Real Estate Rookie Podcast Episode Summary

Episode Title: 17 Units in 3 Years During High Rates with This Low-Risk “BRRRR” Strategy
Release Date: March 3, 2025
Hosts: Ashley Kehr and Tony J Robinson
Guests: Joe Escamilla and Sam Farman
Podcast Platform: BiggerPockets

1. Introduction

In this insightful episode of the Real Estate Rookie podcast, hosts Ashley Kehr and Tony J Robinson welcome listeners to a special edition featuring guests Joe Escamilla and Sam Farman. Due to Tony’s recent addition to his family, the episode is brought to you from the BiggerPockets Real Estate podcast. The focus is on Joe and Sam’s successful application of the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy to build a 17-unit real estate portfolio within three years, even amidst rising interest rates.

2. Background of Joe and Sam

Meeting and Early Partnership

Joe and Sam’s journey into real estate began during their college years at Hobart and William Smith Colleges, where they played soccer together. Their professional paths crossed again when they interned at the same mortgage company, where Joe continues to work as a loan officer.

[01:10] Sam Farman: "Joe and I met in college playing college soccer together. We were both looking into ways to generate passive income and stumbled upon BiggerPockets..."

Joe graduated a year earlier in 2018 and returned to Long Island to focus on his career as a loan officer. Despite the competitive environment, their shared interest in real estate and the resources provided by BiggerPockets fueled their decision to partner up and invest together.

3. First Real Estate Deals

Initial Investments and Lessons Learned

Before collaborating, both Joe and Sam had already dipped their toes into real estate independently. Joe managed a primary residence live-in flip, while Sam held a single-family rental property. Their first joint venture was a duplex purchase in Scranton, Pennsylvania, acquired for approximately $127,500.

[04:15] Sam Farman: "Our first deal was a duplex in Scranton, Pennsylvania. We invested around $127,500 and put about $30k into renovations."

They personally handled parts of the renovation, including kitchen upgrades and flooring, allowing them to save costs and gain hands-on experience.

4. Choosing Scranton, Pennsylvania

Strategic Market Selection

Scranton was chosen deliberately due to its affordability compared to the expensive New York tri-state area. The area offered a strong price-to-rent ratio, enabling Joe and Sam to maximize their investment velocity by requiring lower down payments and achieving higher cash flow.

[05:16] Joe Escamilla: "We chose Scranton because the properties there are affordable, allowing us to save on down payments and move our money faster."

Proximity was also a key factor, as Scranton is within a three-hour drive from their base, ensuring they could manage emergencies effectively.

5. Navigating a Competitive Market in 2021

Challenges and Strategies

In April 2021, the real estate market in Scranton was highly competitive. Joe and Sam faced multiple bidding wars, often submitting offers on five to six properties before securing their first one.

[09:39] Joe Escamilla: "We made offers on five or six properties before we closed on our first one. It was competitive, but we stayed patient and creative."

They maintained due diligence by insisting on inspections, avoiding waiving contingencies despite the pressure to streamline offers. This approach ensured they weren’t inheriting problematic properties.

6. Implementing the BRRRR Strategy

Detailed Application of BRRRR

The BRRRR method proved effective for Joe and Sam. After purchasing and renovating the duplex, they refinanced the property at $188,000, allowing them to extract equity and reinvest in a triplex. This strategy facilitated the rapid expansion of their portfolio while maintaining cash flow.

[12:21] Dave: "BRRRR stands for buy, rehab, rent, refinance, and repeat. It’s a great strategy for value-add investing."

Their disciplined approach ensured that each property not only generated cash flow but also appreciated in value, enabling continuous growth through refinancing.

7. Adjusting to Rising Interest Rates

Conservative Financial Planning Amid Rate Hikes

As interest rates climbed in 2022, Joe and Sam adapted by being more conservative with their financial projections. They leveraged the reduced competition to negotiate better deals, often being the sole bidders on properties.

[13:27] Joe Escamilla: "We stayed conservative with our numbers, knowing that rates were rising. This approach allowed us to navigate the market effectively."

Their background in lending allowed Joe to accurately forecast future rate scenarios, ensuring their investments remained viable even as borrowing costs increased.

8. Financing Multifamily Deals and Syndication

Expanding Through Partnerships and Syndications

Initially financing deals through personal savings and W2 income, Joe and Sam eventually turned to friends and family for additional capital. This led to their first syndication deal—a six-unit property—where they pooled resources from passive investors while managing the property themselves.

[18:00] Joe Escamilla: "We started by using our savings and W2 income, then raised capital through friends and family for our first syndication."

This approach not only increased their funding capacity but also allowed them to scale their operations without overextending personally.

9. Investors’ Involvement and Voting Rights

Empowering Passive Investors

Joe and Sam introduced a unique element to their syndication model by granting investors voting rights on major decisions such as selling or refinancing properties. This transparency fostered trust and ensured that investors felt involved in the strategic direction of the investments.

[26:44] Sam Farman: "Investors have voting rights on significant decisions like selling or refinancing. It ensures transparency and trust."

This strategy differentiated them from typical syndications, where investors often feel detached from the decision-making process.

10. Current Strategies: Delayed BRRRR / Opportunistic BRRR

Adapting BRRRR for Long-Term Stability

As they progressed into 2025, Joe and Sam refined their BRRRR approach to what they call "Delayed BRRRR." Instead of immediate, extensive renovations, they focus on properties with strong structural integrity and only perform cosmetic updates when tenants vacate. This minimizes vacancy rates and maintains cash flow while allowing gradual property enhancements.

[28:59] Sam Farman: "We call it a delayed BRRRR. We renovate cosmetic elements as tenants move out, ensuring continuous cash flow and gradual property improvement."

This method reduces risk by avoiding prolonged vacancies and large-scale renovations that could jeopardize their financial stability.

11. Partnership Roles and Dynamics

Complementary Skills for Success

Joe and Sam have effectively divided responsibilities based on their strengths. Joe, with his lending background, handles the analytical and financial aspects, including tax strategies and number crunching. Sam focuses on deal sourcing, investor communications, and managing the on-the-ground operations.

[33:48] Joe Escamilla: "I'm the analytical brain, handling the numbers and financial strategies."

[34:18] Sam Farman: "I'm responsible for deal finding and communicating with investors and team members."

Their complementary roles ensure a balanced and efficient partnership, enabling them to make informed decisions and maintain strong investor relations.

12. Conclusion and Key Takeaways

Joe Escamilla and Sam Farman exemplify strategic thinking and adaptability in real estate investing. By leveraging the BRRRR method, maintaining conservative financial practices, and empowering their investors, they have built a substantial portfolio even in challenging market conditions.

Key Insights:

• Market Selection: Choose markets that align with your financial goals and logistical capabilities.
• Strategic Patience: In competitive markets, patience and creativity can make the difference between securing a deal and losing out.
• Adaptive Strategies: Adjust investment strategies in response to changing economic conditions, such as rising interest rates.
• Investor Empowerment: Transparent and inclusive approaches to syndication build trust and encourage investor participation.
• Complementary Partnerships: Leveraging each partner’s strengths enhances overall effectiveness and decision-making.

Joe and Sam’s journey underscores the importance of continuous learning, strategic planning, and maintaining integrity in real estate investments. Their success story serves as a valuable blueprint for novice investors aiming to build sustainable and profitable real estate portfolios.

Notable Quotes:

• Sam Farman [01:58]: "We stumbled on BiggerPockets and started listening to every podcast you guys put out, reading every book... all your guys books from A to Z."

• Joe Escamilla [09:39]: "We made offers on five or six properties before we closed on our first one. It was competitive, but we stayed patient and creative."

• Sam Farman [12:21]: "We refinanced at $188,000 and then took our cash out to buy a triplex, which we still own today."

• Joe Escamilla [14:27]: "If the biggest investors are still buying today, they have to be finding a way to do it. We wanted to jump in and see what we can do."

• Sam Farman [28:59]: "We call it a delayed BRRRR. We renovate cosmetic elements as tenants move out, ensuring continuous cash flow and gradual property improvement."

This episode provides a comprehensive look into how disciplined strategy, market understanding, and effective partnerships can lead to significant real estate success, even in less-than-ideal economic climates.