All Forum Posts by: Kevin G.

Investment Info:

Single-family residence buy & hold investment.

Purchase price: $420,000
Cash invested: $55,096

Purchased a distressed single-family home in Antioch, CA, using the BRRRR strategy to create $141,000 in equity and secure a cash-flowing rental property. This deal leveraged strategic financing, value-add renovations, and market knowledge to deliver a strong return.

What made you interested in investing in this type of deal?

Antioch is a growing market with strong rental demand and opportunities for appreciation. The property had significant upside potential as it was priced below market value and required mostly cosmetic updates. This deal aligned perfectly with my strategy to build equity and cash flow while leveraging hard money financing and refinance opportunities.

How did you find this deal and how did you negotiate it?

Discovery: I found this property through a local wholesaler specializing in off-market deals. It was in rough condition, which limited competition and made it a strong candidate for the BRRRR method.
Negotiation: After analyzing comps and repair costs, I negotiated a $420,000 purchase price, which was below the market value for similar properties in the area. I emphasized the quick closing timeline and my ability to pay cash via hard money financing to strengthen my offer.

How did you finance this deal?

Initial Financing: Used a hard money loan (HML) with 10% down, interest-only at 10.95% for 1 year. The HML covered 100% of the $32,500 rehab budget through drawbacks.
Refinance: Post-rehab, I refinanced into a primary mortgage, creating 25.5% equity in the property.
Future Financing: I plan to leverage the property with a HELOC to access up to $86,000 in capital for future deals.

How did you add value to the deal?

Rehab Scope:
Cosmetic remodel: Painted the interior/exterior, updated the kitchen cabinets and countertops, and installed new flooring.
Modernized fixtures: Replaced light fixtures, outlets, and switches throughout.
Enhanced curb appeal: Painted the brick exterior, added landscaping, and modern black accents.
Timeline: Completed the rehab in just 4 weeks to minimize holding costs.
Strategic Upgrades: Focused on cost-effective improvements like vinyl flooring and fresh paint, wh

What was the outcome?

Equity Created: $550,000 ARV - $409,000 loan balance = $141,000 in equity.
Cash Flow: The property rents for $2,950/month, covering all expenses and generating slight positive cash flow.
HELOC Potential: Post-refi, I can secure a HELOC up to $86,000 (90% LTV) to fund future investments.

Lessons learned? Challenges?

1. Finding Value: Identifying properties with strong upside potential is critical in markets like Antioch.
2. Rehab Management: Staying under budget and on schedule ensures better cash flow and quicker refinancing.
3. Leverage Matters: The HELOC strategy allows me to scale quickly and acquire more properties without tying up personal capital.

Quote from @Jonathan Greene:

The BRRRR strategy was great a couple of years ago, but it's much harder to do now because of the high interest rates. It can be done in smaller towns, but the margins are still very tight. All of the BRRRR propaganda was from when rates were very low. Where do you plan to find your deals? Unless you are finding off-market opportunities direct to seller, I can't imagine the deals working on BRRRR.

I completely agree that the current market makes BRRRR a much tougher strategy to execute, especially with higher interest rates and tighter margins. A lot of the success stories and content we've seen in the past came from a very different rate environment, so I'm definitely factoring that into my approach.

For now, I’m planning to focus on the Jackson County/MO area, specifically around Lee’s Summit where I have some local support from family. I’ve been looking at on-market deals as a starting point, but I know the importance of sourcing off-market opportunities. That’s something I’m actively exploring—whether it’s through direct-to-seller marketing, networking with local wholesalers, or even tapping into connections through my brother-in-law, who works with builders and contractors in the area.

I’m not expecting slam-dunk deals or easy wins, but the numbers on a few potential projects I’ve run so far seem to work under the assumption that I’ll leave some cash in the deals. I know it’s going to take a lot of digging and possibly building my own pipeline for off-market leads to make this strategy viable long-term. Definitely open to any tips or strategies you’ve used to find deals that work in today’s market!

Thanks for sharing this perspective—it's super helpful, and I totally agree that the "perfect BRRRR" is incredibly rare these days. I'm fully aware that getting all of my cash out isn't always realistic, especially in the current market with higher prices and interest rates. My expectation is to keep some cash in each deal, but still aim to maximize how much I can refinance out to make the numbers work.

I’ve been cautious about setting my expectations too high, and I appreciate the reminder to focus on deals that work rather than chasing perfection. The deals I’ve found so far (and to be fair, it’s not a huge sample size yet) seem to make sense and pencil out under this mindset. I’m sourcing carefully and trying to approach it methodically, especially with the added layer of investing out of state.

It’s good to hear advice from someone with experience. The last thing I want is to fall into analysis paralysis or burn out chasing something unattainable. Thanks again for the reality check—it’s grounding and motivating at the same time!

Hey everyone,

I’m diving into the world of out-of-state real estate investing and couldn’t be more excited (and maybe a little nervous). I currently live in the Bay Area, but I’ve decided to start investing in the Jackson County/MO area. Why? My sister lives in Lee’s Summit, so I’ll have family nearby to help navigate the local scene. I am not preticuarly brand new to real estate as I've done 1 house flip before and 1 brrrr here locally to me.

To begin, I'm aiming to tackle two single-family BRRRR projects in the Jackson County, MO area. My main goals with these initial projects are:

1. Gaining valuable insights into the local market.

2. Getting hands-on experience with out-of-state investing, particularly when it comes to remodels and managing from afar.

3. Testing the entire BRRRR process to see if it's the right strategy for me long-term.

If all goes well, I’d love to scale up and explore multi-family projects. However, if single-family homes prove financially viable, I’m happy to continue building in that niche.

Since these homes and projects are significantly cheaper than my market, the risk is relatively lower for me and can do at least two at a time.

The Challenge

One of the biggest hurdles is finding reliable contractors and subcontractors in the area. My brother-in-law, who owns a landscaping company in Lee’s Summit, works with a lot of local builders and has been a huge help. While most of his experience is with new construction rather than remodels, he’s already given me a few pointers and is looking into potential referrals for me. I am wondering if anyone invests in this area can provide me with some referrals?

If you’ve worked with trustworthy contractors or subcontractors in the Jackson County/MO area (especially those familiar with investment properties), I’d love your recommendations. Bonus points if they’re used to working with investors or can help keep costs in check while maintaining quality.

Cheers,

Kevin

Quote from @Ko Kashiwagi:

Where in Missouri are you looking at? I know a couple of people in similar situations who lives in CA investing in St. Louis! Happy to connect

 To live, Lees Summit, Greenwood, Blue Springs, Raymore, and to invest in anywhere in Jackson County, MO 

I'm planning a big move from California to the Lee's Summit area in Missouri with my family. As part of this transition, I'm looking to dive into the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to build a portfolio of investment properties, and I'd love to get some advice and insights from those of you who are familiar with the area!

A Little About My Situation:

I currently work in EMS in California and will be super commuting, working 10-day stretches in California while spending the rest of my time in Missouri. This setup allows me to maintain my current income while being physically present in Missouri to actively manage our real estate investments.

My BRRRR Strategy:

My goal is to identify single-family homes or small multi-family units that need some rehab work, ideally in neighborhoods with strong rental demand and growth potential. I plan to:

1. Buy: Find properties that are undervalued or in need of renovation.

2. Rehab: Coordinate with local contractors to perform quality, cost-effective renovations to increase property value and rental potential.

3. Rent: Focus on long-term rentals to generate steady cash flow, with an eye on market conditions for any short-term rental opportunities.

4. Refinance: Use the increased equity from the rehab to refinance and pull out capital for future investments.

5. Repeat: Continue to scale the portfolio, leveraging both equity and cash flow from previous projects.

Why I Chose Missouri:

Missouri, particularly the Lee's Summit area, appears to offer a great environment for BRRRR investing. The property prices are more reasonable compared to many other markets, and there seems to be a healthy demand for rental properties. The local economy is stable, and the potential for appreciation seems promising, especially in areas that might benefit from revitalization.

Looking for Advice and Insights:

Since I'm new to the area and the Missouri real estate market, I'd love to hear from fellow investors who have experience with BRRRR deals in this region. Specifically, I'm looking for advice on:

- Neighborhood Recommendations: Which neighborhoods in Lee's Summit or nearby areas have you found to be best for BRRRR opportunities?

- Local Market Conditions: What's the current state of the market for fix-and-flip or BRRRR properties? Are there particular trends or conditions I should be aware of?

- Contractor and Vendor Referrals: Any recommendations for reliable contractors, property managers, or other vendors who are familiar with the BRRRR process?

- Challenges and Tips: What are some common challenges investors face in this area? Are there any local regulations or processes that are particularly tricky to navigate?

- Successful BRRRR Stories: I'd love to hear about any successful BRRRR deals you've done in the area and what made them work.

Thanks for any help you can provide!

Quote from @Travis Biziorek:

Hey Kevin, a couple thoughts from someone who's done something similar.

My wife and I moved with our (not even) 1 y/o son from the Bay Area to Metro Detroit in 2017. We bought a large home on a large lot we thought would be our "forever" home for $460k. 

While I grew up in Michigan, my hometown was 4 hours north. And the only family I still had there was my dad who isn't very present (to say the least). I mention this because we didn't have family help, etc. so this could have been a factor in what came next.

We soon decided Michigan was not for us and we wanted to be back in California. It's a long story but we ended up aggressively investing in Detroit real estate, built a 12-door portfolio, and then moved back. But this time we're on the Central Coast (SLO county) and we love it here. 

It's more affordable than the Bay Area and we're closer to my wife's side of the family. We don't get a ton of help but it's definitely better for the kids. 

Some advice on what I would do different...

Be prepared for the fact that you may want to move back. We didn't think we would so we bought our "forever" house right away. If I did it over I'd buy a much smaller house that would make a sensible rental. It sounds like you have this covered. 

Make sure that the market there makes sense for your goals to invest. We were originally going to Ann Arbor but the real estate market was so competitive there it started feeling like the Bay Area. So we expanded our search to Metro Detroit and landed there. Still, we thought we'd invest in Ann Arbor RE but that didn't make sense for our goals. Luckily, the Detroit market did and it happened to be 20 min from our house. 

If you're making a big move like this it would be wise to make sure you live as close as possible to where you plan to invest.

Beyond that, simply being open to the idea that you may not enjoy living there and acting accordingly would be my best advice. Difference in weather, culture, etc. might be too much year around for you to enjoy. We found Michigan winters to be blah and too long/drawn out. Summers were ok but are extremely humid. These things can add up and take a toll.

Finally, cost of living may not be as good as you imagine. Yes, housing is cheaper but we found groceries were about the same, eating out was roughly the same (although we don't do it too often anyway), car insurance was higher, home insurance was about the same if not higher in MI, and property taxes on my $460k Michigan home were the same as I now pay on my $740k CA home.

Overall, if you can make this work I like the idea of it. But do not discount your desire to come back to CA.

Very helpful, and I will take all these into consideration, so thank you! I am sorry to hear your original move didn't go according to plan, but it sounds like you got some great investment properties out of it.

We would still be visiting California frequently (me for work, and my wife for family), so I don't think we'd want to move back for sure, especially in the area we live in. BUT you never know. I say that now, but maybe things will change here for the better, and if that's the case, I could change my mind.

I am aware that it may not all be savings, but just having much lower rent/mortgage along with lower utilities is already a huge savings for me. I know that groceries and eating out are still the same, and I'm totally fine with that.

Quote from @Caleb Brown:

Regarding KC Lee's Summit is a nice area overall. Rents and prices are steadily going up and they are continuing to build. If you can afford and manage the commute it could work. I would just make sure to be 100%, that is a large commitment going back and forth. 

Agreed. Every time I visit family in the area, I love it more and more. It's definitely a nice and safe area, especially coming from the Bay. I appreciate the concern. My goal is to minimize the amount of time needed to go back and forth.

Hello Everyone,

I have some experience with real estate investing, mainly house flipping here in the Bay Area, CA. I currently have no rental properties but definitely want some. I work full-time in the Bay Area and earn a strong income (Range is $180k-$240k based on how much OT I work). I am a first responder with essentially endless overtime. I am married with 2 kids and about to have a third soon.

My sister lives in the KCMO area, specifically in Lees Summit. I am considering buying a starter home for my family (around $300k), living in it for a year, and then renting it out while buying a larger home for our family, like a 5-bedroom in the high $400k to low $500k range. I can comfortably afford both the starter home and the more expensive home with my income, given my DTI is basically zero. My plan is to utilize the 5% down payment available through conventional loans.

I would essentially mega-commute for the first year or two, working about 10-day stretches and then having equal time off, using my PTO strategically to gain more time off. I also get baby bonding through CA, which is paid family leave, and I plan to use this strategically to spend more time at home.

When I buy the starter home, based on my calculations, I'd be saving around $6-7k per month. Even with the larger home, I'd save around $4k, depending on how much overtime I work.

I am tired of paying high rent in the Bay Area, along with high utility bills. I feel that even if I work less, my money will go further and I can save more. This would only be a 1-2 year plan as I work on building other income streams to leave my first responder job.

I also want to acquire lots of SFH and small MFH over there using the BRRRR method as I build more connections.

Thoughts on this plan?

P.S. Don't worry, flights would essentially be free (I have tons of points and credit card churn), and I’d have a free place to stay when I am working in California.

Hi,

I’m at a crossroads with a startup idea I’m passionate about and could really use some advice from this knowledgeable community.

I’m currently working on building a platform aimed at revolutionizing the way we approach real estate investment. Initially, I started with a project called Dealsletter, which has grown quite well and has received positive feedback from the real estate investing community. Now, I'm looking to take the next step and build a comprehensive platform.

However, I’m conflicted between two potential approaches for the initial launch:

Option 1: Real Estate Deal Posting Platform

• Concept: A platform where users can post real estate deals they’ve discovered. Other users can browse these deals, view detailed investment metrics, and potentially connect with the deal posters.
• Pros:
  • Simple and straightforward to build.
  • Leverages the existing interest and user base from Dealsletter.
  • Validates the idea with minimal investment.
• Cons:
  • Limited engagement if users only post deals without further interaction.
  • Might not fully address the needs of users looking for investment opportunities.

Option 2: Investment Partnership Platform

• Concept: A platform allowing both accredited and non-accredited investors to come together and invest in real estate deals. This would include user verification, deal posting, and investment tracking.
• Pros:
  • Higher potential for user engagement and transaction volume.
  • Addresses a more significant need in the real estate investment space.
  • Potential for greater revenue through transaction fees and premium subscriptions.
• Cons:
  • More complex to build, requiring robust user verification and secure transaction handling.
  • Higher initial investment of time and resources.

I have already received strong positive feedback from my Dealsletter subscribers, with many expressing interest in a more comprehensive platform. Additionally, I’ve had several successful viral posts on Reddit that indicate a genuine interest in the concept.

Questions for the Community:

1. Which approach do you think has a higher chance of success in the real estate technology market?
2. What features would you prioritize for the MVP (Minimum Viable Product) in either scenario?
3. Are there any significant risks or challenges I should be aware of with either approach?
4. Has anyone here had experience with similar platforms and can share insights on what worked and what didn’t?

Looking to reach out to investors to gain their advice / input on what platform they might be interested in using! Thanks for any help you can provide.