Real Estate Rookie Podcast Summary

Episode Title: How to Keep Tariffs from Derailing Your Renovations (Rookie Reply)
Release Date: May 23, 2025
Hosts: Ashley Kehr and Garrett Brown (Guest)
Description: In this episode of the Real Estate Rookie Podcast by BiggerPockets, hosts Ashley Kehr and guest Garrett Brown delve into the challenges faced by real estate investors amidst rising material costs and evolving market conditions. They address listener questions ranging from optimizing short-term rental investments to navigating complex purchase agreements impacted by economic shifts.

1. Introduction and Overview [00:00 - 01:01]

Ashley Kehr welcomes listeners to the episode, highlighting the focus on the current economic landscape affecting real estate investments. With Tony J Robinson absent, Garrett Brown from Bigger Stays steps in to provide expert insights on topics such as the viability of the BRRRR strategy amidst tariff changes and handling unexpected alterations in purchase agreements.

Key Points:

• Introduction of guest Garrett Brown.
• Overview of topics: BRRRR strategy under tariff pressures and last-minute purchase agreement changes.

2. Optimizing Short-Term Rentals with Rabu [01:01 - 07:00]

Listener Question: Mark Young inquires about the effectiveness of using Rabu for purchasing his first short-term rental vacation home in Destin, FL, with a $100,000 down payment.

Garrett Brown's Insights:

• Understanding Rabu: Rabu is one of several prominent short-term rental (STR) data platforms alongside AirDNA, Price Labs, and Mashvisor. These tools help investors assess potential property performance across various markets.

  "Rabu is one of the good and prominent ones that have been out there... most of the big Core four." [01:46]

• Market Considerations: Emphasizes the importance of researching specific markets. For instance, 30A Market in Florida has strong potential but also presents challenges like high insurance costs.

  "Florida is known to be kind of the insurance desert at times." [04:00]

• Resource Utilization: Recommends using Bigger Pockets' own STR calculator and insurance calculator to refine investment numbers.

• Investment Strategy: Advises considering lifestyle benefits and potential for remote management versus local advantages. Suggests looking into other promising markets like Corpus Christi, Texas, and Charlottesville, Virginia, if 30A doesn't fit the budget.

Ashley Kehr Adds:

• Community Engagement: Encourages setting up keyword alerts on Bigger Pockets forums to stay updated on market sentiments.

  "I have buffalo in there and once in a while it's actually somebody talking about the animal buffalo." [06:30]

Key Takeaways:

• Utilize multiple STR data tools to evaluate potential investments.
• Consider insurance costs and market-specific challenges.
• Explore alternative markets if primary options exceed budget.
• Leverage Bigger Pockets resources for detailed financial analysis.

3. Navigating the BRRRR Strategy Amid Tariff Pressures [09:27 - 34:24]

Listener Question: Danielle from the Bigger Pockets forums questions whether to continue using the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method given rising material and labor costs due to tariffs. She seeks advice on possibly rethinking her investment strategy.

Ashley Kehr's Recommendations:

• Cost-Saving Strategies:

  • 0% Interest Credit Cards: Utilize credit cards to minimize the use of personal capital and avoid high-interest loans.

  • Multiple Bids: Obtain several quotes for repairs and renovations to ensure competitive pricing.

    "The first quote I got was $21,000. The second quote I got was $12,000." [12:00]

  • Bid Rooms: Use services like Lowe's or Home Depot to secure discounted prices on materials by creating a shopping list and allowing the store to find the best deals.

    "We were spending about $4,000. And when we brought it into Lowe's... we got $800 taken off of it." [14:00]

• Adjusting Purchase Price: If renovation costs are projected to rise, consider negotiating a lower purchase price to maintain overall deal profitability.

  "The best way to save money is the purchase price." [13:30]

Garrett Brown's Insights:

• Building Relationships with Contractors: Emphasizes the importance of obtaining multiple quotes not just for cost savings but also for building rapport with reliable contractors.

  "It's always shocking the variance in between these different quotes." [14:30]

• Long-Term Portfolio Growth: By securing competitive rates, investors can allocate more resources towards expanding their portfolio.

Key Takeaways:

• Implement cost-saving measures to mitigate the impact of rising tariffs on materials and labor.
• Regularly obtain multiple bids to ensure the best pricing.
• Utilize bid rooms and negotiate purchase prices to maintain investment viability.
• Foster strong relationships with contractors for ongoing savings and reliable service.

4. Handling Escalation Clauses in Purchase Agreements [20:15 - 34:24]

Listener Question: A Reddit user shares a troublesome experience where, days before closing, the seller attempts to increase the purchase price from $650,000 to $657,000 based on an escalation clause, despite a signed agreement.

Ashley Kehr's Perspective:

• Legal Considerations: Strongly recommends consulting a real estate attorney to understand the legal standing and potential actions.

  "I'm Ashley and he's Garrett. Thanks so much for watching." [35:34]

• Options:

  • Accept the Change: Risk potential financial loss or legal complications.
  • Reject the Change: Stick to the original agreement, possibly leading to the seller backing out.
  • Legal Action: Consider suing for breach of contract if justified.

Garrett Brown's Advice:

• Involve the Broker: Immediately bring the issue to the Realtor's broker for higher-level intervention.

  "My first step would be a you... involve their broker." [22:44]

• Seek Legal Counsel: Emphasizes the necessity of engaging a real estate attorney to navigate the contractual dispute.

  "This is going to be the time you need to get a real estate attorney involved." [25:17]

• Document Everything: Maintain all communications in writing to support your case.

  "It's going to be cheaper than that $7,000 because... you have the written proof." [25:30]

Additional Insights:

• Red Flags: Multiple offers or a property going back on the market can indicate underlying issues.

  "They decided to part ways. But it does like really draw a red flag on the property." [30:31]

• Contract Clarity: Ensure all terms, especially escalation clauses, are clearly defined and documented within the purchase agreement to prevent disputes.

Key Takeaways:

• Escalation clauses can complicate purchase agreements; understanding their implications is crucial.
• Promptly involve the Realtor’s broker and seek legal advice when contractual disputes arise.
• Maintain thorough documentation of all communications and agreements to support your position legally.
• Approach changes to signed agreements with caution and professional guidance to safeguard your investment.

5. Conclusion and Resources [34:24 - 35:34]

Ashley and Garrett wrap up the episode by encouraging listeners to subscribe to the Real Estate Rookie YouTube channel and follow their social media for ongoing tips and strategies. Garrett promotes his short-term rental expertise through the Bigger Stays channel and weekly newsletter, inviting listeners to connect for further insights.

Notable Quotes:

"You can find me on YouTube at Bigger Stays... I [am] writing Bigger Stays weekly newsletter every Wednesday." [35:16]

Key Takeaways:

• Engage with ongoing content and resources provided by the Real Estate Rookie community.
• Utilize available tools and newsletters to stay informed and enhance your real estate investment strategies.

Final Thoughts:
This episode of the Real Estate Rookie Podcast offers valuable advice for both novice and seasoned investors navigating the complexities of the current economic landscape. From optimizing short-term rental investments using data tools to adapting the BRRRR strategy in the face of rising costs, and handling intricate purchase agreements with professionalism and legal acumen, Ashley Kehr and Garrett Brown provide actionable insights to help investors build and sustain their real estate portfolios effectively.