I Started BRRRR-ing in My Mid-40s, Now I’ll Retire a Decade Earlier

0:00This investor had no exit plan from a demanding and dangerous day job. Working a full 30 years to vest his pension just didn't feel possible. But then he discovered real estate. And now, just five years later, he owns 16 investment properties and is on track to retire 10 years ahead of schedule. And he's doing this while investing thousands of miles away from his expensive California hometown. This is the path to financial freedom.

0:33What's up, BiggerPockets community? I'm Dave Meyer, housing analyst, rental property investor, and head of real estate investing at BiggerPockets. Welcome to the show. Today, we're bringing you the story of investor Brian Waters from Huntington Beach, California. Brian loves his job. He's a firefighter, but he's seen friends and colleagues struggle trying to reach retirement in a very dangerous line of work. So he started looking for a long-term backup plan, and he bought his first rental property during the pandemic. Now he's amassed a very impressive out-of-state portfolio that puts him on path to financial freedom well before his 60s.

1:12On today's episode, Brian's going to share what he's been doing, like why he started investing with a turnkey company instead of riskier value-add properties, how documenting his journey on social media paid off huge when he needed capital to expand, and how he's proving every day that the BRRRR is far from dead in Midwest American cities. Let's bring on Brian. Brian, welcome to the Bigger Pockets podcast. Thank you for being here. Dave, thank you so much for having me. I'm super excited. It's good to finally get to meet you, and I can't wait to talk about some real estate. Let's do it. Tell us a little bit about yourself first.

1:48Where were you in life when you first got the bug or started thinking about investing in real estate? I was in my early 20s. I became a medevac pilot in Hawaii, a commercial airline pilot. I was living at home and I wanted to buy a house. I live out in Southern California. It's super expensive. So we'd talked to a real estate agent in the area and he kind of had the inside of this place. And I knocked on the door, a lady answered and asked her if she would be willing to sell her house to me. And she said, yeah, but I'm not ready to move. So we bought it. We'd rented it back to her for a year. And then for the next over 10 years, I had roommates.

2:24I was a pilot. I was gone, flying all over the country. So who cares who's in my house, right? So my mortgage was pretty much free. And that allowed me to build all that equity, which later became the golden goose to my investments. So what'd you do from there after a house hack? I think a lot of people either stick with just house hacking over and over and over again. But what did you do after that first deal? So it was years until I actually got back into the real estate game. So I let that property just increase in value. I'm lucky at Southern California, the home prices go up over time. But that kind of fast forwards me to getting in the fire service and being a 33-year-old with brand new twin boys and kind of almost in panic mode, like, hey, I don't want to work till I'm 63.

3:10And also I'm one injury away from actually having to retire. That's scary. That's hard. Yeah. I've been part of our peer support team for over 13 years and you see a lot of mental and physical stuff going on. And I just had to come up with a plan. So the very next property was, it was right around when COVID was happening. I had enough equity in my house that I was able to refinance. I don't even want to say the rate because it's going to make people, it's going to trigger some people, but it was very low. Does it start with a three? It starts with a two. It starts with a two? Oh, man. Yeah. Just don't hate on me for that.

3:46But I'll be able to pull out some money. And I wanted to get in real estate because I love my children to death. And as a father, I didn't want to have to have them live in Timbuktu and not be around me. So selfishly, I was looking for property where I could buy early and kind of make them have to be around me forever. So as I was looking around Southern California, I found a house that was for sale and I call it the firefighter special because the realtor was a fireman, the seller was a fireman and I was a fireman. And so the seller, he was three years from retirement and he wanted to sell his house, but he wanted to live in it for three more years because his son was in high school and finish off.

4:24And so I was like, perfect. That was my first rental. And that property is still one of my better properties today. But what happened eventually is I looked at my bank account and I was like, well, I can no longer afford houses in California. Yeah. So my next journey was into the out of state stuff. Now, Brian, I want to hear how you scaled because I've sort of gone down a similar path where I started in a more expensive market. At a certain point, it gets super hard. And so you have to come up with a new strategy. You don't have to go out of state, but it sounds like you did. We're going to hear about that, but we do have to take one quick break.

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8:43Welcome back to the Bigger Pockets podcast. I'm here with investor Brian Waters, who was just talking about how he turned his primary residence into a small portfolio in Southern California. But Brian, sounds like he hit the point most people in California do where it's just not really logical to keep going, at least if you want to buy rental property. So what was your solution to that challenge? What I decided to do instead of going into the flips or the burrs, which I later got into, I decided to go the turnkey method. And for me, that has been an amazing transition to out-of-state properties.

9:19People call turnkey different things. Some people say a property that you buy directly that is just fixed up and nice is turnkey, but you're talking about buying from a turnkey operator? Yes, absolutely. So maybe you could just tell our audience a little bit about what that entails and why you were attracted to it. So number one, this is a great strategy for an active, hardworking, W-2, super busy person. I'm a firefighter. I'm a dad. I coach full-time football for my kids I don't have a lot of time to go do this stuff and those other strategies aren't wrong But what these turnkey providers are there's companies all over the country and they Internally do everything they go out and or knock they market they cold call they find the houses Once they do that then they go out and have their own construction teams that fix the properties and they put in new flooring, new kitchens, new bathrooms, new water heaters, new roofs, everything.

10:14And then what they do is they turn around and they have a property management company that finds a tenant and signs a lease. Then they put it on their website. It never goes to the market and investors can go buy it. So I love this strategy because literally they give you the numbers. You already know what it's rented for. You already know that all the major CapEx items like the roof and water heater is brand new. Those are gonna be deferred for later. You have a good quality product and you could run the numbers because you know what the price is, you know what the insurance is, you know what the rent is, and you just have to analyze it.

10:49And that's what I did. And I absolutely love that strategy for beginners. Yeah, I think what you said is so important that where you are, the kind of investor you are will usually dictate if this is a good strategy for you. Like if you're busy and you're out of state, this is a great idea. This just makes a ton of sense, right? Being able to go out and buy something, get the benefits of a value-add opportunity, but not having to go out and source all of the contractors or subs yourself, knowing that the repairs and capex and maintenance and all this stuff is going to be a little bit less, is really appealing.

11:23But I have some questions because I think this is a really interesting option for our audience I'd love to dig in on. So did you know the market you wanted to invest in? Did you go out and find the turnkey operator first? Or how did you find a deal that you were comfortable with? So what I did is I called multiple turnkey providers. And this is kind of a buyer beware for all the listeners. There's some really, really good ones out there. And there's some really bad ones, right? So I am a big believer of follow the herd mentality. So I was talking to other investors through forums, through Facebook groups.

11:57The cool part about that is you're protected in a lot of senses here. You know, you're protected by the inspection report. You're protected by an appraisal. You already have a lease signed and people will argue, well, you're not going to cash flow on these. I want to tell you a little bit about some of the incentives these people are offering, which is actually blowing my mind when I talk about it. So a few of the ones out there that are really good, they will buy the rates down to 5.5%, 30 year conventional fixed, which is amazing. That's awesome. They have a one-year tenant guarantee where if the tenant moves out, they're going to pay you that rent that was talked about.

12:34They often will have lower incentive property management fees of 5%. We're investing in these states that have low property taxes. And again, the CapEx items are all taken care of. So I'm very conservative when I underwrite stuff, but every single one of these cash flows. Well, good on you for doing your due diligence because I think that's the real thing that people get hung up on about. Because you're right. Especially in 2021, 2022, everyone was calling themselves a turnkey rental company. And I would just encourage you all to look for people who have a track record. There are great, reputable companies who do this.

13:12I'm sure they are frustrated by some of the people in the industry that give them a bad name. But there are very good, reliable companies that do this. And I love that you called the investors too. These businesses, they're different than traditional home sellers. And I think it's similar to something we've talked about on the show recently, which is that new construction is becoming more appealing because builders just have a different business model. They need to move inventory. And the same thing is true with turnkey operators, too. They're doing volume and they're willing to buy down your rate to sell something a month faster.

13:43Whereas home sellers, Brian gave us two examples. People are like, I'll just wait three years. It's just like a totally different mindset. And so if you're the kind of investor, one, who can move quickly, two, might buy at volume, might buy more than one, people will potentially work with you and give you really great deals. So Brian, how did you actually ultimately pick a deal? Did you settle on the operator first or the market first? Or what order did you go in? I settled on the market first, which was Memphis. And Memphis was a market that a lot of people were talking about. Never been there, still have never been there.

14:18But I asked around different people who had used them. Some of these investors had multiple ones. And when I interviewed them and talked to them, I mean, these people sometimes are turning over hundreds of properties. And so I was using them as the subject matter experts in that area. That's great. And have you scaled that up since then? Yeah. So I currently have a total of 16 properties. 15 of those are out of state. And I've kind of spread my wings a little bit to other markets as well. The first six properties minus the California one were all turnkey. At that point, I kind of opened the wallet again.

14:51I was like, oh, where's all my money? And so I had to start getting creative. And at that point, I felt like I'd really learned a lot about the industry, even though they were easier to do. I understood how to analyze stuff, how to find stuff. I'd started really digging into the bigger pockets communities and understanding. And so then I transitioned into the BRRRR stuff. And so how many turnkey properties do you have total? Nine turnkey totals. And then the rest are all BRRRS. And you've never seen any of them? Never even been to the state that degree. That's incredible. I know. Yeah. I mean, you must have good reporting then, right?

15:27Like that to me would be the thing that I would be nervous about. I invest out of state too, but I've just hand selected the property management. Clearly you're happy with the property management. Oh, yeah. And they use all the fancy online portals where they send you stuff. And truthfully, it becomes easier by the fact that it's away from me. It has to have better systems and I have to have a better team to do it. So I can go to the fire department and take care of the community or I can be on the football field coaching my kids stuff and not have to worry about, hey, the tenant call me. And first off, I'm not even good at that stuff.

16:00I'd go over there and probably break more than I would try to fix. Right. Oh, I know all about that. Yeah. Right. So by the fact that it's far away, I'll wake up in the morning and like, hey, you had a little plumbing leak. Don't worry. It's fixed. the tenants happy. We're good. I'm like, cool. Thanks. Yeah. Moving on. Incredible. Well, good for you. I know it is a big leap for anyone listening to this to invest out of state, but I completely agree with you, Brian. It forces you to just take a different position on the team. When I lived and invested in Colorado, I did so much myself just because I could, I lived down the road and it just seems silly to go hire someone to do that.

16:35And that worked well. Like I don't regret doing that. But as soon as I started investing out of state, I'm like, oh, I could concentrate on what I'm good at, which is like finding markets, analyzing deals, doing asset management, and find people who are way better at property management than I am. I wasn't doing myself any favors, fixing stuff. Absolutely not. And so I think it's, you know, it's almost like this forcing function that allows you to just like mature as an investor if you do things out of state. But, you know, it takes a certain personality and not everyone's going to be comfortable with that.

17:04I do want to hear more about how you moved on to BRRRS and what you've been up to recently, but we got to take one more quick break. Stick with us.

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20:09Welcome back to the BiggerPockets podcast. I'm here with investor Brian Waters talking about how he moved from investing in his own backyard in California to doing out-of-state turnkey properties in Memphis. Brian, what came next for you? So as I did a few of the turnkey properties, I kind of analyzed what these providers were doing. And I had really started to educate myself. There was so much that I learned early on and it was less risky. Those turnkeys had a lot less risk, but I knew that I couldn't just continue saving up for a property and buy, saving up for a property and buy. So I wanted to scale faster.

20:45One thing that was super, super important, and I had this discussion with this awesome couple at the BiggerPockets convention we just had. Yeah. One of my friends early on told me is you have to start using social media when you first start. And I still to this day cringe when I watch my own videos. It's just uncomfortable. Oh, it sucks at the beginning. It's so hard. The reason I'm talking about this is because this allowed me at a certain point to raise over a million dollars in private money, which is I'm super, super happy about that. I have some amazing partners, but it creates that gap between that awkward conversation of me asking them and them coming to me.

21:28When they come to me, I can just have a conversation. I won't even talk about private lending until they say, hey, I want to do this too, but I don't want to put in all the work. And then it's easier. It's more of an organic conversation. So all my lenders have come from pretty much my warm circle, friends, family, aunts, uncles, people that came to me. and I was able to take that money. And now I'm like, well, now I got to start borrowing, right? Because I have to do something. I learned about the private money process and I found a gem of a contractor in the city of Detroit and I've been hammering Detroit.

22:06And I know you talked a lot about this on a few podcasts recently. And I love that market. And I've in the past two years of Burr. We're on our seventh property there right now. And for those who say that Burr is dead, I disagree. Yes. I love it. Brian, we're just breaking down myths. Burr is not dead. Your primary residence is not a bad investment. I love it. Well, I just want to commend you for the social media thing. I know from personal experience, it's very awkward to get started, but it is a really powerful tool. It takes a lot of guts, man. So good for you. And I know not everyone's going to do that, but it's a really repeatable strategy that almost anyone can do if you are willing to laugh at yourself the first couple of times you make a reel because they're not going to come out well.

22:48They're going to be very cringy and then you'll get better over time. Well, in the spirit of getting uncomfortable, tell me about doing the burr long distance. I'm sure that was a little bit uncomfortable too. Oh, it was completely uncomfortable. And, you know, not all of them went perfect. I will say that my last two were actually home runs. Like in the last couple of years? In the last couple of days, like the last week. So I had heard about the Detroit market. I actually listened to episode one, three, two, five on the Bigger Pockets Daily where they read the articles out. Yeah, yeah. And I highly encourage all the listeners to go and listen to that one.

23:27It's an article that someone wrote about the Detroit market, and it blew my mind. I was like, oh, here's an opportunity. I'd never been there. So this was one of the one markets that I actually went to. Everyone told me like, this city is super dangerous. Don't go there. But you know what? I've learned not to listen to people that have not done what you want to do. The downtown area had people driving around on those beer cars with kegs on them. There's rooftop bars, super clean. Companies like Rocket Mortgage have their headquarters there. They just bought Redfin, by the way. All those factories have been coming back up.