Replacing His Income with Rentals (in 3 Years!) by “Recycling” Money

Summary

BiggerPockets Real Estate Podcast: "Replacing His Income with Rentals (in 3 Years!) by 'Recycling' Money"

Episode Overview In this compelling episode of the BiggerPockets Real Estate Podcast, host Dave Meyer sits down with Ricardo Adames, an ambitious real estate investor from Orlando, Florida. Ricardo shares his remarkable journey of transitioning from a corporate career to full-time real estate investing, successfully scaling his rental portfolio to 16 units and generating six figures in annual revenue—all within three years. Utilizing the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method and strategic money recycling, Ricardo provides invaluable insights into building a stable and profitable real estate business even in challenging market conditions.

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1. Introduction and Background

[00:00 - 03:05] Dave Meyer opens the episode by highlighting Ricardo Adames' impressive achievement of scaling his rental portfolio to 16 units in three years. Ricardo's journey began at the age of 23, driven by dissatisfaction with his corporate career and a desire for financial freedom through real estate.

Notable Quote: Ricardo Adames shares, “I bought a property here in Daytona Beach, Florida. It was a BRRRR, and from there, I kept it going with the rentals” ([03:05]).

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2. Transition from Corporate to Real Estate

[03:05 - 05:32] Ricardo discusses his background in finance and his initial foray into real estate during the COVID-19 pandemic. Working from home and trading stocks, he realized that a traditional corporate lifestyle wasn’t aligned with his long-term goals. This realization propelled him to explore real estate as a means to achieve passive income and greater control over his schedule.

Notable Quote: “I realized real estate offered a pathway not just into passive income, but also into a way of me creating my own schedule, being in control of my time, and building my own business” ([04:03]).

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3. Embracing the BRRRR Method and Mitigating Risks

[05:32 - 09:49] Ricardo emphasizes the importance of preparation and education in mitigating investment risks. By adopting the BRRRR strategy, he was able to purchase properties below market value, undertake cosmetic rehabs, and refinance to recycle his capital efficiently.

Key Points:

• First Deal: Bought a three-bedroom, two-bath house for $150K, invested $35K in cosmetic renovations, and achieved an after-repair value of $240K within 90 days.
• Risk Mitigation: Focused on buying under market value and keeping renovations simple to avoid unexpected costs.

Notable Quotes:

• “It's all about taking the jump. It's not gonna be perfect, probably your first time, but you're just gonna get better from there” ([07:16]).
• “I hit my goal of doing a cash-out refinance and being able to pull the majority of the funds out to keep it going” ([09:20]).

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4. Scaling the Portfolio and Managing Growth

[16:01 - 23:05] After successfully completing his first BRRRR deal while still employed full-time, Ricardo made the pivotal decision to quit his 9-to-5 job and focus entirely on real estate. This transition allowed him to increase his deal flow and manage multiple projects simultaneously.

Strategies for Scaling:

• Capital Allocation: Initially focused on one deal at a time, gradually increasing to multiple projects as his capital and confidence grew.
• Team Building: Hired a project manager and a transaction coordinator to handle construction and administrative tasks, enabling efficient management of up to eight projects concurrently.
• Consistent Relationships: Developed strong ties with a reliable hard money lender and trusted contractors to ensure smooth operations and timely project completions.

Notable Quote: “Once you have multiple projects, you can't have them all everywhere at once. So having a project manager is probably the most important hire you can make” ([21:56]).

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5. Navigating Market Challenges in Florida

[23:05 - 35:18] Ricardo details the unique challenges faced in the Florida real estate market, particularly the impact of hurricanes and rising interest rates. These factors have made flipping houses more difficult, especially in flood-prone areas.

Challenges Discussed:

• Natural Disasters: Hurricanes have led to increased insurance costs and buyer hesitancy in flood zones.
• Interest Rates: Higher rates have tightened the buy box, making it harder to find profitable deals without overpaying.
• Market Adjustments: Ricardo adjusted his strategy by refining his buy box to focus on concrete block houses in desirable locations and catering to first-time homebuyers.

Notable Quotes:

• “Hurricanes are a big issue and that leads to insurance issues on top of that” ([28:45]).
• “House that's in a flood zone, it's a huge red flag” ([28:45]).

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6. Balancing Rentals and Flips for Sustainable Growth

[34:55 - 36:32] To maintain steady cash flow and build long-term wealth, Ricardo adopted a balanced approach, integrating both BRRRR deals and flipping. This 50/50 strategy ensures that while rentals provide passive income, flips generate active income to support and expand the rental portfolio.

Key Points:

• Diversification: Combining stable rental income with high-reward flipping projects.
• Capital Growth: Using profits from flips to fund additional BRRRR deals, thereby accelerating portfolio growth.

Notable Quote: “I think it's transitioning to doing more of a 50, 50 balance instead of going too flip heavy or going too rental heavy” ([30:15]).

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7. Lessons Learned and Future Goals

[35:18 - 36:50] Ricardo candidly acknowledges the inevitable setbacks in real estate investing, including unsuccessful flips. He emphasizes the importance of learning from mistakes and continuously refining investment strategies.

Future Aspirations:

• Commercial Real Estate: Plans to expand into commercial properties once his residential portfolio reaches a significant size.
• Strategic Exits: Utilizing strategies like the 1031 exchange to optimize tax benefits and reinvest equity.

Notable Quotes:

• “If you could buy a house here in Florida in the 200-00 or low 300-00, that's affordable” ([34:55]).
• “I would love to get into commercial” ([36:32]).

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8. Conclusion and Key Takeaways

Dave Meyer wraps up the episode by commending Ricardo's ability to build a successful real estate business amidst challenging market conditions. Ricardo's story serves as an inspiring example for aspiring investors, demonstrating that with strategic planning, risk mitigation, and adaptability, financial freedom through real estate is attainable.

Final Thoughts:

• Adaptability: Essential for navigating shifting market dynamics.
• Education and Preparation: Crucial for making informed investment decisions.
• Team Building: A strong support system enables effective scaling and management.

Final Quote: “So as long as you prepared yourself, all the things that Ricardo just talked about can still make these things possible” ([36:50]).

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Summary Ricardo Adames' journey from a corporate background to a thriving real estate investor encapsulates the essence of strategic investing and resilience. By leveraging the BRRRR method, maintaining a balanced investment approach, and adapting to market fluctuations, Ricardo has successfully built a robust and profitable rental portfolio. His experiences highlight the critical importance of preparation, risk management, and team building in achieving long-term financial success in real estate. This episode of the BiggerPockets Real Estate Podcast not only provides practical strategies but also serves as a motivational blueprint for those aspiring to achieve financial independence through real estate investing.

Transcript

[Dave Meyer]

This investor used one basic real estate strategy to scale his portfolio of cash flowing rentals up to 16 units in only three years. He did it by dialing into his local market to find the best available deals, then repeating a tried and true strategy over and over again. Now he's transitioned his career into full time real estate investing. He's generating six figures of annual revenue and he's building a stable portfolio of rental properties that he can retire off. And he's doing it all at the same time.

[Ricardo Adames]

Foreign.

[Dave Meyer]

Hey, what's up everyone? I'm Dave Meyer. I'm the head of real estate investing here at BiggerPockets and I've been investing in rental properties for 15 years. Today on the show we have an investor story with Ricardo Adames from Orlando, Florida. Ricardo, like a lot of people we hear on the show, was unsatisfied with his corporate career path and he decided to try investing in real estate. He dove in with the BRRRR method and was able to use his modest savings to acquire not just one or two rental properties, but scale all the way up to 11 properties in three years by repeatedly recycling the same money. So if you've been hearing that the BRRRR method is dead, just listen to Ricardo. He only started investing in 2022, but has found multiple great deers every year. He's been investing right in his own backyard. We're going to have a great time talking to Ricardo, but before we get into the show, I wanted to let everyone know that Henry Washington, my friend and often co host on the show, we're going on a road trip. We are going to be driving around the Midwest and looking for on market deals. We're going to be talking to investors, meeting with agents, going to meetups. It's going to be super fun. We're calling it the cash flow roadshow and it's happening right now in the next couple of days, July 14th to 18th, across the Midwest. We're basically driving to markets in three different states. We're going to go to Milwaukee and the surrounding area, then we're going to Chicago, we're going to Indianapolis and we might even buy a deal or two of our own on the way. So look forward to the great content that will be coming out on the bigger pocket social media channels. Best part of all this is if you live in one of these areas, Chicago or Indianapolis, we are doing two free meetups. One in Chicago on July 15th, the other one is in Indianapolis on the 16th. We're going to be there, Henry and I, giving Presentations, talking about local market conditions. It's going to be great networking opportunity, and we have a couple fun surprises planned as well. So if you live in one of those markets you want to hang out, go to pickerpockets.com roadshow to learn more. Again, these events are free, but you do need to RSVP because they're going to sell out. So make sure to go lock that in right now if you're interested in coming. All right, let's bring on Ricardo. Ricardo, welcome to the Bigger Pockets podcast. Thanks for being here.

[Ricardo Adames]

Hey, Dave, thanks for having me.

[Dave Meyer]

Yeah, I'm excited to talk to you. It sounds like you have a really cool real estate story, so give us a little background. How did you first get started in the world of real estate investing?

[Ricardo Adames]

Yeah, sure. So, first of all, I'm from Orlando, Florida, so I've done all my business down here, and it's been great to me so far. I started when I was 23 years old. I bought a property here in Daytona Beach, Florida. It was a burr, and from there, you know, kept it going with the rentals. So currently have 11 properties with 16 units. So I've done that in a little over three years. This year, a little more flip heavy just to build up some cash flow.

[Dave Meyer]

Okay.

[Ricardo Adames]

On track for about 24 flips. That's been the model for this year just to make a little more cash on the flip side rather than relying just on a couple hundred dollars per unit.

[Dave Meyer]

Okay, cool. Well, it sounds like you've done a lot in just three years, so we'll dive into how you found so much success, especially during what has been a higher interest rate era. Eager to talk to you about what's going on in Florida. But you said you started at 23. It's a young age, similar to when I got started. How did you pull that off and why? Why did you choose real estate?

[Ricardo Adames]

Yeah, I graduated with a degree in finance, so I was basically behind the computer during COVID as well, working from home, just trading stocks. And I realized it's probably not the lifestyle I want for the next 30, 40 years. So I realized real estate offered a pathway not just into passive income, but also into a way of me creating my own schedule, being in control of my time, and building my own business that, you know, I could be in control of. So saved up some money, had good credit, and I took a risk, you know, after studying bigger Pockets, studying the BRRRR method, so which property can fit that. That motto.

[Dave Meyer]

So we hear this a lot on the show That a lot of people, you know, they. They just. Something wasn't right about their. Their original career that real estate offers something else. Like, what was it about the lifestyle you said of. Of that traditional career that just wasn't meshing with your ambitions, your goal, the lifestyle that you want?

[Ricardo Adames]

Yeah, I think I've always been someone that's. I'd like to be in control of what I do and of my income. My first job was at a car wash, actually, so I knew I could only make so much there. It was an hourly wage, and I could work harder than everyone else, work harder than all my coworkers, my colleagues, and I would still make the same pay. So real estate offered a way to be in control of my income, in control of my time. I knew as long as I studied and I was prepared at that age, I could take a risk, because what do I have to lose? And I think that's a mentality that even if you're young or older, you know, if you have that mentality, you know, it sets you up for success.

[Dave Meyer]

And it's funny, most people who come on the show talk about their first deal, don't frame it in terms of taking a risk. But of course, every investment is a risk. So how did you evaluate the risk and get yourself to a position where you at least understood the risks so you could try and mitigate them?

[Ricardo Adames]

So the Burr book was huge for me, watching bigger pockets, watching as many YouTube videos as I can. So much goes into preparation before even buying your first deal or even buying your hundredth deal. It's a lot of what you do behind the scenes, I feel. So as long as you're prepared now, you can take the jump. So for me, it was looking at, okay, which property can I buy under market value? And by buying under market value, as a fixer upper, I was already ahead of the game because if it didn't work out on the rehab, I already bought it at a good price.

[Dave Meyer]

That's a perfect example of how to mitigate risk, especially on your first deal, right? If you buy at market value, sure, things could still go well. I've done it before, it's gone well. But if you, especially for your first deal in this kind of market, if you are trying to figure out a way to mitigate risk, this is a perfect example. But I also think, Ricardo, you deserve some credit, because a lot of people prepare but get stuck, right? They see the risks, they see the upside, of course, but they're like, oh, man, so many things could go wrong because I feel like that's like this critical juncture where some people tend to overanalyze or over educate before actually jumping in and acting. So how did that go for you and how did you get yourself to a position to. To pull the trigger?

[Ricardo Adames]

Yeah, I agree. There's an endless amount of books. Same thing with YouTube. I mean, there's an endless amount of YouTube videos out there. So yeah, it's an analysis paralysis. Like you're saying it's all about taking the jump. It's not gonna be perfect, probably your first time, but you're just gonna get better from there.

[Dave Meyer]

So tell us about this first deal. What was the profile of the deal? You sound like you bought it under market value. But what else characterize this deal?

[Ricardo Adames]

Yeah, well, it was a cosmetic rehab. I didn't wanna get too crazy on the first one with roofing, electrical, plumbing, none of that. So I kept it simple. That was something else. That again, mitigating risk, keep it cosmetic. So I bought it for about 150, put 35,000 into it, which includes your flooring, paint, kitchen, bathrooms for a three bedroom, two bath house. You know, at the time, three years ago, you could get it done and then appraised for about 240. So trying to follow that brrrr method.

[Dave Meyer]

You did bathrooms and kitchens, all that for 35 grand. That's pretty good.

[Ricardo Adames]

Oh yeah, yeah. You know, I think the contractor, he needed work. After that he started raising his prices.

[Dave Meyer]

So yeah, James Danard, who's on the show, deals with a lot of contractors all the time. He always talks about how you have to have a lot of contractors so that you find the people at the right time, like if they're in between projects or they're hungry for work, you'll get a good deal. But you know, when things are going well for them, no fault of their own, you know, like they can charge more because they're in more demand. And so you need to kind of balance these contractors, which is a really important lesson. So how do you find this contractor? Because it sounds like it went pretty well. That's a hard thing to do on your first one. How did you find and manage this person?

[Ricardo Adames]

Yeah, believe it or not, Facebook. Facebook was a huge resource for me and it still is. I actually found a house as well off of Facebook. So it was a wholesaler who posted it on Facebook Marketplace. Found a couple contractors through Facebook Marketplace. And one thing I always advise is get multiple quotes, whether it's for your roof or your ac. Get two to three quotes, you'll have three different prices and you might have someone that doesn't show up. Yeah, so I found him. He gave me good pricing. He was there at 7am every day. And when you don't have to call someone to see where they're at, that's the type of person you want to work with and have on your team.

[Dave Meyer]

Okay, and how long did the whole rehab take?

[Ricardo Adames]

Yeah, so the rehab took about 30 days, which that's what I aim for on a cosmetic rehab. And I still stick to that to this day. From there it took me another 30 days to find the tenant and then another 30 days to complete the cash out refinance.

[Dave Meyer]

Wow.

[Ricardo Adames]

So if you could do a brrrr within 90 days, that's best case scenario. And it worked out for there because at that time rentals were in very high demand.

[Dave Meyer]

And this was 2022 you said. So it sounds like you got 100% of your money out. Is that about right?

[Ricardo Adames]

That's right. Yep. I believe I left about 5,000 in. But again, for the first deal, I wasn't trying to be perfect. You want to be as close as perfect as you can. But I hit my goal of doing a cash out refinance and being able to pull the majority of the funds out to keep it going.

[Dave Meyer]

Seems like a home run first deal because you learn something, you built contacts, you got a huge financial return. So there's not much more you could do on your first deal. It's incredible. Were you addicted at that point once you did this and pulled this off in 90 days?

[Ricardo Adames]

Oh yeah. At that point I was like, okay, I'm going to do this again and again and how many more can I take on at once? The first year kept it simple, just one at a time. But yeah, once you see it work, once you start building confidence in yourself and it's time to do it again.

[Dave Meyer]

When you did this first deal, I assume you were still working full time.

[Ricardo Adames]

I was. However, as soon as I closed that refinance and I realized how much I could make on one deal, I decided to quit and I decided to go all in real estate.

[Dave Meyer]

Nice.

[Ricardo Adames]

Because I felt if I kept my nine to five, I wasn't fully committed. I was almost doing real estate part time. So I quit to go all in. And again, that's taking another jump, another risk.

[Dave Meyer]

What went into that decision? Because I think both paths are perfectly viable. You could stay at a W2, do it part time. There are pros and cons going into it full time. Pros and cons. So Was it just, you know, you saw this work and you wanted to do it and felt like you can make more money here or did you think at all about sort of sticking with the job longer term?

[Ricardo Adames]

Yeah, I mean, I think everyone's chasing more money, right? But aside from that, it's also the lifestyle like you said. So, you know, I could have kept the nine to five and then done real estate afterwards. But let's be realistic. Most people after a 9 to 5, they're tired. You know, it's tiring to work a full time job and then come home and try to run a business. It's hard. It's very hard. So at that point, you know, I made the decision, yeah, I'll leave the 9 to 5. I have my savings to keep me floating as I make these burrs work and as I get into a flip just to build some more cash flow. But at some point you should decide, okay, let me take the leap. If you really want to go all in and build a huge real estate business, if you want to do it part time, absolutely. It could work while keeping a W2.

[Dave Meyer]

Well, congrats on figuring that out so quickly. Super impressive. I want to talk to you more about how you scaled up because getting that first deal, it is addicting. But establishing scale and doing this over and over again, that's a whole other beast. We're going to get into that right after this quick break. We'll be right back. If you're in real estate like me, you don't want to lose deals. Juggling multiple tools. That's where Resimpli comes in. A true all in one CRM designed for real estate investors like us. With Resimpli, you can connect with motivated sellers through calls, texts, emails or direct mail. Plus enjoy free skip tracing, cash buyer searches, customizable websites, and automated drip campaigns that turn cold leads into successful deals. Head over to resimpli.com biggerpocketsnow to start your free trial and also get 50% off your first month. Once again, that's R E S I-M P L I.com biggerpockets want to invest in real estate but don't have the time or know the best local markets. Rent to retirement has got you covered. Here's the deal. They've helped thousands of investors just like you find turnkey homes across the best US Markets. And best of all, they do all the heavy lifting for you. With over 255 star ratings on bigger pockets, rent to retirement experts help you build strategies to retire early. Through real estate. And right now, Rent to Retirement offers some amazing incentives on turnkey new construction properties. Just for example, you can get up to 30% off new build prices or you can get 0% down loan options or interest rates available as low as 3.99%. So don't miss out. These deals will not last. Text REI to 33777 or visit biggerpockets.com retirement to start investing in top cash flow markets today. I used to think I could booby trap my house like some scene from Home Alone. But it turns out setting up swinging paint cans can be pretty messy and so I personally turned to a much better solution. SimpliSafe. I use it because it doesn't just react after something happens, it helps stop bad stuff before it even starts. And that's what makes it different and way easier than installing a zip line to my treehouse. SimpliSafe's new Active Guard Outdoor Protection uses smart cameras and live agents who watch over your property in real time. So if someone's creeping around, they can talk to shine lights on them and they can even call the cops if needed. It's like having a professional bouncer for your house minus the velvet rope. There are no contracts, no hidden fees and setup is super simple. Plus CNET just named it the best home security system of 2025 and I get why it gives me real peace of mind every single night. Right now you can get 50% off your new SimpliSafe system with professional monitoring and your first month free at simplisafe.com [e-mail] pockets there's no safe like SimpliSafe.

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[Dave Meyer]

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[Ricardo Adames]

Yeah, I was actually getting my deals or looking for deals, a combination on MLS and through wholesalers. And I was getting a lot of deals starting to get thrown my way as I was reaching out to people, you know, in my market. And I started to realize, okay, the deals are here now, now I just need to manage them, just need to make sure the funds are there because I was using hard money lending to get through the rehabs and pulling rehab draws. So that's another time management thing, a cash management thing that if you're not good at, you know, you could burn your through your cash pretty quickly.

[Dave Meyer]

I would imagine at this point, if you're pretty new to this, you've done one successful one, but now you have time. The temptation is to just sort of go and do as many deals as you want, but I imagine you have some limitations on capital for down payments and kind of stuff, and there's a limitation on your time. So how did you strategically think about scaling up from that first deal?

[Ricardo Adames]

Starting out, I was putting 20% down with the hard money lender, which that's pretty normal. And you have to be careful not to, okay, let me try to do two or three at once now, just one at a time, because one at a time will still get you there. So it's almost like taking the slower route, but it's going to be consistent. If you get into too many deals at once and you start going over on budgets and you're running out of funds to pay your contractors, pay for materials, you might get stuck on one now, now you have to sell the property as is, you know, that's setting yourself up for a loss. So I did as best as I can to stick to one at a time my first year until I realized, okay, the capital is building up and I realized I was not going to scale to more than one bra at a time unless I started bringing in the flips because that was going to grow my bank account to have more capital.

[Dave Meyer]

Got it. Because otherwise you're just, you're recycling it. And I mean if you're timing it really well, you could do four of these a year, right? Because you're talking about a 90 day situation. So let me ask you, if you did it just at four times a year with the example of that first deal, would that have replaced your salary from your previous career?

[Ricardo Adames]

I think it would have. In cash flow alone it would have taken about four or five years. So it was going to take time.

[Dave Meyer]

Then you decided to start flipping. At what point did you do a couple more burs or was it kind of right away you had this realization?

[Ricardo Adames]

Yeah, I had three burrs already done and that was now towards the end of the year I realized, okay, not going to live off the burrs right away. Probably making at that point about $1,000 a month. You know, you'll aim to have 300 something dollars per door. And I was running low on now my living expense funds that I had saved up. So at that point it's like, okay, let me take a shot at a flip. It's only going to help me build up my bank account to do more burrs at once and it's also going to replenish my savings. And at that time, you know, I was doing what I had to do to make it work. If I had to use a credit card to pay for gas and food, I did it. It's, it's again taking risk. But long term, just having that, you know, that mindset, it's going to pay off.

[Dave Meyer]

And how did you think about resource allocation? I think this is one of the hardest things when you're scaling up is like you have this finite amount of money and you want to do the burrs because that's sort of setting you up long term. You want to do the flips because you need more money to do more burrs. So you have this kind of nest egg. How did you think about dividing that between ongoing burs and trying to do flips to try and grow the nest egg and sort of achieve that hopefully exponential scale at some point, if you.

[Ricardo Adames]

Do four burrs a year, let's say over five years, that's 20 properties. I mean your equity is going to be at a good number right there. After having 20 properties with 25% in equity minimum, that's making you wealthy over the long term. But it's not going to allow you to replace your income right away. So that's when getting into the flips made sense and it made sense to help me scale because it's going to build up the capital that I have available.

[Dave Meyer]

I think this is a really important lesson for everyone listening. There are no right or wrong answers in real estate. But I think for most people when you're trying to scale up your portfolio, you have these sort of conflicts where you want to build long, long term wealth. That's what most of us are in this industry for, right? You want to replace your income, you want the stability that comes with being a property owner. But it takes a while for cash flow to get you rich, right? Like it's going to take a while. Even if you're super aggressive with it, it could still take a while. And so most people need to find a way to generate what I would call active income. And that can come in either the form of a W2 job or 1099 job or through something like flipping. And personally I'm actually agnostic to it. I think whatever works for you, that's going to give you more money to put into those long term rentals, long term is probably the right way for you. I've chosen to do W2 because I'm not a good flipper. I've never done it. So it sounds like Ricardo, you're a good flipper and you were able to really start to generate a lot of income. There's but I encourage everyone to sort of just think about this for themselves. If your goal is financial freedom, I know it doesn't sound like working a job or flipping houses is financial freedom, but you need the capital, you need something to invest. Even if you do the brrrr as perfectly well as Ricardo does, you got to keep some equity in these deals because even when you're refinancing them, usually you have to put 20 or 25% equity you have to keep in them. And so how do you build that capital? How do you expand your equity and put it into more rentals? That's something everyone has to answer for themselves. But I think this is a really good example of how if you want to be full time in real estate, a great way to do it. So Ricardo, tell us just a little bit about managing this because how many projects, you know, once you started flipping, how many were you doing at a time?

[Ricardo Adames]

So it grew from about two to three at a time to now I'm currently have eight at once. So that's a combination of on market, under construction or pending to sell. So this is where scaling comes in and knowing how to manage it all and create a good team around you.

[Dave Meyer]

Well, you mentioned a team and I'm sure you have good agents and lenders and everyone, but is it just you basically managing and building your own individual portfolio?

[Ricardo Adames]

Well, I'm the sole owner. Yes. So under me, I'll have. I currently have a project manager who is in complete charge of the construction. I think that is probably the most important hire you can make. When you're looking to scale, it's a lot. You're taking phone calls from Home Depot, you're looking for a roofer, an AC contractor, landscapers. And when you have multiple projects, you know they can't all be everywhere at once. So recommend to anyone that's looking to scale, that's probably going to be your most important hire. After that, a transaction coordinator is great. Help you take care of any paperwork you have going on. Almost like an assistant to help keep you organized. And from the start, I've had the same hard money lender. We've built an amazing relationship where I can send him a deal now and within the hour he'll have me approved or tell me, you know, probably overpaying a bit. So I think consistency with who you work with is huge. Developing relationships, because when you know you have to repair a roof or you have to repair a water heater and you know who to call right away, it makes your life ten times easier.

[Dave Meyer]

Oh, my God, the anxiety level just goes down so much. Once, you know, when you have, like, I got a garage door guy, I got an AC guy, you know, something like that, it really helps a lot. Just for your mental state, not only for your, the returns that you generate on your portfolio. Out of curiosity though, is your project manager full time working for you?

[Ricardo Adames]

Oh, yeah. At this point, yes.

[Dave Meyer]

Cool.

[Ricardo Adames]

You know, we'll easily have three to four properties at once going under renovation. He also helps keep an eye on what's on market. If we're getting a bunch of showings, you know, as soon as someone walks in, you want someone to be wowed. And that's, you know, that's an important thing. I've learned quality matters especially when flipping a house. Whereas if you're renting a house, you know, you can almost drop the quality a bit. So flipping a house, it's. It's more quality. You want someone to walk in, just be wowed, and you want to be the nicest house on the block. That's what will sell the house.

[Dave Meyer]

So one of the things I really am intrigued about your story is that you scaled during A difficult time in the market. You know, you started in 2022, things are still pretty good then. But 2023, interest rates started to go up. What was that like? Did you have to adjust your strategy?

[Ricardo Adames]

Yeah, it got harder to find burrs. It got harder to find properties that you can pay a certain price and you'll actually make any money on as a rental. If you're breaking even, it doesn't make sense. You're going to have expenses, you're going to have a water heater go bad. Even if you burr it and you do that rehab up front to take care of the major expenditures, the major repairs, something always goes wrong. A toilet gets clogged, a kitchen sink is leaking. So you got to have that in mind. I wouldn't buy a rental if I'm breaking even. You need to give yourself a buffer.

[Dave Meyer]

And how was it finding Those deals past 2023, like with higher interest rates, were you still able to find deals that met those criteria?

[Ricardo Adames]

So you got to make an adjustment. So you know, as interest rates rose, you got to be tighter on your buy box so you can't overpay. You still gotta make sure those after repair values are there because that's really the whole idea. How much can you buy this property for? How much do I have to put into it? And is that appraisal value going to be there? If it's not going to be there, you start tying up your capital and then that cash that you were recycling start to get trapped and now you start digging yourself into a hole. So as interest rates rose, it made it more challenging. Currently in 2025 here in Florida at least it's, it's getting tougher to flip homes, especially. One thing I've learned pretty quick is in flood zones after these hurricanes, it's hard to sell a house in a flood zone. So that's been a huge challenge and a learning lesson for me currently.

[Dave Meyer]

Well, I want to dig into that because I think things have changed a lot nationwide. But Florida has some particular dynamics I'm interested in learning about. And I do want to talk to you more about your buy box and like how you've adjusted it and sort of mitigate some of your risks. But we do need to take one more quick break. Stay with us. Do you want to invest in cash flowing rentals but don't have the time to manage the properties? Is your local market too competitive or expensive to invest in? Rent to retirement offers new construction turnkey investment properties that you can buy with as little as 5% down and rates as low as 3.99%. Their team handles everything from financing, management, insurance and more so you can live where you want and invest in the markets that offer the best returns. Rent to Retirement has the best reputation in the industry with more five star reviews than any other company on the BiggerPockets website. To learn more, visit biggerpockets.com retirement or just text REI 233777 to start investing in the best markets today.

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[Dave Meyer]

Welcome Back to the BiggerPockets podcast. I'm here with investor Ricardo Adames. We're talking about how he has scaled a really successful business both doing burrs and flips in Florida. And before the break, Ricardo, you mentioned it's getting harder in Florida. Florida sort of has all these unique dynamics. I actually recorded a whole podcast for the on the Market podcast about what's going on in Florida. But maybe you can describe for yourself your boots on the ground there. Like what is happening in Florida Right now.

[Ricardo Adames]

Yeah, Hurricanes. Hurricanes are a big issue and that leads to insurance issues on top of that. You know, insurance companies have gotten tighter. They see Florida as a risk. We're a peninsula, so we could get hit from a hurricane from any side. And last year, I believe we had two or three hurricanes in a matter of a couple months. And that was a huge hit to our market, particularly in houses and flood zones. So right now, any house that's in a flood zone, it's a huge red flag. A buyer does not want to buy a house in a flood zone. It's as simple as thinking as, okay, we're just right into hurricane season again right now and if another one comes around, your house is going to get flooded again. So that's a huge problem right now. And it's causing these flips to sit. So that's one thing I've learned. You're always going to have challenges and flipping houses or having rentals, and that's one thing I've learned to try to stay away from. And unfortunately, it's going to be an issue as we continue to move into the future.

[Dave Meyer]

Yeah, yeah, it is one of those issues. And as a result, I should mention that prices are also coming down. Right. In a lot of markets. Not everywhere in Florida, but Punta Gorda, Cape Coral, seeing pretty significant declines. I think Orlando is like kind of flat, like it's not really a decline. But how do you think about that? It is more significant in Florida. We're seeing bigger correction there in most other places. But I personally believe we're going to see more markets start to see these kind of corrections. So I'm just curious how you're thinking about this and what you're doing to adjust your strategy to mitigate risk. Are you stopping flipping? Are you stopping investing or what are you thinking?

[Ricardo Adames]

Yeah, how do you keep that balance? So again, I think my rentals are going to pay off big time in the long term. That's building that, you know, that long term wealth. At some point interest rates are going to drop. When no one knows, you know, you can't predict the future, but I believe once interest rates drop, that's going to help the market. Your values are going to stabilize or continue to go up. Historically, if we look at charts, real estate goes up over time. So when you have that in your back pocket, you know, long term you're going to win. With real estate, owning and holding properties, you can't worry about that. Now as far as flips, you know, it's fun to flip. It's fun, you know, to make a huge profit on one deal in a couple months and put that cash in your bank account. But it's risky. It's, it's risky. So I think it's transitioning to doing more of a 50, 50 balance instead of going too flip heavy or going too rental heavy. If you have that 50, 50 balance, you kind of keep checks and balances on each part of your business.

[Dave Meyer]

Can I, if you don't mind me asking, have you lost money on any deals in this sort of transitionary market?

[Ricardo Adames]

Absolutely. Well, not just, you know, this year, but in the past year or two. I have, I've done about 40 properties in three years. So.

[Dave Meyer]

Wow.

[Ricardo Adames]

If anyone thinks they're going to get into flipping and they're never going to lose money, that's very hard to do. You got to be realistic that this is an investment business and nothing's going to be perfect. And you can't be hard on yourself to be perfect. That's one thing I learned with my first loss. Trying to be perfect is just being too hard on yourself and you just learn from it and try to avoid that mistake again.

[Dave Meyer]

Yeah, everyone I know who flip says the same thing. And that's just strategy. Right. Flipping is a high risk, high reward business. And so as long as your wins. Right. The cumulative aggregate total of your wins outweighs those periodic losses, you're still doing well. It's one of the reasons. I, I don't know if you agree with this, but I've always been skeptical about people, you know, just trying to flip one house or, or not really doing it systematically because, like, I get it, you could do one and try, but like, you might just get unlucky on that one deal. Like, even if you have a 80% success rate, if your first one is not successful, that might be like a false indicator that flipping is not good for you. Where if you just kept doing it, you not only would you get better at it, but just like odds wise, you would start hitting a couple more times and that would mitigate some of those losses. So I totally agree with you that that's just the way some people invest. People do this in the stock market or Adventure Capital too. It's like, you know, some of them are not going to work out, but you have to put your money in the game and take those chances to get the opportunities to, to realize the big rewards it sounds like you've gotten with the majority of your properties. So, Ricardo, what does your buy box look like now both for flipping and Brrrr. In this sort of correcting unusual market that we're in in Florida.

[Ricardo Adames]

So regarding my buy box again, I've refined it and perfected it based on my losses as well. It's learning from your losses again. So one of my losses was on a wood frame house with a crawl space. So I bought that house, thought I was going to flip it. I tore up the crawl space. Turns out I got a code violation from the city, red tagged the door and all my workers had to stop. At that point they wanted permits and architect plans to completely replace the floor joists. It was just turning into a nightmare. So after learning a situation like that, okay, I decided to completely stop buying crawl space homes. As flips, they turned out to be a bit more difficult in the rehab process. So I love concrete houses. I think block houses, especially with these hurricanes, they're stable, they're not going nowhere. So that's a great appealing aspect to buyers. Block homes built in the 70s or 80s or newer. And I don't mind location as long as it's a location where people are moving to. Nothing too rural. I think that's the key in Florida. I think for buyers to be able to afford a home, they'll kind of move where they have to move as long as there's still schools and job opportunities in their market. Because Orlando's huge. You have Orlando right in the middle or Florida's huge. You go to the east coast, west coast or you go down to Miami where it's even more expensive. But another big part of my buy box is also catering to first time homebuyers as well. So if it's a buyer that can move into a home that's a three one, a three two, it's perfect for them. That's really where I started out in the 2 to 300 range. And now as I gain more experience, you know, I'm dipping into more higher valued properties.

[Dave Meyer]

And are you doing anything in particular to, to mitigate risk? Because I mean that buy box makes a lot of sense to me. But like, is there anything tactically that you're doing differently now, you know, other than the crawl spaces? Have you readjusted your numbers, the targets you're looking for in terms of anything like that?

[Ricardo Adames]

I think I'm catering more to the buyers. I think of course everyone needs a place to live. Majority of people would rather own than rent. However, if they can't afford it, they can't get into a home that they can make their own. So as closer to affordable, I can Keep it. Which, what does that mean? If you could buy a house here in Florida in the 200-00 or low 300-00, that's affordable.

[Dave Meyer]

Okay.

[Ricardo Adames]

And if you put that on market, people are going to be jumping on it. And I think it's great as an investor to be able to put a family in a house that they're going to move into for the first time instead of renting. And on top of that, you know, it's a fully renovated home, most likely with the new roof, new AC, that for the next 10, 15 years they're not going to have to worry about any major expenses. So that's been my biggest key. Of course I know what works for me. Block houses are great. I also keep in mind who I'm going to cater to, who's. Who are my buyers going to be?

[Dave Meyer]

What about your goals, Ricardo? Like you've had a lot of success. You're doing both of these things. Like is there an exit point you're looking for or a specific number you're trying to get to in terms of properties or cash flow or net worth?

[Ricardo Adames]

Yeah, I think there's always going to be a never ending number that you could chase. But I just want to build the business to a point where it's giving me a comfortable lifestyle while maintaining that balance between the flips and the rentals. I think the cash flow from rentals is very up and down depending on your monthly expenses. So the flips kind of comes in as a, as that active income to keep you steady and keep you living, you know, the lifestyle you want to live long term. I would love to get into commercial. I think building this single family portfolio is kind of like a stepping stone into commercial.

[Dave Meyer]

Nice.

[Ricardo Adames]

Once you own these properties and you have a high number of equity, you know, you could really start playing Monopoly almost how many, you know, let me sell a couple houses, get into eight unit, a 10 unit. I think the 1031 exchange is a great opportunity as well. But that's something every investors should be utilizing if they're, if they're buying and holding.

[Dave Meyer]

Well. Ricardo, thank you so much. Congratulations on all your success. Sounds like you've built a really incredible business at a difficult time in a difficult market. And I think this just goes to show everyone listening right now that these kind of deals, this kind of reality is still possible in real estate. You still can build a business, you still can financial freedom. If you adjust your strategy, if you think about it critically, if you prepare yourself, all the things that Ricardo just talked about can still make these things possible. So, Ricardo, thanks so much for coming on and sharing your story with us. Thank you Dave and thank you all so much for listening to this episode of the Biggerpockets Podcast. I'm Dave Meyer. We'll see you next time. Thank you all for listening to the BiggerPockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian Kay, copywriting is by Calico, content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.