How to Analyze Real Estate Deals Before You Buy | BRRRR, DSCR & Cash Flow

Steven Odebralski (00:00)
Because down here in Florida, there’s a lot of realtors that say, Hey, this is a great investment property, which is not so much the case. If somebody’s losing twenty to fifty thousand dollars a year, some people can afford that. Most mom and pop job jobs can’t afford that. And you’re gonna bankrupt these people because you’re giving them bad information.

Dylan Silver (01:53)
Hey folks, welcome back to the show. Today we’re joined by Steven Odebralski a retired Marine Corps captain, mortgage professional, and real estate investor. Steven, thanks for joining us here today.

Steven Odebralski (02:05)
Thanks, a lot. Great to be here Dylan.

Dylan Silver (02:06)
Now ⁓ when you’re looking at deals, ⁓ are you first evaluating them from the lens of a mortgage professional or from the lens of a real estate investor?

Steven Odebralski (02:17)
Yeah, so for myself, I look at the deals kind of both ways. I use one perspective looking at it in regards to, hey, does this work as a a normal deal from an actual home buyer? But then I also look at it in another perspective, hey, does this deal work as an investor? Obviously we know the one-to-one ratio. ⁓ a lot of the time I’m helping newer investors look at duplexes and triplexes and seeing if those numbers actually work.

Because down here in Florida, there’s a lot of realtors that say, Hey, this is a great investment property, which is not so much the case. If somebody’s losing twenty to fifty thousand dollars a year, some people can afford that. Most mom and pop job jobs can’t afford that. And you’re gonna bankrupt these people because you’re giving them bad information.

Dylan Silver (03:05)
Now, you know, the the interesting thing about working with investors is that it’s a specific type of operator who i is an investor, but I would say even more specific is the investor who also wears the service provider hat and helps other investors. So I I think that the niche that you’re in is pretty ⁓ specific. When folks are coming to you and they’re asking for feedback on an approval or feedback on a a property, I can imagine the the

advice that you’re giving them ⁓ is pretty helpful across the board and not just specific to here’s what your approval would look like.

Steven Odebralski (03:41)
Yeah, so the information that I’m giving them is is from an experienced investor, but then also, like you said, the the mortgage guy as well. And with that, I’m able to show them, hey, these are how many points you’re paying for an investment if you were going to versus if you were going to buy it as a primary home or whatever the case may be. And with having the experience on the investor side, ⁓ I’m able to critique some of their numbers because a lot of people don’t.

don’t account for vacancy and other capital expenses that may occur. And so we try to bring those back into the numbers so that they get a more realistic expectation of what they’re getting into.

Dylan Silver (04:19)
Think I heard you say duplexes. Are ⁓ folks out there looking a lot at small multifamily, you know, a duplex to a quadplex? Is that common?

Steven Odebralski (04:28)
So I work in two different areas. So I live in Sarasota, Florida. And in Sarasota, Florida, there’s a lot of people looking for short time, you know, Airbnb style homes, which is very possible down here. We’re about 15 minutes from Siesta Key, Lido Key, which are great beaches. ⁓ but I’m also in the Buffalo, New York market. And in the Buffalo, New York market, there’s a lot of duplexes and triplexes. And with that comes a little bit more.

The numbers get a little bit easier with that because obviously you have more rental income. So getting the first person or sorry, getting the investor who’s looking at that first home, ⁓ it just depends on what they’re looking for so that we can critique those numbers to their actual situation.

Dylan Silver (05:15)
Now, how often do you see folks who may be evaluating a a property for themselves personally or they may be evaluating it as a a rental property? Is that uncommon or do you typically when folks are coming to you, they’re already wearing the either the investor hat or the, hey, this is for me, this is my gonna be my residence, and I’m not, you know, potentially looking at one or the other?

Steven Odebralski (05:37)
Yeah, so about most of the deals that I do are about it’s about fifty fifty percent. So about fifty, fifty-one percent of the people that I work with are investors. Most of them are more experienced. I have a couple people down here in the Sarasota Bradenton area that that’s all they do. They’ve bought ⁓ a portfolio of 10 to 20 homes, and so they’re very knowledgeable in that aspects of investing. Whereas the

I’d say the newer investors, it’s probably about maybe ten percent of that will actually walk them through their first deal.

Dylan Silver (06:59)
Now, when you’re buying properties in bulk, you know, some of the things that people talk about, or maybe not in bulk, but in succession, is access to capital and a capital stack. How, without giving away all of the gold here, Steven, how are investors able to purchase property after property? Are they using a lot of a DSCR? Is it bank statement? You know, do they have deep pockets and they’re paying cash? What does it look like?

Steven Odebralski (07:25)
Yeah, definitely. So it’s a mix of that. So I would say most people go for DSCR, which is a debt service coverage ratio. And big wave top, you’re looking to see how much your mortgage is compared to how much the actual ⁓ income is for that property. So most lenders are looking for a one to one ratio on that. ⁓ the other thing that’s been really advantageous down here in Florida is asset depletion.

So asset depletion is where we’ll take your your checking savings and tire retirement investment accounts and we’ll divide that over a five year period to get you a monthly income. So that monthly income, I just had an investor come, he had three million dollars in his ⁓ retirement account. And with that, dividing that by five years, it came out to be roughly thirty-six thousand dollars a month, which we were able to get him a loan through there.

Dylan Silver (08:21)
Now, when you’re working with investors in two distinct markets, right? Sarasota and and Buffalo, I also know for many Floridians that there’s now an increased awareness that people have the ability to manage these properties remotely or even potentially snowbird ⁓ or or just straight move down to to Florida. How often are people in Buffalo considering making this transition?

Steven Odebralski (08:47)
Man, there’s a lot of people from what the whole western New York area. I I think that Sarasota has a population of probably about forty percent from like Syracuse, the Buffalo area. They all came down here. They they throw parties for the Buffalo Bills and smashing tables. And then we just opened up a Duff’s Famous Wings chicken wing. So so it’s it’s a happening place down here.

Dylan Silver (09:08)
Now, if you compare, you mentioned the increased ⁓ rentals, ⁓ how much they can get in rents in in Buffalo. But we were talking in the green room, you know, Sarasota and the west coast of Florida, Tampa, right? It’s starting to feel more and more like Miami. Of course, different, right? But it’s starting to feel more and more like that. Do you see a time, maybe not now, but in the next couple of years

where rentals in your neck of the woods out there in Florida could potentially match or surpass Buffalo, or is Buffalo, regardless, going to stay ⁓ ahead?

Steven Odebralski (09:41)
I think there’s two different ways to look at it. If you’re looking for an equity play, I think here in Sarasota, there’s gonna be a lot more equity. ⁓ Buffalo obviously, well, the whole country saw that prices increased with with the COVID time frame. However, Buffalo has kind of been stagnant since then. There’s still some great deals there. You can get some great cash flow. ⁓ normally I would say after all the numbers are all the numbers are calculated.

You can get anywhere between about five hundred to eight hundred dollars per duplex. So we’ll say, you know, four hundred bucks a door, which isn’t which isn’t too bad. ⁓ whereas Sarasota, you can get a little cash flow, but you’re looking more for the equity play. Sarasota is the only place that has three Ritz-Carltons. And then they’ve also just started building a Waldorf Astoria down here as well.

Dylan Silver (10:33)
heard a lot ⁓ from other guests in Florida that there’s a lot of branded ⁓ apartments and and and condos going out. Are you seeing this on the west coast of Florida as well?

Steven Odebralski (10:44)
Not so much on the West Coast, definitely the East Coast, like Miami and everything. I mean, you got the BMW, Bentley and everything else like that. I think that it will slowly migrate over here to Sarasota. I mean, you got Naples, which is obviously billionaire play play place. ⁓ but Sarasota is slowly getting on the map. We do have world class beaches, but everybody just wants to be here. It’s just a great beach vibe, good vibes, and just be a good person.

Tiberia.

Dylan Silver (11:13)
We were talking a about the different areas of of Florida and the green room, and I I feel like I need this resolved for myself selfishly. If you look at Siesta Key, Sarasota, and Tampa, are all of these areas can you consider this the urban sprawl of Tampa or would people in Siesta Key and in Sarasota take offense to that?

Steven Odebralski (12:07)
I think Sarasota and Siesta Key would definitely take ⁓ take offense to that. It’s you everybody thinks Tampa, St. Pete as like a beach place, and it’s like the closest beach is like 45 minutes away. ⁓ you either have to go near the Don CeSar over on the Barrier Islands, Treasure Island, John’s Pass area. But if you’re in Sarasota, I mean you it’s fifteen, twenty minutes to the beach and it’s it’s just paradise. Who doesn’t like a great sunset?

Dylan Silver (12:33)
No, I mean I’ve had this conversation repeatedly. What’s bringing all the real estate operators and investors to Florida? It’s gotta be the weather weather, but it’s also gotta be there’s a lot of entrepreneurial energy and and business owners relocating to Florida. So it now almost becomes a chicken and the egg. Of course, people are there for the weather, but if you eliminated some of the weather at this point, I was told that the west coast of Florida had a very cold winter last year, like historically cold.

Then are people still staying because there’s so much entrepreneurship happening down there? And I think so.

Steven Odebralski (13:06)
Yeah, no, I would agree with that. I like Lakewood Ranch, if you’ve heard of that, it’s a it’s a big ⁓ PUD that’s down here. And there’s a lot of T shirt millionaires that are moving to that area. So I think that the entrepreneurial landscape is growing. I think a lot of people come down here. ⁓ there’s a lot of people from Wall Street that that live in my neighborhood and everything else like that. But

I think it’s people who are retiring or sold their first business coming down here, enjoying life. They get to spend, you know, twelve months out of the year outside with their family and friends. And by the way, if I want to start another business, Florida is a booming market.

Dylan Silver (13:45)
No question about that. ⁓ pivoting here, Steven ⁓ you have a rental portfolio as well. I’d like to talk a little bit about that. Specifically, acquisitions. ⁓ I like to get into the weeds here when talking about how to find deals. People say you make your money on the buy. When you’re looking at properties, do you go direct to seller? Do you look for signs of distress? Are you looking on market, like with a realtor? Where do you like to find deals?

Steven Odebralski (14:11)
So the the two places I really like is wholesalers. I got a couple good wholesalers that actually run correct numbers, right? Like a wholesaler loves to tell you, it’s only gonna be forty thousand dollars a rehab, you step in it, it’s like a hundred. And it’s like, okay, buddy, like this isn’t a good deal. ⁓ there’s that, but then there’s also really I’d say if you look on the the internet Zillow and stuff like that, I search for a lot of homes that have been on the market for like a hundred days plus.

If they need a lot of work, well then guess what? I’m here to do it. My my specialty is taking homes in Buffalo that are from like the 1890s, early 1900s that are just falling apart and decrepit and then bringing life back into them so that people can use them.

Dylan Silver (14:54)
Now that’s not easy. That’s a roof to studs flip. ⁓ obviously that’s not something that most folks can just dive into as as their first flip. How did you work your way up to that?

Steven Odebralski (15:06)
Yeah, so ⁓ long story short, ⁓ when I retired from the Marine Corps in twenty one, I’d been investing in real estate for probably about three, four years before that. I met somebody who I will not name, but they gave me the ruse that they were a very good investor. They had a great handyman at the time who is now my general contractor. I don’t talk to the other person anymore, ⁓ just because but

I I met a great general contractor who’s now my business partner and in some other things, but this guy can build everything from the ground up and has just helped me in so many different ways.

Dylan Silver (15:46)
Now, when we talk about having that relationship with that GC, this is oftentimes where ⁓ real estate investors themselves become distressed because you’re now having to manage ⁓ potentially multiple job sites if you have multiple properties under acquisition, but you also have to manage the manager in in in in some ways. Talk about that, right? It seems like you found a great GC, but what should people be looking out for when they are hiring

someone to do a large rehab like that.

Steven Odebralski (16:57)
So for my GC, the one thing that we always had was if not every day, every other day, the work that was being done was just talked about on a text. And then at the end of the day, they would send me photos to let me know what was actually completed. If we ran into any problems, sure, we’re gonna run into problems when a house is 120 years old, right? Like there’s just things that we can’t foresee. So just having that.

Open conversation and that clear communication with your GC is what has helped me scale things.

Dylan Silver (17:29)
I wanna ask you about underwriting these hundred year old deals, right? So I’ve spoken with investors who tell me, Yeah, don’t send me anything if it’s before nineteen sixty, ’cause you know, the standards weren’t the same as they are today. So you’re looking at deals from did you say the eighteen hundreds?

Steven Odebralski (17:43)
I was the the oldest house I bought was eighteen ninety.

Dylan Silver (17:46)
Yeah, so what is scope of work look like on a home from eighteen ninety?

Steven Odebralski (17:50)
Man, the the things that you find in these homes that are covered up between possible flood damage, fire damage, and I mean nobody knows. ⁓ but I the first couple flips that I did, I always used the 10 to 15 percent rule, right? Like that’s pretty standard, it’s pretty normal. Dealing with houses 100, 120 years old, I bump it up to about 25 to 30 percent. So even with that high of a

unknown factor, the deals still work as a BRRRR. So

Dylan Silver (18:20)
Yeah, I can imai I mean I’m thinking about everything that that goes, you really have no clue what what could be in there. I I’ve heard people say, yeah, you have to buy these homes for for lot value. ⁓ do you think that if you’re looking at these older homes, ⁓ especially if you’re maybe new to to this process or the area, that you should basically be saying, Hey, I gotta get this thing for darn near lot value?

Steven Odebralski (18:41)
That low. So I usually get it for ⁓ just under a third of the price, I would say. Like the actual ARV. And depending on the rehab, what we’re trying to do with it, some of the homes have been completely gutted. Like there’s a house that I’m working on right now. It was a duplex. Somebody from Canada purchased it, gutted the whole entire thing. It has no floorboards, just studs everywhere. And it’s going to cost us probably about 180 for it.

The full rehab, bought it for just under a hundred and the ARV should be about four twenty five, four fifty. So not not too bad.

Dylan Silver (19:17)
Now, when you mention ⁓ several of the strategies that you’ve used and that other investors have used, I’ve heard you say BRRRR several times. ⁓ how did you identify BRRRR and really long term holding versus, you know, fix and flip versus wholesale, you know, versus ⁓ short term Airbnb rental, right?

Steven Odebralski (19:38)
Yeah, so I first started like everybody else, right? Like let’s use our own money to purchase these houses. And then eventually you say, ⁓ heck, I ran out of money. So what do I do now? So I turned to hard money lending to purchase the houses that I was going to BRRRR. And I always made sure that the ARV, one, the ARV was good, and then two, what are the rents in the area? So if the rents are gonna be good in that area and it pencils out, I would usually

attack that problem and get that house under my belt.

Dylan Silver (20:08)
being from the ⁓ Buffalo area, you obviously have some ⁓ almost, you know, special sense, a spidey sense for what constitutes a good deal, right? And and people will say, yeah, I just knew right right away. When you’re looking at deals outside of ⁓ Buffalo, let’s say it’s a deal ⁓ in in a market in in in Florida that you you haven’t reviewed a deal before, is there any one thing that you’re specifically

a stickler on or making sure that this is intact, whether that’s scope of work or what the rents are or you know what overall economic growth looks like in the area.

Steven Odebralski (20:45)
Yeah, for that one.

I would say it’s it’s two factors. One is one is the ARV, two the rent and the ARV are kind of like piggyback off each other. But then also what is the what is the area look like for the future? Because at Florida I see it more as an equity play, whereas Buffalo, I feel it’s more of a cash flow in play.

Dylan Silver (21:04)
⁓ we are coming up on on time here, Steven. Any new projects or activities that you’re working on? And then also anything you’d like to mention directly to our audience.

Steven Odebralski (21:13)
Yes. So I am I’m working on a couple projects in Buffalo, ⁓ some BRRRRs, the one without the sub flooring and everything else like that. That should be done hopefully later this year. And then also looking to acquire another two properties up there to do the BRRRR style as well. And ⁓ as far as that, ⁓ I’m selling some of the properties outside of the Buffalo area to bring that down to Florida so I can start investing in doing the the buy and hold down here.

⁓ but other than that, yes. So I’m a mortgage loan broker, so I work with fifteen to twenty different lenders to get the best products. And obviously a retired Marine, so VA loans is near and dear to my heart. Also helping ⁓ investors get to that cash flow or you know, just changing their family tree. And then the the last thing is

Jarhead Honey. So I’m a beekeeper as well and make phenomenal honey down here in Florida and New York. So if you need some honey or money, I’m your guy.

Dylan Silver (22:15)
Steven, thank you so much for joining us today. Thanks for your time.

Steven Odebralski (22:18)
Thanks, Dylan