The “Repeatable” Strategy That Helped Him Buy 6 Rentals in 6 Months (Working a W-2)

0:00Are you in danger of coming up short in retirement? When Brian ran the numbers, he realized he was nowhere near the amount he'd actually need to walk away from his 9 to 5. But what could he do? He was already putting in long hours at the fire station. He couldn't possibly take on a second job. Well, like many people searching for financial freedom, he turned to real estate. In just five years, he's scaled to 20 rentals, and against all odds, he's on track to retire early. When we last checked in with Brian, he was buying simple, affordable, turnkey rental properties 2 ,000 miles away from where he lives.

0:37But recently, he's pivoted to a hybrid strategy you've probably never heard of, but one that's helping him scale his portfolio rapidly. In the last six months alone, he's bought six more rental properties, all while working his full-time job, coaching football on the weekends, and staying fully present with his family. And Brian's about to give you the highly repeatable strategy he's using to tie it all together.

1:05What's up, everyone? I'm Dave Meyer, Chief Investment Officer at BiggerPockets. Today on the show, we have investor Brian Waters, a firefighter who is building a portfolio of affordable rental properties long distance from his home in California. Brian, welcome back to the BiggerPockets podcast. So good to see you again. I can't tell you how excited I'm to get on here for the second time. I obviously had a great time the first time. So it's a pleasure to be back, you guys. Thank you. There are people who didn't catch your first episode. So maybe just tell us a little bit about yourself and a little bit of background on your investing.

1:39Yeah, absolutely. So my name is Brian Waters. I live out in California, married, have two amazing twin boys that are 13. I was an airline pilot for a number of years, got laid off, became a firefighter for Los Angeles. I'm a captain there now. And I realized at some point, like the pension just wasn't going to cut it. So I did all the other crazy stuff that males do in their younger age from just investing in this and that came across BP, bigger pockets, and it changed my life. Now I'm just scaling my portfolio while combining that with my W-2 job as a firefighter, a busy dad, a football coach, all those things.

2:12And yeah, I would love to get into how I'm doing that from 2000 miles away. What was your approach when you realized you wanted to buy rentals, couldn't do it in California? How'd you go about figuring out the solution that you ultimately landed on? It was almost out of necessity, to be honest, because once I bought that first property out in California, I didn't have a lot of capital. And I was like, well, I can save my way up, but I'll see you in 10 years when I have enough to do it. And so, you know, listening to a lot about what you and Henry talk about on the show, you got to come up with a strategy, a plan.

2:43Like standing there at parade rest for me is not an option. So what I realized is I'm making a very good income and I'm blessed to have my job as a fireman in California. And I'm going to go take it, that money and that capital and go put it to work in markets where it makes sense. So for me, it just became out of necessity, truthfully. And tell us a little bit about what the strategy is you chose. Yeah. So for me, the initial strategy, which we've talked about on the previous episode was turnkey. I think it's a very fantastic way for busy professionals. Like I said, I coach my kids' football team.

3:14I'm a busy dad, all those things, just like I'd say most of the listeners are on BiggerPockets. So what that is for the listener is you're buying a property that a company goes out and finds. They do all the remodeling. They put a tenant in place. They take care of all the capex, all that cool stuff. And they put it out there and you can buy it. It's off market. And then they go ahead and professionally manage it for you. The only problem with that after you do two, three, four, I ran into the same exact problem that I was having in California. Now I have to save my way to the next one. And so I decided to eventually take those skill sets that I was learning, because you're going to learn a lot, even in turnkey and, and, uh, and bridge that into doing the burr process, which you guys talk so much about.

3:52And so I think it was a perfect segue into that. You know, I learned a lot during those things and I'm, and I'm still learning, but I was able to put those things to work and doing the birds. And that's what I'm doing now. Great. And we're going to talk about the burr a lot and how you're doing it long distance, But curious just to hear a little bit more about your experience with turnkey. People have very different opinions on the merit of buying a turnkey property. And again, just for our audience, people use the word turnkey in two different ways in real estate. One is if you went out and bought an on-market rental that was moving ready, you could just put a tenant in it right away.

4:25Some people call that a turnkey deal. But there's this other business where you go to a turnkey provider and they actually find the deal for you. They renovate it for you. That's what Brian was talking about. So what was your experience like with that, Brian? So these turnkey providers, they deal with a lot of out-of-state investors. And I think it's a good combination. So they've solved a lot of our problems. Number one, deal flow is a big deal, right? The interest rates, that's a big deal. Being able to professionally manage it and also on the back end, knowing what you're going to rent. So what I wanted to do initially was not have to do a lot of analyzing and stuff.

5:00So they'll bring you these properties and they're great. They basically do all the work for you. All the CapEx stuff's done. They know the markets. They've done hundreds and hundreds and hundreds of these. But most importantly, the incentives that they give you. It's wild. So right now, they're buying the rates down to 5.5 % or lower for you at no cost, which is, I mean, that alone is great. Yeah, that's great. They're giving us deals on the property management fees. They're also giving us a rent guarantee for the year, which another one is like, what? Like, I can't believe they're doing that.

5:34Oh, I did hear about that. Yeah. That's a new thing that they're doing because, you know, the truth is you're going to have evictions. You're going to have stuff that happens. But they want us to have the best experience possible. So for that year that the tenants are in there, if it's an eviction or whatever, they leave, they're going to guarantee that rent that you sign on the lease. So I'm like, you cannot lose, you guys. You can't lose. That's pretty good. So that's a risk mitigator, especially when you're coming from across the country. That makes a lot of sense. If you think about the way that a turnkey provider, one of these companies operates in their business model, they need to move deals.

6:05They rely on velocity and volume of deals to make money. And so they're buying deals, they're renovating, and they got to sell them quickly. So they will offer incentives in the same way. If you look at what's going on in new construction with builders right now, they're offering incentives too, because their business model relies on velocity. They need to keep moving stuff. And so that presents a great opportunity. The trade-off that you get with a turnkey provider is that a lot of the equity growth of doing a renovation yourself, that opportunity is gone because they've done that, right? And they're selling it to you, hopefully at a fair price.

6:44But you don't typically go out and buy from a turnkey provider and then say, oh, I'm going to renovate this property because it was just renovated. And so if you're a kind of investor who just wants hands off, I don't want to do very much, I get some cash flow, but I don't need a big bump of equity, great option. But Brian, it sounds like you in your own life reached a point where you said, I can't just keep sticking with this strategy because I got to come up with 20 or 25 % down every time I'm doing this and I'm not building more equity that quickly in these deals. So that's when you decided to do what?

7:18I started to do the BRRRR stuff and that's what I've transitioned into. And that's how I've been able to scale my portfolio from the last time we talked at 14, now up to 20 and I've put four more under contract. Whoa. I mean, that was like less than a year ago, right? Yeah, it was six months ago. Well, we're going to talk about that, but why BRRRR? What stood out to you about this? This strategy is what's right for you. I'm kind of a type A personality. I'm a go-getter. I like, I love, I don't like, I love real estate. And so when I fell in love with doing this stuff and the connections and the relationships that I made.

7:54And so my initial goal was never to have a bunch of these. And, but I, once I realized that the process is just a repeatable system, it became really fun for me. And so, um, so yeah, so I, I started to, to jump into the first stuff. I had learned it and I'm like, this is actually a pretty good method. And the benefit, as we all know, is you're getting a lot of equity right away. You could recycle your capital right away and you can take this as far as you want. And that's, I think, the benefit of that system. And that gets you around the challenge you were having, right? Because if you only have X amount of equity, let's call it a hundred grand, you put it into, just for ease of math, you put it into a deal on a turnkey provider, it will grow, but it's stuck in that deal until you refinance it or you build up enough equity to take out a HELOC or whatever.

8:41With the BRRRR strategy, you put that money in and you build more equity. Let's say you invest 50 grand and you raise the value of your property by 100 grand. You've built$50 ,000 in equity that you can take out of that deal and put into your next deal. So that's why it's just so popular for scaling is because it allows you to use your money extremely efficiently to build up your portfolio. But what most people do, Brian, And as you know, is they do a burr in their own backyard because you're managing a renovation and that could be intimidating, even for people who are down the street. So you're doing this from thousands of miles away.

9:19How did you gain the confidence and build the right team to do the first one? Because then I want to understand how you're doing six of these in the last six months. Yeah, I think even with the turnkey stuff, I started to realize kind of what they're doing. I'm somewhat emulating what they're doing. So what I started to do is getting deal flow coming from them and from real estate, other investors and stuff. And what I started to do is going on Redfin, I would go on there and put a little tag or heart on these properties. What I started to notice is that these turnkey providers were investing in the same areas.

9:53It became like a shotgun spread, right? So I'm thinking, these people are professionals. They do this all the time. I know what numbers they're selling them for. And I started to work my way backwards. So when I would go on to Redfin, I would pull up that area and I'd go, okay, I would find another property on Redfin and it was a total outlier. I'm like, okay, I'm not getting there. I'm going to stay with the herd and do what they're doing. So that was how I started to understand where that's part of it. If other people were there, it's probably a pretty good idea to be in the same place, right?

10:24You don't need to be some genius market picker. There's a reason why people buy in certain areas. And it's kind of obvious if you start to just dig in for a little bit. So you built a team. How do you do that? Because that, I think, is what most people get tripped up on when they're looking to invest out of state. Because if you live in an expensive market, want to buy rentals, you look at a property in the Midwest, you're like, damn, I want to do that. That seems way more accessible than everything else I could buy in my area. but then there's the practical realities of who's going to manage these things.

11:01Who's going to look out for this thing that I'm investing so much money in. So how do you go about it? Yeah. So everyone talks about OPM, other people's money. There's something called, um, OPK it's other people's knowledge, right? So I like to go out there and, you know, I think real estate is so unique in the fact that you have to get out there and network and guess there's a, there's a really cool company out there. I don't know if you guys have ever heard of it. It's called Bigger Pockets. Anyone ever heard of that one? Well, guess what? It's probably the best networking real estate company in the world, right?

11:33That's the whole point. Yeah. Within the forms, I've met contractors. I've met so many good connections. I met my real estate agent at Bigger Pockets last year that's helping me. Oh, at BP Con? Yeah. I went up and sat next to him and that became my realtor that's giving me deal flow in Detroit right now. So you got to be willing to get on the phone and make connections. But I kind of wanted to talk about one little secret another little sniper thing that I do. That's pretty, pretty cool because besides funding, besides an agent, there's a million of those, probably the hardest one to find is contractors.

12:06Um, I would say good ones, reliable ones. So one little, uh, thing that I've done is I call it the Facebook group method. So a lot of people go into these Facebook groups, investor communities. Um, it could be even the bigger pockets form that you're going into and they're going to post a question. And then the question is going to be, anyone know a contractor in X city? That is the wrong method because you're going to get blasted, absolutely blasted by people dropping their cards, this and that. So what I personally do is I find a question that not every person would know, like a kind of a more detailed contractor type question.

12:40And what I'll do is I'll, I'll, uh, I'll send a picture in there. Hey, I, uh, how would you handle this situation? And it could be like a front porch. And I want to see their response. The educated response means, guess what? They're probably know what they're doing. So we're all, what I'll do is I'll, I'll call it, I'll kind of call it lurking in a sense, but I'll sit back and I'll go through and search other questions that people have asked. And if someone's just firing off a business card, they're desperate for work, right? They're probably not the best ones out there. So I'm waiting for really, really knowledgeable response, that OPK, that knowledge that they have.

13:12And once they give that, then I I go, okay, I'm going to dig in more and find out who this person is. And in that response, I'm going to give them a chance, at least have an interview. And so what I do is I put together an interview process checklist, and I want to find out how they handle different stuff and how knowledgeable. If they know that one little thing, chances are they at least know what the heck they're talking about. So that's good. Absolutely. I love that. I think that's a great example of how to think creatively and to network really well. That's kind of the whole idea behind BiggerPockets forums was like, I don't know if you've ever heard of this term.

13:44I think it was Gary Vee came up with it. Gary Vaynerchuk. He talks about the thank you economy where it's just like, look for the people who are just going out and sharing their knowledge and not just trying to pitch you something. So like in your example, like if someone's spending the time on a Facebook group, giving you a thoughtful answer about how they would approach a problem instead of just trying to make money off you right away, that contractor winds up getting more work because they're just giving and trying to be productive and trying to help other people. And it just shows you who they are.

14:13And that's the same thing you see on the BiggerPockets forums. People are just on there, experienced investors answering questions for free. It's the same idea. Just try and help one another. And if we can do business together, great. It's a really good approach. I think a lot of people who get into this just think about networking as one directional, right? You just like, hey, I need this one thing from you. But networking, in my experience, if you start doing it in this way where you're contributing and having conversation instead of just getting to that point right away of like, can we transact together?

14:45You actually, again, it's counterintuitive, but you go faster and find better people quicker than if you just try and jump the gun. And if you want to do it, everyone, you can do this for free. I know there are people who listen to this podcast who don't know that you can just go on BiggerPockets website, biggerpockets.com. It is free. You can go on and network with literally three and a half million investors who are out there and ask questions and talk to one another, do deals together. It's awesome. Go check that out. So you've also accomplished something very impressive, Brian, which is the scale that you're doing at.

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18:57Welcome back to the BiggerPockets podcast. I'm Dave Meyer here with investor Brian Waters talking about how he's built a system where he can invest long distance and not just buying turnkey properties, but doing the BRRRR method. So Brian, tell me, once you had a team in place, how did you set it up so that you couldn't, you're not just doing one of these a year or one every couple of months, you're done six in the last six months. How have you built that business? I think everyone talks about the buy box and it is really important. It's probably one of the most important things. I have not steered away from my buy box in the past six months.

19:34And that makes it so easy because if you're getting all these deals coming your way, you're like going to get pulled to the left and the right and you want to analyze this stuff you're wasting your time i know my numbers i know the neighborhoods i know the streets i use the same product and everything i'm literally like creating the exact same recipe every single time it just makes it easier and i treat my contractor really really well and he gets he gets it done for me and just creating that system that sop and sticking to it until you get to where you want to go is the the most important thing.

20:04Study that market. I could see a deal that comes through from Redfin or wherever I'm getting it. And I could know within a minute whether or not I think it's a good deal or not. Obviously, there's more to that. I'm going to analyze it further, but I have to know if I even want to take a look at it. Will you tell us what your buy box is right now? Absolutely. So I'm in the Detroit market and the Memphis market. The deals that I'm looking for are between$70 ,000 and$80 ,000 for purchase price. And then the remodels, I don't do cheapy remodels. I'm not going to go crazy and put like a gold toilet or anything like that in there.

20:37But what I will do is I want to make sure I'm Brian's keeping this for the long term. So I want to know that it's going to last me a long time. So, you know, I'm putting new roofs, new windows, new water heaters, new HVACs, LVP flooring, kitchens, pretty much a full, full job. But the remodels that we're getting, which is mind blowing to me, because in California, you couldn't even get like an awning for this much, but it would be about 40 grand for that. So that's plus or minus what I'm getting. So we're all in for$130. And these properties are appraised. I literally just had an appraisal come in yesterday for$170.

21:08So that's remarkable, right? And they're renting for around$1 ,350,$1 ,400 a month. And yeah, I'm sticking to that plan. I'm using the same materials. I have a spreadsheet of all that. It just makes it easy. I have the same contractor, so he knows the expectations. I barely even have to talk to him anymore. And then you said something important. You've got to analyze data. So when I get my appraisals back, I'm going to look at the appraisal. I'm going to study it. What caused stuff to go up? What caused stuff to go down? Is it a square footage issue? Is it a bathroom, extra bathroom? All that type of stuff.

21:44And so let me just recap those numbers forever in here. You're buying between 70 and 80K in Detroit and Memphis. You're putting about 40K in, which I agree with you. I got a quote for a heat pump for my primary residence that costs that much. Um, uh, so that's pretty impressive. And then you're getting an appraisal at one 70 ish. So with closing costs, you're making 40 to 60 grand in equity on each of these deals. Yep. Yeah. Do that time. Time's five. That's a couple hundred grand in equity a year. That's not bad. That's awesome. Wow. Congratulations. So that's great. It seems to me like your, your whole model is how repeatable you can make this.

22:26Is it anything that's 70K or do you have like a specific format you're looking for? No, it's very neighborhood specific because a lot of those markets all over the country, like you can go on one street and it's like a, it's not nice. But so I'm sticking to the areas I've known. And because I've been analyzing and I love analyzing stuff, I could tell you like a million streets in Detroit because I know when it pops up, I'm like, yep, that's a street I've bought on or looked at. So the reality of it is a lot of these neighborhoods that were built back in the days. they had the same builders. And so the layouts are very similar.