Ashley:
If you’re sitting there thinking you can’t get started in real estate because life’s too hard or you have this going on or you can’t do it, today’s story is with Beth and she’s going to provide you the motivation and inspiration to know that you can do it. At one point in time, Beth was going through divorce, had a struggling failing business, had $70,000 in IRS debt and on the verge of bankruptcy, but she made it out and she ended up getting her first real estate deal.

Tony:
And in today’s episode, Beth is giving us not only how she got out of that very precarious and difficult situation, but how she built a cashflowing real estate portfolio that includes flipping, long-term rentals, mid-term rentals and short-term rentals all in the span of a few years. So if you want the tactical guide along with the motivation, then this episode.

Ashley:
This is The Real Estate Rookie Podcast, and I’m Ashley Kehr.

Tony:
And I’m Tony J. Robinson. And with that, let’s give me a big, warm welcome to Beth Smart. Beth, thank you so much for joining us on the podcast today.

Beth:
Thank you. Glad to be here.

Ashley:
Beth, you were a new single mom. A business had just ended up in your name and you were dealing with a federal tax lien. So the margin for mistakes was basically zero. What was the first domino that fell? What happened that turned your life from manageable to I’m in survival mode and how quickly did things spiral for you?

Beth:
Well, so first I’m going to start by saying it’s so hard to talk about my past because it was such a painful time. And that was about 20 years ago. So that’s the timeline. So I’ve come a long way in that 20 years, so I’m happy about that. But at that time I had a new business. I had a nine-month-old and I had a two-year-old, and I was realizing that I had a horrible marriage. So it was just one thing after another. I had also had a bankruptcy, and that was kind of the first flag that told me, “This is not a good marriage,” because it just was all part of that bad marriage thing. So I had a bankruptcy that I kind of went through by myself. And then I was getting letters from the IRS saying, “You need to be audited.” And my husband at the time had said, “Just ignore that.
” Well, when you ignore the IRS, they do not like that. And so I did get a tax lien.

Tony:
That’s like one of the people that you can’t ignore is the federal government, I think when they asked for-

Beth:
Yeah. Well, I know that now, so thanks. Yeah. Well, and I don’t know.

Ashley:
But you trust someone and you trust them to know what to do.

Beth:
That’s right. And I was trusting him that he was going to give a good advice because when people talk with authority and I don’t know, for me it was like I’ve learned now not to just trust anybody because they act like they know what they’re doing because that’s not always the case. That’s actually probably rarely the case. So I’m not sure if I’m answering your question, Ashley, but there was a lot of dominoes that just kind of fell over all at once. So I had a new business that I really didn’t know anything about. I had started a med spa with my husband at the time and he was working for a laser company. So that’s how we got into that industry. And then with this new little baby and a two-year-old and this new business, and then I’m like, “Oh my God, I have a terrible marriage.
I need to get out of it. ” And oh, I have a bankruptcy and oh, I have a tax lane and everything has to start over. So it was like a clean slate and that’s what happened.

Ashley:
What was the moment like when you realized that you couldn’t live like that anymore, that you had to figure something out once you found out about all this stuff going on, what were kind of the first steps that you took to make some changes?

Beth:
So the last straw was, and I’m laughing because it was like, what a stupid last straw. So we had bought a house during that whole subprime lending thing. So I knew that that was going to be a horrible thing when that seven-year note came due or whatever. And I was cleaning our three-car garage because it was just a mess. And I’m a person of order and everything has a little place. And I had spent the whole day after working at the business and raising these two little kids by myself because he was traveling. I organized the garage because I thought this is going to be nice when he comes home from traveling. And he came home and trashed the garage. And I was up that night and I saw the garage and I burst into tears and I’m like, “I can’t do this anymore.” It was just everything else.
I mean, we were in debt, we just had nothing to our names. And my husband, he wasn’t home a lot because he was traveling for this business. And that was my last straw, was the dirty garage.

Tony:
Beth, I applaud you for having the courage to recognize that you weren’t happy in the situation and kind of stepping out of it, but then that also kind of puts you, like you said, in a very unique situation where now you’re newly single, two young kids. And I guess walk us through what happens with the business. You said you started this business together, but it seems like you became the person really running it after the fact. How did that come to be? How did the business fall into your lap?

Beth:
Well, we had signed a lease in a mall and we had to be open seven days a week, which was working when he had quit his job and we were supposed to be working together, but he was not working. And so when the divorce was processed and he moved out, I had to be at the office every day, even though we didn’t have any clients, even though there was no money coming in, but we had about $15,000 in monthly expenses that I’m like, “Somehow this has to … I have to pay these bills.” And somehow people would come in and spend money and buy my laser services when I needed them too. And it was the first time that I really realized I’m going to be okay that there, even though I don’t have support and I don’t have the people around me and I don’t have a rich uncle to help me, somehow miraculously people would just come in and buy things and I’m like, I’m going to … I started to notice that I got all the junk out of my life and I was cleaning up my messes and I don’t know, the universe just started to help me.
And so it was during that, it was 2007 and 2008, which was another weird period. And people were just, they would come in and spend, they’d give me their credit card and they would charge $7,000. And I needed, how much did I need that day? I needed $7,000. And they would just come in and charge. And I’m like, “This is weird.” And then I would sometimes never see them again. So I had to handle everything from the finding a tax accountant and paying bills because I knew that paying taxes was really important. I’d learned that and I just had to pay the bills. Then I asked the leasing company with the mall if I could just be open six days a week. And they said, “It’s actually, we never do this, but it’s in your lease that you don’t have to be open seven days a week.” So that helped a lot.
Yeah,

Tony:
That’s of course. And I mean, again, I think a lot to put on one person’s shoulders, but when everything was kind of chaotic, you mentioned the federal tax lien, you mentioned bankruptcy, a lot of the options were off the table for you to try and get stable. So what did you kind of tackle first, second, third to start putting the pieces back together and rebuild your own personal financial foundation?

Beth:
I went through all our expenses for the business and I had an employee who was a … Just she advocated for me. I don’t even remember who she was, but she came in and she was helping me run the business and she called up the Yellow Pages because we had a monthly charge of like, I don’t know, $5,000 or something for Yellow Pages. And this is when back in the day people actually advertised in the Yellow Pages, but that was going out because this was all pre-Google and all that. And so she got rid of that Google or that Yellow Page ad for me. So that helped a lot. So things like that. So it was just minimizing my expenses and then just praying every day, “Okay, I need to make $3,000 today. Okay, I need to make $100 a day. I need to find a cheaper place to live that’s just as safe, that is more convenient and closer to work.” So I’m juggling a million things and it was just like, “Oh, I’ll do that one today.
I’ll do that one today.” So that was my modus apperandi, is just deal with it.

Tony:
How long after the divorce and you becoming the sole owner of the business do you feel like it took for you to get to a point where you could kind of breathe again?

Beth:
Well, I think it probably took about two years of just one day at a time, one hour at a time and making it. And okay, I have a little cushion of money in the account. I have this bill paid off, this bill’s about to be paid off. So I think it took about two years. And I remember when I felt like I was safe and I was secure and I was going to make it, and I had a friend come into the store and she’s like, “I’m going away to Estes Park. I’m in Colorado.” She said, “I’m going to go away for the weekend. Do you want to get a cabin and bring the kids and go with us?” And I thought, I looked at the numbers and I’m like, “I can afford to do that. I can afford to pay someone to be in my store.
I can afford to go rent this little cabin and enjoy myself.” But it was two years after the drama. So what would that have been, 2010? Yeah.

Ashley:
Beth, during this time, did you create any rules for yourself that maybe you’re not going to base your decisions on fear anymore or that you’re not going to worry that your kids can’t depend on you? Was there anything that kind of went through your mind that you realized from this point and this experience that you weren’t going to let that control you anymore?

Beth:
I know during that period, my rule was I wasn’t going to fail. I wasn’t going to end up homeless. I wasn’t going to end up living in my car. I wasn’t going to lose my kids. I had a fear I was going to go to jail because of this tax lien. And my biggest, biggest fear was that I knew my ex- husband wouldn’t bring my kids to visit me. So when you’re operating in that level of fear, it’s like nothing is scarier. So the rules I created where I was never going to be in that situation again, but that also I needed to learn to trust my gut that if somebody comes in and tries to sell me something and I think it’s a stupid idea, then I’m going to learn how to say no, because I didn’t really know how to say no. I didn’t know how to advocate for myself.
And so I mean, it was like basic core rules that I was creating of don’t give away your soul.

Ashley:
Beth, how much was the tax lien for?

Beth:
Well, I think I owed $10,000, but because I had ignored him the interest, I think it was $70,000, which when you’re not making any money, it could be $70 million. It was just a lot of money.

Ashley:
I mean, that could be with someone’s whole year’s salary, $70,000. Yeah. And especially when it was only 10,000 knowing that it could have been taken care of, but yet all the penalties and interest. Wow.

Beth:
Yep.

Ashley:
Next, Beth is going to walk us through the exact pivot that made real estate feel possible and the boring insurance call that later protected a $60,000 outcome. That’s coming up right after a quick word from today’s show sponsors. Okay. Welcome back. So Beth had rules, but real estate investing starts when reality tests them. So Beth, walk us through the exact moment you’ve stopped insisting on a cool market and chose a market that actually worked for you. Okay.

Beth:
So we’re going to flash forward about seven years and my medical spa is doing really well. My divorce is completely over and I have met a great man named Patrick. I’m going to refer to Patrick a lot.

Tony:
I love that this story has a happy, not even the ending, but a happy middle part. Yeah,

Ashley:
Happy transition.

Beth:
There’s a good transition and that’s what changed everything. So I’ve gotten out of the mall, they let me out of my lease, which also never happens. And then I rented office space in an office building and I could be open whenever I felt like it. And I met this man online, whatever those things are called, online program. And we were destined for each other. It was just a great fit. And he was an executive chef. So I had manifested a cook into the family. Thank you because my … I don’t know. Anyway, that was a good thing. That was a good big sign. And he ended up after a couple of years quitting his job as a chef and he came to work for me. So we were working together and we were working and that’s when, and he had a little kid and I had little kids and they were … Well, now they were seven, eight and nine by then.
And we were just having fun. And I had a family and I’ve never really had a happy family. So we enjoyed a few years of having a happy family. One of the things that Patrick had was a little cabin in the mountains, and it was a little like a double wide mobile home that the previous owners had built a deck on. And it was just in a beautiful spot with Aspen Trees. And you could see all the Rocky Mountains and all the mountains, I mean, all around. And it was just such a peaceful retreat. We spent a lot of time there. We had a blast up there. And yeah, Ashley, I forgot your question. What was your question?

Ashley:
So go into how you had started in real estate.

Beth:
Oh, thank you. That’s a great question. Oh, yeah. How interesting that we’re on that this podcast and we’re going to talk about real estate. So we didn’t realize we were in real estate at that time, but we loved this. We loved the cabin and we thought other people should enjoy it. And this is when Airbnb was just starting. And I’m like, “You know what? We probably could make some money.” I think somebody would come to this … I mean, it was very rural. It was very rustic. It had running water, a bathroom and a shower and even a laundry room. And so we put it on Airbnb and we got somebody who spent a week up there and they loved it. And I realized we just owned this free and clear, but we didn’t even have insurance on it. And I thought if we’re going to keep renting on our Airbnb, we better get basic insurance on it in case something happens.
So we got a policy, we paid one premium, and I think it was like $30 a month. There was nothing. And we paid monthly. And like I said, we went there all the time. We were there at least every other weekend. And I always wanted to … I’m sorry I have to use my hands, but I always wanted to … It was just a mobile home, but I always wanted to pop the top so that you would have an even better view of all the mountains. And we went up one weekend. It was Halloween weekend and there had been an explosion and the top had popped. So I guess our introduction into true real estate began with the bang because insurance came up three times to inspect our claim and found that we hadn’t committed any crime to fraud. And we ended up getting … I think our claim was for $60,000.
So we got the full amount.

Ashley:
I want to make sure there’s no one in this, right? It happened to be vacant.

Beth:
Yeah. Yeah. Nobody was hurt, but one of the bedrooms, the bed had melted. So something horrible had happened, but I’d made one insurance premium or payment. And I mean, I was crying. We both were just in shock that it’s like somebody popped the top and melted the windows and broke everything. And anyway, yeah, it was so sad. It was awful.

Tony:
Beth, I know that the insurance situation was obviously terrible because obviously we never want that to happen to our properties, but it also becomes this kind of moment where you really do launch into real estate investing. And I want to talk about that, but before we do, you said, “Hey, we’re going to fast forward about seven years or so. ” And you go from this very difficult situation, post-divorce, newly single, businesses struggling, to happily married, family’s there, business is doing well. How does someone separate the difficulties of a moment from their identity? Because at times someone who’s going through something difficult can start to internalize that situation as part of who they are. And the reason that I asked this is because I was just talking to an investor last week and we were having a conversation. She was almost in tears because she had this property that wasn’t performing well.
And she was like, “I just feel like I’m a failure.” And I know that there are other people out there who have gone through similar situations, whether in their personal life, their business, whatever it may be, who start to internalize these difficult situations as part of who they are and they start to question their ability to be successful at anything. How did you not fall victim to that?

Beth:
Well, I don’t know that I didn’t fall victim for that. When you’re a self-made woman or a self-made human being, I mean, when you try something, whether you do it intentionally like, “I’m going to go try doing this, ” or you just have to fall into it and make it work. When it’s not working, you do have to take a look at yourself and say, “This is not working.” And there’s something that I’m not good at. And so some people don’t do that self-analysis and go, “Okay, what can I learn? I need to learn. I need to ask somebody. I need to read a book. I need to now, today. We didn’t do this back then. Listen to a podcast or whatever.” So I think people who fall victim to, “Oh, I’m a failure,” it’s because they’re not looking to learn and they’re not looking for what else?
There’s something I don’t know. I better figure it out. So at least that’s what I did. It’s like, this is not who I want to be. I want to be a different kind of person. I want to be a success. I want to be somebody who has achieved things. And I didn’t know how to do that. I didn’t have anybody showing me how to do that when I was growing up. So it’s like, all right, I’m going to listen to the people that, the science of getting rich, the science of personal achievement, the secret. I mean, there’s what you think about, you bring about, that’s something that I learned during my whole divorce is that book movie came out the secret. It’s all about the law of attraction. I didn’t know anything about that, but it’s true. What you think about, you do

Tony:
Bring about. Yeah. Well, Beth, I appreciate that because again, I know there are a lot of folks who are listening that just don’t have the confidence to move forward. And I feel like that’s what stops a lot of people more than the technical know- how, more than the … They’ve read all the books, listened to the podcast, watched YouTube videos, but they’re just missing the confidence piece. So I think it’s always important when we can talk to someone who’s gone through the kind of peaks and valleys of life and business and can show that Sick and With it has a positive impact. But going back to the insurance story, so you guys, obviously the terrible thing happens, but then you get this big check from your insurance company. What do you guys do with that? Do you rebuild the cabin? Do you turn it into another short-term rental?
What happens next?

Beth:
Well, we did love that location, but it was really far from anything. And our kids were getting older and we thought, “This is just too far from anything, so let’s find something else. Let’s take this money.” I think we paid off a car, but we still had a bunch of money. Plus we sold the land for, I think, another 40,000. So that was like 100,000. Today, I would do it so different, but back then we’re like, let’s go find another kind of retreat center. That’s how we looked at it was a retreat. And so we found a realtor and we’re just driving around, looking on the MLS and found this house in Cripple Creek, Colorado, which is this old gambling town and found this house one block from the casinos that it was in the middle of this little town. So of course in hindsight, it’s not at all what we were looking for, but it’s exactly what we needed.
It’s this 1895 Victorian. It was painted purple and blue and it’s just so cute. It just was so cute. And so it was in December and when we went to inspect it, the water wasn’t even on and we’re like, “It doesn’t matter. We’re going to buy it. ” We just knew in our hearts that this was our house. So we took that money from our explosion, our bang, and we bought this house and we went out and furnished it with period pieces. We’d walk into a thrift store and it’s like, that’s the perfect couch, which I don’t really recommend buying account furniture from thrift stores, but it was like, that’s the perfect furniture. So I think we got it furnished within a week and we spent New Year’s Eve there.

Ashley:
Did you have to do any repairs at all?

Beth:
No, no. Well, once the water got turned on, there was a leak and we had that fixed, but that was it. Otherwise, it was perfect. It had a detected garage with a studio above and we’re like, “We can rent that out. This’ll be fun. It’ll be so much … It’ll be lovely.” And so we were there New Year’s Eve, I remember, and we were staying there and I’m like, “Wait a minute, we have a mortgage on this now. Wait, this isn’t relaxing. We have a mortgage on it, so we’re going to have to do something about this. ” And so that’s what we did with that money. We bought really, truly, our first investment property.

Ashley:
And how much did you purchase it for?

Beth:
Oh gosh, I think it was maybe 200,000. It wasn’t very much, but this was probably eight years ago. So now it’s worth more, thank goodness. But we still have it actually.

Ashley:
Oh, really? That’s awesome.

Beth:
We rented that summer. We put it on short-term rental because I was such an Airbnb expert by then with our cabin and that one tenant that we had, but we put on … And it is a block from the casinos. So that was people would come up for the weekend and they loved it and it was convenient and it was adorable and all the things that we loved about it, other people loved about it. Well, then fall came and nobody really goes to Cripple Creek for the weekend because it’s cold and snowy and it’s not that much fun. So then, okay, we got to get a tenant in here. So we found a property manager and she got it rented. It probably took a couple of months, but so we had long-term rentals in there, long-term tenants there for, I don’t know, two years. And that’s when we started really learning about real estate.
And we’re like, if we converted the garage to another unit, then we could have a duplex. So we actually now have a duplex. We converted that to a duplex. So that’s a nice cash flowing property. Yeah.

Tony:
$200,000 for three units is pretty solid. So you guys take that money, you use that to launch into your first true real estate investment, but you don’t stop there, Beth. I know you go on to start experimenting in all different types of real estate investing. So what was the next deal after this? And my mind is blown when you said 18.95. I don’t even think I’ve been inside a house that was built before.

Ashley:
Come visit me, Tony, and a lot of them.

Beth:
Right? Yeah.

Tony:
Said 1895. What came next?

Beth:
Well, we didn’t really realize we were investors. We were just getting the mortgage paid. And then COVID hit and our business, we still had our medical spa and it got shut down. And my husband had always wanted to be a real estate agent because he loves looking at real estate. He doesn’t like helping people buy real estate or sell real estate. He just likes to look at real estate. And so during COVID, he got his real estate license and I’m like, all right, I’m going to be a part of his life and help him with that. And so I found this Facebook page and this woman was teaching how to be a real estate investor. And so every night, it was a fine night program. We listened to that and we learned all of the real estate techniques, the Burr method and flipping and house hacking and wholesaling.
And our minds were blown. We’re like, “We could totally do this. ” So that’s like giving a little kid a dollar back in the day and go into the candy store. So that’s how my husband was. He’s like, “Now we’re going to go buy real estate.” So we knew Denver, which is where we’re at, the Denver metro area was too expensive. And so Pat was looking in Pueblo, Colorado, which is two hours south of Denver. And I grew up in Colorado Springs, Colorado, which Pueblo, it was like the armpit of the world. It’s just the nastiest place in the world. And so when he’s like, “Look at all these properties without Pueblo.” I’m like, “We’re not buying En Pueblo. It’s disgusting there.” And he’s like, “No, no, really, really. Look at how cheap the properties were.” And they were. I mean, at that time Denver, the average price was $600,000 just off the MLS.
And in Pueblo, it was $150,000 for the same kind of cute little house. And I’m like, “Yeah, but it’s Pueblo. So no, gross.” Well, at that time also there was this TV show on Netflix called Undercover Billionaire and Grant Cordon got sent to Pueblo of all the places in the world and he’s like, “This is the greatest town in the world.” And I’m like, “I don’t even know who Grant Cordon is, but okay, if that guy says that it’s a good place, we should go check it out. ” So again, on a New Year’s Eve, we went, that was when we do everything apparently. So we went down to Pueblo and state New Year’s Eve and we looked around this town and Pueblo, Colorado is the cutest little town in the world. It has a city park and a zoo and old little Victorian homes.
And I mean, there’s some yucky places, but there’s a lot of history. There’s a big reservoir. So I’m like, all right, let’s go buy, let’s look down here. So we ended up finding … So we found out about how to get on wholesalers lists. And so we, I’ll make this very short, we found a property and we went and walked through it. And during that time, it was so chaotic. It was like you could walk into a house, and this is what one of the realtors said that we met at the flipping house or at the house that we were looking at. He’s like, “You could have dog poop on the walls and you’re going to get three offers above asking.” And I’m like, “What?” That doesn’t even make any sense, but it was true. So we toured a house, we put a bid in and we got it.
We got this house that we were going to flip. It was below market. I didn’t understand why they were using a wholesaler because it was a great house. They should have just put it on the MLS. But I know that’s one of those mysteries in real estate, right? It’s like, why did they do it that way? I don’t know. But anyway, it was to our advantage. So yeah.

Tony:
I just want to ask because obviously you’re still in Colorado, but it is a new market for you. And you mentioned it briefly, but you said we got it on the list of a wholesaler. There are a lot of rookie investors who don’t understand how to start building those connections with wholesalers who have the keys to unlock all of the deals that tend to make a little bit more sense. So what did you actually do to get in contact with these wholesalers in a market that you didn’t actually live in?

Beth:
I think probably at that time, my husband went on Craigslist and said, “I want to buy wholesale properties.” And there were just people there where they’re like, “Hey, want to buy this below cost.” Now you can Google buy wholesale properties and they’ll find all these companies and that’s what they do. And they go out and they door knock and they get these properties under contract for below cost. That’s a whole world that I’m not interested in. I would never want to be a wholesaler. It sounds on paper like it would be fun. You just go help somebody get out of their house they’re going to lose and you help them pay off their whatever, but I just didn’t want to do that. Yeah. Right. And so anyway, so we just bought another flip just recently and I’m like, why is this property being sold to a wholesaler?
They could just sell it anyway. I’m sorry, I’m rambling. I ramble.

Ashley:
Tony, didn’t you wholesale deal for a little while?

Tony:
Yeah, we did back in 2021, I think it was. And yeah, I mean, a lot of it was us getting cussed out by home sellers saying that we were the 18th person to call them today and how did you beep this and you should beep this and all these other kind of crazy things, but we dig it if you do, which is I guess the price you have to pay.

Ashley:
Now, when you saw your $65,000 profit, what did you do next and why did you choose to roll it into two more properties instead of just taking the win and pocketing it?

Beth:
So that was how much we made from our very first flip. It took us about, I think a month, maybe six weeks, and we fixed everything, which now we don’t do that. But even then we turned around and we sold it in two days. We actually only got one offer.

Ashley:
Two days. Wow.

Beth:
Yeah. And we made a profit of, if I did the numbers right, which who knows if I did, but we made about $65,000. So what we found is that it was so much fun. And real estate in general is just fun. And it was fun taking this kind of house that just needed some love and making it, improving it and giving more life to it and then turning around and finding somebody who’s like, “This is my forever house. I love it. I want to buy Buy it. And then we made money at it. I mean, it was fun. So we took that $65,000 and instead of spending it on something that we didn’t want, we’re like, let’s keep going and let’s stay in Pueblo. And so my husband, who loves looking at real estate, found a house that was, it had it for sale sign in the front, but it was not on the MLS.
And he called up the agent and he’s like, “Yeah, that’s for sale.” Well, it’s not on the MLS. Oh, well, I don’t know. So we looked at that and the price was right. It was like $160, $70,000. It didn’t need any work. And it needed a little cleaning and some paint, but it had hardwood floors. The bathroom was fine. It had clawfoot tub in it. And we had a contractor who had helped us on our flip. And he’s like, “You should do this as a short-term rental and we’ll manage it for you. ” And so we’re like, “Okay, because it’s two hours away and we can’t do a short-term rental, but we know how much money those can make. So let’s turn this into a short-term rental.” So we bought that house in June, middle of June, and I immediately got it set up on Airbnb and we had it booked for the 4th of July.
So it took us two weeks to turn that around. And we had it booked for, I think, four straight months and made, I mean, so much money. It just was fun. It was fun because people loved it. And then I love helping people, but I also love making money. And I learned from my med spa, those two things are not mutually exclusive. You can have fun, you can help people, and you can do what you’re supposed to do. So that’s what we were doing. The other thing that we did with that $65,000 profit is actually, we bought two properties down in Pueblo. One, we turned into a short-term rental. We actually closed on both those properties on the same day, and we were going to just flip that other property, but we ended up losing our contractor because he got really burned out because we were moving at the speed of light, and he was managing these properties and having to turn them over every couple of days.
And then the one kind of challenge about Pueblo, Colorado is August is super hot. And so that’s by now we’re into August and he got burned out and he quit managing the short-term rental and he quit finishing our flip.

Tony:
I just want to say that’s the biggest fear for every real estate investor is that you build a relationship with someone and then for whatever reason, they don’t follow through. They kind of stop mid-job because now you as the investor are left to pick up the pieces. And I want to talk about that, but before we finish off the serve at the contractor, we’re going to take a quick break to your road from today’s show sponsors and we’ll come back and finish that story. All right, welcome back. We are here with Beth and she just broke the news that her contractor kind of burned out in the middle of not one, but multiple jobs. So I guess Beth, maybe describe the moment that the relationship kind of broke, I guess, what went wrong, what did it put at risk and what did you do in those first 24 to 48 hours to try and keep things moving along?

Beth:
I remember where Pat and I were both standing, we were supposed to go to dinner with our contractor and his wife, and we had made plans to go to this little Mexican restaurant and they called and said, “Oh, we can’t go. We have to go do something else.” And we knew what that meant. We knew that they were quitting because of other things that had happened. And we both just looked at each other and said, “What just happened and what does this mean? Because they’re doing this and they’re doing this and they’re doing this. And oh my God, what are we going to do? ” And so sure enough, they’re like, “We’re not doing this anymore and give us our money that you owe us and here’s the keys and good luck.” So we went on Craigslist, my husband’s really good at that and he found another person to finish this house, finish the house that we were flipping.
And we shut down, I think we probably had a couple more short-term rental appointments or bookings that we finished. And I found a cleaning lady who would go in and she moved those around for a couple months, but it was just too much work. So I’m like, let’s turn that house into a medium-term rental. And to answer your question, Tony, sorry, you have to deal with it and it’s like all hands on deck and what are we going to do? And you have to focus on solving the problems. So okay, we got to finish the house. All right, find somebody to finish the house. We got to find somebody to clean the house because we can’t do it and turn it over because we have bookings. You just have to find somebody. And when you have that laser focus on finding what it is you need, because it’s not like it’s life and death, but it kind of is because it’s your business.
It’s like the universe really does conspire to help you and you find those people show up. And so the contractor that we found to finish the flip, he did a really good job, but he moved at the speed of a sloth. He was so slow. So it should have taken about a month. It took him like three months. And so it was done in November. Well, then it’s too late to try to sell it. It’s in Colorado at least. You just can’t sell anything in that fourth quarter. So we ended up turning that property. We put that on the market to … No, what did we do? We turned that into a long-term rental, which wasn’t the goal. That wasn’t what we were going to do with that money. I wanted that cash so we could buy another flip, but we turned it into a long-term rental.
We actually still have that property and we’re on just our second tenant in, what is it, four years. So that turned out, it turned out okay. The house that we had is a short-term rental, we turned that into a midterm rental, and that went really well for a couple of years also. And that was nice money and pretty easy money. And that cleaning lady that I had found, she would go in after the month or however long that contract was, she would go in and turn that over. And then we just had a couple of bad experiences and I’m like, “Let’s just turn this into a long-term rental.” So we still have that property also, and that’s been a very nice investment for us. It’s still booked. So yeah.

Ashley:
Beth, after having to learn how to pivot and change strategies, what are maybe some things you implement now when you’re managing a project or a rental that you wish you would’ve done before?

Beth:
So the way we funded a lot of these projects was through my medical spa. So we don’t have that medical spa anymore. I sold that and now my husband and I both have W2 jobs. Why? I don’t know, but we do. And so what I wish I could- for lending, but you get loans. Yeah, exactly. And it is, it’s nice to have insurance and whatever. But I wish that I had been wiser with the budget and the money and really everything I’ve learned on BiggerPockets about how to analyze a deal. We would analyze a deal by going in and going, “What a cute house. Oh, we could paint it this way. And then if we do this. ” And we didn’t really run numbers like we’ve learned how to do now. And we’ve had to learn how to run the numbers because we just don’t have that.
I mean, my med spa was a cash cow. So if I needed money, we’d make some. That’s one thing I learned is like, “Oh, we need some money? Well, let’s make some. ” And that’s what I’m loving about real estate and why we decided to get back into flipping because I like making some money and flipping is a really fun way to make some money and I get to help people, I get to be creative. My husband gets to find things. He loves to find things and then we have a nice little payoff. So what I would do different is look at the budget and be a little bit smarter, which now that’s what I’m learning how to do.

Tony:
Beth, one follow-up question on the transition back to W2, because I think for a lot of folks that are listening, the goal is to get to, “Hey, I’ve got my own thing going and that’s kind of sustaining me, ” but you’ve ventured back into the stability that comes along with that. What was the decision-making process that you followed to say, “Hey, we’re going to put the MedSpa up for sale versus continuing to run that alongside the flipping and the other rentals that you own.”

Beth:
When we were shut down for COVID and we got to have a life and try other things, when then we had to go back to work for a couple of years, we realized how burned out we were. And it was one of those decisions that we kind of just made within a couple of days. It’s like, let’s put the business up for sale. And so we found a business broker and they had said, “Well, we’re going to take about nine months to sell your business.” And we’re like, “All right, that’s perfect because then we can make some more money and save some money and maybe even pay off one of these properties.” It sold in an hour. So we closed within a month. So it went from nine months of, I have a lot to do and nine months to, I have a lot to do in four weeks.
And so it was a miracle and we got out of there and yeah. So then we realized, okay, we still don’t have quite enough money and now we’re kind of bored. And that really was. We were kind of bored because we couldn’t do too much because we didn’t have that money that we were making. So we’re like, let’s go get jobs. So I started working for the post office. I thought that would be a fun job. I can get paid to exercise by walking. I can be outside and I could be by myself. I just needed my own, I needed to be away from having to wheel and deal and make sales like I had to do with the med spa. And then six months later, my husband started with the post office too. So we’re both mail carriers. If you work for the post office for five years when you started our age, we’re both in our 60s.
If we work five years, we get a pension. It’s not a big pension, but it’s cashflow for the rest of my life is how I look at it. And we also get to keep all our insurance. So I think that’s a win-win-win. So yeah, we have a job that’s going to give us cashflow.

Ashley:
I mean, that feels like a good retirement strategy.

Tony:
I love the concept of how you described it. If I am by myself, I don’t have to talk to anybody throughout there.

Beth:
Well, honestly, Tony, I’d never listened to podcasts. I’d never, nothing until I got this job because now I am by myself all day. I’ve got my headset on and that’s when I really discovered was BiggerPockets. I’ve been with the post office three years now, so I get paid to learn and I get paid to exercise. So yeah.

Ashley:
Well, Beth, thank you so much for joining us today. I really enjoyed this conversation. I still think it’s incredible that you made the $65,000 off one flip in a short period of time, and that was almost the same amount as that IRS debt you had. And I can imagine that took way longer than the flip did to actually pay that off. But congratulations on all your success. And thank you so much for sharing your journey and also the lessons you learned and what you would do differently too. So Beth, where can people reach out to you and find out more information?

Beth:
I’m not on social media, so my email is [email protected]. Who am I? [email protected].

Ashley:
Well, Bob, thank you so much. We really enjoyed having you on today.

Beth:
Thank you very much.

Ashley:
I’m Ashley, it’s Tony, and we’ll see you guys on the next episode of Real Estate to Ricky.

Even the most surly landlords would have to admit they’ve had it pretty good for quite a while when it comes to rent increases. As of January 2026, some areas have recorded a 40% increase in fair market rents for one- and two-bedroom units since fiscal year 2021.

But finally, after being stretched thin, tenants are getting a break. Rents are down nationwide, and it’s landlords who have to watch the bottom line.

The national median rent just recorded its lowest January level in four years, according to Apartment List data reported by CNBC, down 1.4% from a year ago to $1,353. That leaves rents about 6.2% below their peak in summer 2022 as new supply floods the market.

The asking rents for zero- to two-bedroom units have now posted 29 straight months of declines in many markets, according to Realtor.com’s January 2026 Rental Report. For small landlords, adapting quickly to changing market conditions is key to protecting long-term cash flow.

A “Rental-Friendly” Era

Vacancy rates are up in many markets and nationally by 7.3%, according to CNBC, and with them come concessions and rent drops as the market softens, creating a renter-friendly, more balanced environment. According to Realtor.com, these markets include traditionally high-priced metros, such as Denver, Sacramento, and Washington, D.C.

Some markets—such as Austin, Texas, which saw a 6.3% decline from the previous year—are experiencing an even more extreme contraction. Other declining markets include New Orleans, San Antonio, Texas, and Tucson, Arizona. The Los Angeles Times reported that rents in L.A. dropped to a four-year low. 

Douglas Elliman broker Michelle Griffith told CNBC that “2026 is shaping up to be one of the more renter-friendly periods we’ve seen in a decade.”

The softening is due to supply having exploded, particularly in the commercial and multifamily sectors, as over 600,000 new multifamily units were completed nationally in 2024, according to figures from the U.S. Department of Housing and Urban Development. In addition, 2 million rentals are expected to open by 2028, according to RentCafe.

The subsequent glacial rent growth has seen multifamily housing rents rise just 0.1% in February from December to $1,716, while annual rent growth was 0.4%, from 0.6% the previous month and a precipitous drop from 1.5% a year earlier, according to the Apartments.com multifamily rent growth report.

“We’re seeing price wars within buildings, longer days on market, and the need for multiple price reductions just to generate foot traffic,” Jaclyn Bild, a real estate broker associate at Douglas Elliman, told CNBC.

It’s Not All Negative for Landlords

The recent price drops need to be taken in context. Landlords are still sitting pretty, as “rising rents over recent years have made it more difficult for potential first-time buyers to save for a down payment, further constraining affordability,” Selma Hepp, chief economist at Cotality, said in a Property Markets Insights report. In some markets, such as Miami, rents have increased by more than 50% over the last five years.

“If your income is rising at the same time your rent is, maybe that extra expense is no big deal,” Matt Schulz, chief consumer finance analyst at LendingTree, said in a recent report, as cited by CBS News. “However, so many Americans’ financial wiggle room is tiny, even in the best of times, so having to carve out hundreds of extra dollars to pay rent each month can be a big deal.”

The drop in rents doesn’t mean that tenants are about to bail on signing new leases, especially with inflation far from out of the woods amid economic uncertainty and a poor jobs report.

Realtor.com senior economist Jake Krimmel said in a press release, “The foundation for a housing rebound may be taking shape, but rebuilding confidence and moving the needle on affordability will require a sustained stretch of lower inflation and a more certain labor market.”

By contrast, certain markets in the Northeast and West Coast, where new construction has not been so robust, have been more resilient, according to Realtor.com data, despite year-over-year rent drops in Los Angeles and New York.

The Takeaway for Landlords

The rental market is not monolithic. According to Realtor.com, as reported by sister site MarketWatch, higher?income renters are getting bigger rent cuts, while lower?income renters have seen rents rise more since 2019 and fall less recently, so cheaper rentals have been hit much harder.

“The softness at the top of the market is primarily what is driving down the median,” Realtor.com stated. “Those renters in higher-cost units have seen the bulk of the rent relief since 2023, while those in low-cost units have seen very little of it.”

Not surprisingly, in markets where there has been a lot of construction of large apartment buildings and thus more units to fill, landlords have been far more willing to offer concessions such as a month’s free rent and free parking, Homes.com reported.

According to real estate analytics company ATTOM Data Solutions, some single-family rental markets have not been immune to the softening rental market. Combined with increased operating costs, this has left small landlords with little room for negotiating new leases. This means smaller investors need to be especially disciplined about underwriting rent assumptions and renewal terms because they do not have the same financial leeway as large institutional operators of multifamily apartment buildings.

Final Thoughts: Strategies for Smaller Landlords in a Softening Rental Market

Landlords can no longer rely on presumptive rental increases—at least in the short term. Surviving in a market where expenses have consistently been on an upward tear and rents are stalling will bring different challenges to different investors, depending on the size of their debt burden. Those who bought when interest rates were low are in a good position. Recent buyers or those who have recently refinanced will need to be particularly savvy going forward.

It’s an old-school formula: safeguard income and reduce expenses. Keep good tenants in place through incentivized lease renewals, and cut down on extraneous expenses by negotiating with contractors, utility companies, and suppliers, shopping for insurance, appealing property taxes, and maintaining major systems to offset repairs.

Eventually, once the market absorbs new apartments, rents will start to increase again, as they always do. In the meantime, managing what you have requires meticulous attention to detail and a steady hand on the tiller.

Have Florida’s days in the real estate investment sun come to an end?

That appears to be the takeaway from a new report from brokerage/listing site Redfin, which showed Florida as one of the few states where investment activity—both mom-and-pop and institutional—has declined, while nationally, purchases were up about 2% year over year in the fourth quarter of 2025.

The Sunshine State has experienced a steep decline in investment activity, with major cities down double digits. In Orlando, the 16% year-over-year drop was the largest among the 38 most populous U.S. metropolitan areas Redfin analyzed. Fort Lauderdale was just behind with a 15% drop-off, while further north, Jacksonville was down 7%.

Redfin’s head of economic research, Chen Zhao, said in the report: 

“Some investors are keeping their pocketbooks closed, which eliminates competition for everyday first-time buyers. The pandemic-era investor frenzy that crowded out so many first-time homebuyers has largely fizzled. There are still obstacles for buyers, like high costs, but investors are no longer one of them—at least in many parts of the country.”

The Math for Investors

The reasons for the pullback from Florida are not hard to figure out: rising expenses and stalling rents. While this is true for much of the country, in Florida, those expenses are even more pronounced due to a steep rise in insurance costs. 

Bankrate’s March 2026 homeowners survey put Florida’s average premium at about $5,838 per year for a standard policy with $300,000 in dwelling coverage, more than double the U.S. average of $2,424.

That analysis shows that Florida’s typical homeowner pays roughly $3,400 more per year than the national norm, which is a killer for the modest cash flow that mom-and-pop investors rely on in the current era of high interest rates and rising taxes.

A separate analysis won’t give investors banking on appreciation much solace. Data and analytics site Cotality highlighted several Florida metros, from Cape Coral-Fort Myers to Punta Gorda, as among the most at risk of price declines over the next 12 months.

A Meaningful Rate Change Could Be Monumental

“Lower mortgage rates and more inventory are starting to bring sidelined buyers back into the market—and Florida stands to benefit more than most,” Jessica Lautz, deputy chief economist and vice president of research for the National Association of Realtors, told Yahoo! Finance. “Even a small drop in mortgage rates can unlock thousands of new buyers in Florida. A drop from 7% to 6% could introduce over 6,000 additional buyers each month into the Orlando market alone.”

Higher inventory and lower rates could also bring cash flow back into the equation, especially if price drops coincide with meaningful rate cuts.

But even though some of Florida’s markets are stuttering, it doesn’t mean every market in the state is a bad investment. As expected, Florida Realtors’ January 2026 outlook is rosier, specifically for homebuyers, describing the state’s housing market as moving onto “firmer ground.” It noted that sales have been rising consistently for the first time since rates began climbing in 2022 and that listings are being absorbed.

Where Investors Can Still Cash Flow in Florida

However, for investors, the question is ROI, which is more likely to be found inland, in North and Central Florida, away from the overheated coastal markets.

Multifamily & Affordable Housing Business’s 2025 outlook identified Jacksonville as a strong investment market, driven by affordability, new jobs, and household growth (the increase in occupied housing units). A brokerage-based investing guide on emerging Florida submarkets notes that North Central Florida, specifically Ocala and Gainesville, has appealing rent-to-price ratios and relatively lower insurance and tax burdens than the coastal southern part of the state. It also mentioned stable employment and lower-priced properties that can potentially clear $600-$900 in monthly cash flow.

Other States Are Filling Florida’s Void

As major markets in Florida lose some of their shine, Redfin’s data shows investors gravitating to a diverse mix of markets, including parts of the West Coast, the Carolinas, and affordable “refuge” metros in the Northeast and Midwest. These include markets such as:

• Seattle (investor activity up 37% year over year in the fourth quarter of 2025)
• Portland, Oregon (up 27%)
• Milwaukee (up 24%)
• San Francisco (24%)
• Providence, Rhode Island (up 20%)

However, investments in many of these markets are there for very different reasons. Pricey West Coast markets are attracting deep-pocketed landlords betting on high rental demand driven by the artificial intelligence (AI) boom and tech companies’ return-to-office mandates. Many investors are institutional or wealthy individuals, the Redfin report notes, who can pay cash.

To this end, the report stated that most investor purchases of high-end homes in the luxury market increased 5% year over year as of the fourth quarter of 2025, making it more competitive than the non-luxury market.

Final Thoughts

If you are looking for investing options other than Florida’s coastal markets, it’s best to compare apples to apples. That excludes the high-priced West Coast tech markets. Instead, refuge markets mentioned in Realtor.com’s 2026 Economic and Housing Market Update, as well as other Sunbelt markets in North and South Carolina, will allow you to compare price points and cash flow stats, as well as economic data, jobs, and more with nonperforming Florida markets and find a market that suits your budget. Crucially, markets in economically robust metros where buyers can negotiate a deal are golden for cash flow.

If you are intent on investing in Florida but struggling to make home insurance numbers work, a recent New York Times article reveals that your credit score is often a big factor in predicting your homeowner’s insurance cost.

Zillow’s three biggest buyer-friendly markets for 2026 are Indianapolis, Atlanta, and Charlotte due to lower competition and cooling home values. Jacksonville, Memphis, and Detroit also get honorable mentions, as do other markets in the Sunbelt and the Midwest. 

Fittingly, some of these also coincide with BiggerPockets’ Top Five Cash Flow Markets for Investors in 2026.

This article is presented by Steadily.

Most real estate investors can tell you their ROI down to two decimal places. They can walk you through their expense ratio and their five-year appreciation projection without blinking.

But ask them about their landlord responsibilities? Silence. And that silence is expensive.

I’ve seen some version of this happen more times than I can count: A landlord spends weeks finding the right deal, negotiates a great price, gets their financing in order, and closes with confidence. Then, six months later, they are hit with a habitability complaint, a Fair Housing violation notice, or a liability claim they had no idea was coming. Not because they were reckless, but because nobody ever handed them a clear picture of what being a landlord actually requires.

This post is that picture. Think of it as a self-audit, a plain-English walkthrough of the four categories of landlord responsibility that determine whether your investment is truly protected or just looks that way on paper. 

Responsibility No. 1: Habitability

The moment a tenant signs a lease, you are legally bound by something called the Warranty of Habitability. You do not have to write it into the contract, it is implied by law in virtually every state. And it says one thing clearly: the property you are renting out must meet basic safety and living standards before and throughout the tenancy.

What does that actually mean in practice? Habitability covers more ground than most landlords assume. At a minimum, you are responsible for:

• Structural integrity. Foundation, walls, roof, windows, and doors must be sound and secure.
• Working systems. Electrical, plumbing, and HVAC must function. In states like Arizona, functional air conditioning is a legal requirement due to heat risk.
• Pest control. Infestations are your problem to solve, not the tenant’s.
• Mold remediation. If there is mold, you must address both the mold and the moisture source causing it.
• Smoke and carbon monoxide detectors. Each state sets specific requirements for quantity and placement.
• Common area safety. Stairwells, parking lots, laundry rooms, and shared spaces need proper lighting, secure handrails, and maintained conditions.

The self-audit question that guides you should be: when did someone last physically inspect each of those items at your property?

If the answer is “I am not sure,” that is a gap. And when a habitability complaint hits, “I am not sure” does not hold up in front of a judge. Tenants have legal remedies that range from withholding rent to terminating the lease to suing for damages. The cost of a single habitability lawsuit dwarfs the cost of a quarterly inspection.

Responsibility No. 2: Ongoing Property Maintenance

Habitability may be the legal floor, but maintenance is what keeps you from falling through it.

A lot of landlords treat maintenance as purely reactive. Something breaks; they fix it. That approach is not wrong exactly, it is just incomplete. And incomplete maintenance habits are one of the fastest ways to turn a small issue into an expensive insurance claim – or worse, an uninsured one.

The thing insurance companies know that most landlords do not is that a high percentage of claims are traceable to deferred maintenance. A roof leak that started as a missing shingle, a water damage claim that began with a clogged gutter three seasons ago, or a liability lawsuit from a cracked walkway that someone pointed out in a maintenance request eight months earlier. These are all common and costly maintenance errors.

Your ongoing maintenance obligations go beyond fixing things when tenants call. They include:

• Paying the mortgage on time. Obvious, but worth stating. At 90 days past due, foreclosure can begin.
• Managing utilities. Any utility in your name must be paid. Some municipalities can place liens on your property for unpaid utility bills.
• Scheduling preventive maintenance. HVAC servicing, roof inspections, gutter cleaning, dryer vent cleaning, and exterior walk-throughs should be on a calendar, not waiting for a problem.
• Documenting everything. Invoices, photos, and inspection reports. This documentation is your evidence that you operated the property responsibly. Without it, you have no defense.

The self-audit question here is direct: Do you have a scheduled maintenance calendar for each property, or are you operating on a “wait and see” basis?

Proactive maintenance does two things for you: it preserves the asset, and it builds a documented track record that protects you when something goes sideways despite your best efforts.

Responsibility No. 3: Legal Compliance

This is the category most landlords underestimate, and unfortunately, it is also the one with the steepest penalties.

Legal compliance in property management is not just about avoiding evictions. It covers how you advertise, how you screen, how you handle money, and how you communicate. Get any of it wrong, and you are looking at fines, lawsuits, or both.

The Fair Housing Act

The Fair Housing Act prohibits discrimination in the rental process based on race, color, national origin, religion, sex, familial status, and disability. Violations do not have to be intentional. An ad that says “great for young professionals” can be read as discriminating against families. A policy that bans all pets without a written exemption process for emotional support animals violates the FHA’s disability clause.

First-offense civil penalties can reach $16,000. Repeat violations climb fast. And HUD complaints are not rare.

The Fair Credit Reporting Act

Every time you run a background check, credit check, or pull rental history on an applicant, you are operating under FCRA rules. You must get written permission before running reports. You must protect that data. And if you deny an applicant based on what you found, you must provide a standardized adverse action notice explaining why.

Skipping that step is not just sloppy; it’s a federal violation.

Security deposits, lead paint, and right-to-entry

Security deposits are governed differently in every state. Some states cap the amount at one or two months’ rent. Many require the deposit to be held in a separate account. Most set a deadline for returning funds after move-out, typically 14 to 60 days. Miss that deadline or make improper deductions, and you may owe the tenant two or three times the original deposit.

If your property was built before 1978, you are required by federal law to provide every tenant with a lead paint disclosure before they sign – no exceptions.

Right-to-entry rules also vary by state. Some require 24 hours’ notice before you can enter for a non-emergency. Others require 48 or 72 hours. A few states allow landlords to enter without warning under certain circumstances. Entering without proper notice, even for legitimate maintenance, can give a tenant legal grounds to break the lease.

Self-audit question: When did you last review your lease language and screening process against current federal and state law?

Responsibility No. 4: State-Specific Rules That Change Everything

Here is something that catches out-of-state investors especially hard: what is perfectly legal landlord behavior in one state is a violation in the next one.

Arkansas allows landlords to enter a property without prior notice. California requires a minimum of 24 hours. Kentucky caps small claims court at $2,500. Delaware allows up to $25,000. Some states require security deposits to earn interest. Others have no such rule. Eviction timelines, late fee limits, rent increase notice periods, and move-out inspection requirements all differ by state, and sometimes by city within a state.

If you own property in more than one market, you cannot apply the same playbook across all of them. And if you have not checked whether your state updated its landlord-tenant statutes recently, you may already be out of compliance without knowing it.

The self-audit question: Do you have a current, state-specific understanding of your obligations for every market where you own property?

If the answer is no, that is not unusual. But it is a real gap. Start with your state’s landlord-tenant statutes and run them against your current lease and operating procedures. Bring in a local real estate attorney if anything is unclear.

You Can Do Everything Right and Still Take a Hit

So you ran the self-audit. You checked the habitability boxes. Your maintenance is scheduled and documented. Your lease is compliant with state and federal law. You know your right-to-entry rules and your security deposit deadlines.

That is genuinely solid. Most landlords are not operating at that level.

But here is the part nobody likes to say out loud: Compliance and maintenance reduce your risk, but they do not eliminate it.

A tenant gets injured despite your best efforts. A storm causes damage that your standard homeowners policy does not cover because the property is a rental. You lose three months of rent while a vacancy drags on after a covered loss. A vendor working on your property files a claim, and the liability boomerangs back to you.

These scenarios happen to landlords who did everything right. And when they do, the financial exposure lands directly on the property owner, not the tenant, not the property manager, not the city.

That is exactly where your insurance strategy has to close the gap that compliance alone cannot.

And if you are still carrying a standard homeowners policy on a rental property, I want to be direct with you: that policy was not written for landlords. It does not cover loss of rent. It may not cover tenant-caused damage. Perhaps most importantly in the context of this article, it does not cover liability claims that come from tenants. 

Homeowners insurance was built for owner-occupants, not investors. This is the gap that Steadily was built to fill.

Steadily is landlord insurance coverage designed specifically for real estate investors. Not adapted from a homeowner product, nor pieced together from commercial lines. The products are built from the ground up for people who own rental properties and need coverage that actually matches how they operate.

Here is what that means practically:

• Loss of rent coverage. If a covered event makes your property uninhabitable, Steadily helps replace the rental income you lose while repairs are underway.
• Liability protection. If a tenant or guest is injured on your property, your landlord policy covers legal costs and damages in ways a standard homeowners policy may not.
• Property damage coverage. Fire, storms, vandalism, and more, with coverage calibrated for rental properties, not owner-occupied homes.
• Coverage for all rental types. Single-family homes, multifamily, and short-term rentals like Airbnb. Steadily covers them all nationwide.
• Fast quotes with no paperwork nightmare. Investors can get a quote in minutes, not days. Whether you own one door or fifty, the process is built to move at the pace of your business.

Think about it this way. You just ran a checklist of your four core landlord responsibilities. You identified where your systems are solid and where the gaps are. That same mindset needs to apply to your insurance. When did you last audit your coverage the same way you just audited your compliance?

Most landlords have not. They got a policy when they bought the property and have not looked at it since. That is fine when nothing goes wrong. When something does, that is when the policy details matter.

Steadily makes that audit easy. Their team works specifically with real estate investors, which means they understand what you are protecting and can match your coverage to your actual risk profile, not a generic homeowner template.

Time to Close the Final Gap

You have done the work on compliance. Now do the same for your coverage. Get a fast, free landlord insurance quote from Steadily today at Steadily.com. It takes five minutes. And it might be the most important thing you do for your portfolio this quarter.

Investors with a sizable portfolio of single-family homes have been getting it from all sides recently. A new bill is adding yet more fuel to the fire.

Legislation targeting single-family investors comes from a coalition of Senate Democrats led by Massachusetts Senator Elizabeth Warren, including Oregon Senator Jeff Merkley, Delaware Senator Chris Coons, and 15 other Democratic senators. The group aims to end key deductions for corporate entities that buy up more than 50 single-family homes for rent through their bill, The American Homeownership Act.

In a different and bipartisan measure, the Homes for American Families Act, co-sponsored by Republican Senator Josh Hawley and Democratic Senator Jeff Merkley (who is also involved in the Democratic bill), follows a similar theme but aims the bar higher, amending the Sherman Antitrust Act to make it illegal for investment funds with more than $150 million in assets to buy single-family homes, condos, or townhouses, with enforcement handled by the Justice Department’s antitrust division.

“Families deserve to be able to buy their own homes and achieve the American dream without competing with big investment companies that irrevocably drive up housing prices,” Hawley, a Missouri Republican, said in a statement. “That’s why I am introducing legislation to ban Wall Street from buying single-family homes once and for all.”

Could Mom-and-Pop Investors Be Affected?

While the Homes for American Families Act firmly targets real estate heavy hitters through its $150 million in assets threshold, the American Homeownership Act’s target of companies that buy more than 50 single-family homes for rent could infringe upon mom-and-pop investors who have been accruing their portfolios over the years, often buying fixer-uppers in less expensive areas in clusters when deals became available, particularly after the financial crash.

Senate Democrats’ bill appeared to back away from language that seemed to affect mom-and-pop landlords, allowing investors who buy dilapidated homes to claim tax deductions for rehabbing those properties. However, it does not appear to apply retroactively. For landlords who have long held a portfolio of 50 units or more, whether they were once fixer-uppers or not, the 50-unit threshold still holds, according to Realtor.com and others.

CNBC’s description of the Warren-Merkley proposal says the legislation would prevent companies with more than 50 single-family rental properties from taking deductions for depreciation of housing value and mortgage interest payments. Corporations also would not be able to get federally backed mortgages. The bill would also bar Wall Street investors from buying foreclosed homes sold by a federal housing agency, the New York Times reported.

“Today, Democrats are introducing legislation to stop Wall Street from snapping up homes in bulk and jacking up rent for families,” Senator Warren said in a statement. “This bill will take on predatory landlords while making investments to increase housing supply and boost homeownership for Americans.”

The Trump Administration’s Take

The Trump administration first brought corporate single-family homeownership into the spotlight with its proposal banning investors who own more than 100 single-family homes from buying any new ones. Trump’s proposal includes exceptions for companies that increase the number of single-family homes.

This appears to have been amended more recently, according to the Washington Post, with new legislation unveiled on March 2 that includes incentives to build new housing and grants to renovate older housing. Also, the ban on large investors has been expanded to include those owning 350 single-family houses, at President Trump’s request.

The new legislation was spearheaded by Senate Banking Committee Chairman Tim Scott (R-South Carolina) and Senator Elizabeth Warren. The new legislation has been dubbed the 21st Century ROAD to Housing Act. It still needs enough House members to support the plan for it to pass.

Corporate Ownership Is Higher in Sunbelt States

The deluge of bills addressing single-family-home corporate ownership comes as high housing costs have made homeownership difficult for many Americans. Homebuyers need to earn 43% more than the median worker to be able to afford a typical home, according to Federal Reserve data.

Although nationally, large institutional investors only own 3.8% of all single-family rentals, the numbers vary across the U.S. In Sunbelt cities like Atlanta, for example, according to a 2023 Urban Institute analysis, large investors owned about 28.6% of such homes. That number was 20% in Charlotte and 9% in Houston.

“It would make a significant difference in these places, where it’s an outsized issue,” Colin Allen, executive director of the American Property Owners’ Alliance, a homeowners’ advocacy group, told CBS News. “But they own a small share of homes overall.”

The rhetoric from those proposing bills, from both sides of the aisle, barely differs. With midterm elections coming up, this is clearly an issue that all sides want to address.

“Now with bipartisan support, we have wind in our sails to finally crack down on billionaire corporations gobbling up American homes,” Merkley said in a joint statement. 

Supply Is the Root Issue

Pricing wouldn’t be so prohibitive if there were more houses. The supply-and-demand issue is complex and involves land and construction costs, zoning, and possibly immigration and tariffs.

“We have to build more homes and look at policies that allow us to expand supply,” Allen told CBS News.

Edward Pinto, co-director of the AEI Housing Center at the American Enterprise Institute, a nonpartisan think tank, is unconvinced about how much impact curbing large investors’ purchases of single-family homes will have on the ground, making homeownership more affordable for American families.

It “is not going to have much of an impact—if any—on making homes more affordable,” Pinto told CBS News. “It just gives the impression of doing something positive, and so it may have some attractiveness on both sides of the aisle, but it’s not going to solve any problems.”

Final Thoughts

With so many competing bills in the race, it’s unclear which one will cross the finish line. One bill might pass that combines proposals. Given Trump’s position, it seems likely that his bill with a 350-single-family-home threshold stands a good chance of passing.

However, should the other Warren-led bill be approved, and you are an investor with around 50 units, the workaround is quite simple—1031 exchange some of those for two-to-four-unit homes, as small multifamily properties are not under discussion in any of these bills. 

Equally, if you are an investor looking to aggressively scale your portfolio, sticking to small multifamilies will keep you out of the spotlight while you enjoy all the tax breaks that come with real estate investing.

Foreclosure markets tend to speak in stages. Early filings hint at pressure. Auction notices confirm momentum. And when Notices of Sale accelerate, it signals that distress is no longer theoretical—it’s moving rapidly toward resolution.

According to ATTOM Data Solutions, December 2025 marked a major inflection point in the foreclosure pipeline. After a strong but uneven fall, foreclosure auction activity surged sharply nationwide, pointing to a growing wave of properties advancing toward the courthouse steps.

For real estate investors, the Notice of Sale stage is one of the most actionable moments in the foreclosure process. It provides defined timelines, clearer visibility, and a direct window into which markets are likely to produce both auction opportunities and future REO inventory.

December’s data shows that auctions are not only increasing—they are doing so aggressively across several key states and counties as we head into 2026.

National Notice of Sale Activity Jumps Sharply

According to ATTOM Data Solutions, 23,235 Notices of Sale were recorded nationwide in December 2025, representing:

• +25.10% month over month
• +67.99% year over year

This is one of the strongest year-over-year increases in auction-stage filings seen in recent years. While Foreclosure Starts surged earlier in the month, the Notice of Sale data confirms that distress is now maturing rapidly.

In simple terms, this means more properties are advancing past early filings and entering the final countdown to auction.

State-Level Auction Trends: Five Key Markets in Focus

Florida

Florida’s auction pipeline reaccelerated sharply after November’s pullback. Nearly 50% year-over-year growth confirms that foreclosure activity remains deeply embedded in the state’s housing market.

• 1,056 Notices of Sale
• +24.24% MoM
• +49.58% YoY

California

California’s auction activity rose meaningfully in December, particularly after several quieter months. This suggests that earlier filings are now pushing into the sale stage.

• 1,315 Notices of Sale
• +14.07% MoM
• +25.60% YoY

Ohio

Ohio delivered one of the strongest auction surges in the country. Nearly 76% year-over-year growth signals a pronounced acceleration into late-stage foreclosure activity.

• 688 Notices of Sale
• +28.78% MoM
• +75.51% YoY

North Carolina

North Carolina continues to stand out. Auction filings more than doubled year over year, reinforcing its reputation as one of the fastest-moving foreclosure states.

• 610 Notices of Sale
• +12.46% MoM
• +131.94% YoY

Texas

Texas recorded the highest volume among all states. With a non-judicial foreclosure process, auction notices often follow closely behind Starts—making Texas one of the most dynamic foreclosure markets in the country.

• 4,104 Notices of Sale
• +36.35% MoM
• +58.09% YoY

Why the Notice of Sale Stage Matters to Investors

For investors, the Notice of Sale phase represents a critical transition point.

1. Timelines become defined

Once a Notice of Sale is recorded, an auction date is typically set within weeks. This clarity allows investors to:

• Perform focused due diligence.
• Line up capital or financing.
• Evaluate repair scope and exit strategy.
• Decide whether to pursue pre-auction negotiations.

2. Distress becomes actionable

Properties at this stage are far less likely to cure. While some homeowners still resolve their situation, the probability of sale—or eventual REO—rises sharply.

3. Auctions forecast REO inventory

When Notices of Sale increase, REOs usually follow 60–120 days later, particularly in states with faster foreclosure timelines.

For investors who prefer bank-owned properties, auction data acts as an early warning system for future supply.

County-Level Insights: Where Auction Pressure Is Intensifying

Looking beyond state totals, county-level data reveals where the most meaningful auction-stage changes are occurring.

Florida: Central Florida, and urban cores reignite

Florida’s December surge was driven by:

• Orange County (Orlando), which posted a notable jump in auction filings.
• Lee County, continuing its steady progression from Starts into sales.
• Miami-Dade County, which rebounded after a softer November.

Investor insight

Florida’s auction activity is broad-based, with both urban and investor-heavy markets contributing to rising volume.

California: Inland Empire pushes forward

California’s December increase was led by:

• Riverside County, where auction notices rose sharply.
• San Bernardino County, continuing its role as a foreclosure bellwether.
• Los Angeles County, which showed a moderate but meaningful increase.

Investor insight

The Inland Empire remains one of California’s most consistent sources of auction inventory.

Ohio: Auctions accelerate in Central Ohio

Ohio’s spike was concentrated in:

• Franklin County (Columbus), which recorded one of the largest MoM increases statewide.
• Cuyahoga County (Cleveland), rebounding after earlier softness.
• Montgomery County (Dayton), contributing to the statewide surge.

Investor insight

Central Ohio continues to transition quickly from early-stage filings into auctions.

North Carolina: Rapid conversion continues

North Carolina’s extraordinary YoY growth was driven by:

• Mecklenburg County (Charlotte), with a clear increase in scheduled sales.
• Wake County (Raleigh) continues to show elevated foreclosure velocity.
• Guilford County, adding to statewide totals.

Investor insight

North Carolina’s foreclosure pipeline is moving faster than most states, compressing timelines for investor action.

Texas: Volume and velocity

Texas’ December auction surge was widespread:

• Harris County (Houston) led the increase.
• Dallas and Tarrant counties posted strong gains.
• Bexar County (San Antonio) continued its upward trend.

Investor insight

Texas remains the fastest foreclosure market in the country—Starts often translate into auctions in weeks, not months.

How Investors May Use Notice of Sale Data

Notice of Sale data may help investors:

1. Target auction-heavy counties where inventory is increasing.
2. Prepare capital earlier, especially for retirement account strategies.
3. Forecast REO opportunities before they hit the MLS.
4. Align acquisition strategies with clearly defined auction calendars.

For investors using a Self-Directed IRA or Solo 401(k), the Notice of Sale stage offers a balance between urgency and preparation—more defined than preforeclosure but less rushed than the auction itself.

Disclaimer

Equity Trust Company is a directed custodian and does not provide tax, legal, or investment advice. Any information communicated by Equity Trust is for educational purposes only and should not be construed as tax, legal, or investment advice. Whenever making an investment decision, please consult with your tax attorney or financial professional.

BiggerPockets/PassivePockets is not affiliated in any way with Equity Trust Company or any of Equity’s family of companies. Opinions or ideas expressed by BiggerPockets/PassivePockets are not necessarily those of Equity Trust Company, nor do they reflect their views or endorsement. The information provided by Equity Trust Company is for educational purposes only. Equity Trust Company, and their affiliates, representatives, and officers, do not provide legal or tax advice. Investing involves risk, including possible loss of principal. Please consult your tax and legal advisors before making investment decisions. Equity Trust and Bigger Pockets/Passive Pockets may receive referral fees for any services performed as a result of being referred opportunities.

This article is presented by Proper Insurance.

Waterfront short-term rental properties rarely struggle with demand. Whether it is a lakefront cabin, beach house, or riverfront retreat, these homes command premium nightly rates because they offer the kind of experience travelers actively seek out.

But the same features that make waterfront short-term rentals attractive to guests also increase their risk profile.

Between docks, hot tubs, boats, and outdoor recreation, guests tend to spend more time outside and around the water. That introduces liability exposures that many standard landlord insurance policies were never designed to handle.

If you operate a waterfront short-term rental, here are several coverage areas worth reviewing closely.

1. Off-Premises Liability

Many investors assume their policy protects them as long as an incident happens on their property. In many cases, standard landlord policies stop coverage at the property line.

That becomes a problem for waterfront rentals where the guest experience naturally extends beyond it. Guests may swim off the dock, paddle into open water, or spend time along nearby shoreline areas connected to the property.

If an accident occurs in those areas, the property owner can still be named in a lawsuit, and without coverage that responds, they are left to face legal fees and any settlement or judgment on their own, even if the policy does not respond.

Policies designed for short-term rentals address this more directly. The Commercial Homeowners policy from Proper Insurance includes off-premises liability as a standard feature, helping extend protection beyond the physical property when guests are using nearby recreational areas tied to the stay.

2. Amenity Liability

Amenities are often what justify the premium nightly rate of a waterfront short-term rental.

Pools, hot tubs, docks, paddleboards, bikes, golf carts, and small watercraft all enhance the guest experience. They also increase liability exposure.

Many standard landlord policies exclude these features or require separate endorsements. In some cases, owners do not realize the limitation until a claim occurs.

Short-term rental policies are structured with these amenities in mind. Coverage from Proper Insurance extends liability protection to common guest amenities such as pools, hot tubs, bikes, golf carts, and small watercraft without requiring multiple add-ons.

For high amenity waterfront rentals, confirming these features are actually covered is essential.

3. Business Activity Exclusions

Short-term rentals are legally considered a business activity. That can create problems with standard landlord or homeowner policies.

Many include what is known as a business pursuit exclusion. This can void coverage for liability claims that occur during a guest’s stay.

Incidents such as guest injuries, slips and falls, or accidents involving amenities may not be covered under traditional policies.

There is also another exposure many owners overlook: liquor liability. Alcohol is common during vacation stays, but standard landlord policies typically exclude incidents involving alcohol entirely. This includes furnished alcohol — a bottle of wine left as a welcome gift or alcohol remaining from a previous stay. If furnished alcohol is present at the property and is involved in a liability incident, standard policies typically will not cover it.

Insurance designed specifically for short-term rental operations removes many of these exclusions and aligns coverage with how the property is actually used.

4. Business Income Protection

If a covered loss forces your property offline, the financial impact can be significant. This is especially true for high-demand waterfront rentals.

Traditional landlord policies calculate loss of rents based on average long-term rental rates in the area. For short-term rentals, this often underestimates the actual income a property generates during peak booking seasons.

Short-term rental policies approach this differently by structuring business income coverage around short-term rental revenue models instead of long-term leases.

For waterfront properties that depend heavily on seasonal demand, that difference can have a major financial impact after a loss.

5. Additional Environmental Risks

Flood exposure and environmental factors are realities for many waterfront properties, but they vary widely by location.

Risk levels depend on elevation, proximity to tidal water, regional weather patterns, and local floodplain designations. FEMA flood maps can be a helpful starting point, though interpreting what they mean for coverage is not always straightforward.

Other considerations may include wind, ice damage in colder climates, or shoreline erosion. Some events may be insurable depending on the cause, while others, such as long-term erosion, typically are not.

Because these risks vary significantly by location, they are worth evaluating carefully when assessing a waterfront investment.

Final Thoughts

Waterfront short-term rentals can be incredibly profitable investments, but they also introduce unique insurance considerations.

From off-premises liability to amenity exposure and business-related exclusions, many of the risks that matter most to short-term rental owners fall outside the scope of traditional landlord insurance.

Working with a specialist provider like Proper Insurance can help align coverage with how waterfront short-term rentals actually operate, reducing the likelihood of coverage gaps or denied claims when something goes wrong.

Dave:
AI is coming for the labor market, or so every expert seems to be saying from Elon Musk to Jack Dorsey, to Sam Altman, a major disruption in the labor market, one that disproportionately impacts white collar workers could be heading our way. And if it does, it will ripple through the entire real estate market, impacting everything from regional housing demand to rent prices, and yes, even to mortgage rates. So today and on the market, we’re diving into a recent report detailing which jobs are the most likely to be impacted, how this could play out in housing, and what real estate investors should do about it.
Hey everyone, it’s Dave Meyer, Chief Investment Officer at BiggerPockets. Welcome to On the Market. Today on the show, we’re going to dig into what is being labeled the white collar recession. Basically, most of the studies and information that we have are showing that AI is coming for our jobs. Well, not actually all of our jobs, at least not yet, but some industries do seem particularly vulnerable and that really matters for real estate investors and for the broader economy. What recent evidence shows is that we may be at a sort of turning point for the jobs market. And this may not be the type of normal labor cycle that we’ve seen in the past where layoffs are sort of temporary and then they recover when the economic cycle shifts. Instead, we might actually be looking at sort of a generational shift in what industries are hiring, which industries are shrinking payrolls and which are going to pay the most in the future.
And if all of this does indeed happen, the implications are far reaching for the economy and the housing market. So in this episode, what we’re going to do is we’re going to cover first a new report from Anthropic, which is an AI company. They make a tool called Claude, if you’ve ever heard of that. They use their own data to show what industries are being impacted so far and which might be impacted in the near future. We’re going to talk about the current state of the labor market, and then we’ll shift into talking about what this means for housing, what regions and asset classes could be impacted, and what you should do about this with your own investing and portfolio. So let’s get into this. First up, let’s talk about the state of labor market as it stands today. We just got the jobs report actually last week for February, and it wasn’t good.
There’s really no way to mask it. It was a bad report. Non-farm payrolls fell by 92,000 jobs in February alone, and unemployment ticked up to 4.4%. Now, it’s important to remember, 4.4%, still very low historically speaking. A lot of people might point out unemployment rates, not a great metric. It’s not, but it is important that it is going up. I mean, it signals that things are not heading in the right direction. We also saw some downward revisions for jobs from previous months, just making the whole general labor situation a lot less stable. Now, of course, not all industries are impacted the same. Just like in real estate, not every market is impacted by macro trends the same. Same thing happens in the labor market. And we are not seeing uniform weakness. What we’re seeing is particular weaknesses in what are known as white collar jobs.
Never heard of this term. Basically, these are things like finance or insurance or tech or just general business. They tend to be higher paying jobs and they are a big part of the economy. According to some studies, these kind of jobs account for 40% of US GDP, that’s super high, and 20% of all employment. Now, normally, for decades, honestly, these industries added jobs very steadily. Of course, recessions are sort of the exception there, but during normal times, these industries in general were growing. However, over the last three years, they have on net cut jobs despite the fact that the economy has been growing and GDP has been growing. So the idea that white collar jobs are going to be impacted isn’t new. It’s actually a trend that has been developing for years. From 2010 to 2019, these industries were adding a lot of jobs, like 570 jobs per year on average.
But in the last three years, they’re losing an average of 190,000. So that’s a really big shift. You’re talking about a net shift of 750,000 jobs per year. In just the last couple of years, we’ve just seen postings for these kinds of jobs go down from the beginning of 23 to beginning of 2025. White collar job posting fell 36%. We’ve seen software developer jobs being absolutely crushed. They’ve dropped more than twice the overall rate. And it’s not just software developers, business analysts, market research, data entry people all getting impacted. Now, you might be thinking this happens, right? Layoffs happen, and that is absolutely true. They are an unfortunate part of the economic cycle. But there is some reason to believe, both from evidence and just logic that this economic cycle or this cycle in the labor market might be a little bit different. If you look at the types of layoffs that are happening, you see that we’re moving from times where companies would make big announcements, huge layoffs that would happen kind of infrequently.
Every couple of years, they’d announce they’re cutting a couple thousand jobs for a big public company. Now what is happening is that you’re seeing more frequent, smaller kinds of layoffs. People where they’re laying off 50 or 100 people at the time. Now, not all companies are doing this. We’ve seen massive layoff announcement from Amazon to UPS to Starbucks. Those are still happening. But if you just look across some of the trends, you’re seeing more frequent, smaller layoffs in economy-wide. And these are being called quote forever layoffs because they kind of just are cycling. People are constantly worried about their jobs because they don’t know when the next layoffs are coming. And these forever layoffs now account for the majority of layoffs. And that’s why you may not have noticed that this is happening over the last three years. I know a lot of attention is getting called to it now because of AI, but this has been happening for three years.
We should know ChatGPT has been around for about three years, three and a half years, so maybe there is a correlation there. But the reason it hasn’t been so noticeable is that it’s more of a slow bleed. This isn’t an event. It’s kind of something that’s just been happening, and that makes it a little bit harder to track. So why is this happening? Now, I mentioned AI, and obviously we’re going to get into that in just a minute. We’re going to go deep on the AI thing in a minute. But I actually think there are three different things converging here all at once. First and foremost, in 2021 and 2022, companies overhired. Remember how tight the labor market was back then? People were jumping from job to job. People were getting massive raises. There was just not enough labor for the demand during that booming economy.
And frankly, I just think companies overhired. So starting in 2023, about three years ago when we started seeing these things happen, they were just cutting back. Corporate speak, people like to use the word right sizing when they’re laying off because they’re saying they overhired and they’re just getting it back to the right size. I hate that term, but I do think it’s kind of true right now that we are seeing companies sort of revert back to what their payroll should look like instead of what they were hiring for in 2021 and 2022. Then this sort of continued, right? In 23 and 24, we got a lot of automation, a lot of AI, new software, and they found that most companies found that they could just basically keep cutting jobs, even if it’s slowly 20 here, 50 here, a hundred here, they could keep doing that.
And now the third thing is in 2025 and 2026, we’re getting more AI advances that allow them to hire even less or layoff even more, or they’re just anticipating that more AI disruption is coming or AI capabilities, I should say, and so they don’t need to hire as much. And that brings us back to the big news from last week when Anthropic, the AI LL company that makes the product Claude, released a new report using their own data, detailing where they think the labor market is going to be disrupted most. And it’s kind of scary. I got to be honest with you, I looked at this report and I was like, wow, this is really going to change the entire face of our economy if it comes true. Let’s just remember here before I dive into this, this is one company and they’re finding there’s not really evidence that this is happening at scale just yet, but I do think the data is good enough that we should be talking about it.
So I’m going to dive into it. And you actually may have seen this chart. It’s been circulating on social media a lot. I actually put on my own Instagram. You can check that out at the data deli. We’ll also put it in the show notes. But basically it’s this big radial chart that shows two different things. There’s one thing, it’s the blue on the chart if you’re actually looking at it. That shows the potential for AI to disrupt the industry. And then there’s a much smaller sort of red area on the chart, and that shows where AI is actually being disruptive here today. And when you look at this chart, you see that the potential for disruption is just massive, at least according to anthropic in certain industries. When you look at business and finance, tech, legal work, arts and media, office admin, architecture, engineering, sales, life and social science, all of these are showing that the majority of their work can be done by AI.
That is a little bit scary, right? We are seeing huge numbers of industries that potentially could be completely disrupted. Now, I think it’s important to call out that that red section where we are seeing, is it actually disrupting? Not really. Most the biggest ones are sort of in tech, business and finance. They’re saying about 30 to 40% maybe disruption at this point, but they’re pointing out that that could get much bigger. But again, really important to call out that the disruption is not happening yet. What I take away mostly from this report is that they’re saying they think that these industries may be entirely disrupted by LLMs. Now, they’re not saying 100% replacement of humans, but they’re just saying there’s going to be a lot of overlap between what an LLM can do. That’s a large language model that’s something like ChatGPT or Claude where you talk to it, that a large language model can do and what a human can do.
Now, the reason this is sort of perpetuating the fears of a white collar recession is because the industries that I just named are basically the highest paying industries out there. The most at-risk workers earn 47% more on average than workers with no AI exposure and tend to have graduate degrees or advanced degrees as well. Now, if you look at the other end, the income spectrum, it’s totally different. It is not really hitting industries like construction, agriculture, healthcare, manufacturing, transportation. All of those, at least Anthropic is saying their tool clot based on what they’re seeing, how people are using it, what is required in those fields, at least as of now, they’re not likely to be impacted. Remember here, we’re talking about large language models. These are like the question and answer talking format things that you see in ChatGPT or Claude or Gemini or whatever.
We’re not yet talking about robotics. That might be in a year or five years or 10 years. I don’t know, but we’re not talking about robotics. So just keep that in mind. So big picture here, white collar industries likely to be impacted according to Anthropic, other industries, lower paying industries, more of the trades, those kinds of things not going to be impacted by LLMs anytime in the near future. Now, of course, not all of this has played out yet, but we are starting to see some declines in hiring, but as of right now, it is mostly hitting younger workers, not due to layoffs, but due to declines in hiring. They’re actually seeing, I saw some data that there’s a 16% fall in employment among workers age 22 to 25 in exposed occupations. And that’s basically what Jerome Powell has been saying. If you listen to the Fed chair, he’s been saying that we’re in a quote, no hire, no fire economy, because layoffs haven’t been huge.
Like I said, we’re getting this slow grip of layoffs, but not these huge events or cliffs where there’s massive layoffs all at once. Sure. Individual companies are doing that, but if you zoom out and look at the whole economy, we’re not seeing mass waves of layoffs across tons of different companies at the same time. So that’s why it’s been described as this no hire, no fire economy, which is where we are today. But if you believe this data and you look at some of the trends, they’re suggesting that things could get worse and unemployment might go up. Now, I want to remind you all too of something that I’ve been saying for a while, why I’ve been fearful about the labor market and been making episodes about this because one, it has a lot to do with housing markets, which we’re going to talk about in a minute.
But I also believe that the nature of this economic cycle of what’s going on in the labor market is not really something that the Fed can fix. We talk about this all the time. “Oh, the Fed, they should lower rates so that the labor market does better.” I don’t know. I don’t really think companies are all of a sudden, if you lower the federal funds rate by 50 basis points, are they all of a sudden going to be like, “You know what? I’m not going to use Claude, not going to use ChatGPT. I’m going to go hire someone again.” I don’t think so. I just don’t see that happening. Normally, the Fed lowers rates to encourage companies to expand and hire, but is that really going to matter if jobs are being replaced with AI? Hiring is not slowing because interest rates are high, in my opinion.
There are in some and maybe in manufacturing, maybe in some areas, but personally in tech, I don’t really see that as the reason why hiring’s slowing. And I just think it’s more because either AI is disrupting things or companies are banking on AI disrupting things. So I find this report fairly compelling, and it’s not this alone. I’m looking at this just logically. I have a lot of friends who work in tech or in white collar jobs. If you combine this with the trends that we’re seeing in employment, the revised down jobs numbers over the last couple of years, this report and just logic. If you just use an LLM, you can see that this is going to replace some level of work, right? I believe that this is something that we should prepare for. Is it going to happen exactly like this? We don’t know.
Probably not exactly like this either, but it is something I think we should at least be talking about and preparing for. So after this quick break, we’re going to talk about how this could spill over into the housing market and what you should do about it. We’ll be right back.
Welcome back to On The Market. I’m Dave Meyer today talking about the potential for a white collar recession. We talked before the break about jobs data that we’ve gotten in the beginning of this year and a report from Anthropic about what industries could be impacted the most. So in this next section of the show, we’re going to presume that Anthropic is right, and we’re going to see rising unemployment in white collar industries. Now again, we do not know if that’s going to happen. The unemployment rate overall remains pretty low, but I believe that there is risk. I’m not freaking out, but I do think there is risk here and it’s something we need to watch and it’s something we need to talk about the potential consequences of. So let’s get into it. In a scenario where job losses mount in these white collar industries, the way I see this could possibly spill into the housing market, sort of like the order of operations, the mechanism for how it could move into housing is first and foremost, sales volume is probably going to drop because buyers step back.
If all of a sudden we see a lot of layoffs, this is what happens anytime there’s large increases in unemployment, we see sales volume drops. Then we’ll probably see lenders start to tighten their credit, right? They won’t be as willing to give mortgages to people who might be losing their jobs that can negatively impact the market. Sellers could start selling, but I think they’re probably more likely to cling to their low rate mortgages unless they are forced to move because as a reminder, just the way things have gone in the last couple of years, for a lot of people, paying your mortgage is cheaper than renting. So it doesn’t really make sense to panic, sell your house and then move into a rental if you’re just going to be paying more. So I do think that’s an important thing to remember here that sellers, unless they are forced to sell, are likely to hold onto their homes.
We’ll definitely see days on markets start to rise as demand drops and credit tightens, and we’ll probably see prices decline. Not everywhere, of course, but in areas with high concentrations of white collar workers, I do think we will see price declines in those market if this all plays out. And I think it’s important to remember that what I just said, those things happening would be happening in addition to a market that is already slow. We saw pending home sales fall 6% year over year through February 2026, and it was already slow in 2025. That was the largest decline we have seen in a while, the typical home now taking 67 days to go under contract, which isn’t crazy, but it’s a week longer than it was last year, and it’s the slowest it’s been since 2019. We also, before unemployment goes up, our seed people worried, right?
Two thirds of people in a recent survey said that they’re either somewhat or very worried about possible jobs cuts in their workplace in the next year, and over 60% were worried about losing their own job or having their hours reduced. And so if you just look at these things, I think there is a chance unemployment goes up, but the fact that people are fearful alone is already suppressing transaction volume even before those actual job losses could potentially accelerate. So just remember that we’re starting from a very slow point and it could get even slower. So my main thing is that it will probably suppress overall demand in the housing market, but I also think it could really impact one of the more active parts of the housing market right now. We’ve talked about on the show, I’ve done whole episodes on the quote unquote K-shaped economy that basically wealthy people are spending a lot of money, people on the lower end of the income spectrum are not spending a lot of money, and that is reflected in real estate too.
We see luxury homes selling pretty well right now, high income people still buying houses. And if the professional class for these white collar workers that sort of anchor the, let’s call it the top half of the K, it’s not half, but let’s call it like the upper leg of the K, it’s usually about 20% in most analyses, 20%, if that starts to erode, the upper tier of housing market could start to lose its floor and start to drop down a little bit. And again, transaction volume will be impacted as well. So just keep a lookout for those things if demand starts to decline. But don’t freak out just yet because demand going down, this is what people on social media and YouTube often get wrong, is that demand going down does not mean a crash. And there are important things to remember here on top of just demand.
First is supply, right? You got to think about which way supply is going to go. Now, a lot of people might say people are going to panic sell their homes and there is a chance that could happen, but I actually, where I’m sitting right now, I think supply could go either way. I think it’s possible that inventory actually goes down. If people are scared, they don’t want to move, they don’t want to rent a house that’s more expensive than their current mortgage, that could actually lower total new listings and that could offset lower demand. That would lower transaction volume, right? When demand and supply shrink at the same time, that can lower transaction volume. It does lower transaction volume, but it means that pricing could actually stay stable. It might fall a little bit, but it’s not going to go into any sort of free fall.
So I think that is a very likely scenario that we see even if demand declines. Now, of course, it could go the other way. I think if things get really ugly, if we see a huge spike of employment, as I’ve been talking about for a while, I remember at the beginning of the year I said I thought there was about a 15, 20% chance of a crash, and that would happen if we saw a huge spike in unemployment. So if we see a spike in unemployment, we could supply go up. People start to panic, they can’t make their mortgage payments. That’s when we see the potential for bigger price declines. Not going to say a crash because I think it’s far too early to predict anything like that. We don’t really have any evidence of force selling right now, but I do admit that the risk of bigger price declines happens to be going up.
I said last week on the show, I think it’s gone from about a 15% chance of a crash to about a 20, 25% chance of a crash. And I’m saying 10% price drops or bigger, but I think the risk that we see two to 5% declines is pretty high, but that’s what I predicted back in November before any of this data came out. So I think that correction, probably still the most likely outcome. But just want to remind you all, keep an eye on the supply side because that tells us where prices are going. You can’t just look at demand in a vacuum and say what’s going to happen. You have to look at both. And I think what will happen with supply depends on how severe. If we see unemployment hit eight, nine, 10%, probably going to see big declines in the housing market, but we’re a long way away from that.
We’re at 4.4%, and although eight doesn’t sound that different, it’s very different in a historical context. 8% unemployment rates are very rare, and although it can happen, it doesn’t look like we’re imminently approaching that. So that’s number one thing to look at in addition to demand is the supply side. The second thing to remember, super important here, is mortgage rates. If there is a huge increase in employment, and we see a traditional recession, or even if they don’t call it a recession, because I think that’s stupid, but whatever they decide to do, if we see a big increase in unemployment, it is probably going to bring down mortgage rates. That is the one thing other than quantitative easing that could really bring down mortgage rates in the foreseeable future. Because fear of recession caused by higher unemployment will probably send bond yields down as investors seek safety, and that takes mortgage rates down with them.
How low? I don’t know. I really don’t know. It depends on if the Fed does quantitative easing. If things get really bad and they do quantitative easing, we could see mortgage rates in the fours, maybe in the threes, but I do not think that is the most likely scenario. I think instead we could see bond yields fall into the low threes. Maybe we get mortgage rates towards five or potentially into the high fours. Depends how bad the recession gets. I’m not telling you this though to make predictions about mortgage rates. I’m sticking with my mortgage rate prediction for the year right now, but I am just saying some of the potential downside in the housing market of big job losses could be offset by higher general affordability due to lower mortgage rates. This is one of the reasons why I think a crash is not the most likely scenario still and why I still think a correction is more likely because even with lower demand, things like lower supply and lower mortgage rates could offset some of the impact of that unemployment.
So just keep those in mind. Those are the three variables we’re going to watch, supply, demand, and mortgage rates. And even if demand goes down because of high rising employment, we got to keep those other two factors in mind. But as we all know, even if all of this happens, not all markets are going to be impacted the same. And when we get back from this short break, we’re going to talk about which markets are at risk, which ones are the most resilient and what you should do about it.
Welcome back to On The Market. I’m Dave Meyer talking about a potential white collar recession and what it means for the housing market. And before we get into some of the regional differences that we are forecasting and get into those geographies, I think I’m just going to state the obvious. I kind of mentioned it before, but if we’re talking about where the risks are, where the opportunities are, I just want to say that the higher end of the market could be impacted, right? If white collar workers are getting laid off disproportionately, more expensive homes are the ones that are going to get hit the hardest, right? So just keep that in mind, more sort of workforce, starter home kind of homes probably going to be relatively more resilient, but personally, I think the regional differences are the real things to pay attention to. The housing impact, I think, is going to be felt first and foremost in cities that have really high concentrations of tech employment or white collar employment, where the proportion of people who work in these white collar jobs is high.
In these markets, home prices could fall. Now, I am not going to make predictions generally about all of them, but I do think that we could see single digit declines in the mid single digit declines in a lot of these markets. These are markets like Washington DC and Chicago, Dallas, Boston. We actually, if you look at the data, you could see that in these kinds of markets between the beginning of 2023 and the beginning of 2025, they had some of the highest proportion of declines in job postings for white collar jobs. And there are jobs where the overall labor pool is disproportionately built on, unfortunately, the jobs that are at risk. In addition to that data, I’m just going to call out two markets in particular, Seattle and San Francisco. These are two of the biggest, if not the biggest tech hubs in the country.
You actually don’t see them on the list. Maybe because they are sort of home to the biggest AI companies like both of these cities, home to Amazon and OpenAI and Meta and Google and Microsoft, and maybe there’s less anticipated impact because they also are the core of the AI boom. But personally, I live in Seattle. I think there is still risk in these markets. You’re seeing Amazon lay off 30,000 workers, that’s going to impact Seattle where Amazon is based. So I think all of those kinds of markets, I think you would be remiss not to mention places like New York as well, big tech finance concentrations as well. So a lot of those big major markets, but also the Sunbelt too. I think the Sunbelt continues to see compounding problems, right? They have been struggling for a while due to rising prices, to increased insurance costs, all this rising taxes, all this stuff is going on.
But also partly because all of these pandemic era remote workers that moved to Florida or to Texas or to Arizona, a lot of them have had to return to office, which has reduced overall demand. And now that the remote work migration is sort of reversing, that could accelerate it, right? If you’re seeing white collar workers, even the ones who can still work remote, if those people start to lose their jobs, this would probably accelerate the correction in a lot of Sunbelt markets that are also oversupplied right now. So I do think those markets are at risk as well. Now, the markets that I think are most insulated, I think are markets that are mostly focused on the trades or healthcare heavy metro areas. These are small mid-size cities that are sort of affordable rents that I talk about all the time. Affordability is going to drive the housing market.
And I think that this is true because we see a lot of markets like Columbus or Indianapolis or Cleveland or Kansas City, they have employment bases that are concentrated in healthcare or manufacturing or logistics or the trade and have lower overall exposure to AI displacement and they happen to be more affordable. So I think that those are going to be the most resilient markets. These are a lot of the markets in the Midwest and some in the Northeast. I’ll call out a couple of sectors here. I think personally, healthcare is a really good thing to look for if you’re trying to find markets that are going to be resilient. Healthcare, pretty key defensive sector. If you look at the jobs numbers over the last couple of years, it’s the largest growing area. I think there’s a lot of tailwinds there. If you look at baby boomers aging, there’s probably going to be a lot more hiring in healthcare as well.
And those are pretty high paying jobs that aren’t likely to be disrupted by AI in the short term. So that’s sort of how I break down regional differences. I also want to just mention that I said at the beginning of the year, I know a lot of people are forecasting rents going up, but partly because of weakness in the labor market, I said,” I don’t think rents are going to go up. “You might remember, I was debating my old boss and friend, Scott Trench about this where he said he thought we were going to see massive rent growth in the back half of this year. I just don’t think so. I really don’t think so. If we’re going to see job losses, even if people are fearful they’re not going to stretch for a more expensive apartment, I think we are going to see very soft rents across the country, and that’s something I think every investor should be paying attention to, which brings us to our last section here for the day, which is what this means for real estate investors and what you should do.
Because I obviously just talked about regional differences, but as I’ve talked about, you can invest in any market. So here’s what I would recommend you do given all this information. First and foremost, you must watch your own market carefully. We talk about it all the time from the beginning of the show for four straight years, we have been talking about this, but you need to do your own research. We talk about regional trends on the show, but we can’t talk about every single market. So what you need to do here, I’ll give you some specific data sets you should be looking at. Number one, delinquency rates in your own market. If those start to go up, if you start to see forced selling in your market, that is a red flag, a major red flag that prices are going to go down and that you could see significant price drops.
The second thing to look at are layoffs. You can look at something called unemployment claims, initial and continuing unemployment claims. You can Google all this or ask ChatGPT to pull this up, ask Claude to pull this up, even though it’s going to steal your job after it does it, but you could go ask them. Look at them in your area and then look at rising inventory. If you see rising inventory, rising delinquency rates, rising layoffs, that’s a recipe for price declines. I think most markets, what you’ll see is that inventory is going up in a lot of Sunbelt Western areas. Delinquency rates are low though. That’s good. So you’re probably going to see more muted declines, more muted corrections. I’ve been saying this for a while, but I stand by that. But do the research and look at this for yourself. Markets that have low AI exposure and good affordability, carry on.
If you’re in a market like Kansas City or Cleveland or Columbus, AI exposure is low, inventory is manageable. Jobs keep coming to those areas. Do what you’re doing. You don’t need to change much because even though the headlines might be scary, your area might not be impacted. Now, of course, the opposite is also true. Markets with high exposure, low affordability. I’d be very careful in acquisitions, right? Because in those markets, I would underwrite falling prices. I would underwrite slow or no rent growth, and I would be very careful. Now, of course, that means there’s going to be better deal flow though.This could also turn into really interesting opportunities because remember, there’s a flip side to every risk, which is opportunity. And some of these major markets that may have not be permanently impacted, think of a market like Chicago. They might see a little blip here, but Chicago is a big dynamic economy that will probably start growing again.
Or a market like Boston, right? Huge concentrations of medical and big pharma and those kinds of jobs. So could it go down in the next couple of years? Yeah. Could there be opportunities to buy at a discount? Also, yes. So in those markets that are going to be impacted, you need to be very careful in acquisitions. But I would keep a close eye for opportunity because I do think there’s going to be good assets for sale if all this comes through fruition. The last thing I’ll remind people of is be careful on the higher end of the market. I think this is going to be true most places, but every market has some level of white collar workers. And if this stuff that Anthropic is saying comes true, if we see this white collar recession, I’d be careful at the higher end of the market regardless of what market you’re in.
So be careful there. But also remember that the other segments of the market might have a lot of opportunity. B and C class assets are probably still going to do pretty well in terms of prices and probably will still see really good rent demand. You actually might see more rental demand in these kinds of markets where people don’t want to get into the housing market. So I think that these are areas to focus your attention. This is, again, not in every market, but just generally speaking, if you look at the national trends, B and C class assets for rental properties are probably going to do pretty well. Flipping, not my area of expertise, but I would generally believe that flipping is going to do better in that entry level starter home category than in the higher ends of the market. And so I always say this, but you can invest in any market.
Just be smart about what you do. And I think being in these markets that are resilient against AI disruption and staying in that B2C class area of the market instead of the high tiers in the market are the best things that you can do for your portfolio if these trends continue. Again, we don’t know, but the trends are there. And if they continue, these are some things that you can do to keep growing, keep profiting as a real estate investor, even if they do happen. So that’s what we got for you guys today. Just some closing thoughts. To sum this up, I’ll just say the white collar softening in the labor market, it’s real. I think it’s structural. I think it’s probably here for a while. I don’t know what it means. I don’t know if that means it’s permanent or we’re going to start to see different kinds of high paying white collar jobs emerge in the next couple of years.
We just don’t know. But the data shows that the white collar labor softening started before or around the time of AI and it’s actually just accelerating. The second thing to remember is that I don’t think the housing market has priced this in yet because it’s a lagging indicator, right? People are fearful, but they haven’t really lost their jobs. And I don’t think housing has been really impacted by that yet, but it could come in the coming years. This is one of the reasons why at the beginning of the year, I said that prices could, will probably … I forecasted price declines in the national housing market this year, and this is one of the major reasons for that, not just affordability, but softness in the labor market. Third thing to remember, geography is going to be really big. The forces that are going to impact Seattle or Austin or San Francisco, not going to matter that much in Kansas City or in Cleveland or in some of these different markets.
So remember that where you’re investing is going to dictate your strategy. And the last thing I’ll say is, remember, this isn’t 2008. Could prices go down? Yes. Could a crash happen? Also, yes, but it still remains less likely. I think the correction that I’ve been talking about for years remains the most likely scenario because equity is high. People have a lot of equity in their homes. Lending has been very tight. Forced selling, there is no evidence of it. And even if it comes, it probably won’t come in the wave. Demand erosion that could happen is probably going to be in that upper middle tier of impacted markets. And that could bring down prices in general, but it’s not going to strike everywhere. The chance that this prices go down 10 or 20%, it’s there. I’m not going to pretend that it’s not, but I do not believe that it’s the most likely scenario.
I think a single digit correction is still the most likely scenario, but we’re just going to have to wait and see. We are in such crazy uncertain times. I know I’ve been saying that for four years of hosting this show. We started during COVID. Now we have AI disruptions. We have a war in Iran. There is so much uncertainty. And so the key thing here is I’m telling you where I see things as I sit here at my desk today, but I am not going to hold any of these predictions precious. If I think that I was wrong, I will change my opinion and I will let you know. I look at data literally every single day for hours, every day. And my goal here is not to be right retroactively, it’s to be right going forward and to give you all the information that I can as soon as I have it.
As of right now, I do think there’s risk to the labor market. I don’t think that means there’s going to be a massive crash in the housing market. I think certain markets will be impacted, but overall, the correction, the single digit correction is still the most likely scenario. If that changes, I will be sure to let you know. Thank you all so much for listening or watching this episode of On The Market. I’m Dave Meyer and I’ll see you next time.