to you when you "have a deal", keep looking. A good lender is worth their weight in gold, just like a good Realtor and a good GC.

@Allen Ramirez you're asking great questions and you've gotten some spot-on advice from seasoned investors like @Dan H. who know your market very well. One particularly salient point he makes is "I want a market where my value add adds the most value." This is absolutely critical with a BRRRR and I say that from the perspective of a lender and an investor experienced with this model. It's true that it was MUCH easier to pull off the ultimate BRRRR strategy even 2-3 years ago. But between bloated asking prices, the increase of rehab costs and higher interest rates, it's much harder to do. That does not mean it's impossible, just harder. I've had to shift my thinking in 2 ways. 1) the "infinite return" whereby you get all your money back, plus cash flow, is less likely. But at the end of the day, I'm ok with that and here's why. I don't mind leaving 10-15% in a deal. I look at it like paying 10-15% down on an investment property and I can stomach that. 2) I have to force significant value into the property to ensure I get as much of my cash back as possible. It might seem this is easier to do in a cheap market, but as Dan points out, that's not always the case. You need to buy it right (almost never the listing price), you need to be confident in your rehab pricing and ARV, and you need to use the right financing tool that won't eat up your profits. These are the things that will safeguard your investment and allow your strategy to work for you.

Don't overlook the importance of having the right financing product to achieve your goals. When you build out your team, make sure you've got a lender on your roster. I say that both as a lender and an experienced investor. It's never too soon to create a relationship with a lender so that when the time comes to buy, you know you have a trusted partner in your lender. If you run across a lender who only wants to talk to you when you "have a deal", keep looking. A good lender is worth their weight in gold, just like a good Realtor and a good GC.

Best of luck to you and if I can help in any way, please reach out.