Dave:
The full on buyer’s market is coming for real estate right now. Home buyers are seeing the biggest discounts in more than 12 years, and this is what we’ve all been waiting for. There are deals to be found right now if you’re an investor and in this February housing market update, I’ll tell you how and where to find. Hey everyone, it’s Dave Chief investment Officer at BiggerPockets Real estate investor for 16 years and a professional housing market analyst. And being a housing market analyst is starting to be a little bit fun again these days because there’s so much going on and these are things investors should be paying close attention to because these shifts in market dynamics mean opportunities, specifically opportunities to buy and build out your portfolio. These are the types of changes that we like to see and that we have been waiting for.
So today we’re doing our February housing market update and in it I’m going to cover the full on shift to a buyer’s market that is making deals easier to find. We’ll talk about inventory news that will tell us where the market might be heading next, we’ll of course do a mortgage rate update and my forecast for rates going forward, plus I’ll share my February risk report where I’ll share data that helps you take advantage of the opportunities that are presenting themselves without exposing yourself to the risks that can come in a buyer’s market. So let’s get to it. First up we’ll talk about the big picture, which is this. The housing market is increasingly a buyer’ss market. Now this doesn’t mean that everything is perfect far from it, but it does mean that deals are going to be easier to find, and this isn’t just my opinion or anecdotal evidence, we actually see real evidence of this in the data.
First, we’re going to start by talking about pricing. Home prices are up as of now about 1% year over year, and this is right within the range we’ve been predicting for 2026 where I’ve said things would remain pretty flat and flat is exactly what we’re getting right now, but that 1.2 increase, although it is up in nominal terms, it’s actually below the pace of inflation and below wage growth. And that means when you consider all those things together, that affordability in the housing market is finally getting better. This is something we have been waiting for 2, 3, 4 years now. In fact, Zillow just put out their January, 2026 market report and they found that the typical monthly mortgage payment is now 8.5% lower than it was a year ago. That’s a lot. I know people are still waiting for rates to come down, but 8.4% lower on a mortgage rate is pretty good.
Of course, it is not a solution to affordability. We have a long way to go there, but this is good news for investors and homeowners alike. Things are getting less expensive to buy on top of improving affordability. The biggest headline in the housing market this month, at least in my opinion, comes from a new Redfin report that shows that buyers are actually scoring the biggest discounts since they started keeping this data. It’s only about 12 years, so it’s not going that far back in time, but still that is really good news for anyone who’s trying to build their portfolio. Right now, according to the report, the average buyer is now getting a 3.8% discount off list price. That might not sound that big, but since the median home price right now is over $400,000, that’s about a $16,000 discount on the average property. That means serious equity that you could just be walking right into, and this is something I feel like everyone listening right now should be paying attention to because this right here, this is the benefit of a buyer’s market.
It comes with some downsides of course, like slower appreciation, but our jobs as investors is just to take what the market is giving us and what it is giving us is discounts, and that’s something I will definitely be taking advantage of. Just consider this other finding from Redfin. In the same study, it shows that for people who negotiate below list, because not everyone’s going to do that, but for the people who actually go out and find deals where they can get them under lists, they work with motivated sellers, those people are actually getting discounts of almost 8% off list price. Or if you factor in the average home price, that’s more than $32,000. This is for me the number one shift in tactics. Investors should be thinking about right now. Negotiate being patient, finding sellers who want to move their property quickly because when you find them, there are significant discounts to be had, which can boost your profits on pretty much any acquisition.
Now of course, not all markets have big discounts, but most markets have at least some. The biggest discounts we’re seeing are in Florida and Texas. Not a huge surprise here, but those markets are seeing 10% plus discounts. But even in hotter markets, the markets that have and are still growing like the ones in the northeast and the Midwest, they’re also seeing discounts. Some of the hottest markets in the last couple of years like Milwaukee or Indianapolis, discounts off list are still three to 5%. So to me, everyone, no matter where you’re offering on your next offer, you should be thinking about how do I get this significantly off list price? And even better than that, you don’t just want to get it below list price. You want to get it below market comps because some of these discounts, some of the reason we’re seeing these big discounts is not because home prices are actually falling.
It’s because sellers haven’t really accepted reality. They haven’t really priced appropriately to the market. So not only should you be looking under list price, but work with your agent, do your own comps if you need to and figure out what each property is really worth. Try to buy it three, five, 7% below what current comps are. That to me is the single best way that you can protect yourself in a buyer’s market while still taking advantage of the better and better deals that we’re seeing. So that’s big news to me. The fact that discounts are coming, affordability is getting better, this is good news for the housing market. But before we move on to talking about inventory, I want to be clear that not everything is great in the housing market. I think we all know that. I don’t think we’re really in a healthy market just yet.
We’re moving towards it a more balanced market in terms of supply and demand, but we’re not doing very well in terms of sales volume, the total number of homes that are actually selling. In fact, in January we went backwards. As of January we’re on pace for only 3.9 million home sales, which is below where we were in 2025, which was already a very slow year. We’re basically back down to where we were in late 2024, which if any of you remember was not a great time for the housing market. Just from December to January alone we saw home sales drop 8.5%, which is the biggest monthly decline since February, 2022. This isn’t good for a healthy market. We need more sales volume. I think any agent, any loan officer, any investor or seller knows that we just need more volume and activity in the housing market for it to be healthy.
We want to be somewhere near 5 million, five and a half million. That’s a normal market. We’re at 3.9 right now, so we definitely have a ways to go. And the thing about this is that normally you would think since affordability is improving, we’d have some better sales volume, but I think there are probably two things getting in the way of housing market activity picking up. The first is just general consumer sentiment. It’s low. If you look at any of the many ways we measure consumer sentiment or confidence in the US, it’s not very good. People are worried about layoffs, they’re worried about inflation, they’re worried about AI taking their jobs. There’s a lot going on and when people are worried they don’t make big purchases like buying a house. So that is definitely one thing that’s going on. But the good news is the other thing that I think is probably suppressing activity is only temporary.
It may sound trivial, but I think that massive snowstorm and cold that swept over a lot of the country over the last couple of weeks definitely slowed down housing market activities, these types of events can really slow down the market. I think some of that did happen in January. My bet is that we actually see an uptick in home sales in February because people can actually leave their house, they can go on home sellings and not freeze. So hopefully get back to that four, 4.1 million pace that we were at before January. So that’s where we’re at with general housing market news. And I just want to reiterate that as we’ve been saying for months 2026, the most likely course it’s going to take is what I call the great stall. Basically we’re going to see housing prices be a little bit flat when mortgage rates come down a little bit, wages go up and affordability slowly improves. That was my thesis I presented back in September, October. I’ve been talking about it for a while and that’s bearing out as we speak and I know the great stall. It doesn’t sound like the most exciting thing, but I think this is positive. The gradual return to affordability, better discounts. These are positive signs, but is that going to continue for the rest of the year to understand what happens next? We need to look at inventory and how it’s trending and we’re going to do that right after this quick break.
Welcome back to the BiggerPockets podcast. I’m Dave Meyer delivering our February housing market update. Before the break, we talked about how we are in the great stall prices relatively flat, but we’re seeing slow and steady improvement to affordability and big discounts, all positive news for investors. Now that we understand what’s going on today, we’ll start to look forward a little bit and examine inventory and mortgage rates. Those are going to tell us what happens next. We’re first going to dive a little bit into inventory at the end of January, 2026. Overall inventory across the whole country was up 10% over the year before. And just as a reminder, in the housing market, what we really care about is year over year data. It’s very seasonal, so what happens from December to January is less important than what happens from January, 2025 to 2026. And what we’ve seen is a 10% increase.
That’s growth inventory going up is a sign that we’re moving towards a buyer’ss market, but we’re not in any sort of crash territory. In fact, we’re still 18% below where we were in January, 2019, which is kind of the last normal housing market that we have to compare to. So definitely a softer market than we were a year ago, but well within normal range. And I dug into a little bit more of this data just trying to compare January 19 to January 26th because again, that’s last normal housing market to today. And what you see for most of the country is actually that we’re still well below 2019 levels basically all of the northeast, all of the Midwest, a lot of California still below where we were in the last normal market. And in fact, if you look at the Midwest, the difference is really dramatic still, even though you see these headlines that inventory is rising in a lot of the Midwest, you still see markets where inventory is 50 or up to 80% below where it was in 2019.
That is not a trivial difference and it’s certainly a sign that a crash is not imminent. Now in the southwest, the story is totally different. If you look at San Antonio is the highest inventory growth up 52%. Florida is up 60%, Denver is up 33%. So these are significant increases and it’s why you see prices falling in those areas. I’m bringing this up because I want everyone to remember when you hear headlines that inventory is up or it’s down. It is super market specific and what you want to look for in your own market is changes in recent inventory. If I were you and researching a market, the two numbers I would look at is the difference between inventory in 2019. And now you can look this up on Redfin, by the way, it’s free just Google Redfin data center, you can go check this out.
And then the difference between inventory between last year and this year, year over year data, that’s what’s going to tell you what’s going on in your market. If inventory is climbing fast, that means better deals and bigger discounts, but it also means prices could drop. There’s a bigger chance that prices fall in areas where inventory is going up. That’s how a buyer’s market works. And of course the opposite is true. If inventory is shrinking yet fewer deals harder to find things at pencil. But if you find something that works, you probably will get more appreciation. Just as an example, San Francisco actually has falling inventory, right? Probably because of the AI boom, it’s minus 6% in the last year, prices are going up there, whereas in Seattle inventory is up 30%. Housing prices here are pretty flat or declining just a little bit. Now there’s no reason you can’t invest in either type of market, but it should change the way that you’re underwriting your deals.
If I’m buying a deal in Seattle, I’m going to be looking for steep discounts and I’m going to underwrite for low appreciation. On the other hand, if I’m buying in Jacksonville, Florida also showing inventory declines, I will underwrite for better price growth, but I’m going to have to be more aggressive in my offers because there’s going to be less motivated sellers. So these numbers, inventory numbers, the number one thing you want to look at. If you want to understand where your market is heading and how to formulate your strategy based on current market conditions. The other thing we need to look at of course, if we’re trying to figure out where the market’s going for the rest of year is mortgage rates. This isn’t really regional, but because of where we are nationally with affordability levels, rates are going to provide a lot of headwinds or tailwinds to pretty much every market depending on which way they move.
So we’re going to talk about this just a little bit. As of today, rates are sitting around 6.1% for a 30 year fixed rate mortgage, right where I predicted the average would be for 2026. Now, I know for some people this might not feel like the most inspiring number out there, but I want to remind people that we are down a full 1% since last year. It was above seven just a year ago, and that changed just 1% in mortgage rates. Means that in an average deal you’re probably getting hundreds of dollars in better cashflow and that really can make the difference between certain deals penciling or not. So overall that is positive news. Affordability again, is getting better, but to be real with all of you, and you probably already know this, I don’t think rates are coming down that much more anytime soon unless something really dramatic happens in the economy.
I do believe the Fed will cut rates again some point this year, maybe not that soon and maybe not that much. But even if they do, there’s just a lot of other things, a lot of uncertainty in the economy that will prevent rates from falling much more. My prediction for the year is not changing. I said at the beginning of the year that rates are probably going to stay between five and a half and six half percent per year and they would average around 6.1%. That is still my forecast and that is still okay. In fact, I believe the fact that rates are more stable is just a good thing. The fact that we aren’t thinking every single month our rate’s going to shoot up or go down is good news for investors. It allows us to predict what’s going on. It means you’re not sitting around wondering, should I go out and pull the trigger on this deal?
Or are rate’s going to be a quarter percent or a half percent lower in a month? They’re staying relatively stable and for me, whether we’re talking about pricing or mortgage rates, stability breeds the right conditions for making good deals for good underwriting. And so I am relatively happy that mortgage rates aren’t swinging wildly anymore. And yeah, sure, I wish they were a little bit lower that would probably breathe some life into the housing market. But I just want to remind everyone that relatively high rates, they’re not even that high by historical standards but higher than we’ve had. They’re definitely high compared to the last 10 years or so. Relatively higher rates can help prices move down, which improves affordability in its own right. And arguably I would say that it improves affordability in a more sustainable way. If rates come down fast, we’ll just see ourselves in another affordability crisis in a few months or years because prices will just go up.
And even if we have lower rates affordability, that will be sort of a moot point. So just overall with mortgage rates looking forward, probably not much of a change in my opinion. Meaning what you see is what you get. Look for deals, given where rates are today, analyze them using the BiggerPockets calculators and find one that works. Right now the market is steady, which means you’re in a good position to underwrite accurately. And that’s exactly what I recommend you doing. As I mentioned before, there is opportunity right now because we are in a buyer’s market, but there’s always a risk that a buyer’s market turns into a crash when inventory starts to go up, when there’s potentially less demand. It’s a balance that you need to keep an eye on. So I’m going to share with you my monthly risk report that examines exactly risks exist in the market so you can help mitigate them and avoid them. And we’ll get into that right after this break.
Welcome back to the BiggerPockets podcast. I’m Dave Meyer giving you my February housing market update. Before the break we talked about inventory and mortgage rates. I don’t really think mortgage rates are moving all that much inventory is going up, which means deals are going to be more abundant and we are moving towards a buyer’s market and for most of us investors, we want a buyer’s market, but we don’t want that buyer’s market to extend so far that it goes into a crash or we see significant home price declines. I think that’s probably something we can all agree on. We want more deals, but we don’t want a crash. So even though we’re seeing more deals, we need to at the same time assess what the risks of a crash are. Now, as a reminder, I know there’s a lot of fear mongering out there about what can cause a crash, but basically it comes from basic economics.
You have to have an imbalance between supply and demand. You need significantly more supply than demand. That is what creates the conditions for a crash. And so how would we potentially move from where we are today, which is relatively balanced, tilting towards a buyer’s market to a crash? We need to see either demand evaporate, buyers just leave the market, or we need supply to go up. We need a lot more people trying to sell their home or some combination of both. So let’s look at those. Are those things happening in the market today? When you look at the demand side, it is not very strong. You don’t have 3.9 million home sales in a market where there is strong demand. But the good news is that it’s pretty stable. And if you look at the data, it’s actually up a little year over year. We did have a little setback in January, but if you look at mortgage purchase applications, I’m personally not super worried right now that demand is going to evaporate.
I know people like to say that there are no home buyers, but it’s sort of stable right now because even though demand is relatively low, so is supply, it’s both relatively low and that means the market is somewhat in balance. To me, the bigger risk, at least as of today for a crash, would be a big increase in supply. Either tons of people list their properties for sale all at once, which also isn’t happening. If you look at new listing data, they’re actually down year over year. So all those crash bros saying people are selling in droves, not really true. It’s actually down 2% year over year. So that is another positive sign that although we’re in the buyer’ss market, we are not coming close to a crash. But the other thing you have to keep an eye on is something called forced selling. This is basically when people are no longer paying their mortgage, they are delinquent and they are get foreclosed on and that can increase inventory.
This is similar to what happened in 2008, and this is really what can create a foreclosure issue in the market. I want to remind people that prices going down does not lead to a foreclosure crisis. It doesn’t lead to this increase in supply that could cause a crash. What leads to that is people not paying their mortgage. You don’t get foreclosed on because your mortgage goes underwater. That is a common misconception. That is not how it works. You can only be foreclosed on if you stop paying your mortgage. And that’s why in this risk report, I always focus a lot on foreclosure and delinquency data. And I do have some new data to share with you. This actually came out from the New York Fed a couple of weeks ago, and what it shows is that transition rates from mortgages are still quite low. Transition rates basically means from paying your mortgage as agreed to being some sort of delinquent.
Now, they’ve definitely gone up from 2021, but they’re at about 1%, which is also where we were from 2014 to 2020. And I know there’s a lot of news showing that foreclosures are up and delinquencies are up. And it’s true, they’re up from pandemic lows because of course they are. There was foreclosure moratoriums during the pandemic. So seeing them come back up from that artificially low level is not a concern. In my opinion, they are right in line with historic norms. Could that change if unemployment spikes to 10%? Yeah, it definitely could. But employment, we just got the data the other day. Unemployment is relatively low right now it’s at 4.3%. And there just isn’t evidence really that this is going to happen. If you hear it is it’s just speculation. It is not evidence. The reality is that people still have super low mortgage rates and they have high credit scores.
People can and are paying their mortgages, which means the risk of a crash remains very low. So overall, just to summarize our housing market update, what we got for you today is that better deals are here and I think more are on the way. This is showing in the data as we are seeing with bigger discounts, higher inventory. And I’m also just seeing this anecdotally, I have the great fortune of talking to a lot of investors from all around the country who are doing everything from flips to burrs to co-living. And I’ve just noticed in the last two or three weeks, honestly, second half of January, first couple of weeks of February, I have been hearing people excited for the first time in a while. I keep hearing that they’re seeing great deals right now and are loading up for people who buy a lot are starting to load up.
And so this is great news as an investor, we haven’t seen these kinds of buying conditions, I think like three or four years even in the hot markets. Inventory is rising, which I think means that we’re going to get flatter markets, more stable conditions. And again, those are the conditions you need to be able to underwrite. Well, stable is good. It means less guesswork. It means that you can put better assumptions into the BiggerPockets calculator when you’re going and analyzing your deals. And this is something I think every investor should be taking advantage of. So my advice, keep your eyes open. There’s still going to be a lot of junk out there. Don’t get me wrong. There’s not all of a sudden just amazing deals everywhere. There’s still a lot of things that are overpriced. You need to be patient, you need to negotiate. You need to use the tactics and strategies that we talk about in the upside era during the great stall period that we’re in.
And if you do that, you are going to be able to find better and better deals. And the good news is, even though those discounts are coming, the risk of a full on crash remains relatively low. So get out there, look for deals, negotiate, be patient, buy under market comps. These are the keys to finding great deals right now, and I assure you those deals are here and more are coming. That’s what we got for you today in our February housing market update. Don’t forget to subscribe to the podcast on Apple or Spotify or on YouTube to ensure you don’t miss any updates that help you gain an edge in your investing. Thank you all so much for listening. I’m Dave Meyer and I’ll see you next time.

Ashley:
What if the hardest part of real estate isn’t finding that first deal, but knowing what to do after you get it.

Tony:
Today we’re answering three real questions from the BiggerPockets forms that hit the exact pain points that Ricks like you are running into scaling the right way, pricing rentals correctly, and setting up a short-term rental without all of those costly mistakes.

Ashley:
This is the Real Estate Rookie podcast. I’m Ashley Kehr,

Tony:
And I am Tony j Robinson. And with that, let’s get into today’s first question. So our first question again comes from the BiggerPockets forms and it says, I currently own a property that has around $110,000 in equity. While I do not have a renter in this property yet, my plan is to have one by the end of the year, currently still renovating parts of the house with the amount of equity that I have. I’ve been thinking a lot about investing in a second property. I’ve always had the dream of owning vacation rentals. However, I don’t have that much capital and I worry about the feast or famine aspect of short-term rentals. I guess my main questions are what’s the best next investment for someone who is relatively new to real estate investing? Is the Burr method smart for me and should I do a cash out refi to help fund the next investment?
Alright, so basically this person’s just asking a, they’ve got some equity built up. What’s the best way for them to deploy that? I think first let’s just define for other rookies that are out there like equity and what does that actually mean, right? So when we talk about equity, we’re talking about the value of the home. What is the home currently worth, and what is the loan balance on that house? And the difference between those two numbers is your equity. So I think my first question back to the person who asked this question is how did you come up with that $110,000 of equity? Was that based on the Zillow estimate where it said that your house is worth X amount and you know what your loan balance is? Or did your neighbor’s house sell for a certain amount? But I think get some clarity first on how you came to that equity figure would be important because that’ll give you a better gauge on how accurate and how much equity you actually have to work with. So that’s the first part is just defining that. But for you, Ash, I think before we even get into what strategy or maybe what move makes the most sense, this person also asks what’s the best way to tap into that equity? Is it a cash out refinance or is it a heloc? What’s your recommendation?

Ashley:
Yeah, so I would say for this one, they own the property, but it’s going to be a rental. So you would have to do, you couldn’t do refinance or you couldn’t get a home equity line of credit or do a residential refinance. You would have to go and get a commercial line of credit on the property. So look for a local lender that will do these commercial lines of credit. You want to talk to the commercial lender at the small local bank and see what options they have available for you. The two lines of credits that I have are commercial are first liens. So that means that there’s no mortgage and no other debt on the property. So that is something you’d want to clarify and verify with the commercial department that the line of credit will actually be a second lien, which is traditional for most home equity lines of credit.
So you have your mortgage is your first lien, and then the line of credit is the second lien on the property, meaning if you don’t pay your bills goes into foreclosure, the mortgage getting paid first, then the line of credit. So it’s that positioning. And some banks don’t offer a second position for a rental property. So that’s where I would ask and get that clarification on that before you go ahead and start the whole process to get a line of credit. If you do a refinance on the property and it’s going to be a rental, you have a couple options there. You can go to the commercial side of lending for a small local lender, usually you’re going to have to do different amortization and fixed rate periods. Then you would see on the residential side. So for example, you’re maybe looking at a 15 year amortization or a 20 year amortization instead of the 30 year amortization.
Then you’re going to see a fixed rate, not for 30 years, but maybe for five 10, I’ve seen it for seven years, and then it goes into variable. Or you can refinance again to get another fixed rate. You can do A-D-S-C-R loan where this is looking at the debt you are going to put on the property and can the income, so when you rent it out actually support the property and you don’t have to rely on your own income to support the property. And so if you have a high debt to income on the personal side, this is always a great option where they’re looking at the value of the property and the income potential of the property instead of you to making sure it can support itself. And A-D-S-E-R loan, they do have that nice stur year option amortization and 30 year fixed to look at.
So something to take into consideration when you’re looking at two of these options is what is the current interest rate on the mortgage that you have right now on the property? If it’s like a 2.9%, then we’re probably not going to want to refinance. The only reason I would refinance out of this property, if you have a really low rate and you’re going to refinance into a higher rate, is if there is extreme value in that equity where you can put that money into something else and make such a large return, that interest rate and that increase in interest rate means nothing to you because it is very, very minimal compared to the amount of money that you’re making in the new deal that you’re putting that equity into. So look at that upside potential and evaluate that and it goes back to running the numbers in each scenario. So that’s where I would start is looking at those options that you have available for just doing a line of credit or for doing the refinance on the property.

Tony:
Yeah, all great points, Ashley. And the next part of that question is what is the next investment for someone in their position? And I really think that depends on you as an individual investor first. I think if you have $110,000 in equity, let’s just assume that aside from selling, you won’t be able to access all of that. So maybe somewhere in the 80 ish thousand, 70, $80,000 range, which you’ll actually be able to access through a line of credit or potentially refinance. And with that amount of capital, you’ve got to ask yourself, okay, what is the best way for me to actually go deploy that? I think just generally speaking, I’m a fan of the Burr strategy because it allows you to recycle a portion of that capital. But obviously that does require you finding a deal significantly below market value, which is a skillset in and of itself.
It requires you to manage a rehab, which is another skillset in and of itself, right? So there’s some more complexity there, but I think if you have the desire to learn those skills or the ability to do that already, a bur could be a great way to build your portfolio. And I’ve met so many investors who have taken one heloc, combine that with the Burr strategy and built a decently sized portfolio by just recycling that same capital deal after deal after deal. So it is a good way to build that momentum. So I think if you have the ability or the desire, a burr would be a great way to move forward.

Ashley:
And also too, the burr doesn’t just mean a long-term buy and hold rental. It could be your dream of doing a short-term rental too. So that can give you an extra layer of protection by doing a bur for a short-term rental property. You can really have increase the value of the property so you have more equity in the property when you go ahead and finish the rehab on it and pull your money back out. And you have this equity sitting in there to give you a little bit of cushion and security that okay, that feast and famine and mindset that you had. One little tip on that, if you are worried about that, what are going to be your other strategies that you can pivot to with this property. So for example, could you easily pivot to a midterm rental? Can you easily pivot to a long-term rental with this property?
So if that does happen, I had a property listed before as a short-term rental and a midterm rental, and I would leave the midterm rental booking open and I would just change it and I would keep my short-term rental window very minimal, I think only 30 to 60 days to keep it open. So that way someone booked 60 plus days out for a midterm rental, I could go ahead and close off the short-term rental bookings for that period because I would’ve rather have had the midterm rental bookings than the short-term rental. So think about different ways that you can incorporate other strategies if just doing the short-term rental route doesn’t make sense, maybe it’s seasonality or you just have periods of time where there’s a lull that you’re able to pivot when necessary coming up, even the best strategy falls apart if your rent numbers are wrong, we’re going to break down which rent tools you can trust and which ones get investors in after a quick word from our sponsors,

Tony:
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Ashley:
Okay, today’s second question is between BiggerPockets estimator and Prop Stream, which Rent Estimator do you find most accurate or are they pulling from the same data source? I saw a 2-year-old post on this and almost read that as I saw a 2-year-old post about this, but no, he said, I saw a post that was two years old on this, but wondering what’s the most accurate today? Okay, this is a great question as to where are these rent estimators getting their data from? And I’m going to be honest, I do not like Rent estimators every time I tried to use them. Not enough data, not enough data in my small, little tiny rural towns that I invest in. So I have to say I do like I use Turbo Tenant, and when you go ahead and list it, they have a rent estimator for you that you can go ahead and plug it in.
So I always just do it and check, and sometimes it will work for me and there’ll be enough data in some of the areas I invest in, but I think looking at where their data is coming from and when it was last updated. So if this data is from two years ago that they’re pulling, how are they getting their most recent data? This is a very old school way of doing it, but I really do believe it is accurate. And this is how I estimated rents for a very, very long time, was I had a spreadsheet. I would go in and look at the listings every single day for that market. I would put them into the spreadsheet and then I would update them every day. So if a listing was gone, I would assume that that property was rented, that property was rented, and if it was rented within a 30 day period, I would assume that it was rented for the price that they were asking for.
Very rarely have I in my over 10 years of investing in the markets, I choose seen price drops or decreases on rent. So usually you’re getting what those people are asking for, or if it’s continuously sitting and sitting and sitting, I know that’s not a good comp and I’m not going to use that property. And then I would just track it. I would track it and see what was going on. Then I would call property management companies. I would call, if I saw a four rent sign in someone’s yard, I would call that number and I would ask, what are you charging in rent? Most of the time I would just say, Hey, I’m just interested in that apartment, what are charging in rent for? And okay, thanks, have a great day. Or maybe ask a little bit more like how many bedrooms, things like that.
And I could use that as a comp. So you can always do that, but I think especially if you really want to niche down on an area, you can go ahead and do this heavy lifting or have a VA do it for you too. But BiggerPockets, rent estimator, prop Stream, I’ve never used Prop Stream. I love Prop Stream for a lot of things. I’ve never used their Rent estimator though. Turbo Tenant has a rent estimator. I think there’s a website called Rentometer that is out there too. And honestly, I would just use them all. I think they all are free to use.

Tony:
I couldn’t agree more. I think a lot of these estimating tools are good for a general baseline, but when it comes to actually sharpening the pencil on your underwriting, I do think that that level of manual work that you just talked through is beneficial. But I think the one point that I will disagree with you on is that I think your lack of trust, or maybe the lack of usefulness that you get from the estimator tools is probably because the market that you’re in. But I pulled up the BiggerPockets rental estimator tool for Shreveport, Louisiana where I started my investing career back in 2018, and I typed in the address for the very first property that I bought, and at the time in 2018, it was renting for about 1500 bucks per month. And I typed in that same address, and right now it’s showing that it would rent for about 1600 bucks per month, which feels about right.
That was 2018, right? So what is that? I can’t do that math fast enough eight years ago, give or take that we did that, right? So it kind of makes sense now that the rents have gone up a little bit. And I remember doing this when I first bought that property as well, and it was almost spot on to what I was actually charging in rent. So I think depending on how big of a market you are, the BiggerPockets rental estimator could be a good starting point. But still to Ashley’s point, go back, do a lot of that manual underwriting yourself to validate what you’re seeing in these estimating tools. Alright, we’re going to take a quick break before our last question, but while we’re gone, be sure to subscribe to the realestate Rookie YouTube channel. You can find us at realestate Rookie and we’ll be back with more right after this.
Alright guys, we are back. And here is our final question for today’s rookie reply. Are we just closed on our first short-term rental property in the DFW North Texas area? And I’m excited to start setting this property up. A few questions here are regarding cleaning crews for short-term rentals. Could you walk me through an example of your interview and hiring process for short-term rental specific crews in your area? For example, what questions are you asking when interviewing? What qualifications slash traits or must haves do you pay by the job or each visit or by the hour? Do you issue w nines? What accounting software do you use? And do you use your cleaning crews to do laundry or is that a separate service that you all have? Thanks so much. Alright, lots of really good questions here. And this is a pretty tactical question and I don’t think one that we’ve hit before out of all the Ricky reply questions that we’ve had.
But it is a super important question because your cleaners for your short-term rental business are probably the most important people that you hire because they are the last eyes to see the property before a guest checks in. And they’re usually the first ones to see the property once a guest checks out. So they’re the only people that have access to your property in between a guest checking in and checking out. So it’s on them to really be your eyes and ears and boots on the ground to make sure that everything’s flowing smoothly. And if they aren’t doing a good job, it usually has a pretty big impact on you as the host. You’ll see that show up in your cleaning fees or if they’re not telling you about deferred maintenance issues, you’ll see that show up in your reviews. So there’s a lot that your cleaner does that’s really, really important.
So I appreciate this question. So let’s break it down first he about the hiring process. What questions do we ask? What are some of the must haves? How do you pay? And then what services should you expect? So on the interviewing side, I’ll walk through my process and national pur George looks like. But for me, I’ll usually want to get a sense of how big their operation is. I strongly, strongly advise against hiring a person who is a one woman or one man show because if you do that, you are now subject to all of the ebbs and flows of that person’s life. If they get sick, if they get a flat tire, if they have a kid who gets sick, if they need to go on vacation, if they have a death in the family and they need to take some time, whatever it may be, all the things that happen in their life that would prevent them from getting to your property now becomes a fire that you have to put out.
So my strong recommendation is to hire cleaners who have at least a few people that work together. That way if one person’s out, there’s someone else who can step in and fill in the gaps here. So that’s the first piece for me is we got to have someone that’s got a team. Second, I do strongly prefer someone with cleaning experience already. Someone who’s already cleaned short-term rentals, they know the process, they have everything kind of dialed in. That will be a little trickier depending on what market you go into. If you’re in a super small market, that might be tough to find someone who has that experience already. But if you’re in a market that’s decently sized, I would prioritize someone who has that experience. And the other big one for us is being able to integrate into our systems and processes. We have specific software that we use for all of our cleaners where we can track what time they arrive to the property, what time they leave, we get a checklist they have to submit, there are photos they have to submit.
So we have a very specific system that cleaners have to plug into. And if a cleaner’s not willing to do that, then right off the bat we don’t hire them. So making sure that they integrate with our systems and processes. And then the fourth piece is just making sure that they’ll do same day turns again. In some markets or some cleaners who are maybe stretched beyond their capacity, they’ll tell you, Hey, I don’t have the ability to do a same day turn. So if someone’s checking out at 11 and the next check-in is at 4:00 PM I don’t have enough bandwidth to clean that in that timeframe, so I would need you to block the day of checkout so that they can check in the following day at 4:00 PM And that just decimate your ability to really generate revenue. So anyone who can’t do same day turns is a hard no for me as well. So those are kind of the four big buckets that I focus on when I’m talking to cleaners as I’m curious what your processes look like.

Ashley:
Honestly, I haven’t had to hire a cleaner yet because I had someone who was co-hosting for me and they took care of all that, and I kind of just inherited my cleaner from them. So I haven’t gone through that process yet, but I kind of answered some of these other questions about how I manage it now and how I pay them and the bookkeeping and things like that. So right now we use hospitable where we manage our bookings. Then we also pay them per an hour. So my last cleaner that I had for a very long time, it was by the job, and we paid her no matter if it was a super easy clean or was a disaster, it was she charged the same rate every single time. And this cleaner charges by the hour. So it’s from the time they walk in the door until the time that they leave, they’re charged.
They charge us that. And then for accounting software, we use, well, it’s not really accounting software, but to actually pay them, we use Turo. And then for our full bookkeeping of the property, we use a base lane where we’re actually putting in the income that’s coming in from Airbnb. And then the expenses that are going out that include the expenses for the cleaner. And then that last part there of the cleaning crews, if they do laundry or if that’s a separate service, laundry is included. We always have extra sets for each property in each bed, and then they actually take the laundry with them. Our one property, our A-Frame doesn’t have a laundry there at all. So they take it with them to do it, and then they put on the fresh linens that are there, and then when they come back the next time they bring the dirty that’s turned new and then leave it there as the extra step.

Tony:
Yeah, a lot of our process pretty closely with what you said, Ash. I think one of the biggest differences there is that we actually do pay by the job. And the reason that I like that better for the single family space, we pay by the hour for our hotel. Those are like W2 employees that work for us, and there’s a bunch of rooms under one roof, so we can track that a little bit easier. But the reason that we do it by the job for our single family portfolio is because it’s easier to control the cost, and we can make sure that we always have the margin built into the cleaning fee. So for example, unlike our five bedroom cabin, our cleaner charges us 2 25. Well, I know that I need to charge the guest a little bit more than that to account for the fees that Airbnb charges and all those things to make sure that I’m not actually losing money on the cleans.
So we prefer the single family side to pay by the job. And the way that you can gauge what that per job costs should be is to look at the cleaning fees for the other properties in your area, and that’ll give you a good baseline on the max, max, max that a cleaner should be charging you. And again, ideally, you should always be a little bit less to make sure you’re accounting for those fees. So if you get a quote from these cleaners and they say, I’m going to charge you $600 to clean your two bedroom, and you look at all the other two bedrooms and they’re charging 1 75, or there’s a really solid data point for you to take back to that person and say, Hey, 600 seems a little bit unreasonable. So we do like to charge by the job. We also pay our cleaners usually either biweekly or monthly, depending on the cleaner.
We prefer monthly just because it’s easier for us from a bookkeeping perspective. But we have some cleaners who prefer biweekly, so we’ll do the first and the 15th, and then we will just pay them through our business banking platform. We use Relay, and we just issue a CH payments directly into those cleaners bank accounts. So that’s how we pay them. And then we do issue 10 90 nines at the end of the year. All of our cleaners for our single family properties are all contractors. They clean our properties to clean other properties, so we pay them as contractors, and we issue 10 90 nines at the end of the year for them as well. So that’s kind of how we have ours set up.

Ashley:
Yeah, I do 10 90 nines as well. And I think in the Quish question, they got ’em switched up. It’s said, do you issue W nines? And a W nine is actually what you want to give your cleaner, and I highly recommend that you do it upon hiring them and have them fill it out so that you have the correct information. You need to actually issue them a 10 99 at the end of the year, and it could be their company or their personal name, whatever they operate under, unless they’re like a corporation, then you don’t have to issue them a 10 99.

Tony:
And my strong recommendation is to not pay them until you get the W nine, because once you pay someone for a whole year and then you’re chasing them down to get that information, they’re a little less likely to comply. And that’s actually a cool feature inside of Relay is that in this business bank that we use, is that you can issue someone a payment, but it won’t actually send that payment. They’ll see it in queue status, but it won’t actually send until we have a valid W nine on file for them. So that’s a really cool feature that Relay has to kind of automate that process. The last one that I didn’t answer was about the laundry piece. This does vary from market to market, from property to property. For our smaller properties, our cleaners typically do the laundry onsite. We’ve got a 391 square foot tiny house. We can do the laundry while we’re there, but for our larger properties, there’s not enough capacity to turn five beds or six beds or whatever it may be in one sitting. So there are cleaners will take it offsite. So just kind of talk with your cleaner and get a better sense of like, Hey, what do you feel works best for this specific property? But again, making sure that the total cost of the clean and the laundry is still less than what you’re charging to the guest.

Ashley:
Well, thank you guys so much for listening. And this has been Real Estate a Ricky, an episode of Ricky Reply. I’m Ashley, he’s Tony. Thank you guys so much for joining us. And make sure you are subscribed on YouTube at a realestate rookie and follow us on Instagram at BiggerPockets Rookie. We’ll see you guys next time.

Dave:
Big economic news dropped over the last week from strong labor data to huge revisions about the data we got last year, a new inflation print. All this together brought us new insights that can help us see where the economy and the housing market is heading. So in today’s episode of On the Market, we’re diving into the latest economic news to help you make sense of the markets and help drive decision making. We’re talking about new jobs, reports, inflation data, consumer sentiment, and how all of that comes together to impact our mortgage rate outlook. We’re also going to discuss some particular sectors, the housing market that are poised to shine and which areas might be at greatest risk. This is on the market. Let’s get into it.
Hey everyone, it’s Dave. Welcome to On the Market. Last week was a big one for economic news and all the things we learned are going to directly impact mortgage rates. They’re going to impact buyer demand and the direction of the housing market. So we’re going to dive into the latest data today and talk about what it means as we head into the hopefully busy spring buying season. First up we’re going to talk about labor data. What’s going on in the job market? This is a big question out there because over the last couple of months we’ve had a lot of conflicting signals. But before I dive into what we learned, I just wanted to make clear why this even matters for real estate investors because labor market might not seem obvious what this means for the housing market. But first, it helps us understand buyer activity.
People who are losing their jobs or are fearful of their jobs, probably not going to buy a house. Second, it helps us to understand rental demand and rent growth because same sort of thing about demand applies for renters. If they are worried about their job, wages aren’t growing, that sort of thing, it’s probably going to stagnate rent demand. Third, it helps us predict what happens with interest rates because the Federal Reserve, they’re watching closely bond investors who dictate where mortgage rates go. They watch these things closely. So we need to keep an eye on what’s going on in the labor market. It really does impact the housing market. So let’s talk about what we learned. Overall, it was good news. We saw strong overall job growth with non-farm payrolls, which is basically how the BLS tracks labor data. We saw an addition of 130,000 jobs in January, which is great.
That actually beat expectations of just 75,000, so that’s a significant beat. We also saw the unemployment rate, which has its flaws, but is still a good metric to track alongside everything else we’re looking at. Unemployment rate actually ticked down from 4.4% in December to 4.3%. Now, I’ll just spill the beans here. That’s not necessarily from an increase in hiring, although we did see jobs added. The unemployment rate most likely is ticking down because we a smaller labor force due to less immigration. When you dig into the labor data, you see that the economy is kind of splitting. Most of the jobs that were added in January, were highly, highly concentrated in healthcare. That area of our economy is still growing. They are hiring, but if you look at other sectors in the economy, it’s not doing that great. We see that manufacturing is down a hundred thousand jobs in the last year.
Same with it. Basically tech. We also see professional and business services down big. These are white collar jobs down 200,000 over the last year. So the big headline is good. It is good that unemployment is shrinking. It is good that we added over a hundred thousand jobs in January, but it really depends on the market. If you work in tech or or manufacturing, you’re probably not feeling great about the labor market because those sectors are actually losing. Whereas if you work in healthcare, you probably feel great about your job prospects. So that was the big headline news, but there was actually some other news that came out with this BLS report that I think maybe is even bigger news in January. The BLS always releases their annual revisions. Basically the way that the BLS tracks employment data is not very good. I don’t know how else to say it.
People have been critical of it for a long time. What I always say on the show when we talk about labor data is that there is no one perfect labor metric. You kind of have to look at the big picture. There’s 5, 6, 8 different things that you should be looking at and you can, if you look at them, all get a holistic sense of where things are going. That said, the BLS, this is the big thing that investors look at. It’s on the front page of the Wall Street Journal. This is the big number, but it’s also not very good, and you see massive revisions from time to time where the BLS actually says what we released. That preliminary estimate wasn’t very good and actually the data is changing and they released their big annual revision for the year in January. So what it actually shows that between 2024 and 2025, the total number of jobs that they had previously announced was revised down by nearly 1 million jobs.
That is crazy. So basically they were releasing data, thought that we had these million jobs added. They said more than that, but they’ve come out and said, actually, we overstated how many jobs were added by a million jobs. And I know that’s a lot. It’s crazy. It’s actually the second largest negative revision on record. So yeah, that’s a really big revision, but if you pay attention to this stuff, you probably already know that the BLS, the Bureau of Labor Statistics, their data isn’t perfect. And I’ll just say I don’t think that these revisions are a scam. I don’t think they’re necessarily playing games. I just think they have a very bad imperfect way of collecting data. They extrapolate a lot and this has been going on for a long time. This has been going on for 20 years. So it’s not like something has really changed.
And I think it’s natural that during times where the economy is shifting a lot like right now or like 2009 when they released the other biggest revision ever, that it’s not as accurate because they’re extrapolating a lot and when patterns shift, it is harder to extrapolate. But I will also say I think these revisions are needed. I would rather them admit that they were wrong and then to release new numbers even though it’s frustrating and it makes it a lot harder to trust the new numbers because they are probably going to change it. And this is one of the several reasons that we need to look at the big picture. Again, many different data sets, none of them. Perfect. We got to take in the whole thing. So beyond just this BLS data, what else are we seeing? We’re seeing that A DP, which is a private company, they track jobs numbers every single month, but they’re a private company, not the government.
They showed only 22,000 jobs added, which is a major divergence. It’s still up, that’s good. Still jobs being added but off by over a hundred thousand. So it kind of is a head scratch or it makes you wonder which one is accurate. To me, I think the most important indicator that I’m looking at right now in February of 2026 is job openings. This is a really important indicator of just how many companies are feeling bullish and want to invest in labor and are out there hiring. It is down to 6.54, which in a historical context, it’s a pretty normal number, but it is falling quickly. It is going down a lot in the last two months down almost a full million in two months. That’s like 15% in two months. That’s a big deal and it’s something that I think indicates that companies are going to pull back more on hiring and hiring.
So that’s concerning. And something I personally think is going to continue. If you just look at trends in AI and investment cases, people aren’t hiring that much. But on the other side of things, layoffs are really not as bad as the media makes it out to be. If you look at initial unemployment claims, this is a weekly set of data that comes out that just looks at how many people are filing for unemployment insurance for the first time. So that’s a good indicator of who got laid off. People who get laid off, they file for unemployment insurance. And so you look at those claims and they’re actually been really flat. They fluctuate week to week, but if you just look back over 2025 and into early 2026, it really hasn’t changed that much. Jerome Powell, the chairman of the Fed actually said, we’re in the no fire, no hire economy.
I think that was like two press conferences ago. If you care about these things, and I think that’s a pretty accurate assessment of what we’re seeing. We’re not seeing massive layoffs, but we are not seeing people hiring either the direction of the labor market, not super strong, but definitely not that weak either. I think we’re still sort of in limbo trying to understand what direction this is going ahead. Alright, so that’s what we’ve learned about the labor market so far. More conflicting signals. Personally, I am not feeling like we’re in a very strong labor market, but I am encouraged to see that we’re not in an emergency status either. An unemployment rate of 4.3 is really low, but there are signs that things are starting to weaken and so we need to keep an eye on that. The other major economic indicator we as real estate investors should be paying attention to is inflation. And we got a brand new report on inflation last Friday and we’re going to get into that right after this quick break.
Welcome back to On the Market, I’m Dave Meyer giving you an economic update on all the key indicators we as real estate investors should be watching. First we talk about the conflicting labor data that we have received over the last week or so, but we also got an inflation report, which is going to be really important for the future of mortgage rates. So let’s talk about what was in that. Mostly it was good news. We got a good inflation print last week, which personally I find encouraging the CBI rose 2.4% in January year over year, which is not bad. In December it was up 2.7%, so it actually came down a bit and it was below the 2.5% that economists were expecting. Yes, it is still above the 2% fed target, but it is also way down from where it was a few years ago when it briefly topped 9%.
So it’s not where it needs to be, but for me, if we have a 2% fed target, we’re at 2.4%. We’re getting pretty darn close to where we want to be for inflation. I also want to call out that it has been almost a full year now since the quote liberation day tariffs were announced and although data shows that US consumers are footing roughly 90% of the bill for those tariffs, it is not businesses or other countries paying it, 90% of those costs are going to US consumers. Overall. Inflation has not gone up significantly. The products that are subject to tariffs have certainly gone up, but that has been offset by falling prices elsewhere. We see increases in things like ground beef. That’s the highest one is up 17% year over year. Home healthcare hospital care watches, those are all up well above the target, but we’re also seeing declines in gas prices.
That’s probably the major thing that’s driving down the overall CPI is that gas prices are going down. We’ve also seen declines in used car prices, which everyone knows have been crazy over the last couple of years and we saw a big drop in eggs. The egg drama continues, it’s down 7% in just one month. Truly, who would’ve thought three years ago that egg prices would be such a subject of interest on an economic show? But here we are, my friends talking about eggs and they’re down 7%, which is good news. Now when we combine these things together, when we look at the labor data and the inflation data that we just got last Friday, it starts to inform what we should be expecting for mortgage rates because as we know, the Federal Reserve, their job is to sort of walk this type rope, keep the seesaw in balance between the labor market and inflation.
They don’t want to cut rates too much because they fear that can cause inflation, but if you keep rates too high to control inflation, that can hurt the labor market. So they’re always trying to find this neutral rate is this magical number that they’re trying to achieve that gets us the optimal labor market and the optimal inflation rate and the economic reports, the two that I just shared with you should show you why they have a difficult job right now and why I don’t think rates are going to come down that soon. Look at these reports, hiring was solid, unemployment rate is low. That would suggest holding rates higher, not doing more cuts because the economy, it doesn’t need stimulus right now. However, with lower inflation, many would argue that we now have wiggle room to lower the federal funds rate, lower short-term borrowing costs and provide some juice for the economy.
The fact is we just can’t get a clear signal. Everything is too uncertain and often it’s contradictory. Mortgage rates did happen to fall this week. I’m recording this a few days before the release, but we may even see rates in the high fives this week, which would be exciting. I think mentally, psychologically that is helpful. But we’ve seen it before. We know that this could go right back up and I just don’t think we are going to see big moves in the mortgage market because we have constantly contradictory data and there is no clear signal on which way things are heading. Are we going to see inflation spike? Is it going to continue going down? Is the labor market going to be decimated by AI or is that all overblown hype? So that being said, I’m sticking with my forecast this year as of now for mortgage rates to remain in the five point a half to six point a half percent range because nothing in the data suggests that we’re going to see anything else.
And I’ve said it before and I’ll just say it one more time that I think this is a relatively good thing. Mortgage rates being stable is what we want as investors, whether you’re, even if you’re an agent or a loan officer out there, more stable conditions create predictable underwriting, it creates home buying conditions that people can wrap their head around. They’re not sitting around waiting, wondering if they wait a month, is there going to be a quarter point better rates or a half point better rates? People will get used to it if we have these stable rates. And so when we look at the labor market and inflation data together, I think stability, it’s still going to fluctuate a quarter a point here and there, but I think it’s going to stay in this five and a half to six point a half percent range and personally that is something I can deal with. Now of course, I would love to get to a place where we don’t have to talk about mortgage rates all the time, but the fact is it is going to impact the direction of the housing market and there is one other dataset I want to go over that is also going to impact the direction of the housing market, which is consumer sentiment. How people are feeling about the economy is going to impact demand for rentals, it’s going to impact demand for homes and we’re going to dive into that data right after this break.
Welcome back to On the Market, I’m Dave Meyer going over the latest economic data. Before the break we talked about the confusing signals from the labor market, the good inflation print that we got, but how those two sort of conflicting pieces of information are probably going to keep mortgage rates relatively stable and that should help the housing market gain a little bit of traction. Stability is good. Mortgage rates, yeah, they’re not going to move that much, but they’re down a hundred basis points from where they were last year. But there is one other less talked about variable in the housing market that we should talk about, which is consumer sentiment. It as of three months ago was just dropping, dropping, dropping was really at one of the lowest points we’ve seen in a long time and the good news is that over the last three months it has gone up.
We’ve seen it start to inch back up, but I want to be honest that it’s still not very good. It’s still 40% roughly below where it was a year ago. So people are not feeling great about the economy. Now when you dig into the data, and this is going to really inform sort of what we should be thinking about as investors. When you dig into the data, there is a big gap in consumer sentiments. It reflects a lot of the K shaped economy that we have in the United States right now. If you look at sentiment for consumers who have large stock portfolios, they’re actually feeling really good about the housing market. We’ve seen sure stock market fluctuate over the last couple of months. It’s not just going up and up and up, which is normal I should mention. But those people who own assets are feeling pretty good about the economy.
They’re out there buying, they’re making up a huge percentage of consumer spending right now, but for consumers without stockholding, so folks typically on the lower end of the income spectrum sentiment, those for those consumers has not gotten better. It’s actually stagnated at really, really low levels and this K shaped divide matters for the housing market. It matters for housing demand because wealthier buyers are probably more confident. Meanwhile, first time entry level buyers or renters are feeling far less confident. It is one of the reasons you’ve probably seen in recent months these headlines that show that the luxury housing market is on fire. And that is true if you look at listings for crazy listings like over a million dollars, but also listings over $5 million, listing over $10 million. That is one of the strongest areas of the housing market right now while other areas are starting to stagnate.
So this is something I want everyone listening to this to take note of because it really matters whether you’re buying an A class, B class, C class, D class neighborhoods, if you’re buying workforce housing, if you’re buying for people for renters in the middle or lower end of the income spectrum, demand is probably going to be softer. Just you have to expect this, right? Sure, affordability has gotten better, but when people are not feeling very good about the economy, they don’t buy a lot. Economics sometimes is called the dismal science because honestly some of it is science, yes, but a lot of it is just some psychology. A lot of what happens in the economy and therefore in the housing market depends on how people feel and in a relative sense, people do not feel good. Yes, people at the high end of the spectrum feel okay, but the majority of people are not feeling very good.
We see that reflected in the consumer sentiment survey that comes out every month. We also see that in other surveys in 2025, Gallup actually released some data recently that showed that in 2025, only about 59% of Americans gave high ratings when asked to evaluate how good their life will be in about five years. That’s a pretty important question. It sort of tells you a lot about how people are feeling and 59% might sound high, but it is actually the lowest rating ever. They’ve only been asking this question for 20 years, but in 20 years of data, so that includes the financial crisis, more people are feeling bad about their life prospects in five years than at any other time this data was collected. Now, is this the worst economy it’s been in 20 years? Personally, I do not think so. I think that prestigious award should probably go to 2008 or 2009, but my sense is that there is this cumulative effect going on here.
The economy, at least in my opinion, it’s not great. I also don’t think it’s terrible. There are some bright spots, there are some weak spots. What worries me personally is that the bright spots are really concentrated in certain sectors. We’re seeing labor growth in healthcare. We are seeing infrastructure spending in ai. Sure, those are carrying a lot of the economy, but whenever a lot of growth or a lot of strength is concentrated in one area, it feels a little more volatile. It feels more likely to decline in the future than if you had every industry growing, right? That never really happens. But if you had lots of industries that were growing, to me, that would feel better. But the reality is there are bright spots, there are weak spots. It is neither great nor terrible, but I don’t think the average person who’s responding to these consumer sentiment surveys is really looking at geopolitical unrest and monetary policy and fiscal policy.
I think the reality is that we have had stagnant wages in the United States for like 40 years, right? They’ve gone up about 12% in real terms in the last 40 years. That is really pronounced in certain industries like manufacturing. And then on top of that, we’ve had just five-ish years of higher than expected inflation, which also followed a period of unnaturally low inflation, right? In the 2010s. We had really, really low inflation by historical standards and people got used to that. We are not as a society used to high inflation. The last time we’ve seen this was in the seventies and eighties, and so most people alive today, myself included, were not prepared. We’re not used to or have no frame of reference for this kind of inflation, and we’ve now had it for five-ish years. The fact that we have 2.4% inflation right now is relatively good news.
That’s not a crazy high inflation number. But what people want, whether it’s realistic or not, whether it is good or not, is they want deflation. They want prices to go down. Now, most economists would tell you that’s probably not a good thing. What you want is disinflation and you want the pace of prices going up to slow down, but you don’t actually want prices to go down because that actually creates all these other economic problems. It removes the incentive to spend and continue into this tailwind, or at least that’s the theory. But theories aside, that’s what people want. People want their grocery bill to go down. And so consumer sentiment I think is just reflecting five years of frustration. Now, just think about this. If inflation were at 2.4% in 2017 after years of low inflation, would anyone have even noticed? I don’t even know if it would have made the news.
I’m saying this because I just think that the sentiment that is out there is a reflection of people’s fear about their jobs and fear about layoffs. That is true, but I don’t really think it’s an accurate assessment of what’s going on in inflation. I think it is a combination about fear of the labor market and this cumulative effect of being above the Fed target for five years. Look at the cost of housing. Look at the cost of groceries. There is a reason people are feeling GLO about the economy because their pocketbooks are hurting and they’ve been hurting for four or five years now, and I talked about this a lot in an episode back in November when I came up with my concept of the normal person recession. This is basically my concept that yeah, GDP is growing. It’s been growing for years, but people feel further and further behind.
And that’s because GDP doesn’t really measure the personal finances of the average American. And as we can see, the average American is not feeling very good about the economy, and I think we are awfully close to what I would call the normal person recession. And although a lot of this is kind of semantics, what’s a recession or not, the fact that people are feeling less confident about their economic prospects will weigh on housing, it will weigh on the economy. It just does, and this is going to matter for real estate investors. It’s going to matter for both housing demand if you’re trying to sell a home. It’s also going to matter for rental demand. I don’t expect a lot of rent growth in the lower ends of the market. I know a lot of people have said that we are working our way through the supply GLO and rent growth is going to be strong.
I’ve debated my friend Scott Trench about this. He thinks it’s going to be super strong. I’ve said I think it’s going to be pretty stagnant this year, and I’m sticking with that. When you have low consumer sentiment, people are not as willing to go move into that new apartment or to stop living with roommates or to move out of a family home because they’re worried either about inflation or about the labor market. So I’m just telling you all this because I think it’s wise to underwrite conservative right now for both appreciation and rental growth. I’ve said that before. I know people are getting excited that we have a new fed chair and that things are going to go up and home prices are going to go up. Maybe that’s true, but I still think given what we’re seeing in the economy right now, the smart bet is to be conservative right now to not stretch too far on any deal, on any estimations of red growth because consumer sentiment is indicating people don’t want to spend that much right now.
Now, there is a positive flip side to this for real estate investors. If rental demand is a little bit slow, if people are still going to be listing their homes, that means that better deals are going to be coming on the market. We have seen indications of this all across the housing market. We’re talking mostly about macro today and not about the housing market, but just as a reminder, inventory is up about 10%. There was a recent Redfin report that showed that buyers are getting the biggest discounts they’ve gotten in more than 13 years. So there are still good things going on here for real estate investors, but you need to adjust your tactics. This is exactly why we look at this economic news every single month because it helps us understand what segments of the market are going to be strong luxury. We’re seeing that high end stuff is still doing well, and which ends of the market have the highest risk.
Now, I’m not saying things are going to crash or that things are falling apart, but the data that we have shows us that there’s probably not going to be strong rent growth and that at the lower ends of the market, we’re probably not going to see enormous housing demand. And so that’s just something you need to take into account as you formulate your strategy going into the spring buying season and as you make decisions about your portfolio in 2026. For me personally, I’m still interested. I’m still looking at deals. I haven’t pulled the trigger on anything in 2026 yet, but I’m seeing better and better deals. I actually was talking to James and Henry the other day. They said they were both loading up, was the exact words both of them used in different conversations. They both said they were unquote loading up on projects Right now. They seem optimistic about buying better and better deals, so there’s still good things to be looking at. I just want to point out where opportunity and risk is. That’s the whole point of the show. That’s the whole thing that we’re doing here on the market community. So that’s it. That’s what we got for you guys today. Thank you all so much for listening to this episode of On The Market. I’m Dave Meyer and I’ll see you next time.

There’s nothing that unifies opposing political factions faster than seeing homeless encampments in American cities. That’s why the Housing for the 21st Century Act has cleared the U.S. House of Representatives with an overwhelming 390-9 vote and is now headed to the Senate. 

Within the 200-page bill is a proposal of particular interest to real estate investors. Most significantly, it increases loan limits for small multifamily properties, thereby enabling greater purchasing power and potentially higher returns on investment.

Reps. French Hill (R-AR) and Maxine Waters (D-CA), from opposite ends of the political spectrum, are two of the bill’s main sponsors and worked to ensure it included provisions from both parties, which has been celebrated across the housing and construction industries.

“NAHB commends the House for passing the Housing for the 21st Century Act, bipartisan legislation that will reduce impediments to increasing the housing supply,” said National Association of Home Builders Chairman Buddy Hughes in a press release.

His sentiments were echoed by Shannon McGahn, National Association of Realtors executive vice president and chief advocacy officer, who stated in a press release: “With the nation facing a shortage of roughly 5 million homes and first-time buyers now entering the market at a median age of 40, bold action to expand supply and remove barriers to homeownership has never been more urgent.”

Amongst the broader initiatives that apply to investors are the following.

Modernizing Building Codes (Single-Stair Reform)

Section 103 addresses one of the most significant provisions for small multifamily development: point-access block buildings (also known as single-stairway apartments).

• National guidelines: Requires HUD to establish federal guidelines and best practices for single-stair multifamily buildings up to five stories. Currently, many jurisdictions require double staircases for safety concerns. However, this makes it difficult and expensive to build multifamily buildings on narrow urban lots. This is already under consideration in California and other states.
• Pilot programs: The Act authorizes competitive grants for pilot projects to test the safety and effectiveness of new designs, which could eventually lead to smaller, European-style apartment layouts.

Streamlining Environmental Reviews

The federal National Environmental Policy Act (NEPA) has been criticized for being prohibitively expensive and slow, especially for developers of small-scale projects. In a move similar to California Governor Gavin Newsom’s reform of the California Environmental Quality Act to speed up housing development, new measures aim to reduce the lag by bypassing some review processes.

• Categorical exclusions: The expansion of “categorical exclusions” exempts small-scale construction. Infill development and rehabilitation of residential buildings no longer require full environmental reviews.
• Faster timelines: By reducing federal administrative burdens, the bill aims to reduce construction timelines and lower the per-unit cost for modest multifamily projects.

Incentivizing “Missing Middle” Zoning

The Act uses federal guidance to push local governments toward friendlier zoning for small multifamily units (Section 102):

• By-right development: Encourages localities to fast-track duplexes, triplexes, and quadplexes “by right,” meaning they can be constructed without a lengthy permitting process.
• Pattern books: It provides grants for local governments and tribes to create “pattern books”—preapproved architectural designs for ADUs, duplexes, and townhouses. If a builder uses a preapproved design, the permitting process is accelerated.

Financial and Programmatic Support Updates

• FHA loan limits: Section 106 updates the statutory maximum loan limits for FHA (mortgage insurance) multifamily dwellings. These limits are adjusted to reflect modern construction costs, making it easier for developers of small and mid-sized buildings to secure federal financing.
• HOME program flexibility: The act reforms the HOME Investment Partnerships Program to allow funds to be used for “workforce housing” and infrastructure improvements (like water and sewer) specifically for new housing developments.
• Streamlined inspections: For properties with multiple federal funding sources like Low Income Housing Tax Credit (LIHTC) and Section 8, the bill allows a single passed inspection to automatically meet Housing Choice Voucher (HCV) inspection requirements, reducing the administrative headache for small landlords.

How These Laws Help Small Investors

Although many of these proposals are geared toward developers, some specific aspects will appeal to landlords. Increased FHA loan limits for small multifamily properties can help newbie investors leverage the power of house hacking and rental income to jump-start their investing careers.

An FHA loan, which allows a buyer to put as little as 3.5% down, mandates that a buyer live in one of the units for at least 12 months, which means after the one-year mark, they are free to move out and buy another property, renting out the initial FHA loan property in its entirety. FHA rules state that a buyer can have only one FHA loan at a time (unless the other is in another state); however, investors can refinance the first home into a conventional mortgage, allowing them to buy the second with an FHA loan.

By living in one unit and having the tenant’s rent cover most, if not all, of the mortgage, an owner-investor puts themselves in prime position to save for the down payment on their next investment property. The cash flow from the initial FHA home and the second property could also provide the down payment for a third home, and so on. Eventually, the timeline between property purchases reduces. 

This often-used strategy to build wealth relies on a few basic tenets: meticulous tenant screening and living low to the ground, not splurging on a fancy personal residence until your passive income is considerable.

FHA Multifamily Loan Limits

The current 2026 FHA multifamily loan limits are as follows:

Two-unit (duplex)

• Low-Cost Area: $693,050
• High-Cost Area: $1,599,375

Three-unit (triplex)

• Low-Cost Area: $837,700
• High-Cost Area: $1,933,200

Four-unit (fourplex)

• Low-Cost Area: $1,041,125
• High-Cost Area: $2,402,625

Limits are higher in Alaska, Hawaii, Guam, and the U.S. Virgin Islands.

The Effect on Housing Inspections

For anyone who has ever had the misfortune of dealing with an officious housing inspector, you know that they can make or break your cash flow. The less time you have to interact with them, the better. Thus, the streamlined inspections proposal will come as a massive relief for landlords who are used to standing on eggshells while an inspector looks for hairline cracks in outlet plates or a faucet that drips once every 30 seconds. 

For clarification, here is the 2025 Section 8 inspection checklist.

Final Thoughts

Increasing FHA loan limits means more people will be able to buy more multifamily houses, putting as little as 3.5% down and potentially qualifying for financing with lower credit scores than required for a conventional mortgage. Rinsing and repeating this formula works as long as interest rates and house prices are relatively low and rents are high. Two out of those three no longer apply, which means implementing this strategy invariably means leveraging a lot of borrowed money and hoping your tenants pay their rent on time.

So, if you’re planning to use this to boost your portfolio, be careful. It’s not a technique that will allow you to quit your day job anytime soon. In fact, if you execute correctly, you should keep your day job as a cushion in case things go askew, which they usually do.

FHA loans were invented to make it easier for owner-occupants to buy a house and, in the case of small multifamily homes, to allow homeowners to get a little help from their tenants with their payments. As real estate investors, we tend to think outside the box and have developed the concept of repeat house hacking to game the system. However, in the current high-rate, high-cost era, that’s fraught with risks. Just because the FHA loan limits will increase, allowing you to borrow more, doesn’t mean you should.

Despite stock markets hovering around record highs, investors are feeling jittery. You can see it in consumer confidence collapsing to its lowest level since 2014, as well as in the mass flight into precious metals as a safe haven, with gold up 74% over the last year and silver up 139%. On the other “side of the coin,” high-risk investments like Bitcoin are crashing, with Bitcoin down 46% from its all-time high. 

Meanwhile, recession and inflation risk both remain higher than usual, due to softening labor markets, trade wars, and heightened geopolitical risk. 

Where Billionaires Are Investing

So what are the wealthiest, best-informed investors in the world doing with their money in 2026?

Every year, UBS conducts a survey of billionaires and asks about their investing plans for the coming year. Here’s how billionaires said they plan to shift their investments in 2026:

At first glance, real estate looks like it falls in the middle of the list for increased exposure. But that’s only direct ownership—which is often not how billionaires invest. 

I invest in real estate in many different ways, as do billionaires. Here are the many ways you can invest in real estate over the coming year and beyond, most of them passive, like billionaires do. 

Private Equity Real Estate

Private equity includes privately owned businesses, of course—but it also includes real estate syndications. 

The UBS survey says half (49%) of billionaires plan to increase their exposure to private equity this year, for the largest investment jump. Only one in five plans to decrease exposure. 

“We’re seeing the wealthiest investors shift toward hard assets and income-producing assets that hedge against volatility,” notes Lesley Hurst, president of Penn Charter Abstract, in a conversation with BiggerPockets. “In uncertain cycles, wealth tends to consolidate around tangible assets with long-term utility.”

I myself invest in real estate syndications with relatively small amounts ($5,000) through a co-investing club. I get the cash flow, appreciation, and tax benefits of real estate ownership without the constant wrangling of property managers, contractors, and tenants. 

Because really, do you think billionaires mess around with that? They invest passively and let other people manage assets and properties. 

Equities: REITs

I still own shares in a few REITs, although I no longer invest in the space. 

Sure, they’re liquid and easy to buy and sell in small amounts. But they don’t do what I need my real estate investments to do: provide diversification from the broader stock market. Read more about the uncomfortably close correlation if you don’t believe me. 

Real Estate Funds

You can, of course, also invest in private equity real estate funds. On the plus side, they offer diversification. You get exposure to several properties with a single investment. 

But they often come with high fees, and most only allow accredited investors to participate. You don’t have to be a billionaire—but you do need to be a millionaire. 

I’ve invested a few times in passive real estate funds, such as a land fund that pays 16% in distributions. But in my co-investing club, we prioritize investments that allow middle-class investors, not just millionaires. 

Secured Private Debt

As much as I love owning a big piece of real estate pies, debt investments come with their own advantages. That starts with a steady income, often at a high yield. Our co-investing club has lent notes at 15% interest, secured with a first-lien position at a low LTV ratio.

These often come with a shorter timeline, and one that you know in advance. Sometimes they’re even flexible: I’ve invested in a rolling six-month note that I can exit at any time with six months’ notice. 

Real Estate: Solo or JV Ownership

You can, of course, buy properties directly and make a side hustle (or a full-time business) out of it. I used to do that myself. 

Today, I only invest passively. We often form joint venture (JV) partnerships with active investors, such as partnering on house flips, land flips, or construction projects. 

We provide the money as silent partners and get a cut of the returns. In some cases, we’ve even negotiated a guaranteed floor return. 

“The savviest investors aren’t chasing hype in 2026; they’re positioning for resilience,” observes professional investor Erik Drentlaw of Sell My Dallas House Fast when talking to BiggerPockets. “We’ve seen a shift favoring cash-flowing assets and strategic private investments over frothy public markets.”

Investing in 2026: Risk and Strategy

I don’t chase trends. But I do find it reassuring to see the wealthiest, best-informed investors in the world looking to move more money into the same types of investments that I make every single month. 

And I do mean every month. I practice dollar-cost averaging with my real estate investments, putting relatively small amounts in new investments each month. I no longer play the fool’s game of trying to time the market. I just keep putting one step in front of the other, regardless of whether everyone else is panicking or hoovering up investments. 

I have tried to keep one eye on recession-resilient investments to help protect against downside risk. Nothing’s foolproof, but some investments do protect better than others. 

As for inflation risk, real estate hedges against it better than most investments. Likewise, real estate withstands geopolitical risks better than most as well. 

Some new crisis will come along, whether in five months or five years. It’ll feel scary in the moment, and some investments will likely suffer. But I’d rather keep stacking up small, diverse real estate investments over time and letting them form a bell curve of returns, rather than making a few huge, isolated investments.

Henry:
Should your next investment be a single family home or a multifamily property? It’s a critical question. You want to scale a portfolio and progress toward financial freedom as quickly as possible, but taking on the wrong type of property could leave you overwhelmed and slow down your progress in the long run. The good news, this choice does not need to leave you paralyzed. Today we’re sharing a simple framework to help you pick the right type of property for you. The answer isn’t the same for everyone, but by the end of this episode, you’ll know how to think through big decisions of whether single family or multifamily is right for your experience level, financial situation or investing strategy. Plus we’ll tackle how to balance getting your rents close to fair market value without forcing unnecessary tenant turnovers where new investors should take on burrs or flips and so much more. What’s up, friends? I’m Henry Washington here, the co-host of the BiggerPockets podcast and I am here along with Dave Meyer. Dave, you’re looking a little bundled. Are you wondering why I am dressed like Macklemore right now? Is there something going on at the thrift shop we need to know about?

Dave:
My heat went out two days ago over the weekend on Saturday morning I woke up and my house was like 40 degrees and they actually just left my house and fixed the furnace, but it’s still freezing in here. It’s like literally 42 degrees, but the show’s got to go on, man, so I’m just here dressed in full winter gear.

Henry:
Well, today we’re giving people what they want. We’re answering questions you the audience asked us on the BiggerPockets forums, so let’s jump into it. The first question is from an investor named Christopher and he said, I’m a new investor based in California looking to start my portfolio out of state. My target is the 80,000 to $125,000 range in landlord friendly markets with steady job growth. I’m most interested in burr and buy and hold rentals, and I’m deciding between starting with a single family or a small multifamily. He goes on to say, here’s where I’m stuck. Single family seems easier to manage, less intimidating, but the cashflow might be a little less, whereas Multifamilies could bring stronger cashflow and efficiencies of scale, but I’ve heard they could be tougher to finance and tenant issues could hit harder if I don’t have a solid team yet. So which one should you start with and what do you think the best path is for someone investing out of state for the first time?

Dave:
Alright, I’ll take this one. First off, Christopher, good question and I think a great approach. If you’re based in California, super expensive, you want buy and hold or burrs, they’re harder to find in California, so an out of state is a great option for you. I’m going to start with actually the second question because basically what you said is, which is better? Small multifamily or single family, all things being equal. I don’t know how you feel about this, Henry, but I personally think small multifamily is just the best asset class and I don’t actually think it’s really all that different from a management perspective. You still got one roof, you got one tax bill, you do have multiple tenants, but I think what you’ll learn as almost every investor does over the course of their career is it’s really not that hard once you place tenants.
It’s just reacting and trying to do some repairs proactively. But I personally just think small multi-families are better. I would challenge you, Christopher, on your question saying that you think that they’re harder to finance small multifamilies and that tenant issues could hit harder. I think they’re very similar to finance. Even if you are out of state, not owner occupying, you can get very similar types of loans for small multifamily, anything, four units or fewer is considered a residential mortgage and so you’re still going to have pretty favorable financing. Some you can put five or 10% down so you still have that option. The thing that I would challenge about, yeah, if all of your tenants decide to up and leave at once, that will be an issue or if they all complain at once, that can be an issue, but I actually think that having a small multifamily mitigates risk because if you have a vacancy in one unit, it’s not all of your income for that entire property.
When you buy a single family home, if you can’t find a tenant for two months, you’re losing one six of your entire revenue for the whole year. Whereas if you have two months of vacancy in one of four units, maybe you’re only losing one and a half percent of your revenue for the whole year. So I actually think it helps you mitigate risk, which I really like. That’s just on principle, but I will say buying a multifamily for 80 to 1 25 is probably not realistic in a decent market. I think if you’re looking for a place with job growth, you’re going to be really hard pressed to find a duplex. I invest in the Midwest. Maybe in Detroit you could probably find a duplex for that range, but if I were you at that price point, I actually would focus on buying the best asset I could and not on whether it’s single family home or multifamily. The advice I gave earlier was all things being equal. If you could afford both, I’d say small multifamily, but it sounds like you might want to focus on single family because you’ll be able to get a high quality asset that’s not going to be a pain in your butt.

Henry:
Very well said. When you were sitting there explaining why you liked multifamily as an answer to this question, I started thinking through what are my favorite properties and some of my favorite properties are single families, but when I ask the question differently and say, what are my most profitable and or wealth building properties, I get the most cashflow and I’ve built the most equity in my small multifamilies and it’s not even close

Dave:
Really.

Henry:
Yeah, and so I think you’re right. Small multifamily in terms of financial benefit, cashflow and wealth building seem to be the best asset, but my favorite properties are some of my single families and that’s who cares about what your favorite is, but

Dave:
Why are they your favorite then? Just because you are proud of what you did to them and the

Henry:
Renovations proud of what I did to them. The locations that some of them are in just prime locations, just excellent properties.

Dave:
You get the warm and fuzzies with the single families. You flip a house, it turns out great. If family moves in, they’re happy with it. That’s nice. That’s a good experience. Multifamily, you don’t really get that as much. I agree with that, but I just think if you’re trying to build that long-term portfolio, it’s great, but I just think as a first time investor, the name of the game is don’t lose. You don’t need to win by a lot. You don’t need to hit a home run. The game is to hit a single,
And my fear is that if you take my original advice and say, oh, I’m going to buy a three unit or four unit at 1 25, there’s going to be something wrong with that. Your tenants are going to be sitting there like me with their hat and jacket on because their heat doesn’t work or their toilets don’t work or something like that. This is what you get when you buy assets that are not up to their highest to best use. So I would make it easy on yourself as an out-of-state investor and buy something that’s in good shape. That would be my number one criteria.

Henry:
The other caveat here is Christopher, I would focus some of your time on learning more ways to finance deals. There are so many tools in the tool belt in terms of financing properties, small multifamilies like I think you can get a small multifamily financed pretty easily, no sweat. And given the concerns that you’ve outlined here, I would say my answer to you would be definitely focus on small multifamily if you’re going to up that 80 to 120 5K range, but if not, then I think Dave is w right. Buying a quality single family asset will save you so much headache over going and buying a trash multifamily.

Dave:
Great question, Christopher. Thank you and good luck to you. We have a new question asking about inherited tenants from Nick in upstate New York, but before we answer that, we got to take a quick break. We’ll be right back.

Henry:
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Dave:
Welcome back to the BiggerPockets podcast. Henry and I are here answering your questions. By the way, if you want your question to answer, go to BiggerPockets forums, ask those questions, we pick them there, or you can always send Henry or I a message and we pick a lot of questions from there as well. Our next one though comes from Nick in upstate New York who says, I’m a 19-year-old real estate investor. Impressive getting this done. At 19 years old, I just closed on my first duplex last and I’m house hacking. The tenant I’m inheriting has been here for 12 years and is on a month to month lease. She pays $635 a month and comps show that the market rent is about 1200. Wow. She has been a fantastic tenant for the previous owners. Rent is always on time. She’s quiet and takes care of her unit. Well, I have no problem with her paying slightly under market rent in hopes of retaining a great tenant, but I know it is irresponsible as a business owner to sell myself short. My other hesitation is that the previous owners are very good family friends. They started renting to her 12 years ago for 6 0 5 and just last summer increase it to 6 35. How would you handle a rent increase, Henry, what do you think?

Henry:
I love this question first of all, and second of all, 19 years old investing in real estate on the forms, asking these questions

Dave:
Crushing,

Henry:
Man, what a headstart you had. I wish I was as smart as you were when I was 19. Unfortunately, I was

Dave:
Not. I don’t think I could have typed this sentence when I was 19th,

Henry:
So kudos to you, Nick. I have had this situation a few times, maybe not as nuanced as this, where it’s family friends and it’s in a house hack, but I have inherited tenants paying very low rents and I’ve had to work with them to figure out how to get the rents where they need to be. And so first and foremost is you need to realize that you’re a human being dealing with human beings, and it sounds like based on the way you phrase phrased this question, you’re already in that mindset. And so what I have learned managing my own properties as a landlord and trying to do it in a way that both balances being human and being a business owner, most people will work with you if you give them the opportunity to. And so I’ve always tried to approach these situations where I’m just open and honest with people,

Dave:
Transparent,

Henry:
Transparent,
And I let them know. And so if this was a situation I was dealing with, I would go to the tenant and I would try to work out a situation where I could get them to stair step their rent up to where you want them to be and realizing that yes, I think you’re also in the right mindset of saying, Hey, I’m willing to take a little less than market rents because she’s a great tenant. That is the absolute right mindset because the first thing I tell people who ask me this question is, is the tenant a good tenant? Because if they’re not a good tenant, right, you need to focus on getting that out of there. Anyway, different question. Yeah, completely different process, but if they’re a good tenant, they take care of the place they pay on time, they don’t bother you. That’s perfect.
That’s ideal. The second key is getting them involved in the decision making process. So typically what I do is I pull comps for market rents and I sit down with them and I say, Hey, look, these are the comps that I have. This is what’s available for rent close by similar amenities, and I let them see for themselves, if you were to move and get something equal, this is the price point that it would be at. I understand that if you can’t pay that amount yet, but I do need to get you somewhere closer to market rents,
What would you feel comfortable paying as a rent for you to stay here and want to stay here? And a lot of the times they’ll tell me, look, I can’t do 12, but I could probably get to a thousand. Okay, cool. And then you have to decide, can I work with that number? And if the answer is yes, then you figure out, well, do I raise the rent next month or do you stair step, right? You’ll be able to tell through the course of the conversation and what they’re saying and how they’re saying it if things are reasonable. Because if you go to them and they say, look, I can’t pay anything over 6 35 period. I’m done. That’s it. That’s all I can do. Well then you can’t. It’s not reasonable. It’s not reasonable. You can’t reason with that person and you have to figure out, okay, what are my next steps Now that I know they won’t pay anything else, but when you’re showing them the comps and you’re trying to work with them and you’re involving them in the decision making process, I found that that typically always works well.
Then you can determine based on what they say, do I need to stair step? Because you can do things where you say, okay, if we agree in a thousand, how soon do you think it could get to a thousand? I ask them that. If they say, Hey, I could probably get there over the course of the next six months, if that works for me, then we just work on stair stepping. Then every month until we get there, their rent goes up a little bit until they’re at that thousand, maybe they say a year. If you can work with that, then you sta step ’em a year. You get to determine what works for you and your tenant, but involving them in the decision-making process and being transparent with them because they understand if you bought a property, you have a new mortgage, you’ve got things to pay. People know these things, but where I think landlords fail is they dictate things to their tenants versus including them in the decision making. Hundred percent. And so if you treat them like human beings, try to include them, and I’m not saying because you include them, you have to do what they ask. What I am saying is it makes an easier way for you to transition to something meaningful if you include them.

Dave:
I completely agree. I think that’s the absolute right approach. When I was self-managing, used to just give this speech to everyone who was one of my tenants, I would just be like, I want our entire basis of a relationship just to be reasonable. Just talk to me like you would ask a friend or a family member for a situation and I’ll do what I can and I’m going to be ask you to be reasonable about things, to let contractors in to be reasonable. And that has worked for me a hundred percent of the time. I’ve really never had an issue with that approach. I love what you said about involving them in the decision. People just generally it’s just human psychology. They want agency, they want control, and even though you’re not giving up actual control, giving people a say is really powerful and meaningful and will matter for your relationship going forward.
If you’ve listened to any of the episodes with Dion McNeely, he sort of patented the binder strategy. Have you heard that? Yes. What he calls the binder strategy, yeah, it’s the same idea, but he basically shows his tenants what rents are in the area. He pulls comps and prints them out and shows ’em to them. I think in a situation like this, you can, even if you wanted to show what rent was 12 years ago and how rents have changed over the last 12 years recently, if you want to, you don’t have to beat people over the head with data, but you could show how much taxes have gone up over the 12 years. There are real reasons why rent goes up. There has been enormous inflation across this country in the last 12 years and not changing rents is not a tenable option for real estate investors. Now, you don’t have to maximize and squeeze every drop out of a tenant. I highly recommend against doing that. I don’t think that’s the human thing to do, nor do I think it’s good business and I think that what Henry suggested is absolutely the right way to do it. I think the numbers you gave Henry are a perfect example. Would you personally take a thousand over 1200

Henry:
Absolutely for the right tenant?

Dave:
A hundred percent. If they move out and you have two months of vacancy, that’s pretty much a wash, right? So wouldn’t you rather keep a great tenant for a wash? It’s a no brainer. People get obsessed with their absolute people really, I think in general get obsessed about their rent numbers. When every experience investors know it’s your net cashflow that matters. The gross rent number doesn’t matter. If you have vacancy, it’s going to eat away at that and that crushes your deal every month of vacancy. Just keep this in mind. That’s 8% of revenue you lose. You lose two months, that’s 16% of your revenue. That’s enough to take almost any deal from cashflowing to negative. So just keep that stuff in mind.

Henry:
This is why we harp so hard about underwriting conservatively. I think what happens when people get in this situation is they underwrote buying that deal assuming they’re going to get the highest best rent number possible, and that’s how the numbers worked. And then you get into a situation like this and you realize, I’m not going to get that, or if I do, it’s going to take me a year before I can get there and I’m going to lose a lot of money in between then. So if you underwrite conservatively where you underwrite based on a lower rent number, the midtier of the rent price range, maybe even the low end of the rent range, and then you buy a deal that pencils, you have room to be able to take care of people like this.

Dave:
This is playing out for me all the time right now. I don’t know about you, but I’m not getting top market rents these days. When I have renewals, I’m usually able to keep rent, but there have been a couple units where I’ve had to lower rent, especially in Denver, if you guys follow the news, Denver is not doing great on rent growth, which is fine because I underwrote them this way. I have great property managers, I have great agents. They say, Hey, you’re going to get 1500, 1600 bucks. When I underwrite it, I say 1350. I’m like 10% below what they tell

Henry:
Me

Dave:
Because I want that flexibility. I don’t want to be strapped. I love being in a position where the property manager comes to me. Actually, I can only get 1450. I’m like, great. I underrated a 1350. This is excellent. I’m not worried about that. But when you set yourself up to only succeed if things go perfect, that is just a recipe for failure all the time. So to Nick, I think you know what to do. Hopefully this is a good answer and let us know what happens. I actually, I bet if you follow Henry’s advice, you’re going to find a mutually beneficial situation, which is what Henry and I are always talking about. Find mutual benefit. It’s the best thing for business, it’s the best thing for you. Alright, let’s move on to question number three, which comes from Morgan in Houston where we just were by the way, we ate at this great barbecue place. I just saw it made top 10 barbecue in the country.

Henry:
Best ribs I’ve had in a long time.

Dave:
Anyway, go to Pendleton’s Morgan in Houston wants to talk about real estate, not barbecue though. Morgan says, I want to get started with real estate in Texas and I’m going back and forth between the burr or a fix and flip. I have a good amount of cash, a hundred K or more to invest and I want to take a risk, but not a huge loss. Don’t we all? And I don’t want to rent a property or deal with tenants, but I am open to the idea if it is advantageous. What are your thoughts for a rookie?

Henry:
Yeah, this is an interesting one based on what was said in the question because it says, I don’t want to rent a property or deal with tenants, but I’m open to the idea if it’s advantageous. Well, first of all, being a landlord is very financially advantageous. I think that’s why a lot of us are here, and so I think that that’s the question you need to get comfortable with first because if you go into this not wanting to be a landlord and trying to get yourself sold on being a landlord by taking on your first property, I mean you’re going to get punched in the mouth. Being a landlord is tough. There’s a lot of problems that come with it and the benefits are more long term than short term. Getting into this business and expecting to buy a property that’s just going to go perfectly, you’re going to be making all this cashflow from day one. It doesn’t work like that. You have to have a long-term mindset. So if you aren’t mentally prepared to be a landlord, take on some short-term pain and get the gain in the longterm, then you probably shouldn’t be looking into burrs at all.

Dave:
Totally. I think you basically have a choice to make Morgan one you said, I want to take a risk, but not a huge loss. Those things aren’t a hundred percent compatible risk and reward work going to continuum. The higher the risk you take, the bigger the potential reward. So if you’re saying that you want to take a risk, you have to be open to the idea of loss. That is just investing in general. People who invest in Bitcoin have had amazing returns. People have also lost fortunes in Bitcoin. If you want to just safe investment, go buy bonds, you’ll earn a 4% return and you’ll be fine. But if you want to take a risk, you have to be comfortable with the loss. So I really think you need to figure out where you want to fall on this risk continuum because if you’re comfortable with risk and loss, go flip houses. I think that’s probably the right answer for you because you seem to not want to deal with tenants. In my opinion, Burr is a lower risk strategy than flipping, and so if you instead want to focus on not taking big losses and can warm up to the idea of having tenants, then I would say bur,
Because with a bur, you don’t have the same time pressure as a flip. You still want to do it as quickly as possible, but if you finish your renovation at a bad time to sell, you just keep it and rent it out. You lose that pressure for disposition. So I think you need to sort of make a decision here because you can’t have it all.

Henry:
Yeah, I agree. And you need to figure out are you looking for short-term money or long-term money, right? If you want to do a fix and flip, you’ll get money faster, right? You’ll get paid hopefully in six to eight months. A bur is probably going to take you longer. You’ll pull out some of your cash, but the likelihood of you finding a deal that pencils as a burr in a short term timeframe, that’s going to allow you to pull all of your cash back out and some additional profit. That’s a tough sell right now.
Can it be done? Yeah. Yes, it can be done, but it takes work. You’re going to have to be searching for off market deals or putting in a ton of extremely low offers on our market deals, and it’s just going to take a long time to find that. So it sounds like you need to A figure out what kind of risk reward you want, and B, when is that timeframe that you’re looking to get paid? Because a burr is going to take a longer period of time. A flip can be a whole lot shorter, but a flip is going to be a bit riskier, so you’ve got some decisions to make for sure.

Dave:
Honestly, once you figure out the goal, I know it sounds boring and no one really wants to think about it, but I promise you it sort of just makes every question after that easy, you’re like, okay, should I buy this? You have this frame of reference that you can analyze any question through. It’s like, should I buy this deal? No, it doesn’t meet my goal. Should I buy this deal? Yes, of course. It gets you over analysis paralysis, it gets you over that overwhelm feeling, so just take the time and think through what you really want to accomplish here.

Henry:
Alright, well, we’ve got time for one more question, but before we get there, we’ve got to take a quick break. All right. We are back on the BiggerPockets podcast answering your questions from the forums, and we’ve got one more question and it comes from an investor named James in Seattle. James says he’s looking to buy his first house hack in the Seattle area and is finding it incredibly hard to find a property that will cashflow positive when he moves out. He says, I’ve had agents and lenders tell me that’s a pretty great deal when I would be getting negative $1,400 a month in cashflow. How am I supposed to continue buying a house hack every year or two if I’m racking up more and more payments? Am I supposed to buy the house and hope that I can eventually rent and refinance, help me make a deal in this expensive market?

Dave:
Well, first of all, I love that this comes from someone named James in Seattle. I love the idea of this just being James Dnar submitting questions to us many. What’s this whole cashflow thing?

Henry:
There’s no juice in the cashflow, guys.

Dave:
There’s no juice, but seriously, James, I live in the Seattle area and I sympathize. My short answer to this question is, this does not sound like a good deal. I wouldn’t do it if I were you. I don’t know what else to say. Henry and I actually recorded a show last week talking about house hacking popular topic five, 10 years ago. There was almost no situation or no market. I would advise against house hacking. It was just a no-brainer. Check the box, go do it. But in the expensive, the truly expensive markets in the country right now, these are Seattle, California, New York, Austin, Miami, these kinds of markets, it does not make sense. I have literally done the math and it does not make sense to buy house hacks. I know BiggerPockets is partially responsible for this mindset where we’ve been telling people the house hack for 15 years
And still for 80% of the population. That is true, but if you’re in one of these uber expensive markets, it doesn’t make sense. You have two options in my opinion. You either do heavy value add strategy, which is what I have resorted to since moving to Seattle. This is why I started flipping houses for the first time because you absolutely can make money in Seattle doing that strategy or you have to invest out of state. This is why I do both. I invest out of state for cashflow and for long-term rentals. I am trying my hand. I wouldn’t say I’m a flipper yet, but I am dabbling in flipping a little bit because I do like, I enjoy real estate. I want to be doing deals where I live, and so the only way that that makes sense for me right now is to do heavy value add in the form of flipping. I’m also starting to look at value add rental properties like buying stuff that really needs a lot of work and doing that, but house hacking here, it just doesn’t work. It doesn’t make sense right now.

Henry:
Here’s the framework that I kind of look at in terms of should you house hack or not. If you’re looking at house hack deals, especially just consider a duplex. If you’re living in a place where you’re looking at a duplex and if you buy it, live in it, rent out the other unit, and your remaining mortgage payment is still as much as it would cost you just to go rent a place by yourself, you should not house hack. It’s not going to

Dave:
Work well. I wish rent here for a single bedroom was only 1400 bucks a month. It’s probably more than that, but you can rent a nice apartment in Seattle for two grand, 2,500 bucks a month, especially in the neighborhoods that James is talking about. So it’s a lot of risk and a lot of work and a lot of capital, frankly, that if you’re going to go even listed some neighborhoods here, we won’t read them to you, but you’re still going to have to, if you’re putting 20% down on these properties is over a hundred grand for sure. If I were me, I would rent and I would go find a duplex in a growing city in the Midwest and just bite the bullet. It’s not that bad. I do it and everyone can figure it out. We put out a lot of resources on BiggerPockets about how you can do this as well.
I offer this freely on biggerpockets.com/resources. I made a free calculator. It’s a house hack rent or buy calculator. Go play around with it. It will confirm what I’ve said and anyone else who’s thinking about these different options, just go play around with it. You will see that you’re putting 80, $90,000 into this deal. Even if you put that in a bond, you’re going to be making more money than this house hack deal. You should just think about the opportunity costs that you’re giving up with this. I know we talk about house hacking all the time. It does make sense, but there are situations where it doesn’t make sense. This is why no matter what you do, you have to just run the numbers and see for yourself if the math pencils out, and for most people in Seattle or LA or New York or Miami, it just doesn’t pencil right now and it’s frustrating, but there are other ways that you can win as an investor, so go focus on those.

Henry:
Absolutely. You’re right. It is our fault. We talk about house hacking all the time. It is amazing. Yeah, that’s

Dave:
Awesome. Blame us,

Henry:
But we’re being honest with you about what situations it does work and what situations it doesn’t work. So if you want to learn more about house hacking, you can check out a couple of previous episodes that Dave and I did, number 1236 from a couple of weeks ago that was all about how to analyze these specific rent versus buy decisions that we talked about today. Or you can check out episode 1182 where I talked about several ways you can add value to your house hacks and your rental properties to help you be more profitable,

Dave:
And if you want to learn how to add value in Seattle specifically, we’re literally doing a value add conference in Seattle because this is such an important question. This is a question, James, that we hear all the time, and that’s why James Dard one of the best value add investors out there and who does it in Seattle makes more money than Henry and I combined is teaching us how to do this. So it’s March 28th. You can get your ticket at biggerpockets.com/seattle. Henry and I will both be there. Henry will be teaching. I’ll be in attendance learning and hope to see you guys there as well. I personally am going to go start enjoying the benefits of indoor heating and shed a couple layers. But thank you all so much for listening to this episode of the BiggerPockets Podcast. We’ll see you next time.

“Follow the money” is cogent advice for investors deciding which Sunbelt state to invest in. Unlike in previous years, however, the money trail leads not to Florida or Texas but to North Carolina, where millennials are flocking for tech and finance jobs and a lower cost of living. While cash flow is tight for landlords in the main hubs here, by picking the right neighborhood, those who buy smart and move fast can enjoy the spoils of a state on the move.

From July 2024 to July 2025, North Carolina attracted 84,000 new residents, according to Census data, more than any other state, and is consequently the third-fastest-growing state in the nation. While North Carolina has plenty to offer in terms of climate, geography, and jobs, the two Southern powerhouses that have grabbed the headlines over the past few years for attracting remote workers and job seekers—Florida and Texas—have handed North Carolina an immigration victory lap due to the rapid cost of housing and soaring insurance costs in the two states.

“The cost of housing, in particular, is driving young people and retirees to other states,” University of Florida research demographer Richard Doty told the Associated Press. “Also, insurance is higher in Florida than in most other states.”

Rival States Hit the Brakes

The post-pandemic tech boom in Texas appears to have hit the brakes recently, as major companies have laid off workers, while traditional coastal employment hubs such as New York and San Francisco have picked up.

Isabelle Bousquette, a tech reporter for the Wall Street Journal, said on Texas Standard, a Texas Public Radio station:

“There was a recent report from SignalFire, which is a venture capital firm, and that was showing that in 2024, employment in big tech companies declined 1.6% in Austin, and employment in tech start-ups declined 4.9%. We also saw declines in cities like Dallas, Houston, Denver, and Toronto. But then, you know, increases actually in New York and the Bay Area….A lot of the companies that moved to Texas have done layoffs since.”

Escalating rents and home prices have also contributed to the exodus. “I think a lot of people were frustrated and disappointed when the housing costs went up or fluctuated. And yeah, I think that was also one of the reasons that they may have headed out,” Bousquette added.

Smaller Cities Make for a Better Quality of Life

Also playing into North Carolina’s hands are the generally smaller, less bustling metros compared to Florida and Texas, where families can live closer to their jobs or work remotely while being in a scenic environment.

“North Carolina is attracting younger folks because we have so many nice areas in North Carolina—the mountains and beaches and lakes in between—that we’re benefiting from younger people who decided they can work from anywhere and would rather be in a nice area,” North Carolina state demographer Michael Cline told the Associated Press. “One of the things about North Carolina, our cities are not huge, and that may be attractive to folks, too.”

These factors have helped employment hubs such as Raleigh, Durham, and Charlotte evolve into diversified centers rather than single-industry boomtowns. 

This is why Ralph DiBugnara, founder and president of real estate investment platform Home Qualified, recommended Raleigh as the prime place to invest in 2026.

“A great strategy for 2026 would be to look into any cities that are growing population because of workforce,” he told GoBankingRates. “This can be a major needle mover in higher prices for real estate.”

Employment Diversity

In addition to its core employment drivers in tech and finance, North Carolina has been broadening its employment reach in manufacturing and life sciences through Swiss drugmakers Roche and Novartis, as reported by Reuters. Construction for the buildout, along with the creation of permanent new positions, will result in thousands of new jobs.

The Landlord Play

For smaller landlords, the play is straightforward: More high-paying, stable jobs result in stronger rent rolls and deeper tenant pools over time. The real decision is choosing where to invest.

For all-cash buyers who are looking for a solid place to park their money and enjoy strong returns, Raleigh, Durham, and Charlotte in B and B+ neighborhoods close to the main employment area are a no-brainer. Research is needed, though, on the types of wages being paid so that rent does not take up the majority of a tenant’s paycheck.

High on a millennial’s list of must-haves will likely be a walkable neighborhood, with easy access to parks, trails, restaurants, and an adequate supply of housing to invest in with numbers that make sense. That means targeting submarkets with commuting distance to their jobs.

Important Stats

Raleigh, Charlotte, and Durham

Charlotte is a prime target for investors, according to lender Equitycheck, and has recently posted a 12% appreciation rate. It’s competitive and pricey. Prime investment areas include Uptown (City Center), NoDa and Plaza Midwood, Optimist Park, and Villa Heights, while more affordable suburban markets such as Huntersville, Matthews, and Indian Trail appeal to families.

Granitepark.co, a real estate investment blog, recommends University City, Steele Creek, and Concord in Charlotte as places to attract young professionals without premium pricing.

With a thriving tech industry, Raleigh has seen an influx of workers with higher-paying jobs in recent years, driving demand for housing. However, they come with higher price points.

In addition to Charlotte (Chapel Hill), Raleigh and Durham—the Research Triangle—Asheville, and Carolina Beach are strong short-term rental enclaves. There is also high student housing demand, especially in Chapel Hill, which has over 32,000 students and is home to the University of North Carolina. Raleigh is home to North Carolina State University (NC State), with 36,000 students. Duke University is based in Durham, with students paying high rents.

Greensboro

No mention of investing in North Carolina would be complete without mentioning Greensboro, which is generally affordable, with a median price of $257,450, according to Zillow, and strong cash flow potential in manufacturing, tech, and logistics.

Wilmington

The laid-back coastal city of Wilmington offers a small-town vibe with big-city amenities, attracting many well-heeled investors. The average home price of $406,726 means rental prices need to be high to turn a profit. However, for investors who can afford it, it’s a solid place to buy due to expected appreciation, consistent demand, and a steady short-term rental business.

“Wilmington should continue to grow, and because most of the land within the city limits is developed, we’ll continue to see more redevelopment of existing properties,” developer Jason Swain, of Wilmington-based Swain & Associates, told Wilmington Biz. “At the same time, much new growth will likely occur on the periphery of the city…With interest rates falling, we expect some projects that have been on hold to start moving forward as development fundamentals stabilize and expectations adjust to new market norms.”

Rent prices

Compared to the state average rent of $1,895, Raleigh’s average rent of $1,574 is on the lower side, especially considering the average home price of $424,924. Durham is also fairly expensive for rental income, with cap rates around 4.4%. Greensboro is around the same, but the lower-priced housing makes this far more attractive for investors from a cash flow perspective.

Final Thoughts

What North Carolina has going for it is momentum. It’s growing fast, with vibrant employment and education hubs, and people are moving there in droves, so it’s hard to put a foot wrong if you plan to buy. The main question for an investor is whether to buy for appreciation or cash flow, because the coveted job-heavy cities are pricier and, with current interest rates, won’t cash flow for leveraged buyers.

The smaller pockets in and around areas like Greensboro will, however, and with prices still around $250,000, even a break-even scenario with a view to tax breaks, debt paydown, and refinancing to a lower rate in the future could be a prudent move.

Everyone hears “five Airbnbs in five years” and immediately pictures some kind of motivational speaker montage. You know the one:

• Scrolling Zillow at midnight with one eye open.
• Signing five mortgages while pretending you understand what “debt service coverage ratio” means. 
• Buying 37 throw pillows from HomeGoods because apparently that’s what makes a house “Instagrammable.” 
• Chugging cold brew like it’s a performance-enhancing drug. 
• Yelling “CASH FLOW” into the void and hoping the universe manifests a check.

And then year two hits:

• The hot tub breaks and costs more to fix than your first car. 
• Your cleaner quits via text at 9 p.m. on a Friday before a check-in. 
• The city changes the STR rules, and suddenly, you need a permit that requires a blood sample and your firstborn child. 
• You’re on your third “emergency” Home Depot trip this week, wearing the same hoodie you slept in, and you’re pretty sure the cashier recognizes you now.

So, no. Getting to five short-term rentals is absolutely not “buy five houses as quickly as humanly possible and figure it out later.”

That’s how people burn out, overleverage themselves into oblivion, and start posting desperate questions in Facebook groups at 2 a.m., asking if anyone has a “miracle pricing spreadsheet” that also fixes existential dread and poor life choices.

The real path to five short-term rentals in five years is calmer, smarter, and honestly way more repeatable than the Instagram version. It’s a mix of ownership, co-hosting, and economies of scale that don’t require you to sell a kidney or develop a caffeine dependency.

Here’s the step-by-step plan that actually works—without destroying your mental health in the process.

Why Your First Airbnb Should Feel Like Tuition (Not Your Retirement Plan)

Your first short-term rental is not your forever property, your brand, or the thing you’re going to feature in a glossy magazine article about your “real estate empire.”

It’s tuition. Expensive, sometimes painful, absolutely necessary tuition.

You’re paying to learn how guest expectations really work, which is to say they’re both completely reasonable and wildly unhinged at the same time. You’ll learn what breaks the most (spoiler alert: It’s always the thing you thought was “nice to have” but “probably fine”). 

You’ll figure out how pricing actually moves, and why your gut feeling is usually wrong by at least 20%. And you’ll discover what a good cleaner is worth, which is more than your ego wants to admit but less than therapy would cost if you tried doing it yourself.

Most importantly, you’re learning how to build systems you can actually reuse later without wanting to throw your laptop out a window.

Most people fail their first STR because they treat it like a retirement plan instead of a learning experience. They stretch to buy the prettiest property with the biggest mortgage payment, then try to operate it like a legitimate business with the budget of a kid’s lemonade stand. It’s a recipe for disaster—or at least a recipe for spending every Saturday at Home Depot looking for the right lightbulb while questioning every decision that led you to this moment.

The goal of the first STR isn’t to maximize profit and retire to Bali. It’s to build a playbook that works. A boring, repeatable, “I’ve done this before, and I know it works” playbook.

Because once you have a playbook, scaling becomes boring. And boring is massively underrated in business. Boring means you’re not constantly improvising. It means you can sleep at night. Boring means you might actually take a vacation without checking your phone every 11 minutes.

Year 1: Build Something Simple That Prints Money—Without Printing Stress

In year one, your job is not to create the Taj Mahal of short-term rentals or some boutique hotel experience that requires a staff of 12. It’s to build the simplest possible machine that prints money, without printing ulcers.

Here’s the actual recipe: Pick a market in demand, even when your listing isn’t perfect. You want a place where people are actively traveling, not one where you’re the only thing keeping the local economy alive.

Buy a property that’s easy to clean and maintain. This is not the time to buy the historic Victorian with original hardwood floors that need to be refinished every six months. You want the boring house that doesn’t fall apart when someone uses the shower.

Keep your design simple, memorable, and durable. You’re not designing it for Instagram. It’s for real humans who will spill wine on your couch and not tell you about it.

Set up your systems from day one: messaging templates, pricing rules, cleaning schedules, and maintenance checklists. Build these now or hate yourself later.

Learn the guest journey obsessively. What do they actually care about? Where do they get confused? What questions do they ask 47 times that you should just put in the listing?

If you do this right, you’ll end up with consistent reviews, occupancy, and confidence that you’re not completely winging it, as well as a repeatable setup you can literally copy and paste when you’re ready to scale.

And you’ll also have the one thing most investors never get: proof that you can run this business without being physically present for every single decision, which is the whole point unless you enjoy never sleeping or taking a day off.

The “tuition mindset” makes everything else possible. Skip this part, and you’re just collecting houses, not building a business.

Year 2: Co-Hosting Is the Cheat Code Nobody Wants to Admit Actually Works

Here’s where we take a hard left turn from the “normal” advice you’ll find in every other real estate blog, written by someone who read three books and bought one rental.

If you want five short-term rentals in five years, you need cash flow that doesn’t require buying more houses immediately and taking on more debt that makes your accountant nervous.

That’s where co-hosting comes in. Co-hosting is hands down the easiest way to scale your income in this space without taking on more debt, risking more capital, or convincing a bank that yes, you really do need another mortgage.

And I know exactly what you’re thinking right now: “I’m not trying to be a property manager. That sounds terrible, and I already have enough problems.”

Totally fair. I get it.

But co-hosting (when done right) is not traditional property management, where you’re fielding calls about broken garbage disposals at 11 p.m. and mediating neighbor disputes about parking.

If you do it right, it’s more like running an operating system. You build the messaging system, pricing system, cleaner and maintenance network, guest experience standards, and reporting cadence. And then you apply that exact system to other people’s properties.

You get paid to practice scaling, refine your systems, and figure out what works and what doesn’t before you risk your own money on property No. 2.

Most people skip this step because they think it’s beneath them, or they’re obsessed with “owning doors” like it’s some kind of status symbol. Those same people are also the ones posting in Facebook groups six months later asking how to afford their second down payment while their first property is bleeding cash.

Co-hosting can fund your growth in a way that buying another house simply can’t. And it teaches you the single most valuable skill in this entire game: how to run short-term rentals that you don’t physically babysit 24/7, like they’re a toddler who just learned how to open the fridge.

What co-hosting actually does for your five-year plan (besides make you money)

Here’s the real point most people miss: If you can co-host three to 10 properties while owning one, you start stacking benefits that compound way faster than just buying another property:

• Extra income that doesn’t require a down payment or a mortgage 
• Operational reps that make you better at this faster 
• Vendor leverage, because now you’re worth their time and attention 
• System refinements, because you’re seeing what works across multiple properties, not just your one special snowflake 
• Confidence in your numbers, because you’re not guessing anymore

Your first Airbnb taught you how the game works. Co-hosting teaches you how to run the game at scale without losing your mind or your savings account.

Also, your cleaners start actually liking you because you feed them more consistent work. Your handyman starts answering your texts faster because you’re not just “that one guy with one property.” And your pricing decisions get dramatically better because you’re seeing patterns across multiple listings in real time, instead of just staring at your own calendar wondering why nobody’s booking.

Economies of scale show up way earlier than most people realize. And they make everything easier, cheaper, and less stressful.

Year 3: Buy Your Second Property Later, Not Sooner (Yes, Really)

Most people rush their second purchase because they’re completely addicted to the idea of “owning doors,” and they want to tell people at parties that they have “multiple properties,” like it makes them sound sophisticated.

Then they end up owning two doors and exactly zero hours of sleep while wondering why their bank account looks like a crime scene.

Buying the second property later can genuinely be better than buying it sooner. Here’s why: 

• You’ll have more cash saved because you weren’t throwing everything at another down payment before you were ready. 
• Your systems will be tighter because you’ve had time to actually test and refine them, instead of just making stuff up as you go.
• Your vendor network is stronger because you’ve been working with them long enough that they actually return your calls.
• You’ll underwrite properties better because you know which numbers are real and which are fantasy.
• You’ll know what actually drives revenue in your specific niche, instead of guessing based on some pro forma you found on BiggerPockets.
• Your co-hosting income can help cover slow months on your owned property, which means you’re not panicking every time occupancy dips.

This is the boring truth that nobody wants to hear: The second purchase is dramatically easier when you’ve already proven you can operate at scale, even if that scale is co-hosting other people’s properties. It’s the difference between “I really hope this works, and I’m not making a huge mistake” and “I’ve literally seen this exact playbook work on 10 other properties, so I know exactly what I’m doing.”

That confidence is worth actual money. It helps you negotiate better, avoid bad deals, and sleep at night.

Year 4: Stack Smart, Not Fast (Because Fast Is How People Go Broke)

At this stage, you’re not “starting” anymore. You’re repeating a process that you already know works.

This is where growth stops feeling like complete chaos and starts feeling like an actual business, with systems and processes and maybe even some predictability.

In year four, your only job is to do two things:

1. Buy one more property. Now you’re at three owned, which is enough to feel legitimate, but not enough to drown.
2. Keep co-hosting, or transition into partial management if you want less day-to-day involvement and more strategic oversight.

This is also where you’ll feel the first real benefit of scale that makes you realize why you did all this work in the first place. You can:

• Bulk-buy supplies and actually save money. 
• Standardize amenities across properties so you’re not reinventing the wheel every time. 
• Reuse your guidebook and messaging templates without changing a single word. 
• Train cleaners once, and then copy that exact standard to every other property. 
• Negotiate better pricing with vendors, because now you’re actually worth their time. 
• Move faster on deals, because you already know what matters and what’s just noise.

You’re basically building a tiny hotel brand—without a lobby or matching uniforms or any emotional stability. But you do have a business that actually works.

Year 5: The Jump to Five Is a Systems Question, Not a Money Question

By year five, getting to five rentals is no longer about “can you find the next deal?” or “can you convince a bank to give you another loan?” It’s about three much more important questions:

1. Do you have the cash flow to support down payments without stretching so thin you can’t handle a single surprise expense?
2. Do you have the team to support more listings without you personally answering every guest message at 10 p.m.?
3. Do you have systems tight enough that adding another property feels like an addition, not a complete lifestyle change that requires you to quit your job and become a full-time Airbnb babysitter?

At this point, you can hit five properties in a few different ways, and honestly, they’re all valid:

• Option A: Own five properties outright. This is traditional, straightforward, and requires the most capital, but gives you the most control.
• Option B: Own three to four properties and co-host 10 to 20 for other owners. You still have “five STRs” in terms of operational experience and income, but they’re just not all sitting on your personal balance sheet, making your debt-to-income ratio look terrifying.
• Option C: Own two to three properties, but build a brand that’s actually worth more than the properties themselves through direct booking, repeat guests, content, partnerships, and systems that other people would pay for.

Most people obsess over “How many properties do I own?” like it’s a scorecard at a networking event. Real operators obsess over “How much infrastructure have I built?” Infrastructure is what makes five feel easy and makes 10 feel possible instead of insane.

The Real Secret: Scaling STRs Is Not a Buying Strategy. It’s an Operating Strategy.

If you take exactly one thing from this entire article, make it this: Buying properties is the fun part. It’s exciting, gives you something to post about on LinkedIn, and makes you feel like you’re making progress. However:

• Operating properties is the part that actually gets you paid and determines whether you succeed or fail spectacularly while drowning in debt and regret.
• The first Airbnb is tuition. It teaches you the game.
• Co-hosting is cash flow without debt. It teaches you scale.
• Waiting on the second purchase is discipline. It teaches you patience.
• Scale is systems, not hustle. It teaches you leverage.

And if you build it that way, five properties in five years doesn’t feel like a sprint where you’re constantly on the edge of disaster. It feels like a plan. A boring, repeatable, actually sustainable plan that doesn’t require you to sacrifice your sanity, relationships, or ability to sleep through the night without checking your phone.

And honestly? That’s the version worth building.