The Beginner’s Guide to BRRRRing Out of State: Build Wealth Beyond Your Backyard

Real estate investing is an exciting way to build wealth, but what if your local market is too expensive or doesn’t offer the returns you’re looking for? Enter out-of-state investing with the BRRRR method—a strategy that allows you to maximize cash flow and appreciation in markets beyond your own backyard.

In this guide, I’ll walk you through the process of BRRRRing out of state, covering everything from choosing the right market to building a reliable team to manage your investment.

Why BRRRR Out of State?

Some real estate investors shy away from out-of-state deals because they seem too complicated or risky. However, there are many advantages to consider:

• Affordable Markets: Many secondary or tertiary markets offer lower entry costs and higher rental yields compared to expensive coastal cities.

• Diverse Opportunities: Out-of-state markets let you diversify your portfolio geographically, reducing risk.

• Scalability: Lower prices in other areas make it easier to acquire multiple properties and grow your portfolio faster.

The BRRRR method works particularly well in out-of-state markets where undervalued properties can be rehabilitated for significant appreciation and strong rental demand.

Step 1: Choose the Right Market

The success of your out-of-state BRRRR hinges on picking the right market. Key factors to evaluate include:

1. Affordability: Look for markets where you can purchase properties below their market value and still generate cash flow.

2. Rental Demand: Research job growth, population trends, and vacancy rates. A thriving local economy often means strong demand for rentals.

3. Landlord-Friendly Laws: Some states, like Texas or Ohio, have laws that favor landlords, making it easier to manage tenants and enforce lease agreements.

Tools to Use:

• Roofstock: A platform for buying investment properties with tenants already in place.

• Mashvisor: Analyzes rental markets for cash flow and ROI.

• BiggerPockets Market Reports: Offers detailed data on emerging real estate markets.

Step 2: Build Your Team

When you’re investing out of state, having a local team you trust is crucial. Here’s who you’ll need:

1. Real Estate Agent: Specializes in investment properties and understands your target market.

2. Contractors: Handles renovations to increase the property’s value.

3. Property Manager: Manages tenants and ensures smooth operations post-rehab.

4. Lenders: Find lenders familiar with BRRRR deals, especially those willing to refinance based on after-repair value (ARV).

5. Inspector and Appraiser: Provides detailed property evaluations to avoid surprises.

Pro Tip: Lean on online networks like BiggerPockets to find investor-friendly professionals in your chosen market. Interview multiple candidates and ask for references.

Step 3: Buy

Once you’ve selected your market and built your team, it’s time to buy your first out-of-state BRRRR property. Focus on properties with:

• Value-add potential: Properties that need cosmetic or moderate rehab (not full gut renovations).

• Good locations: Proximity to schools, shopping, and employment centers.

• Clear upside: Ensure the purchase price plus rehab costs leaves room for profit.

Since you’re out of state, your agent and inspector will be your eyes on the ground. Request detailed photos and videos of the property and neighborhood before making an offer.

Step 4: Rehab

Rehabbing out of state requires extra coordination. To stay on track:

• Get a detailed scope of work: Before the project starts, agree on a clear plan with your contractor, including costs and timelines.

• Request regular updates: Weekly video walkthroughs or photo updates ensure you’re informed without being on-site.

• Budget for surprises: Even with thorough inspections, unexpected repairs can arise. Plan for a contingency fund of 10-15% of your rehab budget.

Pro Tip: Use project management tools like Asana or Trello to track the rehab remotely.

Step 5: Rent

Once the property is ready, your property manager will take over:

• Set competitive rents: Use local rental comps to price your property effectively.

• Market the units: Professional photos and listings on platforms like Zillow or Apartments.com attract quality tenants.

• Screen tenants thoroughly: Run background and credit checks to avoid costly turnovers or evictions.

If you’re house hacking an out-of-state property, you’ll need a local team to manage your unit while you live elsewhere.

Step 6: Refinance

After stabilizing the property with paying tenants, refinance to recover your initial investment. For out-of-state deals:

• Work with lenders familiar with the market: They’ll understand the nuances of appraisals and ARV calculations in that area.

• Leverage your local team: Your agent and property manager can provide data to support a higher valuation during the appraisal process.

Step 7: Repeat

Once you’ve successfully BRRRRed your first out-of-state property, you’re ready to repeat the process! By reinvesting the funds from your refinance, you can quickly scale your portfolio while diversifying across markets.

Overcoming Common Challenges

BRRRRing out of state isn’t without its hurdles, but with preparation, you can minimize risk:

1. Challenge: Managing a team remotely.
   Solution: Use communication tools like Zoom, Slack, or WhatsApp to stay in touch with your team. Schedule regular check-ins.

2. Challenge: Unfamiliar markets.
   Solution: Spend time researching and visiting your target market before investing. Attend local investor meetups if possible.

3. Challenge: Finding trustworthy contractors.
   Solution: Ask your property manager or real estate agent for referrals. Always vet multiple contractors.

Real-Life Example

Let’s say you live in Los Angeles but want to invest in Cleveland, Ohio. You buy a duplex for $100,000, invest $25,000 in renovations, and rent out both units for $1,500/month combined. After refinancing at 75% ARV ($150,000), you pull out $112,500, recovering your initial investment while holding a cash-flowing property.

Final Thoughts

BRRRRing out of state can seem daunting, but it’s one of the most effective ways to build wealth in real estate—especially if your local market doesn’t make sense for investing. By carefully selecting your market, building a trustworthy team, and following the BRRRR process, you can unlock opportunities nationwide.

Are you ready to take the leap into out-of-state investing? Subscribe to my blog for more tips and resources to help you succeed!