USA Property Investment for Foreigners: My Investment Strategy After 120+ Properties

Hi, I’m David Garner.

I’m a British investor, and since 2016 I’ve purchased, renovated, financed, refinanced, and managed more than 120 rental properties across the United States while living overseas.

But in 2023 my portfolio collapsed, I nearly went bankrupt, and I had to start pretty much from scratch.

This is the story of what happened, and how I fixed it.

Table of Contents

My Story: From One Rental Property to 120 Houses

I bought my first U.S. rental property in 2016 while living in Europe at the age of 36.

At the time, I had some limited experience in the U.S. housing market. I had brokered some defaulted U.S mortgages between institutional and private investors. But I wasn’t a real estate expert by any stretch of the imagination.

I was just looking for a way to build some financial security for the future and maybe generate some extra income outside of my day job.

From my limited experience, I knew it was possible to buy properties in the U.S. pretty cheap, and I knew where to find them.

The first property I purchased was a fairly typical rental house in Jackson, Mississippi.

• Three bedrooms.
• Two bathrooms.
• Around 1,000 square feet.

Nothing particularly special. But remember the location. That’s going to be important later on in this story.

We purchased the property from a wholesaler, completed a light renovation, and has a leasing agent place a tenant to generate some rental income.

Then we refinanced it with a long-term DSCR loan.

The whole process took less than 90 days, and based on the experiences I’ve had with contractors since, I think we were very lucky with that project.

We were all in for about $73,000 (purchase and renovation).

When the final appraisal came back at exactly $107,000.

That meant we could get a $75,000 loan to pull all of our money out tax free, and recycle the capital into the next property.

That was my first introduction to the BRRRR strategy.

• Buy
• Renovate
• Rent
• Refinance
• Repeat

The process worked remarkably well, even from overseas.

We bought another property.

Then another.

Then another.

Now with a bit of experience under our belt, we also started building relationships with private lenders.

Access to that private capital was like throwing gasoline on the fire.

What started as a single rental property gradually became a much larger business.

By this point, honestly, I thought I had it all figured it out.

I knew how to find deals.

I knew how to renovate houses.

I knew how to refinance them.

I knew how to place tenants.

And because we were good at those things – and because we had access to capital from private lenders – growth and scale came incredibly quickly.

Every successful refinance felt like proof that the system worked.

So, over the next few years we expanded into multiple cities and states, eventually building a portfolio of more than 120 rental properties.

From the outside, it looked like a huge success story.

The portfolio was growing.

The spreadsheets looked fantastic.

And we were making about $30,000 per month in free cash flow after all our costs.

But there was one major problem.

The foundation we were building on was far weaker than we realised.

And it would eventually bring the entire portfolio to its knees.

The Mistake That Nearly Cost Me Everything

At first, I didn’t know there was a problem.

In fact, for me the opposite was true.

I mean, we were making great money.

The more properties we bought, the more successful we felt.

The problem wasn’t the investment strategy. It was the properties we were buying with it.

I was focused purely on buying the cheapest properties possible.

What I wasn’t paying enough attention to was the quality of the underlying asset and neighborhood.

Most of our portfolio consisted of properties with a finished values between $80,000 and $100,000.

And those are 2016 to 2023 prices, so it’d be more like $100,000 to $130,000 in today’s market.

That’s great on paper.

The cheaper the property, the higher the rent-to-price ratio.

The higher the rent-to-price ratio, the higher the projected cash flow.

That’s what all the investor forums, podcasts, YouTube channels, and real estate gurus were preaching.

• Buy cheap
• Add value
• Rent high
• Cash flow
• Refinance
• Repeat

And to be fair, they weren’t wrong!

At least not on paper.

The problem is that the cheapest houses – the kind we were buying – are in the worst neighborhoods.

And those neighborhoods contain a significantly more challenging tenant pool.

And that changes everything. And I mean, everything!

Instead of tenants who pay and stay, you get tenants who pay late, move frequently, damage the property, or stop paying altogether.

Instead of collecting rent every month, you’re dealing with payment plans, evictions, and vacancies.

The cash flow that looked amazing on your spreadsheet starts disappearing very quickly.

Then the maintenance problems start.

Those kind of tenants don’t report small maintenance issues.

And small maintenace issues left unattended become diasasterously expensive problems.

That small water stain evetually becomes a $20,000 collapsed ceiling.

Or a $50,000 black mold remediation.

Thats not even mentioned that these tenants do not treat the properties well.

My typical turnover cost when a tenant left or was evicted was between $5,000 and $20,000!

before you know it, you’re spending all of your time and money just trying to keep the portfolio operational.

The portfolio wasn’t failing because we had too many properties.

It was failing because we owned too many bad properties that housed bad tenants.

And the more we scaled, the worse the problem became.

I Just Didn’t See it Coming

But here’s the thing… you don’t see it right away.

In my experience, everything works out pretty well for a year or two when you first buy one of these types of houses.

Your first tenant might pay and stay for a full year because it’s a nicely rehabbed home. But trust me, evetually, things start to slide.

They treat the properties like trash,

They start paying late.

They stop paying altogether.

And until this starts happening, you think you have the perfect tenant because you never hear from them.

But trust me, in this situation, silence is not golden.

When they leave (or get evicted) the real economics of the property reveal themselves.

The Collapse

From 2016 to 2022, we scaled. And we scaled fast!

Everything was going great until around March 2023.

At that point, I noticed a sharp spike in repair costs and vacancy rate.

Over the course of about 4 months we went from $30,000+ per month in postive cash flow, to heamoraging $60,000 per month in debt service and operational costs.

It didn’t take long before we’d burned through our cash reserves.

We were cooked.

Everything we’d worked to build for the last 7 years was gone.

All we had left were a mass of vacant damaged properties, and a bunch of very unhappy mortgage lenders who we couldn’t afford to pay back.

We had no choice but to start selling off the properties – most of them at a loss – and try and rebuild something from the ashes.

Fortunately, within the rubble of our portfolio were a few remaining properties that had actually performed exceptionally well.

What shocked me was that almost all of those surviving properties shared remarkably similar characteristics.

Why Cheap Properties Are Often the Most Expensive

Before I get into the detail of how we turned this around, I think it’s important to understand something…

… The biggest lesson I’ve learned through all this is that the purchase price tells you almost nothing about the true cost of owning a renal property.

I spent 7 years buying, owning, and managing these houses. Believe me when I say they cost a lot more than the purchase price.

Most investors look at a property and ask:

“How much does it cost to buy?”

Today, I ask a very different question:

“How much will it cost to own?”

Those are not the same thing!

A cheap property might look like a fantastic deal because the rent appears high relative to the purchase price.

But if anything, a low value is a strong indication that property will turn into a money pit!

Let’s imagine two houses.

Property A costs $100,000 all cleaned up, and rents for $1,200 per month.

Property B costs $180,000 and rents for $1,700 per month.

Most of us will immediately gravitate towards Property A because the rent-to-price ratio looks better.

The projected cash flow, cap rate, everything on the spreadsheet looks better.

But the spreadsheet doesn’t tell you who is going to live there.

It doesn’t tell you the turnover rate.

It doesn’t tell you how many maintenance calls you’re going to receive.

It doesn’t tell you how much damage the property will suffer over the next ten years.

It doesn’t tell you when you’ll need to replace the big expensive items like the roof, furnace, sewer line, HVAC, plumbing, and electrical!

And it certainly doesn’t tell you how much stress working with low income housing is going to create.

What I learned (the hard way) is that there is a strong relationship between:

• Property quality
• Neighborhood quality
• Tenant quality
• Maintenance costs
• Vacancy rates
• Long-term profitability

Better properties in better neighborhoods tend to attract better tenants.

And better tenants tend to:

• Pay on time
• Stay longer
• Report maintenance issues quickly
• Take better care of the property
• Create fewer management headaches

That changes the real-world economics of the entire investment.

When a good tenant stays for five years instead of one it’s a $25,000+ difference to your bottom line.

Across vacancy, renovation, and leasing costs, you’re easily in for at least $5,000 per turnover!

It doesn’t take too many of those before you’re severly underwater on a $100,000 house.

And that’s not even touching on the stress levels involved in dealing with tenants in low income housing!

A stable, long-term tenant is aboslutely the key to your success.

And most importantly, income that actually makes it into your bank account.

That’s what I mean when I say I care about real cash flow, not spreadsheet cash flow.

When the perfect storm of vacancies, repairs, turnovers, and capex hit in mid-2023. We went from $30,000 per month in postive cash flow, to losing $60,000 per month in the space of 6 months.

Once I understood the true nature of the problem, everything about my investment strategy changed.

The Pivot & The Buy Box I Use Today

When it all hit the fan, I sat down and asked myself a very simple question:

What do the best-performing properties in my portfolio have in common?

The properties that actually put money in my bank account every month and caused me the fewest headaches.

The properties where the tenants paid and stayed.

The properties that I genuinely wanted to own for the next 20 years.

So, I went through every single property I’d ever owned.

I looked at everything I could think of.

• Property values
• Square footage
• Bedroom and bathroom counts
• Property condition
• Neighborhood quality
• Rent rolls
• Property management reports
• Maintenance records
• Vacancy rates
• Turnover rates
• Financial performance
• Renovation scopes
• Tenant applications
• Evictions
• Turnover rates

Anything that might explain why some properties consistently performed while others constantly created problems.

It didn’t take long for a clear pattern to emerge.

Almost all of the properties that actually performed shared the same characteristics.

The lesson was obvious.

I didn’t have a financing problem. I didn’t have a property management problem. I didn’t have a scaling problem.

I had an asset quality and neighborhood problem.

I knew that if I could replicate the successes, and avoid the failures, I could rebuild.

And that’s how my buy box was born.

Today, I rarely buy anything that doesn’t meet most, if not all, of the criteria below.

Minimum Value: $150,000+

In today’s market, I generally want the finished value of the property to be at least $150,000.

Ideally, it’s closer to $175,000 or more.

Why?

Because after analysing my portfolio, I found that property value is a surprisingly good proxy for both neighborhood and tenant quality.

As a very general rule, the lower the property value, the higher the operational risk tends to be.

That’s not because the house itself is bad.

It’s because cheaper houses are typically located in rough neighborhoods, and those neighborhoods tend to house a more challenging tenant base.

As I already discussed, evetually that translates into:

• Higher turnover
• More vacancies
• More evictions
• More property damage
• Higher maintenance costs
• Lower long-term profitability

When I looked back through my portfolio, every single one of the properties that caused me problems had values below this threshold.

Meanwhile, the few higher value properties I owned in nicer neighborhoods were the ones that actually generated reliable cash flow year after year.

They didn’t look as good on paper. But I’d look at the operating accounts for these properties, and the balance would just keep growing every month.

So if I have the choice between buying one $300,000 property or three $100,000 properties, I’m taking the $300,000 property every time.

Minimum Size: 1,000 Square Feet

When I analysed my portfolio, there was a direct correlation between sqft and profitability.

More sqft equals more reliable and consistent cash flow.

When I dug a little deeper, I saw my larger homes also had lower vacancy rate and maintenace costs.

Why?

My best tenants were all families, and families want larger properties.

So for me, 1,000 sqft is the minimum size of house I want to own today.

Three Bedrooms and Two Bathrooms

This goes hand in hand with property size…

Three-bedroom two-bathroom homes appeal to the largest segment of the rental market.

I’ve found that tenants – especially families – are willing to pay a surprisingly large premium for a second bathroom.

Whenever possible, I would rather own a 1,000 sqft three-bedroom, two-bathroom property than a 2,000 sqft house with fewer bathrooms.

Stable (Improving) Working-Class Neighborhoods

This is where things might get a little subjective.

Let me be clear.

I don’t buy luxury real estate. But I don’t buy properties in war zones either (at least, not any more).

I still invest in cheaper cities and secondary markets because that’s often where I can still find sustainable cash flow!

But I’m not looking for the cheapest house in the city, or even on the street.

That’s going to lead you right back the the ghetto!

Today, I’m looking for the middle ground.

Areas where people work for a living. Raise families. Own homes. Pay taxes. Take pride in their neighborhood.

And generally want a safe, stable place to live.

Some investors would call these B-Class neighborhoods.

Personally, I don’t get too caught up in classifications.

My B-Class neighborhood might be your C-Class neighborhood.

Real estate isn’t an exact science.

It’s part data and part judgement.

What I do know is this:

One of the biggest mistakes I made early on was focusing almost entirely on the property and not enough on the neighborhood.

I thought I was buying houses.

In reality, I was buying neighborhoods.

And neighborhoods come with their own tenants attached.

The longer I’ve been doing this, the more convinced I become that the neighborhood is often more important than the house itself.

A beautifully renovated property in a bad neighborhood is still in a bad neighborhood.

A great tenant might move in.

But they’re unlikely to stay forever.

And when they leave, the neighborhood determines the next tenant.

My mentor once told me:

“You can renovate the house, but you can’t renovate the neighborhood or the people who live there.”

I’ve never forgotten that lesson.

One final point…

…In many of the markets where I invest, neighborhood analysis isn’t enough.

You need to understand the street.

In these markets you’ll find two streets in the same neighborhood with completely different:

• Housing quality
• Crime rates
• Property values
• Rental demand
• Tenant quality

One street might be full of homeowners who have lived there for twenty years.

The next street over might be a war zone!

That’s why I always tell other investors that real estate is local.

But in many of the markets where I invest, it’s even more local than that.

It’s street by street.

Fully Renovated Major Systems

This is one of the biggest operational changes I made when rebuilding my portfolio.

In the early days, I was renovating for appearance and cost.

Fresh paint.

New flooring.

A modern-ish kitchen.

A nice-looking bathroom.

And wherever possible we tried to keep renovation costs as low as possible.

At the time, that seemed like the sensible thing to do.

After all, every dollar I didn’t spend on a renovation was another dollar of profit.

Or so I thought.

The problem is that tenants don’t call you because the paint is peeling.

They call you because the furnace stopped working in the middle of winter.

They call you because the sewer line backed up.

They call you because there’s a leak in the roof.

They call you because the electrical system is failing.

And when those systems start failing, all that projected cash flow disappears very quickly.

I learned this lesson the hard way.

Many of the properties we bought looked fantastic on the surface.

Freshly renovated.

Nicely presented.

Easy to rent.

But underneath, they were still old houses with old roofs, old plumbing, old electrical systems, aging HVAC equipment, and sewer lines that hadn’t been touched in decades.

Before long, we’d find ourselves back at the property dealing with repairs that should have been addressed during the renovation.

And because I invest remotely, every repair becomes more expensive.

I can’t simply drive over and take a look.

I have to pay somebody to do it.

These days, most professional tradespeople won’t even get out of bed for less than a few hundred dollars.

Every little repair quickly turns into a $500 invoice.

Then another.

Then another.

And before long you’re spending thousands of dollars fixing systems that should have been replaced years earlier.

The biggest mistake I made was treating renovations as a cosmetic exercise.

Today, I treat renovations as risk management.

I want all the expensive stuff updated, repaired, or replaced before I buy the property, or before I place a tenant.

That means things like:

• Roof
• Electrical
• Plumbing
• Sewer line
• HVAC
• Furnace
• Water heater
• Windows and doors

The kitchens, bathrooms, paint, and flooring are important.

But they’re not what keeps me awake at night.

A failed sewer line can wipe out years of cash flow.

A collapsed roof doesn’t care how nice your kitchen looks.

A furnace failure doesn’t care how much equity you have in the property on-paper.

Today, I’d rather spend more money upfront and own an asset that requires very little capital expenditure over the next decade.

I want low-maintenance properties.

And so do my tenants.

Because constant repairs don’t just destroy your cash flow.

They destroy the tenant experience.

Good tenants have other options.

Eventually they’ll move somewhere else.

And when they leave, you’re right back where you started.

The irony is that spending more money on renovations often results in spending less money overall.

Fewer emergency repairs.

Lower capital expenditure.

Better tenant retention.

Less vacancy.

More predictable cash flow.

Today, I don’t renovate properties to make them look good.

I renovate them to make them perform.

Positive Cash Flow From Day One

This should be obvious, but it still needs saying.

I don’t buy properties hoping they’ll become profitable.

I buy properties with verifiable metrics that are already proven and profitable.

After all financing costs, property management fees, maintenance reserves, vacancy reserves, property taxes, insurance, and every other foreseeable expense, the property needs to generate positive cash flow from day one.

Not theoretical cash flow.

Not projected cash flow.

Not “once the market appreciates.”

Not “after rents increase.”

Not “after I renovate the kitchen.”

Real cash flow.

Based on real rents and real costs.

The type that actually turns up in your bank account every month.

Because after everything I’ve experienced over the last decade, that’s the only kind that matters.

One of the mistakes I made early on was confusing potential free cash flow with actual net earned and received cash flow.

My portfolio looked fantastic on-paper.

The projections looked fantastic.

But what ultimately matters isn’t what’s written on a spreadsheet.

What matters is what happens in your bank account after the tenant moves in.

Do they pay?

Do they stay?

Do they look after the property?

Do the repair bills stay under control?

When I rebuilt my portfolio, I stopped asking:

“How much cash flow could this property generate?”

And started asking:

“How much cash flow ends up in my bank account?”

Because something always goes wrong.

A tenant moves out.

A furnace fails.

Property taxes increase.

Insurance premiums rise.

A roof starts leaking.

That’s real-world property ownership.

And if a deal only works under perfect conditions, it probably isn’t a very good deal.

That’s not only changed how I underwrite deals, but also the type and condition of property I want to own.

Today, I’d rather own a property that generates $250/mo that actually shows up, than a property that projects to pay $1,000/mo but actually ends up costing you $500 instead.

After all, you can’t spend projected cash flow.

You can only build wealth with the money that actually arrives in your bank account.

The Real Lesson

Looking back, almost every property that went sideways in my portfolio – which was most of them eventually – violated one or more of these rules.

The ones that actually paid me instead of cost me, shared most, if not all of these charateristics.

I’m not a big believer in coincidence. But I do recognize patterns.

By far the biggest mistake I made early on was believing that finding the cheapest properties with the highest projected cash flow would automatically equal success.

What I eventually learned is that to be successful in this game, it’s really about owning high-quality assets that attract high-quality tenants.

That’s it.

Better neighborhoods attract better tenants.

Better tenants stay longer and create fewer problems.

Everything else flows from that.

So how do I actually apply those lessons when analysing a property today?

How I Analyze Rental Property Investments Today

For me today, analysing a rental property is about much more than just running the numbers.

And this is one of the biggest problems with the gurus and coaches you’ll see online.

They’ll sell you a course, mentorship, or spreadsheet and teach you how to calculate cash flow, cap rates, and returns.

But that’s only a small piece of the puzzle.

Don’t get me wrong, the numbers matter.

But if the last decade has taught me anything, it’s that a beautiful spreadsheet can’t save a property in a bad neighborhood, with a bad tenant.

Today, I analyse every investment in roughly the same order.

First, I Analyze the Neighborhood

Before I even look at the house, I look at the location.

The first questions I ask are:

• Is the area attractive to working families?
• Is it close to major employment centers?
• Does it have good transport links?
• Are there schools nearby?
• Is the crime trend improving or getting worse?
• Are people investing in the area?
• Market rents
• Current rental availability
• Marketing time to lease
• Application volume
• Application quality
• Rent price trends

One thing I’ve learned is that many of the best cash-flowing cities in America aren’t particularly glamorous.