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

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

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

The Data Tells a Much Bigger Story Than the Headlines

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

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

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

Why This Growth Is Happening Now

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

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

Who the Monthly Renter Really Is

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

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

Why Monthly Rentals Are Sustainably Profitable

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

Monthly Rentals Are Not Just a Big-City Phenomenon

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

Monthly rental demand is showing up in:

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

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

Where the Opportunity Starts to Take Shape

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

They tend to make the most sense when:

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

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

What Monthly Renters Actually Value

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

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

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

Final Thoughts

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

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

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

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

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

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

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

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

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

How Affordability Is Squeezing Buyers

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

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

Migration and Rental Demand: The Happy Couple

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

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

Moving Company Reports Back Real Estate Data

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

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

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

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

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

Seven Is the Magic Number

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

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

Older Movers Are Increasingly Choosing to Rent Over Buy

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

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

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

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

Final Thoughts

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

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

Rental investing isn’t passive. I know firsthand—I once owned 20+ rental properties. 

It takes a ton of work to buy them, stabilize them, and manage them, year in and year out. Even if you hire a property manager, you then have to manage the manager. 

Rentals, flipping, and wholesaling—these are all business models. They appeal to plenty of entrepreneurs looking to launch a side hustle or full-time business. But make no mistake: They involve starting a business. 

I don’t want a side business. I just want the cash flow, appreciation, and tax benefits of real estate investments. 

So, for those of you like me who want a real estate portfolio without having to run a real estate business, what options do you have?

Entry Level: REITs

Anyone with $10 can buy a share in a real estate investment trust (REIT). You buy and sell them with the click of a button in your brokerage account, just like any other stock. 

They’re cheap, liquid, and easy. So what’s the catch? There are several, unfortunately. 

First, by definition, you’re paying market value for them, as they trade on the open market. Don’t expect a bargain or outsized returns. 

Second, you pay taxes on the dividends at your full income tax rate. And unlike some other ways to passively invest in real estate, you don’t get a juicy depreciation write-off. 

Third—and arguably worst of all—they’re too correlated with the rest of the stock market. I’ve written about this before: They act as just one more sector of the stock market, with a similar correlation as other sectors like utilities or consumer staples. 

That means they don’t provide true diversification. They trade on public stock markets alongside other stocks and generally move to the same market rhythms. 

Goldilocks Level: Co-Investing

To solve all three of those problems with REITs, you need to go up a level and invest in private placements. But that doesn’t mean you have to be rich or invest the typical $50,000 to $100,000 in a single investment. 

When I say “private placement,” I’m referring to passive real estate investments that don’t trade publicly on stock exchanges or get hawked by crowdfunding companies. Options include:

• Private partnerships with investors 
• Private notes
• Real estate syndications
• Real estate funds

I’ve invested in all these and continue investing $5,000 every month in a new one or two. I approach it as dollar-cost averaging for my real estate investments. 

Yes, operators do typically require a minimum of $50,000 to $100,000—if you invest by yourself. This is why I don’t. 

I invest alongside other members of a co-investing club. We all meet on a Zoom call to vet a new passive real estate investment together, grilling the operator with questions. Then we boot them off the call and have an internal club discussion to analyze risk and returns. 

We can then each invest $2,500 or more if we like it—or skip it and wait a couple of weeks for the next one. 

My current portfolio includes 45 of these passive investments, all spread across dozens of cities and operators. It’s a true “set it and forget it” portfolio, where I just sit back and collect distributions every quarter. 

Wealthy Level: Solo Private Placements

Of course, the wealthy could potentially invest $50,000 to $100,000 by themselves in a new passive investment every month. 

That said, you’d need a massive income to do this kind of dollar-cost averaging, investing $50K to $100K every month. That’s $600,000 a year, minimum, just in real estate investments. 

Granted, not everyone practices dollar-cost averaging. But then you start getting tempted to try and time the market, which adds a whole new risk to your investments. 

Tracking Your Passive Investment Portfolio

As you start stacking up all these passive real estate investments, how do you keep track of them all? How do you track returns for them? 

You have a few options. I keep a spreadsheet of all my investment accounts, and I list all my real estate investments on it as well, along with my initial investment and the approximate yield. This helps me track my passive income as well for measuring my “FI ratio”: the percentage of my living expenses that my passive income can cover. When that reaches 100%, working becomes completely optional. 

As another free option, I also use Credit Karma’s net worth tracker. It’s not as good as Mint was, but Intuit discontinued Mint and imported the data to Credit Karma. The better to sell you other services, my dear. 

As a paid option, Vyzer specializes in tracking alternative investments alongside traditional paper assets. 

Finally, my co-investing club has an automated tracker for its group investments. It updates with the current yield for each investment. 

A Counterweight to Stocks

I want my real estate portfolio to look almost as diverse as my stock portfolio. That includes geographical diversification, property type, debt versus equity, operator diversification, and even timeline diversification. 

My stock portfolio provides relatively liquid investments I can sell anytime. They’re more growth-oriented, paying almost no income yield. But they’re easy to put in an IRA, diversify, and automate weekly contributions and investments through a roboadvisor. 

Real estate is not liquid and is harder to invest in through an IRA. It requires much larger minimum investments, which makes it harder to buy once or twice a month for dollar-cost averaging. 

But it generates high income yields for me and provides built-in tax benefits and true diversification from the stock market. A stock market crash won’t necessarily derail any of my real estate investments. 

That high yield on many of these investments will also help me avoid selling any stocks in the early years of not working full-time. I don’t plan to “retire” in the conventional sense, but I will gradually shift from traditional work to writing novels and other not-so-lucrative work. The longer I can delay withdrawing from my nest egg, the better. 

If you’re wealthy enough to practice dollar-cost averaging in private placements by yourself, I tip my hat to you. For the 99.99% of the rest of us, consider joining a co-investing club if you want to build a set-it-and-forget-it real estate portfolio like I have, with the full cash flow, appreciation, and tax benefits real estate offers. 

Ashley:
Ever thought about flipping houses or running a rehab project that felt maybe way more chaotic than you expected? This episode is for you. Today we’re talking about how building real systems can completely change not just your rehab, but your life outside the business too.

Toni:
Yeah, because success isn’t just about finding good deals. It’s about how you run the project once you’re under contract. And today we’re breaking down how Serena Norris built repeatable processes, how she creates scopes of work and estimates rehabs and the exact tools she uses to keep her flips organized and most importantly, keep them profitable.

Ashley:
This is the Real See Rookie Podcast. I’m Ashley Kehr.

Toni:
And I’m Toni J. Robinson. And for the third time, we got a three-peat happening for the Real Estate Rookie podcast. Serena, welcome back. Appreciate you coming on.

Serena:
Thanks so much for having me guys. Good to see you again.

Ashley:
Serena, for those listening that maybe didn’t listen to the previous episodes, can you give us a little background on your real estate investing experience?

Serena:
Absolutely. So I got into real estate in 2015. I knew that I wanted to go the investment route. I didn’t know where to start, so I was currently trying to get my license online, which I did. And I ended up meeting my mentor two days after I moved back to Washington State and he just mentioned he was flipping and I was like, “That’s exactly what I want to do. Where do I show up?” So I started flipping with him in 2015, got thrown into high volume early. He was doing 22 active flips at a time. And we honestly didn’t have really any systems. It was complete chaos. But over the last 10 years, or going into 11, we’ve done over 130 flips together, about a $55 million worth of volume. We have a portfolio, mostly long-term rentals, mostly single family, some retail commercial, and also have short-term rentals.
So my role in everything was the construction management, the operating systems, all the finishes and the design for the flips. And I’m also a licensed broker, so I sold a lot of the flips on the backend. And yeah, over my course of my time, I just learned how to turn that chaos into repeatable systems. And today I focus on helping investors run flips like a business instead of that chaos and constant emergency. Yeah.

Toni:
I think everyone, flipping is probably the type of real estate investing that a lot of folks are familiar with because HGTV and all the TV shows and people who become celebrities flipping homes. Even our own James Daynard is now a TV celebrity because he’s flipping homes. But I think the people underestimate what really goes into or how chaotic flipping a home and running a renovation, even if we’re not flipping, just a renovation in general can be. So just maybe paint the picture for us, Serena, before you had the right systems in place. When we talk about flip number one or flip number two, what did your day-to-day life actually look like trying to manage all of these rehab projects?

Serena:
Yeah, absolutely. I mean, before we had the systems, it was total chaos. I mean, we were juggling so many projects at once. We didn’t have any repeatable systems from project to project. So each project felt like it was starting over from scratch. When I was working with my mentor, I was just learning everything, but a lot of times he was also in peer chaos. So I was just trying to organize as much information as possible. And when I started seeing patterns, that’s when I was really starting to just organize everything and collect all that information. So I have saved time where I can reference things. The other thing was that I just felt like we were making decisions all day long. I mean, it felt like constant texts and calls from contractors. We were absolutely needed to move the project forward. If we didn’t respond, then the project stalled.
And because we didn’t have templates to reference or we hadn’t built that organization system, we missed a lot of scope items. We had late budget surprises, like change orders mid-project or even after the project was done. Didn’t fully understand the true costs until the very end. And of course that ate into all of our profit. Even though we were successful, we were making money on the projects. We definitely didn’t … Yeah. We were losing out for sure. And mentally, it was just exhausting. It always felt like we’re behind. The biggest issue was that we were the system. And so if we forgot something, it just didn’t exist. So a lot of times we would think a contractor is being inefficient, but really it was us. We were the bottleneck, not the contractor.

Ashley:
I can imagine this would lead to a lot of miscommunication too, or especially having multiple people involved and relying on text and phone calls and things like that to communicate. It could be one person said one thing and the other person said, or no proof that you even picked that tile instead of another tile. So how did your life change once you started to actually implement the right systems? And not even on the business side, but I’m sure this impacted your personal life too.

Serena:
Yeah, absolutely. Yeah. I mean, going back to what you said, my biggest role throughout all of this, especially when contractors are like, “Well, I knew that. ” I’d be like, “I don’t assume anything because there can be so many miscommunications on job sites and my goal is to eliminate all of that and create as much clarity as possible for all parties involved.” So yeah, once I started building repeatables processes, one of the first noticeable change was mental clarity, confidence that we had on the execution, also confidence we had in contractors and contractors having confidence in us as well. And we started trying to answer as many decisions as possible in the planning phase, not in the execution phase. There will always be problems arise that you didn’t plan for, but if we can be more proactive instead of reactive, that saves so much time and headache and it saves a lot of money.
So it also built a lot of trust between us and the contractors. A lot of flippers, especially in the beginning, they see contractors as an obstacle that they need to overcome to get the house from to ARV.
And what we learned is they are an external team that we need to value so well. So trust between them is extremely important. So the more organized we are, the more organized and more trust that they can have with us, and then they want to work with us more and give us good pricing. I was able to actually get some freedom. A lot of people get into flipping because they want financial freedom. The real freedom in flipping is having time, control over your time and your energy. So flipping is 100% an active income source and the goal is to systemize and streamline it as much as possible to have more control over your time and energy. So I got to a point where instead of working seven days a week, I’m traveling two or three times a month, sometimes spending months out of the country at a time because my systems are working for me.
And yeah, I stopped carrying everything in my head so that way people could execute without me.

Toni:
Yeah. And Serena, we spent some time together walking some of your projects just a few years ago and just the way that you had everything. So it was like everything was at the tip of your tongue and you knew where everything was. And that’s something that happens with having the right systems and just being able to fall back on those. So I’ve seen it in action and it’s pretty impressive to see up close. But I guess let’s zoom out maybe a little bit for our rookie listeners. Just walk us through the full lifecycle on one of your flips. If we go from acquisition to sale, what are some of those systems that show up at the various stages across the starting point to the finish line?

Serena:
Yeah, absolutely. I always think about this in there’s five core systems that every flipping business needs. So you have your information systems, which are really the foundation. So file storage, where you organize the information and have that as standardized as possible. Then you have your planning systems and then your execution systems, communication systems, and quality control systems. So within the planning system, that incorporates your acquisition and your post-acquisition planning. So with acquisition systems specifically, that’s really like checklists for me. That’s going to be, did I pull my comps? Have I reviewed my title? Have I gotten a sewer scope? We didn’t get sewer scopes in the beginning for a long time. And then we had a surprise 5K bill at the end. What is our strategy? And so acquisition system is a lot of gathering that information in a centralized place to be able to figure out our strategy as much as possible to take that into our planning.
Now, once we know we’re going to buy the property, the planning starts as soon as possible. And that is the most important part of your flipping process. If a lot of people, especially a lot of newer and people to flipping and beginners, they will oftentimes skip over that process because they don’t feel comfortable or feel like they know enough to plan well, but with poor planning comes poor execution. And a lot of times if you’re already executing without the right plan, you’re already in a reactive mode, you’re already probably on the chance of losing money and effectively managing your time. So with the planning system within that, I always have probably the most important piece for every flip is a very detailed scope of work and having that tied to your budget so you know what your projected numbers are going to be for that project.
I also in the planning, so I have my scope of work and I have my budget. I have my design and finish packet. So I have chosen all of the design materials for that job and put in all of the details of even how to install it, grout color, everything. And then my floor plans. Even on simple projects, I loved having floor plans because they are an opportunity to have a centralized piece that everyone can reference and take you out of the equation. So little details like how high to hang chandeliers from the floor, how to put vanity lights. All of these questions that I’ve gotten over the years from contractors, I don’t want to answer again. That’s the key. It’s not that you’re never going to have problems. It’s that I don’t want any new problems. So having to be able to put all of those details into the floor plan and the scope of work, depending on where it should live is important.
Execution systems. So absolute need task management software to keep all of your internal tasks organized. And so that way you can track contractor scheduling, milestones for different quality control checkpoints. If you need a home inspection for permit inspections, how you keep all of that task. And then also when you’re ready to hire an assistant or someone on your internal team, that’s your place of communication and coordination. Communication systems, figure out how the cadence between how you want to communicate with you and the contractor or you and your internal team. And then last but not least, which is the cherry on top, is quality control. So again, like checkpoints at each milestone, I have probably about, I think like five or six quality control checklists. And at any given point during the project, my goal is that the sooner I can correct a quality control item, the least expensive it’s going to be for me.
So the result of that is like fewer surprises, faster decisions, or taking me out of the equation to even make the decision and flip stop being as chaotic, business becomes more scalable and the best thing is repeatable.

Toni:
I guess two follow-up questions to that. First, I love the idea of having the different systems and what we need to plug into our business, but I also can imagine that there are maybe Ricky investors who are listening that might feel overwhelmed at the thought of putting all of these systems together. So a two-part question. The first part is, which one would you focus on first and why? And then once you’ve decided on which one to focus on first, how do you know how far to take it before starting to focus on the other ones? Do I need to get it 100% everything’s dialed in or can I take it a certain percentage? So where to focus first, then how deep do you go on that one once you’ve decided?

Serena:
First absolute system that everyone should apply right now and it’s super easy is your filing system. The information systems that you have are the foundation to all of this because if you have your information in a million different places, you have bids and emails, you have just all of your files not organized per project or even not in certain files or folders within your project folder, right? It creates chaos. I can’t tell you how much time I wasted trying to find some piece of information or just a picture that a contractor needed, but because I wasn’t organized, it took me forever. And so setting up a file system, we would do folder for each project within that project, it’s standardized the same folders. We have our analysis, we have our purchase docs, we have our rehab, and we have our rehab pictures, and then we’ll have our listing folder as well.
And that’s the same folder system for every single project. And within that, it’s just so standardized filing system to start buying that information. That’s super simple. I’d say to answer your question, like how far to go, okay, think of it like this. A lot of people will come to me and they’re like, “I have no systems.” And I said, “Well, have you already done a few flips?” And they say, “Yes.” And I go, “Well, you already have systems. Every process that you are processing on each of your houses makes up a system. Now is it an effective system?” That’s what you have to ask yourself and revise over time. So if you are going to even your first flip and think about how do I want to process this right now or you did one flip before and go, “Okay, this was my process. This is what I did.
Here’s where it didn’t work. Here’s where I think I should refine it and then try that on the next flip.” And honestly, that’s what I did. And I built it over time, always coming back to the same mindset of like, how do I standardize this where I’m not doing a different project and starting from scratch from each project? How can I take from the last project, apply it to this project, and then make it unique to that specific project? I hope that answers that question.

Ashley:
We have to take a short break, but when we come back, we will get into creating your scope of work and running your rehab project in an efficient and repeatable process. We’ll be right back. Okay, welcome back. So we are here with Serena. So Serena, once the property is under contract, how do you organize the rehab before you’ve even closed on the property so nothing slips through the cracks?

Serena:
Over time, so over projects, I’ve created a super extensive scope of work and budget template. So I essentially have been … Anything that we’ve ever done to a project will go into that scope of work template, it becomes organized. So that way I’m just working off of a scope of work template where I’m just deleting what I don’t need instead of having to think to add what I do need.

Ashley:
Serena, is this in Google Sheets, in a project management software? Where does this template live?

Serena:
Yeah. So I used to use Smartsheets and now I’ve rebuilt everything into Google Sheets to be an all- in-one. We were using Asana, Smartsheets and other platforms, and I rebuild it all in Google Sheets. You just need a sheets, some sort of Excel platform to use this. And so the structure of that template is you’ll have your item, your line item, and then the most important part is you’ll have your description, line item description. And what that defines is what needs to happen with that line item. I also describe the outcome of that item. I specify what is included in that line item. So if it’s materials and/or labor or both, and then I’ll put a quantity by it, hopefully to give me out some numbers, some costs associated with it. But most important part is the description column. And the reason why is, and before, when we used to just do our scope of works on Word documents, like literally bullet point, it would be like a one-page bullet point, walk with the contractor.
So you get it? Cool. See what I see?

Ashley:
Well, Serena, I have a question on the line item. So in this template, how are you breaking it down? Are you going room by room? So it’s like the kitchen, this is the cabinet, or are you doing it by the trade? So here’s the plumbing section, here’s everything we’re doing for the plumbing.

Serena:
I do it by trade, 100%. I do not suggest doing room by room. The reason why is because I want to be able to put a quantity next to each one and have it one place. I also want to have it in the format of the way that contractors think. So if you’re comfortable going through room by room and that’s comfortable when you are on the property to make notes, but when you go back, I highly suggest putting it in a format where you’re going trade by trade. And so I have it in three main categories. You have your initial services, which are going to be getting the property clean to even start construction. We have initial landscaping, we have re-key, trash out, demo, making it like a clean slate so contractors can go in and work. Then I have all of my exterior and then I have all of my interior.
And then for all of the line items within there, each category, they are separated out by trade. So I have all my plumbing. I might separate out plumbing and then plumbing fixtures, but plumbing is all together. And then the line items within there are actually what’s happening. So like plumbing install. And then my description is everything that comes with that. And back of the day, what we used to do, for example, with drywall, that one bullet point would just be repair drywall. That would be the only information we’re giving to the contractor. And then he’d give us some number back based on filling in the gaps and assumption he had and then he would execute and then we would end up surprised why he didn’t do it to the level that we were thinking of. And so what we learned is that that extra description in there, instead of just saying repair drywall, we are describing the outcome we want, right?
Repair drywall throughout the whole entire house to make the walls smooth and blend in. We want them to match the texture with existing, or if it’s like install a new drywall, we’re detailing what level of finish that we want it. Or if you don’t know the level of finish for it, then describe extremely fine texture or smooth wall, no texture at all and then include materials. I like to split that up into two different categories. Is it design material, like a finished material or installation materials and then labor? Who’s responsible for that? So once that line item’s complete, I always think about that is your contractual language. If you took it in front of, say there was a dispute and you took it in front of Judge Judy, who would she side with? I want it to make it where there’s absolutely no question about what needed to be executed.
And not only does that create apples to apples, eliminates any sort of ambiguity or assumptions, but then it takes me out of the equation. They know exactly what to do. They don’t have to ask me another question about it and eliminates surprise change orders on the backend as well if it didn’t meet my expectation. So going line by line, making sure that all of those details are covered. And luckily, I know beginners are asking, “I don’t even know how to fill in that information.” We live in probably the most easiest time we’ve ever lived in order to learn and gain information. Use those tools, use ChatGPT and AI to help you with this, Google and ChatGPT can even give you a framework, a checklist to go through. And when you’re walking a property, it’ll give you like, look at the fascia. Well, what’s the fascia?
Google what the fascia is. These projects are your opportunity to learn. And I suggest creating a scope of work to the best of your ability up to about 85% and then start walking with contractors and just ask them to help you fill in the rest of the 15%, get clarity on them, ask them what they suggest. Contractors love to talk about what they know, right? So leverage that. Also, you can hire a home inspector. They don’t know everything about construction, but they’ll at least tell you what to look for, what buyers are going to care about on the backend as well. We used to pay a few hundred bucks to walk the property with us and don’t need a report or anything. Just point out what is going to be a defect or what I should look at. And that helps you put all of the pieces together and then you can start getting pricing.

Toni:
Serena, when it comes to contractors, and you mentioned kind of relying on them a lot during this process, should a rookie investor, if they’ve never done a rehab before, should a rookie investor be working with a general contractor first or would it make more sense for them to go directly to the subcontractors, like the actual trades people, the plumbers, the electrician, the folks doing painting and drywall and the millwork, or would it make more sense to work directly with a general contractor as a rookie?

Serena:
Yeah. I would say just to give some background on how where I ended up was I would pretty much only hire a general contractor for about 30 to 40% of the scope of work and the rest that I would sub out. One of the reasons why we need to do that was our market just to keep costs lower, but there is some learning curve because you have to understand the coordination between all of the subs and the GCs who are hiring all of those subs, they fill in all of those gaps for the trades where the electrician stops and the plumber starts, for example, for certain things. So to answer your question, in the beginning, absolutely go the GC route. And when you are analyzing, you might need to add a percent, 10, 15% on top to when you’re analyzing deals, just because GCs are going to be a bit more expensive, but they’re going to help you do a lot of that coordination and you can also learn how to manage a job site from them in the process.
I would say though, vendors that you should always go directly to from day one, find a cabinet and countertop vendor and stay in control of that process the entire time.

Toni:
So that actually leads into my next question, Serena, is you said you’ll use the GC today for like roughly 30% of your overall scope of work. How should a Ricky’s, as they start to maybe mature, how should they make the determination of when to use the GC versus when to just sub it out? You mentioned cabinets is one example, but just what is your decision making process to say, keep this with the general contractor or sub this out to someone else?

Serena:
I would say if … Okay, maybe it helps to explain what that 30% that I’ll always use a GC for is. So that’s typically more on the finish stage of the house where there’s a lot of overlapping processes when it comes to millwork and doors install and paint and flooring, and where that would be really technical for me to figure out how to schedule all of those contractors. And again, I am not a contractor and I don’t want to become a contractor because I’m a real estate investor. And so if it’s too technical and overlapping and I don’t understand the process to it, then I will rely on hiring out a GC to coordinate all of that. Now, in the beginning of the project, when I started getting more comfortable of hiring electricians directly and then just communicating with the general contractor if they’re already on a job, “Hey, I’m going to be coordinating the electrician, can you let me know when you are ready for electrical rough-in?
Can you let me know when you’re ready for electrical trim out? ” And typically I only needed to schedule them twice and I felt confident enough in, to my dog’s crane, confident enough in their scope and coordinating them that I could take that away because GCs, they will add about a margin on top, 10, 15, 30% of that subcontractor bid just to coordinate them. And so you’ll want to eliminate certain times, but it still needed to work within my system. So if it was simple, the coordination was simple, it was easy and it didn’t take up too much of my time and I understood their scope, then that’s when I would start taking it over.

Ashley:
Now you said you might mark it up for a GC because they pay a percentage or cost a percentage of whatever the overall budget is usually, but what about, do you add any buffers or contingencies when you are estimating the cost of this rehab?

Serena:
Yeah, especially in today’s market, please add in a rehab contingency. Right now, labor pricing and material pricing are really variable. And what was nice from 2015, well, 2017 to 2021 is in most markets, they were really hot. So we’re getting multiple offers, typically getting offers that are over list price. And so if we ended up going over budget and in part during the rehab, we’d be saved on that backend. But in most markets right now, It’s not as hot. You might get list price, you might get below list price, and you might be offering buyers a seller concession as well. And so you need to have your rehab budget as accurate as possible. And especially if you’re newer, that’s going to be hard for you to do. And so I would definitely add a contingency on top of that. And you know what? If the project doesn’t pencil with those numbers, then it doesn’t pencil and move on because you need to protect yourself with it.

Toni:
And you mentioned margin and your initial budget, but once the rehab starts, I think this is where a lot of rookies kind of get punched in the face where they’re like, “I’m going to budget $2,700 for this full gut rehab.” And it ends up costing 10X that amount or 5X that amount, whatever it is. But how do you make sure that once the rehab starts, assuming that you had a good budget to begin with, how do you track your actual cost against your budget to make sure you’re not having any cost overruns?

Serena:
Yeah. So I have my scope of work organized in a way where when I get a bill, I can see what those costs and actually excluding that scope of work and what that bill actually ties to. So I’m comparing apples to apples where, okay, here’s my scope for all of the electrical that I need to do. I need to do a full rewire or I just need to change out these outlets or just move a few lets. That’s all in one place within my scope of work. So when I get the bill from the electrician, I can cross reference those are. And over time I developed a cost tracking sheet that puts the costs where what I’ve projected, what I’ve have bid and what I’ve actually paid out, and it all balances like a checkbook and then lets me know at any given time during the project where I am projected to hit my budget.
For a long time, we didn’t have that. A long time, it was random bills coming in. They don’t match the scope. We couldn’t track anything until it was near almost the end of the project or after the projects ended and were paid everything out. At that point, we don’t have any control to pivot or bring back any costs. So my goal is that at any given time during a project, I know what my projected numbers are going to be. So if I need to choose a tile that’s a little bit less expensive on the backend or maybe choose a task that I know I can DIY, like Nate once had to do a short fence or something just to save up some money, put on his work belt and build his fence so we can stay within budget. You can actually make that decision at that time.
So yeah.

Toni:
So it sounds like the biggest mistake is that a lot of times folks are a little too retroactive in comparing their actual expenses against their budget, but doing it in real time gives you the ability to kind of stop, pause, reassess, and make changes as needed. Now, I want to get into, Serena, the actual tools, the software that you’re using to operate all of these systems and keep your flips profitable. And we’ll cover that right after a short break to your word from today’s show sponsors. All right, welcome back. We were here with Serena and she just talked through the systems that every rehabber and flipper should have, how to stay on budget. But I want to talk a little bit more about some of the tools and the software. So when you think about running your rehab projects, you’re running your flips as a business, what specific software are you using?
You already mentioned Google Sheets, but what else are you using on a daily basis to stay organized?

Serena:
Yeah. So I used to use a bunch of different platforms and that worked for a while, but my dream was to have it more in an all- in-one place. So you were going to need a file storage. So whether Dropbox or Google Drive, we use Dropbox because Google Drive didn’t even exist back in the day when we started. And so file system, then you need a Excel-based system. So Smartsheets, Google Sheets, or Excel. I don’t suggest Excel because you really want it to be able to update in real time, especially when you start adding different team members. And then you have to your task management software. So we use Asana. I know Ashley used Monday.com. That’s going to be your task management. Use Podio for acquisitions. I know there’s so many options out there now for that, for acquisition pipeline and CRM. But honestly, I rebuilt my Smartsheets and my Asana to be all in one into Google Sheets now.
So that’s what I operate within. So that way I just have one master Google Sheet for each project that has like 10 or 11 tabs. And that’s my centralized information, my project hub that I use.

Ashley:
So now that you have a place to organize documents like your scope of work, invoice permits, photos and contracts, that’s all in Dropbox. How are you kind of now connecting these systems? So connecting your Google Sheets to your Google Drive, to your Dropbox, to your task management software. Can you maybe give us an example of maybe one little process and how it all implements and integrates together?

Serena:
Yeah, absolutely. So now actually instead of Dropbox, I’m going to use Google Drive because now I have the Google Sheets, so it’s all within my Google, but then I can easily link them to each other. And oh, another system that I wanted to mention is that I use Chief Home Design Pro for floor plans. It’s pretty easy to use and it’s super capable. You could build a whole house with it, but I use it for, probably use 2% of what it’s capable of to do the floor plans. And so yeah, to tie in them all together, of course, and within your Google Drive, each folder, you’re going to have links to all of your Google sheets as well. But yeah, I keep all of my files, all of the contractor estimates within the drive, once I’m done with the floor plans, I’m exporting them into a PDF all on the drive.
I very clearly highlight which ones are finals, which ones might be old drafts. I’d archive those. So that way your filing system is really organized that imagine if anyone went in and tried to find something that didn’t fully know or wasn’t onboarded, they’d be able to find it. And building it all in one hub as well, help just organize that information in one place. And so I don’t even really need to link it anywhere. It’s all together.

Toni:
Serena, I think obviously we’ve covered a lot here on what Ricky should be focusing on. And like I mentioned at the top of the show, I’ve walked your project with you. I’ve seen how dialed in everything is. And I appreciate you sharing early on how that was an iterative process for you. Didn’t start off that way, but with each subsequent deal, it got a little bit better. But what piece of advice do you have for the Ricky listener who has no idea where to start when it comes to even potentially estimating the rehab and what that process looks like?

Serena:
Non-negotiables, what you need in order to execute a project is a scope of work and you need your design and finish information. I like to keep them separate because again, I’m thinking about standardization. So my scope of work that I’m going to be … You build from day one is your launchpad for a scope of work template that you should be using for each project and you just delete what you don’t need customized to that specific project or add in and you keep adding. And so your scope of work, the design elements are typically going to be different per each project. That’s why I like to keep them separate and then your task management. And that’s really a progressive list of everything that you need to do and putting dates next to it. So those are really the three aim pillars that you need for each project.
And so for the scope of work, if you don’t know even where to start, what I suggest is hiring a home inspector to walk with you on the property and identify actual defects to the house, stuff that would come up with a buyer’s inspection after you’re done, and start making note of all of that. I’d look at the comps and look at your subject house now and say, “What needs to change between my subject house to these comps that I’m trying to get the ARV? What’s the difference? I need to describe that. ” Then you’re going to put it into by trade. And like I said, we live in the best time to have resources for information. So I definitely highly suggest utilizing AI to help you through this, help you organize it, and then put it into an Excel sheet, and then even give it the questions, like give it a prompt like, “For this line item, can you help me describe what the outcome should be, what the level of finish could be, and then decide should I have materials included or is this labor only?” And then once that’s built for that one project, duplicate that for the next and then work off of that so you’re not making everything from scratch.
And same thing for the task management schedule. Use ChatGPT. “Hey, for a fix and flip, can you give me a schedule outline for everything with a flip?” And that will give you a place to start, at least to reference. And then you can customize what works better, best for your process.

Ashley:
Well, Serena, thank you so much. This is one of the biggest questions we get is how to run a rehab project, how to management, how to build out your scope of work. So thank you so much for giving us this little mini masterclass on getting organized and being able to be efficient and successful at running a rehab at your project, whether it’s a BER or you’re doing a flip. So where can people reach out to you and find out more information?

Serena:
Yeah, absolutely. So I am going to be doing a lot of education over on Instagram. You can follow me at systemstack.io. If you want to learn about construction management, rehab execution, how to systemize working with contractors, that’s going to be the place to go to find me. My personal is also @serenanorris_ And also, if this conversation really resonated with you and you want to go deeper into how to actually run flips like a business, I’m now sharing the exact system that I’ve built over the last 10 years. It’s now available to the public. So go over to @systemstack.io or systemstack.io.com and to learn more.

Ashley:
Well, thank you so much. We really appreciated you taking the time to share your experience with everyone. For everyone listening, make sure you subscribe to Real Estate Rookie on YouTube and that you’re following us on Instagram @biggerpocketsrookie. I’m Ashley, he’s Tony, and we’ll see you guys on the next episode.

Dave:
These are seven ways to lower your expenses and save money on your rental property. Most investors obsess over finding their next property. They renovate, they increase rent, but they’re bleeding thousands of dollars every year on expenses they honestly just don’t need to pay. These are things like closing costs, insurance, materials, higher property taxes, software, and more. And these add up to thousands of dollars per property and almost all of them can be negotiated or reduced. So today we’re breaking down seven ways to cut your expenses and keep more money in your pocket on every single property. Some of these will save you a few hundred dollars, others can save you thousands. And you don’t have to cut corners or downgrade on quality. This is about being smart with your money and being willing to shop around when other investors won’t. What’s up everyone? I’m Dave Meyer, Chief Investment Officer at BiggerPockets.
My co-host, Mr. Henry Washington, is also here with me today. Henry, how you doing?

Henry:
I’m doing great. I’ve got my Onyx, I mean McDonald’s coffee and I’m doing fantastic.

Dave:
Onyx is the bougie coffee shop in Henry’s town and he likes to make fun of me and our producer, Ian, for liking bougie coffee. I’ll drink McDonald’s coffee too. I’ve had tons of it, but given the choice, I would have a nicer coffee if I have the option. Well, actually the discussion of McDonald’s coffee is very on topic for today’s show because we are talking about some of the ways that you can reduce your expenses, save money, and increase your cash on cash return for every property you buy. And no, I’m not one of those people who’s like, “Oh, if millennials just stop drinking coffee out, they could buy more rental properties.” But we did get on the right topic talking about saving money on coffee.

Henry:
Oh, very Dave Ramsey of us.

Dave:
Yes, exactly. But these are actually seven great tips that you can use if you’re buying a new deal. And even actually if you’re already managing a property, these are some ideas that can take a deal that is completely underperforming, isn’t up to standard, and turn it into a good one. And we’re going to go through these seven topics. And as we do, I’m going to actually share with you some really cool new stuff that BiggerPockets can actually do to help you with this. We just announced this week a few brand new Pro Perks for the BiggerPockets Pro membership that can help you save serious, serious money. We’re talking reducing your costs on investment properties, on your loans, on your insurance. It’s the biggest addition we’ve made to the pro membership in years. And we’ll talk about some of those opportunities that every one of you can utilize as we go through these, but let’s just get into this.
Our number one is getting closing cost credits and looking for down payment programs. This is one of the most powerful options available to real estate investors that I think, while all of these are underutilized, I’m going to say this several times today, but I do think this is probably one of the most underutilized programs. People do not negotiate or talk to enough banks. They don’t look for state and local programs, but these things can actually save you thousands of dollars on any new acquisition.

Henry:
This is one thing where people don’t do enough research because there are tons of different programs out there that are designed to help people with home affordability, but you do have to do the research. Some examples, without getting too specific, there are places where you can get forgivable second mortgages. In other words, they will give you a certain amount of money, maybe 10, $15,000 that you can use towards your down payments. It comes as a second mortgage, but if you live in the house for five to 10 years, that loan is forgiven, meaning you just got to use that money for your down payment. You don’t have to take it back. The second mortgage is removed. There are down payment grant programs in some states and grants is money that you don’t have to give back. Grants oftentimes do have pretty strict criteria that you have to meet, but it’s worth looking into to see if it fits your specific situation.
There are closing cost assistance programs, some nonprofits, but there are also company benefits that you may not be aware of. So check with the company that you work for. They may offer some sort of home ownership grants, down payment assistance as part of their benefits package. You know that little handbook they give you when you first start that you kind of breeze over and you just sign up for your benefits. But check with your company that you work for because you never know what kind of benefits they may have or check with your HR department and see if they have any resources that may not be tied to your direct employment that you can utilize as well. They tend to be tied into these kind of information that can help you out.

Dave:
100%. I also recommend talking to your agent, talking to property managers. My first deal, I was exposed to a couple of programs that I took advantage of because it was an owner-occupied deal. I will say that a lot of these state and local programs are for owner-occupied deals. So just keep that in mind. But actually, it’s not just governments. There are businesses that also offer closing cost credits or down payment programs. And that’s actually one of the amazing new features of BiggerPockets Pro. We actually went out and used the massive size of the BiggerPockets community. We have over three and a half million members. We went out and actually were able to negotiate discounts for BiggerPockets Pro members with two of the biggest lenders in the country, LendingOne and Kiawi. So if you’re a rental property investor, you want to do buy and hold, you want to go out and use a DSCR loan, great way to buy properties right now.
You could actually save $1,000 in closing costs per deal with lending one if you’re a BiggerPockets Pro member. So that’s great value in itself. BP Pro costs a fraction of that to get it. So if you’re going to do one deal a year, that is going to save you a ton of money. And you can actually use that credit towards closing costs twice per year. So if you do two deals, you use two DSCR loans, you can actually save $2,000 in closing costs. This is kind of a no-brainer way to save some money on your next loan. We also have a program with Kiawi, who’s a lending partner specializing. They do sort of like fix and flips and bridge loans. They’re going to give you $1,250 off your closing costs. So these are just examples. If you’re a BiggerPockets Pro member, go use these. They’re worth way more than it costs to become a BiggerPockets Pro member, but there are also other examples of these kinds of discounts that you can get if you’re aligned with the right organizations, if you’re in the right communities like being a BiggerPockets Pro.
All right, so that was number one. Henry, what is cost saving technique number

Henry:
Two? Cost-saving technique number two is, again, not something people have probably never heard of, but we are in a market where this is more prevalent and you should be taking advantage of it.
It is seller credits. So this is during the negotiation. You can ask for seller credits. Sometimes those credits can come in the form of dollars. Sometimes those credits come in the form of asking the seller to do some work that you would have to pay for once you own the property. We’re in a market right now where sellers are much more willing to give a little bit more to the buyers because there’s less seller activity in a lot of markets. And so people want to capitalize on the opportunity they have when somebody’s interested in their property. You need to take advantage of this and ask for what you want. So when you think about seller credits, yes, you can ask for things to be fixed, but sometimes what we like to do is you can just ask for a discount on the property. Maybe you go through the inspection process and every inspector is going to find things that are air quotes wrong with the property.
That’s their job. When you look at these inspection reports, sometimes you don’t really care about the things that they say, but don’t just take that and say, “I’m good with it. ” You can ask for seller credit. So maybe you say, “Hey, I have this laundry list of things that my inspector found. How about you give me $5,000 off the purchase price in lieu of repairs?” For investors like me who are rehabbing properties, sometimes that’s a dream come true because I don’t have to go back in and fix anything. I can discount the property. You can get a discounted property and you can choose to fix what you want.

Dave:
Henry, what is the psychological thing about this? Because I think a lot of people out there are probably saying, “Why can’t I just pay less for the property?” But sometimes I just find that sellers want their number. And for some reason, you pay them 300 grand, they’re willing to give you five grand in seller credits, but they wouldn’t take 295 on the deal, even though it’s literally the same. But is that just me or does that happen to you too?

Henry:
No, that happens all the time. There’s a psychological piece to it for sure. You want to hit your number because it makes your ROI look good, but net net at the end of the day, I’m concerned about what am I walking away with. So in my opinion, it truly doesn’t matter to me how it happens. We have given seller credits to the buyer on probably my last five flip sales. We have, in some instances, based on what they’re asking for, have raised the purchase price to then allow them to take a seller credit, which is a net no difference in my opinion. But I got my butt kicked on a recent sale where I gave a ton of seller credits just because I was ready to move on from that property. And so use the market in your favor right now. You should be asking for some sort of seller credits on every single deal because the market is giving you the opportunity to do that and people are much more likely to hear that.
And seasoned investors like myself, we’re expecting it. Totally. So if it’s expected, just ask for it and you can probably get some sort of a discount off of the price or get maybe a big ticket item that you were concerned with covered through that transaction.

Dave:
Or a rate buy down. Yes. The less common seller credit now too. People are buying down points for people’s mortgages is another really good thing, super valuable.
I will say as a seller, I think it’s kind of a funny thing, but from a buyer’s perspective, a lot of time getting a cash credit is really advantageous because you can finance the purchase price. So let’s just say you’re buying a property for 400,000. If you just buy it for 400 grand, no seller credits, any reserves that you need or cash to renovate the property, typically you’re going to have to come out of pocket for that. But maybe you have some leverage and instead of negotiating down to 390, you keep that property contract at 400 grand and get the 10 grand in cash credits. That means, yeah, you’re still paying the same price, but you’re financing usually 80% of that. And the seller is giving you 10 grand that you can then use as either your cash reserves or to finance some of your renovations, and yet you’re going to have to pay that back over time.
But oftentimes that’s a drop in the bucket in terms of your monthly payment and it gives you cash upfront, which is super valuable.

Henry:
Absolutely. All right, Dave, what is the third option for saving money when buying a property?

Dave:
Shop around for insurance.

Henry:
Man, people don’t do this.

Dave:
I’m going to be honest, I used to not do this at all, but in today’s day and age, I think it is probably the fastest rising expense for almost every landlord. Taxes are going up, but insurance premiums, I don’t know the number off the top of my head, but they’re up like 40 plus percent since 2020. It’s crazy.

Henry:
Insurance premiums are going up. And in 2025, we did an analysis of our expenses on our entire portfolio and insurance was among the top expense that we have in our entire business. So we actually went shopping at a portfolio level for a lot of properties to make sure we were getting the best rate. But this is something I’ve always done because it is such a high expense, but it’s also an important expense. You don’t think about it until you need it, and then you panic when you need it and hope you’ve got the right coverage.
So not only do you need to be shopping for the best rate, but you need to be shopping for the best rate for the appropriate amount of coverage for your portfolio. If you have a big portfolio, use your size to your advantage, try to negotiate discounts. Also, don’t just shop directly with certain insurance providers. Also, throw in a couple of insurance brokerages into your search because brokerages go out and search multiple insurance providers. Some you may not even know exist or think about. And that’s going to give you a total picture of what your insurance options are so you can select the best option.

Dave:
Totally. I think shopping at a portfolio level is excellent advice. I did that recently and it does make a significant difference in terms of the price. And it’s just headache. I love sending one check per year to one provider and it’s just like you talk to someone about renewals. It’s not that big of a deal. I love that. But I think you’re right. I’ve learned painfully at times to make sure that you really have landlord-specific insurance. I think business interruption insurance is probably the most underrated part of getting that. If your house becomes unlivable, if you have business interruption insurance, you get paid, you get your rent.That’s really valuable and it’s usually a couple hundred bucks a year to get that. But for me, I find that kind of stuff that is designed for landlords to be super important when shopping for insurance.

Henry:
One of the things I shop for to protect yourself, I like what you said about business interruption insurance. That’s one I actually wrote down because I don’t have that. But I shop for umbrella policies. So I have an umbrella policy that covers me above and beyond what my normal policy would cover. You’ll start to notice as you shop for insurance that you’re only going to have so much coverage in terms of a dollar amount. And so if you have a bigger problem than your coverage has, that comes out of your pocket unless you have something like an umbrella policy, which kicks in after you exceed what’s in your insurance coverage for that property.

Dave:
Dude, and another thing that people should be looking for is look at the replacement value that you’re getting quoted for your properties because I have been noticing some of them are insane, like so low. They’re low balling you to the point where if you had to rebuild your property, you would not be able to do it without coming out of pocket for, in the case of the one I’m thinking of, hundreds of thousands of dollars. And so you need to be super careful about that stuff because construction costs have really changed a lot. And so you need to make sure that you’re actually going to be able to get the kind of claim that you need. Shopping for insurance, great way to save money. And if you want to, and you are a BiggerPockets Pro, you can actually save up to $250 per year from Steadily.
This is another deal that we just negotiated with Steadily. If you don’t know them, they specialize in landlord insurance. I actually use them for a lot of my rental properties. They’re offering $5 off landlord insurance premiums if you are a Baker Pockets Pro. So you could get 5% off your insurance premium. That could be hundreds of dollars depending on what you’re insuring. I need to just say legally that these discounts may vary. They’re not available in all states or cover all risk. So make sure to read all the fine print, but it is a great way to save money on a type of insurance policy that is designed for our community. All right. So those are our first three ways to save money right now. Closing costs, credits, down payment programs, seller credits, and then shopping around for insurance. We have to take a quick break, but when we get back, we have four more ways that pretty much everyone listening to this can use to save money right now.
We’ll be right back.

Henry:
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And you can lose thousands of dollars that you just end up paying to a general contractor when if you’re only buying one property, you can source a lot of your materials on your own. The amount of amazing things I’ve found in places like Amazon for finishes, Facebook Marketplace for furniture, if you’re doing a furnished rental, there are huge discounts. And one of my secret sauces is when you’re shopping for things like flooring, like tile, like carpet, a lot of these big box stores are just buying these things from warehouses. You can also go to these warehouses and get the same products for a little bit cheaper. And trust me, if you’re saving 50 cents a square foot on flooring for an entire house, that’s thousands of dollars on renovations and that can go directly back in your pocket.

Dave:
Where do you see the biggest savings? What kind of finishes? What are the most important things to shop around on? The

Henry:
Biggest savings I get are on luxury vinyl plank flooring and on carpet. I get carpet at a great discount.

Dave:
How much? So

Henry:
When I carpet a house, I’m typically only carpeting bedrooms and I’m only doing that on flips. Guess what it costs me to carpet a three bedroom house total. How

Dave:
Big is the house?

Henry:
Call it a 1,800 square foot house, but you’re doing three bedrooms.

Dave:
Just the bedroom’s like 400 square feet. I’m going to guess three bucks a foot. Normally I would guess like four or four and a half, but since you’re bragging about it, I’m going to say three bucks a foot. So 1,200

Henry:
Bucks? Yeah, I’m paying less than a thousand dollars on that. Damn. If you look at it for every house that I do, that’s saving me three to 500 bucks depending on the square footage. It doesn’t sound like a lot, but when you’re doing multiple houses, that adds up. And even if it’s just one house, three to 500 bucks, why not?

Dave:
Dude, totally. And it’s like each of these things we’re talking about today aren’t going to be amazing things. But if you get 2,000 bucks off closing costs, if you get $5,000 in seller credits, you get 250 bucks off your insurance, 500 on your carpet. You’re talking about eight, $10,000 on a single deal here just from doing a little bit of legwork. It’s not even that much stuff. And we’re just talking about saving maybe five figures on some of these deals.

Henry:
And when I walk properties that other investors have rehabbed, I often see everybody has the same light fixtures and finishes from like Lowe’s or Home Depot. And so I started pricing those against places like Amazon or other big box warehouses. And I’m saving anywhere between 5% and 20% depending on what kind of light fixtures. And then my property looks different than everybody else’s that’s out there because most people are just walking into Lowe’s and Home Depot.

Dave:
You just see the same backsplash, the same pendant lights. It’s the same countertops every time. And they’re usually pretty nice. There’s a reason people choose them, but I do think it goes a really long way, even if they’re slightly different just to stand out. And if you could do that and save money, that’s just like a double win.

Henry:
Yeah. That’s another big savings point too, as you talked about countertops. Man, getting countertops directly from a countertop supplier will save you a ton of money than going to a third party. A ton.

Dave:
I will also say this isn’t always the easiest thing to do, but if you’re plugged in with other investors, you can also trade. There are sometimes, I know people are getting rid of cabinets that you need to do.

Henry:
That’s fair.

Dave:
I once traded a guy, a working hot tub. I got the working hot tub for carpet that I was going to throw in a dumpster. You never know what people want. This guy wanted to get rid of his hot tub because some insurance thing, and I just traded it to him and it was great. And I’ve done that with cabinets as well. I’ve been getting rid of cabinets and gotten fixtures in exchange. People might want, if you’re cleaning out a house and you have working appliances, trade it to someone or sell it to someone and reuse that money to go buy something else. I see a lot of people just trashing out things that they can actually resell.

Henry:
That’s a great point. You just jogged my memory. I bought cabinets at a secondhand store once because somebody was rehabbing their house. They had perfectly good solid wood cabinets. They got rid of them to a secondhand store. I picked them up and installed them and they looked fantastic. And they were better quality than me going to get something from Lowe’s that’s like half particle board now.

Dave:
100%. I’m redoing my kitchen and my primary. I’m going to go buy nice appliances, right? But I have perfectly good appliances. They’re just white and I want stainless steel ones and I can sell them or I can trade them to any … These would be great in any rental property. So figure out a way or trade it to … Your contractors might buy these kinds of things. They might be interested. I’ve sold tons of stuff to contractors in the past. These are great ways to just make money off of the stuff that literally would go in the trash.

Henry:
Almost every great hookup I’ve found in parts and materials, almost all of them have come from contractors telling me about these locations or about these people.

Dave:
Contractors with flooring, right? Oftentimes they’ll know a project where they bought too much and maybe you only need 500 square feet of flooring and you could just go buy it from some person who doesn’t even want it. These are like absolute ways to do this. So these are great, great ways. I just think you got to get creative. Most people do this kind of comparison shopping in their own life. If you were furnishing your own home, you’d probably be doing these kinds of things. Do the same thing with your rental property. Do the same thing with your flip. If you spend a little bit of time on it, easy, hundreds, if not thousands of dollars a deal.

Henry:
Couldn’t agree more. Do a little bit of research, save yourself potentially a lot of money. And speaking of saving a lot of money, what do you have for number five, Dave?

Dave:
Number five is similar. We’re staying in the same theme of shopping around here, but this is getting multiple bids, not just when you’re doing a renovation, but on every single time you talk to a contractor. I don’t know about you, but I noticed the variance, the difference between the high-end quotes and low-end quotes that I get right now are absolutely insane. I am scraping asbestos. I got one quote, 4,500 bucks. Guess what the next quote was?

Henry:
What? Six grand?

Dave:
$23,000. Yeah. No joke. They’re not even fucking around. These are real people putting things on paper. $23,000 to scrape 809 square feet. Are you kidding me? But that’s an extreme example, honestly. But I got two HVAC quotes the other day. One was 33,000, the other was 17,000. It’s literally double. People are just throwing stuff out there. So I don’t care if you’ve worked with someone for years. Get multiple quotes on every single project.

Henry:
This is just a smart thing to do. One of the things I’ve learned as a seasoned investor is that contractors don’t always bid a job as if they want to win the job.

Speaker 3:
Oh, so true.

Henry:
Sometimes they bid the job because they don’t want it, and if they’re going to do it, they want to get paid a lot of money for it.

Dave:
A ridiculous price. Yeah.

Henry:
And that’s because some contractors are just like other business owners. They have different superpowers. So you may have a contractor that has guys that do the kind of work that you need done. They do it fast, they do it efficiently, and they get the materials cheap. They may give you a very good bid versus the very next contractor does not have the same connections or the same people to do that job as effectively. And you’re going to get a much higher price because it’s going to be much more of a pain for that contractor to get the job done. So they’re going to price it astronomically. It doesn’t mean that the contractor’s jerk. It just means they’re built different than the other contractors. And you’ll never know those things unless you get multiple bids.

Dave:
Yeah. One of the things I’ve learned from our mutual friend, James Daynard, is that a lot of this also just depends on how busy they are. Someone might have a bunch of other projects, and so to take the time away from their other projects, they might need a charge. It’s fair, three grand more because they’re like, “I have other stuff going on. ” Meanwhile, you catch a company who’s between jobs, they might be willing to lower their cost to fill a spot in their schedule. That doesn’t mean they’re bad people. It’s just this is supply and demand. Their supply and demand waivers over time, and you need to just be constantly in tune with what’s going on. This can save you so … I mean, this might be the biggest one of all of the ones that we’ve been talking about. It can just save you tens of thousands of dollars on a project.

Henry:
And I know a lot of people just generically say you never use the lowest bid. I would say you need to be careful when using the lowest bid, but you got to compare that to your other bids because when you just … The example that you used, why would you pay an extra $15,000 just because it wasn’t your lowest bid? Get multiple bids so you can have a good apples to apples comparison because they’re not all bidding with the same things in mind. Each business is different. And also, a lot of contractors become contractors because they were great at turning wrenches and that got them a lot of business. It doesn’t necessarily mean they’re a great business person. So they’re not thinking all of the times like a business person who’s trying to write up a bid in order to win the job. They’re just thinking, “How am I going to survive this week and what’s my most important thing to do?
” And they’re focused on that more so than making sure you get the best bid. So you got to get multiple bids to protect yourself.

Dave:
100%. I know it’s annoying. It is annoying. Usually you have to drive back and forth to a property, show people around depending on the project, get three bids per project. That’s what I would say. Three bids per trade per project minimum. And if you don’t like them, keep going. Just keep going.

Henry:
One trick of the trade I learned to help you with the time management on this is to write up high level scopes of work. They don’t have to be super detailed. Just line item, maybe room by room at a very high level of what the work is that needs to be done. And if you send that out with your request for the bid, it helps the contractor understand what’s the size of the price before they go out there. That way, if they’re too busy and they can’t get to it, or if they’re like, “Hey, I don’t know that this job is worth my time,” they can give you that information upfront and save you the headache of having to go out there and wait for bids to turn around. So the scope of work hack has saved me a ton of time and honestly saved the contractors a ton of time as well.

Dave:
All right. So that’s our number five tip for saving money in today’s market, but we have two more for you when we get back from this quick break. Welcome back to the BiggerPockets Podcast. Henry and I are here going through seven top ways to save money in 2026. Henry, what’s number six?

Henry:
Number six is cost effective systems. Look, if you’re going to operate property, you’re going to need systems. There are tons of different software systems that do tons of different things. They all have different pricing models. And so you need to pay attention to what you’re paying. It’s like those commercials where somebody asks you how many streaming services are you paying for? And they’re like three and it’s like 33. I

Dave:
Hate when people ask me that question because I know that I’m like, my wife and I are both paying for the same ones like seven times.

Henry:
Yes. I’m scared to look at how many streaming services I pay for, but we often do look at our bank account to determine what different software systems that we’re paying for. And then we try to either consolidate those into one system or determine if we truly still need them. I think a lot of investors waste a lot of money paying for subscriptions for things they don’t use anymore. That service had a need at one point. You stopped using that product or service and didn’t even realize you’re still paying for it. But one thing I’ve found most recently is now that AI’s become more prevalent and software tools have become more and more advanced. There are tools now that are more effectively priced than two to three years ago when I started paying for systems. And in 2025, there was one tool in specifically that we purchased and it literally replaced about five different subscription services and saved me a ton of money.
And it was so nice to be able to email and cancel those subscriptions. So I know this one seems a little pain in the butt/convoluted, but I promise you, you are throwing money away on systems that you’re not using anymore.

Dave:
I think there are just ways to save money now. Software’s definitely one of them because if you’re a self-managing landlord, if you’re real estate investor, you’re going to need software platforms. There’s a ton of different options out there and you’re going to need to find good ones. This is something that we have always been helping people with at BiggerPockets. If you’re a pro member, we’ve been negotiating software discounts for people for a long time. You can get free access to rent ready, $350 value, you can get free access to Baseline, that’s $240, but whatever it is, shop around, find good systems that you feel like are sustainable for you, where you’re not spending a ton of money and eating up your cashflow because frankly, you don’t need to, so you shouldn’t be spending money on that.

Henry:
One of the things that I do to help with this is I have a spreadsheet that I literally add every product or service that I use onto this spreadsheet, and then that way when I review it, Once a year or once every six months, I can see, oh gosh, I haven’t used that in ages and I can go and cancel it. So every time I add a new one, it goes onto this spreadsheet. It’s the way I track. I mean, honestly, it’s a bad idea, but it is also the way I track the logins and passwords for all these things. Don’t do that. But doing that keeps the visibility. You’re going to get hacked tomorrow after this podcast comes out. I know. I know. I mean, that doesn’t exist anybody. But no, in all seriousness, having the spreadsheet, which I track where all my software tools are, make sure that I don’t have an excuse not to be paying for things that we’re not using anymore.

Dave:
It took me like nine years before I started doing this, but it is a great

Henry:
Option.

Dave:
All right, Henry, what is our last way of saving money? Number seven here, what do you got?

Henry:
This is actually something that I learned from a business partner of mine. It’s just not something I thought about before or I didn’t know that you could do. And it’s just something I learned from hanging out with other investors. But it is contesting your property taxes.

Dave:
Yep. I love doing this. It’s a subjective thing. It’s just they make it up. It’s so subjective. They make it up.

Henry:
When you buy a property, especially if you’re an investor and you’re going to improve that property, at some point the city comes around and goes, “Hey, that property is cooler than it used to be, which means you should pay us more in taxes.”

Dave:
Give us more money.

Henry:
And then all of a sudden you get a new assessment and your tax bill’s gone up by a few hundred bucks, a thousand bucks, sometimes a couple thousand bucks depending on where you live. This can drastically affect your cashflow, but you can just call the city and say, “I don’t like that.

Dave:
” Every city has a process for doing this. It’s not just like you call Stan down at the market online. I just do it online.

Henry:
You can do it online in some places. Here, most of the time you have to make a phone call, but every time I’ve done that, almost every time, I think there’s been one time we’ve called and said, “Hey, I think that’s a little too high,” that they were like, “Nah, it’s good.” Every other time, they’re like, “Yeah, we’ll take a look at it. ” And then they come down.

Dave:
I am batting 1,000. 1,000 in the city of Denver, every time I’ve contested my property taxes and I tell them what I think it’s worth, they split the difference. 100% of the time, down to the dollar, they say 700, I say 500 at 600. That’s exactly what happens every time. Why not do that? It takes four minutes. It’s amazing.

Henry:
Just do it. Worst case scenario, they say no. Best case scenario, you save yourself a few hundred to a thousand bucks or so. It’s unbelievable. Do it. It’s just people at the city office, they’re making their best guess. And if you call them with actual data, a lot of the times they’re like, “Yeah, no, that’s good. I’m fine with that.

Dave:
” Yeah. I think this is true for all these things. All of these things, you don’t know if they’re going to save you a ton of money for each deal. But if you go through these seven steps for each deal that you have or each deal that you’re going to acquire, I promise you, you’re saving a thousand bucks. You’re saving 2,000 bucks, you’re saving 3,000 bucks on every single deal. That adds up so much. That’s more money for your next down payment. That’s more money in your reserves. That’s more money you can put into a renovation. That’s more money you can go and go out and have a nice dinner. Whatever you want. These are amazing ways to save money and boost your cashflow and they’re things that literally everyone can do for every single project.

Henry:
Yes, exactly. And if you go back in this episode and you listen to number three through number seven, all of those are things that you can do with existing properties you own right now. So you don’t have to be buying a new one to start taking advantage of some of these benefits.

Dave:
All right. Well, that’s what we got for you all today. If you want to take advantage of all of the amazing discounts that you get as a BiggerPockets Pro member, go to biggerpockets.com/pro. Check out all the money saving tools that we have there on top of the calculators, the rent estimators, all the other stuff that you get for being a part of the BiggerPockets Pro community. Thank you all so much for listening to this episode of The BiggerPockets Podcast, Henry. Oh, he’s dancing. He’s looking good. All right, he’s ready to get out of here. I hope you all enjoy this episode as much as we did making it. We’ll see you all next time.

Dave:
If you’re watching inventory climb right now, it can look like supply is surging. But a big part of what is hitting the market is not truly new supply. It is homes that tried to sell last year, got pulled, and are coming back as re-listings. And this is a really new phenomenon in inventory dynamics that really changes how you should be thinking about market dynamics. I’m Dave Meyer, and today I’m joined by Mike Simonsen to break down this re-listing trend, why it’s happening, how to separate re-listings from new listings, and what it tells us about seller behavior, buyer demand, and price pressures as we head into the spring market. We’re also gonna dig into why inventory can rise without sending prices lower, how pending sales can improve at the same time, and what investors should do with this information in the next few months. This is On The Market.
Let’s get into it. Mike, welcome back to On the Market. Thanks for joining us again.

Mike:
Dave, it’s always great to be here.

Dave:
Well, we are excited to have you here. I was thinking about writing an episode to talk about de- listings and re-listings, and, you know, I figured why not just have the inventory master himself come join us. So we’re excited to, to hear from you. So it seems like this, this trend that we’re seeing with a lot of interesting movement in inventory kind of started in the fall with de- listings, right? Can you maybe just give us some background on what’s going on there?

Mike:
Yeah. So the housing market stayed slow for four years now. And if you’re a seller trying to get an offer for your house and, and if you don’t get the, the price you want, you can cut the price or you can pull the house off the market and try again, wait for better conditions. Both of those things were happening last year. Both of those things were happening at a, at an elevated pace. So the most of any, you know, recent years. And so that means like you cut your price and maybe you get the offer and then you move it, but if you don’t have to sell, the option is like to withdraw or de- list or let it expire. And, and there’s any number of ways that that happens. You know, so we watch that. And one way to, to track that is not just in a total number of those, but also as a percentage of the new listings.
So like, what percent of the people who are listing now ultimately withdraw-

Dave:
Oh, interesting. …

Mike:
Is an interesting way to think about it, right? Yeah. So it’s, if there’s more homes on the market, there’s gonna be more withdrawals, there’s gonna be more sales and what, you know, like all the numbers will be bigger. So doing it as a percentage of new listings is an interesting way to look at it.

Dave:
So what did you find? I mean, I, I’m, I’m curious because yeah, like of course if more things are being listed for sale, there’s probably more de- listings, but proportionally, what was going on?

Mike:
So proportionally, you get a few things. You get, uh, you get a kind of a canoe shape in the year, uh, where de- listings climb over the holidays and then fall again in the spring, you get fresh new inventory and you get new buyers. And so you’re not withdrawing over the spring, but then if the, the year progresses and you don’t have a buyer, now you start thinking about it. And so it’s very common to have more withdrawals over the holidays. As a percentage of new listings though, last year might have been 35 or 40% in the third quarter. So 30, 35% of those new listings are ultimately getting frustrated. And that compares to like 25% the year before- Okay. … which, which compares to maybe 20%, you know, each- Yeah. … year or longer in a slow market, you see more people who are getting frustrated.
Over the holidays, that might normally drop to 50% or s- you know, last year, 24 was 60%, and in December of 25, we counted 80%- Oh, whoa. … uh, in that. Oh my God. Really dramatic. Like a elevated number of de- listings. So that’s as a percentage of the new listings. January dipped back down to 44%, so dips down, uh, and will fall February or fall lower again in March, April will be the lowest months, and then, and then you get a little, uh, elevation in the spring. So that’s the de- listing. Okay. So de- listing is definitely elevated, hasn’t resumed back down to the very normal, you know, the more normal levels, like it’s still elevated. All of those pieces are in place now. Okay. Uh, it really kicked in last year.

Dave:
De-listing’s probably not a sign of a healthy market, right? Like it reflects some imbalance between buyer demand and, and supply out there, right, or pricing, uh, mismatches. But the, the thing I kept thinking about, it was like, it also, maybe it reflects health in home sellers, that the fact that they are able to pull their property off the market rather than continuing to slash prices, or at least that’s what I was thinking, like there’s not e- this is better than forced selling, which is kind of the other option, right?

Mike:
Uh, I think that’s exactly what it reflects. In other words, almost everybody in the country s- still has the best mortgage terms-

Dave:
Yes.

Mike:
… ever in the history of mankind. And so for those folks, if they don’t get the offer, one option is to sell never. It is super cheap to hold the house.
Yep. Um, each day, that be- there’s fewer and fewer of those folks. Some of those people, you know, those deals transition. There are more people who have expensive mortgages, and so that option fades a little bit every day. Uh, but there’s still a lot of them. Mm-hmm. And at the same time, there are folks, even if you don’t have a cheap mortgage, like let’s say you bought in 2023, you still have your job, unemployment’s low, and so you may want to move, but find yourself with really no price appreciation over the past few years, or maybe negative if you bought at the peak in Austin or something like that. Yeah. Mm-hmm. And now it’s, you know, it’s painful to take that loss. It is. So you say, “Well, I’m gonna try to do it at a, at a gain, but I can’t, and so I’m gonna wait.” So it also is a reflection of the fact that basically everybody’s still employed.
Yeah. You know, unemployment is still low. So there isn’t force selling on that side really either, yet in the cycle. Maybe that comes, but it hasn’t come yet.

Dave:
Right. Of course this can change. Like if unemployment shoots up, something will change, right? It, it will, but there’s no evidence of that just yet. I think, you know, when you hear these ideas that there’s gonna be massive foreselling or foreclosure crisis, that is speculation. I’m never gonna say it could never happen, but it is speculation at this point, not, not really evidence. We gotta take a quick break, everyone, but we’ll be right back with Mike Simonsen. Welcome back to On the Market. Let’s jump back in with Mike Simonsen. So, Mike, you alluded to sort of the flip side of this though. I remember reading something you, you wrote talking about de- listings and saying, like, maybe what happens in the spring? Are they all gonna be relisted or are these permanently coming back? So maybe update us on the re-listing trend now.

Mike:
Yeah. So I think, you know, it is very easy to look at the, the, the de- listings of last year purely as supply for this year, like supply that wants to happen. These are home sellers that want to sell. Therefore, if they come back on the market, there could be a flood of inventory, uh, that, uh, of these folks who clearly tried to sell but couldn’t sell. And so that’s the intuitive take, right? Wow, there’s a lot of de- listings. If they come back, then there’s a lot of selling. There’s a lot of listings and, and there’d be a lot of active inventory, and maybe that has therefore, uh, negative price implications, right? More supply. My observation in, in, in the Compass data, we dove in and looked and, uh, did some, some evaluation of, like, who are the D-listers?

Dave:
Mm-hmm.

Mike:
And it turns out that most of them are- Flippers? Owner-occupiers.

Dave:
Oh, really? Okay. I thought it was gonna be all flippers. That’s super

Mike:
Interesting. So most of them are not investors or flippers.

Dave:
Interesting.

Mike:
Okay. Most of them are owner-occupiers, and that means that these are actually delayed demand- mm-hmm. … as well as delayed supply. Yeah. So these are folks who wanna move up or wanna move down, but they’ve delayed it because they, the conditions aren’t right. So if conditions improve or as conditions improve, you could look at these and see that most of them are owner-occupiers, most of them are two transactions that wanna happen. And so there is shadow demand there as well. Now there’s, there are some investor flippers. There are some folks like, you know, in some of the second home markets of Florida, where maybe these are not two transactions. These are people like, “I just wanna unload this thing.” And to that extent, those would be, those would add to supply. But-

Dave:
Yeah.

Mike:
… in our analysis, most of the folks we see, because de- listing, it’s not just happening in Florida, it’s everywhere.

Dave:
Yeah. Okay. That was kind of my next question is, like, it’s just ubiquitous.

Mike:
It is, you know, is by our measurement and when I get to talk to agents across the country, they’re all, you know, “Well, I had a seller, he tried, and, you know, it’s probably overpriced, but the, the, you know, he’s gonna wait and try again.” That is super common.

Dave:
Yeah. I wonder what happens with transaction volume in the next couple of months because I, I think at some point people just have to realize, like, rates are probably not going down that much this year and, like, maybe, you know, we’ll get, you know, sort of a proportionate rise in supply and demand at the same time and hopefully kick us back up from that dismal, uh, home sales report that we had at 3.9 million. I’m curious if you think that’s likely this year.

Mike:
Well, uh, so in, in our data, in the weekly data, we don’t see nearly as dip, uh, as NAR reported. I am suspect of the seasonal adjustment they did. I, I can’t find that. I can’t find a massive dip in the data anywhere.

Dave:
Okay.

Mike:
So I didn’t see it. Maybe, maybe timing of the snowstorm and there, maybe there was some end of month closings- Yeah. … that didn’t happen in the NAR data. I don’t, I don’t know where it came in, but man, I couldn’t find it in, in any of the, the real time. Uh, you know, uh, December, the pendings in December slowed, and so, you know, not great improvement in endomen, but, like, we’re measuring a few percent every week, uh, better, typically better than, than a year ago.

Dave:
I’m optimistic. I, I just feel like, you know, I saw this dealer report that came out the other day that said the average mortgage payment now is 8.4% lower- Yeah. … than it was a year ago. And I just gotta believe it’s, you know, we’re still not great affordability, but any improvement in affordability has gotta help get those pendings and the transaction volume up a little bit, right?

Mike:
Yes. I, I agree. It’s, yeah, it’s 8% cheaper now, and every dollar makes a few more people, puts a few more people in the market. Mm-hmm. And so, yes, I think that’s, that’s the case. We, you know, the one week we saw dip that last week with the deep freeze below year over year. But here’s the thing, you know, my assumption and my hypothesis about the, the de- listings relistings is that these are really two transactions that wanna happen. And right now, we can see the relistings and there are 75,000 single family homes that are now relisted. They were pulled last fall and they’re relisted back on the market now. It’s like 11% of the active inventory.

Dave:
It’s a lot. Yeah.

Mike:
It’s higher than last year, right? They are coming back on the market now. But if they come back on and the, the pendings don’t climb, or if they come back on and inventory expands- mm-hmm. … that would disprove my hypothesis, right? That would just say that these are people, this is only supply that wants to come on the market. You know, if there’s 75,000 people, like, if inventory is rising by 75,000, uh, because these are all relisted, that’s a thing I’m looking for. Mm-hmm. What we’re seeing though is that active inventory is actually, it’s not yet below last year at this time, but in Florida, it is below. There are fewer homes for sale in Florida now than last year at this time. Really? And I think- That

Dave:
Is surprising.

Mike:
… almost nobody is aware of this, right? Yeah. And you, if you ask anybody, they’d assume inventory in Florida is expanding.

Dave:
Yeah. Like one thing that I have been tracking is what you would expect in a normal correction, right, is that in the markets where prices are declining and their softness, new listing data is declining the fastest, right? Like, aga- another sign that people just have the option not to sell and in markets like Florida, they’re just choosing not to.

Mike:
Yeah. But, you know, we have sales up 8% in the pen to weekly pending data. Sales are up 8% year over year in Florida. Oh, interesting. Okay. So there’s more sales happening too. There’s more homes available to buy. There’s more transactions that can happen. There are some bargain hunters happening. Yeah. Like there’s, there’s a few of those things coming into place, uh, that are keeping sales a little bit elevated and inventory falling in Florida. So inventory is still up 8%, 8.5% year over year nationwide, but that was, you know, inventory a year ago has grown by 30%.

Dave:
Right. Yeah.

Mike:
And so it’s now down to 8%. And on the cur- if the current trends hold, we could be negative year over year by June. We could have inventory shrinking.

Dave:
Right. I know. It’s wild. It, it just makes you laugh about all these, like, doom and gloom things that we’re saying over the last couple years that we’re gonna see this massive explosion of inventory. I think, uh, on this show, we’ve been a little bit more measured and maybe that’s proving correct. But I, I think that, you know, that phenomenon is super interesting and important for our audience because it tells us a lot about, like, where the housing market might be going, which I wanna ask you about. But before we do, the last thing, just on the pure inventory side, new listings are down, right? Are you seeing that as well, that fewer people are posting new properties for sale?

Mike:
In our data, weekly new listings are really about the same as they were- Flat. … a year ago.

Dave:
Okay.

Mike:
In the last two weeks with the deep freeze and storm- Yeah. … they dipped below last year. That’s totally common in February. Like storms happen, and so you can get, like, if the storm happens in January, then l- you’ll get the dips earlier. But in general, outside of that weather, uh, I’d say that they’re about the same as they were, uh, a year ago, maybe, you know, within a few percent plus or minus.

Dave:
Yeah. The market is adapting in the way that, to me, logically makes sense, right? This is not … We’ve moved to a buyer’s market, so to see, in, in a lot of markets, to see sellers choose not to sell makes sense, right? Like, especially given the recency bias that’s going on, right, where they’re like, “Oh, my neighbor sold three years ago, like, 100,000 over asking. I don’t wanna sell into this market.” It’s just not that appealing to sell these days. So I think, you know, it does seem like the market is heading towards some more stable equilibrium. At least that’s what I’m seeing. What, what is your sort of outlook for the year from here?

Mike:
Yeah. Our outlook for the year is that because inventory’s up and affordability improves not just mortgage rates, but, you know, income’s rising faster than home prices- Yep. … in most of the country, like, that approves affordability, that leads us to forecast about a 5% sales growth in 2026, 5%, not huge, but a little bit. Yeah. And in the weekly data, the weekly pending data, it’s been, uh, been coming out, right, three, five, 8% improvements over last year, like I said, with the dip for the storm for the first week, last week, but, but in general, it’s been averaging about three, 5% more. So that, in my view, bears out our forecast. A year ago, the opposite was happening. So we kept coming in slightly under, you know, and a year ago, mortgage rates were 100 basis points higher- Yeah. … than they are now. And so we were missing on the forecast numbers each week.
And so this, this year, they’re, they’re coming in right, right where they need to, to have a, a full year of, of gains. It would, you know, we looked at scenarios of, like, what would it take to have a big gain year? Yeah.

Dave:
What would

Mike:
It take to have, like, a 10% growth year in home sales? And a bunch of things would have to align at the same time to make that happen, like, you know, mortgage rates dip maybe into the fives in the first quarter here.

Dave:
Yeah.

Mike:
That kind of thing would move. But it’s also, it’s not just that, it’s also the jobs market, unemployment’s still relatively low, and the latest numbers, you know, show it just seems like it’s actually dipping. The number that I’m, that I care about really for the year is the hiring rate. So even though unemployment’s low, companies are hiring at a rate that is- Yeah.
… much more like a deep recession. I know, it’s weird. It’s weird, right? They’re holding on- Yeah. … everybody’s, like, holding onto the job they have and, you know, it’s like, if I wanted to sell my house in Chicago to move to Denver, but I’m afraid about getting a job in Denver, I’m delaying that move. And so I’m not selling in Chicago and I’m not buying in, in Denver. So if hiring rate ticks up during the year, maybe, you know, you get some Fed rate cuts, you get a, whatever, you get AI investment things, whatever the things are, hi- if hiring rates improve this year, I believe that will have a cascading effect down to the housing market- Yeah. … allow people to go like, okay, now I can finally move out of Ohio and, and go to Texas where I’ve been wanting to go for a while.

Dave:
Interesting. Yeah. And I guess that probably just extends beyond voluntary relocations too, where companies are probably not hiring people from other states and asking them to relocate to a new location, which, uh, we see that in the migration data now too, that it’s, it’s slowing down generally.

Mike:
Yeah. And migration data is a little tricky because it’s lagging. Yeah. It’s, you know, backward looking, but all of it shows a lot less migration, you know, 24 and 25 really, uh, down migration in places like Tampa with actually out migration, negative. Um, I, I would expect Tampa flips around this year and actually comes back to positive growth on the, on the migration side because we didn’t have any hurricanes last year. People have a short memory.

Dave:
Yeah. We gotta take one more quick break, but we’ll be right back. Stick with us. Welcome back to On The Market. I’m Dave Meyer, joined today by Mike Simonsen. Let’s jump back into our conversation. Mike, I think what you’re saying to me sounds encouraging. I know 5% sales growth, flat home prices may not sound like the most exciting thing in the world to people listening to this, but you gotta bottom out somewhere, right? Like, yeah, if, if the switch gets flipped, I think that’s a good sign. We’re not gonna get, in my view, some dramatic recovery all of a sudden. And if that comes, it’s probably because something bad has happened in the economy. Like, you know, if mortgage rates drop to 4%, it’s because something bad has happened, or if we see a huge influx of supply, it’s because unemployment’s popping up. You know, like something not good is going on.
And so it’s frustrating. It’s hard to be patient when you’re in this industry for three or four years and it’s just kind of stunk. But, you know, the fact that things are moving in a positive direction and are no longer getting worse is a good sign, I think.

Mike:
I think so. And, and the way we’ve described it is really, it’s sort of the, the next era of the housing market. In the last era, the last four years has been ultra low sales, but affordability is sort of relentlessly getting worse.

Dave:
Yeah. Yep. Mm-hmm.

Mike:
And we’re now, we have sufficient inventory in most of the country where sales can climb, like in Florida right now, but also prices are flat or down, meaning incomes rise faster than home prices, meaning affordability gets to improve for the first time in many years.

Dave:
Yep.

Mike:
So you have the next era, which is allows sales to increase and improving affordability, where the last era was the opposite of that. Sales were low and affordability kept getting worse. Yeah. So in that sense, you know, that, that next era is underway and it may be multiple years of that where it’s slight growth in sales each year- mm-hmm. … which would be, you know, a growth market. I’ll take anything we can get.

Dave:
Exactly. That’s the sentiment we need around here.

Mike:
And, and, and likewise with the affordability improvements, you know, not a- Yeah. … not a price cor- not a major price correction, but, but slowly every year getting an improvement on affordability slowly gets us back into line where actually things need to be, right, for, for affordability for the median income family.

Dave:
100%. I mean, I, you know, we’ve talked about this before. I’ve labeled this in, in the bigger pockets community, we’re calling it the great stall. Like it’s not, you know, it’s not this dramatic thing, but we have to see home prices stagnate a little bit, I think, to get back to a healthy market. And to, the only way we get affordability is either prices, you know, you could have a dramatic event like a crash, which no one wants, right? The patient approach is, yeah, real home prices are negative. They’ve been negative for a while now. And just for everyone listening, that means not the price you see on Zillow or Compass, you know, like that’s the nominal home price. That means not inflation adjusted. But by most measures, you know, everyone’s got different data. We’re somewhere between zero and 2%-ish up year a year, something like that.
Inflation this, this past year was two and a half-ish percent towards three. Wage growth, similar, right? And so when you combine those things, affordability is getting better without a crash. And that’s, I think, personally, I think that’s what we got for at least this year and maybe even longer. I don’t know how long you think this might last, Mike.

Mike:
Oh, I think it’s probably these conditions are, uh, underway for a while- Yeah. … would be my expectation. Um, I mean, there could be big catalysts that change things, but- Sure. … but if you think about it, we’re in this 6% mortgage rate range and we’d have to have some big crisis for it to drop dramatically lower. There are some forces that wanna push mortgage rates down and, but there’s plenty of forces that are pushing the bond rates up and therefore mortgage rates up too. So I don’t see anything in the data that suggests a big crash in, you know, a big dip in mortgage rates. Yeah. Mortgage rates are impossible to forecast. Yes. Like they could go up, they could go down, uh, but, but, uh, I haven’t seen any indication of dramatically down yet either. If we were to get the unlucky and get some inflation news or the jobs market heats up or something, mortgage rates could push the other direction.

Dave:
Yes, that’s correct.

Mike:
And that would, I think we’d have immediate correction on prices- Yeah. … and slower sales. I think, you know, whatever recovery we have right now is consistent, but also very fragile.

Dave:
Yeah. I think just psychologically, there’s obviously the economic element of it, but psychologically, I don’t think anyone, if we saw six and a half, six and three quarters again, it, it would hurt. You know, people who’ve been sitting on the sidelines, I don’t think they’re gonna be able to justify that. So I’m with you. I think from an investor standpoint, it means lock in what you can today and underwrite deals today. But as an investor, I like these conditions. It’s just more predictable than it’s been in the last couple years. There’s still a ton of uncertainty. But I just feel like 23, 24 was just like peak uncertainty. No one knew, like, could interest rates go down 1% next month? Maybe. Could they go up 1% next month? Maybe. Now it’s like at least the variance is smaller. You know, the fluctuations are smaller and that just makes buying a home feel much more approachable to me.
Whether you’re a homeowner or a real estate investor, stability, I think is like a good place for us to be.

Mike:
Yeah. I mean, you know, that’s right. Like you wanna be able to underwrite your deal and if it, if it pencils out at mortgage rates in the sixes, then it pencils out. If it doesn’t, you’re not, you don’t wanna make the deal because you’re hoping it’s gonna fall. You know, and on the other hand, if you start a deal and it’s at six, and by the time you’re done with the deal, it’s at seven and a half, that doesn’t help anybody. Right.

Dave:
Yeah. And I think from, from my seat, you know, I, I just am enjoying the fact that you don’t need to make these split second decisions anymore on a deal. Like you can think about it for a week or two. You could go visit it. You can have your property manager and your contractor in the building before you go and write an offer. Those are the conditions I think as an investor, I appreciate. But I would imagine that translates to homeowners too when we talk about home sell volume. You know, the years of just writing offers sight unseen, I don’t miss it at all, even though there was crazy appreciation. I don’t miss that at all. Yeah. I personally would rather something like this where it’s just a little bit more balanced. Um, so thank you, Mike, for, for sharing all this information with us.
Before we get out of here, any other insights you have with your work at Compass or inventory news you wanna share with the, on the market community?

Mike:
Well, I do think that this withdrawn and re-listings phenomenon is the data to watch each week this spring.

Dave:
Okay.

Mike:
If we’re seeing the relists come back in, which we are, if it’s not com- accompanied by an increase of demand and the demand, you know, numbers, that’s the bearish scenario. Mm-hmm. But as of right now, it is, they’re both, we see the relist and we see the demand coming back in and that, so that is bearing out the hypothesis that these are generally owner-occupiers.

Dave:
Mm-hmm.

Mike:
Generally two transactions waiting to happen. And if we’re lucky, that means there’s a lot of two transactions and it actually translates into good growth for home sales in the first and second quarter.

Dave:
Great insight, Mike. Thank you. See, this is why we gotta have you on. You know, I learned something very new. I assumed it was flippers and investors and learning that changes my opinion about this a little bit. So Mike, thank you as always, always great insight information. We appreciate you being here.

Mike:
Always great to see you, Dave.

Dave:
And thank you all so much for listening to this episode of On the Market. If you like this episode, make sure to share it with someone. If you hear anyone who’s confused about inventory or what’s going on with the market, what’s likely to happen, share this episode with them, hopefully they’ll learn something too. Thanks again for listening. We’ll see you next time.

Ashley:
Today’s guest went from working full-time as a registered nurse to building a self-storage portfolio of multiple facilities before turning 30. And he didn’t do it with a syndication or huge investors. He started with a cold call, a 15% down bank loan, and a willingness to learn a completely new asset class from scratch.

Tony:
And what I love about his story is that this wasn’t some overnight viral success. He was house hacking, buying single family rentals, and then made a strategic pivot into self-storage. And once he figured out that model, he started buying another facility and another one in roughly every six months. And today we’re breaking down exactly how he did it.

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

Tony:
And I’m Tony J. Robinson. It’s give a big warm welcome to Steven May. Steven, thank you for joining us on The Ricky Podcast today.

Steven:
Hey, thanks for having me on. Excited to chat today.

Ashley:
So after college, you started investing by house hacking, and then you started buying single family rentals while working full-time, and you were a registered nurse. But things change in 2021. You pivoted into self-storage. So this is an asset class that you never operated before. So what made you decide to switch from investing in single family rentals to into self-storage?

Steven:
Yeah, I wish I could nail down just an exact moment where I had a light bulb moment of going into storage was the future of what my portfolio would hold. But yeah, I was in nursing school, learned a lot from BiggerPockets, was listening to the podcast, reading the books, started with a house hack, bought another house hack. Waited about a year. I thought I was just really going to go into small multifamily. That was the plan. Just saving up cash, thought I would go put 25% down. And once again, I don’t know exactly what triggered me to get into storage. I think just slowly by hearing about the asset class from people like AJ Osborne, who’s active with BiggerPockets, listening to his podcast, reading his book, driving on the highways, seeing these storage facilities, and it just kind of being in the back of my mind of this asset class on paper seems simple.
You’re renting out metal boxes. You hear the no tenants, no toilets, and that whole spiel about it. So yeah, the pivot from residential to commercials played out well for us.

Tony:
Was there something that frustrated you, Steven, about the single family space that kind of made this move more attractive or was it more so just a natural progression?

Steven:
Yeah, I think a little bit of both. I mean, single family investing is great. I would still buy single families that the right deal pops up. I mean, my full-time job is I’m a realtor selling single-family homes to a lot of out- of-state investors, so I totally get it. It can be a great business model. I think with the storage, it was kind of the same concept of I was thinking about going into multifamily. It’s commercial real estate where there’s a little bit more of economies of scale. A hundred-unit facility was our first one, so just being able to have some vacancy there, but still cover your mortgage with quite a bit of cashflow leftover as well. And ultimately, yes, I mean, I’m not going to call it passive by any means. I don’t think anything’s truly passive, but in general, just a little bit less maintenance quote unquote compared to the single family world of we don’t really have windows, we don’t have that many appliances, we don’t have toilets.
So that was kind of a big point into getting into that asset.

Ashley:
What did your single family portfolio look like at this time?

Steven:
Yeah, so I bought my very first one at 23. I actually bought it a couple of weeks before graduation. So I was literally in nursing school studying for my state boards test while also reading BiggerPockets books, listening to the podcast in between. And so I moved to a new city, Kansas City. I’m from St. Louis, so still Missouri. But basically, yeah, went to Kansas City one weekend, toured a couple houses, had been studying the house hacking method. So went and got a 3% down conventional loan. So that’s what I started with. House hacked, rented out the rooms to a couple buddies. Eight months later, bought another one. So within a year, basically bought two single family homes, got the real estate bug for sure. Knew I was going to keep buying some sort of real estate. I thought the plan was single family, multifamily. So just kept looking, studying, seeing how to scale efficiently, but while working, still full-time as a nurse.
And so before I got into the storage asset class, I mean, it was 2019, I had two single family homes. Looking back, 2020, I did not buy anything. Unfortunately, looking back, I wish I would’ve because it was a great real estate market and environment with rates and inventory. And then 2021, ended up buying two more single family homes. And at the end of 2021 was when we took down that first storage facility. Haven’t bought a single family home rental since. And basically we’ve purchased eight storage facilities since, and we currently hold seven of them.

Ashley:
Congratulations.

Tony:
Yeah, incredible journey. And I’m excited to get into your story here. But for the rookies who have only heard of houses and apartments, and that’s all they think about when they think about real estate investing, what made you think specifically that self-storage is actually a bigger and better opportunity?

Steven:
Yeah, you kind of don’t know what you don’t know when you’re starting. I mean, once again, reading the books, listening to the podcast on paper, it seemed like an ideal asset class. Wanting to get into storage, it’s definitely not your standard single family home investing. You can’t just go on Zillow and there’s a handful of single family homes available to purchase and look at rental comps. Storage is definitely less inventory available. A lot of times, I mean, especially in 2019, 2020, it wasn’t as sexy of an asset class. It’s definitely become pretty hot. In the last few years, a lot of people trying to get into it. And so in that regard, I mean, you really had to pull up your sleeves and find them. I mean, you had a cold call, you had to look on Google Maps. You couldn’t, like I said, just go drive around.
They’re kind of secluded off highways in different areas. But ultimately, yeah, it was just the idea of having something with less maintenance was really the idea of getting into it.

Ashley:
Now, this would be your first time doing a commercial asset and commercial strategy. Did you have any fears going into it of how this may be different to purchase, to acquire, to operate a commercial property compared to residential, what you were used to?

Steven:
Yeah. Yeah, definitely. I mean, you can read all the books, you can, you can listen to all the podcasts. And in my head it clicked. It made sense. I had already done single family homes, and it’s the same concept when you’re buying your first single family house hack, your first single family rental. I think it can all make sense on paper, but until you go view a property, get an accepted contract, go put earnest money down and really figure it out, and you get to learn what the lender needs. Of course, the single family world when I was starting, I was at W2, relatively simpler times of just sending over the W2 pay stubs and kind of assets on hand. When it went into commercial, I thought it was going to be relatively similar to multifamily lending 25% down, 30% down. So basically we found this first storage facility and we had an idea of what we thought the financing would basically look like just from research and talking to other operators.
But ultimately, once we got that offer accepted, we went down to a local bank nearby the storage facility, basically walked in and said, “Hey, can we talk with a commercial lender here?” And they took our appointment and basically they were like, “Yeah, we’ve done these before.” They actually offered us a 15% down conventional commercial loan basically. So that worked out well. And honestly, it’s a little bit easier in my opinion to get commercial loans sometimes. I mean, really it’s kind of give us your personal financial statement. Let’s see your liquidity, your assets and your net worth type thing versus running a credit check and seeing pay stubs. So that’s kind of how we went with that first loan and that worked out well because once again, we were even under the impression that we were going to need 25, 30% down. This first storage facility was a $330,000 purchase.
So that’s quite a bit of money when you’re 25 years old. But once she said 15% down, that really worked out well. And of course, this was 2021. So the interest rate environment was pretty healthy. I think we locked in a low 4% interest rate. So yeah, the main difference is really the amortization. I mean, the single family, multifamily world, a lot of times you can get 30-year amortization, which really helps the cashflow. When it comes to commercial or self-storage in particular, a lot of times these banks are going to, what, 20 year amortizations, you can kind of push for 25 sometimes, and then there’s usually three to five year balloons. So that can kind of change things a little bit as well as far as an exit strategy or a buy and hold strategy.

Tony:
Steven, one of the things you mentioned that I want to highlight is you said the purchase price was $330,000?

Steven:
Correct. Yeah.

Tony:
I think that’s a big mindset shift for a lot of our Ricky’s that are listening. And we’ve interviewed AJ Osborne on this podcast a couple of times, but one of the things that he mentioned was that exact fact that you can go out and buy a self-storage facility for the same price that a lot of investors are already spending to buy traditional single family investments or small multifamily. So it’s not even always a matter of increased cost, it’s just a matter of knowing what to look for. But I want to go back to how you actually found this property because you mentioned you closed or you founded it at the end of 2021, but you actually made a cold call to a mom and pop owner in the lake of the Ozarks that led to that first deal. How did you even find the property?
How did you find that owner? And what did you actually say on that first call to open up the dialogue?

Steven:
Yeah, I wish I had the recording of that first phone call because I must have been saying some good things to allow him to kind of work with us because I was just a young kid, really didn’t know the asset class. So what I had heard from people like AJ Osborne, other operators and just research from the BiggerPockets Forums was to try and find mom and pop owners, distressed properties, quote unquote, if you can. And how you kind of do that is really Google searches, Google Map searches. And I mean, you could drive for dollars if you really know the area, I guess. Once again, just not as much inventory in the storage space versus a single family search of you can just go walk up and down and drive up and down neighborhoods. So Lake of the Ozarks, once again, geographically, I’m from St. Louis, Missouri.
I live in Kansas City, Missouri right now. Lake of the Ozarks is about two hours south from both of those towns. It’s kind of a vacation market. It’s this hundred mile manmade lake. We go there all the summers. I’ve been going there every summer since I was a child, so I was familiar with the area and in the back of my head I was like storage down there has to make sense. I mean, I didn’t do any actual formal feasibility study or anything like that. But me being naive, I was like, they have boats, RVs, trailers. A lot of the people in that vacation market have condos versus single family homes. So less room for storage in the condo space versus a single family market and just the demand in my mind for RVs, boats, even though it’s a little bit seasonal, that’s kind of how we came to that market.
And then once again, just a particular town in that area, I kind of Googled self-storage in Osage Beach, Missouri, which is a town there. And one popped up that once again had two-star Google reviews, no website. You called the phone number and as two older ladies were kind of answering. So yeah, I picked up the phone and just kind of went at it. Honestly, it was my third or fourth cold call trying to get a storage facility. And the ladies in the office were just like, “Yeah, here’s the owner’s phone number,” which doesn’t happen too often. And yeah, he called me and we met and walked through it.

Tony:
Steven, I just want to clarify, so the property wasn’t even for sale? No,

Steven:
This was completely off market, direct to seller. He was an older gentleman. I want to say at the time he was probably early 70s. He had two other partners. They had been doing business and development their whole lives down in the area. And once again, just good timing of, he was like, “Yeah, we’re kind of ready to let it go and not necessarily break up their partnership, but they were all getting older, just wanted the capital and to get out of it. ” And I think when we first met and walked through the facility, I think he maybe realized they’re not operating it as efficiently as they probably should. But

Tony:
Steven, this was an unsolicited call to buy this person’s business that he hadn’t even in any way, shape or form communicated that there was interest in doing. What did you say to him? How did you open up that conversation, if you remember, to even open the door of possibility for the transaction? Yeah,

Steven:
Like I said, I wish I could have a recording of that call. I mean, I honestly think he called me and I was driving on the highway and I pulled off the highway to chat with him. And once again, I don’t recall exactly what I said, but I think I kind of just sweet talked him a little bit of, “Hey, in real estate, I have a couple single family home rentals.” I do have a fifty fifty business partner on these storage facilities. He’s familiar with the area as well. It kind of brought him in because I was like, “Well, I have this business partner. He’s a CPA.” So basically just talked through it. I was like, “Look, we’ve seen that facility. We’re interested in getting to the asset class. We have a little bit of a background of CPA, real estate investing in the single family world, and can we at least just meet and walk through the place and get an idea of it?
” And so we set up the appointment and walked through it with him and kind of got some numbers and went from there.

Tony:
I love that that opportunity even exists. So once you actually set up the appointment, what do you think as you walk through it that kind of also starts checking the box that this is maybe an opportunity for you to go in there and increase the value? Yeah.

Steven:
And once again, kind of not knowing everything about the asset class, knew the basic terminology, the basic underwriting of it, it really is. I’m a numbers guy, of course, being in real estate investing, I’ve always been a cash on cash return person. So walking through it, we didn’t know how to operationally obviously run a facility. Once again, it was a hundred units. There was newer roofs. It’s kind of a center block building. There’s three buildings. It’s all fenced in, gated in. So that was ideal. But yeah, walking through the facility with him, he kind of opened up some of the units. The doors are hanging off the hinges, a couple of them. A couple of the units are full of trash and we’re like, okay, are we in over our heads here? Of course, basic information I need just for any standard investing in real estate is just like, “Hey, can I have an occupancy, rent roll, anything like that?
” I think at the time he gave us just a paper sheet of what he thought they were doing per monthly revenue, kind of back checked numbers with his two office ladies a little bit. And once again, just the golden 1% rule of single family home investing is kind of a standard golden rule. When we got the numbers, he threw out the number of 330,000. Of course, that sounds quite low for a hundred unit facility, which it was, but we knew he was doing approximately 42, 4,500 a month in revenue. So of course that price to rent ratio, we’re like, okay, these numbers make sense. I think we can make this make sense if we learn how to run it because we don’t live in town. I mean, we both are two hours away, so that was a big step. But of course, the general numbers, I mean, initially we actually kind of walked away from the deal because we were like, “Well, does this place need too much work?
What are we walking into?” And then kind of a month or two passed, we gave him a call again, walked into that bank, got the actual financial numbers, what the lending would look like, crunched the numbers, and we’re like, “Okay, this is going to make sense.”

Tony:
Yeah, fantastic story, man. And we own a hotel in Southern Utah and along with that hotel, we also, I believe there are 13 storage units that we acquired with that property as well. And much like what you just described, that’s how the current owners were kind of managing the storage units. They were just kind of like the redheaded stepchild. They didn’t get a lot of love. They had no paperwork on who owned the storage units. People would randomly come in at various times and drop off cash with no identification of what unit it was even tied to. So it took us a long time. We had to go through a formal eviction process to get out all the stuff for people that we couldn’t identify, but it turns out that it’s a nice, easy way to add some additional revenue to that hotel. And it’s only 13 units.
We’re charging between 40 and 60 and 80 bucks per month. They’re not big units, but still across 13, that does add a little bit of cushion to the profit margin every month. So it’s interesting that it’s a universal thing for these self-storage facilities to be maybe underutilized and not necessarily taking advantage of all the technology and the tools and the automations that exist today.

Ashley:
I had talked to this guy once that was wanting to sell his self-storage and his process for collecting rent was that every first Sunday of the month, he would go and sit there in his lawn chair and his tenants would come and drop off cash or checks or money orders to him on Sunday. And he would sit there and hang out and wait for them to come first Sunday of every

Steven:
Month. A lot of people in the self-storage asset class, I mean, they are cashless. A lot of the operators I know nowadays. I mean, of course, we still have PO boxes. We allow people to pay with cash or checks. We have an office on site. It’s an unmanned kind of remotely managed office ordeal. But yeah, when we took over, I mean, there was no website, there was no credit card processing or online payment system. So that was one of the first things we did, which of course some of the tenants were like, “Okay, awesome. We can do this just at home now.” So yeah.

Tony:
So Steven, you buy this deal for just over 300 grand. You go in, you improve the operations. What was the actual revenue once you guys stabilized this property and what’s the approximate cashflow?

Steven:
Yeah. So I mean, when we took over, I think we were doing 42, 4,500 was probably the running average for the first 12 months. I mean, we didn’t take any distributions or anything. We were just building up this basically reserves account. I mean, fast forward to what we do now, it’s about six grand a month in revenue. So I think the net cashflow after taxes, insurance maintenance is probably about 3,500 a month.

Ashley:
Okay. So we’re going to take a short break, but Steven has walked us through why he chose self-storage and how he landed that very first deal. But what’s actually even more impressive is what happened next. He didn’t just stop at one. After the break, we’re diving into how he turned one facility into a six property portfolio by buying consistently every six months, and he was still working full-time. We’ll be right back. All right, we’re back with Steven. So you bought your first storage facility, you’ve cleaned it up, implemented systems, and it’s now performing. So instead of slowing down, you actually decide to accelerate. Let’s talk about how that first win turned into a repeatable acquisition machine. So after that point in time, your first facility is going, what mindset shift made you think we should immediately do another one?

Steven:
Yeah, so you’re just kind of learning as you’re going. I mean, you don’t know it all until you really just take ownership of a property like that and do it. So quickly, we implemented a software that basically helps us run it and manage it remotely.

Ashley:
What’s the name of the software?

Steven:
Yeah, so we use Easy Storage Solutions, pretty user-friendly from an operational standpoint. So we still have that. I know there’s a lot of softwares out there now. So we implemented that. I started taking the phone calls on a second. I basically carried a second business phone around and just you learn some things and kind of create your scope of how you’re going to operate this when certain things pop up. Are we doing late fees? How do we lock people out that are behind the Missouri laws of eviction and the storage assets class? So we kind of just day by day figured it out, got it operating a little bit better. It definitely takes a bit with a facility that’s a little distressed like that. Little did we know. So he had these two ladies working, basically answering the phone calls, collecting rent and stuff like that at another location down the road.
So we went and met them, got some paperwork from them, got some deposits on file from them. And they just happened to mention that these owners who were the same owners, the first one we bought, owned the one that their office was at just down the road and that they had mentioned potentially selling this one too. So of course, we kind of look at each other and now it’s been five months. We’re like, “Okay, well, yeah, we like the cash and cash return. We like how this is going, how we’re able to run this from two hours away.” So basically same thing. We called him, same owner from that whatever, third, fourth phone call. And he gave us the numbers on that one as well. So another 100 unit facility. This one was a massive five, six acre gravel lot. Also came with a 6,000 square foot warehouse.
He threw out the number, gave us another paper rent roll, and we were kind of just like, okay, this one also makes sense, so how do we take it down? So same thing. We were a little bit more familiar. Obviously the purchase price on the second one was 750,000. So definitely not a small purchase price by any means, especially I think once again, I was 25, 26 at the time. Luckily, I had pulled a HELOC on that second house hack. So I had some liquidity from still just working full-time as a night shift nurse. I was house hacking, so I was living below my means saving quite a bit of cash. And yeah, the time came, we both wrote a check and took it down. And so those first two, that’s kind of how it happened. And it wasn’t an exact timeline. We didn’t think we were just going to keep rapidly buying, but we got those first two.
The cashflow was just so significant compared to my single family portfolio. I got hooked, started cold calling literally every owner in that market. And just, yeah, every five to six months it seemed we closed another one, another one, another one.

Tony:
Stephen, do you feel that self-storage lends itself to scalability better than traditional single family homes? Basically, put it another way, is it easier to scale? In a dollar for dollar scenario, so if I buy a $330,000 single family home, long-term rental, then a $700,000 single-family home, long-term rental, comparing that to the same prices, but with self-storage, is it easier do you feel to scale buying self-storage than it is with single family? And if so, why?

Steven:
Yeah, I think they both have their ability to scale. I think with any asset class in the real estate world, it’s just the two biggest things are access to capital, access to deals. Of course, these first two and all these deals we’ve really done in the storage asset class was me cold calling direct to seller. So that helps avoid any bidding wars. Interest rates were a little bit lower. I mean, you definitely have the economies of scale originally already there. I mean, we’re talking 200 units between two properties. For us in particular, I mean, all these facilities are in the same market, so that really helps you scale. You can have the same lawn care business running all the landscaping there. If you have a handyman, it’s all there locally. If you want to go out and buy storage, but you’re looking at nationwide, I think it’s going to be a little bit harder to scale for sure in general.
So we’re just super localized, which allowed us to scale. We still run it ourselves. We haven’t outsourced to management yet. So I think that definitely helps. Once again, 750,000, if you’re in the residential space, that can go quite a long way, especially in a market like Kansas City where I live. I mean, that’s a 20-unit apartment complex, to be honest. So I think you could scale quickly either way, but for storage, it just made a little bit more sense.

Ashley:
And what was the actual timeline of from the first property you closed on to the last one that you closed on?

Steven:
So yeah, I think the first couple, it was literally bought the first one six months later. I mean, give or take a month, it was like buy one, six months later, bought another one, six months later bought another one. Six months later bought another one. One of those, we actually ended up selling and 1031ing into another one that was six months later. So it got to the point where we had seven, sold one, 1031 into another one. I personally own one without my business partner that I bought last year, or I guess it’s been about a year and a half. And then we took a little bit of hiatus, not that we necessarily wanted to, but we kind of just got to a point where we were like, okay, this is kind of an eight-figure portfolio now, I mean, based off the numbers and let’s just … We don’t need to scale that much more at the moment.
We did buy one back in April. So when a good deal pops up, of course that’s been an aspect of not being able to scale. It’s the difficulty to find good deals that pencil, especially the higher interest rates over the last year and a half, two years. So we just got to a point where we’re like, “Okay, we really have to build some systems and processes before we keep going. ”

Ashley:
That is a skillset that I wish that I would’ve had, something that I wish I would’ve acknowledged a lot sooner is because that can cause such a pain point of getting that itch and just scaling and growing and not focusing on your systems and processes before you go any further. And it’s going to make you a better investor in the long run and your portfolio’s stronger than even if you were to continue and grow in scale, you think you’re losing time, but in reality, your portfolio is just going to be stronger.

Steven:
And it’s something we always battle with, especially me personally, just how big do you want to get? We own this basically all in- house 100%. So do you want to own 100% of an eight-figure portfolio or do you want to go out and once again, raise capital and own just a small percentage of $100 million portfolio? So just something we always battle with. How big do you want to go? Do we just keep our small but mighty portfolio and just let it rip with cashflow and pay down the principles?

Tony:
Well, Steven, you grew the portfolio quickly just from one to seven, ultimately eight, but you did that in a very short period of time. You talked about the first deal, how you structured that one financially from a debt and cash perspective. You talked about the second deal, but just how are you continuing to structure these deals financially so that roughly every six months you were able to buy another one? Because I think for a lot of the rookies listening, they can maybe wrap their head around, “Hey, I’ve got some cash saved up for my first deal.” And maybe they could start to see like, “Okay, if I squeeze a little bit here, continue saving the second deal, makes sense.” But to do one every six months, I don’t think a lot of folks can even fathom what that would take. So how were you structuring things in a way that actually allowed you to keep that pace?

Steven:
Yeah, I mean, obviously being transparent, I have a business partner. So being fifty fifty, if you can find the right business partner, that will definitely let you go a little bit farther, a little bit quicker to incomes being able to do the down payment to manage it together. So that’s huge. I would not be able to do this by myself. So yeah, just looking back at how we built it, I mean, once again, the first purchase was 330,000. We did 15% down, so split that fifty fifty. Next purchase, 750,000. We did 20% down on that, split that fifty fifty. Thankfully, I had bought those house hacks. Once again, like I mentioned, I did pull a HELOC on that second house hack. So I bought that at a pretty deep discount. So I think it was about 40, 45,000 on a HELOC that I was able to use as a recycling or a revolving line of credit.
The third one we purchased, it’s our largest and we did bring in a partner on that. So a little bit of outside capital involved with that. I mean, that purchase was 3.2 million. So by no means did I have that liquid nor did my business partner. So we did have an individual who at this point, he’s like, okay, these guys are operating it. They know what they’re doing. This deal made sense. It was a very nice A class. I mean, that’s our trophy asset. So we did have a little bit of outside capital on that, but outside of that, the next couple that, once again, the fourth one we bought was a smaller property. It was like under 150,000. So that one was relatively easy to take down as far as the down payment. We didn’t plan to sell that one, but in the background, I had been talking to another owner who finally agreed to sell or finance us the deal.
So that one, we ended up 1031ing. So that gave us basically quite a bit. I mean, it was almost a six-figure gain in about five months from the sale. So we took all those funds, went into that storage facility. From there, that second storage facility we bought, just putting some numbers out there, purchased it for 750,000. It’s been doing about 13, 14,000 a month in gross revenue. So we went to a bank, they appraised it for well over a million and basically gave us a line of credit on that equity. So instead of going out and raising capital and syndicating, we use this line of credit that’s, I would say, I believe it’s about a quarter million of dollars, so like $250,000 line of credit that you can just go pull on. So we have used that, and then we basically decided to not take any distributions, rip all the cash flow into the line of credit, pay that down.
So the last couple deals, we basically have used the line of credit, quickly pay it down with the cashflow and then recycle that. So that’s kind of how we went about doing that. That’s been very helpful. The most recent purchase was a seven-figure purchase. On that deal in particular, we had the seller carry back 10% of the purchase price on a note, so that allowed us to bring a little bit less to the table along with the line of credit. So Sorry, that was kind of long-winded, but that’s how we did it. We used our own capital in the beginning, have a little bit of outside capital on our biggest deal, and then got a line of credit on the equity. And then we used that line of credit to basically fund the down payments, and then the cashflow pays off that.

Ashley:
Can you explain the carryback? Because that’s something you usually only see on the commercial side. A lot of residential loans won’t allow you to do this, but explain how you were able to do that and how a rookie might be able to structure that in one of their commercial deals too.

Steven:
Yeah, a hundred percent. And I mean, once again, the first two purchases, the good old days of the three and 4% interest rates. I know it’s been a battle in every asset class over the last two years is interest rates. I mean, seeing the … Honestly, at one point it was in the mid to high sevens. So the most recent purchase we did, we got it well under asking price that had been on the market for a while. We had originally made the offer to the seller direct before he listed it. Ultimately, once again, we purchased that. I think it was like a 7.5% interest rate is what the bank was giving us or quoting us. So we went to the seller, we said, “Hey, if you want your price, which was not too much more than we were offering, can you carry back 10% of the purchase?” So that one, let’s just for simple numbers, say it’s a million dollars, he’s carrying back 100K at 6% interest.
So it’s a lower interest rate than the bank. And then the bank sees that as partially a portion of the down payment, so you have to bring less capital to closing. So you can have two mortgages, which sounds complicated, but relatively it really is simple.You’re paying to the bank who has first position lien. The seller has a second position lien that you’re just paying a small note to.

Ashley:
And the thing is residential most of the time, especially an FHA loan or a lot of times even just a conventional loan, they want to see that the proof of funds that you’re using for the down payment are coming from you. But on the commercial side, this is way more flexible. And as long as the numbers still work on the deal, that the income, the revenue can still support paying the mortgage to the bank and then paying that debt payment to the seller and then you bringing your portion of the down payment as long as the numbers still work on the deal. A lot of times this can be negotiated with the bank to do it this way. And I think that is a great strategy that people could be using right now to negotiate their commercial deals that just aren’t making sense to put that much money down or with the higher rates than we saw several years ago too.

Steven:
Yeah, 100%. And lately we’ve been trying to honestly do floating rates just because they’re starting to trend down a little bit. So that’s helped us lower our debt service. I mean, the commercial world, like you said, it’s just a little bit easier to get the bank what they need. They just want to see your liquidity, the personal financial statements versus credit checks and W2s and pay stubs. So it’s a little bit easier in that regard. And then when people are talking about a Fed rate interest cut, I mean, that’s directly related to our loans. So every time it goes down a quarter point, our monthly interest rate goes down a quarter point, which is a little bit different than a residential mortgage. And then one of our other facilities, we did completely 100% seller financed, no bank involved. We did do a 25% down. So I’m not saying we did 0% down, but there’s no banks involved.
And that was one that it wasn’t necessarily that we needed a lower interest rate because it was a pretty good cash cow of a deal, but the seller just didn’t want to pay capital gains. And so that was kind of what we … We did a five-year note, and so explain that to her. And so we did that.

Tony:
Steven, a few of the things you mentioned as you were going through how you financed it, the creativity around seller financing and working with the sellers on that side, but you also mentioned pulling a line of credit against one of your existing properties. I’ve actually never pulled a line of credit on anything before. What was that process like in terms of going to the bank and getting that line of credit? What were they looking for? How did they determine how much to give you? And I guess what kind of documentation did they need from you to actually put that in place?

Steven:
Yeah, so we’ve had that line of credit active for a while. I learned a lot once again from the single family world of pulling a home equity line of credits. So basically they go in similar to that. They’ll appraise the property and then whatever you owe on it, there’s a certain percentage they’ll give you. So once again, in our scenario, the second facility that we purchased, I think they purchased or appraised it for 1.2 million and we owe 550,000 or 600 something like that. So he was willing to give us a percentage of that. Typically, it’s like 80%, 75% loan of value. We have a 4% interest rate on that one, so we haven’t done any cash out refinances. We’ve just left all of our equity and all of our properties. In my personal opinion, I’ve just always been a fan of line of credits versus doing cash out refinances, just keep the existing debt there.
And you just have a significant size line of credit that you can go pull on and pay off as you need. So basically it’s just an appraisal minus what you owe and the bank just wants to see financials to explain the appraisal. I mean, appraisals in the commercial world can be expensive. I mean, on a million dollar purchase, you could be paying four, five, six grand for the appraisal, which is definitely a little bit different than residential, but ultimately there’s really no way around that if you’re doing just standard bank lending.

Tony:
And then the other thing that you mentioned was the partner. And for a lot of investors, both new and experienced, eventually we run out of our own cash and being able to raise capital from other people becomes an important skill. How did you as a former registered nurse start building the network to the point where you could find someone who could help you take down a $3.2 million purchase?

Steven:
Yeah. So my business partner is, he’s a family member of mine. He’s actually my first cousin. So we started talking about it. You’re wearing merchandise, you’re kind of posting on social media about it. I was just making a little bit of content. So we’d go out on the boat because once again, it’s kind of a vacation market and there’s a lot of heavy hitters down there that are heavy hitters in their own regard, business people, early retirees that did well. So if you’re the young gun on the boat, they’re like, “Well, what’s your story? What are you doing down here?” And so just kind of talking in that regard. We had met an individual who, he was in the commercial real estate world himself. He owned a handful of convenience stores. He was, once again, kind of getting older, ready to retire. They had just refinanced their portfolio, so he was pretty cash liquid.
And so we just kind of discussed this deal with him and he came and walked in with us. And originally it was just going to be strictly a promissory note debt structure at a pretty high interest rate, but we needed the cash to close and we knew there was quite a bit of potential in this deal. Ultimately, going to the bank, they did require us to give just a small percentage of equity, just basically using their balance sheet and their net worth to get the deal done. Because once again, a $3.2 million deal when you’re 26, 27 and your network’s not even there at that point, that they’re kind of like, okay, we need some liquidity and somebody else. I mean, I don’t think they had them do a personal guarantee. We did a personal guarantee on that one, but basically just talking about it, saying what we were doing and the stars just aligned that they had just refinanced their portfolio.
We’re a little bit liquid and looking to park some capital, so that worked out.

Tony:
We interviewed someone once who signed up for a super expensive country club and he would play tenants with a lot of the guys. And that’s how he started finding Capital Partners was being really good at tennis. He started making a lot of friends at this country club. We interviewed another guest who joined a really expensive gym. It was like Equinox or something even more expensive than Equinox. And he found private money partners through his gym membership. So there really is something to be said about even if you don’t have the network today, can you just go pay to be in the same space as the other people who do have the capital that you’re looking for and then position yourself in a way in a very honest way, but as a person who maybe has a skillset that they might get some value from. So I love that story, Steven.

Steven:
Yeah. And I’m by no means any social media influencer, I’m pretty relatively not active on social media, but I do put a little bit of content out there just letting people know what I do on LinkedIn, Instagram. And it’s guiding me quite a bit of business, especially in my realtor business, just seeing me selling houses in Kansas City and then it has played a factor in the storage world as well of people reach out on LinkedIn or Instagram when I post a little bit of content in the storage world of, “Hey, I am 29 and I own an eight figure storage business.” And some people will be like, “Oh, well, let us know if you’re ever doing another deal type thing.” That’s

Tony:
All it takes, man. It’s just sharing your story and you never know who’s listening on the other side.

Steven:
Got to put yourself out there a little bit.

Tony:
Well, Steven’s story isn’t just about scaling fast. It’s about building a repeatable system. And after the break, we’re turning this into a bit of a mini self-storage masterclass. We’ll break down exactly how to analyze your first facility, the operational levers that can increase value fast, and how to approach the banks the right way, and what it really takes to scale this asset class in today’s market. We’ll be right back after this. All right, welcome back. Steven has built a portfolio that’s done incredibly well, but it’s these systems that keep you in the game. So Steven, I want to get into how you actually build your processes, your systems, how you identify a good deal versus a bad deal. So if one of our rookies is analyzing their very first self-storage deal, what are the maybe three numbers they should be most concerned with or understand best before actually making an offer?

Steven:
Yeah, that’s a good question. I mean, there’s a lot of levers you can pull. We’ve always bought existing cap rate. The cap rate evaluation is a huge thing, commercial real estate and storage. So just, I mean, overhead view, I guess if you see something around an eight cap, you’re probably in a decent spot to start talking with the owner or the broker. But general information you’ll need is the unit mix, or let’s just call it the rent roll, what they’re doing monthly as revenue. And then a profit and loss statement would be huge to see what they’re actually doing for expenses. Are there utilities on site and stuff like that? So those are the biggest numbers. I mean, once again, for me, I’ve always just been a cash on cash person. So that really entails knowing what the bank financing is going to look like, what’s the current monthly revenue.
Some people will call it secret shopping. So let’s just say you know the occupancy, the unit mix. You can call around to other existing storage facilities in the area and see what they’re charging per rent, see if you’re above them, below them. If you see you’re pretty full, let’s just call it 85 to 90% or higher, and you see the person down the street’s also relatively full and they have higher rates on the same sizes, then you can see that you have potential to do rent increases. So other than that, it’s really just a spreadsheet of rent minus expenses and what’s your cash on cash return. That’s kind of how we’ve always gone about it.

Ashley:
Now, what are some of the operational levers that a rookie investor could pull when they’re purchasing a self-storage facility to really boost the net operating income?

Steven:
Yeah. So for one, obviously, if you can find something that has below market rents, that’s huge. We almost, I don’t want to say yearly, but typically the last few years in the winter, we’ve done small rent increases. We bought ours at pretty good prices that we’re able to keep a high occupancy. And in the storage world, it’s a beautiful thing. I mean, in the single family world or the multifamily world, you’re going to have to go in there and usually increase your rents like 25, 50, 75, 100 bucks, which is generally more to pay obviously for one individual versus in the storage world, we have these small, I don’t want to just call them small metal boxes, but we can send out 500 letters because our current portfolio, we have 750 units. We can go out and send just a $5 a month increase, and that can be significant when you have that size portfolio.
Let’s just do the math, 500 units times $5. It can add up pretty quickly. So you have the economies to scale there to increase rents. Everything’s month to month, so you can do that pretty easily versus six month, one-year leases. So that’s the biggest lever on the top line revenue to increase. A lot of people will say you can expand and do outdoor parking for RVs and boats if you’re in the right market, that’s an option. A big thing is, I mean, self storage is real estate, but it’s run like a business and it really is a service-based business. So if you’re buying a mom and pop owner facility, do they have any Google reviews? Do they have any website presence? That can be huge just for organic people coming to move into your facility. The biggest thing, we see the Google Analytics of some of our storage facilities.
We have Facebook pages, Google Business pages that we post on biweekly. I mean, if you’re in a market, just say like Nashville, Tennessee, people are going to Google storage units in Nashville, Tennessee. Who’s going to be the top five facilities that pop up in that search? And that’ll bring in a lot of revenue if you can kind of just automate that to a degree.

Tony:
And then what about from a financing perspective? Obviously you walked into that first bank and they seem to love the deal, but when you walk into a bank today, what are the things you’re presenting to them that makes them say yes and offer you the best terms?

Steven:
Yeah. And some of these mom and pop owners, I mean, there’s going to be a lot of paper documentation. It’s going to be hard to give them to just give you a digitalitized rent role or profit and loss. So I would do my best to give some sort of proforma of what we’re going to do. Once again, storage is a beautiful thing where it’s not necessarily you’re having to go in and do a kitchen remodel or cosmetic renovations. It’s more of just an operational business thing where you can go in there and if you find a good deal, you can just raise the rents and show a proforma to a lender. Some of these lenders will do six, 12 months interest only if needed to kind of lease up a facility or improve it a bit, but there really is just, it’s a numbers game and they’re trying to make sure they can get their debt paid back.
So

Ashley:
Steven, before we wrap up here for somebody listening that wants to go from zero to multiple facilities, maybe in the next several years, what does a repeatable playbook look like that they could follow?

Steven:
Yeah, I mean, step one, I think you just have to live below your means and kind of stack some cash. I mean, I know there’s people out there that say you don’t need cash to do deals. I mean, I disagree to an extent of you need to have some sort of cash machine, giving you some cash to be able to go put a down payment down on a deal if it comes across your desk or just be a great networker and have people ready to roll with you. The biggest thing is once again, always access to capital, which I kind of just alluded to, and then access to deals. In the storage world, I mean, you can get on Crexi, you can get on LoopNet, search storage facilities for sale near me, but a lot of times those have kind of been picked through a little bit already or they’re going to be a lower cap rate, a.
K.a. Just less cashflow and it’s going to be a little bit harder for a bank to give you financing or ideal financing at least on a deal that’s not really producing any sort of cashflow after debt service. So I think just really picking up the phones, putting your nose down, working hard to just find deals that makes sense and keeping at it. So I think it’s kind of a game of how many phone calls you have to make, how many doors do you have to knock to find a deal.

Ashley:
Well, Stephen, thank you so much for joining us today. We appreciated you taking the time to share your journey and tell your story and to give a lot of knowledge about self-storage investing. Where can people reach out to you and find out more information?

Steven:
Yeah, I think the easiest would just be Instagram is I’m relatively active on just @stephenmay_realestate. Other than that, I’ll just provide my contact info to you guys for you to share on your platform, but Instagram’s probably the easiest. So BiggerPockets, of course, I’m pretty active on as well.

Ashley:
Okay, awesome. Thank you. Well, Rookie, thank you so much for listening to this episode. I’m Ashley, he’s Tony, and we’ll see you guys next time.

After many years of back-and-forth, the quest to end property taxes has intensified. Last year, BiggerPockets reported on eight states that were weighing options to reform or outright eliminate property taxes. This year, another state has thrown its hat into the ring.

Kentucky is pushing to freeze property taxes, but specifically for seniors. While that’s a commendable feel-good retirement strategy for the over-65s, it could also present challenges and opportunities for real estate investors as other states jump on board with senior-friendly tax rules.

What Kentucky’s Senior Tax Freeze Would Actually Do

Kentucky lawmakers are advancing Senate Bill 51, a proposed constitutional amendment that would freeze property tax assessments for homeowners aged 65 and older on their primary residence. The measure would lock in the assessed value on a senior’s home starting either the year they turn 65 or the year they purchase the property, whichever comes later, WDRB reports. Seniors would still pay taxes, but only on the frozen value, even if the tax rate increased.

“For instance, if your home was $200,000 when you turn 65 and it goes up to $300,000, you will still pay the tax on the $200,000 in whatever rate it is,” bill sponsor Sen. Mike Nemes (R-Shepherdsville) said in a statement.

“I, too, get emails constantly from people that say, ‘I’m going to have to sell my home or move out of my home because I can’t afford the taxes,’” Sen. Cassie Chambers Armstrong, D-Louisville, said, as WDRB reported. “We know that, for those low-income seniors, homeownership is how they build and transfer wealth to the next generation.”

HousingWire reports that the bill has already cleared the state Senate committee and must be approved by three-fifths of both chambers of the Kentucky General Assembly before going to voters in November as a constitutional amendment.

A Wider Movement to Shield Older Homeowners From Increasing Property Taxes

Kentucky is just one state examining ways to alleviate property tax strain on seniors. Many states now offer some form of senior property tax relief, typically through exemptions, freezes, or deferral programs, that reduce the taxable value or allow payments to be postponed until a sale or death, according to The Mortgage Reports.

New York and Texas

In New York, a recent law allows senior homeowners a property tax exemption of up to 65% of their home’s assessed value, up from 50%, starting Jan. 1, 2026. 

Texas lawmakers are also considering something similar. A proposal known as Operation Double Nickel would reduce the threshold for certain school-related property tax benefits from 65 to 55 and freeze the school portion of the bill at its value when the homeowner reaches that age. Analysts estimate that Texans could save around $1,000 a year when the bill is introduced.

The national view

Property taxes are a key factor in deciding where retirees want to live, the New York Times reports, based on a study by WalletHub. It’s why Florida, which, in addition to its mild weather, has no state income tax.

How a Senior Tax Freeze Could Shape Investor Opportunity

If the loss of property tax revenue from senior housing is offsetby increasing taxes on other homeowners, the effects could further decimate affordability. In the case ofinvestors, who tend to own rentals in pass-through structures where property taxes factor directly into NOI and cash flow rather than providing a straightforward personal deduction, it would take a big bite out of cash flow. 

The bottom line is that cities need tax revenue to function properly. Should seniors see their taxes freeze, the shortfall would need to be made up from somewhere.

The Kentucky Center for Economic Policy, a nonpartisan research organization, warned about the effect decreased tax revenue could have on school and local services. In 2023, Kentucky collected $4.94 billion in property taxes on real estate, vehicles, boats, airplanes, and business equipment, with most of that revenue coming from real estate, according to Houses Marketplace.

The center wrote:

“The property tax is a critical component of a diverse, resilient tax system because it adds stability to revenues. Capping, freezing, or even eliminating property taxfor broad groups of individuals, as some are proposing, disproportionately benefits the wealthy and harms Kentucky communities becauseit serves as the primary source of revenue for so many local services. The property tax can be modifiedin ways that would make it fairer, but it should be protectedas a vital revenue source.”

The opportunity

On the positive side, a region with a stable senior population, particularly those who have relocated from higher-tax regions, would boost demand for both owner-occupied housing and rental housing from older tenants, many of whom don’t want to be saddled with the financial obligations of owning a home. That could strengthen rental demand in age-friendly submarkets, especially for single-story homes, small multifamily properties, and accessible units.

Senior investors could increase their cash flow

Low real estate taxes would benefit seniors who are also real estate investors. 

First, if they do not have to pay higher taxes on their personal residence, they would have more cash in their pockets. Second, if their personal residence were a two-to-four-unit property, they would presumably be eligible for a tax break on some or all of the residence, while also benefiting from the cash flow of having a tenant—a double win when their working life is over.

At the federal level, a New York Times guide to filing 2025 tax returns notes that individuals 65 and older can claim an extra deduction of up to $6,000 for single filers and $12,000 for married couples, subject to income-based phaseouts. That deduction can strengthen after-tax cash flow for older mom-and-pop investors who hold rentals personally or through pass-through structures in which rental income flows through to their individual returns.  

Final Thoughts

While low-tax states for seniors might have some long-term implications for real estate investors—both positive and negative—it’s too early to predict what they will be. However, if you are a senior or approaching senior age and a real estate investor, taking advantage of various states’ tax relief measures can boost your cash flow, whether it simply results in less cash going out of your pocket in a single-family personal residence or by boosting your net income in an owner-occupied two-to-four-family residence.

Most people think short-term rentals begin and end with Airbnb. Maybe Airbnb and VRBO, if they’re feeling advanced. But some of the most profitable hosts I know don’t rely on Airbnb at all.

Entire travel platforms are quietly doing millions in bookings every year without ever trying to compete head-on with Airbnb. No splashy headlines or creator hype—just consistent demand and serious revenue.

This article is about what exists beyond Airbnb. Because if Airbnb disappeared tomorrow, most hosts would be in trouble. The smartest ones are steps ahead of this. 

Why Airbnb’s Dominance Is Also Your Most Significant Risk

There’s no denying it: Airbnb is the largest distribution engine in short-term rentals. But when one platform controls most of your bookings, you don’t actually own demand. You’re renting it. 

Here are some risk factors:

• Algorithm changes
• Account issues
• Fee increases
• Market saturation

Most struggling hosts don’t have a decor or pricing problem. They have a distribution problem. Hotels figured this out decades ago. They don’t rely on one channel—they stack them.

That same shift is underway across STRs, cabins, glamping, and outdoor hospitality. The operators who survive long term are the ones who stop treating Airbnb as a business and start treating it as one channel.

The Great Backups

Before getting niche, let’s cover the platforms everyone knows, but most hosts still fail to leverage fully.

Booking.com

Booking.com has a massive international reach and incredible Google visibility. It performs exceptionally well for urban STRs and global travelers who never open Airbnb.

Expedia Group

This isn’t just one website. The listings here meet demand from Expedia, Hotels.com, Orbitz, Travelocity, and more. You’re tapping into a hotel-first audience that often never even considers Airbnb.

Google Vacation Rentals

Still wildly underrated. These guests are actively searching destinations, not scrolling listings. If you’re only on Airbnb, you’re invisible to a massive chunk of high-intent demand. You may need to sign up for property management software to be listed here.

Niche Platforms Quietly Printing Money

Now let’s discuss the platforms most hosts genuinely don’t know exist. This is where intent beats volume.

Whimstay

Whimstay focuses entirely on last-minute travelers. It’s perfect for filling orphan nights and short gaps in your calendar. Everything here is incremental revenue you wouldn’t have captured otherwise.

WeChalet

This site is design-forward and curated. It’s lower volume, but higher-quality guests, and performs exceptionally well on cabins, boutique homes, and properties with strong aesthetic appeal.

Plum Guide

One of the most selective platforms in the industry. They reject the majority of listings, but if you’re accepted, you gain access to higher-budget travelers who trust the curation and book with confidence.

Glamping Hub

This is one of the largest glamping marketplaces in the world and includes domes, tents, cabins, mirror houses, and treehouses. Guests come here specifically seeking unique stays and are willing to pay premium rates.

Hipcamp

Think Airbnb for land-based stays, such as camping, RVs, glamping, and farm stays. The audience is massive and especially powerful for hybrid properties that blend lodging and outdoor experiences.

BringFido

Pet-friendly isn’t just a checkbox. It’s a niche with loyal, high-value guests. This is the go-to platform for pet parents. These guests often travel, stay longer, and book faster when they know their dog is genuinely welcome.

VacayMyWay

Built around transparent pricing and lower fees, this up-and-coming platform could make waves soon.

Mid-Term, Corporate, and Quiet Cash Flow Platforms

Furnished Finder

This site is designed for traveling nurses, corporate stays, and insurance placements, which means longer stays, less turnover, and more stability. This platform alone has stabilized thousands of STR portfolios.

Corporate housing networks

Think consultants, construction crews, and project-based workers. Lower nightly rates, but much higher occupancy and predictable demand.

Insurance and displacement housing

It’s not glamorous, but extremely consistent. This strategy is how many hosts sleep better at night during slow seasons.

TikTok/Instagram

This still surprises people. TikTok is no longer just marketing. It’s search, discovery, and booking intent. People actively search for phrases such as “cool cabins near me,” “glamping Texas,” and “romantic weekend getaway.” One good video can outperform months of algorithm chasing.

Instagram and YouTube function similarly. They’re top-of-funnel OTAs now. The difference is, you own the audience.

Final Thoughts

Distribution is a strategy, not chaos.

The biggest hosts aren’t winning because their properties are nicer. It’s because their bookings don’t rely on a single app. If you want consistency, leverage, and a business that survives algorithm changes, distribution must be part of your strategy.