Real Estate Rookie Podcast Summary

Episode Title: If Your Rental Property Is Doing THIS, You Should Sell It (Rookie Reply)
Release Date: March 14, 2025
Hosts: Ashley Kehr and Tony J. Robinson
Description: Hosted by BiggerPockets, Real Estate Rookie serves as a personal trainer for aspiring real estate investors, providing detailed breakdowns of real-world deals, coaching sessions, and a supportive community. This episode delves into the crucial decision of when to sell an investment property, featuring insightful discussions and actionable advice for novice investors.

Introduction: When to Sell Your Investment Property

Timestamp: 00:00 – 00:28

Ashley Kehr opens the episode by addressing a common dilemma among real estate investors: recognizing the right moment to sell an investment property. Tony J. Robinson emphasizes the factors influencing this decision, including maintenance challenges, market shifts, and the need for improved property analysis skills.

Ashley Kerr:
"Today we're tackling the question of when it's time to sell your investment property. We'll explore the clear signals that might be telling you it's time to cash out and move on."
[00:00]

Tony J. Robinson:
"This episode will give you the clarity you need to make that tough decision."
[00:10]

Listener Question 1: BRRRR vs. Turnkey Strategies

Timestamp: 00:28 – 10:16

A rookie investor shares their experience with purchasing a turnkey duplex and contemplates transitioning to the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) strategy. The investor is unsure about their readiness to take on BRRRR and seeks insights into the advantages and disadvantages of both methods.

Key Points Discussed:

1. Definitions and Differences:
   • Turnkey Investing: Purchasing properties that are fully renovated and ready to rent out, often managed by companies like Rent to Retirement.
   • BRRRR Strategy: Involves buying properties that need renovation, adding value through rehabs, renting them out, refinancing to pull out capital, and repeating the process to scale the portfolio.

Tony J. Robinson:
"The pros of turnkey are really that it's easier... you’re getting a fully completed product."
[02:15]

Ashley Kerr:
"With a BRRRR, you have control over the rehab, where with turnkey you don't. So you're getting the finished product whether it's been a good remodel or a bad remodel, you really don't know."
[05:26]

2. Pros and Cons:

   • Turnkey Pros: Ease of use, speed of acquisition, scalability.
   • Turnkey Cons: Limited value creation, inability to recycle capital, potential lack of control over property quality.
   • BRRRR Pros: Greater potential returns through value-add, ability to recycle capital.
   • BRRRR Cons: Requires more effort, knowledge, and hands-on management.

3. Assessing Readiness for BRRRR:

   • Team Quality: Importance of having a reliable team, including contractors and property managers.
   • Deal Quality: Securing favorable deals that support the BRRRR model.
   • Experience: Both hosts share that their first deals involved rehabs, indicating that starting with smaller projects can build confidence and expertise.

Tony J. Robinson:
"My very first deal was a BRRRR... assuming you have the right support mechanisms in place."
[09:24]

Ashley Kerr:
"Think about your time value for money... sometimes it's not worth going after the better return because it's going to be more work and take up more of your time."
[07:39]

Listener Question 2: Duplex Not Appreciating as Expected

Timestamp: 12:21 – 24:56

A listener in a rapidly growing city purchased a duplex in 2022 with the expectation of long-term appreciation rather than immediate cash flow. The property has only appreciated modestly, and unexpected repairs have led to significant debt, prompting the investor to consider selling.

Key Points Discussed:

1. Evaluating Appreciation and Cash Flow:
   • Assessment of Market Conditions: Understanding the timing of the purchase, especially post-COVID market dynamics.
   • Financial Analysis: Comparing the property's appreciation rate against the amount invested in repairs and maintenance.

Tony J. Robinson:
"They're averaging about four and a half percent appreciation each year, which is pretty much right in line with where the larger real estate market is moving."
[17:31]

Ashley Kerr:
"If you're going to continue going into debt for this property, you should sell it now and get out of it instead of continuously going into debt and adding more financial strain on yourself."
[24:13]

2. Strategic Considerations:

   • Reserve Funds: Importance of having adequate reserves to cover unexpected expenses.
   • Comparative Market Analysis: Advising against relying solely on online estimates like Zillow, recommending a thorough analysis of comparable properties.

3. Decision-Making Framework:

   • Opportunity Cost: Comparing the $20,000 invested in repairs to potential alternative investments, such as the stock market.
   • Future Market Projections: Considering the uncertainty of future appreciation rates amidst changing economic conditions.

Ashley Kerr:
"Think of it that way too, with that kind of mindset as to if you are investing that much money over the period of time... does the property value out beat the $40,000 you put into it?"
[19:40]

Tony J. Robinson:
"What did you actually base your appreciation target on? Were you hoping to see it appreciate at like, 2020 levels when things were just going gangbusters?"
[15:14]

4. Actionable Advice:
   • Consulting Professionals: Recommending getting a real estate agent's opinion and conducting a detailed financial review before deciding to sell.
   • Expense Reevaluation: Scrutinizing repair costs and property management fees to identify potential savings.

Listener Question 3: Stagnant Multi-Unit Property for Sale

Timestamp: 27:01 – 37:31

A listener seeking ideas to sell a multi-unit property containing four commercial units and two apartments has struggled to attract buyers for over a year. The property requires a new roof, and the owners are unwilling to invest further funds into repairs.

Key Points Discussed:

1. Evaluating Property Management:
   • Effectiveness of the Property Manager: Assessing whether the current property manager is adequately handling repairs and tenant issues, thereby reducing the owners' involvement.

Tony J. Robinson:
"Are your operations really dialed in in a way that you are kind of removed from that process?"
[32:36]

2. Selling Strategies:
   • Broker Performance: Ensuring the commercial broker is effectively marketing the property, utilizing professional photos, accurate listings, and extensive distribution channels.
   • Pricing Adjustments: Considering price reductions to make the property more attractive in a buyer's market.

Tony J. Robinson:
"If your goal is just to get out of it, ... get it as low as you possibly can without you having to actually come out of pocket to get rid of the deal."
[36:43]

3. Creative Selling Techniques:
   • Seller Financing: Offering a portion of the financing to make the deal more enticing for potential buyers.
   • Escrow Agreements: Negotiating terms where buyers can handle certain repairs post-purchase, making the property a less risky investment for them.

Ashley Kerr:
"Maybe going out and finding a new real estate agent, going to biggerpockets.com agent finder and... to help you move this property."
[34:52]

Conclusion and Final Recommendations

Timestamp: 37:31 – End

Ashley and Tony wrap up the episode by reiterating the importance of thorough financial analysis, realistic market assessments, and effective property management in determining whether to hold or sell a property. They encourage listeners to engage with the Real Estate Rookie community for further support and insights.

Ashley Kerr:
"If you're going to go into more debt, I would say sell the property."
[24:13]

Tony J. Robinson:
"Could you hire maybe a part-time virtual assistant?... leverage VAs in our business."
[32:36]

Notable Quotes:

1. Ashley Kerr on Turnkey vs. BRRRR:

   • "Sometimes it's not worth going after the better return because it's going to be more work and take up more of your time."
     [07:39]

2. Tony J. Robinson on First BRRRR Deal:

   • "I think what's more important than saying, like, at what point am I ready? I think the bigger question to ask is how good of a team do I have?"
     [09:24]

3. Ashley Kerr on Financial Strain:

   • "If you're going to continue going into debt for this property, you should sell it now and get out of it..."
     [24:13]

4. Tony J. Robinson on Property Manager Oversight:

   • "I would really seriously consider reevaluating those expenses to see if they're really necessary and if those prices are really reasonable."
     [22:41]

Final Thoughts: This episode of Real Estate Rookie provides invaluable guidance for new investors grappling with the complexities of managing and potentially selling their investment properties. Through real-life scenarios and expert advice, Ashley and Tony empower listeners to make informed decisions that align with their financial goals and personal circumstances.

Join the Community: Engage with other real estate rookies and seasoned investors by visiting BiggerPockets Forums or joining the Real Estate Rookie Facebook Group. Follow Real Estate Rookie on Instagram @BiggerPocketsRookie and subscribe to their YouTube Channel for more insights and updates.