Ashley:
What if the scariest part of your first real estate deal isn’t the numbers, but the moments you actually have to wire the money and commit?

Tony:
Today we’re answering three questions from the BiggerPockets Forums that hit exactly where Ricky’s are filling the most pressure, closing on your very first deal, investing in a market where sales are slowing down and figuring out your after repair values when you’re investing from a distance.

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

Tony:
And I’m Tony J. Robinson. And with that, let’s get into today’s first question. So our first question today says, “I’m closing on my first investment property tomorrow afternoon. Congratulations. That’s what every single person listening to this podcast wants to gets to. ” So he says, “I’m closing on my first investment property tomorrow afternoon. Sweaty palms, you bet. It’s a small property, only a duplex, and not a large dollar value. But when I looked at the closing statement and saw the out of pocket I need to wire tomorrow morning, reality started to hit. On paper, the numbers work. I walked through it with many people that I would consider advisors, but deal analysis to reality is tomorrow. I’m pretty excited and nervous at the same time. So here’s a question. It says, think back to your first deal. What were some of the challenges you didn’t expect out of the gate as a real estate investor?
I’d love to hear some stories. So first, this is major, right? It is a little scary when you’ve got to wire in those funds for that first deal, but it’s a big moment and it’s a culmination of a lot of hard work. And regardless of where this first deal goes, you got to give yourself some credit for being a member of the BiggerPockets community who doesn’t just consume content, but actually turns that content into action and into a first deal. So when I think back to my first deal, some of the challenges … I got to say, all in all, my first deal was actually a pretty smooth first deal. I found a property that needed to be renovated, and I was doing this all remotely. I live in California. The property was in Louisiana, and the renovations went relatively smoothly. There were no big gotchas, or we were actually pretty spot on with the budget as well.
So I got pretty lucky on my first renovation. I had a great property manager, and they found me a pretty solid tenant who was there for the entire … I think I owned that deal for two years and had someone in there for the entire two years that we owned that property. It was a pretty uneventful first deal. I didn’t make a ton of money off of it. I think I was cash on 150 bucks a month after all my occupancy or vacancy and expenses and property management fees, but it taught me the ropes. So I really can’t think of anything for my first deal, Ash, that was a big gotcha. What about for you?

Ashley:
The really big gotcha, I guess, was we had done our homework, we had gotten quotes, and we were going to put a split unit in the upstairs for the heat and the AC. And when it actually came time to install it, the HVAC company said, “You actually don’t have enough amperage for your electric and you need to upgrade your electrical panel.” And that was about an $800 expense, which that was a lot of money for me to not be prepared for. And so that was something really unexpected that happened, but we actually did everything right. And it was really the company that we worked with that they should have told us that when they came out to quote the job and not wait until it was installed for somebody to realize that it wouldn’t work out that way. So that was a big thing that was frustrating is we did the right process, but there still was a hiccup and that’s why I preach reserves, reserves, reserves are so important to have.
The next thing is I would’ve put in a lot more maybe software and tools right away instead of a lot of pen and paper and QuickBooks. I would’ve used a property management software right away with my first tenant instead of just having them mail a check, entering it into QuickBooks and having them text me or call me for maintenance requests and things like that. So that was a challenging when I accumulated several properties as to making the switch where it would’ve been so much easier to just implement that from day one and then here you go, here’s my process for paying rent through … Right now I use Turbo Tenant paying through there and this is how you do it. Instead of having tenants just switch after they were already used to a certain method of paying rent and submitting maintenance requests.

Tony:
Yeah. I’m thinking not just my first deal, but just other mistakes that I’ve made as a real estate investor. And I grew up in an area where everything is like city, sewer, right? So like I’ve never dealt with a septic tank before. And the first property that I bought, the first short-term rental that I bought in California was on septic. And I did not do a septic inspection. And a few months into owning this property, and this is a short-term rental, I get a call from a guest who’s very pleasant and polite, but says, “Hey, there’s some brown liquid coming up from the bathroom and the shower.” And it’s because the septic was backing up. And it turns out the septic was a massive need of a pump, right? It hadn’t been pumped out for a while. So now every time that we buy a property that’s on septic, one of the things that we do early on is check the septic, right?
We do a septic inspection. And we’ve actually had deals where there was a property that I purchased where there was no septic. And this is a big renovation job, but there was no septic. It was like all of the plumbing was just like going out into the dirt. And had I not had that experience beforehand, I probably wouldn’t have caught that. So I think one of the big things that I would ask, and obviously you’re pretty close here, but just this is for all the rookies that are listening, is for whatever area you are in, ask your agent like, “Hey, what are some of the inspections that are maybe not common nationally, but that are common to this specific area that I should know about to make sure that I’m not stepping into a bigger problem down the road? Or for this age of home or for this part of town or for this structure, whatever it may be, and a good agent should be able to kind of point you in the right direction there as well.”

Ashley:
And then just doing a home inspection and walking through with the inspector, going through each item on the list. And I always ask their recommendation or if they have anybody that they recommend to do the repair work, if they have an estimated cost that they see, but that would take for that. And then I also have them prioritize like, “Okay, what are things that need to be fixed right away? What are things that need to be fixed within the next year do you think is going to die within the next year?” The HVAC system, the hot water tank. And so it’s kind of like immediate within the next year, then five years and then maybe like a 10 year thing like the roof, you probably got another 10 years on the roof or something like that. And I’ve always found that really helpful in kind of like helping me estimate my repairs, but also my CapEx and then also what I want to negotiate with the seller too.
So for a property right now that I have under contract, we negotiated there was mold in the attic. So having them remove all of the mold, the vents for the bathroom or actually venting into the attic and that was part of reason for all the mold. So having the vents redirect to the outside and then there was just a couple other like little miscellaneous things that we had them just take care of that things that we didn’t want to have to deal with.

Tony:
That’s actually a really good point, Ash, about like thinking about your repairs and renovation during that window as well. I think we’ve heard from a lot of Ricky investors that they close and then they start to like try and plan out what their renovation schedule looks like, but then you’ve lost like a week or two weeks or sometimes more by waiting until you close. Ideally, if you’ve got like a renovation project going on, which you didn’t say in this question, but if that is the case, you want your demo to start on the day that you get your keys, right?

Ashley:
That dumpster dropped right off.

Tony:
Right off, right? Because otherwise you’re eating up a lot of holding costs by just trying to plan things out. So even for us, even if it was a short-term rental, we would sometimes start purchasing the furniture before we even close on the deal because sometimes a couch, there could be a three week lead time on the couch alone. So we would even pre-order some of the furnishings for our short-term rentals or like flooring if it’s a renovation. We might purchase some of that beforehand if there’s a long lead time in this specific tile that we want for the bathroom showers, knowing that obviously there’s a chance that maybe we don’t close and then we’ll have to go through the household trying to get that stuff returned, but better to have all of that material sitting in the driveway on day of closing so renovations and demo can start all on day one.

Ashley:
And not even just to have it furnished, but also you can’t even list it until it’s furnished either. So you’re not going to take a picture of your empty living room with no couch and list it on Airbnb. You need to have the house complete to give your accurate photos to the listing to put up. So that’s like an even bigger thing with short-term rentals is like you can’t even start accepting bookings until you have your pictures with all of your furnishings in it. Okay. Well, coming up, we’ll break down what actually surprises investors after their first closing, the stuff that no spreadsheet prepares you for and how to avoid the most common early mistakes. That’s right after a quick word from our sponsors. Let’s zoom out from that first deal because once you’re in the game, the bigger question becomes how to adjust when the entire market feels off.
So this second question says, reports indicate 2025 is on track to be the worst year for home sales in US history. Based on a news article I saw recently with buyer activity way down. For active investors, how are you adjusting your strategy? Finding better deals because of less competition, pivoting from flips to rentals, holding longer than planned, offering seller financing to make deals work. Would love to hear how seasoned investors are navigating this unusual market. Okay. So the first thing I’m thinking of here is my own market, and there’s nothing for sale. There’s literally nothing. I actually am listing a duplex for sale right now, and I think that it’s actually going to sell just because there is literally nothing you could buy in that market. I literally think that it’s a smaller town, but there’s one other property for sale. And I also have an apartment for rent in that same town, and within 48 hours, I received 37 leads of people interested.
I had to open up more showing time because it was so booked. So I think just because there’s not a lot of transactions going on in the market doesn’t mean that there aren’t pockets of areas where deals can happen. I saw a Facebook post where somebody asks, “I’m looking for a home, my family’s moving to the area. Does anyone have anything for sale? We can’t really find anything right now.” So many people commented listing in the spring, listing in the spring, listing in the spring, DM me for details, DME for details. And it was like, okay, we’re going to get that spring surge again. And I think that will kind of give us more of a feel of what’s actually going on in the market because then if you get flooded with these listings again and they’re still just sitting there, even if they’re decently priced, then yeah, that’s more opportunity for you as a buyer to go in and make these low ball offers for people that have to sell their house, that need to sell their house.
So I think it’s hard to gauge. I think looking at the news and what they say is going on nationwide, I think is very different. And you need to look at your market specifically as to what is happening with property sitting days on market, looking at how they are priced. Are the properties that are sitting on market, are they the ones that people are still listing them for 2021 prices that people could get when the market was crazy? And then also make sure you’re looking at pending. Click that little checkbox in Zillow so you’re not just seeing sold houses, but you’re seeing the pending and you can go and you can look at the history of that property to see when it was listed and when it went pending. There could be a bunch of decent houses that are actually selling pretty quickly. And I’ve seen that also in my market where if a property is decently priced and a lot of grandma houses are selling where they’re great bones, but they’re not renovated at all, they’ve got the old shag carpet, but like great condition and great shape, those sell like that in my market.
Or if they’re like somewhat renovated and like three beds, two baths, those are also selling very quickly. It’s more of the properties that need rehab that are sitting, more of the small multifamily that’s sitting, and also like larger properties that aren’t renovated or updated at all.

Tony:
Yeah. I think there are a few things that happened in 2025 that were somewhat unique. First is that we had this combination of prices continuing to increase while mortgage rates remained elevated. And because of that, we had affordability challenges and that somewhat limited the potential buyer pool because homes were just more expensive, right? So affordability, I think continues to be a challenge for a lot of folks looking to buy homes. And obviously for us as investors, increased prices and increased rates can also squeeze our ability to produce cashflow on traditional single family homes. And I’m talking nationally, right? Every market kind of sees a different breakdown locally, but just nationally is what we saw. There’s also what’s been called like this lock-in effect where there are a lot of homeowners with really low interest rates, think 4%, 3%, some even below 3%, who have no intention of ever moving or selling their homes because they don’t want to trade their 3% interest rate for a 6% interest rate, right?
Even if they bought the same house, that’s a significantly more expensive payment for them. So if they want to move up to a bigger home, it’s even more of a challenge for them. So there are still a lot of sellers who are sitting on the sideline because they don’t yet feel that they can afford to move up because of where rates have gone. So it’s this weird thing where there’s this affordability challenge. There are sellers who don’t want to sell. There’s a lot of buyer demand, but they’re kind of stuck on the sidelines and all these things are kind of coming together at the same time. I think all of that has changed what it means to be a real estate investor in 2025 and now going into 2026 and beyond. Like for me, I know Ash and I both had properties that have sat for a lot longer than what we wanted.
And we’ve interviewed other investors in the podcast, Henry Washington, Dominique Gunderson, both of them talked about their flipping business and what that looked like this year. And they saw volumes decrease because they just simply weren’t getting as many yeses because they were underwriting more conservatively. So maybe that’s what it looks like. The volume took a bit of a step back in 2025. So you’ve got to be more disciplined in your underwriting. You’ve got to have the courage to say no to a deal and not just get so deal happy that you start saying yes to things or kind of fudging your numbers to try and make them seem more reasonable. But I don’t think that you stop being a real estate investor. We also interviewed Thatch Wynn and James Dainer and that episode just recently aired and these are folks with multiple decades of experience in real estate investing.
And their biggest point of that episode was, it doesn’t matter if the market is up, it doesn’t matter if the market’s down, you still keep doing deals. How those deals look and what those deals look like and your criteria might shift and change, but we don’t stop being real estate investors simply because the market is a little bit stickier than it was before because a lot of times it’s in these moments where the big wealth is really made. So 2026, we’ll see what the year looks like. I think there’s a lot of anticipation that rates might continue to come down. I think it was maybe last week or so. We’re recording this in late January, and I think it was like last week that rates had hit a recent low. So maybe we’ll see that again as we get into 2026. But I think the goal for you is how do you still find deals that meet your investment criteria?
And it doesn’t matter what the market’s doing. If the deal matches what it is you’re looking for, then move forward with the deal.

Ashley:
I actually just emailed my lender last night and I had gone through the loan process, I think it was in December, early December, and then the closing has been delayed on the property because of the mold, the remediation and everything that the sellers are doing. And so I emailed them and I said, “I’m just wondering, has my interest rate gone down? Can I get a better rate now because our rates have changed since I started the loan application process.” So he hasn’t emailed me back yet, but I’m going to keep harping on it. And the rate lock actually expired on it because of the timeframe anyways. So I’m really hoping that I can even get a better rate on this deal.

Tony:
I was talking to an investor recently and they were able to get a couple of point reduction on their rate because I think they opened up a credit card with this local credit union or something. But either way, they told me that their rate was like 5.75.

Ashley:
On an investment property or their primary?

Tony:
On an investment property.

Ashley:
Wow.

Tony:
And I was like, “I haven’t heard anything below a six in a while.” So the fact that there were some banks out there, different incentives, whatever it may be, that are getting people below sixes, I think that’s going to start to open up a lot more demand as well.

Ashley:
Yeah. And I think I’ve seen just for primary residents, the rate around 5.8, I think is the lowest that I saw even just for your primary, which is usually lower even than an investment. But I think it was Dave Meyer who had talked on the podcast one time about, he opened an account with Wells Fargo or something. And because he had a brokerage account with them, I can’t remember specifically, they actually gave a discount on the interest rate too if you did a loan with them too. Yeah.

Tony:
And that’s just a good thing to ask guys. And this is more so, especially a lot of the bigger banks can probably offer this as well, but just ask, “Hey, are there any incentives? Is there anything that I can do to maybe earn an additional point or two off my mortgage?” And you’d be surprised what options are out there. All right guys, before we go into our final question, if you are not yet subscribed to the Real Estate Rookie YouTube channel, make sure you do that. You can find us at realestaterooky. If you want to do more than just hear mine and Ashley’s lovely voices and see our lovely faces. You can hang out with us on YouTube and join the conversation there because you can leave comments, but we’ll be right back after a quick word from today’s show sponsors with our final question.
All right guys, welcome back. And we are here with our final question for the day. It says, “I’m looking to flip in the Tampa, Florida area, and I’m in touch with a few wholesalers and realtors in that market. I’ve received multiple properties from them. However, I’m always concerned that their ARVs are inflated, which will leave me in the red. How do you determine correct ARVs when you are not physically present and can’t pull your own comps from the MLS?” Great question. I think first, let me just define a few terms here. Number one, ARV stands for after repair value. This is the value of the home after you’ve made any renovations or improvements to it. So you buy an old beat up house for a hundred thousand bucks and after you’re done renovating it, now it’s worth 200,000, right? The 200,000 would be your after repair value.
Wholesalers, we talk about wholesalers a lot, but just to quickly define that, a wholesaler is basically someone who’s a professional deal finder. They do all the work of knocking on doors, sending mailers, sending text messages, cold calling people to try and find motivated sellers who are willing to sell their properties below market value for various reasons, and they sell those contracts to real estate investors like me and you. So I define those two things because a wholesaler makes their money by locking a property up at one price and then selling that contract to an investor for a different price. And the price that the investor pays is always based on the proposed after repair value. The higher the after repair value, the more the investor is willing to pay. The lower the after repair value, the less the investor’s willing to pay. So if a wholesaler wants to maximize the amount of money they can make on a contract, it’s in their best interest to provide the highest potential after repair value to the seller.
Now, why do I share that? It’s because the wholesalers are motivated to paint the rosiest picture possible for you as the investor about what that property might sell for. My strong recommendation is to use whatever they propose as a single data point, but do not make any definitive decisions on whatever ARV a wholesaler provides to you. When I get properties from wholesalers, and sometimes I’ll read the comps I send over, they might pick comps that are like 12 months old or that are six miles away, and those aren’t the best comps that we want to use when we’re going through our process of predicting or projecting our own ARV. So I think that’s the first thing that I’ll say is that do your own homework, find your own comps. Not to say that you can’t trust the wholesaler, but you guys have slightly different motivations and your best interests aren’t always aligned in terms of what they project and what you project.

Ashley:
Yeah, definitely doing your own research and not going off of what anybody else is telling you, especially if they have skin in the game and making a fee on the back end of the wholesale deal. But one thing that I think has really helped me is just making a spreadsheet and looking at properties that have gone pending and then properties that have sold in the area on my own. And you can … A recent agent that I just worked with, she printed it off for me of different comps, but sometimes I’ve noticed that they’re not the comps that I would use. So I’m looking at every single listing to actually look what’s comparable because sometimes listings aren’t accurate. They don’t have the right bedroom count. They are stated that they’re in one zip code, but it’s actually in a different town, even though it has the one zip code and there’s different things like that.
In my area, a lot of their villages are called and they have their own water and sewer supply and you don’t have a well on your property. Well, you could still be in one village’s water and sewer hookup, but you’re actually a different town zip code. So different things like that, when you’re pulling just from a generic list off the MLS and not actually looking in detail at the comps, those are little things that could be missed. So I really like just pulling my own comps off of Zillow. And one thing to take into consideration too is like in New York State, it can take like 45 to 60, sometimes 90 days to close on a property. So I always look at, and then I keep in my spreadsheet, what is the purchase price, what was the listing price, and how long did it take to close, and when did it go pending?
So for example, if I see a property went pending in September and then it didn’t close until December, I know that that’s market value for September, that that’s not what the property is worth in December, like the market could have shifted. So I always try and take that into consideration. And if a property goes pending right away, I usually factor in that and make a best guess that if it hasn’t closed yet, but it’s gone pending right in December at the time period I’m looking, that it probably sold for asking price or over asking, but I just use the purchase price as my comp number.

Tony:
I think one of the things that I found to be super beneficial too is to ask whatever agent you can find in Tampa for copies of recent appraisals that have been done on properties that they’ve sold. The reason that I like to see the actual appraisal is because you then get the framework that actual appraisers are using to determine what comps to use. You can see how big of a radius they might have in that specific market. Ash for you, in some of the more rural parts of town that you operate in, how big of a radius from the subject property do you see? How far out are they willing to go?

Ashley:
Yeah. So for me, when I’m looking at the comp, I want to be in a five mile radius, I try to be, but sometimes that is so hard. I’ve gotten appraisals done before where it’s like 10 miles away. That’s a big difference, but they’re trying to find a comparable property. So it really is difficult in that sense.

Tony:
And in some neighborhoods, like I say, it’s like a subdivision, you might only be able to go like a half mile before you start to get into properties that aren’t the best comp. So seeing the actual appraisal, I think is a really solid way to get an understanding of how big of a radius do they draw around the subject property. What kind of differences in value are they giving for either additional bedrooms or fewer bedrooms or additional bathrooms or fewer bathrooms or differences in square footage or lot size. You can see how they back into all of those numbers by looking at the appraisal and you simply take that same approach and find other properties in that same radius, and then you can apply the same pluses or minuses for those variations in square footage, lot size and so on and so forth. Ash, you mentioned Zillow, I like to use PropStream, Privy’s another good one for comping out properties.
So whatever your data source, you can do it that way. You can even ask your agent like, “Hey, agent, can you give me a list of all the homes that have sold in the last 90 days?” And they should be able to just export that for you and send it to you. It’s static data, so it won’t update over time, but even if you just want to do a one-time search, you can do it that way as well. So there’s a lot of different ways you can go about getting that data to give you the confidence and then sanity checking your process for building those comps against the appraisals that that agent gave you as well.

Ashley:
Well, thank you guys so much for listening to this episode of Real Estate Rookie. I’m Ashley and he’s Tony and we’ll see you guys on the next episode.

Henry:
Today’s guest started with literally $0 in the bank, waited tables and secretly moved into a 55 plus retirement community to save money. I am not kidding. He bought his first property in 2010 with a loan from a partner because he couldn’t afford his share of the down payment. Now 16 years later, he’s achieved financial freedom with a rock solid rental portfolio built entirely on his own terms. Wait, is this story sounding a little bit familiar?

Dave:
To me? It sounds a little familiar to me, yes.

Henry:
What’s going on everybody? Henry Washington here, co-host of the BiggerPockets Podcast. We bring you an investor story every Monday on the show, so you might be wondering why there’s no guest here today. And that’s because Dave Meyer is our guest, and we are going to be hearing about his investor story from 2010 to today. Davis told pieces of the story before, but not in a few years and definitely not to me. And since I am the new co-host, that’s what we’re going to do here today. We’re going to go full into this journey. We’ll talk about the hidden unit he found on a mislabeled MLS listing, his 100% success rate on cold calling, which is impressive, and how moving to Amsterdam forced him to become a much better investor. And Dave, I’ve also got a couple surprise questions for you that you may not see coming.

Dave:
Okay. Well, I am coming prepared to answer any and all questions you have for me.

Henry:
Well, let’s get started and let’s start off this episode the same way we start off every investor story. And that’s by asking, Dave, what were you doing when you first decided to get into real estate?

Dave:
I got started in real estate about six months after I graduated college. I had moved from New York to Denver, sort of just on a whim to ski and wound up waiting table. Yeah. I mean, that’s what I was. You

Henry:
Moved for

Dave:
Vibes. Yeah. But I mean, I was looking for a job, but it was 2009. It was, at that point, the worst job market since the Great Depression. I wound up waiting tables, but I was looking for a sort of corporate job. But I had always wanted to do something entrepreneurial throughout college, even in high school, even in middle school. I had started small businesses and always trying to make money for myself. And so I was open to the idea and looking for side hustles as they’re now called. And a friend of mine introduced me to real estate, and that’s how I got into it.

Henry:
So similarly for me, my father was an entrepreneur. Now, he never talks to me about entrepreneurship. He wanted me to go the normal corporate route, get a job, climb the ladder, and all those things, but he always had a side hustle or a gig. And so that’s where that seed was planted in me. But why do you think you were so entrepreneurial minded?

Dave:
Necessity, I think. Honestly, I didn’t grow up poor, but when I was 11 or 12, my parents went through a couple in a row, pretty big financial challenges that lasted a decade. And so my family’s finances just kind of got turned upside down. And if I wanted money starting in middle school, I had to earn it. And I don’t know if you know this, but not a lot of people hire middle schoolers for real jobs. I walked dogs, I shoveled snow, I tutored. So I was just always doing that kind of stuff. And I did it throughout high school. And I should say that one of the financial issues my family faced is after the dot-com boom, my dad lost his job and was out of work for two or three years. And his smart dude works hard, had recently gotten promoted. And I just remember seeing that like so many people do and being like, “Corporations will throw you out in no time.” And I just, for a long time, I think it got sort of ingrained in me that you can’t trust a job.
And I wanted to just do things on my own.

Henry:
And it’s tough because corporations are very good at trying to make you feel like you’re a part of some family, but trust me, if it’s in their best interest to let you go, they will. And if you leave, they’ll have a cake and then somebody will be in your seat in a week.

Dave:
It is- Everyone’s replaceable. Yeah, 100%. And I don’t blame them. I own businesses too. I understand you have to make these decisions. I just realized, I guess at a young age, I want to be making the decisions. If I own my own business, then no one can fire me. And that was just always really appealing to me. At 22 though, when I was starting real estate, I wasn’t thinking, oh, I was going to just go start some huge company. I was just kind of like, I want sort of a side backup thing going on in case I can’t find a job or someone fires me.

Henry:
So you had the entrepreneurial seed planted, you had the entrepreneurial spirit, and then you said someone introduced you to real estate. What did that look like?

Dave:
The way I remember it is I was going skiing with this guy who lived across the hall from me, good dude, but not someone who you would go out and be like, “This guy has got it all together.” And at this point, he was doing it with his girlfriend at the time. And I feel like we all knew these couples when you were like 23, but they were the worst couple. They were always fighting. You knew that it wasn’t going to work out, but they were just crushing it on rental properties. And he was telling me about it when we were skiing once. I was like, “Man, if this guy can do it, I can definitely do it. ” And I had actually started working one of the multiple jobs I had at the time in addition to waiting tables that I was cold calling for a tenant rep, a commercial broker.
And I was just kind of asking her a bunch of questions. And I started to figure out that I thought I could do this and it just gave me the confidence just learning a little bit and getting some validation from some people I trusted and was working with that this was a good idea.

Henry:
I kind of had a similar epiphany. Mine was just because I kept seeing people online that were doing this. And I was like, “If they figured it out, I got to be able to figure it out.

Dave:
”

Henry:
But then I had to set a goal because I didn’t really know where to start. And so my original goal was to buy one house a year for five years. Once you decided, okay, if this guy can do it, I can do it and I’m going to go all in. Did you have a goal in mind?

Dave:
Not really, to be honest. I just saw this as a side hustle. At that point, I was trying to do two things. I guess I had some short-term goals, but nothing big. The first was pay rent. I know that sounds silly, but I honestly wanted 300 bucks a month in cashflow, 400 bucks a month. That was pretty meaningful to me at that point in my life. And then the other point was at 22, I could see if I buy a property now, even though I had three partners, it was a four-way split, if I pay this off by the time I’m 52, I’m going to have a nest egg. And that was the only tangible savings account I had at that time. I could not save money based on my income and what my expenses were. And so I thought if I buy this property, at least I know I’m saving up a bunch of money and I’ll have something in my 50s.
And that was sort of the other thing that motivated me.

Henry:
You did say you were waiting tables. That doesn’t tend to make you a ton of money. So how did you buy your first deal?

Dave:
That is true. It wasn’t making a ton of money. Actually, I tell a story and it’s true. I mean, I had a bank account, but all the money I had was in my nightside drawer. I had zero dollars. You

Henry:
Just kept money in a mattress.

Dave:
Basically, I got paid in cash every day, which is weird, but they did pay us in cash at the end of every day. And I just lived day to day on that kind of thing. So I had to partner with people. I wound up finding three different partners. One was a family member, two were friends, and the total we needed closing cost reserves, down payment, I think was 104,000 because I’ll tell you why I remember that number because we split that four ways, but I did not have $26,000. I had no dollars basically. And so what I wound up doing was taking a loan from one of the partners for my part of the down payment. I paid them, I think, a 7% rate on that. And then I managed the property. And so I was getting 10% of rents to manage the property. And I used that income to pay off the loan that I got for my portion of the down payment.
So if you’re following this, I was really stretching myself to figure out how to do this, but it’s how I got in the game. I mean, even with that, I was still making a couple hundred bucks a month, not in cashflow, but from property management. And that’s honestly one of the major things that was motivating me was because that was the immediate return that I was getting.

Henry:
I mean, you call it stretching yourself. The kids, I believe, call this hustling.

Dave:
Yeah, it was.

Henry:
You hustled your way into a deal.

Dave:
100%. I would do anything to get into this first deal and it worked.

Henry:
Okay. So tell me about that deal. What was it? What’d it look like?

Dave:
So what it was, it was a four unit. You see this a lot in Denver. You see it a lot in the Midwest. It’s like these cut up old Victorian homes. So big three, 4,000 square foot house in a really good location, walkable, high demand area for young professionals. So it was someplace I wanted to live, two, two units and two one bedrooms, bought it for 462. And I think the rents when I first bought them were about 4,000. So not quite the 1% rule, but after really easy, cosmetic and just getting things up to market rents, they were quickly at 6,000. Within a year, they were at 6,000 in rent. So that was the opportunity I saw in buying that deal and was, honestly, I had no idea what I was doing, but was pretty easily able to get rent up to market rate.

Henry:
One more question about the first property. Did you occupy it or any of your partners occupied or was it a pure investment?

Dave:
I had no idea what house hacking was. I am not one of those people who was an early adopter of BiggerPockets. I was just making stuff up. I had no idea what I was doing, but I was like, “Man, I could live in this unit for less than I’m paying in rent.” And so I was going to move in with my roommate at the time, who was one of the partners, that was one of my partners. And then this is a crazy story, but his grandma had passed away and she lived in a 55 plus community a little bit outside of Denver. And I see your face where you think this is going and it absolutely is where it went. No. Well, so it was like 2009 and no one … His family was like, “We’re not selling this property. No one was buying it.

Henry:
” So

Dave:
You’re not-

Henry:
Did it do the 55 plus community?

Dave:
Yes. We did it in the middle of the night too, because you’re not allowed to move in. And we were like, “We’re just going to move into the middle of the night.”

Henry:
Did you live there in Frank in secret? No one knew.

Dave:
We tried to. We lived there secretly for five days until people quickly realized what was going on. But all the people loved us because we would carry their packages. We would just do nice things for the people in the community. We were like, “This is going to be three months until we figure it out. We’re going to save up some money.” I lived there for three years. No. More than three years. More than three years. It was basically free. We were just paying utilities. And funny story, when I first met Jane, my wife, I was living in the basement, my friend’s grandma’s basement in a 55 plus community in the exhurbs of Denver. And she loves to point this out that she was truly a visionary. She was like, “I met you then and I still fell for you. ” Lord,

Henry:
She saw something in you. Ooh,

Dave:
Boy. I know. Yeah. She’s some sort of Oracle because man, that was ridiculous.

Henry:
As a real estate investor, the last thing I want to do or have time for is to play accountant, banker, and debt collector. But that’s what I was doing every weekend, flipping between a bunch of apps, bank statements, and receipts, trying to sort it out by property and figure out who’s late on rent. Then I found Baseline and it takes all that off my plate. It’s BiggerPockets official banking platform that automatically sorts my transactions, matches my receipts, and collects rent for every property. My tax prep is done and my weekends are mine again. Plus, I’m saving a ton of money on banking fees and apps that I don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp. So I imagine this cost savings allowed you to start saving a lot of this money that you were making. And so what was the next step?
What was the next deal?

Dave:
I didn’t buy my next deal until 2014. It took me four years to figure that out. And so that one I did house hack. I was like, “I got to get out of this basement.” So I wound up buying a three unit one block away from my four unit. That was a big appeal to me. I was self-managing both of these, and so I could walk from one property to the other. I love telling this story about finding this deal because I looked for quite a while to find deals. And eventually I walked into this place. It was marketed as a two unit. It was supposed to be one three bed and one four bed, super nice units. And at that price, I was walking around this property and I was like, okay, it’s pretty good. And then I opened this door and there’s a staircase and I walk up there and there’s an amazing recently built, renovated, permitted, one bedroom apartment.
And I’m like, no wonder no one else is looking at this deal because they’re just completely mismarketing it. And I wanted a house hack. And I was like, “This one bedroom is a perfect place for me. ” And so I just tell this story because people think on market deals you can’t find. They’re mislabeled, they’re mismarketed, they’re mispriced all the time. That’s so funny. This was sort of an extreme example of that, but that’s how I found that deal, wound up moving into that and house hacking there for over two years.

Henry:
That’s almost exactly how I found my first house hack.

Dave:
Seriously? I did not know that.

Henry:
Absolutely. It was a mislabeled property.

Dave:
A hidden unit?

Henry:
It wasn’t hidden. It was there, but it was just listed as a single family home and there was no mention of an ADU. And this was before the BiggerPockets house hacking craze. So no one called it house hacking yet, but I knew I wanted to live in a duplex, but I was at work. And this is when I worked at Walmart and I overheard a guy in the restroom just saying, “Man, I just can’t seem to get my house sold.” People, they come and they see it and they just don’t want the extra unit. They just want a

Dave:
House. You just pop your head over the stall and you’re like, “I’ll buy it. ”

Henry:
Look, I had some tact, okay? I waited outside of the bathroom door like a normal creeper. And as soon as he came out of the bathroom, I was like, “Hey, tell me about that house.” And he told me all about it. He gave me his agent’s phone number. I went to look at it. It was just listed as a single family home. She said the same thing. Nobody wants the second unit. And I was like, “No, I want the second unit.” And so I bought that house and that was my house hack.

Dave:
Oh, that’s awesome. Wow, that’s great. I love that we both had mislabeled. Honestly, it still happens.

Henry:
It’s still a thing.

Dave:
It’s still a thing. It absolutely happens. It’s pretty rare for an entire unit to be missed, but opportunities for lockoff to create another unit, people mislabel bedroom counts, people mislabel square footage all the time. Absolutely these things happen. So just throwing that out there that those things are possible.

Henry:
Okay. So you bought this house hack. What’d you pay for it? How’d you finance it?

Dave:
So prices in Denver had gone up a lot in just those couple of years, I guess four years between buying deals. So I financed it with another partner. I actually was a minority partner in this as well because I didn’t have enough capital to put in. So I split it with a partner and then paid, I think it was 720 for a three unit. This is again in a prime location in Denver though, like really good walking distance area.

Henry:
I assume you mean walking distance to libraries and research facilities that all the

Dave:
Things you were very interested in. Yeah. Museums and cultural experiences. No, there was a sandwich place called Snarfs down the road. I was very happy with it. There was a grocery store two blocks away, a dive bar with a couple of pool tables and darts. I was in heaven. Honestly, I look back on it. I think the two years, the most fun I’ve ever had was those two years househacking in that house. I had a great time and it was a great deal. I still own that place today. It’s one of the best deals I’ve ever done for sure.

Henry:
So your second deal was a house hack. You were having the time of your life. When did BiggerPockets come into the picture?

Dave:
Yeah, so that was 2014 when I bought that deal. And then towards the end of 2014, 2015, the tech company that I had started, it was profitable. It was doing okay, but decided to wind it down. It was just not taking off in the way that I wanted to, a whole other topic. But basically I was trying to figure out what I wanted to do next. And I decided two things were really interesting to me. I really like data analytics, shocking for everyone who listens to this podcast. I know. So I decided to go back to grad school and I wanted to stay in Denver. So I got into grad school there for data analytics. But then I was realizing that I just loved real estate. I really enjoyed doing it. I found that I was going to open houses even when I had no money to buy anything.
I would just go and look at them. It’s pleasant. I had a friend who was a real estate agent and I would just go look at deals. I was just having fun. I really enjoyed it. And so I decided to see if the next job I could get was both tech and real estate. That’s what I was looking for. And I literally just Googled tech companies real estate and went through a bunch of them and found this company called BiggerPockets. I had never heard of it before. And I was like, “This is really interesting. This is kind of what I’ve been doing. What are these words like house hack?” There were forums where all of these people who are doing what I’m trying to do are talking to each other. I was amazed. And so I looked at it and the office was one mile from where I was housed.
It was just like complete luck. And I looked and reached out. There were no jobs for me. And so I waited, I think it was nine months from the first time I reached out and they put up a job that I was qualified for and I applied. And thankfully I got interviewed first by Scott Trench, then by Josh Dorkin, then by Brandon Turner, then by all three of them together sitting on a couch, all three of them and then me sitting on together. But luckily I got the job. And that is when I think I started seeing myself as a real estate investor. Joining BiggerPockets sort of changed my whole trajectory from wanting to be in tech, which I still did. I still like working at tech companies, but that’s when I was like, oh man, I should grow a portfolio, take this thing a little bit seriously, start setting goals, get a little bit more sophisticated about it.
And that really sort of changed my trajectory as an investor forever.

Henry:
So can you give us maybe some specifics about how BiggerPockets helped you become maybe a more structured or a more intentional investor?

Dave:
I was still investing in Denver at that time. I started to see all of the equity that I had saved up in these first two properties that I was really proud of. I was like, “Oh my God, I’ve got a couple hundred grand between these two deals, even being a partial owner of these.” That’s my nest egg, that’s my life savings. And I think the big, honestly, the big thing was like, “Oh my God, I should have reinvested that years ago into different deals.” I sort of realized that I had been going much slower than I needed to. And then sort of having that realization, learning about doing refis effectively, using equity for one deal to build into others from 2016 to 2020, it allowed me to just do way more deals in Denver over the course of those couple of years.

Henry:
Can you give us an example of how a deal you did now that you were a more experienced investor with a little more strategy was different than maybe one of those first two deals?

Dave:
So I’ll just give you an example of the third deal I did, which is I realized that I could take money out of one of my first two deals. I think it was the second one I did a refi on and wound up doing my one and only off market deal. I think I’ve told you this story. But I was just learning about off-market deal finding. I was learning about buying in the path of progress. I was learning about how real estate investors research areas to buy. This is obviously my thing. I had just gotten a degree in data analytics. I’m good at this stuff. And I was like, I’m going to find the best block to buy in Denver and go out and find an off-market deal. And that’s exactly what I did. And I would’ve never done that years ago. I was just buying on- market retail prices, things were easier to buy back then.
And then I was like, no, I’m going to really get good at this and figure out exactly what corner, what pockets to buy and where I’m finding the deepest value and just really getting good at the analytical side of things. And so that one deal I probably bought for 70, 80 grand below comps because I bought it off market and I knew all these things were coming to the area and there was all this infrastructure spending. And so I just started thinking about it in a really different way and was able to finance it without having to wait several more years to build up for my next deal.

Henry:
What were some of the characteristics or things that you were looking for in the neighborhood to let you know that this is where you needed to buy?

Dave:
Denver this time was just growing like crazy. And the city was struggling to keep up with infrastructure, like cities, roads, railroads. And so they announced this light rail. They were storing the major train station in downtown and it would connect to the airport, which if you’ve ever been to Denver Airport, is in the middle of nowhere. And so you needed a trade to get there. It’s very fair. And so I was like, I’m going to figure out where the stations are. And I actually went to city planning meetings myself to try and figure out. They were coming up with different routes that they were thinking about doing, but there was like two neighborhoods that had common stations in them. Either way that they did it, there was going to be a station in this neighborhood. Then they announced that they were going to tear down this whole street and build a park alongside it.
And I was like, okay, this is the place I got to be. They’re putting a ton of money in here. Denver, people love to bike, they love to walk. So it was like a bike lane going in there. And I was like, I got to buy this. And literally, the friend you were joking about before, well, my friend who is a great real estate agent, and I went and we literally marked off on streets where they were going to be doing eminent domain, which were the houses that were going to be closest to this park. And we figured it out. And I called, I’m one for one on cold calling on off market deals. I called one guy. You

Henry:
Bet and a thousand on cold calling?

Dave:
And then I quit. I’ve never done it again. I was like, I did this once and I got this deal off market and then never did it again. It was honestly one of my first days at BiggerPockets. I was like, I got to do … I was so stoked about all this stuff I was reading. I remember walking into the hallway and being scared. Josh was going to be like, “Why are you not at your desk?” I went out and I just called this guy. He picked up and I was like, how about, I think I bought it for like 4:30. I was like, “How about 4:30?” He was like, “Okay.”

Henry:
What?

Dave:
And I bought it. It was great. House hacked that too.

Henry:
So you paid 430, you moved into it. What’d you rent the units for?

Dave:
So that actually became my primary residence. I still own it as rental today, but that became my primary residence because I figured out that I could move out of the apartment I was living in, rent that out for about 1,500 bucks, which was great. That was going to cover basically my mortgage on this new property. And also at that point, just life stuff, my wife and I, now wife and I wanted to move in together and I was really stoked about this house. She was less stoked about this house, but I was proud to have a place that I owned for us to move into.

Henry:
And you still own the property today. Were you correct in terms of the park and the infrastructure that was coming?

Dave:
Oh, crushed it. Yeah. I bought it for 4:30. It’s probably worth 800 now.

Henry:
Nice.

Dave:
Nice. And I didn’t even renovate it. That was not even a Burr deal. I bought that straight up from a flipper.

Henry:
Before we move on to the rest of your journey, is there some sort of tips or strategy or resources you could give people who want to do similar market research to determine where the path of progress is or what may be coming?

Dave:
People always ask me this because you can get really analytical about it, but I honestly think the best thing to do once you’ve picked a market is go analog, go old school, go to … I think that the best things that I still look at is every market I invest in, I subscribe to the local business journal or if there’s an economic development area, see where businesses are moving and also just understand where you would want to live. People pay for walkability, people pay for convenience, they pay for access to jobs. These are the kinds of things that you can learn by talking to your tenants, talking to your agent, talking to local people. I honestly still think that is better than any analytical thing that you can do. That’s how I learned about it is I was just like, “Hey, they announced they’re building a train.
I’m going to figure out where the train stops are going to be. ” It wasn’t online. I had to literally go and look at the renderings that they were building and I wrote down the addresses and the cross streets and then just figured it out from there.

Henry:
All right. I think the story’s been super interesting and I’m learning a lot about you that I didn’t know. So I hope our audience is also learning a lot about you that they didn’t know. But one thing I do know about you is that you just up and moved to Europe out of the blue is what it seemed like to me. And so when did that happen? Why did it happen and how did it change or shape you as an investor?

Dave:
Yeah, so it happened in 2020. And I’ll say that in 2016 when I started getting serious about investing and when my wife and I moved in together, we actually made a goal. We had some financial goals, but one of our goals was to move abroad. It was always my dream. I love to travel. It’s probably my greatest passion. Even more than sandwiches, it is my greatest passion. And so I really wanted to do that and I had no idea how it was going to happen. And then in 2019, my wife’s job, they were like, “You’re getting transferred to Amsterdam.” And we were kind of like, “Cool, this is it. ” We’ve been waiting for a chance to do this and it fell into our lap. And I was pretty nervous, but Scott Trench, who was the CEO at BiggerPockets at the time, let me go.
And it was cool, but I was self-managing at least 10 units at that point. And so I really had to figure out how to become a more sophisticated investor. At first, I sort of did a hybrid strategy where I had a friend who was kind of a maintenance guy who would pick up the phone if there were emergencies, but I was still doing the leasing. And then over time, I just started to realize that I should just hire a full-time property manager. And then I sort of had this realization then I was like, now the whole country is open to me. All kinds of investing are open to me. It was sort of forced into this way of thinking, I can’t be hands-on no matter what. There’s no way from Amsterdam, it was an 18 hours door-to-door flight back to Denver, how was I going to do this?
And I just started really learning about everything else. I was learning about commercial real estate, syndications, passive investing opportunities like private money funds. And I also started thinking, I’ll start to invest in other markets. Now, because of COVID, I actually wound up not buying any active deals for like three years, I think until 2023. But I actually think the experience made me a much better investor. I just learned all of these different skills that I did not have when I left Denver. And that’s really opened me up to having a much more diversified and I think sophisticated portfolio now, even though I’m back in the United States.

Henry:
I think out of state investors have a strategic advantage over backyard investors, and I’m a backyard investor. And what I mean by that is out- of-state investors are forced to build an automated business that operates without them. They don’t have the luxury of being in the backyard. And so they have to build systems, they have to have tools, they have to have people to do things for them in order for their business to function. And I think that gives them an advantage because at some point all of us decide, “Hey, maybe I don’t want to be as hands-on.” And most of us like myself who invest in our backyard, I now have to go build those things that somebody who invests out of state just inherently structured their business to be able to operate. And so I totally can see how that would just make you an all around better investor.

Dave:
There’s trade-offs. There’s total pros and cons, but given where I am in my investing career, I’ve been doing this now 16 years and I’ve fortunately built up a lot of equity and I’m transitioning from what Chad Carson would call from the growth stage to the harvesting stage. And I am grateful for those skills now. Now that I’m in this sort of era where I don’t need to buy a lot of deals, I can buy deals, but I’m more thinking about sort of an end game and how to reduce risk and build just a rock solid portfolio that is highly automated. The skills I learned when I moved to Europe and was forced to offload a lot of this stuff are coming in handy right now. I’ll say that.

Henry:
With that being said, what does investing now look like for you and what is the plan, the end game, as you say?

Dave:
So I basically, my overall portfolio, I think of it in three, in thirds. So one third, yasp for people who are hearing this, but I invest in the stock market. So I do actually diversify, unlike a lot of real estate creators. I put about a third of my net worth into the stock market. I have about one third of my wealth into what I would call actively managed properties. I’m not self-managing, but they’re things I own directly. They’re not like funds or syndications. And then I have about a third in funds and syndications, which is split between multifamily syndications. And I actually have put quite a lot of my net worth into lending funds recently, private credit. It’s a great way to make cash if anyone is interested. So that’s what it looks like right now. And I’ve started buying actively again since I’ve been back in the United States in the Midwest.
And I think I’ve told you this, but my goal in the short term is to keep buying those deals, but getting better at value add investing. It’s been a weakness of mine for 15 years. I did do Burrs in Denver while I was living there, but never structural. I’ve added units, I’ve added some bedrooms, I’ve done some lockoffs, that kind of stuff, but never the kind of stuff you do or what James does. And I don’t really want to get there, but I just want to get better at construction. I think that in 16 years, I think I’ve learned that that is the one way to make money in real estate that doesn’t really change with market conditions. You can always make money if you’re a good value add investor. That’s very true. And I want to get good at that. And so that’s why I’ve been a part of Three Flips.
I’ve kind of done two in the last year. Not because I want to be a flipper, that is not really my goal, but it has taught me so much about construction and I want to do it to just be able to take on bigger Burr projects is kind of what I’m moving towards, but I’m still doing … I really like passive investing, so I’m going to keep doing that as well.

Henry:
All right, Dave. I was thinking about letting you off the hook, but I think I changed my mind. I got a couple of good ones for you.

Dave:
Okay. Well, I don’t even know what you’re talking about. Let’s go.

Henry:
All right. First one, we’ll start off easy. What’s something that people may be surprised to learn about how you actually like to spend your free time?

Dave:
Okay. I guess, I don’t know if this is surprising or not, but I am a exercise freak. I’m like one of those people who has to go to the gym or do something active every day, or I actually go crazy and lose my mind. So I definitely do that every single day.

Henry:
Okay. Makes sense because you said you needed a gym when you came to visit.

Dave:
I mean, I sit in front of a computer all day. So the rest of my day, usually they’re doing real estate stuff or working for BiggerPockets. So if I don’t do something physically active, I become a psychopath.

Henry:
Next question. Are you one of those morning routine guys? Do you have a morning routine every morning that you follow

Dave:
And you

Henry:
Can’t

Dave:
Function? Absolutely not. I actually made a whole real making fun of this trend because I think it’s so silly. People are like, “Oh, if you don’t get up at five in the morning, you can’t be successful.” Honestly, I do wake up early. I wake up at 5:30, not because I want to. If I could sleep till 9:00 AM, I would. I just naturally wake up that early. No, I’m not one of those people who is super regimented in the time I do stuff. I work a lot, but I’m pretty loosey-goosey on when I do different things. Are you? Do you have a morning routine?

Henry:
No, no, no. My day is different every day.

Dave:
The

Henry:
Only morning routine thing I have is I take my daughter to school every morning.

Dave:
That’s like a nice one. It’s not like I wake up every morning and do an ice bath. Then I do 15 minutes of journaling about why I’m the best guy in the world. About why ice

Henry:
Baths are awesome.

Dave:
Then I eat 150 grams of protein and nothing else. Not a single carb since 2022. Then

Henry:
I intermittent fast until 6:00 PM and eat two crackers.

Dave:
No, I actually like to enjoy my life.That’s part of why I invest in real estate is to not have to live some completely stoic lifestyle. So no, not me.

Henry:
All right. Now we’re going to get a little spicy. Tell us your wildest tenant story as a landlord.

Dave:
Oh, I actually have a fun one. So I was house hacking, I told you guys in this three unit. I had a really good relationship with these people living downstairs who lived there for four or five years in the main unit. We got along really well. And then when they moved out, they just straight up didn’t clean the apartment. And so I paid a professional cleaner to go in and clean it out and they got really mad about it that I deducted it from their deposit. And it’s truly one of the two or three times I’ve ever gotten a disagreement with a tenant. And I was personally upset with this. We hung out. We were friendly with each other and we had this blow up fight and I was really upset about it for a while and I sort of forgot about it. And then I was living in Amsterdam and Jane and I had a party.
We invited over a bunch of our friends. Some of them were American. And my buddy, Joe, was like, “I’m going to bring some friends of mine. Can they come?” And I was like, “Yeah, of course.” And in walks, my tenant in Amsterdam across the world, this was eight years later, across the world, walks in and she was like, “Hey, Joe told me you were going to be here and I just wanted to apologize. I was really immature about that. Can we be friends?” I was like, “Yeah, we could be friends.” And we hung out. We had this cocktail party. We stayed up and drank and reminisced and we’re now friendly again. So it came full circle. That’s

Henry:
Hilarious. Your life seems to be just a smattering of randomly unusual circumstances. That’s hilarious.

Dave:
I have plenty of awful situations, but I’m going to now answer that with a positive story because that was a good one.

Henry:
All right. Have you ever been recognized for being on the show in some sort of weird or unusual place or doing something you wish somebody hadn’t recognized you?

Dave:
Yes, a lot. More and more recently, I think I got to tell them what you were there for, which was so funny. So before BPCOD, Henry, myself, Henry’s wife, Jessica, and a friend of mine, Andrew, were going out. Henry suggested this steakhouse. We booked it on OpenTable, right? No special connections, just went out on OpenTable. We get there and they see us at a table for four and it’s this beautiful table looking out over the strip. It was a nice place. It was a nice restaurant.

Henry:
It was really great view.

Dave:
It was great view. And so we’re sitting down and the host or server says to us, “You guys must be pretty important to be able to get this table.” And completely jokingly, I was just joking around. I was like, “What? You don’t know who I am?” And he goes, “Actually, I do know who you are. You’re the host of the pockets.” And I was like, “Well, now I look like such an apple.” He

Henry:
Looks like

Dave:
A giant douchebag. I did look like a huge animal. I just am not used to actually getting recognized, but it was so funny in the moment. It was hilarious.

Henry:
Hilarious. It caught us all off guard because it was clearly the best table in the house. And he brought it up on his own. He was like, “Oh, you guys must be special.” And Tam was like, “Don’t you know who I am?” Yeah. Yeah, bro, I do. You’re not that cool. Yeah,

Dave:
You’re a giant dream.

Henry:
Oh, classic class.

Dave:
Still embarrassed thinking about that. But yes, that happened.

Henry:
All right. Have you ever been around or seen somebody that you were starstruck by?

Dave:
Oh my God, yes. Okay. I grew up in the suburbs of New York and had an internship when I was in high school. I was filing cabinets and I’d go to New York City for it. And I got in the elevator one time by myself and in walks, live Tyler. And I’m like, this is probably- I would’ve

Henry:
Died.

Dave:
2001 or two. She was just in Lord of the Rings, Armageddon stage. Can I tell

Henry:
You Armageddon

Dave:
Secretly one of my favorite

Henry:
Movies?

Dave:
It’s everyone’s favorite movie. I love it. It’s the best movie. I’ve seen it at least 25 times. It’s so good. So I guess I was probably 15 or 16 years old. And she walks in. She’s very tall. She’s taller than I am. And she just comes in and is super nice to me. She’s like, “Hey, how’s it going? ” And I did not say a single word the entire time. We went from the 40th floor to the first floor, probably a full minute. I just stared at her, probably drooling out of my mouth. And then she was just like, “Okay.” Bye. I haven’t thought about that in so long, but yes.

Henry:
First

Dave:
Of all, you

Henry:
Nailed

Dave:
It.

Henry:
Congratulations.

Dave:
Yeah. I really nailed my chance with Lib Tyler too because I’m sure in 16 I had a chance or now ever had a chance with Liv Tyler.

Henry:
That’s hilarious.

Dave:
That was pretty cool.

Henry:
All right. Well, that’s hilarious and a great way to end the show. Thank you for sharing your story with us, your investor story, but also thank you for getting a little vulnerable with us, both in the story and then answering these random questions at the end. It’s been a good time. And I think the audience enjoys learning about our journeys, but also you’ve got a lot of lessons in your journey and I appreciate working beside you. And I love how you treat investing and I hope other people learn from this and can treat investing very similarly.

Dave:
Well, thank you. I hope what people have learned is although I talk a lot about math and people think I’m smart, I’m just a normal idiot. And if I can do this, any of you can do it as well.

Henry:
That should be the takeaway. If Dave can do this, anyone else could do this too. All right folks, thank you so much for listening to this episode of the BiggerPockets Podcast. We look forward to seeing you on the next episode.

 

Ashley:
Today’s guest was sleeping in an empty box truck with his friend’s eviction boxes piled around him one week before closing on a seven bedroom house.

Tony:
And not only did they almost lose the deal mid-contract because their lender messed up, they had to switch to FHA, cut down trees themselves before they were approved, and almost had their closing reversed after signing.

Ashley:
Now the three of them are living in the property, paying about 450 a month each and projecting over a thousand dollars in monthly cash flow when they move out.

Tony:
If you’re young or if you’re broke or if you think, I can’t afford real estate, this episode is for you.

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

Tony:
And I’m Tony J. Robinson and Isaac. Welcome to the Showber. I’m excited to have you on, man.

Isaac:
Hey guys, glad to be here. Huge fan.

Ashley:
Well, Isaac, take us back to the week before closing on your investment property. You were sleeping in a box truck, your partner just got evicted and you’re launching another business. So what is actually happening at this point in time?

Isaac:
Yeah, it was pretty busy. It was pretty crazy that week. We had a lot going on. Yeah, we decided to switch to FHA, and so we had to conform to the FHA requirements, which meant we had to go cut down some trees at the property and do some painting all before we knew if our financing was approved. It’s one of the situations where we had to really go out on a limb to enable ourselves to even have a chance at the property. And that’s how we were thinking about it.

Ashley:
What was the financing you were trying to do before the FHA loan?

Isaac:
Yeah, so we had one lender and he gave us a pre-approval pretty early. We’d only talked to him for a couple weeks and we were telling him about this house. We wanted to go buy a seven bed, five bath, and he was like, “Yeah, you guys are approved. You’re all set.” Which felt a little bit early. Our finances were kind of all over the place, but we were excited to hear that. So we got under contract and we were still deciding between FHA and conventional. And then a little further along, it became super clear that FHA was the way to go.

Ashley:
What were some of those deciding factors between the two? Was it the lower down payment? Were you getting a better interest rate?

Isaac:
The down payment wasn’t the biggest deal. 3.5 compared to 5%, we were just going as low down as possible. But with all the fees and the rates, it actually came out to three or $400 a month difference on the payment, the monthly payment. So we decided to go with the FHA mainly because of that.

Tony:
Isaac, just one question that pops out to me because you said that the deal almost fell apart because of your lender. And you said, “Hey, it was a little shocking that everything was moving so quickly.” I do think that that’s a more common than it should be experience for a lot of people looking to buy a home where they go talk to a lender, the lender promises them everything under the sky, everything under the sun. And then when it gets close to the closing table, they’re like, “Actually, this isn’t going to work because of X, Y, and Z.” So I have a question for, before I say that, I guess my point to everyone that’s listening is when you’re working with a lender, don’t ask them, “Can you give me a loan on this property?” Because that’s like asking a car salesman, is today a good day to buy a car.
It’s always a good day to buy a car. A better question is, how many of these specific types of loans have you written in the last year? Or what percentage of your book of business is this specific type of loan? And if they’re like, “I maybe write one of these or underwrite one of these or sell one of these loans once every couple of years,” versus, “Oh yeah, 90% of my client base is the type of loan that you’re working on. ” Those are two very, very different experiences. And I know that from firsthand experience because I had a deal that I almost lost. I think we were less than three weeks out from closing. I think it was like 18 days out from closing. And then my lender came back to me and said, “Hey, actually I can’t close this deal for you. ” And I had to scramble to go find another lender who could actually get it done in that timeframe.
So it’s super important to not only understand can they write this loan or can they give you this loan, but what level of experience and expertise do they have with it? So for you, what did they say when they called? Did they give you a reason? What was the reason they couldn’t actually get the loan done?

Isaac:
Yeah, great questions to ask. I think there was a lot of factors. We had a lot of 1099 income and a lot of tips between the three of us, and so it’s all kind of hard to show on paper. But when he called me, he was just like, “Hey, I know you guys wanted the 450. We can only approve you for 380. I don’t know what to tell you. ” And so that was kind of all he said. And I was like, “Oh, okay. So what do we do? ” And he’s like, “I’m sorry, man.” And we’re under contract at that point. And so I was like, “Oh my gosh, this is crazy.” So we ended up going with the lender that our real estate agent recommended, which hindsight, we should have did that from the very beginning.

Tony:
Where’d you find the initial lender? Where did that person come from?

Isaac:
I was on Google searching, first result.

Ashley:
Been there, done that for many things. Actually, a plumber today.

Isaac:
I feel like that’s one thing that as a rookie I think is good to know is everybody in the process wants to talk to you and sometimes they’re a little too eager, but if you’re worried about, “Oh, is it worth the time of day for this agent or this lender?” They’ll talk to you, man. They’ll approve you, even if they’re not sure about it. But not always. But I feel like that can be a good thing is people are excited to talk to you, but you obviously got to make sure that everything’s on the up and up.

Tony:
So one piece that we started to talk about in the intro, but I didn’t get the final answer to is what was going on with the box truck? Why were you sleeping in a box truck? How did this story lead to that moment?

Isaac:
Yeah, so I’ve been working on a box truck for a while. I’m trying to build a house in the back of a box truck and then go drive around the country. Oh,

Ashley:
Like a camper van or something or like a schooly. Yeah.

Isaac:
Yeah, doing the van life. Yeah. So I was in the process of getting that all set up and I actually moved out of my place to move into my truck, but it wasn’t going great. I was mostly just crashing with my girlfriend and then we kind of split the week of. And so that left me just in a truck.

Ashley:
I feel like this is a country song, the beginning of lyrics.

Isaac:
Yeah. And then my partner was evicted, so I had a couch and a bunch of books and DVDs. It was a crazy week.

Tony:
But the deal ends up closing. And I guess what motivated you at that point, or maybe prior to that point, Isaac, to even think about trying to buy real estate? Because I mean, it sounds like you didn’t have an abundance of cash going into this, right? You were crashing on couches, your friend had just got evicted. So it wasn’t maybe these big piles of cash that someone would think is necessary to actually go out and get a first deal, but you guys somehow found a way. But I guess what was this about? Was it more about trying to save on money or to save on rent? Or what was the genesis of this idea and what made you believe that you could actually do it?

Isaac:
I didn’t realize this till I was living in the house for a couple months, but two years ago, I was done paying rent. I hated paying rent in kind of in any way, shape or form, just feels like your money’s not working for you. It’s just disappearing every month. And at one point when I was working a different job, I was paying half of my income to my rent and I was getting nothing out of it. And so I just wanted to do anything I could to get away from paying rent. And so now I’m in a situation where I pay 450 a month and I’m poised to get every dollar out that I put in. Pretty much all the interest is paid by our tenants. And so I can feel good about paying my mortgage now because I’ll get it back. I might as well be putting my rent payment in a bank account, which is one of the huge benefits of real estate.
So that was the big motivator where I was just done paying rent.

Ashley:
How did you guys structure this deal? Did all three of you go on individually as partners? Did you guys have any kind of written contract or agreement for this deal?

Isaac:
Yeah. So we bought this house in June. In March, together we three of us bought a cargo van. I just saw it on Facebook Marketplace and I got my friends. We all split it. So we went three ways on a cargo van. We had some business ideas with it. We ended up doing a soda truck. It’s big in Utah. I’m sure Tony knows. But so because of that, we formed an LLC and we had a contract of how to handle the truck, the van. And so ownership of that kind of led us organize into making a bigger purchase. And when we bought the house, we obviously drew up another agreement as to how we were going to operate with that.

Ashley:
I think that’s a really important piece though, that you guys actually started with something smaller before just jumping into a $450,000 loan together, is being able to test out your partnership with something smaller and see how that goes before investing yourself into something bigger.

Isaac:
Yeah, totally. It makes you feel a lot more confident going in that you like working with each other and you know each other.

Ashley:
Well, Isaac, we have to take a short break, but when we come back, we want to hear more about your story. We’ll be right back. Okay. And we are back with Isaac who partnered with two of his friends to purchase their seven bedroom house. So Isaac, now that you’ve got your loan approved, you’ve had your week of living in the box truck and now it’s closing time. So did you need to do any rehab or anything on this property before you moved in or while you lived there?

Isaac:
Not really. It’s been pretty easy so far. We had a couple things, like small things, and we actually had a leak in our back room, which you guys know about. Leaks is a pain. So we had to tear down some drywall for that and put it back up. And we were just doing all that ourselves, but other than that, it’s been pretty much unchanged from when we bought it. It was a single family was living in here, and so they kept it pretty well maintained, so we haven’t had to drop a lot on renovation.

Tony:
And then what was your total out- of-pocket cost to get into the deal?

Isaac:
Yeah. For each partner, it was like $6,500, 6,500, which is a lot less than I thought it would be to buy half a million dollar house.

Tony:
Yeah. But I mean, even all together, 6,000 … There’s three of you guys?

Ashley:
Yep. Yeah.

Tony:
So we’re talking about $19,500 across the three of you guys to buy a seven bedroom home.That’s a pretty good trade. And so I mean, there’s seven bedrooms, only three of you guys. So what’s happening with the other four bedrooms right now?

Isaac:
Yeah, so we got three of our friends to be our tenants. And so we have three guys renting from us. We’re everything legit, got a lease in place. It’s important to make sure you’re doing everything, even among friends to make sure there’s paper behind it all. But yeah, we’re renting out three of the rooms. It gets pretty crowded with seven out of seven rooms. So one of them is just an office and I think two of our guys use the office. And so …

Tony:
Man, you combine a couple of strategies here, right? You have the partnership strategy of getting together with some other folks to acquire the property. Then there’s the house hacking component of, “Hey, we’re going to rent out the extra space,” but then you also layered on, we’re going to rent out each room individually. So we got room rentals, house hacking, partnerships, all coming together in one deal, which man, talk about being scrappy. I think one of the questions though that a lot of folks might have is the sacrifice maybe that comes along with sharing your space with so many people. How has that experience been for you? We have a friend in the podcast, his name is Craig Krolop, and I always bring him on when we talk about house hacking because his first deal, his first house hack, he was sleeping on the couch. He bought, I don’t know, it was like a four or five bedroom and to maximize the revenue, he was sleeping on the couch and renting out all of the four or five bedrooms.
Do you feel like you’re in that position or just what’s it been for you so far going through this process?

Isaac:
Yeah, totally. It’s been pretty good for us because we’re just a bunch of 20 somethings. And so we’ve all been living with roommates for the last seven years. And so it hasn’t been a big adjustment for us. Most of the guys that live here, I’ve either lived with before or they’ve been my good friends for a while. And so for us, it wasn’t a big deal at all. But yeah, I love those stories of people who buy a whole house and they just live in the garage and rent it all out. I get stoked on those just because it’s like just maximizing the space and-

Ashley:
Yeah, Isaac, you’re not doing enough. You got to be living in the box truck in the driveway,

Isaac:
Man.That’s the goal. Yeah. I want to get a house with a big backyard, park the truck back there and rent out the whole house.

Ashley:
Actually, the living flip I’m doing right now has an RV hookup outside too.

Tony:
I can’t remember which guest it was. We definitely interviewed someone who did something similar to that, but they had a camper van or an RV and a bunch of land and they would stay in the camper van and they would, I think they were short-term renting or maybe midterm renting out the main house, but they would stay in the camper van. And like, man, what a great way to really drive some extra revenue through your property.

Ashley:
Isaac, let’s break down the actual numbers on this property. So what was the … And did you find this deal in the MLS? We didn’t even talk about that.

Isaac:
Yeah. Yeah, it was on Zillow.

Ashley:
And how much was it listed for?

Isaac:
Yeah, so I’ll kind of go day by day more or less, but we found it, we saw the listing in April and it was listed at 470,000. It was already down from 570. It was going down month by month. I could see the price history. And so my eyes just lit up like, “Oh, wow, they need to get rid of this thing.” And so we were tossing around the Zillow link in our group chat and thinking about it. And so I just set up a tour. We went and checked it out and at 470, it was pretty expensive. While we were talking about it and thinking about it, the price goes down to 460 and I’m like, “Man, they needed to sell this thing. We got to get on this. ” And then we were still reaching out to some lenders, talking about different things, and it goes down to 450 and we were like, “Oh, man.” And so we finally got approved and we made an offer at 428.
We’re seeing it go down, and so we wanted to see if we could … Yeah. But it was like, I guess everybody’s getting the Zillow emails that the price goes down. And so when we put our in our offer, there was three or four offers at the same time. And so we ended up going back up to 450, which was the asking price at the time. And then they said, “Give us your highest and best offer.” And we went to 4575. So that was the official purchase price when we got it under contract.

Ashley:
And what was the date of this? What year was this?

Isaac:
2025 this past year, we got it under contract at the end of May. That’s just how long it took to get financing and everything figured out. And then that set us up for a closing at the end of June.

Tony:
And with three different partners in the mix, Isaac, how do you guys actually come to a decision on, yes, pull the trigger versus no? Was it everyone just kind of felt good about it? Was there some healthy debate? Was there, “Hey, we’re going to take a vote in majority rules.” How did you guys go about actually saying, first, this is the property, but then second, this is the number that actually makes sense for us.

Isaac:
So as far as the property, you never want to get too attached to a deal, but this one was kind of a fluke, a seven bed, five bathroom. And when we were looking at different houses, this was kind of the only one that penciled out for what we wanted to do. And so we looked at three other houses, but for me, this was always the one that we wanted to get. And so talking about when it was time to pull the trigger, this is maybe a tip for the rookies out there is if you have an agent and you’re deciding on whether or not to make an offer, if you ask me, make the offer because you can always back out before your deadlines. And so one of my partners was feeling he was a little hesitant to put down an offer on a $450,000 house.
And I got on a phone call with him, “Hey man, this is no commitment. It’s a great house. It’s what we want. If we need it back out, we can. ” And so that gave us a lot of confidence to move forward with it.

Ashley:
What did your mortgage payment end up being after you did 3.5% down?

Isaac:
So our mortgage payment is like 3,150.

Ashley:
And that’s with escrow, your property taxes and insurance too?

Isaac:
Yeah, that’s P-I-T-I.

Tony:
What’s your interest rate, Isaac?

Isaac:
We got 5.99.

Tony:
Wow, that’s pretty good in 2025.

Isaac:
Yeah, I was kind of surprised.

Tony:
So hold on, let’s pause there for a second. I mean, because sub 6% in 2025 wasn’t super common. I don’t know if you guys just got lucky when it dipped or was there some sort of bonus or promotion? What bank did you go with? Was it a local bank, a regional bank, a credit union?

Isaac:
They’re not like a local bank. They’re not like a little branch. They’re a lending company.

Ashley:
So like a brokerage?

Isaac:
Yeah.

Ashley:
Did you pay any points, do you know, to get the interest rate down?

Isaac:
I don’t think we did. They gave us a closing credit is what they call it, I think. They credited our account towards our closing costs, which I think we could have paid that and not taken the credit and gotten our rate down a little bit more. But maybe one factor is like when we were looking at the conventional versus FHA, the conventional was a lot more expensive and I think that was into the six percentage. But when we went to FHA, it was, yeah, we got it to 5.99.

Tony:
Ashley, I haven’t seen anyone close, at least from the conversations I’ve had aside from like, I think one person I know used some weird Chase thing, he had a lot of money with them, but most of the investors that I know and I talk with, I don’t know anyone that closed below 6% in 2025. Do you know anyone or even-

Ashley:
No. Darrell was doing a loan for a VA loan and usually you can get a lower interest rate. And he started the loan process in December and that was a 6.125%, but me have to negotiate since things have changed from them and we still haven’t closed. So now we’re locked in at a 5.99% even right now.

Isaac:
Yeah, I don’t know. We’re also owner occupied, so that could be a factor. And yeah, in June, I don’t know. I guess we got lucky.

Ashley:
So what do you guys end up charging for rent from your tenants and then how much are you each contributing every month yourselves, if any?

Isaac:
Yeah, we get about 700 per person on average per room, and that’s maybe a little bit more than we were hoping we could get. One of our rooms has like … Well, I guess let me take it back. We have five full bathrooms, and so we’re able to charge a little bit more because two of our renters have their own bathroom and they actually have their own basement, both of them. It’s a weird house. Yeah, we have two separate basements and they don’t even share a wall. It’s crazy, but …

Ashley:
That is terrible. I like trying to imagine. So is the access to the basement in their bedroom or they just get that access to the basement?

Isaac:
The house is laid out. It’s got a living area with a living room and a kitchen and two bedrooms. Then you go up a half flight of stairs and there’s a bedroom with an en-suite, and then there’s a master bedroom with an en suite. And then below that is one basement, and then below the first living area is one basement. And they’ve all got their own doors and everything. So yeah, it’s a weird house. Anyways, I think your first question was, we get about 700 per room and with three guys, we pull in about 2,100 from rental income, which leaves the owners with about, what is that? Yeah, 1050 and then utilities and all that.

Tony:
How much were you paying in rent for your loss place, Isaac?

Isaac:
In our last place, I was paying like 850.

Tony:
So you cut your rent or your living expenses in half, and you got to own the place that you were actually paying money toward every single month.That’s a big win.

Isaac:
Yeah, it was a huge improvement for us. It was great.

Ashley:
So what about utilities? How are you guys handling that? Do you split it between the six of you or how does that end up working out? And even common area stuff, are you sharing food in the kitchen that you’re sharing costs, paper towels, things like that? How does that all work in the co-living situation?

Isaac:
Yeah, so we split utilities six ways, and so that’s on top of what we get for the rent, but it’s not too bad with six people and just a single family house. Normally, for most of the time we’ve been living here, it’s been like 60 bucks per person. In the winter, it’s been closer to 100 or 110 bucks per person. As far as sharing spaces, most of us have our own bathrooms, which is super nice. And so that’s not as big a deal. The paper towels, a little bit of a contentious thing. That is another thing are-

Ashley:
They’re expensive.

Isaac:
They are. They are. Got to get that bounty, but we only have one kitchen in our house. For six people, that’s a little bit tight. But I don’t know, it’s pretty workable because most of us have just a mini fridge or a personal fridge. And so that’s probably the biggest bottleneck that we’ve been able to just fix that way.

Tony:
And just to clarify, the consumables like the toilet paper paper towels, that’s something that you guys all put in for together as well?

Isaac:
We’re all friends. We just switch off. We just text in the group chat, “Hey, I got it this time. Somebody else get it next time.”

Ashley:
Tony, we should start doing that with our kids like, “Hey.”

Tony:
You

Ashley:
Guys got savings accounts. It’s your turn to pick up the toilet paper today.

Tony:
Well, Isaac, I want to get more into your story and specifically around some of those challenges you saw with the FHA inspection, because I think that is one of the things that detracts people or deters people from wanting to go toward an FHA loan. And we’ll cover that right after a quick word from today’s show sponsors. All right. We were back here with Isaac Mann and Isaac before the break shared with us how we found the deal, how he structured with his partners, how he’s combining partnerships and co-living and all these different aspects. But one of the things we didn’t touch on earlier was the actual FHA inspection. And there are a lot of pros to the FHA loan, one being that you have the ability to get them with a very low down payment. They’re a little bit more flexible on DTI and things of that nature than a conventional loan.
But one of the big challenges or one of the big detractors of an FHA loan is the inspection process. What was the inspection process like for you on buying this deal? And was it all a pretty reasonable request or I’ve heard horror stories about the things that FHA has asked folks to do. So what was that experience like for you?

Isaac:
Yeah, they gave us a laundry list of things to do. So we had our inspector come out and do a regular home inspection, which was good. And then I think they sent out an appraiser as well. It was kind of just in that process. They also sent out an FHA inspector and we’d heard like, “Oh, if there’s any peeling paint, I feel like that’s the big one.” And so we expected a couple things and they gave us … So they did the inspection and then they gave us a list of there can’t be any trees touching the house and there can’t be … They gave us a few spots that we needed to touch up some paint and they gave us … In the back, part of the gutter was hanging off a little bit. They said we needed to repair that. And so it was pretty reasonable.
Nothing was … Oh, they also told us we had to fix something in the bathroom. We just had to repaint with some mildew resisting paint. So we hired a handyman for that. That wasn’t a big deal. But the biggest one was the trees. The house, it wasn’t super overgrown, but there were definitely trees all around it. And I thought it looked fine, but after they mentioned that, we came back and we were looking at it and the trees were in the house onto the eaves and onto the gutters. And so I think it was a good thing, but we asked the sellers, “Hey, do you guys want to cut down all your trees?” And they were like, “Nope, we’ve got backup offers.” But they said we could come and do it if we wanted. And so we were like, “Okay.” So we showed up-

Ashley:
So you guys actually cut down the trees?

Isaac:
Yeah. That week was crazy. So I used to do events and me and both of my partners were going to go work an event from Friday, Saturday, Sunday, and our financing deadline was Friday. And so on Tuesday and Wednesday, I’m getting ready to leave on this job and we’re going over during the day with a chainsaw and clippers and a ladder. We’re climbing up on the roof of these people’s house, and the seller’s great. They’re just super nice. They’re like, “Yeah, man, do your thing.” They bought us pizza one day.

Ashley:
I just think about cutting down a tree. What if you get hurt, first of all, on their property or the tree … My mind just immediately goes to liability with anything, but that’s great that they didn’t make you hire a licensed tree trimmer.

Isaac:
They weren’t huge trees. I’m not talking like a enormous trees. They were probably six inches around type of thing.

Tony:
Man, I was thinking the big oak trees that grout and covering shade and all that stuff.

Isaac:
Nothing too crazy. Yeah. But yeah, we had to … Yeah, six or seven of them. And we got up on the roof and chopped off the first 10 feet and then we chopped off the next 10 feet. And so it wasn’t too bad, but it was a bit of a crazy week because we had to go and do that. And we didn’t know if we were approved for the house yet. That was the thing because we were still dealing with all that financing and stuff. And so it was a situation where we could have gave them a tree trimming and then found out the next day that we weren’t going to get the house. So we kind of just went for it and it worked out.

Ashley:
Well, Isaac, what’s next for you? Do you have any future plans for this house to hold it for so many years? Do you plan on buying another property with your same partners? What’s the plan going forward?

Isaac:
We are not planning on selling this house anytime super soon. When all the partners move out, I think we’ll get a either property management company or just manage it ourselves, continue to manage it ourselves from afar. And then we are expecting to get 1,200 cash flow when we do that. And so actually one of our guys just moved out 30, 40 days ago. So we filled his room with another renter. So right now it’s two owners and four tenants, and he’s actually getting cash flow.

Ashley:
Oh, for that room. That’s actually a good way to structure it too, so that you’re not stuck living there because you own it. If you wanted to move out, you’ve got the income from your room.That’s cool. Yeah.

Isaac:
Yeah. You guys book the first time home buyers really emphasizes the exit strategies. And I actually didn’t read that until a few months after I bought the house, but I think going into it with the exit strategies in mind is super important. And so yeah, we’ve got it set up so any of the owners can move out and once their room is filled, they’ll just start taking a dividend basically. And so when we are all moved out, we all expect to take around 350 a month. And so probably just hold it for a while. As far as looking forward, we are touring a few more houses on Friday. We’ll see how that goes.
I think this one is a good situation and we won’t be able to do an FHA again, but I’d love to get a couple more houses in this area and see what we can do. But I’ve actually been looking around … Utah is a little bit tough. The median house price here is like over 400, which is kind of hard to get into, but I was looking in Buffalo actually. I feel like that place is great. I saw one of your guys’ reels and it was like Binghamton, New York. And so I was looking around Bington. I was like, wow, this is cheap compared to Utah.

Ashley:
The thing you have to … I don’t know about Utah property taxes, but that’s the one thing that will get you in New York is very high property taxes. So that’s one thing to look out for.

Isaac:
Yeah. There’s a couple of things in New York, like the certificate of occupancy.

Ashley:
Well, the tenant landlord laws are very tenant friendly too. Yeah.

Isaac:
Yeah. So yeah, lots of stuff to think about. I love thinking about real estate. I feel like before … We can cut this out maybe, but before we got this place, when I was living in my box truck, I was just always talking about, dude, we got to get a duplex and live in one half of it. And yeah, I remember my friend said to me, he was like, dude, you talk about money a lot for someone who’s practically homeless. I was like, huh, that’s interesting. Yeah, I guess I hadn’t thought about

Tony:
That. You got to speak it into existence, man. You got to speak it into existence.

Ashley:
Well, Isaac, thank you so much for joining us today. Where can people reach out to you and find out more information about your story?

Isaac:
Send me an email, manmakeslc.com. Yeah, I’d love to chat.

Tony:
And that’s man with two Ns, right?

Isaac:
Yep. M-A-N-N-M-A-K-E-S [email protected].

Ashley:
Well, thank you rookie listeners for tuning in today. I’m Ashley. He’s Tony, and we’ll see you guys on the next episode.

 

In This Article

As if house prices and insurance weren’t expensive enough, throw soaring property taxes in the mix, and you have the holy trinity of unaffordability, eating into cash flow like termites into untreated wet wood.

According to a recent analysis by the Urban-Brookings Tax Policy Center, cited by CBS News, the median property tax bill in the U.S. rose 30% between 2019 and 2024. However, there is a vast discrepancy between states. WalletHub reports that the average American household now pays roughly $3,119 a year in property taxes, according to the U.S. Census Bureau, with effective rates over eight times higher in the costlier states than in the cheapest.

Almost 50% of the Median Income Goes to Principal, Interest, Taxes, and Insurance (PITI)

The Atlanta Federal Reserve’s Home Ownership Affordability Monitor highlighted the combined effect of rising costs. According to the findings, the median-priced home in late 2025 required 42% of the median income. To put it in perspective, the median principal interest and mortgage payment with taxes, homeowner’s insurance, and private mortgage insurance doubled in a five-year period between June 2020 and June 2025, increasing from $1,564 to $3,114—far outpacing wage growth. Some cities, such as Nashville, are higher.

Doug Duncan, former chief economist of Fannie Mae and founder of Duncanomics, laid some of the blame at the Fed’s feet. Duncan told Bankrate:

“That role is having driven real interest rates negative and nominal interest rates essentially to zero, which brought mortgage rates down to the 3% range for a sustained time period. There was no rational reason why rates should have been that low, that long, or even that low to begin with. But the fact that rates were that low [for] that long moved a whole bunch of people forward in time with a once-in-a-lifetime opportunity to lock in an unreasonably low interest rate. Of course, that stimulated demand, which accelerated the pace of price appreciation.”

The Vicious Cycle of Rate Hikes, Low Inventory, and Soaring Prices

The escalating cost of owning a rental has made the idea of achieving short-term cash flow as difficult as threading a needle in a hurricane. The post-pandemic interest rate hike led to a lack of inventory as potential sellers held on to their low rates and buyers balked at buying homes they could no longer afford. 

Factor in the increase in prices, tax assessments, and taxes, and extreme weather was the final nail in the coffin, driving insurance costs skyward.

A Bloomberg analysis of ATTOM data found that in 2023, tax levies on single-family homes climbed 6.9%, the biggest increase in five years, with the average homeowner’s tax bill around $4,000.

Thomas Brosy, Tax Policy Center senior research associate, wrote in a September blog post:

“Surging home values have amplified calls to cut or even abolish the property tax. Because property taxes rise with home values, homeowners may fear being squeezed by larger tax bills. Those fears aren’t unfounded: The median bill rose about 30% between 2019 and 2024—still far short of soaring home values, but with wide variation across states.” 

Where Cash Flow Is Under Pressure From High Taxes

Unless you have owned a rental property in New Jersey for a very long time or purchased it free and clear, good luck seeing any cash flow. That’s because it has the most expensive effective property tax rate in the country, followed by Illinois and Connecticut. As of early 2026, the average home price in New Jersey was $558,805, according to Zillow figures, which would mean an almost $12,000 tax bill. 

By contrast, the lower real estate tax states of Hawaii and Alabama have rates in the 0.27% to 0.38% range, putting their average annual tax bills at a far more manageable $2,239 and $788, respectively.

The combined burden of high taxes and insurance now exceeds mortgage payments in many areas, according to a 2024 Wall Street Journal article citing data from Intercontinental Exchange. The constant upward pressure on expenses forces landlords to raise rents, tightening the squeeze on affordability.

Top 10 states with the lowest property taxes

1. Hawaii: 0.27%; $2,239 average annually
2. Alabama: 0.38%; $788 per year
3. Nevada: 0.47%; $2,027 per year
4. Arizona: 0.48%; $1,879 per year
5. Colorado: 0.48%; $2,602 annually
6. South Carolina: 0.48%; $1,251 yearly
7. Idaho: 0.49%; $2,038 per year
8. Delaware: 0.50%; $1,768 annually
9. Tennessee: 0.50%; $1,442
10. Utah: 0.52%; $2,525 annually

Top 10 states with the highest property taxes

1. New Jersey: 2.11% effective rate; average of $9,590 annually
2. Illinois: 2.01%; $5,298 per year
3. Connecticut: 1.81%; $6,643 annually
4. New Hampshire: 1.66%; $6,667 yearly
5. Vermont: 1.59%; $5,039 annually
6. New York: 1.55%; $6,582 annually
7. Nebraska: 1.49%; $3,549 per year
8. Texas: 1.49%; $4,232 annually
9. Wisconsin: 1.42%; $3,792 yearly
10. Iowa: 1.39%; $2,897 annually 

Why Tax Math Is Never That Simple for Investors

It could never be as simple as “low taxes good, high taxes bad,” could it? 

Yes, on an even playing field, low taxes would mean more cash flow and high fives all around. However, in the U.S., the playing field is more like the lip of a volcano, and high-tax states often have better schools and infrastructure, and consequently higher rents, because more people want to live there.

Lower-tax states may depend on other revenue sources, such as sales or income taxes, to fund local services, which means a landlord might incur greater costs for renovation materials. Overall, when lower-tax states strain school and infrastructure budgets, desirability drops along with rental and tenant incomes.

There are pros and cons to every market, and taxes are only part of the equation. For example, Florida, considered a low-tax haven, is not that low when it comes to real estate taxes, which have increased 9.5% per year from 2019 to 2024, as property prices climbed 14.6%, according to a report by Cotality.

Final Thoughts

Many landlords, including me, can attest that choosing a market and rental property based on paper cash flow alone is a big mistake. Low taxes, insurance costs, and prices, as well as decent rents—what’s the catch? If something’s too good to be true, it often is.

While there are many affordable markets in the Midwest, Pennsylvania, and the South, where, in theory, it is possible to cash flow, investors must prepare for a dip in local economies, secure higher-paying jobs, and have access to a quality tenant pool. There is also increased turnover, as well as management and maintenance costs.

Higher taxes do come with a trade-off, but usually it isn’t so bad—better schools, lower crime, higher rents, and better-qualified tenants. In the current market with interest rates, taxes, and insurance at high levels, cash flow—like the penny-farthing bicycle and bonnets—seems like a quaint concept from a bygone era.

This is the long-game era. Buy a high-quality rental in a decent neighborhood at the best price you can, for tax benefits, high demand from stable tenants, and long-term appreciation. Eventually, it will start cash flowing and stacking on equity—and that’s when you’ll look like a genius.

In This Article

Mortgage rates have hit their lowest levels in three years, and while that should be a cause for celebration from prospective homebuyers, it hasn’t translated into greater sales. In fact, it could trigger the opposite: a greater affordability crisis.

According to brokerage and listings site Redfin, 13.7% of homes that went under contract in January fell through—the highest share ever recorded for that month. There are two main reasons for this. 

First, it’s a buyer’s market, so they can afford to pick and choose. However, the second reason has greater repercussions for investors: financial insecurity. 

Many buyers are walking away from deals because they are worried about the additional costs of owning a home—taxes, insurance, and maintenance—all of which are soaring. Additionally, there is job insecurity and the fear of how tariffs will affect their business and income, which, coupled with the overall cost of living, from food prices to furnishings and energy costs, has many buyers fearful about using a large lump of cash for a down payment and then being on the line for a cadre of monthly expenses they didn’t have when they were renting.

“They’re second-guessing the wisdom of making a huge purchase when there’s a fear in the back of their mind about the state of the economy and the uncertainty of their finances,” Los Angeles real estate agent Alin Glogovicean told Redfin’s news site. “That’s particularly true when they’re first-time buyers who don’t have equity from a previous home sale, and they’re using most or all of their savings on a down payment.”

Mortgage Rates Fall, But Affordability Barely Moves

Despite mortgage rates dropping below 6.1%, NAR’s chief economist Lawrence Yun says that has not translated into sales. He said in a press release: 

“Improving affordability conditions have yet to induce more buying activity…Unless housing supply increases, these additional potential buyers becoming active in the market could simply push up home prices. This will put increasing pressure on affordability, which is why it is critical to increase supply by building more homes.” 

The market is not monolithic, and while sales are stagnant nationally, Realtor.com reports that these markets saw increased sales year over year as of January:

• Phoenix-Mesa-Chandler, AZ: +11.8%
• Boston-Cambridge-Newton, MA-NH: +10.7%
• Charlotte-Concord-Gastonia, NC-SC: +10.7%
• San Francisco-Oakland-Fremont, CA: +8.9%
• Oklahoma City, OK: +8.7%

How Cheaper Rates Make Homes Less Affordable

As a recent HousingWire article points out, analyzing data from Zillow, Redfin, and Realtor.com shows that past episodes of sharply lower mortgage rates triggered rapid price appreciation that more than offset the savings from cheaper financing, particularly during the pandemic-era boom, leaving buyers facing higher monthly payments despite lower interest rates.

As yet, there has not been a sudden price increase, partly because the interest rate decreases have been gradual. The drop from about 6.96% in early 2025 to roughly 6.1% a year later, along with modest income gains, has given a medium-income household more than $30,000 in additional pricing power compared to a year ago, according to Fox Business, using Zillow research.

How Real Estate Investors Should Navigate the Current Market

Investors looking to stay active in the current market have a few options.

Buy with cash and negotiate

Whether you use your own cash or hard money with a plan to refinance, making an all-cash offer when houses aren’t selling and buyers are backing out gives you negotiating power. Finding a motivated seller and striking a deal will stand you in good stead when rates drop further and prices increase.

Buy now with a fixed-interest loan and service the debt

An interest rate of around 6% is nothing to sneeze at, especially considering where we were a couple of years ago. The good news is that house prices have only moved incrementally recently, so lock something in now, service the debt with rents, and enjoy the tax benefits—hoping to cash flow at 6% in most markets is a tad optimistic—and plan to make a move when things pick up, either through lower rents or an increase in prices.

Buy a small multifamily with an FHA loan

This old chestnut works in most markets because you’re always going to need somewhere to live, so you might as well have your tenants help you do it. 

At around 6%, your mortgage payment, when buttressed by your tenants’ rents, will be affordable, and after a year, you can see where the market is and either refinance this home into a regular loan, rise and repeat elsewhere, or stay put and save for another investment. The great thing about an FHA loan is that you only need to put 3.5% down, and your credit doesn’t have to be stellar.

Move to a much cheaper market and start accruing rentals.

If you have equity in your personal residence, live in an expensive market, and have flexibility about where you can live and work, selling and moving to a cheaper market could help you kick-start your investment career.

If you have lived in your primary residence for two out of the past five years, you will be eligible to avoid capital gains taxes on $250,000 (if single) or $500,000 (if married) in profits (that amount could be dramatically increasing), which could serve as a down payment in less expensive areas on a few rentals. If one of those rentals is also a small multifamily where you live, you have just jump-started your retirement.

Final Thoughts

It would almost be easier to strategize if interest rates were higher, because your options would be more clear-cut. A 6% interest rate tempts you to stick a toe in the water—and only hope that a shark doesn’t come and grab hold of your ankle!

But remember that taxes and insurance are still high, as is the cost of living, so an interest rate drop by half a point or even a point probably doesn’t move the needle much in your overall finances from where they were a year ago. However, the same goes for renters who need a place to live but can’t afford to buy.

Thus, if you buy a rental in a decent area now, you are likely to have a line of applicants. The important thing is to buy sensibly, not exhaust your reserves, and not rely on making much, if any, cash flow in the short term. 

Dave Meyer:
The biggest risk in real estate isn’t buying the wrong property. It’s never buying it all. The perfect rental property, it does not exist and waiting to find it is costing you thousands of dollars per month. Most beginners spend months or even years stuck in analysis paralysis. They’re waiting for the perfect deal, the perfect time, or the perfect market. Meanwhile, they’re missing out on years of appreciation and cashflow. But right now, we’re going to tell you the 10 things we wish people had told us before we bought our first rental properties, so you can stop overthinking and start building wealth. If you’re watching this video, you’re probably anxious about pulling the trigger. You’re worried about making a mistake, buying the wrong house, or losing money. I’ve bought dozens of rental properties I’ve been investing for 16 years, and it took me a long time to learn the principles to grow a successful business, but you don’t have to wait.
Here are 10 things about rental property investing we wish we knew before we got started. Welcome to BiggerPockets. I’m Dave Meyer. He’s Henry Washington. So Henry, start us off. What is the number one thing you wish you knew before you bought your first rental?

Henry Washington:
The number one thing I wish I knew was that goals should dictate your strategy, not your strategy dictating your goals.

Dave Meyer:
Yes. Yes. Thank you.

Henry Washington:
I hear all the time from investors, “I want to be a house flipper,” or, “I want to be a landlord,” or, “I want to operate short-term rentals.” But why? But yeah, but why? All of those things are exit strategies. They’re ways to monetize your real estate deal, but the way that that money comes in may not actually fit your goals. And so getting started, I know it sounds cliche, but having your goals clearly lined out in your head should help you pick the strategy or the exit strategy that you use because your goals should be a function of how much money you want to make and in what timeframe you want to make that money in. And not every strategy is going to fit a particular set of goals. So if you’re somebody who’s saying, “I don’t need cash flow now. I need to supplement retirement.
I need cash flow later.” Well, you’re probably looking at some strategy that involves you buying established good assets in parts of a community where there’s going to be appreciation. You may not get the best dealer cashflow now, but in 10 to 15 years, 20 years, those things could be close to paid off and you’ll have great assets. But if you’re somebody who’s like, “I need large sums of money in short periods of time,” you may need to look at flipping a house. And then you look at where in the country can you do that strategy. I think people do this backwards all the time. They say, “I want to buy cash flowing assets in a cashflowing market, but they don’t have any money and they need money sooner than later.” Well, then you probably don’t need to go buy houses in Cleveland. You probably need to look at flipping house, maybe where you live.

Dave Meyer:
For me at least, real estate is a means to an end. And if you don’t know what the end is, how are you going to figure out what the means are? There are probably some people out there who invest in real estate because they just love real estate. I like real estate, but what I love is the stuff that real estate gets me, the financial freedom, the time freedom, that kind of stuff. That’s my actual goal. My goal is not to own 10 houses. My goal is to have more flexibility, to have more time with my family, to do the things that I love. And so I choose real estate investing strategies that support that. That’s why I don’t flip houses because it would be the opposite of what I want because it’s too time intensive for me given where I am in my life.

Henry Washington:
Absolutely. You’re right. If you’re looking for freedom, the strategy you may pick can be very labor intensive, even though it might hit your financial goals. So you need to think about your lifestyle as a part of your goals as well, or else you just build yourself a job where you’re working more hours in your real estate business than you are in your day job anyway.

Dave Meyer:
100%. Everyone wants to jump in and I get that sentiment. You should be excited about this. It’s fun and it’s empowering, but take a minute, take an hour and just think about exactly where you want to be. And I promise you, every decision you make for the rest of your investing career will be easier if you just think about this upfront.

Henry Washington:
If you take your goals, once you have them, take them, write them down and stick them where you can see them often. I have sticky notes with my goals on it. They were all over my shower when I first got started. But what happens as an

Dave Meyer:
Investor- Is sticky notes in your shower? Oh

Henry Washington:
Yeah, it’s awesome.

Dave Meyer:
Does that work?

Henry Washington:
That’s my best ideas. I can’t

Dave Meyer:
Lose a

Henry Washington:
Good idea because I’m taking a shower. I got to write it down.

Dave Meyer:
Your wife must hate you.

Henry Washington:
But seriously, stick them everywhere because one thing that happens as an entrepreneur or as a busy person in general is you get decision fatigue. And then you sit here spending so much time thinking through something and it’s really easy to just look at your goals and say, “Okay, is the decision I’m trying to make aligning me to my goals?” If the answer is yes, then it helps you make that decision. If the answer is no, you can literally forget about it. So it’s like your North Star treat it as such. Put it where you can see it, use it to guide your decisions. Dave, what you got for number two?

Dave Meyer:
Number two is you are an entrepreneur, not an investor. I know this is going to make people mad. I know people are going to get mad. Real estate investing is not pure investing. It’s not opening up Robinhood and buying stock or cryptocurrency. You are starting a business. This is entrepreneurship and you have to treat it as such. You have to work. And that is just an inevitability of real estate investing. Maybe one day you do what I do now, which is mostly passive investing, it’s still work. I still spend time on my business every single week. It’s not a lot of time, but it is still time. It is not actually passive. And I think for people who are starting out this idea that you’re an investor and you’re just … Investing just means putting money in someone else’s business. That’s not what you’re doing.
You’re putting money in your own business. And even though we call it real estate investing, I think it really helps to think of yourself as a small business person, as an entrepreneur. And that puts you in the right mindset to do what it takes. This isn’t passive. You have to go out and do the stuff to make yourself successful.

Henry Washington:
Investing in real estate involves you having a customer, an end client. And you have to provide them a customer service. You have to provide them the product or service you’re promising to provide them. And then you also have to do what most business people do in businesses outside of real estate, which is strategically plan your business. And that’s not something that you think about when you’re first getting started.

Dave Meyer:
Which is true about your goals. If I go out and buy Tesla stock, I don’t have a goal for my stock. You are playing- Make money. Yeah, exactly. This is a good goal. But yeah, this is the reality of it. But it’s also the opportunity and the cool part about it. You are not passive. People knock on real estate. They’re like, “It’s not passive.” Well, that also means you have an opportunity to turn into anything you want it to be. You can create and craft a business that supports your lifestyle, that highlights the things that you’re good at, that avoids the thing you don’t like doing. That’s what’s so cool about it is that you get to design the business that gets you the lifestyle that you want.

Henry Washington:
And the not passive part, the active part is actually what helps you mitigate the risk. When you’re working in stocks and crypto, you don’t control the decisions these companies make once you buy the stock. But in real estate, you control a lot of the levers. You get to choose what to buy, where to buy, how to buy it, how much to spend, who gets to live in it, what kind of finishes you put in it. You control the risk levers, but that control comes at a cost. It comes at a cost of time.

Dave Meyer:
You are investing and betting on yourself instead of someone else.

Henry Washington:
Absolutely. All

Dave Meyer:
Right. So that’s number two of the 10 things we wish we knew before we bought our first rental properties. Henry, what’s number three?

Henry Washington:
Number three is you’re not going to go broke on a single family home. Look, real estate is scary. It is. Buying an asset. Most people’s largest expense of their life is buying their home. And now you’re doing this as a sport. It’s a business for you. Now you’re doing something that people wait their whole lives to be able to do. They save up all this cash. I get how scary and overwhelming it can be. And also, yes, you’re borrowing money, you’re leveraging to buy this asset. That’s also scary because if you screw up, now you’re in debt. So it’s this scary thought of like, I don’t want to put myself in financial ruin. At the end of the day, that’s what people are really scared of when they’re first getting started. But that’s what I love about being able to buy single family homes. Now I get it.
Single family homes are very expensive in certain markets and not as expensive in other markets. But if you follow basic real estate principles, which is buy at a discount, buy in an area that people have a desire to live in, buy a property that’s in demand, you protect yourself pretty heavily. And can you make a bad decision that’s going to cost you some money? Sure. Can you make a bad decision on picking a contractor that’s going to hurt your business? Sure. But the likelihood of you going completely bankrupt when you’re starting out with a three bed, two bath, single family home in a great neighborhood is probably pretty low. I’m not saying go buy a bad deal. And I’m not saying just go buy anything. What I am saying is to check yourself when you’re feeling that fear of like, “Man, should I do this?
” You get to control some of these levers. So if you’re scared, start small. Start with a smaller single family home in a neighborhood where you know people like to live in a place where you know that the market is appreciating with a mortgage that you can afford and plan for the worst case scenario. If I buy this asset and I don’t rent it for what I want, can I sell it or can I rent it and can I cover the overage if it doesn’t work out? And if the answer to those questions are yes, you’re going to be fine.

Dave Meyer:
I think a lot of people maybe around our age grew up through 2008. Feels like housing and real estate is super volatile and risky. But actually when you look at it, the risk of going to zero is extremely small. I’m not going to get into it because you’re going to make fun of me, but I actually calculated the risk of it. It’s very- Of

Henry Washington:
Course you did.

Dave Meyer:
I did. It’s in my book. But it’s way lower than stocks or anything else. And I think I find that comforting. Yeah. Could you lose a little money if you sell it and buy it an inopportune time? Of course there’s risk in real estate investing, but especially with single family home, the demand is extremely high. The risk that you’re going to lose it all is extremely low. And I personally find that comforting because as we talked about, this is entrepreneurship, the risk of going to zero in other businesses is very high. You start a restaurant, you start a store, a failure rate is super high. Real estate’s actually pretty forgiving. And it doesn’t feel that way because it’s capital intensive, but when you actually look at it, it’s pretty forgiving.

Henry Washington:
I was talking to an investor when they were first getting started and they were like, “I’m so scared. I don’t know if I should buy this duplex, yada, yada, yada.” And I was like, “Man, it’s a duplex in Northwest Arkansas. In five years, you’ll look like a genius.

Dave Meyer:
Just

Henry Washington:
Buy the duplex.” And in real estate, you don’t really lose until you sell at an inopportune time. So your goal is to figure out, can I afford to hold this if it gets bad? And if you can, you’ll look brilliant in five to 10 years. Just buy the asset.

Dave Meyer:
Yep. 100%.

Henry Washington:
Okay, Dave, what’s number four?

Dave Meyer:
Number four is no one will ever care as much as you do.

Henry Washington:
You’re right. No one will care as much as you do and we’ll hear about that when we get back from this break. As a real estate investor, the last thing I want to do or have time for is to play accountant, banker, and debt collector. But that’s what I end up doing every weekend, flipping between a bunch of bank apps, bank statements, and receipts, trying to sort it all out by property and figure out who’s late on rent. But then I found Baselane and it takes all that off my plate. It’s BiggerPockets official banking platform that automatically sorts all my transactions, matches receipts, and collects rent for every property. My tax prep is done, my weekends are mine again, plus I’m saving a ton of money on banking fees and apps I don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp.
BiggerPockets ProMamers also get a free upgrade to Baseline Smart. That’s packed with advanced automations and features to save you even more time. All right. We’re back on the BiggerPockets podcast and we’re talking about things we wish we knew before we got started investing. Dave says no one’s going to care as much as you.

Dave Meyer:
That’s right. This is actually one of the best pieces of advice I got before I got into real estate investing, but I didn’t apply it to real estate investing. I’ve started a bunch of businesses. I’ve been pretty entrepreneurial my whole life. And I had started a tech company and I was meeting with this advisor and I was basically just complaining about how a business partner of mine and a vendor I was working with and they just weren’t putting in the hustle that I was putting in. And he was like, “You’re the founder of the business. No one is ever going to care as much as you. It doesn’t matter what you pay them, how much you talk to them, how well you treat them. It’s your business and no one is ever going to care.” And since then, I’ve sort of developed this mental model of every degree of separation you get from you, people just care less and less and you have to hold on tighter and tighter.
So if you have a team, a great agent, property manager, they’re going to care, but they still don’t care as much as you. And then if they sub something out to someone else, they’re not going to care that much. And if they sub it out, they’re not going to care that much. And ultimately, I think the lesson is the buck stops with you. That is ultimately what you have to accept if you’re going to get into this business, is that you can hire people. They might be well intentioned, but they have other things going on in their life and it’s up to you to keep the business on track. And if you’re not willing to do that, it’s probably not the right business for you.

Henry Washington:
I learned a very similar lesson from my property manager and I basically said the same thing to him. It’s like, “I don’t want to turn over my properties to property management because you’re not going to care about my properties as much as I am.” And he said the same thing. He was like, “You’re right. I am not going to care, but I am well positioned to be more efficient than you in operating these.” And so I found trust in knowing that this guy is going to operate my properties as efficiently as possible because that’s what he takes pride in. And no, he’s not going to care about as much as I am, but the efficiency is what was important there. So find people who you want to work with who have a common goal with you. And if that common goal suits your business needs, then you can trust in that because you’re right, they’re not going to care as much as you do.

Dave Meyer:
Yeah. I think property management is kind of the perfect example. I’ve fired property managers and most of them started great. And I don’t think they were bad business people. Their business just went in a different direction than mine and they were prioritizing different things. And it was my responsibility to say, “You know what? This relationship is no longer mutually beneficial and we got to part ways.” And it’s like, I don’t hold it against them. It’s my job as the entrepreneur to say, “I’m doing what’s best for my business. You’re clearly doing what’s best for your business.” And you just have to think about it that way. It’s not nefarious. People aren’t trying to screw you over most of the time. They’re just trying to do what’s best for them. And no two people, no two businesses are ever going to be perfectly aligned along the same path.

Henry Washington:
Agreed. All

Dave Meyer:
Right, Henry, what is the fifth thing you wish you knew before you bought your first rental?

Henry Washington:
This one is, I wish I understood the construction process a little better before getting into my first deal. When you study real estate investing, listening to podcasts, reading books, you hear about to know how to find deals, you got to know how to find the money for those deals, you got to know how to select the right tenants. You hear about all the things in the process, you hear very little about construction or understanding the construction process

Dave Meyer:
Of

Henry Washington:
The background. And I remember after closing on a series of duplexes, we were evaluating contractors and one of the contractors showed up to look at the job and he was like, “I don’t want this job.This was a big waste of my time.” He’s kind of fussy with

Dave Meyer:
Me

Henry Washington:
About it. And he basically said, “You should just do scopes of work and send those out so that we can see what’s going on the size of the price.” And he told me, he’s like, “Some jobs are going to be too big for some people. Some jobs are going to be too small for some people, but if you approach it this way, you’re not going to waste my time or waste other people’s time.” And A, I had no idea to think like that. And B, I really didn’t understand how big the job was I

Dave Meyer:
Was

Henry Washington:
Asking him to do. And a lot of new investors end up losing money on deals, not because they bought the worst deal, it’s because they didn’t budget properly on their renovation, they end up overspending and you get in a tough situation. So understanding more about construction, how to do scopes of work, what an actual rehab is going to cost you, like spending the time to learn those things I think would be a value to you prior to doing a first deal.

Dave Meyer:
I think probably my biggest regret as a real estate investor is my weakness in understanding construction. It took me, I mean, I’ve said it on the podcast, I think in 2024 I made a goal 14 years into real estate investing to learn construction better. And I’ve done rehabs on pretty much every project I’ve ever bought, but I’m just not that good at it. I don’t understand it that well. And I actually think in my experience, it’s not as much losing money on deals. It’s avoiding deals that I could have made money on because I was like, this is too big of a project for me and I didn’t want to take on really big rehabs. And so in 2024, I was like, my goal next couple of years is to get better at this. And I’ve been lucky working and doing some flips. At first I did passively and started to learn it.
Then I invested and started getting in on the planning process a little bit more. And I did that in sequential steps before actually doing my own. And I found it super helpful. It’s honestly not that hard. There’s just moving pieces. And I think just understanding what I would call the order of operations was what I needed to understand. It’s like when you do each thing, what’s like basically a checklist in your mind of things that you need to do? And once you do that, it’s not that hard. Value add just is the most reliable way to make money in real estate these days. So getting comfortable with some level of construction, it doesn’t need to be structural, big lifts, but getting comfortable with it and just ripping the bandaid off is something I wish I did way, way earlier in my career.

Henry Washington:
All right. Number six, Dave, what you got for it?

Dave Meyer:
Door count doesn’t matter. I know people get mad about that. Efficiency does. I think that is the most important thing. I joined BiggerPockets in 2016 as an employee and everyone’s just talking about how many doors you have. It’s

Henry Washington:
Your badge of honor.

Dave Meyer:
Yeah, I know. It’s like you go into any meetup, people are asking how many doors you have. I think it’s not only just an ego thing for people. I think it’s actually counterproductive and hurts people’s effectiveness as real estate investors because first and foremost, depending on what your goals are as we started this conversation, and having a lot of doors might not be your goal. At this point in my career, my goal is to have fewer and fewer doors and to have more and more passive income, whether that means investing passively, doing lending, or just owning a couple of paid off properties. Those are the things that I prioritize, not scaling more and more. But the reason I really, this drives me nuts is because someone may come up to you and have 50 doors and they’re 50 terrible doors. It is not a measure of success to buy assets.
A measure of success is buying performing assets. So I would rather brag to people about what my return on equity is. To me, your efficiency as an investor is a much more important metric to hold yourself accountable to. How good are you at this? That’s what ROI or return on equity measures. Door count is like, you can just go out and buy stuff.

Henry Washington:
And it matters what kind of assets you buy. It matters what your strategy is because you could buy an asset tomorrow that doesn’t produce a great return, but the goal for that asset could be to provide you the kind of return you’re looking for in 10 to 15 years. This isn’t a short term game and it’s not the same for everybody. So measuring somebody’s success based on the amount of doors that they own literally means nothing. And I like what you said about measuring the efficiency, the return on equity. That is a good measure of are you getting the return on the money that you put into the business? Because you and I talked about this on an episode recently. You can go pay cash for a house and it cash flows. No cash flow. That doesn’t mean that it was a good deal. It doesn’t mean that you’re getting a great cash on cash return or a great return on equity.
Just paying cash means nothing. It’s about what are you getting in exchange for the money you had to put into the deal?

Dave Meyer:
You have to think really carefully about what you’re holding yourself accountable to. And if my goal personally was to go out and just get to 50 or 100 or 200 doors, I could go do that. I’ll go buy bad multifamilies and then I’ll get to my goal. But my goal is time freedom. And so I hold myself accountable to that instead of the number of doors.

Henry Washington:
And honestly, don’t you envy somebody who has like five to 10 paid off properties and is living a great life more so than the guy who owns 3,000 units and is stressed out.

Dave Meyer:
100%. I was looking at this the other day. I have a triplex I’ve owned for 10 or 12 years now. That one property I think makes me 4,500 bucks a month in cash flow. Yeah. Give me more. It’s not even paid off. When that’s paid off, it’s going to be eight grand a month. I need three of them. What else do you need? Absolutely. So I just think it’s silly. What you should be holding yourself accountable is like, are you working towards your goals and figure out what your goal is and make a metric that matters to you, not this metric that other people think are important. All right. We’ve done six of our 10 things that we wish we knew before we bought our first rental property. What seven?

Henry Washington:
Number seven is to treat your properties, especially your rental properties like a business. And what I mean by that is when I was getting started, I wanted to find good deals, buy good deals, rent those good deals out, right? But I didn’t think about-

Dave Meyer:
You didn’t want to operate them. Or you don’t think about it.

Henry Washington:
Operating it. Yeah. It’s more about like rental properties are a business like flipping a house as a business. If you tell somebody that they’re going to flip a house, they’re thinking about what finishes to put in it. They’re thinking about that end customer and how they can add value to it in a way that that end customer will want. But for some reason with rental properties, people just don’t think about that. They think, “I want to get a property. I’ll just clean it and we’ll throw it out there and somebody will come and live in it. ” And in some markets, maybe that’s true, but I think I had to learn, you need to think about your rental properties in the same way that you think about a flipping business. Who are the people that are going to come and live there? What kind of amenities do they want?
How can I add value to this in a way that those people are going to want? Because vacancies kill rentals. And if your property looks just like everybody else’s property, it doesn’t stand out. There’s no guarantee somebody’s going to want to rent yours over somebody else’s. But if you add the right amenities, if you think through who your end customer is, and if you position your property in a way that stands out, you get your properties rented faster and saving in vacancy is literally putting more cash flow in your pocket. So think about your rental properties and marketing your rental properties just like you would think about your flips. I

Dave Meyer:
Don’t know if you get this question, but speak at meetups and stuff. People always ask this question like, “I have this property that’s sitting on the market, vacant. You have any advice?” Yeah, have a better product. Your product’s not good enough. It’s just not competitive. You have to think about it in the same way that if a coffee shop’s competing against another coffee shop, what’s the value proposition? What’s the difference between your coffee shop? Are you competing on value? Are you competing on quality? Are you competing on convenience? Think about it in a way, if you were a tenant. Everyone listening to this probably at one point in my life has rented a property. What were the things that were going through your head perspective? When you were deciding which one to rent, I want to buy the cheapest place I can afford. I really want to be close to the store.
I need two bathrooms. How are you going to differentiate yourself? And that shouldn’t be after you buy your property, by the way. Yes. This is something you absolutely need to think about. It’s probably the first thing I think about. It could

Henry Washington:
Underwrite it into your deal to pay for the things that you need to do appropriately.

Dave Meyer:
100%. How many times have you walk into a rental, it’s a two-two and you walk in and you’re like, the layout doesn’t work. People are going to walk into this and be like, “I don’t like it. It doesn’t make sense for my life.” You got to avoid those deals. You have to put yourself in the shoes of your customer and your customer as a tenant.

Henry Washington:
And then there’s a bonus to this one in terms of operating your rental business like a business is having some sort of system to help you track tenants and track collecting rents. Because when I got my first rental property, they could have paid me in a sack of pennies. I was like, “Somebody wants to pay me to live here, give it to me. ”

Dave Meyer:
I did that for 10 years. Give it to me. I would lose checks and I’d have to be like, “Can you write me that check?” A little old lady had to wrie.

Henry Washington:
I did that too. Little old lady was like, “Do you know what you’re doing? Oh man, I’m figuring it out lady.” But once I used the property management system and it just collected everything for me, it saved me driving around town and taking things to the bank. And it doesn’t seem like a big deal now because you’re just so excited to have somebody pay you, but I promise you the sooner you do that, the easier your life gets.

Dave Meyer:
Well, I think those things go together because treating your tenants like a customer is not just about you, it’s about their experience as a tenant. And if you’re more organized, I think that’s what ultimately got me to be more professional is like, not because I couldn’t handle it. I’m not doing a good job for my tenants if I’m losing their checks, right? Or if you forget about a maintenance request or you don’t follow up on a lease renewal proactively that you should have just had software ping you about.

Henry Washington:
Because you don’t want your tenants to hit you with the UNO reverse card and be like, “I gave you the check.”

Dave Meyer:
You did it already. You’re like, “Did you? I have no idea.” So yeah, totally agree. All

Henry Washington:
Right. We’re going to get into number eight on our list of things we wish we knew before we started real estate investing right after the break. All right, we’re back talking about things we wish we knew before we started investing in real estate. Dave, what’s number eight?

Dave Meyer:
Number eight is that the 10 years it takes for the average person to achieve financial freedom, it goes really fast.

Henry Washington:
Boy does it.

Dave Meyer:
And it’s kind of fun. Right?

Henry Washington:
It absolutely

Dave Meyer:
Is. I mean, I started doing this 16 years ago now, and I didn’t really know what my goal was when I was first starting, but all of a sudden I’m 15 years into this. I’ve made a lot of friends. I’ve had a good time. I’ve built a portfolio and I honestly have been more financially successful than I ever dreamed that I would have been when I started. And I think the reason is because I just took it a deal at a time. I kind of knew sort of what I wanted to do, but I just worked hard every day and kept going after it and did other stuff and had fun and enjoyed my life and didn’t get too crazy about any particular deal or anyone losing 500 bucks and it went fast and it’s been fun.

Henry Washington:
Yes. The time does seem to go quicker, but what I like about this strategy and what I think people who haven’t started yet need to hear about this particular thing I wish I knew before is when I look back at my portfolio, the deals that have the most equity, the deals that have the most cash flow, the deals that give me the most flexibility in terms of being able to leverage and do more real estate are all the deals I bought in my first couple of years. And that’s not because I just bought the best deals in my first couple of years, it’s that I bought them in the longest period of time, right? Real estate compounds over years. 100%. Your value goes up, your equity goes up, your debt gets paid down by your tenants, and the longer you hold the asset, the more typically financially beneficial it gets to be.
And you start to see some of that after about five years in the space. Because when you’re buying a property after five years in and you’re looking at the performance of your property that you bought in year one or year two, you’re like, “Man, how do I do more of that? ”

Dave Meyer:
Yeah, exactly. Well,

Henry Washington:
You’re actually doing it. You wait.

Dave Meyer:
Yeah.

Henry Washington:
Yeah. You just need to wait.

Dave Meyer:
Yeah, 100%.

Henry Washington:
And so what I’m saying and what I hope people hear from this lesson is that you just need to get started. You need to buy smart, use the fundamentals, and you’ll look back in five years and think, “Man, I’m so much closer to that financial freedom than I thought I was when I’m looking at the performance of these assets because real estate truly is a long-term game. 10 years sounds like a long time, but I promise you it goes fast and there is a lot of upside along the way.”

Dave Meyer:
Well, this might be different for you than for me, so I’m curious your opinion. But for me, it’s like, “Oh, I’ve been doing this for 16 years, but I work full-time and the energy I’ve had to put into real estate comes in bursts. I’ll buy a new deal. It takes a couple months to stabilize something and then it’s pretty chill for a while.” And so that’s why it’s always gotten quickly for me because I’m not grinding on real estate every day. I work at BiggerPockets, but I’m curious how you feel about that. I

Henry Washington:
Mean, I am full-time in the Business, right? And I look at my business in kind of two separate windows. As a flipper, there’s one thing and that is much more active and on a day-to-day basis. But my rental properties, I don’t think much about. My property manager handles most everything. And then I get to look at my P&L at the end of the year and be like, “Oh, look, I have a lot of equity over

Dave Meyer:
There.”

Henry Washington:
And so I think about it in separate veins. So if you’re a buy and hold investor, the power is in the hold.

Dave Meyer:
Yeah. I mean, if I think about the total amount of time I’ve spent on my portfolio, it’s not like eight hours a day for 15 … I don’t know what it would be, but it would probably be more like a year of work or two years of work. It’s minutes a day. Yeah, exactly. It’s like minutes a day. I will calculate that.

Henry Washington:
He’s not lying.

Dave Meyer:
All right, Henry, what’s number nine?

Henry Washington:
Number nine is your goals will change over time and that’s okay. That is

Dave Meyer:
All. Mine changed by the minute.

Henry Washington:
My very first goal when I got into real estate was to buy one house a year for the next five years. And after I did my first deal, I ended up doing like four more in the same year. And that’s because I didn’t know what I was actually capable of because I hadn’t done a deal. I didn’t know that you could find financing and people would lend you money even though you didn’t have a ton of experience. I had all these thoughts in my head about what was possible. And then that theory got blown out of the water after my first deal. And so my goals changed and they should change because your lifestyle’s going to change. Your family dynamic’s going to change. What you want out of life may change. Everyone’s different. And so I think we should all be evaluating our goals on at least a semi-annual basis because sometimes things change that we don’t have control over that

Dave Meyer:
Forces. That’s so true. That’s a good point.

Henry Washington:
What we need to be able to do. And so it’s okay to change your goals. It’s like right now, my goal was to grow my portfolio. I wanted 200 doors. And we talked about how door count doesn’t matter. Now I want to be somewhere around 50 paid off assets. And I don’t care because my life changed. The things that I want out of life changed. I had kids. It’s okay to pivot. And the cool part about real estate is there is a strategy that fits almost any lifestyle goal that you want.

Dave Meyer:
My goal when I first started, I hadn’t heard of BiggerPockets. I was 22 years old. I was literally to pay rent and have some money to go out with my friends. That’s it. I was like, “Could I get 200 bucks a month?” Because I was waiting tables. I was like, “That would be awesome.” I hadn’t really thought that much more about it. And this was 2010, real estate was kind of cheap. So you’re

Henry Washington:
Saying you wanted to buy a house for drinking money?

Dave Meyer:
Literally, yes. Yes. I’m not going to pretend it was that different. I wanted a ski pass. I wanted to go drink some beers with my friend, and I didn’t want to be worried about rent every month, which was … I was. I was straight out of college. So of course your goals are going to change, but I think where people sometimes struggle is we started the show by saying, “Think 10 years out, ” which is true, you should, but it can change. It’s just a reevaluation. You need to iterate on your goals. And it’s kind of the fun part of real estate too, is to keep dreaming, to keep being inspired and thinking about the things that this business can get you because that’s what keeps you motivated. And it’s cool because I think you’ve seen this for me. I’ve totally shifted the way I do real estate in the last couple of years based on how my goals have changed.

Henry Washington:
And I also think people set goals based on things that they think they’re going to like, but if you’ve never actually done it, then you don’t know if you’re going to like it. I remember one of my goals was to buy an over a hundred unit apartment building. I don’t want that. I do not want that in my portfolio now that I’ve operated other properties. And it’s not that I think large scale multifamily is a bad thing. No, some people are great at it. And it can be a great asset class. I just don’t enjoy it as an

Dave Meyer:
Asset

Henry Washington:
Class and that doesn’t make it bad or wrong. It just, that’s not what I want in my goals anymore.

Dave Meyer:
Totally. People always talk about raising money. Oh,

Henry Washington:
I don’t want

Dave Meyer:
Any part of that. Yeah. I would be so anxious. 0%. Once someone gave me their money, I’d be like, “Take it back.” And I don’t need to at that point in my career. And that’s like what has changed. If someone had said, “I’ll give you money to go buy rental properties to me 10 years ago,” I’d be like, “Give me every damn dollar you have. ” But life changes, right? And that’s the cool part about it. And the market changes too. You have to adjust to what’s possible, not just what you want. All right.

Henry Washington:
Well, we got through nine things that we wish we knew before we started investing in real estate. Take us away with number 10.

Dave Meyer:
Number 10 is something I really wish I knew. It was when in doubt, buy the best asset that you can afford. I just think as a buy and hold investor, who’s someone in this for the long run, there are a lot of things that can confuse you, what strategy to go after, what tactics, short-term rentals, long-term rentals, midterm, whatever you’re going to do. At the end of the day, if you control a high quality asset, you’re going to be okay in this business. Don’t buy something in a fringe neighborhood speculating that it’s going to turn around. When in doubt, if you want to take the safe path to real estate, if you’re in this for the long term, I would rather buy an amazing asset that breaks even than a questionable asset that gets a 10% cash on cash return. I don’t know if you agree with that, but for me, because I’m thinking 10, 15 years down the line, the best asset’s going to win the marathon, not this, maybe not the sprint, but the marathon it’s going to win.

Henry Washington:
Similarly, a lot of people look at real estate and think, “I want to pick a market where houses are cheap.”

Dave Meyer:
Exactly. Or

Henry Washington:
A neighborhood where houses are cheap. And even though they may be able to afford a more expensive asset, they go and buy the 30, $40,000 house that needs $100,000 rehab. And if you’re new, there is so much that can happen in that rehab and there is so much that can happen with who you’re going to rent that property to and are you going to be able to get the return that you’re looking for? My better assets aren’t the ones I paid the least for. I’ve often end up selling those.

Dave Meyer:
For sure. Exactly. And I should clarify, the asset doesn’t need to be in the best shape today. I just mean the highest and best use of this property. It’s in a great location. If I fix this up, it’s going to be a beautiful place that has demand from renters. It has demand from homeowners. It’s in a great neighborhood. It’s close to a park. It’s near a job center that people want to be. Those things, they say it in real estate true. The things you can’t change, how much you pay for it and the location of the property, you also don’t normally change the total layout or structure of the house. You might, but I don’t. So as a buy and hold investor, I’m thinking I can make something great out of this house over the long run. It’s buying that and figuring out the way to operate it to me is so much easier than trying to figure out how to make money off a place that has a bad layout or has bad architecture or is it a neighborhood that doesn’t have a lot of demand.
That to me is way harder.

Henry Washington:
I think you’re right. And I think the key to this rule is the first part of the sentence, which is when in doubt. So in other words,

Dave Meyer:
If you’re good

Henry Washington:
At it. No, and you’re uncomfortable buying a better quality asset that you can afford is going to be a safer play. Yes, there are cheap houses and yes, people make a ton of money buying cheap houses, but there are lots of intricacies and risks involved with that. And if you’re new and you’re unsure, then I totally agree with you. Buying a safer asset that maybe costs you a little more, but is better positioned to be successful in the long run is a much safer play.

Dave Meyer:
I have literally never regretted buying a house in a great location. Even if I quote unquote overpaid for it, it has always been the best returns on every single deal. I think it’s not just location, but it’s quality of the house, housing stock kind of thing. But I think that it just matters so much if you’re in it for the long run.

Henry Washington:
I’m selling a house right now that I overpaid for in a great neighborhood and I’m going to overpay, make 70 grand.

Dave Meyer:
Someone’s going to overpay you 70 grand to take it off your hands. Yes. All right. So those are our 10 things that we wish we knew before we bought our first rental property. Hopefully this is helpful for you. And if you’re watching this on YouTube, let us know in the comments, what’s one thing that you wish you knew before you started investing in real estate? I’m Dave Meyer. He’s Henry Washington. Thank you so much for listening to this episode of the BiggerPockets Podcast. We’ll see you next time.

 

In This Article

This article is presented by RentRedi.

Most DIY landlords are more organized than they give themselves credit for. You likely have a spreadsheet for rent tracking, leases saved in folders, maintenance conversations documented in texts, and a solid mental grasp of what’s happening across your properties. But that doesn’t mean there isn’t room for improvement.

Property management software isn’t about starting over or fixing something that’s broken. It’s about taking the systems you already use and bringing them into one streamlined, efficient hub. When everything lives in one place, your rental business becomes easier to manage, easier to grow, and far less dependent on you remembering every moving piece.

Streamlining Daily Operations

As portfolios grow, even from one unit to two or three, the number of small, repetitive tasks grows with them. Collecting rent, tracking deposits, responding to maintenance requests, sending reminders, organizing leases, and preparing reports for your accountant all take time. None of these tasks are difficult on their own, but they do require attention. Platforms like RentRedi are designed to streamline those tasks so you can spend less time on administration and more time focusing on your investment strategy.

Take rent collection as an example. Instead of manually checking payment apps or bank deposits, tenants pay through an app via ACH, card, or even cash at retail locations. Many choose autopay, which means rent shows up consistently without reminders. With RentRedi, you receive instant payment notifications, and every transaction is automatically tracked. Your records stay current without extra work, and you always have a clean paper trail.

Maintenance becomes more structured and professional as well. Tenants submit requests directly through the app, often with photos or videos attached. You can assign the issue to a vendor, track progress, and keep all communication documented in one place. Instead of scattered text threads, everything is tied directly to the unit and stored for easy reference. Communication overall feels more streamlined when it stays inside a centralized platform, keeping conversations organized and searchable while helping you maintain healthy boundaries around your personal phone.

Scaling Your Portfolio with Efficiency

Marketing vacant units also becomes more efficient. Rather than creating separate listings across multiple sites, you can syndicate your property to major platforms like Zillow, Trulia, HotPads, and Craigslist with a single post. Applications flow back into the same system, where you can review and screen applicants. Built-in screening, powered through a partnership with TransUnion, allows you to run credit, criminal, and eviction reports directly within the platform, typically paid for by the applicant. Keeping everything under one roof simplifies decision-making and documentation.

One of the most underrated benefits, especially for smaller landlords, is accounting clarity. When rent and expenses are tracked automatically, generating profit and loss statements, expense summaries, and income reports becomes simple. Come tax time, a Schedule E makes the entire process smoother. Even if you own just one property, you’re operating a business. Organized financials don’t just reduce stress; they give you better visibility into performance and profitability.

Some landlords hesitate because they assume switching software will be time-consuming. Today, that transition is far easier than most expect. AI-powered onboarding that allows you to upload existing lease documents, automatically extracting property addresses, tenant names, rent amounts, and key dates. What once required hours of manual entry can now take minutes. You connect your bank account, invite tenants, and you’re up and running. Tenants typically adapt quickly as well. Paying rent, signing leases, and submitting maintenance requests through an app feels natural in today’s world.

The Advantage for Small Landlords

It’s also worth reframing the idea that only “large” landlords benefit from property management software. In reality, smaller landlords often see the greatest impact. When you have one, two, or three units, you don’t have staff, bookkeepers, or assistants. You are the operations team. Software becomes your leverage, helping you operate with the efficiency of a much larger portfolio while keeping overhead low. Automated rent collection, centralized communication, tenant screening, lease e-signing, vacancy syndication, and built-in accounting all add professionalism and consistency to your business, regardless of size.

There’s an additional advantage many investors may not realize: RentRedi is included as part of the BiggerPockets Pro membership at no additional charge. If you’re already a Pro member, you have access to a full property management platform built into your membership. That means you can centralize operations, strengthen your systems, and elevate your rental business without adding another software expense.

Ultimately, this isn’t about fixing a broken system. It’s about enhancing a good one. You’ve already built the foundation of your rental business. Bringing everything into one streamlined platform simply helps you run it more efficiently, more professionally, and with greater confidence. And if you’re a BiggerPockets Pro member, you already have the tools available, the next step is simply putting them to work.

In This Article

Real estate trends usually announce themselves loudly. There’s a new buzzword, a viral tweet, a flood of “this is the next big thing” posts.

Monthly rentals arrived quietly. They just kept getting booked, month after month, while most of the conversation stayed focused on short-term versus long-term rentals.

Over the last several years, furnished monthly rentals (stays of 28 days or more) have quietly grown into a meaningful part of the U.S. rental market. This is a third lane that solves a unique problem, acting as a supplement to existing strategies. When you look at the data, it’s clear this is a permanent shift in the market.

The Data Tells a Much Bigger Story Than the Headlines

According to the latest Monthly Rental Market Trends Report from Furnished Finder and AirDNA, demand for monthly rentals has grown at a pace that’s difficult to ignore. From 2019 through 2025, booked monthly rental nights increased from roughly 20 million to 46 million. That’s more than double in just a few years.

Even more telling, monthly rentals now represent about 19% of total rental demand in the U.S. Nearly one out of every five rental nights is for a stay lasting 28 days or longer. At that scale, monthly rentals have become a core segment of the housing market.

Supply has followed demand. Listings on Furnished Finder alone grew from around 20,000 pre-pandemic to more than 300,000 today. That kind of growth only happens when renters are actively searching and booking.

Why This Growth Is Happening Now

This surge happened because the way people live, work, and move has fundamentally changed. Remote work, hybrid schedules, job flexibility, and project-based employment all created a larger group of renters who require more than a weekend stay but less than a one-year lease.

Monthly rentals sit perfectly in that gap. They offer a balance of flexibility and commitment. As lifestyles became less linear, housing followed.

Who the Monthly Renter Really Is

One of the most misunderstood parts of the monthly rental market is where demand actually comes from. Monthly renters tend to be people in transition, often with stable income and a defined reason for needing housing for several weeks or months at a time. This group includes traveling healthcare professionals, corporate employees on temporary assignments, families relocating between homes, remote workers spending time in new cities, and contractors or consultants working on multimonth projects.

As a result, their expectations differ significantly from those of short-term guests. They prioritize functionality, comfort, and ease of living. A well-equipped, practical space that feels easy to settle into is the primary requirement for these tenants.

Why Monthly Rentals Are Sustainably Profitable

Monthly rentals typically feature longer stays, fewer turnovers, and more predictable income patterns. For many investors, especially those scaling portfolios, this consistency is a major advantage. Fewer check-ins mean fewer opportunities for things to go wrong. Less turnover results in lower operational stress. Predictability is a primary benefit of this model.

Monthly Rentals Are Not Just a Big-City Phenomenon

It’s easy to assume monthly rental demand is concentrated in major metros like New York or Los Angeles. Those markets are certainly strong, but they’re far from the whole story. Some of the most interesting growth is happening in secondary and tertiary markets, where housing supply is tight, and employment hubs are expanding.

Monthly rental demand is showing up in:

• Hospital-adjacent markets.
• University towns.
• Growing job centers.
• Smaller metros with limited new housing.
• Areas with seasonal or project-based workforces.

In many of these locations, renters arrive before investors fully recognize the opportunity.

Where the Opportunity Starts to Take Shape

Monthly rentals often work best as a flexible layer inside a broader portfolio. Investors use them to fill seasonal gaps, stabilize cash flow, or reduce operational intensity without locking into long-term leases.

They tend to make the most sense when:

• Short-term rentals face off-season softness.
• Long-term leases feel too rigid.
• Operating costs push toward fewer turnovers.
• Local regulations favor longer stays.

Some investors run monthly rentals year-round. Others shift between monthly, short-term, and long-term models, depending on demand. The strategy adapts to the market.

What Monthly Renters Actually Value

One advantage of monthly rentals is the practicality of renter expectations. Monthly renters usually value livability above all else. Their priorities are straightforward and consistent across markets. They want:

• Reliable, fast Wi-Fi.
• Comfortable furniture.
• A functional kitchen.
• Laundry access.
• Parking.
• A dedicated workspace.

Because expectations are clearer, successful monthly rentals thrive on simplicity. Practical design is a competitive advantage.

Final Thoughts

Monthly rentals grew because of genuine demand. As renter behavior continues to evolve, strategies that offer a middle ground between rigid and reactive are likely to play an increasingly important role.

For investors willing to explore monthly rentals with data, clarity, and realistic expectations, the opportunity is now a proven reality.

Dave:
The housing market is split, much like the rest of the economy. Some areas are up, others are struggling. Regional variation right now is really high. And although you can invest in any type of market, any market conditions, the tactics you should use depend largely on where in the country you are actually investing. So in today’s episode, we’re going to dig into some important regional trends that we’re seeing across the country. We’ll look at housing price trends, of course, but we’ll also look a level deeper. We’ll look at inventory, affordability, and critically foreclosure and delinquency trends that could spell trouble in certain markets. And if you combine all this data together, you’re going to have an analysis that not only tells you what’s actually happening in your market, but what you should be doing about it.
Hey everyone, welcome to On The Market. I’m Dave Meyer, housing analyst and chief investment officer at BiggerPockets. Today on the show, we are going to dig deep into the different regions of the country and how each of them are behaving. We’re talking about prices, of course, but we’re also going to look at inventory, which helps us forecast what’s going to happen next. We’ll talk about affordability, delinquencies, and crash risks in different regions of the country. And we’re doing it all so you understand how to approach investing in your specific market. And I’ve done a lot of research for this episode. It’s going to be a great show. But before we get into it, I want to just give a quick word on the war in Iran and how it could impact the housing market. Obviously, this war has brought implications beyond just the housing market, but I’ve gotten a lot of questions about how the war could impact the housing market.
I’ve also seen a lot of, frankly, really bad takes about it on social media. So I just wanted to weigh in with my perspective. The long and short of it is we just don’t know. I know that’s frustrating. It’s unsatisfying, but that’s the honest answer. We don’t know if this war is going to last a couple of weeks and then the status quo resumes. We don’t know if this spreads to a broader regional conflict. We just don’t know. And I think it is important to admit that. So all of those videos out there saying that this is definitely going to cause the housing market to crash, or the other ones, which I’ve seen that say that this is going to lead prices to accelerate. All of them are just speculation. They’re not based on any evidence. They’re not based on any actual fundamentals changing. People are just trying to get attention.
That said, this is an important change in the geopolitical climate, and therefore the economy can be impacted. The way I like to think about this and the way I just generally think about the housing market in general is probabilities. If you listen to the show, you know that I never say a crash will never happen. Prices will definitely go up. I am very careful to say things like, “I don’t think a crash is the most likely scenario,” because as a data person, it is my whole job to think in probabilities to say, “Okay, the great stall is the most likely scenario, but could other things happen?” Of course, other things can happen. And that’s how I think about things. And at BPCON, back in October 2025, I shared my predictions for 2025 where I said, I thought there were basically four different scenarios. The biggest probability is the Great Stall.
I’ve talked about this a lot, but this is a modest housing correction where real home prices go down, wages hopefully keep going up, mortgage rates come down a little bit, and that brings affordability back to the market. That I gave about a 50% chance this year. But I also acknowledge that in 2026, there’s a lot of uncertainty and there’s three other things that could happen. We could have a melt up if rates dropped really quickly. Prices could go up. I gave that about a 25% chance. I said a chance of a crash was about 15%. And then I always keep one other category for a Black swan event. This is things like the COVID-19 pandemic or nine eleven. Huge impacts on the economy, huge impacts on society. And you just by definition, a black swan event means it’s sort of outside the realm of normal fundamentals and you can’t really see it coming.
And I always keep about a 10% chance of a black swan event happening because by definition, we don’t know whether that’s going to happen. So that’s where I came out for 2026, 50% chance of the great stall, 25 melt up, 15% chance for a crash, 10% of a black swan event. Now, sitting here today, I still think the great stall is the most likely outcome. But the other variables, I do believe that they have changed. The black swan variable is much higher right now. We now know a little bit about it. It might not be a black swan, but if there’s a giant global war or a huge regional conflict, the chances of that impacting the economy are up. Keeping that still under the black swan category, and I think that’s now 30% chance. I think there’s a good chance this does impact the market.
How? We don’t know. That’s the whole point of it being a black swan event. We don’t know how it will impact the market, but is there a rising probability that geopolitical conflict impacts our economy? For sure. Absolutely. You can’t deny that. Next, although I still think a crash is unlikely, I’d say the probability has increased a little bit. Let’s just call it 20% up from 15. But a melt up on the other hand, upside huge appreciation I think is less to me, maybe 15% for now. I still think great stall, again, most probable at 40-ish percent. So in short, what’s happened is that we have even less certainty than we did going into a very uncertain year. A modest correction, still the most likely outcome in my opinion, but the world just feels a little bit like a Tinder box, and there’s no knowing how that plays out.
The overall risk to the downside is up in my opinion, and it just underscores what I’ve been saying for years, which is conservative investing will win the day in this era. That does not mean you cannot invest. And as we’re going to talk about in the rest of this episode, there’s still plenty of opportunities even in an uncertain market, but you need to be super honed in on what’s happening in your market. So with that, let’s get into our regional market analysis, which is what we had planned for today’s episode. First up, we’re going to talk about appreciation and just get a general sense of what’s happening in the country. Depending on who you ask, nominal home prices, non-inflation adjusted home prices across the country are up like zero to 1%. So basically flat. I think that’s pretty in line with what I have been projecting for this year.
As a reminder, I said a little bit flat, probably a little bit down, maybe negative one, maybe negative 2% nationally. So there’s no reason to think that there is a crash. This is a classic housing correction where we are seeing prices nationally trend from what they were a year or two ago at 5% up to 3% up. Now they’re at 1% up. And I think by the end of the year, they will probably turn negative nationally. But in this episode, what we’re talking about is not national data. We’re going to dig into regional trends and how things are changing across the market. And I’m going to throw a map up here for anyone who’s looking on YouTube, but basically what you can see, it’s a map that shows where prices are going up, where they are basically flat and where they are declining. And the map is really stark because you could basically draw sort of like a diagonal line starting in Washington and down to Florida.
So from the northwest down to the southeast and everything north of that line, so the Midwest and the northeast, those markets are basically still positive. You see the strongest growth in places like Wisconsin and the Northeast and Connecticut and New York, Massachusetts, they still have above inflation, real home price growth. Everything south of that line, and I’m not saying every single market, but if you look south of that line, the vast majority of markets are down. Yes, there are some places randomly in New Mexico or West Texas that are up, but all of Florida is down basically much of Texas, most of the big metro areas, almost all of California, Utah, Denver, these places are all seeing declines. So when I said there’s a split in the market, that is absolutely true. Now later in the episode, I am going to call out specific metro areas that I think have the biggest risk and the biggest upside, but I want to get through some of more of the data before we do that because I think it will make more sense to everyone once I’ve gone through not just what happened with prices last year, like last year’s results, don’t tell us what’s going to happen this year, right?
We have to look at other data to start projecting what’s going to happen going forward, and that’s what we’re going to do. So the next data set I want to look at is actually a forecast that Zillow puts out all the time. I think they update it monthly about forecasts for housing markets, specific housing markets in the country. And when you look at their forecast, and again, I’ll throw the map up on YouTube, but what you see from this is that largely they believe that the trend is going to continue. If you look at the West Coast, Seattle, Portland, much of California, we’re looking at modest decline. So if you look at most of California, it’s like a 2% decline. Seattle’s like a 1% decline. If you look at Utah and Phoenix, it’s like basically flat. So what they’re projecting is a lot of the markets actually that were down a little bit last year, none of them were down a lot.
They were down maybe 1%. A lot of them are actually flattening out. So that is relatively good news. The areas of the country where they’re projecting the biggest declines are where they have been the biggest so far. So that is mostly in New Orleans. That’s the biggest decline they’re forecasting at negative 4%. Austin continues to just get beat up at negative 3%. Denver, Colorado, Springs, a lot of Louisiana is forecast to go down, but surprisingly, they’re actually projecting sort of a bottom in the Florida market. So that is positive news for anyone who’s invests there because that market has been hit hard over the last two years, but they’re projecting rebounds in most of Florida, basically except Punta Gorda and Tampa, that general area. Now in the north of the country, north of that line I was describing, they’re seeing modest growth in most places.
So I would call the projection for most of the Northeast and the Midwest flat in real terms. So yeah, they’re projecting it’s going to go up one or 2%, but remember, that means that’s below the pace of inflation. And so we’re going to have negative real price growth in most of those markets. That’s why I’m calling, even though most of these markets might go up on paper, that’s why I’m calling it a correction because negative real home price growth in my book is a correction. Some markets will grow faster than that. Rochester, New York continues to outperform. They’re projecting a 4% year over year growth. Hartford is projecting 4% year over year growth. You see places around Milwaukee, Chicago’s up a little bit. So that’s what they’re projecting. Basically modest growth in the Midwest and the Northeast, modest declines in most of the South and the West.
The only real areas they’re projecting big declines are in Louisiana and Texas as of this point. But do we buy this? Yeah, Zillow is making their own forecast, but I don’t personally just like to look at what they say is going to happen and assume that’s correct. So I actually did my own research into affordability, into inventory trends, into delinquency rates. And we’re going to get into all of that to fact check this and see if we actually believe what Zillow is saying or if we should have our own forecast for different markets. We’re going to get into that right after this quick break. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer going through our regional market update. Before the break, I shared what happened last year in terms of appreciation rates and what Zillow thinks is going to happen next year, which is largely a continuation of what we saw last year. But I don’t want to take Zillow’s word for it. I think that we should, as real estate investors, go a level deeper and understand each of the variables that are going to dictate whether or not your market is going to go up, is going to remain flat, or is at risk of declines. And I’ve pulled together a bunch of different data sets. The first one is going to be an affordability update. Then we’ll talk about some other data sets includes delinquencies and homes underwater that have negative equity. We’re going to get to all that, but we’re going to start with affordability.
As you know, if you listen to this show, I think affordability is kind of the key to the market. It has been for several years, and I think it’s going to be important for predicting where markets go. So far, that prediction has been right, and so I’m sticking with it. I just follow affordability really, really closely. And the good news there is that affordability is improving. With incomes now rising faster than home prices and mortgage rates right around 6% as of right now, home affordability improved to its best level in nearly four years. The housing market’s not great, but it is good to hear that. I am very happy about that. The monthly payment now on average for an average price home fell to $2,091. That is down 7% from a year earlier. That’s $164 a month in savings. That is the lowest amount you have needed to buy an average price home since early 2023 in three years.
So that’s good news. And overall, the one that I am really looking at is something that they call the median income to payment ratio. Basically, how much of your income is going towards your mortgage payment. Now, if you look back in 2023, it peaked at, as long as I have data for it, the highest it had been, it was at 34%. So just so you know, most budgeting experts say that you should put about 30% of your income towards housing at the most. So having it be at 34% means that pretty much most, at least half of the country was priced out of those markets. Fast forward to today, it is now at 27.8%. It’s still not great, but it is below that sort of critical threshold of 30%, and it’s continuing to fall. So I think that is highly encouraging on a national level, but of course, we’re talking about regional differences right now.
My thesis has been for a while that the markets that are the most affordable are going to be the most resilient in this housing correction and the ones that are the least affordable are going to struggle the most. Now, that is not universally true. You see markets like San Francisco that are actually doing well right now, but generally speaking, I think that is a good rule of thumb to follow. If the market is super unaffordable to the people who live there, there is going to be risk there. What makes me happy about this is we have now seen 15 major markets return to their long run affordability norms. So this just means that, yeah, during COVID, things got super stretched. It was really unaffordable for a long time, but we are now seeing markets like Cleveland, Detroit, Memphis, Tennessee, and Chicago all get back to their regional trends.
Even pretty expensive markets like Denver are getting close to their long-term trends. Portland, Oregon getting close to its regional trends. A lot of places in Texas are getting closer and closer. Now, I’m not saying things are good. Housing prices are still really unaffordable, but in these markets where you are near long-term affordability trends, there is going to be, in my opinion, a floor on how bad the correction can get because people can still buy homes. And sure, there is risk of big unemployment sometime in the future, but right now that’s not happening. The unemployment rate is relatively low. And so these markets I think are still going to do pretty well. Other markets though, when you look at places like LA and San Francisco or Tampa, for example, they’re still well above long-term affordability trends. Same thing’s going to happen in Seattle. We’re still seeing this in places in the Northeast.
Some of those markets are still going well, but I think as long as those long-term affordability trends remain elevated, there is risk of a correction, and that’s why I’m bringing up this data. So that is one thing I highly recommend everyone listening. Look up in your market, look at the price to income ratios in your market, and also look at the income to payment ratio. That is also super important. You can just Google these things, you can put into ChatGPT and ask these questions, see where your market is in terms of affordability. If it’s really above long-term affordability trends, that’s one data point that will say, “Hey, there’s actually higher risk in this market.” That does not mean there’s going to be a crash. We have to look at all this data together, but in this episode, I’m just walking you through different data sets you should collect to make this assessment for yourself and affordability, first thing I would check out if I were you.
The second thing we want to look at is delinquencies because major risks of crashes come when there is something called forced selling. When people can’t pay their mortgages and they need to put their home on the market before they really want to, that can increase supply and that could create downward pressure on pricing. As we do with all of these things, we’ll start with a big national picture. Delinquencies actually fell in December. So all those people saying that delinquencies are going up, that is not true. We actually saw that they were going down 16 basis points, so not a lot, but it’s now at 3.68%. And just for some context, because I know that number probably doesn’t mean anything to any of you, pre-pandemic, the delinquency rate was about 4%. So we were still below where we were in 2019 when no one was freaking out about delinquencies.
No one was worried about a foreclosure crisis in 2019, and we’re still below those numbers. So keep those things in mind. It’s an important grounding exercise amidst the many headlines you’re likely to hear about delinquencies going up. Now, the improvement that we saw was very modest, but it was a small improvement, was largely driven by early stage delinquencies declining. That’s great. Less people are going delinquent. This is in December, the last month we have data for than there were in November. The flip side of that though is we need to call this out that 90 day delinquencies, more serious delinquencies are rising and they’re at the highest point they’ve been in three years. Now, compare that to 2008. We’re not even close. They’re not even in the same stratosphere on opposite ends of the graph, but it is important to know that they have risen and are at the highest point in three years.
I am not surprised by any of that. If you look at the forbearance programs and the other foreclosure moratoriums and all that, yeah, three years ago, a lot of those were still in place. So delinquencies were going to be lower. They are going to revert back to the mean, and we are seeing that right now. We are also seeing a couple other national trends, VA loans, which I had mentioned were going up and something that I wanted to keep an eye on. Good news there, they’ve actually started to go down by a quarter point, so that’s really good. To me, the biggest risk, sort of the one red flag, I wouldn’t even call it a red flag, a yellow flag that we need to keep an eye on is FHA delinquencies. Those are actually up. 13% of FHA mortgages are delinquent right now. That’s nearly a million home buyers.
And that sounds scary. 13% delinquencies is really high when you consider the national average is 3.7, right? But I just want to remind everyone that FHA loan delinquencies are always higher. Even in 2019, when things were fine and no one was freaking out, FHA delinquencies were 10%. They were still 10%. So they’re up to 13. That’s an increase for sure. It’s something we need to keep an eye on. But just remember that that’s actually just 300 basis points higher than where we were in 2019. It’s also important to remember that FHA loans are just a small portion of the market. They’re about 10% of all loans. So if we talk about 13% of 10% of mortgages, it’s like 1% of the total market. So that is just keep that in mind. It’s not an emergency right now, but if it keeps going up, it’s something we are going to talk about.
Now, let’s go back to our regional analysis because I want to talk about where we are seeing delinquencies rise faster than the national average and where they are lower than the national average. And I’m going to throw up another map on YouTube here, but what you can see is the Southeast has the highest rates. Florida, Texas, Alabama, Arkansas, Georgia, South Carolina, actually, we see the highest rates of delinquencies in the Southeast. Some of them in Louisiana are at eight or 9%. That’s high. That worries me. I’ll just be honest. You see eight, 9% delinquency rates in a single market. That’s a concentration of delinquencies that worries me. We do also see some places in the Northeast, but it’s not as severe. The high ones in the Northeast are four and a half, 5%, but we are starting to see those rates tick up. Now, interestingly enough, in the markets where we have seen a lot of declines over the last couple of years in terms of prices, those people still paying their mortgages, right?
If you look at Seattle, we’ve seen a decline or low affordability, super low delinquency rate, 1.7%. We look at San Francisco, 1.2%. San Jose, 0.8%. Portland, Oregon, 2%, all below the national average, super healthy numbers. So really nothing to worry about there. Even in markets that are seeing a lot of risk right now like Denver, that only has a 2.2% delinquency rate. So this is why I’m telling you that we have to collect all this different data before we make our analysis. If you look at a market like Seattle, you could say, okay, prices were down, affordability is low, there’s going to be a crash. Yeah, there’s going to be downward pressure in that market, but when we look at delinquency rates, which is what really can pull the rug out from a market and make it go from a correction to a crash, actually not that bad.
It’s not even not bad. It’s very healthy at 1.7%. That is very, very low. When you look at the Northeast now, you sort of have to do a little bit of a balancing act, right? Those markets have low inventory, prices have been moving up, but by the fact that we are seeing rising delinquency rates in the Northeast, that is a counterbalance to some of those tailwinds. We are now seeing that that’s why I believe a lot of these markets are going to start to slow down. We’ll probably see more and more inventory come on the market because there are delinquencies. It’s not going to be emergency. It’s not going to be a flood. This is just downward pressure on pricing. The third category that we’re entering in is the Southeast. These are areas where we have rising inventory. Prices fell fast. We have relatively low affordability, and now we’re seeing rising delinquency rates.
That worries me a little bit, especially in the context of AI and the job market. Now, we don’t know if there’s going to be a lot of job loss. That hasn’t happened yet. But to me, the Southeast still poses a lot of risk. I know that Zillow is saying that a lot of those markets are going to flatten out and they’re going to be just fine. I worry about markets where delinquency rates are well above the national average and there is relatively low affordability. That worries me. If you’re in the Southeast personally, I would be very careful investing right now. I think there’s going to be better deals on the market, which is a plus and that’s something you can work with. But I think the risk of declines in the Southeast personally is bigger than what Zillow is saying they are. I also think that the upside in the Northeast is a little bit lower than Zillow is saying they are.
They’re saying markets there two, three, 4%. If some of these trends continue, low affordability, higher delinquency rates, rising inventory, I think they’re going to be mostly flat. I’m not saying they’re going to crash, but I think these markets where they’re projecting three, four, 5% appreciation, maybe, but I would personally err on the side of caution and assume they are going to be closer to flat if it were me. So if you’re in a market with rising inventory, rising delinquencies and low affordability, that’s the biggest risk category. So go look those things up for yourself. That is the biggest risk category. If only one or two of those things are trending the wrong way, I think you’re going to probably be closer to flat. And if all of those three things are trending the right way, you’re probably in a market that’s going to appreciate. That’s sort of how I would look at these things.
There is one more thing I want to talk about, which is homes being underwater, because this has increased pretty significantly over the last couple of years. And this is another factor you need to think about in your market. We’re going to talk about that right after this quick break. We’ll be right back.
Welcome back to On The Market. I’m Dave Meyer. Before the break, we talked about delinquency rates, but I want to tie in one more thing here, which is homes being underwater. Now, I don’t talk about that much on the show because I think delinquency rates and foreclosures are much better predictors of where prices are going than homes being underwater. I actually think people overestimate what homes being underwater does to the housing market because honestly, it might do nothing. If delinquency rates are low and your homes are underwater, it doesn’t matter because banks, they cannot foreclose on you just because you have negative equity. They only foreclose if you stop paying your mortgage. And when those two things combine, that’s the problem. If you are behind on your mortgage and then you have negative equity, that’s when you might see more supply come on the market because banks are forcing sales.
Now, we don’t know if banks are going to do that. I personally actually think that they’re going to take over these properties and actually operate them because that is a better financial decision for them. But I just want to call out in Florida, there are very high negative equity rates. Some markets are at 10%, 11%. In Austin and in San Antonio, we have 9%. In Colorado Springs, we have 5.6%. So it’s just another variable. Most of the other markets in the country, I actually really wouldn’t worry about. There are some places with 3%, 2%, but that happens during a housing correction. That is just one of the things that happens is when prices go down, more homes have negative equity. As long as people are paying their mortgages, that doesn’t really matter. But when you look at the big picture, when I’m looking at all this data and I see Austin, San Antonio, a lot of Florida with these huge negative equity rates, rising delinquency rates, low affordability, I worry.
I think those markets are in for another bad year. But just remember, this is just the minority of markets. If you look at California, it’s super low. The Northeast, it’s super low. If you look in the Midwest, it’s super low. So it’s really concentrated, honestly, in a little bit of Louisiana, but Texas and Florida as well. So before we get into the conclusions, and I’ll share some of the riskiest markets, some of the highest upside markets I personally believe in, just remember, go look these things up for yourself. You can go on ChatGPT, double check it, but you can go Google these things as well. Look at affordability in your market, delinquency rates, the way inventory is trending and negative equity rates. Get a picture of what’s going on. If it’s a mixed bag, probably going to be flat. If it’s all negative, prepare for better deals, but also declining home prices.
If everything’s going well, which is very, very few markets right now, you can prepare and plan on appreciation. So depending on where you fall in that spectrum, if you’re in a market that is declining, if you’re in Florida or Texas or Louisiana right now, absolutely can still invest. You’re going to see better deals. And I actually think this is one of the more straightforward investing propositions right now. Buy well below current comps. There are going to be a lot of motivated sellers. And if you can buy five, 10% below market comps in some of these markets, that’s probably a good buy because a lot of these have strong long-term fundamentals. If you look like markets like Austin or Tampa, they’ll probably recover, but it might be a couple of years. So if I were you, the way I would, if you were looking at rentals, I would look at buying well, being very patient, buying 10% below current comps and buy great assets in great locations because those are going to recover quickest when these markets eventually do turn around and they will.
But I would not underwrite with appreciation this year or next year at a minimum. I would say maybe 2028, I would start to show modest appreciation and I would keep those appreciation rates going forward at two or 3%. I would not expect some huge massive rebound. If you get that, great that you are positioning yourself for that upside, which is awesome, but I wouldn’t bank on that in your underwriting. If you’re in the flat markets, I honestly think this is a little bit harder because it can be tempting to go after a thin deal. And the sort of downside of being in a flat market right now is that deals are still pretty hard to come by in a lot of these areas, but I would still recommend caution in these markets. You still have to buy below current comps. I think that’s true in pretty much any kind of market.
I wouldn’t say you need to get 10% below market comps, but if you can get below three to 5%, that is the way I would try and insulate myself against this correction right now. And again, still focusing on great long-term assets. Now that’s just if you’re in a market with strong long-term fundamentals. These are markets that are going to keep growing. They have strong economies. They have population growth. If you’re in a market that’s flat and has a kind of meh economy, that’s not bad, but I would focus one more on cashflow because those markets may not appreciate at the same rates going forward. Even after the market returns, I would say in those kinds of markets, I’m thinking of market, I’m going to just call out Cleveland. It’s not a terrible market. It’s kind of flat right now, but appreciation rates might not go up to where they were two years ago or three years ago or four years ago in the next couple years.
They might not go up there ever again. And so I would prioritize cashflow in these markets that are kind of flat without long-term appreciation prospects. I would need at least a seven, 8% cash on cash return to do those kinds of deals. But again, if you’re in a market that’s kind of flat, but it’s a great fundamentals market, I’d say four or 5% cash on cash return if you think that market is going to appreciate long term. So that’s kind of my advice. If you’re in a market where things are going really well, you’re going to have less deal flow. You can still buy and forecast a bunch of appreciation, but I would not project that to continue forever at the rates that they are at today. I just think there’s going to be negative pressure everywhere in the market and you want to account for that.
So that’s why I recommend you do your research, look at the data I shared with you, and then there’s some advice on tactically what you should be doing in your market. But I did also want to share with you what I think the riskiest markets are right now. I’m just calling out a couple of them. To me, when I did this research, Austin, Texas, Punta Gorda, Florida stand out as the most risky markets right now. Tampa as well, Ocala, Florida, and Colorado Springs. Those are markets where things just don’t seem to be going well. I don’t know if they’re going to go down another 2% or another 10%, but I do not expect appreciation or rebounds in any of those markets this year. I’ll also call out Asheville, North Carolina, super strong, fundamentally strong market, but they had some flooding events there. Inventory is up really high.
And so I think declines are going to continue there as well. On the positive side, I do think there are some comeback markets, markets that were not doing that well that I think are probably going to have a better year this year. First, I think Reno, Nevada, we did see price go down a little bit less than 1% last year. They’re 6% off their peak in 2022, but I think that market has found a bottom. We’re seeing inventory falling. It is 26% below 2019 levels. There’s a lot of momentum towards places that have zero income tax like Nevada. And so I think that market is going to stabilize. Another market I see stabilizing this year is Mobile, Alabama. Prices did fall 2% last year, but inventory sort of peaked and is starting to fall again. It’s 16% below 2019 levels. And now I think we are going to see that market start to flatten out.
The number one comeback market of the year, I believe, is going to be San Francisco, California. People always love to bet advance California, San Francisco, New York. They’re both performing really well right now. I think this is going to turn around. Prices are actually down. It’s 2.6% year over year. It had one of the biggest corrections in the country last year. They’re down 9% off of the 2022 peak. But if you just look at the changing inventory dynamics there, it is falling quickly. You have all this money pouring into the area with AI enthusiasm. I think that we are going to see a rebound in San Francisco. That’s my guess for the comeback market of the year here in 2026. So that’s what we got for you today. Hopefully this helps you do your own research for your markets. I can’t talk about all 300 major metro areas in the country.
I’ve given you some insights into regional trends, but go Google this stuff. It will take you five to 10 minutes. Look up inventory, affordability, delinquency rates, price trends, negative equity in your market, and make an assessment. How risky is your market? What is the upside? When’s that upside coming? And base your investing decisions on that. Overall, I think there is probably more negative pressure on housing prices than there is positive pressure in the market. I think even the markets that are going to go up are probably going to go up at a slower pace than they did last year. The markets that were flat last year will probably go down a little bit. That’s just generally speaking how I’m approaching my own investing. And to be a conservative investor, that’s what I recommend you do as well. Thank you all so much for listening to this episode of On The Market.
I’m Dave Meyer. I’ll see you next time.

In This Article

Out-of-town buyers are no longer a niche market. They are the market.

Those who are old enough might remember their first pre-2008 investment seminar from old-school gurus like Robyn Thompson and Ron LeGrand when they suggested sending postcards to buyers who lived out of state, and you dutifully made a note, thinking, “That’s a good idea.” It was.

Flash forward two decades, and potential out-of-town buyers now comprise 62% of online views for homes in the largest 100 U.S. metros, according to a report from Realtor.com, with 87 of those 100 markets being driven by out-of-market interest. In 2019, 48.6% of online shoppers were out-of-market. 

What’s driving the move away from traditional employment hubs? Affordability and warm weather. Throw in remote work as a facilitator, and more residents are seizing the opportunity to live a more relaxed life away from adverse weather and without stretching their finances. This is also borne out in U.S. News and World Report’s ongoing “Moving Trends,” which shows the allure of affordable metros in the South and Midwest.

Realtor.com notes that Sunbelt enclaves such as Cape Coral-Fort Myers and Lakeland-Winter Haven in Florida and Durham-Chapel Hill in North Carolina attracted around 80% of their listing traffic from out-of-town buyers in late 2025, a figure even higher than during the pandemic, with interest coming from potential owner-occupants, second-home buyers, and investors.

“We have seen a fundamental change in where Americans who are shopping for a home are looking to live,” said Danielle Hale, chief economist at Realtor.com, when releasing the report. “As the ‘lock-in effect’ keeps some owners from selling, those who are moving are increasingly untethered to the market they’re currently in.”

How Affordability Is Squeezing Buyers

According to a recent Investopedia analysis citing Oxford Economics, a household needed to earn $110,000 in the third quarter of 2025 to buy a single-family home as well as pay property taxes and home insurance costs—almost double the amount needed at the same time five years earlier. Despite house prices slowing rather than collapsing due to tight supply, a starter home is still out of reach for many.

It’s not just sunnier climes that buyers and new residents are looking to. Midwest and Northeast markets that traditionally sourced their buyers locally now average about 56% and 62% out-of-town listing views, respectively, with smaller and mid-sized markets being the target for migration.

Migration and Rental Demand: The Happy Couple

Migration and rental demand often go hand in hand because when moving to a new city, potential homeowners usually test-drive it first by renting. When tenants are moving from larger cities to smaller cities such as Richmond, Virginia, and Pittsburgh, Pennsylvania, the end result, according to Yahoo! Finance’s analysis of Realtor.com data, is a lower vacancy rate and higher rental demand.

Renters arriving from expensive metros are helping to bid up prices in what have been considered budget?friendly cities, according to Realtor.com analysts.

Moving Company Reports Back Real Estate Data

Transportation companies echo the same message, adding their own nuances.

United Van Lines’ 2025 National Movers Study shows inbound migration led by Oregon, West Virginia, and South Carolina. Its top destination metros include Eugene-Springfield, Oregon; Wilmington, North Carolina; and Dover, Delaware, with a focus on smaller cities and towns.

Michael A. Stoll, economist and professor in the Department of Public Policy at the University of California, Los Angeles, said in the United Van Lines report:

“For most Americans, interstate relocation is no longer a linear calculation; it’s a complex decision balancing multiple competing factors. It is interesting to see that in general, population movement continues from North/Midwest regions to Southern states, and again, top inbound locations are dominated by smaller- to medium-sized metro areas. This reflects a legacy of COVID-era preferences for lower-density living, combined with the reality that housing costs continue to drive people toward more affordable regions.”

Similarly, Allied Van Lines’ U.S. Migration Report highlights the Carolinas, Tennessee, New York State, and Florida as its customers’ top destinations. The report says that North Carolina has “burst on the scene as a hot destination,” with former resort towns reimagined as full-time hubs for remote workers, while tech and finance workers are drawn to Charlotte.

Seven Is the Magic Number

Metros with vacancy rates above 7% give tenants a tactical advantage, according to a Realtor.com report, with landlords often eager to offer incentives, such as rental concessions, to fill units. 

In smaller cities where tenants have been arriving en masse, that advantage slides back to landlords. U.S. News and World Report’s exhaustive The Fastest-Growing Places in the U.S. is a good companion guide for investors looking for safe havens to buy rental properties. It’s clustered with smaller Southern cities in Florida, South Carolina, and Texas, with some Western states like California and Arizona attracting more affluent movers.

Older Movers Are Increasingly Choosing to Rent Over Buy

Wondering whether all the migration translates into actual tenants? It’s a valid question, especially when the demographics skew toward older tenants who have former homes, equity, retirement funds, and pensions to presumably see them through their later years. Wouldn’t they simply want to buy a place of their own? Apparently not.

According to a study by Point2Homes, a real estate listing website for American Rental Homes, citing U.S. Census data, seniors are one of the fastest-growing rental demographics. In a 10-year period, the senior renter population increased by 30%, adding 2.4 million people. 

But it’s not just seniors who are choosing to rent rather than own. The 55-64 age group is up by 500,000. Finances play a big part, as a Harris Poll cited in the report shows, with older residents less willing to be saddled with mortgages, taxes, insurance, repairs, and possibly HOA fees, preferring the ease of movement that renting offers.

Not surprisingly, Florida is a prime destination, as the Realtor.com report confirms, with Cape Coral-Fort Myers among the top destinations. Also, for smaller investors, older renters are not opting for gleaming new apartment buildings and amenities but instead prefer single-family rentals, with numbers increasing by more than 25% compared to a decade ago among the 65+ age group.

Final Thoughts

Looking at these various reports together helps make the decision of where to invest easier. The good news is that people are moving to more affordable markets and have a preference for smaller single-family homes, especially among older tenants, which plays into the hands of BRRRR investors and buy-and-hold landlords.

For flippers, upgrading homes in smaller markets means less capital at risk and faster turnover, helping feed demand from investors and homebuyers alike.