Rookie Podcast 85: Stop Creating Your Own Roadblocks to Investing with Justin Munk

Rookie Podcast 85: Stop Creating Your Own Roadblocks to Investing with Justin Munk

47 min read
Real Estate Rookie Podcast Read More

Join BiggerPockets (for free!) and get access to real estate investing tips, market updates, and exclusive email content.

Sign in Already a member?

Coming up with capital isn’t easy when you’re just starting out. How are you supposed to get 20% down for one property, let alone multiple when trying to grow your portfolio. This was the predicament Justin Munk was in until he found out about the BRRRR strategy. When implementing the BRRRR strategy, Justin was able to use a fraction of the money he would need as a down payment to get a renovated, highly desirable rental property.

Justin invests over 1,000 miles away in Ohio and manages all his rehabs remotely. Most investors would stray away from remote rehabs, but Justin has so many “checks and balances” set up that he feels confident to do them. His rehabs have to go through an inspector, a contractor, and a leasing manager before they’re put on the market. This allows Justin to have extreme confidence that he’s rehabbing a property to get the highest rent, with the lowest headache to management.

Justin gives some valuable advice to new investors that are struggling with analysis paralysis: don’t sabotage your own deals by finding problems in every property! 

Click here to listen on Apple Podcasts.

Listen to the Podcast Here

Read the Transcript Here

Ashley:
This is Real Estate Rookie, episode number 85.

Justin:
It’s not like I don’t want to work anymore, but I wanted to be able to fit in work around life rather than fitting in life around work.

Ashley:
My name is Ashley Kehr and I am joined by my co-host, Tony Robinson. How are you today, Tony?

Tony:
I’m doing great. It’s been a busy week for us. We’ve taken now three listings live on Airbnb in the last like two and a half weeks, so my head’s spinning a little bit, but it’s a good place to be in.

Ashley:
I love seeing the Airbnbs come together when you and Sarah set them up on Instagram. It is so cool, you guys. They do the Airbnb experience that is really unique. It’s very Instagrammable, I have to say.

Tony:
What you don’t see is all the background work of me having to go to Home Depot like four different times to build this picnic table because the nuts kept getting stripped. So yeah, there’s a lot of things that are happening.

Ashley:
Yeah. Tony and I actually did a call last week, and while we were on the call, there’s the power tools going. I think it was the picnic table you were actually putting together.

Tony:
Yeah, it was the picnic table.

Ashley:
And one thing Tony has said to me, and I would totally relate to this too is, you’ve mentioned this to me a couple of times how putting together furniture really tests your marriage, and I’m like, “I can not imagine being in a confined space, putting together furniture for two days with somebody.”

Tony:
391 square feet, me and my wife shared for three days building furniture with no directions, no words, but it’s cool, we got there.

Ashley:
Yeah. How many have you guys done together by now? You guys are turning into pros.

Tony:
Yeah. I’m losing track. Yeah. We’re figuring it out now. What about you, Ash? What’s new on your side?

Ashley:
Oh, not much. Actually, this weekend I’m going to Portland, Oregon. It’s a big secret. Actually, I’ll be flying into Portland then going to Bend, Oregon. So if you guys have not read Brian Murray’s book, Crushing It, a super great investment book on multifamily real estate. It really goes through all things real estate like getting started, going through the hard things, the successes and building a team and a property management company, and scaling up. So I highly recommend that book. But he’s actually running an ultra marathon in Bend, Oregon this weekend, so a bunch of us are going and we’re going to surprise him there. And we got, t-shirts made with his face on it. We’re just going to show up and tear him on and surprise him.
So I’m really excited. He’s a really interesting, awesome guy, very humble, but always willing to teach and help someone learn and grow. So couldn’t have picked a better person to go surprise, run an ultra marathon.

Tony:
That’s beautiful. I’ve only been to Oregon once, but it was so lush and green when I went out there, so it’s quite a lovely-

Ashley:
I’ve never been.

Tony:
Oh, there you go. Exciting.
Well, today’s guest, what a phenomenal person we had on today. Ashley and I were geeking out in our little chat on the side about all the great things this guy was saying. First, I should give you guys his name, Justin Munk was our guest today. He’s based in Utah, but he invests out in Ohio and he gives I think really almost like a master class on how to build a team and effectively BRRRR out of state.

Ashley:
Yeah, and defining your market. We actually go through what you should look at when you’re analyzing a market, things that may be important, things that aren’t important. And we go through an actual list of, this is what you should look at and see if these are things that you want to analyze when you’re looking at a new market. But yeah, building the team. And he’s just very insightful and he described things very well. He talked about things that we bring up on the podcast, but almost gave a little bit of a twist to it, such as when an obstacle comes up, you’re making an assumption, that’s an obstacle, but is it really an obstacle? So you guys should listen through to the whole podcast.
At the end, he gives his Instagram, and I think some of you will actually know who he is. You’ve seen his Instagram content, but just because he’s always trying to help people learn and grow and become better real estate investors.

Tony:
Yeah. One of my favorite episodes by far. Justin was phenomenal, so you guys are going to love this episode. And if you guys are watching this on our brand new Real Estate Rookie YouTube channel, please make sure to Like, Subscribe, turn on the notifications, that way, you guys are notified as soon as we drop a new video, but hopefully you guys are enjoying the content so far.

Ashley:
Justin, welcome to the show. Can you start off telling everyone a little bit about yourself, maybe even pre real estate?

Justin:
Yeah, you bet. I am super excited to be here. I’ve always been a big fan of BiggerPockets, so this is a dream come true for sure. Hopefully, I can share a few things that will help new investors to get started on their journey. When I first got married, we bought a town home and we knew that there was some potential to rent it out and make some money and start that real estate journey there. I’d had an uncle that was very successful in real estate investing, so I’m like, “There’s got to be a way for us to get into this.” So once we moved out of that town home, we started, we rented it out and everything was good. So I started, I’m like, “Where do we go to get the next property?” And we realized really quickly that in order to get that next property, we had to come up with 20 or 30% down or whatever.
And I’m like, “Well, how many of those can I do before I run out of capital, ran out of money.” And so I quickly learned that I needed a new way to invest in real estate, I needed to learn more about it. I grew up on a dairy farm, learned how to work really hard. And so I knew that if I put in some effort, got after it, I would be able to figure out a way to continue into real estate investing. And so I dove in, discovered BiggerPockets and the podcast and the books, and really learned about the BRRRR method, which was really intriguing to me because I could see a way to get my capital back and do more, or do another property and another property and not be limited on just my personal capital. So that’s how I got started into it.
Like I said, I grew up on a dairy farm, have a full-time job in the solar industry. So real estate has always been something on the side, but I’d like that to become more of a full-time thing for me. And so, yeah, that’s where we’re at now, we use the BRRRR method and we invest long distance.

Ashley:
Justin, real quick, can you give everyone an overview real quick of your portfolio? How many deals you’ve done? How many rentals you have now?

Justin:
Yeah, for sure. We ended up using that townhome. We sold that townhome. I still have mixed feelings about selling it. But that was our seed money, that was our capital. Because we had lived in it for five or six years and then we rented out for two or three years, so we had some equity in it, and that allowed us to use that money for our next property. So that was the first one. The second one was the first BRRRR method, and we ended up not picking a very good contractor and it didn’t turn out to be the best deal. We can maybe go into more details on that, but we learned a ton. And we decided that in order for our capital to go farther, we needed to go into other markets, the Northern Utah market, Idaho market is super expensive, at least from my perspective. And so we started looking into other markets outside.
So now we own four in Ohio and we’re hoping to pick up another one this week, and they’re all BRRRR properties.

Ashley:
That’s awesome. Congratulations. I want to go back to your mindset and what you were thinking when you bought that first townhome. What was your life like then? Were you working your W2? What was your lifestyle like and how did you make that jump, that leap and get into real estate investing?

Justin:
Yeah, the W2. I had the full-time gig, and I just knew… I’ve never wanted to be the guy that worked till I was 65 and then retire, that’s not what I’ve wanted. So I knew that I had to start building up other forms of income, other forms of wealth so that I could retire early. And I know we talk about this a lot, retire early, financial independence. And I just feel like what I’ve always wanted, the mindset around that was, I wanted to be able to… It’s not like I don’t want to work anymore, but I wanted to be able to fit in work around life rather than fitting in life around work. Does that make sense?

Ashley:
Definitely.

Justin:
And I don’t get me wrong, I have a really good job and I’m a manager, a part owner in the company, so it’s a really good gig, but I always feel like life and family are getting the leftovers and I’m working in like, “Okay, yeah, I can squeeze in an hour here to go do whatever with my son or whatever.” And I’m just like, “That’s not how I want to live my life.” I want it to flip around so that I’m like, “Oh, I’m going to take a break from fishing with my son to close this real estate deal down or whatever. I want it to flip around.” And so that was the mindset going into real estate. And that’s why we’re like, “Okay, we got to figure this out.”
I knew there was potential, and so we just dove in and started learning and that’s how we got to where we are.

Tony:
Justin, you brought up a really good point there. You didn’t say it this way, but what you’ve just described was your why. Your why behind your real estate investing is, you want to make sure that you have enough time for your family and that’s your work activities don’t detract from your family life. And for a lot of new real estate investors, I think the first thing that they sometimes focus on is just the dollars and the cents of real estate investing, but it’s such a hard path to get to the point of financial freedom through real estate investing that if the dollars and the cents are the only thing that’s motivating you, there’s a high chance that you’re not going to persist through all of the struggles, through all of the obstacles, through all the challenges that come along the way.
I guess just a word of advice to all the listeners is, take a page out of Justin’s book and tie your motivation to something bigger than just the money. Justin, I want to go back to something you said, because you said that you’ve used this strategy because you initially ran out of capital. But for the listeners that aren’t familiar with the BRRRR strategy, what is that, can you break it down for us?

Justin:
I love the BRRRR strategy. Obviously, you know that if you’re picking up investment properties, you’re usually having to come up with 20 or 30% down if you’re not going to live in it. House hacking is another strategy which is awesome too, but I have a wife and four kids, so living in just one side of a duplex is tricky for me. But the BRRRR method, you’re able to buy a property, you rehab it, and then you rent it out and then you refinance your capital back out. So it allows you to, let’s just say, like this deal that hopefully I pick up this week, we are going to offer like $41,000. We might put in maybe $10,000 into the rehab. It’s probably worth 70 or $75,000. So the bank, my bank, I’m looking for other financing solutions, but some banks will go 70% loan to value, some will go as much as 80% loan to value.
So they are giving you a long-term loan, a cash out refinance, so you have a mortgage on the property and that you get that total investment, call it the $51,000. You get that back out and now you get to go do another property. You have zero money in the deal, sometimes there’s two or $3,000 left in the deal, depending on how it comes together. But you have zero money left in the deal, you’re cash flowing, and now you have your money to go do it again. And that to me was the ultimate way of being able to repeat it and scale a portfolio over time.

Tony:
So many people in the BiggerPockets community leverage the BRRRR strategy for all of the reasons that you just recommended. It allows you to recycle your capital over and over and over again. You talked about your markets, I just want to go back to that really quickly. You said you started investing in one market. If you can remind us what that market was, what you moved into a second market. I want to know, how did you identify what that second market was? Because I think a lot of people who are looking to get started in real estate investing, one of their pain points or one of their obstacles is trying to decide, “Where do I invest?” So I’m curious how you landed on your second market.

Justin:
I live in Northern Utah, so that was obviously where we started looking, but an average three bed, two bath in this market is 150, $170,000, where I’m picking up three bedroom, one or two bath in Ohio for 40 or $50,000. I didn’t even have enough capital initially to start in this market and to pick those up because we were obviously buying cash, we’ve got to buy it outright, so we had to go to a different market. And my tip here will be, it sounds so simple, but just Google it. Like if you start to research, just Google it. There’s so much data out there that’s available, whether it’s BiggerPockets or other members of BiggerPockets and their own resources, there is so much data out there.
For example, if you’re looking into the Memphis area, there’s a company there, a group that they have a podcast and all they do is they break it down every zip code every year. All I have to do is like, “Oh, here’s a Memphis properties that I may be interested in.” I go to the podcast episode where they cover that zip code, and I learn about that zip code. The data is so available to us. The forums on BiggerPockets are obviously huge. For me in deciding to go to Ohio, I was following somebody on Instagram and I could tell that he was investing out of state. I’m like, “Hey, where are you investing?” And he said, “Ohio.” And I’m like, “Hey, can I pick your brain?”
I think I think I paid him like 100 bucks for an hour of his time, which is crazy. But what it did is that it shrunk the research period down. In an hour, I knew what neighborhoods to invest in, what neighborhoods to avoid, some of the tricks of the market out there with the point of inspection and things like that. And so within an hour, I felt really comfortable with where I was investing. And I think within a few days I was making offers. Obviously, I had to build my team and stuff like that, but we were on our way really quickly, not taking months to do the research. So long answer to your question, but leaning on people that are already doing it, just Googling it, looking for the resources that are already there, we can get a long ways with just those resources.

Ashley:
Justin, I think a big thing to point out though, is not that you reached out to this person and not that they helped you and cut your time down, but that you actually did the research first. You Googled it first, then you approach them, so it wasn’t just a DM that said, “Hey, what should I know about your market? Or, can you tell me everything there is to know about that market?” You had already done some research yourself. So it wasn’t like you were an Ohio market rookie coming in, you had some data already and you had a foundation so that they didn’t have to take the time to teach you those steps you could easily Google and you could spend that hour with your $100 getting more valuable information, stuff you couldn’t Google or easily find.
So I think that that is huge right there because we talk so much on the podcast about finding mentors and what questions to ask. And I think that right there is, Google everything you can, and then after that, go and get their opinion on what you have actually found out.

Tony:
Yeah. Ashley, you bring up a good point too, because Justin, maybe you can share, what data were you looking at when you were analyzing those different zip codes? What did you see in the data to make you say, “Okay, this is a good market for me”?

Justin:
I used that Memphis example just as an example, but in Ohio, I felt like I could figure out… I knew the BRRRR method and I had looked at properties, and I could see what properties were going for that were slightly distressed and may make a deal. I was using the BiggerPockets calculators, obviously, to run the numbers. But the only thing I didn’t really know and that was crucial for me to get from this investor was the markets. I could talk to property management companies and agents, but I wanted to get from an investor, what were the, not markets, but the neighborhoods to avoid and the neighborhoods to focus on?
I felt like that was the missing piece in the data or that was the one thing I was afraid of, was like, I’ve got to make sure this is in a decent neighborhood. And sometimes it’s just really hard to tell. I know you can use like the crime maps on Trulia and things like that, but I don’t think that’s super fine tuned, I think it’s generalities. And so that was the data that I needed from that investor, that coach or mentor, I guess, is just, “Okay, now that I have all this data, I know it’s a good market. I did the population trends, who are the employers.” I did all of that stuff. All I needed from him really was, “Okay, what zip codes do I go to?” And that was really where we fine tuned everything and I was able to feel pretty confident in making offers.

Ashley:
I just pulled up my market analysis worksheet here that I use with each thing that I look at, so I was wondering, if you guys wouldn’t mind, I can read through it real quick and then I’d love to get your guys’ feedback, because you both are investing out of state and finding new markets, and see what things should be added or what things you don’t think really matter at all. So the first one is job industry, population growth percentage, average home value, average rent, price to rent ratio, tax assessment percentage and then anything unique with utilities. Like I had to introduce Tony that houses, some houses have wells on them, and explain what a well is. Seasonal maintenance such as snowplowing, any specialty insurance, such as earthquake or flood insurance, the average age of the renters, average education level, percentage of homeowners versus percentage of renters in the area, the crime stats, school district rating, average age of properties, and then average vacancy rate in the area from other landlords.
And then lastly, what kind of exit do you have? Like if you’re buying a rental, is there potential to sell it, if it’s single family house, sell it and flip it or something like that?

Justin:
That’s super thorough. That’s even beyond what I did, and that’s awesome. Yeah. That’s a good list.

Tony:
I’m looking through. I did something very similar when I first started investing too, so I pulled up that old spreadsheet that I had. And I think you hit on pretty much everything that I had in here. I did have some stats on vacancy, multi-family versus single family. I think the only other thing I had on there was the school ratings, and I was doing it by MSA, so by each MSA, like what were the grade school ratings. But I think everything else, you pretty much hit. Maybe if there’s like any other economic anchors in those markets as well, like is there a big Amazon hub that just got built or is there some, I don’t know, whatever the other economic anchors might be. But for everything else, you’ve got a pretty exhaustive list.

Ashley:
Yeah, with the job industry, I think it’s important to point out too, is make sure there’s not just one job industry too in that market, maybe there’s two or three that are supporting it because if that business fails or they move locations, then you just lost most of your potential renters. Justin, what are some of the things you think that really don’t matter when analyzing a market? What are some of the things that you didn’t even look at because they don’t align with your goals? Because some of these things, they could not matter to anyone because they’re looking for appreciation, they’re not looking for cashflow or vice versa. So what are some things you don’t care at all to even analyze in a market?

Justin:
That’s a great question. For me, I had some people challenge me like, “Hey, well, Ohio is not like a real high appreciation market,” and it’s not. It’s felt that way the last six months though, but it’s not an appreciation play. For me, I want cashflow. So for me, I’m able to rent these properties out for well over the 1% rule, which is awesome. Again, they’re worth 70 or $75,000, they’re renting for 950 or 1050, and so the rental ratio is awesome, but I know that the appreciation isn’t going to be as great as other markets, but it’s also not going to swing the other way as bad as other markets. So I feel like I’m safer there in some regards because I won’t see the swings, it’ll just be consistent rental income, and that’s ultimately what I was after.
I wasn’t going to these super hot markets that were appreciating like crazy, because that wasn’t what I ultimately wanted. I’ll still get the loan paid down so I will build equity in that fashion, but not necessarily through appreciation, although it’s starting to appreciate like crazy right now.

Tony:
Justin, something that comes up a lot from the real estate rookies is this idea of analysis paralysis. They listen to the podcasts, they read the books, they’re active in the Facebook groups, but for whatever reason, they can’t get started. And one of the things that holds people up is this idea of trying to find the perfect market. I just want to give my thoughts on it, and I’m curious what both of you think, but for me, the first market, as long as it’s not a city that’s on fire and as long as you can find a deal that makes sense in that market, then I think you should pull the trigger. Even if it’s not somewhere that you want to invest in for the next 30 years, there’s always an opportunity to exit that market if things don’t work out.
But for me, if you’re a rookie that’s done zero deals, what’s more important than finding that very first or perfect market is getting the first deal done. So Justin, I want your insight, and then Ashley, we can go to you afterwards because I know you’re in the process of looking for a new market as well, but Justin, for you, how did you move past the analysis paralysis? Was it that conversation with that other investor or was it something else that helped you take that leap of faith?

Justin:
It’s a great question because this, as I’ve spoke to other people that are trying to get into real estate investing, they do the exact same thing that I did. I have a perfect example of talking myself out of deals. So finding the one little booger that’s on the deal and being like, “Oh yeah, no, we can’t do this. Oh, that’s just too much risk. Or, that assumption is too big,” or whatever. And so I talked myself out of a lot of deals before finally, the same investor that was that mentor, he messaged me out of the blue. Because the whole time I’m sharing this on social media, showing the deals and I’m talking about, “Oh yeah, we decided not to offer on this property.”
Out of the blue, he calls me out. He DMS me and he’s like… I can’t remember what he said, something about sabotaging the deals, talking myself out of these deals. He’s like, “You’ve got to stop it.” And so it was a wake up call like, “You know what, you’re right.” And so I’ve learned over time now that there is no perfect market, there’s no perfect deal, there’s no perfect scenario, there’s no perfect time. You’re right, there’s always going to be some unknown, there’s always going to be some calculated risk or assumptions that we’re making, but that’s why we as investors make money because that’s the value we bring, is we figure this stuff out. We make the calculations and we jump.
There will always be some point in your real estate journey, whether it’s the fifth door, the first door, maybe even the 100th door, I don’t know, not there yet, but where you have to jump into something new, you have to take a little bit of a blind jump. Otherwise you’re never going to accomplish anything. So that was it, not looking for the perfect deal and understanding that there really is no such thing. And then having that investor call me out. In fact I messaged Brandon Turner one day, surprisingly, he responded to me. I’m like, “Hey, these numbers don’t work. I’m not getting all my money back out on these BRRRRs.” And he’s like, “Yeah, I very seldom get all of it. The perfect BRRRRs even is rare scenario.”
So that was super liberating. And I was way more confident to jump into deals after I figured that out or got that mindset.

Tony:
Justin, I love, love, love your response to that one, man, because it was a change in mindset, not a change in knowledge, not a change in some kind of technical skill. It was a switch in your mind that went off that said, “This is the change that I need to make in order to be a successful real estate investor.” So for all of the rookies that are listening, I want all of you to go back, re-listen to that last like 60 seconds over and over again, because that’s what elevated you, Justin, to be able to move into that second market and finally find success. Ash, I want to get your input. I know you’re looking for another market as well. At what point do you feel you’ll be ready to make that leap?

Ashley:
Yeah, I don’t know. This is where I struggle, is that I go and I search out for these other markets and then I find this perfect opportunity in my current market and then I get distracted. But I think that one thing for me that holds me back is that it’s finding your team, that that’s always been the struggle for me. And a part of me is the blame because I’m not putting in the work to actually find a team in different markets. I had done Houston, Texas, and I have a team there, I just haven’t found a property there. But yeah, I think you’ve got to find the market, but you also have to make sure that there’s the people and there’s the team to help you in that market too.
Brandon Turner, we can bring them up again, he had done this post recently on his Instagram saying what he looks for in a market, and one of the things was there must be at least six property managers available for him to pick from in that market before he will invest in there. And I think that’s a great thing because you can get caught up, on what’s going to be your return? What’s going to be your cashflow? Are you going to have renters? And stuff like that, but also, are you going to have the boots on the ground? Are you going to have someone that can show that apartment for you? And yes, there’s tons of ways to manage your property remotely and you can set up keyless entry and stuff, but you’re still going to need a handyman to come in, you’re going to have to still find those people.
So I think that’s where I struggled the most, is not really analyzing the market, but really finding the people in the markets. And even close to me where I live in from my house that I invest probably 30 minutes north and 30 minutes south of my house, well, the same people I have helping with maintenance on those north properties don’t want to travel an hour south, so I have to find different people there. But that would be my recommendation, is make sure that you’re not just analyzing the market, but you’re finding your team in there too.

Tony:
That’s a great point, Ashley. Justin, how are you finding and building your teams in that new market that you selected?

Justin:
There was a little bit of luck. We ended up finding some good people to help us out. So once I had identified Ohio as the place I wanted to go, I started out on BiggerPockets. I know I’m banging on that thing a lot too.

Ashley:
We don’t mind.

Justin:
Yeah, I know. I bet you don’t. It is a phenomenal resource. So I went to BiggerPockets, I’m not sure what tab it is, but basically where I can network with people. I can say, “Hey, I’m looking for this type of person, like an agent or a profit management company in this market. Search, and then you got whatever it is, 45 property management companies, and I just started a messaged them, right through BiggerPockets, you can message them so I’m not having to email or whatever. I messaged like 25, “Hey, I’m going to Ohio. I’m an out of state investor and I’m want to see what you guys can do for me.” Sure enough, you message 25 and really only like seven or eight even respond.
So there’s sign number one of who you want to work with. Because I liked that they’re active on BiggerPockets, I liked that they’re paying attention. So those obviously shortlisted themselves pretty quickly. And then I just had conversations. And I wasn’t so concerned about, and maybe this is a detriment, but I wasn’t so concerned about their fees and how they compared with other companies, what I wanted is responsiveness. I wanted them to be super responsive, I wanted them to be big enough that there was a team so everybody had their responsibilities, it wasn’t just like a one or a two-man show. And with the one that I ended up picking, they were super responsive.
I could tell that there were different people into different departments, so I was talking to… The leasing agent wasn’t necessarily doing everything, it was diversified a little bit. So this company rose to the top. And I did the same thing. Well, they ended up having an agent in-house because there are brokers also, so they recommended an agent and he ended up working out really well. But I also did the same thing for an agent, same BiggerPockets tool, search the agents, start messaging them. The people that responded are obviously shortlisted. And then I just started interviewing them. I just started sending them properties. I’m like, “Hey, what do you think? What do you think? What do you think?”
And the people that were the most responsive, even outside of business hours, because “Ohio’s two hours ahead of me, so I would be finally getting to real estate after 5:00, six o’clock my time, so it’s 8:00 or nine o’clock their time. But if they’re responding, that was a really good sign that they wanted to help me out. Eventually, I’ve narrowed it down to two, and the one that was already with this property management company rose to the top as being the most helpful. So that was how I found the agent property management. Then the agent had a contractor that they referred me to, that he’d done work with before. So that’s right where we started with the contractor.
And luckily, he’s been really good. I don’t think that usually happens. I think you got to go through two or three to find the right one, but this one, we lucked into a great contractor right out of the gate and it’s been pretty good so far.

Ashley:
Justin, I just have to say that the ones you’re sending deals to who didn’t respond, it’s because they went and bought those deals that you’ve sent to them. That’s why you never heard back. If anyone wants to take Justin’s route to find and agent through BiggerPockets, the link to that is biggerpockets.com/agent. And you can search the market you’re looking in and it’ll pop up agents that are available in those areas. So Justin, let’s dive into one of your deals. Let’s hear all the numbers. I’m going to just ask you a couple of questions real quick before we get into the actual story of it. So what deal do you want to talk about today?

Justin:
Do you want a good deal or a bad deal?

Tony:
Whichever one is the most educational, probably for the listeners.

Ashley:
Justin, I’m going to do some fire, rapid questions at you real quick and then you can go into the story. How did you find the deal?

Justin:
On the MLS. Yeah.

Ashley:
Okay. What was the purchase price?

Justin:
I think it was $42,000.

Ashley:
And what kind of strategy are you using this for, BRRRR?

Justin:
We did the BRRRR method, yup.

Ashley:
And what was the rehab cost on it?

Justin:
This one was like, I think it was $12,000.

Ashley:
And is it fully rented now?

Justin:
Yep.

Ashley:
All done with it?

Justin:
Mm-hmm (affirmative).

Ashley:
Okay. We’ll save so you can tell us, is this the good deal or the bad deal?

Justin:
This is a good deal. Yeah. This is a good one.

Ashley:
The good deal. You don’t have to tell us how it worked out yet. So go ahead and tell us the story of how you acquired it, things you learned along the way. And then at the end, let us know what’s your cashflow, what did you refinance it, and how did it work out for you?

Justin:
Yeah. This is one of the, I think this was the first deal in Ohio, and it was important because we proved the model. We proved that it could work. So what we learned was, “Hey, we can do this.” Which is a big thing for me because just knowing that it can work and I can succeed just like all the guests on the BiggerPockets Podcast, that was important to me, just knowing that the model worked and that we could succeed in it. So we bought the property, it went really pretty smoothly as far as through the rehab. And we’ve learned how to work with that contractor, how to communicate.
There was definitely some things that I should have been more clear on as far as what exactly he was going to do on the rehab, so I’ve been fine tuning that over time now, like, “Okay, great that’s your price, this is your very vague scope of work,” but I’ve learned that I need to be a lot more specific because when he comes for that, whatever the second payment or whatever, it’s nice to know that he actually did certain things in the scope of work. So the more specific that scope of work is, the better. That’s been a tough lesson for me to learn, but that’s one thing we learned on this first deal. It ended up appraising, I think it appraised for like 75,000. And so we were able to get all, but a couple thousand bucks out of the cash out refinance.
It’s renting for 950, so I think there’s like just under $300 of cashflow. So it’s been a good property for us, it’s been our favorite, for sure.

Tony:
Justin, I have one follow-up question, I brought it up on Google Maps here, Utah is 1,712 miles away from Ohio. That’s a very long distance, and I think a lot of people have fears of not just investing out of state, but even more so managing this rehab from out of state. So you already touched on the scope of work and how you’ve made some tweaks to that, but A, were you nervous about managing a rehab from such a far distance? And B, what are some of the things you felt that you did that made managing that rehab successful?

Justin:
Anytime that I tell people that I invest in Ohio, they just look at me like I’m absolutely crazy, they just don’t understand. But the way I look at it is honestly, I’m the real estate investor, I’m not the contractor, not the property management company, and I’m not like an inspector. I know what a distressed property looks like, and I know what some of the big issues are, but I don’t know the finer details and I don’t know how to rehab the kitchen, I’ve never done it. So I tell people that I’m like, “Well, I would probably use this…” So I have a method of checks and balances to make sure that no one team member can take me too far astray.
We have the agent, he obviously wants to sell me or help me buy a property. So he’s a little bit biased as far as, “Yeah, it’ll be a great deal, not just a little light rehab.” So he has his biases, which is fine. But then I have a contractor as soon as we get into contract, and I always have an inspection contingency, I think that’s crucial. It may eliminate some deals for me, but it’s the safety net for me. Once we’re in contract, I have the contractor go over there and he can say, “Whoa, whoa, this is way more rehab than we’re thinking.” So he can check what my agent was saying. Anyway, he walks through it, he gets me a rehab, I then pay an inspector, a home inspector to go through it every time.
And some people might cringe at that, I know it’s like 350 bucks every time, but this is my eyes. Once he’s gone through that property, I get like a 75 page report with like 100 pictures. I’ve seen every nook and cranny of that house even though it’s 1,200 miles away. So people say, “Well, how are you buying these places without seeing them?” I’m like, “I’ve technically seen them. I haven’t walked through them, which would probably be bad, I’d probably just get all emotional about the deal and find a thing wrong was it to not do it, but it’s actually works better.” So the inspector goes through it. So he’s holding my contractor and my agent accountable and their opinions of the deal.
He’s also going to add a few things to the scope of work that the contractor may have said, “Ah, that’s going to be a little bit hard, we’ll just leave that out or whatever.” He’s got everything. So now I go back to the contract, I’m like, “Hey, these things need to be added to the scope of work.” And we adjust this number. And then if all that’s checking out, we close, we start the rehab. The final member of the team, that’s checking again is the leasing manager. She’s walking through the place and she, thank goodness, she is super picky, super picky. And so she’s holding the contractor… I’m paying the contractor based on what she’s telling me has been done or not.
And if there’s a light fixture that’s still loose or a light switch that doesn’t have a cover on it, she’s telling me about it because that’s obviously a safety issue, that’s a rental… She wants it to rent well, so now she goes through and she says, “Hey, these things still need to be addressed.” And I go back to the contractor, I’m like, “Hey, these things are in the scope of work, you didn’t do them, or these things were missed, please add them to the scope of work.” So now I have another checkpoint where the property management company is now holding my contractor accountable. And so I feel like that hedges my risk a little bit. Now, obviously it could still spiral out of control, but that keeps me a little bit safer.
Now, obviously I’m still putting a lot of trust into these people and that’s just one thing you have to get comfortable with, but I feel like that check and balance system of those four people is really a safe way to do it.

Ashley:
I’m so glad you brought that up. That is really great advice because it can be so easy, I guess, or so exciting to be like, “Oh, I found one perfect person. I only have to manage one person, they’re going to do it all for me.” But really you made a great point, it’s the checks and balances, just like if you were running an office, you wouldn’t want the same person to manage the bank account, write all the checks, take care of the cash. You would at least want another signer on the check or someone else inputting the payables. So I think that’s great, and that’s a great way to look at it is having those checks and balances in the process of your team.
So, are those your three main team members right there? Is the property manager and the leasing agent with the realtor, they’re all on within the same company or different positions?

Justin:
Yeah. They’re the same company, but different positions. So that could be some conflict of interest there. I keep an eye on that for sure. But yeah, the agent, the contractor, the inspector, and then the leasing agent are the team members that I use out there. Yes, I have private money and I have lenders and stuff, but as far as acquiring the property, that’s the team I use for that check and balance system, which has kept me pretty safe.

Ashley:
Within their maintenance division, do they offer any remodeling inside of that? Like my property management company, they will do big remodels on the properties and I get a quote from them. And usually, it’s a little bit higher than if I don’t use them, but it’s a convenience, I guess, but you are paying a premium. Do they offer that to you, but you have your [crosstalk 00:37:18].

Justin:
Yeah. They do offer that and I haven’t used it yet. I try and keep my contractor so busy that he doesn’t have time for any of the maintenance stuff. Like we’re turning a property right now into a rental or getting a new renter attended in it, and so there’s some maintenance stuff. So I use a property management company to do that kind of stuff because I need the main contractor focused on the new properties that we’re trying to bring in. So I haven’t used it on a full-fledged rehab, but just the maintenance stuff on that company.

Ashley:
Okay, awesome. Is there anything else you want to share with us the about this property, any last minute advice to a rookie that’s looking into getting a BRRRR?

Justin:
One thing that I will mention as far as this check and balance system, it has been working really good. One perk you have in Ohio is that a lot of the cities have a point of sale inspection. So this is an inspection that the city does when a property is listed for sale. And so there’s a list of things that have to be fixed before the property can change hands. As the buyer, I obviously assume that those things to fix them, and I sign a paper with the city saying that I’ll take care of everything. This is a pretty cool thing because before I even make an offer, I can see a list of all the issues that the city has identified on the outside of the home.
Some cities do both inside and outside, so they’re going to tell me about the roof, they’re going to tell me about maybe does the driveway need repaired, what’s the roof like on the garage? There’s a lot of things that I can look at before I even make an offer to know what the rehab is going to be. And so that’s a cool little perk in Ohio. I’m sure it’s done in other markets across the nation, but that point of sale inspection is a good tool. So my agent, if I say, “Hey, I’m interested in this property, will you send me the POS?” That’s the first step, I want to look at that, check my numbers and then we’ll make offers.

Tony:
Justin, I want to go back to one thing that you mentioned earlier because we went through it quickly, but you talked about creating your scope of work for this project. Can you define what a scope of work is and then how do you go about creating yours being so far away from the property? And just as a second part to that question, when you get to the actual finishes, what kind of countertops, cabinets, the flooring, how are you going about choosing those as well?

Justin:
I give a lot of power, I guess, to my contractor to pick the stuff. I don’t know what colors match, that’s not my strength, so I just let him do this thing that… We’ve looked at examples of the level of rehab that we want in other properties, so he knows what level to bring it to. We’re not going granite countertops, we’re not going to the level of like flipping the property because we don’t need to. We just need it to appraise for a certain amount so we can cash out, refinance, and then put a renter in it. We’re not breaking walls down and making it an open concept and things like that. And we’re not just lipstick on a pig either, we are somewhere in between there. So we’ve established the level of rehab we want.
And so he’ll give me his first rundown of the scope, it’s just listed out, it’s not very detailed, and then a price. And then if that looks right, then we wait for the inspection to come through on the house. And then this is the tidiest part, then we get on the phone together, we’re doing a screen share and we go through every picture, everything in the inspection. And I’m like, “Hey, is this already in your scope of work? If it’s not, do we need to do it?” And we decide we would need to do it or not. And so we’re building out a scope of work. What I’m not good at is making him get super detailed on like what each item costs. I usually just see chunks of dollar, okay, painting is this much, and then the kitchen is this much.
I don’t know, maybe I should go more finer details there, but that’s how we build out the scope of work, and it usually takes an hour-long phone call is to go through every item, every picture and just build that scope of workout.

Ashley:
That’s great, especially for someone who doesn’t know what a rehab will cost, doesn’t know how to estimate those costs, that’s why you use the people, you leverage the people on your team to help with that. I once had someone tell me that when they have an inspection done, they have the inspector put together the list of things that are wrong or maybe need to replace. And he does it in like, “Okay, what needs to be fixed or replaced within right away? What needs to be done within the next year? What needs to be done within the next five years? And then what’s something that needs to be done within the next 10 years or something like that?”
And I thought that was great advice too, because it gives you a look down the road too, not what needs to be done right now, but in the future, what expenses do you need to plan for so that you know that costs up front too. So awesome. Tony, do you want to take us to our Mindset segment?

Tony:
Absolutely. Justin, thank you so much for sharing all the details on that BRRRR, brother. So much good content out of that, I know the listeners are going to love it, but let’s roll into the Mindset segment, which is one of my favorites. The question that I’ve got for you, Justin is, before you became a real estate investor, you had all these assumptions about what it was going to be like, what it was going to take, who you were going to have to become, the skills you were going to need, what were some of the misconceptions you had about becoming a real estate investor that you realized once you actually became one?

Justin:
It just takes longer. It takes longer than you expect it to. Even just closing a deal, even if you’re making cash offers close in 10 days, very seldom does it ever take 10 days, there’s always stuff that just gets in the way, and it’s going to take longer and it’s going to be harder, and there’s always going to be something, even when you’re at a certain level of doors, I’m sure you’re expanding into new markets or wherever, there’s always an obstacle and there’s always growth opportunities. And so the mindset for me, the shift was like, “Oh, well, yes, this is passive income. This is a great way to build wealth, but it’s no picnic, there’s still stuff there. It still requires work.”
When I first got started, I was up like at 4:00 or 4:30 AM sending out direct mail when I first got started. I don’t do that anymore, or even now, like this morning, from 5:00 to six o’clock I was just analyzing deals and new markets to seeing what the numbers look like. So it definitely takes work. And that’s probably one of the biggest things. Sometimes it’s sold as like this, “Oh, it’s passive income,” which it is in a way, but there’s still a lot of work that goes into it. And so that was a mindset shift that I had to make like, “Hey, we still got to work hard, we still got to put a lot of time into this.” And to not get frustrated with sometimes how slow you seem to be going, because you’re actually going faster than you think you are.

Tony:
And we see that all the time. We received on the Facebook group, Real Estate Rookie Facebook group, received on the forums where people were saying, “Hey, I’ve been at this two months and I haven’t gotten my first deal yet.” Or, “Hey, I’ve submitted seven offers and I haven’t gotten anything accepted yet.” Or, “I’ve analyzed 10 deals, but nothing’s penciling out.” This is a business of large numbers. You’ve got to submit 15, 20, 30 deals, you’ve got to analyze 100. You’ve got to keep going, you’ve got to be at it for several months before that first deal, that first offer is finally accepted. So I’m so glad that you brought that up because I’m sure there’s a lot of rookies that are listening right now that are thinking, “Man, I must be doing something wrong because it’s so long.” But in reality, that’s how long it takes for almost everybody.

Justin:
I now have, I’m not perfect data, but when I come up against a roadblock, let’s just say for example, when I got started, “Hey, there’s no way I can buy more than one property if I got to put 30% down.” That was an assumption based on a lack of knowledge. Based on the data I had, that’s how I felt, but I started to challenge that, I’m like, “There’s got to be a way. There’s got to be a way, who knows how to do this, start searching, Google, whoever. Find BiggerPockets and learn about, oh, ‘Hey, here’s the BRRRR strategy?'” So there is a way.
So my advice, or what I learned early on was to challenge the assumptions. Again, another one was, how am I ever going to fund one of these deals in Ohio if I got to buy it cash for 40 or 50 grand? And I’m like, “There’s no way I can do that.” So I actually set a goal, it was like towards the end of the year, I set a goal, I’m like, “I’m going to figure this out by the end of the year. And I’m going to buy a property by the end of the year.” And by setting that goal, and I treated it like life or death, like, “Life or death, I have to figure this out.” Got super committed, and all of a sudden, one day, I don’t know if I was on a run or if I was listening to a podcast, but the idea came to me, “Well, hey, I have a personal residence where we have a ton of equity in it, we could just use a home equity line of credit for that first deal.”
And so again, just challenging the assumptions because most of the time, the roadblocks that we encounter are an assumption that we’ve made based on a limited amount of data. It’s almost 100% of the time, I swear, maybe not 100% of time, but most of the time when you’re like, “Oh, this is the roadblock I’m up against.” If you really look at it’s just an assumption that you’ve made based on either inaccurate or not complete data. And if you challenge that and get committed, like we have to figure this out, if this was life or death, how would we get around this roadblock? And you’ll see the gears start to turn, the lights start to come on and you’ll learn things that can help you get around that.
So challenging your assumptions or your perceived roadblocks is a huge thing that I’ve learned getting started in real estate.

Ashley:
Justin, that was so great. That is awesome advice. I love that you didn’t look at it as, “I can’t,” you looked at it as, “Okay, how do I do it? How can I figure it out?” And also listening to podcasts, reading books, or talking to other investors and staying engaged with other people in your network, that you get those ideas from them. Even if they didn’t say exactly go get a line of credit, you can create ideas off of what somebody else did or what they were thinking and use that to overcome your obstacle that you have in front of me. But I love the way you look at it that you’re just creating that obstacle, they’re ours, you’re making that assumption. So great advice. I think that was one of the best responses we’ve had on our Mindset segment.

Justin:
Going to places where you’re constantly hearing success stories was big for me, believing that it could be done. And so BiggerPockets was huge, I think, I don’t know how long the Rookie Podcast has been around, but it started a little bit later after I started listening to the main BiggerPockets one, but that was huge because I was hearing people succeeding in it every day. And so my mindset, I’m like, “There has to be a way. I’m not the first person that’s faced this, so there has to be a way.” And so that little bit of faith or that little bit of courage, knowing that other people have done it, I’m like, “If they can do it, I can figure this out.” And that was just a little bit of the motivation that needed to stay after it.

Tony:
Justin, I add on to that because for most people who are venturing off into the crazy world of real estate investing, they might be the only person in their entire network that’s thinking about becoming a real estate investor. And when you talk to your uncle Jim or whoever, and he’s saying, “The market’s about to crash,” or, “Don’t buy that house because you’re going to have people calling you at three o’clock in the morning,” it’s easy to get discouraged. So it’s super important, I’m glad you highlighted this, to surround yourself with other people who are on the same journey as you and who have completed that same journey, or who are a few steps ahead of you even better.
If you’re at zero deals, being able to talk to someone who’s done one deal, that’s a mind opening, life-changing experience. To talk to someone who’s done five deals, that’s like, “Oh my God, how did you do that?” So building the right community, finding the right community is huge. And this is a perfect opportunity for me to plug the BiggerPockets Real estate Rookie Facebook group. We’ve got like 30,000 people in there, but there’s stories in there all day, every day about people getting their first deal, their second deal, their fifth deal, and they’re sharing how they did it.
Obviously the podcast is a great resource, but connect with people, send them a friend request, send them a message, say, “Hey, how can I provide value to you? What can I do to help you continue to grow your business?” And allow them to give you some value back in return. So I just love that approach, Justin, I had to pause on that so we could highlight that for the listeners.

Justin:
That’s perfect. Yeah.

Ashley:
Okay, you guys. It is time to go to our Rookie Request Line. You guys can reach us anytime at 1-8885-ROOKIE, and leave us a voicemail with your question and we may play it on our next show for a guest to answer. Today’s question is from Kyle and Madison, Wisconsin.

Kyle:
Hi, this is Kyle from Madison, Wisconsin. My question is I’m, at a point now where I’m trying to really figure out my location. Should I be looking at Wisconsin as a whole and trying to find deals that I think makes sense in the area? So in other words, find a deal and then research the area to make sure that deal makes sense in that area? Or should I focus on an area and then wait for a deal to come to me?

Justin:
I would do all the research I needed to where I had the neighborhoods, down to the neighborhoods pinpointed of where I want to have a property, especially if it’s a rental or even a flip, I want to know that neighborhoods that are going to work with my model. And then I’ll just obviously watch for those neighborhoods, for deals to pop up. And I know that I’m already in a neighborhood and I know the numbers can work. So I guess my answer would be, I would drill down to know which specific zip codes or neighborhoods I want to be in. If that makes sense, have the right demographics and low crime rate and things like that.
And then when a deal pops up, you know you’re comfortable with that area and you can make an offer.

Ashley:
Yeah, I agree with, Justin. I think that if you are just looking for deals, then analyze the market. You’re going to drive yourself crazy because you’re going to be looking all over. You need to find your market and then set your criteria in that market so that when you are analyzing deals, you just go through your checklist, does this meet the cashflow I want? Does this meet my appreciation I want? Is this an A-class school district? Whatever your criteria is, find the market first, analyze that, then look for deals in there. And Kyle had mentioned, should I wait for a deal to come to me? No, don’t wait, there’s so many ways to source deals, having a realtor send you deals on the MLS, that’s free, that’s easy to do.
You can do driving for dollars, you can send direct mail, you can door knock, tell everybody you know in that market that you’re looking for a property to buy. Go to investment meetups, see what’s out there, where other people are finding deals. So definitely, don’t wait for a deal to come to you.

Justin:
Because what happens, there are certain synergies or efficiencies that happen when you know the areas and the zip code you want to be in, because the HRVs are going to be very similar and the rents are going to be very similar. And so you can move a lot faster and analyzing the deal. I can be at work in the middle of the day and see a deal, a lead pop up in my email and say, “Okay, that’s this neighborhood.” So I just throw it out, or, “Hey, that’s an area that I want, and I know the rent is going to be about here, I know ARV is about here. That’s a deal. Let’s throw an offer out.” It’s so quick once you have the metrics for those neighborhoods down.
If you’re just going big, man, you’re going to be like, “Okay, well, I don’t know, what’s the crime in that neighborhood? What’s the ARV for the neighborhood?” You almost have to redo it for every deal. I get a little more fine-tuned and know the numbers for those zip codes in the neighborhoods so that you can move a lot faster, especially right now, you’ve got to be making offers very quickly to get these deals. And so moving fast, it’s going to be huge.

Tony:
Justin, I want to take us to our next segment here, which is the Random Question Segment. And you touched on this already, but I’m hoping that you can maybe articulate it a bit more clearly for the guests. In order to be a successful BRRRR investor, do you feel that it’s required that someone have like a really handy background? Or should I know how to lay tile, how to put a backsplash, how to pick out… What are the handy requirements someone needs to have to be a successful BRRRR investor?

Justin:
No, I don’t think you need that. No. It definitely helps when you see pictures and you’re like, “Hey, we could do this for that kitchen.” I don’t have a lot of that, so I lean on my team members pretty heavily and other example pictures. So you don’t, it definitely helps, but you don’t. If you get the right team members, then you should be just fine without that. I would not wait around and I would not study rehab books. If you’re not going to be the guy or the girl doing the rehab, me, this has be passive for me, or as passive as it can be, because I have a full-time gig. So I can’t spend time, I can’t swing the hammer, and I can’t really even go to Home Depot and pick out tile because I just done have time for that. So I lean on it as in, I’m going to hire where I don’t have the expertise.

Tony:
I think that’s one of the benefits of investing out of state is that it really forces you to build the teams, to incorporate the systems and to focus working on your business as opposed to working in your business. I’ve always struggled with the fact, and I’m not super handy, I can’t go out there and lay down the flooring or update the black splash or put up dry wall, but at the end of the day, my job as a real estate investor, isn’t necessarily to know how to do those things, but it’s to know how to run the numbers, to include the cost of having that job done. And as long as the deal still makes sense after accounting for those things, then I’ve done my job as real estate investor, because now I’ve still got a good deals.
So I just know a lot of times people struggle with them not having the technical knowledge of doing some of that repair work, but I’m glad you highlighted that it’s not always necessary.

Justin:
Yeah. And I grew up on a dairy farm and farmers are really good at just figuring it out, they’re mechanics and they’re veterinarians, they have tons of skills. So I could probably figure out how to put a countertop on, but again, I don’t want another job, I don’t want to be doing that because I have my other things. And honestly, I would probably, I tell people this all the time, I would probably follow the same method of acquiring properties using this team even if the property was across the street from my house, I would still send my inspector, I’d still send the contractor. It would be exactly the same. I would be selling solar and I would send my team, even if it was right here in my neighborhood, because that’s the model, that’s the business that I want. So it just depends on what your ultimate goals are, I guess.

Ashley:
That’s great. Thank you, Justin. For my question, I’m wondering does your property management company use software that you get your own reports from, stuff like that? We always hear from the property management side of the software, but I am curious about your experience as an owner using the app, using the software to look at your rent roll, to look at your income statement, to pull your own reports?

Justin:
Yeah. They’re pretty awesome at that. I get a monthly statement of where all the expenses have been, what the rent income has been and then what the distribution to my bank account is going to be, which is the funniest part. So yeah, I get really good details. I had to learn how to interpret it initially, I didn’t know what I was looking at first, but they walked me through it and yeah, I get really good reports. I can go see, I’ve got, not a portfolio, but a platform where I can log in and I can see the properties, I can review all those documents. It’s pretty slick. They do a good job with that.

Ashley:
I think that’s a huge advantage when you’re going with a property management that has all of those departments like you mentioned before, and is a larger company because they have that software. You can log in right now and look at, is there a vacant unit coming up? You can look at who your tenants are, you can look at who paid rent, and then you also get those monthly emails. So what would be your advice for someone seeking out a property management company on looking at the software? What are some things you really like that you’re getting from your property management on the report side?

Justin:
I would definitely just ask for examples of the reports that you’re going to receive as the investor. What are the finances look like? Is it easy to show? Is it easy to see where your money is going as far as the bills that you’re paying and any maintenance that’s being done? Just seeing that is super big. And then again, I already said this, but the responsiveness, if I have a question on that, I need to be able to email or call and get a pretty quick response. And that’s probably been the biggest thing for me on this property management companies is just their responsiveness. So ask for examples, have them show you the online portal, how to use it, how it functions and what their process is like. That’s been huge.

Tony:
Awesome, Justin. Thank you for sharing that, brother. Before we start wrapping up the podcast here, Ashley, I want to give a quick shout out to one of our Real Estate Rookie Rockstars. So today’s Rookie Rockstar is Gus Ofili. And Gus actually already has 11 rental units, but he put down 20% on all of those. Gus, just closed on his first BRRRR deal. So I just want to run through the details really quick. It was a four bedroom, one BRRRR, single family house. He bought it for $70,000, put another $40,000 into the rehab. So its total, all of them was about $110,000, and the ARV was $160,000. So a pretty solid BRRRR. And he’s planning to rent that out for $2,000 per month.
So much like you, Justin, he realized that the capital wasn’t going to last forever, seems like you did a few more deals than you did before he made that change, but congrats to you guys for knocking out the BRRRR, brother.

Justin:
That’s awesome.

Ashley:
Thank you so much for joining us today. Can you tell everyone where they can find out some more information about you and maybe reach out to you?

Justin:
Yeah. I’m probably the most active on Instagram @themoneymavenproject on Instagram. That’s where I share everything. Initially, the reason I share it is because I feel like there’s… It’s just, again, I was helped so much by other people sharing their stories, so I share as much as I can on there, but @themoneymavenproject on Instagram is going to be the best place. You can find my podcast and website there, is through Instagram.

Ashley:
Justin, thank you so much. I hope everyone got a ton of value from this podcast episode today. Make sure you check Justin out on Instagram, and join our Facebook group. And don’t forget to subscribe to our very new YouTube channel, Real Estate Rookie on YouTube. Every week, we’re going to be putting out new videos and we also have all of the podcast episode recordings uploaded onto there now, too. I’m Ashley @wealthfromrentals, and he’s Tony @tonyjrobinson on Instagram. And we’ll see you guys on Saturday for our next Rookie Reply.

 

Watch the Podcast Here

In This Episode We Cover

  • Using the BRRRR method to get around the 20% down payment rules
  • Investing out of state and putting together a great team
  • Leveraging expert investor knowledge to make your property search easier
  • Taking cash flow over appreciation in Midwest markets
  • Using BiggerPockets to find agents, contractors, and team members 
  • Setting up “checks and balances” for every rehab project
  • And So Much More!

Links from the Show

Books Mentioned in this Show:

Rookie Deal

  • Purchased Price: $40,000
  • Rehab Cost: $12,000
  • ARV: $70,000
  • Rental Income: $950
  • Cash Flow: $300/month

Connect with Justin: