Dave:
Today on the BiggerPockets podcast, I have a big exciting announcement.

Henry:
Yes, you do have a big exciting announcement.

Dave:
Hey everyone. I’m Dave Meyer, head of real estate investing at BiggerPockets and the co-host of the BiggerPockets Podcast. And I’m saying co-host because after a year and a half of doing this thing solo, we are finally having a co-host join the show and it is none other than Mr. Henry Washington. Henry, thank you so much for joining the show and welcome and congratulations on officially being the co-host.

Henry:
Thank you so much. I am so excited to be able to be the official co-host. You finally made an honest man out of me.

Dave:
We’ve been talking about this for a very long time. So I’m excited to make this official and I couldn’t be more excited because you are obviously one of the best investors out there. I think we have really complimentary skillsets and can bring different things to the audience. And you’re just a good dude and someone I like hanging out with. So I think this is going to be a lot of fun.

Henry:
I also know it’s going to be a lot of fun. And I mean, I’m just blessed. I’ve been fortunate enough to be around BiggerPockets over the past few years, but even when I first got started with my journey, BiggerPockets is where I turned to to learn how to do this. And so to be able to now go from that to being the co-host and being able to be a voice for more people to learn, this is a dream come true.

Dave:
Well, I’m super excited. We have a lot of fun shows and content planned for all of you in 2026 here on the BiggerPockets Podcast. So today on the show, we are going to give you a little behind the scenes about how we made this decision. Then we’ll talk about what you can expect from the BiggerPockets podcast going forward in 2026. And then we’re going to get into Henry’s incredible investor story. You may have heard bits and pieces of it on the show because Henry’s been on the show before, but we’re going to go into it because it’s super motivational, it’s inspiring, it’s relatable. And I think it’s a great way to kick off our official partnership and for all of you to kick off the year in 2026, because there’s so much good information that you all can take with you for your own investing strategy heading into this year.
So I have been hosting the show for a year and a half now, and I’ve always wanted to co-host, but that’s a big decision. That’s a big commitment. And we took some time and obviously you’ve been on the show, but it just has become more and more clear. Every time you come on the show, I have more fun hosting the show when you’re there. I think the audience has more fun. The guests have more fun.
And so it’s just become really obvious that you are the right person to be on the show right now in 2026.

Henry:
Yeah, man, it’s been super cool just to go on this journey of growing as a podcast host because this is my, I believe, third going on, fourth year, just being involved with BiggerPockets in some capacity. When I was first asked to co-host some episodes back when Brandon left, I just remember how nervous I was. And I remember thinking like, why would anybody want to listen to anything I have to say on this show? And I’ve had to grow a lot as a co-host and a personality. And I think the timing is just kind of perfect.

Dave:
I, in addition to everything you said, really feel confident that you and I, although we have sort of the same long-term vision and sort of big picture philosophy about real estate investing, the stuff we do day-to-day is pretty different. Very different. It’s really different. And I think that’s a great perspective to bring to the audience because I am much more analytical. I do a combination of different types of investing. I have my hands in a lot of different pots. You are all in doing the thing every single day. And I think both are really important and both approaches are representative of the BiggerPockets audience. This is what most of the people listening to this podcast right now are doing. And so I think joining forces, we are really bringing that level of expertise for pretty much the whole BP community.

Henry:
Yeah, no, I agree with you. I think most people are in a position similar to either you or I. And if they aren’t now, they probably were when they got started. And so having a couple of coasts that are representative of the majority of your community, I think can only be helpful because people can learn from our successes, but also learn from our mistakes. I make a lot of mistakes. We all. And I want to be transparent with the audience. I want to talk to you about the things that I screw up. And I want people to just know that we’re just a couple of dudes who happened to buy some houses and they turn out usually to be pretty decent investments. And it changed our lives. And I know that people can learn a lot from hearing about our experiences.

Dave:
If we can do it, anyone can do

Henry:
That. You darn right money.

Dave:
Well, again, man, super excited to have you. I think this is going to be great for the whole BiggerPockets community. Just so you all know what you can expect, we’re not changing up the shows or anything. We’re still going to have three shows a week. We’re still going to be doing investor stories once a week. We’re going to bring you tactics, strategies, conversations, debates once a week. We’ll also be doing economics, market data at least once a week as well. Most of those are going to be Henry and I together. Some of them will be Henry alone. I’ll probably do most of that economic stuff alone to spare you from having to do all that stuff. But you’ll basically just see a lot more of Henry and the same kind of formats that we’ve been sharing with you for the last year and a half.
We’re going to go into Henry’s story. You’ve probably heard bits and pieces about it as he’s been on the show a lot, but I think we should just start from the beginning and talk about where you were in life, sort of mentally and financially when you decided to get into this business.

Henry:
Mentally, I was immature. Financially, I was immature. I didn’t have any financial background, so we didn’t talk about money in my household.

Dave:
As a kid or even with your wife?

Henry:
As a kid. When I got married, that came up. But prior to me getting married, I worked a corporate gig for Walmart. I was designing software. I had great job. I made six figures and because I had no financial education, I was just bad with the money. And so I spent it. I had a bigger apartment than I needed. I had a nicer car than I needed. And so I spent more money than I made essentially. Were

Dave:
You putting on credit cards?

Henry:
I was. I was. I would spend most of my money every couple of weeks, and if I needed more, I’d put it on credit cards or I would eat ramen noodles and McDonald’s dollar menu food until I got paid again. And I didn’t contribute to my 401k. I had no savings. I had about $1,000 in my savings account and I was fine living like that. But as you mentioned, I got married.
And what I quickly learned when I got married was that my wife, Jessica, did not want to eat off the dollar menu toward the end of the pay period until we got paid again. She thought that that was something we shouldn’t do. That was the first time in my life where I started to realize that my poor financial decisions were now impacting somebody other than myself. And it all came to a head when we tried to buy a house together with the American dream, get married, buy a house, have kids. We were going to go down that path. And during the loan process, the banker called me and said, “Hey, if you want your wife to be able to buy a house, you can’t be on the loan. Your credit is bringing down her ability to own a home.” And I literally remember that conversation.
I remember feeling nauseated. I remember just thinking that I’m screwing this up for us. And even though I made more money and I wanted to be this provider, I had this urge to provide for my now new wife and I couldn’t.

Dave:
But you could have. You had the resources to be able to do it, but I mean no offense, but it was your decision you’re making. It wasn’t like your circumstances.

Henry:
That’s what made it feel worse.That’s what made it feel terrible is that it was no one to blame but me. My ignorance about financial education was now costing us the life that I wanted us to have and that she wanted. And so I did remove myself from the loan. She did buy the house and luckily she allowed me to live with her and I thought that was very kind. And not long after that, we’re sitting in bed one night having a conversation about our future. And this is what all young married couples do. You talk about how many kids you want to have and places you want to go on vacation and just visualizing your future life together. Amy, we’re talking about our dream home and what that looks like and where that would be. And I just remember thinking while we were talking, I can’t afford any of that, like a dream home.
I wasn’t on the loan for this home. And now we’re talking about dream homes. And I didn’t want to let her know how scared I was during that conversation, but I was terrified because I was just like, at some point she’s going to realize that I can’t provide her this life
And she’s going to be out the door. And none of that is true.

Dave:
That’s where your brain goes. Yeah. Can imagine you just feel like you want to make your wife’s dreams come true and you didn’t have the maturity, like you said, to provide it at the point.

Henry:
And so that night I had a literal panic attack because I just couldn’t stop thinking about these things. People say the word panic attack or the phrase panic attack all the time. This was legitimate. I woke up just sweating and couldn’t breathe. And I felt like the walls were closing in on me and I didn’t know what else to do. So I just started Googling on my phone how to make extra money. I remember I started Googling side hustles. I started Googling how to make extra money because in my head I was like, the problem is I don’t have enough money. So if I get more money, then everything will be okay. And so I was just like, I’ll just do anything on the side to start making money. And I started finding articles about real estate investing on bigger pockets. Those were all the search results where just people were investing in real estate.
And I started to read through some of the posts and started to watch YouTube videos of people investing in real estate. And I just realized that normal people owned real estate. And before that, I’d never thought about it. I just assumed super rich people or corporations owned real estate. I never had to think about real estate before, but something about it just gave me a peace. I was like, “Oh, if all these people have figured out how to own real estate and change their financial future, I’ll just do that. ” I felt so comfortable with that decision,

Dave:
Which

Henry:
In hindsight is silly.

Dave:
Yeah, it’s wild because there are easier sides. They’re like, there’s easier things to stand up. You could go buy for Uber or something, but what was it about this? Is it kind of like the long-term benefit or what about real estate

Henry:
Hooked you? I don’t know. It almost felt like I was supposed to do it because it’s silly to think about. I had $1,000 in my savings account. I had sub-600 credit score and I was sitting in a house that I couldn’t afford to be on the loan for, and I thought my solution to my money problems would be to buy more

Dave:
Houses. Oh, you got more loans. This is a perfect time to go apply for a loan. But honestly, sometimes it takes a little bit of naivety to get into this. You don’t know what you don’t know. You just throw yourself into it. Clearly something about it inspired you. That is, as your story is evidence of, sometimes the inspiration and the motivation matters more than the facts on the ground of what your financial situation looks

Henry:
Like. Yeah. And I’m not telling people to just go do something stupid. I didn’t do this in a stupid way. What I did at that time at 3:00 in the morning was I made a decision. I remember deciding, I was like, “Oh, I’m going to do this. I’m going to do this. I’m going to figure it out. ” And I had this piece and I went to sleep and I woke up the next morning and I told Jessica, I was like, “We’re going to be real estate investors.” And she kind of- She did that. What you just did, that’s what she did. But in all seriousness, I think that she thought anything that it was better than the trajectory that we were on. And she was like, “All right, well, I had to grandfather own some rental properties. I think this is something that we could do if we put our minds to it.
” And then I started to just surround myself with investors. I didn’t know how to do it. And so in my brain, all I could think was like, there’s got to be people locally doing it. I’ll find who they are and I’ll see if I could just spend time around them. And so that’s when I found real estate meetups. I didn’t know meetups were a thing, but I was just Googling real estate investors in Northwest Arkansas. I found the meetups. I would go to the meetups and I found this community of people who just wanted to help you, which is so weird because most industries like this, people are competitive and they play everything close to the vest and they don’t want to share. But when I went to the first real estate meetup, everybody was like, “Well, how can we help you? ” Yes.
“What do you need? Do you need money? Do you need deals?” I just never expected that. It is

Dave:
Unusual. It is unexpected. That’s a good way to think about it. Even on BiggerPockets, you go on the website, people are just sharing ideas, sharing contacts. It’s a very collaborative community. It was one of, I think, the most underrated parts of real estate. Obviously, the financial returns are great, but it’s fun. And you meet people and you make friends. It gives you a sense of community- Absolutely. … that in other industries I’ve worked in has been completely total opposite. I

Henry:
Just remember coming home from that first meetup and just feeling even more reinforced that this was going to happen because now it wasn’t just me anymore. All these people were wanting to help. And so I started to just make all these friends with these seasoned investors. And I went to every meetup I could. I just wanted more and more of that community. It was intoxicating almost. It was like, I just want to be around this. And that turned out to be super helpful for me because 60 days after that, I got a lead for my first deal and I had no idea how to do it.

Dave:
This story is, I think, very inspiring. You started where a lot of people are, whether it’s exact same situation, but no experience, not a good financial position.This is where a lot of people in the BiggerPockets community start. That enthusiasm, I think, ramps up quickly because there’s so many just positive proof points. So many people have done it, so you know you can do it, but then there’s this hard gap to cross where you translate the excitement, enthusiasm, and long-term goal into like, “All right, now I got to go do something.” I should do anything. I still got the sub-600 credit score. I still don’t have money. So how do you go from enthusiasm to actually getting in the game?

Henry:
That is a great question, which I will be happy to answer right after this break.

Dave:
I love having you here. This is great. I don’t have to even think about it. We’ll be right back. The Cashflow Roadshow is back. Me, Henry, and other BiggerPockets personalities are coming to the Texas area from January 13th to 16th. We’re going to be in Dallas. We’re going to be in Austin. We’re going to Houston, and we have a whole slate of events. We’re definitely going to have meetups. We’re doing our first ever live podcast recording of the BiggerPockets Podcast, and we’re also doing our first ever one-day workshop where Henry and I and other experts are going to be giving you hands-on advice on your personalized strategy. So if you want to join us, which I hope you will, go to biggerpockets.com/texas. You can get all the information and tickets there. Running your real estate business doesn’t have to feel like juggling five different tools.
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Welcome back to the BiggerPockets podcast. I’m here talking to Henry about his story and how he got started. Where we left off, you were going to answer a question I asked you about translating the excitement, the enthusiasm, the long-term vision into doing the thing when you don’t have a lot of resources or experience.

Henry:
Well, one of the things that I just believe in life is that in this world, you get what you give. And if you want something, you need to put it out there that that’s what you want. And so I would just tell people I was a real estate investor, even though I’d never done a deal because I felt like if I didn’t believe this was going to work, then why would anybody else

Dave:
Do it? Look at it. Yeah.

Henry:
And so I got a phone call one day when I was at work from a buddy of mine, good friends with this guy. And he says, “Hey, I heard you’re buying houses.” And I was like, “Yes.”

Dave:
Something’s working.

Henry:
Yes, I am. And he said, “I’ve got to sell my house and I got to sell it in the next 30 days.” He was like, “I’m buying some land for my church and I need X amount of dollars to do that. And I need this loan to be off my record to do that. And I have a drop dead window. So in 30 days, I need this much money. So I’ll sell you my house for $116,000. It’s probably worth 160 to 170,000. I don’t care. As long as I sell it for this, I get the exact amount of money I need to go buy this land from my church, but I need it in 30 days. Can you close in 30 days?” And I’ve been to this guy’s house. I know his house. I know the neighborhood. And so I go, “Yeah.” Just

Dave:
Blind confidence. And then you go, Google, how do I close in 30 days? It’s

Henry:
Literally what I did. This is 100% what I did. And he was like, “All right, well, what do we do? ” And I was like, “Hold on. ” And I literally had to Google, how do you buy a house without a real estate agent? And it was like, “Well, you need to put it under contract.” And then after I Googled what under contract meant, it told me I needed to sign a real estate contract. So then I had to find a real estate contract online. I downloaded it, we signed it and I was under contract for this house. That’s terrible legal advice. Don’t do that. Yeah, don’t do that.

Dave:
But where did the money come from?

Henry:
So we signed the real estate contract and he’s like, “Okay, what do we do now?” And I said, “I don’t know, but I’ll go find out. ” And so we have the contract and it says I’m going to close in 30 days. And I go, “All right, well, I need $116,000. Where am I going to get $116,000?” And I said, “I’ll call a bank. Banks give loans for homes. I’ll just go to a bank and I’ll ask them what’s the process to get a loan to buy this home.” So that was my thought process. So on my lunch break at work, I took that contract to one of the closest banks to my office. I figured I’d just start there. I walked in with the contract. I had $1,000 in my savings account. So I walked in needing $115,000. I walked into this bank and it happened to be a community bank, which I didn’t know walking into it.
And the guy standing in the lobby happened to be the commercial loan officer. He was just standing. I didn’t ask for him, but when I walked in, he asked could he help me. And I was like, “Yes, I’m looking for somebody to help me purchase this home.” And I literally handed him the contract. He looked at the address and he was like, “Come back to my office.” And he put it in his computer and he was like, “This house is probably worth a lot more than this. ” And I was like, “Yes, got to do it. It’s this. That’s why I would like to buy it. ” And he was like, “Well, what we do is commercial loans. Does it need work?” And I was like, “Yeah, I think it needs some work. There’s somebody living in it, but I don’t think it’s in the best shape.” And he was like, “Well, the way our loans would work is we would loan you 85% of the purchase price.
You would have to bring a 15% down payment and we’d give you 100% of the renovation costs.” And I was like, “Oh, that’s awesome.” He was like, “So you have the 15% down payment?” And I was like, “Yes, I do.
” I did not have the money, but I wasn’t going to tell him that. And most people would’ve seen that as a stopping point to say, “Okay, well, I don’t have … ” It was like 20 grand at that time, but I was excited because I walked in the bank needing $115,000 and I walked out only needing about $19,000. Just got

Dave:
95.

Henry:
So I am almost there, plus I have renovation money that I didn’t think I would get. And so I then had to figure out where to get the rest of this $19,000 from. And so I leaned on this community of investors who I’d been building a relationship with over the past 60 days with going to these meetups. And I called three or four different ones and brainstormed all these ideas to get the down payment. And I remember I finally called my buddy because I couldn’t find the money after about a couple of weeks. And I said, “Hey, I have this deal. It’s a good deal. I told my buddy I’d buy it. He’s in a pinch. Can you buy it because it’s a good deal and I don’t want to let him down.” And he was like, “Henry, I would buy this deal.” I was like, “But if you are going to be a successful investor, you need to figure it out.
” And he sat there on the phone with me and just rattled off ideas and we ended up landing. He was like, “Dude, just use your 401k.” And I was like, “How does that work?” And he was like, “Well, yeah, you can borrow against your 401k.” And I was like, “Well, I don’t want to cash out my 401k. You got to pay penalties and fees.” I was like, “No, no, you can borrow against it. Your employer will typically let you borrow a percentage of what you have saved up in your 401k. You pay it back with interest, but the interest is yours because it’s your money. So you’re actually paying yourself back with interest. If you buy this property and rent it out, technically your tenant’s going to pay the mortgage and be paying back your 401k loan.” And I was like, “That’s a brilliant idea.
I didn’t know that was an option available to me. I just got to find a 401k.”

Dave:
Yeah. I thought you were saying we had

Henry:
It- I did not

Dave:
Have one. Okay.

Henry:
But my wife did.

Dave:
Oh, nice.

Henry:
Yes. And so I went to her and I said, “I think we need to borrow 20 grand from your 401k for us to buy this rental property.” And she said yes, almost immediately without a doubt, without a thought, she was like, “Yeah, let’s do it. ” We had the money in a week and some change. We closed on the house. We kept the tenant in it. We put the rents closer to market rents and it started to pay for itself and pay for the loan and pay us back and put a little bit of money, a cash flowing off pocket at the end of the month. And that was the proof of concept that this worked. But right after that, the bank called me and they said, “You should take out a line of credit on the equity for this- ”

Dave:
You’re walking into 50 grand, right?

Henry:
Yeah. And I was like, “Cool, what’s that? ” And so he walked me through what the line of credit was. He walked me through that process. I got access. I ended up getting access to almost $30,000 on a line of

Dave:
Credit.

Henry:
And not 90 days before that, I was having a panic attack about how I was going to take care of my family financially, and now I knew I had found the thing. I found the way that I was going to be able to take care of my family financially for the rest of my life. The banker literally told me, “If you bring me another deal like this, use the line of credit for your down payment going forward. We’ll finance the deal, 85% plus the renovation. Line of credit’s your down payment. And then when you sell that property, you pay back off the line of credit. Or if you keep it as a rental, then you’ll refinance it on a 30-year fixed and you’ll pull out the money that you use for your down payment and go pay off the line of credit.” So he was explaining the BER method to me before there was a fancy term for it and that’s how I learned to get started.
And so at that point I knew I’ve got money now.
I’ve got money to buy deals. I just have to go figure out how to find more of these deals. And so that’s why I became this deal find. Everybody knows me as a guy who finds deals. Well, that’s why, because I had this banker who was giving me money to buy deals and I just had to learn how to find more of them if I wanted to grow. So I was able to solve those two problems early on. And that’s how I started to grow and scale my portfolio by leveraging that very first deal and by doing either the BERR method or flipping and paying off those properties.

Dave:
Amazing story. It’s such a great example of how just perseverance and a little bit of hustle can get you into this industry. Well,

Henry:
We’re going to take a quick break, but when we come back, we have more from your new co-host, Henry Washington, where he’ll be sharing some of his investor story with you. We’ll be right back.

Dave:
You’re on the show once, you’re talking about yourself in the third person already.

Henry:
Oh, that’s not what you do? Yeah, I thought that was what you do.

Dave:
Yeah.

Henry:
Yeah.

Dave:
Okay.

Henry:
I’m the end of

Dave:
Washington already. Welcome back to the BiggerPockets Podcast. I am here with my co-host, Henry Washington. All right, so super cool story. You’ve obviously established yourself as these deal junkie and great deal finders from the beginning, but where are you now? Fast forward to today, what does your portfolio and your business look like in 2026?

Henry:
Yeah, I’ve got somewhere around a hundred rental properties and I still flip anywhere between 10 and 20 houses a year, depending on the year. I think we’re doing 12 this year. We did 19 the year before that. So I flipped 10 to 20 houses a year. In terms of my portfolio size, I’m not aggressively growing my portfolio anymore. I’m pretty comfortable with the size of my portfolio. What I’m more focused on now is prioritizing the assets that I have into the ones that I know I want to keep forever and ever. Amen. And then the ones that would be nice to keep forever and ever, and then the ones that I sure would like to sell to somebody. But the goal is through selling those assets to pay off the ones that I know I want to keep forever. I’m in a mode where I’m more focused on stabilizing my assets and paying them off, protecting them.

Dave:
Because

Henry:
If you own real estate that’s leveraged, it’s not fully protected yet. You don’t truly own it. A bank can take it from you. And I really want to get a certain percentage of my portfolio paid off so that that’s that true family generational wealth. Those assets are ours. They’re in my family and no one can take them from us unless we decide to sell them.

Dave:
So obviously it’s an incredible success story going from where you were to where you are owning hundreds of units, being in this harvester stage. But what are some of the things that you’ve learned or maybe the principles that you’ve employed in real estate that have gotten you through that scaling phase and that you want to share with the audience as you’re more and more involved in the show?

Henry:
First and foremost, the thing that I’ve learned and that is the most important to me is that this is a people first business. For me, it’s people over profits. I think that we as investors are in a unique position to be able to help people who might need some of the help. And sometimes we have to be willing to do that even if it costs us money or time.

Dave:
Yeah, I think that’s true in the short run. I guess the way I think about it is how do you create mutual benefit? You’re not a charity, you’re a for- profit business, you’re not going out there to just help people stay in their home, but it’s like how do you create a situation where everyone wins? And I think that’s the most important thing about real estate. In any transaction, how do you create a situation where you as the investor can win, tenants win, the real estate agent you work with wins, the lender wins, the property manager wins. It’s the thing that you learn being part of these communities is that it’s not a zero-sum game where one person wins and then the other people have to lose for real estate investing to be successful. Everyone can benefit from these situations. I think that’s such an important thing.
And it might sound like you’re giving up profit, but I promise you in the long run, you will have a better, more sustainable business if you think about it that way.

Henry:
There’s enough deals and enough houses and enough opportunities to make money. If you take care of the sellers you’re encountering, if you take care of your tenants, we don’t have a business without tenants. They’re customers. And I feel like they don’t get treated like that by a lot of landlords. I feel like it’s this weird customer service business where the customers don’t actually get treated like they should be.

Dave:
Right. Yeah. It’s your job to provide them with a good product.

Henry:
And so if you can be a landlord who treats your tenants with respect, then they reciprocate and treat your properties and investments with respect. The second principle that I operate by is this is a business where you make money by controlling a deal. It doesn’t matter how you want to invest in this business, you need to be able to buy an asset at a discount. And so my principle is I want to walk into equity on day one. I may not always walk into cashflow on day one, and we can argue in comments about whether that’s right wrong or indifferent, but I’m always going to walk into equity on day one. I like that. I’ve got to be buying a deal at a discount or else it doesn’t make any sense. I’m not doing it. And the third principle is we’ve got to leverage our superpower.
Everybody has a strategic advantage of some kind, and it’s our responsibility to know what it is. A lot of the times it’s going to be your understanding of whatever particular market you’re investing in. Yeah, totally. And I think a lot of people sometimes throw that superpower out of the window because they want to Go invest somewhere else where they think it might be easier, but they’re not factoring in.

Dave:
It’s hard to learn in other

Henry:
Markets. Yeah, what your superpower is in your market.

Dave:
I was talking about that at BPON actually, because I was saying to people, even newbies, you have something to offer to the community and a lot of first timers like, “Oh, what can I help with? ” It’s like, you know your neighborhood, you know your area.That is something that you’ve rented in this neighborhood. You understand what it’s like to be a tenant in that neighborhood. That’s knowledge that helps you as an investor.

Henry:
Yep. You might know about projects that are coming down the road in certain neighborhoods. There’s a strategic advantage that we all have and you need to be able to leverage it. And don’t just throw your strategic advantage out of the window because you think things will be easier in some other market or some other niche. It’s just learn what your strength is and leverage it. Real estate is a game. What’s

Dave:
Yours? What’s your superpower?

Henry:
My superpower is, A, for some reason, people just want to tell me things. And so I’m really good at building rapport with people. Yeah, you are. And that helps me build trust with people. And this is a trust-based business. And so I’m able to get great deals and people choose to work with me over people who might be willing to pay them more just because they trust me. And so yeah, I think I have great people skills and that helps me in all areas of my business.

Dave:
What’s your non-real estate superpower?

Henry:
Non-real estate superpower. I got in the gym range in basketball.

Dave:
Oh, really?

Henry:
Well, if I walk in the gym, I’m in range.

Dave:
Oh, we got to see that. I won’t play you because I am awful of basketball. But I want to see that.

Henry:
I thought

Dave:
You were going to say as though you don’t get hangovers.

Henry:
No. No, I don’t get hangovers. That’s true. You get super powerful. Give me a basketball and I’m in the gym. The slights out.

Dave:
Okay. All right. We’ll put that to the test. Well, love those principles. They’re great. And I think we’re going to hear a lot more about them and more with you now as a co-host. So thank you so much for joining the show and for sharing your story. I guess I could stop thanking you. Now it’s your job. But I do appreciate you coming on and being vulnerable and sharing the story because I think this is the reality. People see it with people like you and I who have social media accounts, who host podcasts and see where you’ve gotten to, but we all start from the same

Henry:
Place. We all start from the same place. It’s

Dave:
Like everyone starts not knowing what to do, not having any clue if this is going to work out with not a lot of resources. And you’re a perfect example. It’s a super motivating and I think inspiring story showing that you can go from very little to being super successful and still being a great person and having a good business at the same time.

Henry:
Thank you very much. I’m more than thrilled to be here. I’m super excited to see where we take this show and I’m super, super blessed to be able to be here and share with all of you. And so thank you everybody for all the support that you’ve showed me and the comments over the past three or four years, and I just can’t wait to bring you more.

Dave:
All right. Well, thank you all so much for listening to this episode of the BiggerPockets Podcast. In the comments, we want to know what shows you want Henry and I to come out with here in 2026. We got a couple good shows playing for January and February, but we’re not that far planned out. So tell us what kind of shows, what guests you want, what topics you want to cover. Make sure to hit us in the comments. Thanks again. We’ll see you next time.

 

In This Article

Foreclosure markets move in stages. First come early filings. Then come the auctions. And when auction volume rises, it signals one thing clearly: Distress is maturing, and opportunities for investors may be expanding.

November’s foreclosure data tells an important story. While Foreclosure Starts cooled across much of the country, Notices of Sale surged 27.93% year over year, signaling that a large wave of properties is now entering the auction phase of the foreclosure pipeline.

For investors who buy at trustee sales, courthouse auctions, or pre-auction negotiations, the Notice of Sale stage is one of the most decisive points in the process. It compresses timelines, accelerates decision-making, and often reveals where future REO inventory will appear if properties fail to sell on courthouse steps.

This month, the numbers—especially county-level shifts—highlight where auctions are heating up, where they’re cooling, and what that means for investors entering the end of 2025.

National Auctions Push Higher While States Diverge

In November 2025, the U.S. recorded 17,402 Notices of Sale, up 2.38% month over month and 27.93% year over year.

This upward movement is meaningful. Even though October saw a temporary decline, November’s increase reinforces a broader trend: 2025 is ending with more auctions and more properties moving deeper into foreclosure compared to 2024. But the national averages mask big differences across states.

State-Level Auction Performance: Five Key Markets

1. Florida

• 800 Notices of Sale
• ?41.63% MoM
• Still +17.30% YoY

Florida recorded the steepest MoM decline of all major states. But the YoY increase keeps it above 2024 levels. Auctions slowed dramatically—likely due to October’s backlog.

2. California

• 1,130 Notices of Sale
• ?10.09% MoM
• +7.93% YoY

California’s auction activity cooled slightly compared to October, but remains higher than last year.

3. Ohio

• 490 Notices of Sale
• ?2.45% MoM
• +25% YoY

Ohio continues its steady upward march, consistent with its long-term trend of ongoing pipeline normalization.

4. North Carolina

• 534 Notices of Sale
• +35.39% MoM
• +92.09% YoY

 

This is the auction story of the month. North Carolina saw massive increases both monthly and annually.

5. Texas

• 2,612 Notices of Sale
• ?18.03% MoM
• +2.75% YoY

Texas dipped month over month, but remains one of the highest-volume foreclosure auction states in the country.

Why Notices of Sale Matter So Much

For investors, the Notice of Sale stage provides visibility into both timing and opportunity.

1. Auction timing becomes predictable

Once a Notice of Sale is issued, the property is typically scheduled for auction within three to six weeks, depending on state law. This creates a clear runway for:

• Due diligence.
• Funding decisions.
• Bidding strategy.
• Partner alignment.
• IRA or Solo 401(k) preparation for non-recourse financing.

2. Properties become more actionable

Unlike early-stage filings, which may cure or be resolved through modification, auction-stage properties are far more likely to change hands—either at the sale or shortly after as an REO.

3. Investors get first access to distressed assets

Buying at auction often means:

• Lower acquisition prices.
• Less competition than retail listings.
• More margin for BRRRR, flip, or long-term rental strategies.

4. Auctions signal future REO supply

When auction numbers spike, REO inventory typically grows 60 to 120 days later. Tracking NOS activity helps investors anticipate supply before it hits the MLS.

County-Level Insights: Where Auctions Are Heating Up or Cooling Down

Under Option C, we focus only on the most meaningful and statistically significant county-level moves—the ones that help investors understand where the action is happening.

Florida: Big auction pullbacks in the counties that matter

The statewide decline was driven by:

• Miami-Dade County: One of the steepest MoM drops in auction volume
• Broward County: Notable decline tied to October’s spike
• Lee County (Fort Myers): Also posted a sharp auction slowdown

But in contrast:

• Orange County (Orlando) saw a moderate increase in Notice of Sale filings, suggesting localized pressure.

Investor insight

Florida’s auction volume cooled dramatically, but key Central Florida ZIP codes still show rising pre-auction activity.

California: Slower auctions, but Inland Empire holds firm

Notable county-level shifts include:

• Los Angeles County: Meaningful MoM slowdown in auction postings
• Riverside County: Remained elevated despite the state’s decline
• San Bernardino County: Stable-to-rising NOS activity in several investor-heavy neighborhoods

Investor insight

California’s cooling is uneven; some Inland Empire markets are still quietly accelerating toward auction.

Ohio: Columbus leads the way

The most important county-level movement was in:

• Franklin County (Columbus): One of the strongest MoM increases in Notices of Sale
• Cuyahoga County (Cleveland): Posted a surprising slowdown despite historically high volume
• Hamilton County (Cincinnati): Stable, not signaling distress acceleration

Investor insight

Columbus continues to emerge as Ohio’s top pre-auction opportunity zone in Q4.

North Carolina: Massive auction injection

The state’s 35.39% MoM surge came primarily from:

• Mecklenburg County (Charlotte): One of the largest increases statewide
• Wake County (Raleigh): Rapid growth in trustee-sale scheduling
• Guilford County (Greensboro): Strong contribution to the YoY surge

Investor insight

North Carolina is moving through foreclosures faster than any other major state this month. This is a prime state for auction-focused investors.

Texas: Drop in volume, but one jaw-dropping spike

Despite a statewide decline, Texas still delivered one of the most dramatic county-level movements of the month:

• Harris County (Houston): Strong MoM drop in Notices of Sale
• Dallas & Tarrant Counties (DFW): Noticeable declines
• BUT: Bexar County (San Antonio): Posted one of the few MoM increases

Investor insight

Texas remains the fastest foreclosure pipeline in the country. Even during slow months, cases move quickly toward sale.

How Investors Can Use Notice of Sale Data

Auction-stage data is one of the most actionable foreclosure metrics. Here’s how investors can use it:

1. Build a county-level auction watch list

Identify counties where NOS filings accelerated this month:

• Charlotte
• Raleigh
• Columbus
• California Inland Empire ZIP codes
• Parts of Central Florida

These counties offer greater odds of finding auction inventory in the next 30 to 120 days.

2. Evaluate non-recourse loan timing (for IRA/401(k) investors)

Because auction dates are fixed, investors using self-directed retirement accounts can:

• Prequalify for non-recourse financing
• Prepare capital within tax-advantaged plans
• Structure cash offers in advance

3. Predict REO supply before it appears

Auctions that fail to produce a winning bid often become bank-owned. Rising Notices of Sale = rising future REOs.

4. Accelerate local market due diligence

Auction-rich markets require:

• Contractor availability.
• Property manager relationships.
• Title research efficiency.
• Local legal familiarity.

Tracking NOS data helps investors front-load their preparation.

Take Control of Your Investment Strategy

Auctions represent one of the most dynamic moments in the foreclosure process. They compress timelines, sharpen investor strategy, and reveal where motivated sellers—and lenders—are active.

If you want to deepen your understanding of foreclosure opportunities and explore how to use a Self-Directed IRA or Solo 401(k) to invest in real estate, learn more at: www.TrustETC.com/RealEstate

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

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

Dave:
2026 is finally here. I hope you all had great holiday and New Year’s. With the New Year upon us, this is a great time to start looking forward into 2026, talk about our goals and our New Year’s resolutions. I’m Dave Meyer, joined by Kathy Fettke and Henry Washington today. And we’re going to be laying out what we want to be more disciplined about this year, the strategies we think are going to pay off best for us, and the goals we want to have checked off by 2027. From how we buy and manage deals to how we think about risk and opportunity, we’re putting our plans on the record. This is On The Market. Let’s jump in. Kathy, Henry, how are you? Happy New Year. Happy New Year to you.

Henry:
Happy New Year.

Dave:
I am not going to lie and pretend that we’re recording this in the new year. It’s not really the New Year, but proactively to everyone. We’re recording this in December, but happy New Year to all of you. Kathy, you have some great holiday plans. Tell everyone what you’re up to. You’re always somewhere fun.

Kathy:
Well, yes, I’m in Paris recording this from a cave.

Dave:
You literally look like you’re in a medieval wide seller right

Kathy:
Now. I’m pretty sure I am. I’m in the oldest part of Paris, but I am here for the Christmas markets and mainly because my daughter is getting married in France. So I had to come see the venue with her. Had to. And then it’s also-

Dave:
Wow, you had to.

Kathy:
I had to, and it’s the last year of the Northern Lights being really intense. So we’re going to take a little trip up to the North Pole, to the North of Norway.

Dave:
Oh, that’s so great. Wow. What a fun trip. Henry, what were you up to in the holidays?

Henry:
Food.

Dave:
Enough set,

Henry:
Really. Absolutely. I mean, I have little kids, so I do get to enjoy the joy of Christmas still, so that’s fun, but mostly I’m eating my way through the holidays.

Dave:
Yeah, good for you. All right. Well, let’s jump into today’s episode because I really want to just start looking forward. Last year was a interesting … I wouldn’t call it a great year. I was going to say it’s a great year. I would not have called 2025 a great year. That would’ve been a straight up lie. I am feeling optimistic going into 2026 and just about real estate in general. So let’s talk about this in terms of what our New Year’s resolutions are. We’ll start with real estate, but if you want to throw a non-real estate one in, I would love to hear them. But Kathy, what’s your real estate New Year’s resolution?

Kathy:
Well, I have a few, but one is to really dive into AI because Rich actually bought a really expensive program and he’s finished it and I have not. I’m not even close. But I know it’s so powerful. I mean, one of the things that Rich did is he uploaded everything, our bank statements, the cash flow. Our system knows everything about us. And when we upload it, we could know which properties are performing well, which are not. I mean, we should be knowing that anyway, but I feel like sometimes it’s easy to get lazy or you’ve just owned properties for a while and haven’t really taken a look. Is this still a good performer? So using AI to optimize our portfolio is my goal for real estate.

Dave:
I like that a lot. I like this as a goal. It’s not like, oh, I have to buy this property by this data. This is more like a growth mindset kind of goal. How do you just evolve as an investor generally so that you can make better decisions going forward? Is that program, is that real estate specific?

Kathy:
No, no. It was just a bunch of business owners. But I mean, it’s like he’s got a business consultant now. All of our business financials are in there and we had every employee detail what they do, not in a dog kind of way, but I guess kind of like what do you do all day? And so AI knows each employee and knows how to optimize for them. It’s really been phenomenal. Wow. And we had one of the best months ever for our company last month. I don’t know if it has to do with that or not, but that’s strange, right? At a time when real estate has been so slow, sales have been slow, we had a really good

Dave:
Month. That’s awesome. So it sounds like you’re using AI not just to identify properties or deals, but work on and in your business as well.

Kathy:
Yeah. I mean, how many times do you really know what your insurance covers?

Dave:
Literally never.

Kathy:
So with, I’ll say Claude, for example, we can upload our entire insurance thing. There’s a word for it.

Henry:
Your insurance binder? Yeah.

Kathy:
Yeah, that thing, the binder. To just really know the details of your insurance policy and even ask it, “Hey, is this covering me for everything I need for this investment property in this particular state?” It’s really phenomenal with what’s available to us and it’s only going to get better, so why not be on the cutting edge of it?

Dave:
I love it. Henry, are you using AI regularly?

Henry:
The short answer is yes, but I’d be lying to you if I told you I was using it on a much deeper level than just the surface level asking for help with certain items. Now, I did try to build something similar to what Kathy was talking about about two months ago where I was uploading transaction data and information from my property manager because I wanted to see if AI could give me a sense of how well certain properties are performing. And I thought if I could upload the actual bank statements and marry that against the data from your property manager who’s actually going out to the properties, doing the actual repairs. And then I wanted to marry that against what I’m spending with contractors on certain properties to get just a bird’s eye view of my portfolio. And it was very challenging in ChatGPT. And so I’m wondering if I should try Claude or Gemini or one of those.

Kathy:
Claude is so good for business.

Dave:
Oh, really? I got to check that out because Henry and I were just in Seattle and people were raving about Gemini.

Kathy:
Yeah.

Dave:
I feel like it’s a horse race right now. One releases a new one and it gets a little bit better and then the other one gets a little bit better, but there’s not a clear winner. I just have to tell you guys, I got a little bit of a behind the scenes look at a big real estate company’s new AI tool. It’s not BiggerPockets, but there’s another one that’s going to release one soon. I got to do the beta. It is so freaking cool. It’s unbelievable how good the analysis and information about properties and markets. For a data analyst, this thing is so cool. I am super excited to start using these kinds of tools in my own analysis. But I have to ask you guys, maybe I’m just a complete control freak, but I use this for research, but I double check everything

Kathy:
That

Dave:
I do still, right? Okay,

Kathy:
Good. Because it still makes lots of errors. It’s not there yet, but it will be. It will be. So learning the things that we’re learning. And bottom line, the goal for me for doing all this is I want to see if I can … Wait, let me say that in a more powerful way. I’m going to increase cashflow by 10% by optimizing our portfolio, whether that means taking some older properties that aren’t really performing and 1031 exchanging them into better ones or just looking at things like we bought a lot 10 years ago because we were living at a house where someone was going to build this mega box property that block our view. And so we bought the lot so they wouldn’t do it and now we don’t live there anymore and we just kind of haven’t done anything with it. We tried to sell it.
Nobody wanted just a lot. So that’s one thing. It’s like, how do I optimize this piece of land that’s just been sitting there and we’re paying taxes on? And so I’ve been working with a manufactured housing company and we’re going to put manufactured housing on that lot. And so when I’m doing a whole new thing and it’s actually going to cash flow in California

James:
California.

Kathy:
Yeah. And if my daughter ever decides she wants to move down the street from us, there’ll be a house there for her. Intent. But yeah, it’s kind of just stuff like that. Just kind of looking at what we have, the theme is more isn’t always better. Look at what you have and make it better.

Dave:
That’s great. Well, I think this is an awesome New Year’s resolution. I really like this idea of getting better at AI because I will admit, I am simultaneously excited by AI and very, very scared of it and terribly side of it. And so sometimes I just choose to ignore it because I’ll see these deep fake videos online and I’m like, “AI is evil.” But then you talk about all these things that AI is amazing for. I just need to figure out the right way to use it for my business that makes sense and not be overwhelmed by the societal implications that might be coming with AI at the same time.

Kathy:
For sure. I mean, an example is just I’ve been working a lot with Claude, that’s what I use. And asking for LA County, what do I need to know about manufactured housing? Tell me this step-by-step process. And it’s not 100%, it’s not easy, but it helps it feel not as daunting.

Dave:
All right. Well, I love this. This is a great New Year’s resolution. Thanks for bringing this one, Kathy. We got to take a quick break, but we’ll be back with Henry’s New Year’s resolution right after this. Welcome back to On the Market. I’m here with Kathy and Henry sharing our goals, New Year’s resolutions for 2026. We heard Kathy’s, which I love about getting better at using AI. Henry, what is your New Year’s resolution even though you don’t like them?

Henry:
No, I don’t like them. And I always feel awkward when people ask questions like this because of the kind of investor I am. I just do old, boring real estate, Dave. I buy distressed properties, I fix them up and then I rent them out or I sell them. And I think when people ask about resolutions, they expect to hear some super ambitious, creative thing that you’re doing. Like a big pivot,

Dave:
Like you’re making some change. Yeah.

Henry:
Yeah. And my goals are very similar each year because I just want to continue to do what works and what’s worked for generations, which is another iteration of the same thing. But now that I’ve placed that caveat, essentially I think of investing in three buckets where you’re either growing, you’re stabilizing or you’re protecting.
And we as investors operate in typically two of those buckets at a time, heavily weighted more so on one than the other. And so as I started in 2017, I’ve been a lot more focused on growth. So my goals each year were always around how many more assets do I need to acquire? How many more projects do I need to flip to give me the funding to acquire those assets? But now I’m in a place where I’m more focused on stabilization and protection. And to me, protection is paying off. And so my goals for 2026 or my resolution, if you want to call it that, is more focused around stabilization, optimization similar to Kathy and paying off debt. So I have a stretch goal of paying off two properties in 2026. And I know two doesn’t sound like a lot, but we’re talking about completely clearing the debt on two assets, which I think is a big deal.
So I want to pay off two of my assets and there’s about four assets that I need to stabilize because I’m bleeding money in them right now.
Some of them my own fault, some of them, no fault of my own. One in particular, I bought a duplex, not in a flood zone, and we had a crazy flash flood and it tore through both units of the duplex. And then on top of that, a big mistake happened with one of the remediation companies where they did some work unauthorized to the tune of $40,000. So I have about a $40,000 bill that we’re fighting because they weren’t supposed to do the work and I have about a $50,000 renovation I’m going to have to fund out of pocket. So these are big ticket items. They don’t just come very easy. So that property right now is a duplex that I pay monthly all the expenses on, but has no income. So stabilization is a big deal for me in 2026. I also have some multifamily assets I bought in 2023.
Again, no fault of my own. The city has come in and is requiring me to do some work that we didn’t plan on doing that where you can’t really fight. So there’s a lot that happens in a real estate portfolio that I just, I think requires you to take a step back and evaluate. So 2026, stabilizing the assets that are bleeding money and paying off two properties. And so those lead me to my other goals, which is I need money to do those things. So that guides me to how many projects I need to take on throughout the year to generate the income I need to solve those problems, live my life. Make sense?

Dave:
It does make sense. I love the way of thinking backwards. A lot of people would be like, how many flips can I do, maximize, and then take that money and be like, what am I going to do with it? But I really like thinking about it like, what do I need to do? And then sort of backing into the minimum amount of work that you can do. That doesn’t mean you might not take on more deals if you find opportunity, but just having a good sense like, okay, I need to do two a quarter or one a year. I need to do that, make sure I’m hustling on that, and then I’ll take everything else that comes from there.

Henry:
Yep. I average probably around like $45,000 net profit on a flip, and I would estimate that I need to do about 15 projects to be able to pay off the properties that I’m looking to pay off and to be able to have the income necessary to continue to live and be able to stabilize the four assets I need to stabilize. So that’s my goals.

Dave:
I love it. I guess I understand maybe why you don’t love a New Year’s resolution because this sounds like it’s a multi-year project too. It’s not like this is something you do in 2026. This is a piece of a larger goal that you have been working for and will probably need to keep working towards beyond 2026.

Henry:
Yeah. My larger goal, ideally, now they say your goals are supposed to be big and scary, right? In corporate world, they call them stretch goals. The big scary stretch goal is to have a third of my portfolio paid off 10 years from now.

Dave:
I like that.

Henry:
That’s a lot.
It’s a lot of money. But I feel like if you don’t set a big scale … Shoot for the moon land on the stars. If I end up with half of that paid off, that’s still going to put me in an extremely strong financial position in 10 years. So the larger goal is that. And then what I do each year is tying into that. And then I have to adjust each year because yeah, I have a goal of two this year, but what if I only get one? So then I need to take what happens in 2026 in terms of the economic outlook and make new goals. Maybe 10 might be too far out. Maybe I need to change it. So I think I’m not afraid to reevaluate my goals based on what’s happening, but I try to make it all tie together.

Kathy:
I love that. It sounds like you’re also looking at the protection side of it because as you start paying off properties, oh, there’s such relief knowing that if there’s anything goes wrong and you just can’t predict, you can’t predict things like 2020 coming along that turned out not to be bad for real estate at all. Ended up being a pretty good time for real estate, but could have gone the other direction. And when you’ve got paid off properties, boy, all you have to do is sell a couple and it’ll help pay for the other ones that you’ve maybe over-leveraged. And I know that you have way over-leveraged to get to where you are now and that has worked, but at some point you’re like, okay, it’s time to turn the ship and pay some of this off. That’s great.

Dave:
It’s interesting to hear both of you are focusing on optimization instead of growth. Is that a reflection of the market or just where you are in your personal investing journey?

Kathy:
That’s a good question. It was just the first thing that came to mind because it’s what I’ve been doing and excited about. Just taking a look at some of these properties that I bought 10 or 15 years ago and really haven’t paid any attention to them. For example, one, it just vacated and I talked to the property manager and she goes, “If you update this by about $20,000, you’ll get about 100,000 extra in equity.” I hadn’t even thought

James:
About

Kathy:
It. Easy. So that’s exciting. And if I do that, then we can sell that or keep it, take the money out. And so it’s almost like an after the fact bur,

James:
10

Kathy:
Years later down the road, bur.

Dave:
A slow bur. It just doesn’t matter. Just keep optimizing things over the long run. This is the way to do it. It’s absolutely right. I love that.

Henry:
For me, Dave, it is more a function of where I am as an investor because I’m a deal junkie and I love the process of finding deals. I love buying a great deal and I love operating assets in great parts of the community. It all is so fun for me, but at some point I have to get to a place where I am protecting the assets I have so that I have paid off assets to pass on to my children. The overarching goal for my real estate business is for my children to be able to be the people they’re called to be and not the people they have to be for money. So if they need or want to do something that isn’t going to pay them a ton of money, at least I have these assets that will be paid off that can provide income for them.
And so to get there, I have to pay off properties. And so I have to draw a line in the sand somewhere and start paying down these assets. And so that’s why I have the 10-year goal trying to get some of these paid off so that I have those to pass. Now, when I get to that point, Dave, I may just start doing more deals again, but I will always have- You will. You will. You’re right. And I’ll probably still do deals that are home run deals along the way. I’m not saying I’ll never buy another rental property between now and 10 years from now. I’m just saying I’m not in aggressive growth mode. So optimization is more important to me right now than growth was. And growth was more important to me when I first got started. It’s just a shift in where I am as an investor.

Dave:
All right. Well, these are great resolutions. Thank you. I really think these are, obviously they’re not just resolutions, but just goals and good perspective on where you both are in your investing journey. We are going to take a quick break, but we’ll come back with my New Year’s resolution right after this. The Cashflow Roadshow is back. Me, Henry, and other BiggerPockets personalities are coming to the Texas area from January 13th to 16th. We’re going to be in Dallas, we’re going to be in Austin, we’re going to Houston, and we have a whole slate of events. We’re definitely going to have meetups. We’re doing our first ever live podcast recording of the BiggerPockets Podcast, and we’re also doing our first ever one-day workshop where Henry and I and other experts are going to be giving you hands-on advice on your personalized strategy. So if you want to join us, which I hope you will, go to biggerpockets.com/texas.
You can get all the information and tickets there.
Welcome back to On the Market. I am here with Henry and Kathy talking about our New Year’s resolution. Kathy shared that she’s looking to optimize her portfolio and learn more about AI. Henry is going to be trying to pay down some of his debt and stabilize some of his assets. My New Year’s resolution for 2026, and I’m with you on this, Henry. This is something I’ve been thinking about for at least six months and is going to take me 10 years. But my plan right now and the thing that I’m focusing on is enacting what I’m calling my end game.
Hopefully not going anywhere, but I’ve been investing for 15 years now and I feel like I’ve had these two different eras of my own investing. My first 10 years, I bought rental properties, I self-managed them, all of them locally in Denver. Those were the first 10 years. The last five years, then I moved abroad. I was living in Europe. I sold some rentals. I got pretty into passive investing. I got into lending. I do syndications. I still own rental properties, but I’ve kind of had this second era. And now I want to move. I’m back in the United States. I want to move into my third act as a real estate investor. And I call it my end game because I want to spend the next 10 to 15 years putting myself into retirement. I am in a fortunate position where I do feel like I have enough capital to do it, but I need to rearrange my portfolio into an optimized way so that 10, 15 years from now, I’m going to have a portfolio that is just rock solid.
It’s only assets that I really like. Ideally, they’re paid off or have very low debt on my overall portfolio. And I actually think it’s a good time to start acquiring rental properties right now. And so I’m seeing opportunities trade out of some of my more passive options or lending and start acquiring the assets that I want to own ideally for the rest of my life.That’s kind of what I’m starting to think about. And I’m even considering … Henry and I were just together in Seattle. We were talking about this, thinking about putting things on 15-year notes, for example, instead of going to the 30-year fix that I’ve always really used and just start thinking, I’m 38 years old. At 53, I probably still won’t retire, but I want the portfolio that I can retire off of and that I wouldn’t need to touch if I didn’t want to for the rest of my life to be in place.
That’s not going to happen in 2026. This is going to take me probably at least five years to reposition things, do some different projects, learn a little bit, but that’s my goal. That’s the thing I’m really working on.

James:
Love it.

Henry:
Yeah, no, I think that that’s just smart financial planning. It’s similar to what I’m thinking about because I enjoy what I do now. I like chasing deals. I like flipping houses. It’s still fun and exciting. And is there annoying parts of it? Sure, but I enjoy it. But will I still enjoy it in 10 years? Will I just be tired of the chase? I’ve talked to a lot of seasoned investors in their 50s, 60s, and 70s, and the one theme across all of them is at some point they got tired of chasing deals. They got tired of churning houses and flipping houses. And so if I can get myself to a point where I don’t ever have to flip another house if I don’t want to, but I can still choose to, that’s ideal. And it sounds like that’s what you’re trying to get to.
How do I get to the point where if I just want to sit down and do nothing, I can. I’m taken care of, my family’s taken care of, my legacy’s taken care of. But if I want to go do some cockamamie crazy deal, I can also go do that. Definitely.
Getting yourself to retirement doesn’t mean you have to retire.

Dave:
First of all, I got tired of flipping houses before I even got started. So good for you. I did one, that’s all I needed. I’m at two right now and I’m tired. And I didn’t even do the GC. You

Henry:
Didn’t do the hard part.

Dave:
I didn’t even do the hard part. I’m tired of it. No, I signed last night though and getting this thing done. So that’s great. No, that’s exactly right. For me, it’s not even the flipping. I’m always tinkering. I’m just like an optimizer. I’m always moving money from here to there. And I got to stop doing that too. I will do some of it. I will keep some of my money for fun because for me, that’s fun. Like you were talking about, Henry, you like looking at deals. For me, I like investing in passive deals. I like underwriting deals and figuring them out and looking for different opportunities, but I need to put the rock solid thing back in place because I had a lot of great rentals. I don’t regret selling any of them, but I have not rebuilt my active portfolio in the way I want to yet.
And so that’s really what I’m going to be focusing on. And like I said, there’s better and better deals. It’s not even that prices have gone down that much. It’s just the asset quality is so much better, in my opinion. And you’re seeing high quality properties come on the market. I think multifamily is looking more and more attractive right now. And so that’s the plan for 2026. My other resolution, just so you know, as always, is to go on as many vacations as humanly possible.
How do I travel all the time?

Henry:
Can we go on record, Dave, and set a stretch resolution? You and I? Uh-oh. Can we set a resolution that within five years we land an Anthony Bourdain style TV show where we travel around, eat food and talk about real estate?

Dave:
This is our dream in life. Yes. We need a new vision board, you and I. Yes. All right. Well, this was a lot of fun. Thank you guys. I would love to hear your New Year’s resolutions, right? We want to hear them. Share them with us in the comments. We want to hear what your New Year’s resolutions are real estate-wise, fun-wise, lifestyle-wise, because at the end of the day in real estate, we’re doing this usually not because we just want to own or acquire assets for something, because it frees up something else in our lives, spending more times with our friends, family, traveling, eating disgusting amounts of food. This is why we’re actually here. So tell us what your resolutions are. Kathy, happy new year. Thanks for being here.

Kathy:
Thank you. You too.

Dave:
Henry, happy new year. Excited for another year doing on the market with you both. And James, of course, when he decides to grace us with his present. Yes.

Kathy:
Absolutely. Thank

Dave:
You. Thanks everyone. We’ll see you next time.

In This Article

This article is presented by NREIG.

Winter has a way of exposing every weakness in a rental property. 

The first deep freeze can turn a hairline pipe crack into a flooded basement. One unshoveled walkway can become a slip and fall dispute. A furnace that worked “just fine” in October can suddenly fail the moment temperatures drop into the teens. And when these issues hit, you’re looking at liability exposure, frustrated tenants, and preventable property damage. 

That’s why smart landlords treat winter like the high-stakes season it is. The risks are predictable. The solutions are straightforward. But clarity is everything. When you assign winter responsibilities clearly, before the first snowflake, you drastically reduce emergencies, misunderstandings, and costly claims.

Winter is one of the top seasons for insurance claims. Partners like National Real Estate Insurance Group (NREIG) help landlords stay protected when the unexpected happens, even when you’ve done everything right.

Let’s break down the biggest cold-weather threats to your property, why these risks spiral when lease language is unclear, and how to structure winter responsibilities so you and your tenants stay aligned from day one. 

Winter may be unavoidable, but winter damage doesn’t have to be. Let’s get ahead of it.

The Biggest Winter Risks Landlords Face

Winter exposes weaknesses in a rental property faster than any other season. Even well-maintained homes can experience failures when temperatures swing, snow loads increase, and moisture builds in hidden places. Understanding these risks in detail is the first step to preventing midwinter emergencies, insurance claims, and tenant disputes.

Frozen and burst pipes

When temperatures plummet, water inside pipes can freeze and expand, causing cracks or catastrophic ruptures. A single burst pipe can release hundreds of gallons of water in minutes, damaging drywall, flooring, electrical systems, and tenant belongings. 

These events often trace back to simple oversights like a tenant turning the thermostat too low, a drafty crawlspace left uninsulated, or an outdoor spigot not winterized properly.

Frozen pipes also tend to trigger disputes about responsibility. Tenants may blame the property, while landlords suspect improper thermostat settings or failure to drip faucets. Without clear winter expectations in the lease, determining fault becomes messy, fast.

Ice dams and roof damage

Ice dams form when heat from the home melts roof snow unevenly. The meltwater refreezes at the edges, trapping water behind it. That water can then seep under shingles, causing leaks, ceiling stains, mold, and insulation damage. Landlords often don’t realize there’s a problem until tenants report water spots, and by then, repairs can be extensive.

Roofs also bear extra weight in winter. Heavy snow accumulation can strain older structures, loosen shingles, damage gutters, and set the stage for leaks during the thaw.

Slick walkways, stairs, and driveways

Slip-and-fall incidents spike during winter. Even a thin layer of ice can send someone to the ER. Landlords risk liability if walkways, stairs, and driveways aren’t addressed promptly, and tenants may assume the owner is responsible unless the lease explicitly states otherwise.

Regular clearing of snow and ice is critical, but problems arise when expectations aren’t communicated clearly, or when a tenant believes “minor ice” isn’t worth reporting.

Heating system failures

A broken furnace in winter is both inconvenient and a habitability issue that can force tenants into hotels, damage your property, and trigger rent credits or claims. Heating systems work harder in extreme cold, so worn parts, dirty filters, or overdue maintenance can lead to sudden failure.

Inconsistent heating also increases pipe-freeze risk and pushes tenants toward unsafe temporary solutions like ovens or portable heaters.

Space heater fire risks

Space heaters cause thousands of residential fires each year, many of them in rentals. Tenants often place them too close to bedding or curtains, plug them into overloaded power strips, or leave them running unattended. Without clear rules and education, landlords may face fire, smoke, and liability fallout.

Outdoor fixtures and drainage

Unwinterized hoses and spigots can freeze and burst. Clogged gutters and downspouts create ice dams. Poor drainage causes meltwater to pool near foundations, leading to seepage or basement leaks.

Each issue is predictable and preventable when both landlords and tenants know exactly what to do and when. That’s why the next section digs into why clarity in the lease is the most powerful winter-proofing tool you have.

Why Winter Responsibilities Must Be Crystal Clear in the Lease

Winter issues can cause property damage and create confusion when the lease isn’t specific about winterization responsibility. When a pipe freezes, a walkway ices over, or a furnace stops working, tenants and landlords often have completely different assumptions about who should have prevented the problem, and who must fix it now. And that confusion turns into dollars lost—fast.

At its core, unclear winter responsibilities open the door to three major risks: disputes, liability exposure, and preventable losses.

Clear responsibilities prevent costly losses

Winter property damage is expensive, but most common issues are preventable with the right actions: dripping faucets, clearing gutters, insulating exposed pipes, and reporting heating issues immediately. The problem is that tenants don’t automatically know they’re supposed to do these things.

When the lease clearly outlines winter expectations and those expectations are communicated early, problems are resolved quickly, before they turn into emergencies. A well-written lease protects both landlords and tenants, so keep winter specifics in mind when drafting your lease. 

What Winter Responsibilities Should Actually Look Like

Once you understand why winter duties must be clearly defined, the next step is translating those expectations into practical, actionable responsibilities. The goal is to eliminate any guesswork about who is responsible for what and when.

Tenant Responsibilities: Daily and Weekly Winter Tasks

Tenants play a key role in preventing winter damage, but they can only do so effectively when their responsibilities are spelled out in the lease.

Snow and ice removal

Tenants should be responsible for clearing snow and applying ice melt on walkways, steps, driveways, porches, and any areas they use regularly. This reduces slip-and-fall risk and keeps access points safe.

Thermostat minimums

A clear minimum temperature, often 55 to 60 degrees, prevents pipes from freezing. Tenants must understand that turning the heat off to “save money” can lead to thousands in damage.

Dripping faucets and cabinet access

During extreme cold, tenants may be required to drip faucets and open cabinet doors to allow warm air around pipes. These small steps can prevent major plumbing failures.

Prompt reporting of issues

Tenants should immediately report:

• No heat or inconsistent heating
• Slow drains or signs of pipe freezing
• Roof leaks or ceiling spots
• Ice buildup around gutters or walkways

A simple delay in reporting can magnify losses dramatically.

Safe use of space heaters

If space heaters are allowed, tenants should follow strict rules: Keep them away from flammable materials, avoid power strips, and never leave them unattended.

Landlord Responsibilities: Structural and Seasonal Preparation

Landlords must handle the tasks that protect the property’s infrastructure, especially the systems tenants cannot safely access or maintain. Fireplace maintenance?

System maintenance and inspections

Seasonal furnace inspections, filter changes, and identifying weak points in the HVAC system help prevent midwinter failures.

Insulating vulnerable areas

This includes crawlspaces, attics, basements, exterior walls, and any exposed piping.

Gutter and downspout clearing

Removing fall debris reduces the risk of ice dams and roof leaks during freeze-thaw cycles.

Winterizing outdoor fixtures

Disconnect hoses, shut off exterior spigots, cover exposed fixtures, and ensure proper drainage away from the foundation.

How to Document These Tasks Clearly

A strong lease spells out responsibilities in plain language. Create a winter addendum or dedicated section that includes:

• Exact temperature requirements
• Snow and ice removal details
• Clear timelines for reporting problems
• Specific safety expectations (space heaters, plumbing steps, etc.)

Communication is key

Even with a solid lease, reminders matter. Sending tenants a winter checklist or early-season email reinforces expectations and helps keep everyone aligned. With responsibilities clearly divided and documented, both landlord and tenant are equipped to keep winter from becoming a season of emergencies. 

How to Conduct Mid-Season Inspections

A mid-season inspection is your next best tool for catching winter-related issues before they escalate. By the time January or February arrives, your property has already endured weeks of freezing temperatures, fluctuating weather patterns, and increased system strain. A quick check-in can uncover small issues before they evolve into expensive emergencies.

Additionally, a quick check-in also reinforces accountability. When tenants see that you’re monitoring the property’s condition, they’re more likely to report issues promptly and follow winter responsibilities outlined in the lease.

What to look for during the inspection

A thorough mid-season walkthrough should include:

• Heating performance: Is the furnace cycling normally? Are there cold spots or signs it’s struggling? Insulation still in place?
• Frozen pipe indicators: Check under sinks, in basements, and in crawlspaces for condensation, frost, or slowed water flow.
• Roof and gutter areas: Look for ice buildup, icicles, blocked downspouts, or ceiling discoloration inside.
• Drainage concerns: This includes meltwater pooling near the foundation or improperly directed downspouts.
• Exterior walkways and stairs: Ongoing slick spots or areas that tenants aren’t maintaining.

How to communicate findings

After the inspection, send tenants a short, friendly summary, outlining:

• Any issues observed
• What you will be addressing
• What the tenant needs to handle
• A follow-up timeline

This keeps everyone aligned and shows tenants you’re actively protecting the property, and their comfort, from mid-season risks.

How to Protect Yourself This Winter

Even with clear winter responsibilities, diligent tenants, and proactive inspections, winter still has its surprises. Landlords who take winter seriously don’t just rely on good communication and strong lease language—they also make sure they have the right insurance partner in place. Because when something goes wrong in January, the cost of recovery can escalate fast.

This is where National Real Estate Insurance Group (NREIG) becomes such a critical part of your winter strategy. NREIG specializes in protecting real estate investors from exactly the kinds of risks winter brings. Their coverage is built around real-world property challenges like frozen pipe damage, roof leaks from ice dams, slip-and-fall liability, heating system failures, and even tenant-caused issues.

NREIG’s programs also include investor-focused protections like:

• Liability coverage tailored for rental properties
• Property coverage for sudden winter damage events
• Loss of rents support when units become temporarily uninhabitable
• The Tenant Protector Plan®, which adds another layer of protection when tenant negligence contributes to a covered winter loss

Having an insurance partner who understands these seasonal risks means you’re not navigating winter alone or left fighting through claims with a carrier unfamiliar with rental operations.

Winter may always bring uncertainty, but your financial exposure doesn’t have to. The strongest defense is a combination of clear winter responsibilities, proactive maintenance, and investor-focused insurance that steps in when the unexpected happens.

If you want to ensure your rental portfolio is protected against frozen pipes, slip-and-fall claims, fire-related damages, and other cold-weather surprises, now is the time to strengthen your coverage. Take the next step: Review your current policy and get a tailored, investor-focused quote from National Real Estate Insurance Group (NREIG). Their team understands the unique winter risks landlords face, and can help you close coverage gaps before the next storm hits.

Protect your investment with confidence. Start your quote HERE.

In This Article

This article is presented by LegalZoom.

A frequently asked question in online real estate investing threads is, “Should I form an LLC for my rental property?” 

It may seem like setting up an LLC is one more thing to do on a list that can seem so long to a new investor that it’s overwhelming. There’s insurance to research and sort out; there’s the property management company, the rental payments, the accounting…is setting up an LLC really worth it if you’re investing on a small scale, say, into a single unit, at this point? Isn’t it enough to just purchase good insurance?

As a matter of fact, you really, really should set up an LLC for your rental. New investors often don’t realize that buying rental property in their personal name exposes them to lawsuits, tenant claims, and debt collection. An LLC separates personal and business assets, creating a liability firewall. 

Let’s consider all the implications in a bit more detail.

What a Lawsuit Could Mean If the Property Is in Your Name

From a legal perspective, becoming a real estate investor is a higher risk, for the simple reason that you will be dealing with a lot of people and situations that can lead to a lawsuit. The most obvious risk comes from tenants, who could sue you for anything from slipping and falling on an icy driveway (which is your responsibility to maintain) to mold in the bathroom. 

But risks don’t stop with the tenants. The neighbors could sue you for accidental damage to their property (say, a fence) during repair or renovation work on your property. They might even sue you if a new fence (or tree) accidentally crosses the property boundary onto theirs. 

A lawsuit, if it does happen, is always a headache, but if the rental property is in your own name and not under an LLC, you could be looking at a true nightmare. 

The biggest risk of not forming an LLC for your rental investment is exposing your personal assets to claims. If you personally are being sued, you could lose your personal savings and even your own home. Depending on the size of your personal assets, your landlord liability insurance policy may not cover all of it.

Even more unpleasantly, if you happen to go through a divorce, if your real estate property is in your own personal name, it’s considered your personal property and can become part of the divorce settlement, just like the house you share with a spouse.

How LLCs Isolate Rental Risk

These are just some of the potential scenarios in which an investor can suffer because of their failure to separate their business and personal assets. Setting up an LLC does just that: In the eyes of the law, it creates a clear separation between business and personal assets. It’s a metaphorical wall between your personal life and business life. 

If a court determines that you must pay damages, only your business assets would be at stake. Legally, claimants and/or creditors cannot go after your personal assets. 

Say a tenant decided to sue for an accident in your rental unit. If the rental is registered as an LLC, the maximum they could sue you for are the assets held in the LLC (worst-case scenario, that includes the value of the rental property). But they cannot then also go after your personal savings, car, etc. The liability is limited by the size of your business.

This, of course, doesn’t mean that setting up an LLC protects you from the possibility of lawsuits—the meaning of “Limited Liability” is sometimes misunderstood in this way. All it means is that your liability stops at your business assets; the business can still be sued, and, if the claimant has a case, they can win. 

Common Mistakes First-Timers Make

If you have already bought your first investment property (the traditional route with a mortgage, not cash buyer) and are now reading this and thinking, “great! Now I’ll form an LLC!” you need to tread very carefully. 

Forming an LLC after closing on a property technically triggers what’s called the “Due on Sale” clause, where the mortgage lender can demand full loan repayment due on the transfer of ownership. Your lender may not do this, but they certainly can. You should always form an LLC before you close and sign the deeds on the rental property. 

Having said that, there still are ways to incorporate the property into an LLC, but it will need to go through a land trust first. If you already own property and want it to become part of an LLC, you’ll need legal advice first. 

Newbie investors often dislike the administrative work (especially come tax filing time!) of running a separate LLC, so they sometimes incorporate multiple properties into one LLC. This can seem like an efficient way of running things, but it is a mistake from a legal standpoint. If a lawsuit does happen and all your properties are part of the same LLCs, they are now all on the line. You should always isolate the liabilities for multiple properties, incorporating each into its own LLC.

Another common mistake first-timers make with LLCs is that they don’t keep personal and business finances separate. This is known as “piercing the corporate veil” and essentially negates any protection offered by the LLC. If, for example, during a lawsuit, it’s discovered that you were using your LLC bank account for personal expenses, the court can determine that you can still be held personally responsible. 

Finally, holding rental property in an LLC can place restrictions on financing future properties. Fannie Mac and Freddie Mac, for example, will not lend to LLCs, so if you want to finance an investment property through them, you’ll have to do it in your own name. 

Final Thoughts

LLCs are not a panacea, but for most investors, they do offer very real asset protections and are well worth the extra time, paperwork, and small fees involved. 

If you want to make sure your rental investment LLC is set up correctly from the get-go, get in touch with us at LegalZoom. We can help with everything from timing the formation of your LLC to paperwork and any individual complexities of your real estate business.

In This Article

This article is presented by Steadily.

If you’re like most landlords, you probably assume that once you pick a policy and pay your premium, you’re covered. Simple, right? 

Unfortunately, that assumption is exactly how landlords end up blindsided by denied claims, unexpected exclusions, and thousands of dollars in out-of-pocket losses.

Your landlord insurance policy is one of the most important business contracts you’ll ever sign. It determines what’s protected, what isn’t, and how much financial risk you’re actually carrying—long before anything ever goes wrong. 

But these forms are long, technical, and packed with fine print that’s easy to skim past when you’re trying to close on a property or onboard a new rental. According to the insurance experts over at Steadily, many of the most painful surprises come from misunderstandings that could have been caught before signing. 

Think about the most common losses landlords experience: water damage, liability claims, aging roofs, tenant-caused damage, and weather events. Many of these issues are covered… but many others are covered only under certain conditions, or not covered at all. The difference comes down to understanding what’s in your policy before you commit.

Let’s walk through the eight things every landlord should check before signing a policy, so you can avoid costly gaps, spot red flags early, and make smarter decisions for your portfolio.

While every insurer structures things a bit differently, investor-focused providers like Steadily make this process much easier by using clear, landlord-specific language and coverage options built for real-world rental risks.

1. Understand What’s Actually in Your Policy

The first thing you need to understand before signing your policy is what’s actually inside it. This sounds obvious, but most landlords never read past the declarations page, and that’s where costly mistakes begin.

Steadily’s general guidance is that there are seven core components you’ll see in nearly every insurance contract. Knowing how to read each one gives you a massive advantage when comparing quotes or evaluating exclusions.

Declarations page

This is the snapshot of your policy. It lists:

• The property address
• Named insureds (who’s covered)
• Policy period
• Coverage limits
• Deductibles
• Key endorsements

Most landlords stop reading here, but this page only tells you what you think you have, not what you truly have.

Insuring agreement

Think of this as the “promise” section. It outlines:

• What the insurer agrees to cover
• Under what circumstances they’ll pay
• The basic framework for how your protection works

If the declarations page is the summary, the insuring agreement is the foundation.

Definitions

Insurance policies use industry-specific language, and the definitions page is where those terms are spelled out. This matters because:

• A single definition can change the outcome of a claim.
• Terms like “water damage,” “residence premises,” or “vandalism” may not mean what you assume.

These definitions matter, and you need to make sure your definition aligns with those in the contract.

Coverages

This section specifies exactly what losses are covered and under what limits. It’s where you’ll find:

• Dwelling coverage
• Other structures
• Loss of rent
• Personal property (if applicable)

It’s important to read this section carefully so you understand the true scope of your protection.

Exclusions

This is where insurers outline what is not covered. Common exclusions include:

• Floods
• Earthquakes
• Neglect
• Wear and tear
• Sewer backup (unless endorsed)

Many landlords are shocked when something they assumed was covered appears here, making it essential to read before signing.

Conditions

Conditions are the rules you must follow for coverage to apply. Examples include:

• Maintenance requirements
• Timelines for reporting claims
• Steps you must take after a loss

Missing a condition, even accidentally, can jeopardize a payout.

Endorsements

Endorsements modify the policy. They can:

• Add coverage
• Limit coverage
• Clarify terms

For landlords, endorsements are often where essential protections live, such as:

• Ordinance or law coverage
• Sewer backup protection
• Short-term rental endorsements

Before you sign anything, go through these seven sections with a fine-tooth comb. This is where the most important coverage details and the biggest potential pitfalls live.

2. Confirm Whether You Have Named Peril or Open Peril Coverage

One of the quickest ways to misunderstand your insurance protection and end up with an unexpected denial is not knowing whether your policy uses named peril or open peril coverage. The difference is simple, but the financial impact can be huge.

Steadily’s policy guide highlights this as one of the first questions landlords should ask, because everything else in your policy flows from this choice.

Named peril coverage: Only what’s listed is covered

A named peril policy protects you only against the specific events listed in the contract. If it’s not named, it’s not covered, period.

There are two types:

1. Basic named perils covers a limited set of events, such as:

• Fire
• Lightning
• Windstorms or hail
• Explosions
• Smoke
• Vandalism
• Riots
• Damage from vehicles or aircraft
• Sinkhole collapse
• Sprinkler leakage
• Volcanic activity

2. Broad named perils include everything in the basic list, plus additional protections like:

• Burglary
• Falling objects
• Ice or snow weight
• Frozen plumbing
• Accidental water discharge
• Electrical issues

Named peril policies can work well, but only if you fully understand which events are included and which aren’t.

Open peril coverage: Everything is covered unless excluded

An open peril policy flips the script. Instead of listing what is covered, it lists what isn’t. If the cause of loss is not specifically excluded, it’s covered.

This typically provides:

• Broader protection
• Fewer gray areas during claims
• Greater peace of mind for landlords

But open peril policies are also more expensive, and not all exclusions are obvious at first glance.

Why this choice matters for landlords

Knowing whether you have named or open peril coverage affects:

• How you evaluate risk
• What supplemental endorsements you may need
• How claims are handled
• Whether certain losses will be denied outright

For example, a basic named-peril policy might deny a claim for ice dam damage, while an open-peril policy might cover the same event unless ice dams are explicitly excluded.

Before signing your policy, read the definitions and coverages pages carefully. Notice whether the perils are listed individually or not. 

Check your exclusion. Even open-peril policies can have exclusions you wouldn’t expect. Ask your insurer or broker directly about what type of peril is listed. 

And compare your options. Open peril often delivers better long-term value for landlords, but don’t just assume this is the best decision without thoroughly reviewing the policy.

3. Verify Replacement Cost Value vs. Actual Cash Value

Now that you know what your policy covers, it’s time to understand how your insurer will calculate what they owe you after a loss. This is where many landlords get blindsided, because two policies with the same coverage limits can produce very different payouts depending on whether they use Replacement Cost Value (RCV) or Actual Cash Value (ACV).

Steadily’s guide emphasizes this distinction as one of the most important details to check before signing.

Let’s break it down in landlord-friendly terms.

Replacement Cost Value (RCV): The higher, safer payout

With RCV coverage, your insurer pays what it costs to replace or repair the damaged item with a new one of similar kind and quality, without deducting for depreciation. In other words, if your 15-year-old roof is destroyed in a storm, the insurer covers the cost of a new roof, not the depreciated value of the old one.

RCV benefits:

• Larger payouts
• Better long-term protection
• Fewer surprises during claims

Actual Cash Value (ACV): Depreciation hits your wallet

With ACV, the insurer subtracts depreciation from the payout. Using the same roof example: If the roof originally cost $12,000 and depreciation brings its value down to $4,000, then $4,000 is what you get, even if replacement costs $12,000+ today.

ACV benefits:

• Cheaper premiums
• However, significantly lower claim payouts

Why this matters so much for landlords

Landlords deal with:

• Wear and tear
• Aging systems
• Tenant-caused damage
• Weather exposure

That means most items in a rental property have already depreciated. If your policy uses ACV, a major claim could cost you tens of thousands out of pocket.

Even worse, ACV may apply differently to your dwelling versus your personal property, so confirm how each section of your policy is handled. 

Questions to ask before signing

• Is my dwelling covered at RCV or ACV?
• What about other structures?
• Is personal property covered at RCV or ACV?
• Are there age-related stipulations (for roofs, HVAC, plumbing, etc.)?

The smart move

If your budget allows it, choosing RCV for both dwelling and personal property coverage typically provides the strongest protection for landlords, especially during catastrophic losses.

4. Understand What Kind of Water Damage Your Policy Covers

Water damage is one of the most common, and most expensive, insurance claims landlords face. Not all water damage is treated the same, and what you consider water damage may not match what your insurer considers water damage.

Steadily’s policy guide highlights just how nuanced this category is and why landlords must understand the distinctions before signing a policy. 

What’s typically covered

Most landlord insurance policies cover sudden and accidental water damage, such as:

• Water damage after a fire: If the fire department or sprinklers drench your property, resulting water damage is generally covered.
• Accidental appliance or plumbing leaks: This includes leaks from dishwashers, washing machines, refrigerators, and faulty plumbing.
• Burst pipes: Especially those caused by freezing weather, as long as you maintained adequate heat and weren’t negligent.
• Roof leaks from storm damage: If a storm tears off shingles or a fallen tree causes a breach, interior water damage is usually covered.
• Ice dams: This is when ice builds up on the roof and forces water inside. But, similar to burst pipes, claims may be denied if poor maintenance contributed.

What’s usually not covered

• Flooding: Standard landlord insurance almost never covers flood damage, including rising groundwater, storm surges, river overflow, and heavy rain accumulation. If your property is in a flood-prone area, you’ll need separate flood insurance.
• Sewer or drain backup: Unless you’ve added an endorsement, backup from drains, toilets, or sump pumps is typically excluded.
• Appliance replacement: If your washer leaks, the water damage is covered, but the washer itself usually isn’t.
• Neglect-related damage: Slow leaks, ignored repairs, or deferred maintenance often lead to claim denials.
• Earthquake-related water damage: If an earthquake causes a pipe to break and flood a room, the water damage is excluded unless you carry earthquake coverage.

Why water damage is such a high-risk blind spot

Water damage can lead to mold growth, structural damage, tenant displacement, loss of rental income, and major out-of-pocket expenses. Lots of water-related scenarios fall into a gray area of coverage, so landlords should read this section with extreme care. You can ask these questions before signing:

• What types of water damage are explicitly covered?
• Is sewer or drain backup included or available as an endorsement?
• Are there maintenance conditions tied to water-related claims?
• Do I need separate flood or earthquake coverage?
• How does the policy define “neglect” or “seepage”?

Understanding these distinctions could be the difference between a fully paid claim and a five-figure personal expense.

5. Check How Your Policy Handles Roof Coverage

Roof coverage is one of the most misunderstood parts of a landlord insurance policy, and one of the most common sources of claim disputes. Roofs age, storms hit, shingles wear down, and insurers treat all these situations differently depending on the carrier and the state.

Steadily’s guide notes that many insurers reduce roof coverage once the roof reaches a certain age, switching from Replacement Cost Value (RCV) to Actual Cash Value (ACV). This means a much smaller payout if your roof is damaged. 

Here’s what landlords need to watch for before signing.

Age-based roof restrictions

Some insurers automatically downgrade older roofs to ACV once they pass an age threshold, often 10, 15, or 20 years. That means you get reimbursed for the roof’s depreciated value, not the cost to replace it. In states with severe weather risks, this downgrade is even more common.

Location matters

Certain states impose stricter rules on roof coverage due to climate risks. For example, Steadily’s guide highlights that Texas insurers are particularly strict about older roofs because of the state’s frequent hailstorms and intense thunderstorms. That means a roof that qualifies for RCV in one state may only qualify for ACV in another.

Cosmetic damage is often excluded

Even if hail or wind damages your shingles cosmetically, many insurers exclude minor denting, surface impacts, and aesthetic-only damage. If the roof still functions, it may not be covered.

Your roof is a first line of defense against water intrusion, mold, structural damage, tenant complaints, and habitability issues. If a storm compromises the roof, you could face multiple layers of costly problems. 

 

To protect yourself ahead of time, you can ask these questions before signing your policy:

• Is my roof covered at RCV or ACV?
• Does the policy change coverage at a specific roof age?
• What documentation is required to prove roof condition?
• Are cosmetic damages excluded?
• Is there a separate wind or hail deductible?

Getting clear answers now can save you from a painful surprise when a storm hits.

6. Clarify Liability & Defense Cost Limits

Liability coverage is a critical part of your landlord insurance policy. It’s also one of the least understood. Many landlords assume that if they’re sued, their policy will handle everything. Unfortunately, that’s not how liability protection always works.

Steadily highlights a key distinction that can dramatically change your financial exposure: whether your defense costs are inside or outside the liability limit.

Liability coverage: What it actually protects

Liability coverage is designed to protect you if:

• A tenant or guest is injured on your property.
• Someone sues you for negligence.
• You’re pulled into a legal dispute over conditions at the property.

This coverage typically pays for medical bills, legal defense, and settlements or judgments. The payout structure varies, depending on how your policy treats defense costs.

If defense costs are inside the limit, your legal expenses count toward your total liability limit. For example, let’s say you carry $300,000 of liability coverage. If your legal defense costs $85,000, your remaining coverage for the settlement is now $215,000. This can leave landlords dangerously exposed, especially with today’s legal costs.

If defense costs are outside the liability limit, legal fees do not reduce your coverage, and you retain the full liability limit for settlements. This is the preferred structure for landlords. This provides a more predictable, comprehensive protection.

 

Why this matters for landlords

Legal defense costs can escalate quickly due to tenant injuries, habitability claims, premises liability lawsuits, and disputes surrounding mold, water intrusion, or structural issues. If these costs erode your liability limit, you could be responsible for paying substantial amounts out of pocket.

Here are some questions to ask before signing your policy:

• Are defense costs inside or outside my liability limit?
• What is my base liability limit?
• Are there sublimits for specific types of liability claims?
• Are medical payments included separately?
• Does the policy offer higher liability options (e.g., $500,000, $1 million)?

Defense cost structure can completely change how protected you are during a lawsuit. It’s one of the most important details landlords should confirm before committing to a policy.

7. Look for Location-Specific Exclusions

Even the strongest landlord insurance policy has limits, and many of those are directly tied to where your rental property is located. Geographic risk is one of the biggest factors insurers evaluate, and depending on your region, certain hazards may be excluded from standard coverage.

This is one of the most common blind spots for landlords, because exclusions aren’t always obvious until a claim is filed.

Flood exclusions (almost always excluded)

Standard landlord insurance does not cover flood damage. This includes flooding caused by storm surges, heavy rainfall, overflowing rivers or lakes, and rising groundwater. If your property sits in or near a FEMA flood zone, you’ll need a separate flood insurance policy, either through the NFIP or private flood carriers.

Earthquake exclusions

Earthquake damage is also typically excluded, unless you purchase an endorsement or a stand-alone policy. This matters even if you’re not in California. States like Utah, Washington, Oregon, Oklahoma, and South Carolina all experience seismic activity that can cause structural damage, cracked foundations, and, importantly, water damage from burst pipes. Without earthquake coverage, those losses are not covered.

Named storm or wind/hail restrictions

Certain states have special deductibles or exclusions for hurricanes, windstorms, and hail damage. For example, Gulf Coast and Atlantic states often have named storm deductibles, while Midwest states may have separate wind/hail deductibles due to severe storms. These deductibles can be based on a flat dollar amount, or a percentage of the property’s insured value (often 1% to 5%). 

Wildfire exclusions or underwriting restrictions

In high-risk areas—especially parts of California, Colorado, Arizona, and the Pacific Northwest—some insurers exclude wildfire, require defensible space inspections, or offer limited or restricted coverage. If you invest in these states, wildfire-related underwriting deserves special attention.

Why these exclusions matter

Location-specific exclusions can dramatically change your risk exposure. A policy that looks affordable at first glance may leave you unprotected against the very hazards most common in your region. 

 

Here are some questions you can ask before signing your policy:

• Are floods excluded? If so, do I need separate coverage?
• Are earthquakes excluded? Is an endorsement available?
• Are there special deductibles for wind, hail, or named storms?
• Are wildfires covered or restricted?
• Are any geographic limitations mentioned in the exclusions or conditions section?

8. Bonus Checks Landlords Often Miss

Even if you’ve reviewed the big-ticket items like perils, water damage, roof coverage, and liability limits, there are still several smaller—but equally important—details buried in your policy that can make or break a future claim. These are the kinds of conditions most landlords overlook until it’s too late.

Vacancy clauses

Most landlord policies change coverage the moment your property becomes vacant. Common restrictions include:

• Reduced protection after 30 or 60 days of vacancy
• Exclusions for vandalism, theft, or water damage
• Special inspections or maintenance requirements
•  

If you invest in value-add properties or have extended turnover periods, vacancy rules matter.

Tenant-caused damage limitations

Many landlords assume that if a tenant causes damage, insurance will cover it. This is not always the case. Some policies exclude:

• Tenant negligence
• Intentional damage
• Pet-related damage
• Smoke damage from careless behavior

Review this section closely, especially if you allow pets or rent to higher-turnover tenants.

Maintenance obligations

Insurance policies often include conditions requiring you to:

• Keep heat on during freezing weather
• Maintain plumbing and HVAC systems
• Monitor and repair roof leaks
• Manage mold proactively

Failure to meet these obligations can void a claim, even if the damage would otherwise be covered.

Loss of rents coverage details

If a covered loss makes your rental uninhabitable, loss of rent coverage replaces your income. But pay attention to:

• Time limits (often capped at 12 months)
• Payout caps
• Exclusions tied to specific hazards

This coverage is crucial for protecting cash flow, especially during lengthy repairs.

Policy sublimits

Even if your main coverage is strong, sublimits can quietly restrict certain types of claims. Common sublimits include:

• Mold remediation
• Debris removal
• Tree damage
• Ordinance or law upgrades
• Theft of landlord-owned property

These can drastically reduce payouts if you don’t expect them.

Required documentation processes

Before signing, understand what documentation your insurer requires during a claim, including:

• Photos or videos of damage
• Receipts for repairs
• Proof of maintenance history
• Tenant communication logs

Policies often specify these requirements in the “Conditions” section.

These smaller details might not seem urgent during onboarding, but they can become major problems in a crisis. Completing these bonus checks ensures your policy performs exactly how you expect when it matters most.

Why Having an Investor?Focused Insurer Matters

By now, you’ve seen just how many moving parts go into a landlord insurance policy. From exclusions to roof age restrictions to water damage nuances, there’s a lot for investors to keep track of. And the truth is, most landlords don’t have the time nor desire to become insurance experts.

That’s why working with an insurer built specifically for real estate investors can make all the difference. 

Steadily specializes in landlord?first coverage, meaning they design every policy, workflow, and support system around the realities you deal with every day. Here’s what that means for you.

Clear, transparent policies (no hidden surprises)

Steadily’s focus on rental properties means their policies are built for the exact scenarios covered here. Instead of ambiguous terms buried in dense documents, they use clear language and investor?friendly structures so you understand what is and isn’t covered, why certain exclusions exist, and how to avoid preventable claim issues. It’s insurance written for landlords, not repurposed for them.

Fast, digital?first quotes when you’re under contract

If you invest regularly, you already know that insurance can be one of the most painful bottlenecks when closing. Calls, back?and?forth emails, and slow approvals can all waste time. When you’re trying to hit a contract deadline or bind coverage for a new rental, speed matters.

Steadily removes that friction by giving landlords instant online quotes, rapid underwriting turnarounds, and a modern dashboard for managing all your properties. 

Coverage designed for real?world landlord risks

Because Steadily works exclusively with landlords, their policies automatically account for:

• Vacancy?related exposures
• Short?term rental needs
• Tenant?caused damage
• Loss of rent
• Liability concerns specific to rental properties

You don’t have to piece together coverage or guess which endorsements you need. Steadily helps you get it right from the start.

Support from people who understand rentals

Whether you’re dealing with a claim, asking about coverage, or insuring a full portfolio, Steadily’s team understands landlord concerns like habitability rules, state?specific risks, renovations and value?add projects, and cash flow protection needs. That context matters when you need fast, accurate answers.

With so many complex details hidden in a landlord insurance policy, partnering with an insurer that specializes in rental properties makes your life dramatically easier. Steadily helps eliminate blind spots, reduce risk, and protect your cash flow with confidence.

Get a quote in minutes

Steadily’s digital-first process lets you:

• Compare landlord-ready coverage options quickly
• Avoid confusing paperwork and endless back-and-forth emails
• Bind a policy fast when you’re under contract

Whether you own a single rental or a growing portfolio, the right coverage is your safety net.

Protect your investments with confidence. Get a fast, landlord-specific quote from Steadily today.

The best time to close your coverage gaps is before something goes wrong. Steadily helps you do exactly that.

In This Article

This article is presented by WDSuite.

For new and experienced multifamily investors alike, choosing the right market is often the most important decision you’ll make. You can buy a beautifully renovated apartment building, secure great financing, and even underwrite the deal conservatively. But if the neighborhood lacks stability, demand, or the right tenant base, your investment will struggle.

What separates the pros from everyone else is knowing how to assess a market beyond surface-level trends. Rent growth and job numbers matter, but they don’t tell the full story. That’s especially true in multifamily investing, where you’re dealing with dozens of tenants, longer hold periods, and more exposure to economic shifts in the surrounding area.

If your 2026 goal is to buy smarter and scale with less risk, the first step is learning how to evaluate a market the right way—not just with your gut, but with data that tells you what’s really going on in the neighborhood.

1. Median Credit Score

One of the strongest signals of a stable rental market is the median credit score of residents. A higher median credit score often points to a more financially responsible tenant pool, fewer payment issues, and reduced turnover. For multifamily investors, this can mean more predictable rent rolls and fewer evictions.

Strong market

The median credit score here is above 675, indicating higher financial responsibility and lower default risk

In neighborhoods with higher credit scores, residents tend to have stronger financial habits, which translates into consistent rent payments and less wear and tear on units. These markets also tend to attract more stable employers, better school systems, and lower crime rates—all of which support long-term property value and resident retention.

Weak market

This is indicated by a median credit score below 600, especially when combined with other risk indicators like high vacancy or stagnant income growth

A significantly low median credit score may be a red flag. It can indicate economic distress, frequent job instability, or an area where rent collection could become more hands-on. That doesn’t mean the deal is bad, but it does mean your property management approach may need to shift, and risk mitigation becomes even more important.

How to use WDSuite to analyze median credit score

With WDSuite, multifamily investors can view the median credit score by neighborhood directly from their personalized dashboard. The data drills down to specific properties and submarkets, giving you a far more nuanced view than looking at citywide data. You can compare the credit score of a target asset’s area to local, state, and national benchmarks, helping you assess the risk profile at a glance.

By monitoring this data over time, you can also detect trends that point to a neighborhood improving or declining. These insights are crucial when planning long-term holds or value-add projects.

2. Safety Score

Multifamily properties are community-based by nature. Unlike single-family rentals, where tenants may tolerate less-than-ideal neighborhoods because they’re more isolated, multifamily tenants rely on shared spaces. Parking lots, hallways, laundry rooms, and playgrounds are common areas that mean the perceived safety of a neighborhood plays a much bigger role.

For multifamily investors, safety is not only a tenant concern but a performance metric as well. A property’s location directly influences occupancy rates, tenant turnover, and the type of renters your property attracts. If a tenant doesn’t feel safe, they will either leave early or never sign a lease at all. In contrast, a well-rated area often commands stronger rents, longer tenancies, and fewer maintenance headaches caused by frequent move-outs.

Tenants today are doing their own research before signing leases. If your property is located in a ZIP code with known safety issues, it will show up in their online searches, which can cost you potential renters. As an owner or operator, understanding and proactively addressing safety-related concerns can prevent cash flow interruptions before they begin.

How WDSuite helps you evaluate safety before you buy

WDSuite provides a Safety Score directly within its property and neighborhood dashboards. This metric pulls in crime data and aggregates it into a clear rating, helping investors evaluate potential acquisitions or compare submarkets side by side. Rather than manually digging through local police blotters, county crime maps, or outdated blog posts, you get a real-time snapshot that helps you answer questions like:

• Is this neighborhood on the rise or decline in terms of public safety?
• Will this score impact my ability to lease up quickly?
• Should I budget for additional security features like lighting, cameras, or fencing?

If you’re scaling a portfolio across multiple cities, WDSuite’s Safety Score helps you create a repeatable underwriting system by identifying the areas worth your time and money without relying on gut instinct or word of mouth.

Start adding Safety Score as a standard column in your property analysis spreadsheet. When evaluating deals with brokers or partners, be ready to justify why you’re passing on certain ZIP codes, and back it up with WDSuite’s data. Over time, you’ll build an acquisition strategy rooted in risk-adjusted returns, not just surface-level cap rates.

3. Neighborhood Rating

Unlike single-family rentals, multifamily properties typically attract a broader tenant base and serve as microcommunities within a larger ecosystem. The quality of the surrounding neighborhood plays a significant role in tenant decision-making, lease renewals, and long-term satisfaction. 

 

That’s where Neighborhood Rating becomes an essential tool. This metric represents a composite score that reflects the overall desirability of a specific area, factoring in elements like crime, schools, amenities, walkability, and more.

A strong neighborhood rating typically signals:

• Lower turnover because tenants are happier where they live.
• Higher rent growth potential as demand increases in desirable areas.
• Reduced marketing time, since renters are actively looking in those ZIP codes.

On the other hand, a weak neighborhood score can mean stagnant rents, increased vacancy, or lower-quality tenant leads. Even if a building itself is well-maintained, the surrounding environment can either reinforce or undermine its performance.

How WDSuite helps you evaluate neighborhood health

Rather than relying on hearsay or outdated anecdotes from agents or forums, WDSuite’s Neighborhood Rating platform aggregates various data sources into a single, easy-to-compare rating. With this feature, you can:

• Compare neighborhoods across different cities or submarkets.
• Spot trends in gentrification or decline based on historical shifts.
• Identify hidden gems: neighborhoods on the upswing that haven’t yet priced out.

If you’re evaluating Class B or C properties for value-add plays, WDSuite’s neighborhood insights help you balance risk with opportunity. For example, you might choose a C+ building in a B- neighborhood with rising momentum rather than investing in a cheaper asset in a declining ZIP code.

What makes a market strong vs. weak?

• Strong markets often show high neighborhood ratings, combined with solid school systems, retail access, and declining crime. They’re likely to attract renters with stable incomes who are looking for more than just affordability.
• Weaker markets tend to have lower ratings due to poor infrastructure, limited amenities, or high turnover, even if prices are lower upfront.

When underwriting a deal, pair the Neighborhood Rating with other core metrics like rent growth, population trends, and safety score. This holistic view lets you identify not just whether a deal pencils out today, but whether it aligns with long-term demand and tenant satisfaction.

4. National Percentile

In multifamily investing, context is everything. You might find a neighborhood that looks promising on the surface, but without understanding how it compares to others nationally, it’s easy to misjudge its true potential. 

 

That’s where the National Percentile metric comes in, offering a clear benchmark of how a given location performs relative to markets across the country. WDSuite calculates a National Percentile Score for each neighborhood or area, based on a combination of key metrics like credit score, neighborhood quality, and safety. A percentile score ranks the area from 1 to 100, meaning if a neighborhood scores in the 85th percentile, it outperforms 85% of other neighborhoods nationwide.

For multifamily investors evaluating new acquisitions or managing a growing portfolio, this percentile insight adds powerful context:

• A high national percentile indicates a strong, competitive market with solid fundamentals.
• A low national percentile may mean the area is underperforming, unstable, or higher-risk.

Percentile metrics help you gut-check your assumptions. For example, a market with low rents might seem attractive for cash flow, but if it falls in the bottom 20% of national rankings, it might signal tenant instability, low credit scores, or future turnover risks.

How to use WDSuite’s National Percentile Score in your underwriting

WDSuite simplifies the market comparison process by giving each area a consolidated percentile score that combines various performance indicators into one digestible number. This score is displayed directly on the dashboard, alongside other insights like safety and credit profile. You can use the percentile score to:

• Quickly vet markets without needing to stitch together multiple data sources.
• Compare submarkets across different cities when deciding where to expand.
• Justify decisions to lenders, partners, or LPs with third-party benchmarking.
• Spot appreciation potential in neighborhoods moving up the percentile ladder.

For syndicators or operators scaling across several metros, this is a key tool for staying objective.

Strong vs. weak multifamily markets

• Strong markets often rank in the top 30% or higher. These tend to be stable, sought-after areas with strong tenant demand, consistent occupancy, and room for rent growth. Even if cap rates are tighter, these areas usually perform well long-term.
• Weaker markets tend to rank below the 50th percentile, often signaling economic decline, tenant instability, or structural risk. While they may offer higher cash flow on paper, they often come with increased management headaches and lower equity upside.

Use the National Percentile Score alongside your boots-on-the-ground research to confirm you’re investing in a market that aligns with your strategy, whether you’re looking for safety and stability or you’re comfortable taking on more risk for higher yield.

As you evaluate new markets, underwrite multifamily deals, and manage your portfolio going into 2026, having real-time, hyperlocal data is essential.

These four key metrics—Median Credit Score, Safety Score, Neighborhood Rating, and National Percentile—each offer a unique lens into the health and potential of a submarket. But trying to manually source and analyze this data from dozens of tools or public records is time-consuming and error-prone.

Where WDSuite Comes In

WDSuite pulls all these metrics into a single, easy-to-read dashboard so you can make better decisions faster. Whether you’re screening neighborhoods before acquisition or tracking asset performance as part of your quarterly review process, WDSuite simplifies your workflow.

With the dashboard, you can:

• Vet markets before sending your LOI.
• Identify high-credit, high-demand submarkets.
• Spot emerging trends across metros and ZIP codes
• Benchmark performance across your entire portfolio.

Instead of relying on gut instinct or outdated census data, you get real-time insights that help you stay competitive, reduce risk, and allocate capital more confidently. 

If you’re planning to scale your multifamily business in 2026, start by leveling up your data and your decisions with WDSuite.

In This Article

This article is presented by Steadily.

When most real estate investors analyze a potential rental property, they start with the obvious metrics, including rent comps, neighborhood ratings, and a quick scan of recent sales. While these high-level numbers matter, they don’t tell the full story of whether your specific property will stay occupied, command strong rents, and attract the kind of tenants who will take care of the place.

Micro-market due diligence is essential for any investor to be successful and create the full picture for their portfolio’s performance. It’s the layer of detail that separates a good deal on paper from a great deal in real life.

1. Start by Zooming In, Not Out 

Within the same ZIP code, one street can outperform the next by a mile. Sub-neighborhood pockets often have very different renter demographics, turnover rates, and even levels of demand you won’t see in a broad comp report. You’re researching who actually lives here, how long they stay, and what the immediate environment signals about future demand.

Beyond that, dive into patterns that seasonality masks. Some areas spike in vacancy during winter. Others see tenant turnover every summer due to school schedules or local employers’ hiring cycles. If you only look at the month you’re under contract, you might completely misread the true demand story.

Then there’s the tenant profile. A market heavily populated by students, short-term contractors, or hospitality workers behaves very differently from one anchored by long-term families or medical professionals. Understanding who rents in your micro-market is often more predictive of your future cash flow than the rent comps alone.

Finally, validate demand with actual operators on the ground. Local property managers can tell you which listings get the most inquiries, features tenants ask about, and which rent ranges are softening. This qualitative intel is just as important as the hard numbers.

When you map out these micro-market dynamics early, before inspections, financing, and negotiating concessions, you’re buying into the demand ecosystem that will determine your long-term revenue. Missing that layer is one of the fastest ways investors misjudge a deal.

2. Evaluate Physical Systems and Future Capital Expenditure Exposure

Even when a property looks clean, updated, and turnkey on the surface, the biggest financial hits almost always come from the parts of the house you can’t see. Roofs, foundations, plumbing, electrical systems, and HVAC units don’t show up in listing photos, but can wipe out a year of cash flow in a single repair.

That’s why a true due diligence process digs far deeper than the standard inspection report. You’re not just confirming the condition of the property. Rather, you’re forecasting timelines, when each major component will need repair or replacement, and what that means for your long-term returns.

Start with big-ticket items like the roof, HVAC, plumbing type, and electrical panel. Each has a predictable lifespan and carries a price tag large enough to reshape your pro forma. A 22-year-old roof may still pass inspection, but if it’s at the end of its useful life, you need to account for that future expense now—not in three years, when a leak forces an emergency replacement.

Foundation issues can be equally costly. Hairline cracks aren’t always a problem, but shifting, moisture intrusion, or stair-step cracking can signal structural issues. Ignoring them during due diligence is one of the fastest ways to inherit a six-figure problem.

Plumbing deserves special attention too. Galvanized steel, cast iron, and polybutylene all carry risk, and insurance carriers are increasingly wary of them. A property with outdated plumbing might still be a great deal, but only if you know what you’re getting into.

And don’t forget HVAC. A unit that’s “working fine” today might be running on borrowed time if it’s 18 years old. You should know the age, service history, and expected remaining lifespan of every system before closing.

Your goal in this stage of due diligence isn’t to avoid every older component, but budget for reality. When you forecast capital expenditures accurately, before you make an offer, you protect your cash flow, strengthen your negotiation leverage, and ensure you’re buying a property with eyes wide open.

Remember, if you upgrade these non-structural elements of your home, they may qualify for bonus depreciation and the value of the upgrades can be written off on a yearly tax return.

3. Analyze Operational Complexity and Management Fit

A rental can look fantastic on paper—great comps, solid neighborhood, clean inspection—and still be an operational headache that drains your time, energy, and returns. That’s because not all properties are created equal when it comes to daily management.

This part of due diligence is about understanding the true workload of the property. Investors often underestimate it, especially when they’re excited about a deal. Misjudging operational complexity is one of the fastest ways a passive investment turns into a second job.

Start with the layout and physical design. Odd floor plans, multiple entrances, triplexes carved out of old single-family homes, and properties with shared utilities invariably come with more tenant coordination and maintenance calls. These quirks aren’t necessarily deal-breakers, but they must be factored into management planning.

Next, look at the tenant profile the property naturally attracts. Student housing, short-term contractors, workforce renters, luxury tenants, and multigenerational households each have different expectations, turnover patterns, and communication needs. A mismatch between the property’s natural renter base and your management style (or your manager’s skill set) can create friction from day one.

Location adds another layer. Properties near nightlife, hospitals, colleges, or transit hubs tend to bring noisier environments, parking pressure, or frequent move-ins and move-outs. Meanwhile, homes in HOA communities can require more administrative oversight and strict compliance.

Then there’s the local regulatory landscape, noise ordinances, rental licensing, inspection schedules, parking requirements, and trash rules. These small but constant obligations can pile up quickly if you’re not prepared for them.

The goal of this due diligence step isn’t to eliminate those operational challenges. Instead, this due diligence allows you to choose a property where the management demands align with your lifestyle, experience level, and available support. 

When you understand how complex or simple a property will be to operate, you can make smarter decisions about whether to self-manage, hire a property manager, or walk away entirely. And those all translate to a dollar value and a time commitment.

4. Do Financial Stress Testing Under Real-World Conditions

You can truly make every rental deal work in a spreadsheet. A little tweak here and there can hide some very un-hideable metrics. 

It’s easy to plug in best-case assumptions, full occupancy, stable rents, modest repairs, and predictable taxes and convince yourself the numbers pencil perfectly. But real-world investing rarely plays out that cleanly. Due diligence helps you prepare for what will eventually happen with your investment property. 

That’s where financial stress testing comes in. Instead of relying on a single pro forma, smart investors evaluate a range of outcomes: conservative, moderate, and optimistic. This reveals whether the deal only works when everything goes right, or whether it can survive normal volatility.

Start by adjusting rents. What happens if your projected rent comes in 5% lower? Or if concessions become the norm in your micro-market? A deal that breaks at a small rent reduction is already signaling fragility.

Then test vacancy. Even in strong markets, turnover happens. Model the impact of longer leasing times, seasonal dips, or tenant quality shifts. A single extended vacancy can erase months of profit, so anticipate that now.

Expenses deserve the same scrutiny. Property taxes tend to rise faster than investors expect. Insurance premiums can jump, especially in certain states. Utilities fluctuate. And maintenance never stays flat. Build in higher-than-expected costs to see if the cash flow still holds.

Finally, factor in capital expenditures. Even if you’ve budgeted carefully in the previous due diligence step, stress-test what happens if a major system fails earlier than planned. A prematurely dead HVAC or roof leak can reshape annual returns.

The goal of this exercise is not to be pessimistic. But you want to reveal the deal’s durability so nothing is a surprise later. A strong investment should survive bumps, not collapse under the first unexpected bill.

5. Consider Insurance Underwriting Red Flags That Change the Numbers

This is the due diligence step almost everyone overlooks, and it’s one of the most expensive places to get blindsided. Even if the property passes inspection, cash flow looks strong, and the neighborhood feels perfect, the deal can still fall apart when you try to insure it.

Insurance underwriting works as a financial gatekeeper. If you don’t understand what underwriters look for before you go under contract, you risk discovering—far too late—that your projected numbers were never realistic to begin with.

Start with the big three underwriting triggers: roof age, electrical panels, and plumbing type. A 25-year-old roof, a Federal Pacific panel, or cast-iron plumbing can dramatically change your premium, or prevent a carrier from offering coverage at all. Your pro forma may assume a $1,200 premium, but the quote could come back at $3,800 once these risk factors surface.

Then, dig into prior claims. Even if you didn’t file them, the property’s history follows the address. Multiple water damage or fire claims or liability incidents can bump premiums, increase deductibles, or eliminate carrier options. In some markets, certain addresses land on restricted lists, forcing investors to use specialty carriers with higher pricing.

Geographic hazards matter too. Flood zones, hail belts, wildfire corridors, and wind-exposed regions all shape premiums. A property that looks like a cash-flow machine at first glance may fall apart once you price in real insurance costs.

What catches most investors off guard is that these underwriting red flags don’t show up in typical due diligence documents. Inspectors may not flag insurability issues, sellers rarely disclose them, and most investors don’t ask.

But ignoring insurance underwriting is how deals that look amazing online turn into underperforming headaches in real life. When you evaluate insurability early, you eliminate false positives, avoid hidden risks, and ensure the deal you think you’re buying is actually the deal you’re getting.

Partnering with an investor-focused insurance provider becomes a strategic advantage. Steadily was built specifically for landlords, so instead of waiting days for answers or sifting through confusing policy jargon, you get fast clarity. Their underwriting process is streamlined, their coverage options reflect real investor needs, and their quotes reveal exactly how insurability impacts your deal’s bottom line.

Final Thoughts

If you want real confidence before you commit, rooted in all five layers of due diligence, make insurance your final verification step. And if you want that verification without the friction, Steadily makes it simple.

Before you close on your next property, get a quick, investor-friendly quote from Steadily. It’s the fastest way to confirm whether the numbers truly work, and the smartest way to protect your portfolio from hidden risk.

In This Article

When a property reaches the REO stage—Real Estate Owned—it signals the final step of the foreclosure cycle. The homeowner is out, the auction has been completed (often unsuccessfully), and the lender now holds title. 

For investors, the REO category can represent a unique opportunity: properties priced below market value, homes needing renovation, and inventory that banks often prefer to liquidate efficiently.

November’s REO data reveals a continued rise in completed foreclosures compared to last year, even as early-stage filings pulled back. That combination—fewer new filings, more completed cases—is a hallmark of a maturing foreclosure pipeline. It means the early distress we saw in spring and summer 2025 is now materializing into real, actionable inventory.

This month, the numbers also revealed fascinating regional and county-level differences. Some states saw REOs surge sharply, others cooled, and several counties experienced dramatic shifts in how quickly properties moved from auction to bank-owned status.

If you’re an investor looking to understand where real distressed inventory is emerging—and how to position your strategy—November’s REO story is essential reading.

National REO Activity Climbs Again

In November 2025, the U.S. recorded 3,884 REOs (bank-owned properties), down just 0.15% month over month, and up 25.74% year over year.

This slight monthly dip is negligible—REO activity remains substantially higher than one year ago. Nationwide, more properties are completing the foreclosure process and returning to lenders’ inventories.

Remember: REOs lag Starts and Notice of Sale by several months. So this year-over-year jump reflects the elevated Starts we tracked throughout 2025, especially in fast-moving states like Texas and judicial states like Florida and Ohio.

State-Level Breakdown: A Tale of Diverging Markets

Let’s take a look at the five core states driving national REO activity.

1. Florida

• 311 REOs
• +27.98% MoM
• +132.09% YoY

Florida saw one of the most dramatic increases nationally. Even with a steep decline in new filings this month, the state’s backlog of distressed properties continues to clear.

2. California

• 314 REOs
• –6.55% MoM
• -21.89% YoY

California bucked the national trend, posting both monthly and annual declines. This suggests that, while distress exists, cases here are dragging longer through the legal process.

3. Ohio

• 130 REOs
• +7.44% MoM
• -11.56% YoY

Ohio’s REO activity is steady but slightly lower than last year. This reflects a more normalized cycle after elevated filings earlier in the year.

4. North Carolina

• 122 REOs
• -20.26% MoM
• +40.23% YoY

North Carolina continues to be one of the nation’s fastest-moving foreclosure states. Even with a monthly dip, REOs remain far higher than in 2024.

5. Texas

• 546 REOs
• +52.51% MoM
• +135.34% YoY

Texas delivered the biggest REO spike of any major state—both month over month and year over year. The state’s fast nonjudicial process continues to push properties from Start to auction to REO faster than any judicial state.

Why the REO Stage Matters for Investors

For investors, REOs offer a powerful mix of opportunities and advantages.

1. Banks become motivated sellers

When lenders take possession, maintaining the property becomes an expense, not an asset. They often want these properties sold efficiently and may price them below comparable retail listings.

2. Due diligence is easier than at auction

Unlike at a courthouse sale:

• Investors can inspect the property.
• They can order an appraisal.
• Title issues can be addressed before closing.
• Financing—including non-recourse loans inside a self-directed IRA—is possible.

This makes REOs an accessible entry point for new and experienced investors alike.

3. REOs reveal the end-point of market distress

As REO levels rise, it signals that:

• More homeowners have exited their homes.
• More auctions went unsold.
• Lenders are about to release inventory to the public market.

This can create opportunity in both acquisition pricing and volume.

4. IRA and Solo 401(k) investors benefit from timing

Because REOs move slower than auctions, investors using tax-advantaged retirement accounts can:

• Perform deeper due diligence.
• Arrange non-recourse financing.
• Structure long-term buy-and-hold strategies.

Compared to the fast pace of trustee sales, REOs fit comfortably within retirement account rules and timelines.

County-Level REO Insights: Where Distress Is Converting Fastest

Using Option C (only the most meaningful changes), here are the county-level standouts for November:

Florida: Gulf Coast and Central Florida lead REO growth

• Lee County saw one of the largest MoM REO increases in the state.
• Orange County (Orlando) also posted a meaningful rise, indicating steady conversion from earlier filings.
• Miami-Dade and Broward stayed elevated, but moved more modestly this month.

Investor insight

Florida’s REO growth is real—and geographically diverse. Expect new inventory across both coasts heading into 2026.

California: Inland Empire slows, LA stabilizes

REO declines this month were driven by:

• San Bernardino: One of the sharpest MoM pullbacks
• Riverside: Slowing REO conversion despite persistent distress
• Los Angeles: Stabilized, showing neither a surge nor collapse

Investor insight

California’s REOs are cooling, suggesting longer foreclosure timelines and fewer quick-turn opportunities.

Ohio: Columbus and Cincinnati shift

• Franklin County (Columbus) posted a surprise increase—one of the few counties to rise this month.
• Cuyahoga County (Cleveland) dropped, reflecting fewer auctions converting to REO.
• Hamilton County (Cincinnati) remained steady.

Investor insight

Columbus continues to emerge as Ohio’s most dynamic foreclosure market.

North Carolina: Volatility across major metros

• Mecklenburg County (Charlotte) saw a meaningful MoM REO decline.
• Wake County (Raleigh) followed the same pattern.
• Cumberland County (Fayetteville) experienced the steepest drop.

Investor insight

North Carolina is still growing YoY, but November marks a clear slowdown in REO conversion.

Texas: The biggest REO story in America

Texas delivered one of the most dramatic county-level stories of the month:

• Harris County (Houston) saw REO volume surge sharply MoM.
• Dallas and Tarrant Counties (DFW) also reported substantial increases.
• Bexar County (San Antonio) posted a strong jump, consistent with its rising auction activity.

Investor insight

Texas continues to convert distress into REO at record speed—ideal for investors seeking bank-owned opportunities.

How Investors Can Use REO Data to Advance Their Strategy

1. Identify markets where inventory is increasing

Rising REOs often lead to:

• More distressed listings.
• Increased negotiation leverage.
• Expanded buying opportunities.

2. Target counties where conversion is fastest

Counties with rapid Start > NOS > REO progression are ideal for:

3. Track lender behavior

Banks with growing REO portfolios may:

• Price listings more aggressively.
• Offer incentives.
• Prioritize faster closings.

4. Use REOs to build a tax-advantaged portfolio

Inside a Self-Directed IRA or Solo 401(k), REO investing may offer:

• Potential tax-deferred or tax-free rental income.
• Long-term appreciation.
• Structured loan strategies using non-recourse financing.

Take Control of Your Investment Strategy

REOs represent the end of the foreclosure cycle—but for investors, they can represent the beginning of opportunity. With clear inventory trends emerging across key states and counties, now is the time to study local patterns, evaluate property conditions, and be ready for new listings as they hit the market.

To learn how to invest in real estate using a Self-Directed IRA or Solo 401(k), visit: www.TrustETC.com/RealEstate

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

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

Dave:
Real estate investing is about to get easier, much easier in 2026. Deals are getting easier to find. Homes are sitting on the market longer. Rates are actually starting to come down and buyers finally have more choices. But the average American may miss this. Many people are looking at the housing market and they don’t like what they see. Meanwhile, small investors, they’re buying, they’re building wealth, and they’re more optimistic about 2026 than ever. So what do they know that the average American doesn’t? What opportunities are appearing in the market that you don’t want to miss? We’re breaking it all down today in the 2026 state of real estate investing. I’m going to give you the exact strategies that are primed to work in 2026. I’ll share my vision of the housing market and where we’re heading, and I’ll explain why waiting for a crash may be the single most expensive mistake that you can make.
The 2026 state of real estate investing starts now.
Hey, everyone. Welcome to the BiggerPockets Podcast and happy new year. I’m Dave Meyer, investor, analyst, and head of real estate investing at BiggerPockets. It is so great to start a new year here on the BiggerPockets Podcast with all of you. This is an exciting time of year. It’s time to set ambitious goals, to map out your plans for the year and to put yourself on track towards the life you want for yourself and for your family. But I want to just start by saying, I think there are good opportunities coming for real estate investors in 2026. These are better opportunities that I’ve seen honestly in years, and it just gets me excited in general to be in this industry at this time. So in our show today, that’s what we’re going to be covering. I’m going to run through my state of real estate investing report as I do every year.
It’s basically my outlook for the housing market and investing conditions for the year. I’ll share my personal strategy that I am working on for 2026. We’re going to talk about better inventory that’s on the market, better deal flow, better cash flow possibilities out there. Yes, that is absolutely happening. We’ll talk about improving affordability, the outlook for housing prices and mortgage rates, whether you should wait for a crash and more. We do have a packed episode today and I want to get right into it, but first, I just have a little bit of a teaser for you because on Wednesday show, the next show that comes out, we have a fun announcement to make. I personally could not be more excited about this announcement. It is a huge win for this show and the BiggerPockets community, but I will say no more. You got to tune in on Wednesday.
So with that, let’s get into our 2026 state of real estate investing. So what is the state of real estate investing in 2026? If I had to pick just one word for it, I always try and just narrow it down to one word. And my word for 2026 is improving. Things are getting better for real estate investors after several tough years. I doubt I need to tell any of you this, but deals over the last couple years, they’ve been pretty hard to find. Cash flow has been tough. Financing is hard. Uncertainty has been super high and nothing is perfect. We still have a long way to go in the housing market to get back to normal, to get back to healthy, but it does in many ways feel like we’ve turned a corner, at least from my perspective. I am personally not super bothered by a modest correction in the housing market like the one I think we’re in.
I actually think this is a step in the right direction to a more affordable, a more predictable, a more productive housing market. And at the same time, those changes makes investing easier for real estate investors because every single market has its trade-offs. When things are going up like crazy, like it was during the pandemic, yeah, it can boost returns. That is the benefit of that kind of market. But there’s also a downside to those kinds of market where deal flow was hard. Cashflow was harder to find. Now we’re transitioning and we’re sort of getting the opposite, right? Maybe appreciation is not going to be great over the next couple years, and we’ll talk about that. But that means at the same time, there’s better inventory. Great assets are on sale right now. There’s less competition. So let’s look a little bit at some of these specific things that are improving for real estate investors.
The first one, like I said, is deal flow. I think this is the thing that gets me really excited right now because it has been a slog looking for deals since at least 2022, maybe even earlier. Even during 2020 and 2021, it was hard to find good deals. But right now, inventory is getting better. That means there are more homes for sale on the market. It’s not crazy. It’s not like we’re seeing some flood of inventory that’s going to lead to a crash, but it’s getting better. That means there are more options for us as real estate investors to choose from. Affordability is going up. This one just honestly, it warms my heart. We have had years and years of declining affordability. You’ve probably heard me say this on the show, but housing affordability the last couple years have been near 40 year lows. And although we still have a long way to go, don’t get me wrong, housing is not affordable yet.
Just this last data that we have from October of 2025, it is the best affordability we’ve seen in three years. As investors, this really helps. We’re also seeing days on market go up. This leads to better negotiating leverage. When sellers are seeing their properties sit on the market longer and longer, it makes them more likely, more willing to cut a deal that also benefits us as real estate investors. The next one might surprise you, but cashflow is actually getting better. If you think about a correcting market like the one that we’re in, even if home prices in your local market are staying stagnant, but rents are continuing to grow, which on a national level they are. Most of the forecasts I’ve seen for rent expect modest rent growth in the next year. That means that cashflow prospects are getting better. Now, I’m not saying it’s back to 2019 levels.
It’s slow, but they’re starting to get better. And competition is going down because there’s just more homes on the market. Demand actually hasn’t come down that much, but since there is more supply on the market, that means relatively there is less competition. All these things combined, these are things that we can and should be celebrating. It is a reason, in my opinion, for optimism. And I am not the only one here. I look at these things and I don’t see, oh man, the housing market might be flat. Maybe it will decline a couple years and think, “Oh, this is risky.” I don’t see this so much as risk as I see it as opportunity, reason for optimism. Now, again, not everything’s great. Like with any market, there are trade-offs and this market is no exception. Prices are pretty stagnant. Prices might fall in some places.
So appreciation is going to be lower. I personally think the risk of a crash is relatively low. Affordability, even though it’s getting a little bit better, it’s still pretty rough out there. And rent growth, although I think most forecasters are saying it will go up a little bit, probably not going to be a banner year for rent growth in 2026. So given these trade-offs, the fact that deal flow is getting better, but there are some downsides to the market. How do we invest? How do we move forward in a market where there is both opportunity and there is risk? What do we do? Should we wait to get more clarity? Some people might advocate for that, but personally, I don’t think that’s the right strategy. First of all, and this is kind of always true, no market is without risk. That’s just not how it works.
That’s not how investing works. There is always risk. So just remember that you can’t wait for a perfect market because it’s never going to happen. And the second thing is that financial freedom isn’t going to find you. It’s not going to present itself all wrapped up in a perfect package. You have to go out and get it. And in my opinion, now is as good a time as any. So waiting, especially because I don’t personally think there’s going to be a crash, is not really going to help you. Instead, what you got to do is focus on what tactics and what strategies are going to work well in 2026. So we’re going to pivot our conversation to that, what works well in 2026, but we do need to take a quick break. We’ll be right back. As a real estate investor, the last thing I want to do, or the last thing I have time for is playing accountant, banker, and debt collector all at once.
But that’s what I was doing every weekend, flipping between a bunch of apps, bank statements and receipts, trying to sort it all out by property, figure out who’s late on rent. But then I found Baseline and it takes all of that off my plate. It’s BiggerPocket’s official banking platform that automatically sorts my transactions, matches receipts, and collects rent for every property. My tax prep is done, and my weekends are mine again. Plus, I’m saving a lot of money on banking fees and apps that I just don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer delivering the state of real estate investing for 2026. Before the break, I talked about why I feel like real estate investing is getting a bit easier. Deal flow is better. There are opportunities out there for investors who are willing to study the market, to learn from what has worked historically and to apply that to their own investing decisions and portfolios here in 2026. So let’s do that. Let’s talk about what’s going to work. Now, you’ve probably heard me say this before, but I think the housing market is in what I call the great stall. Affordability, although it’s getting a little bit better, is still pretty low. And to me, this is the major thing that drives the housing market. I talk about this all the time, but affordability is the big thing driving what happens in the housing market.
Now, some people point to low affordability and say, “Oh, this is the reason the market is going to crash.” That hasn’t happened yet. Affordability been low for three years now, and that hasn’t happened yet because there is an alternate way that affordability gets back to the market, and that’s what I call the great stall. Rather than seeing something dramatic or crazy like a crash in housing prices, you actually see a slower restoration of affordability through a combination of things happen. Number one, prices remain kind of flat for the next couple years. Now, they could be up 1%, they could be down 1% in the next year, but that’s, I call all of that relatively flat. I think the main thing that we need to look at here is whether on paper they go up 1% or down 1%, they are going up slower than wage growth.
And that is happening in the market right now. Wages are growing faster than the prices of homes. And that brings back affordability, right? Because if prices stay flat, but people are making more money, that slowly brings back affordability. That’s not something that’s going to happen super quickly because wage growth is something that happens relatively slowly, but that is going on right now. And hopefully that’s what’s going to continue into next year. On top of that, we’ve seen mortgage rates come down. I know not everyone’s super excited about it, but one year ago in January of 2025, rates were at seven and a quarter. They’re 1% lower now at six and a quarter. And that’s obviously way higher than they were during the pandemic, but that is a significant improvement. That brings millions of people back into the housing market. And this dynamic of slowly improving affordability in the housing market is what I think we are in for in the next year or two.
This is why I call it the great stall because I don’t think it’s quick and I don’t think it’s going to be dramatic. I think prices are kind of just going to stall out for another year or two, might be even three. I can’t predict that far out, but I wouldn’t be surprised. Let’s just put it that way. I wouldn’t be surprised if we saw real home prices, inflation adjusted home prices kind of be slow, kind of be flat for the next couple of years. Now, what is happening, this great stall could be called a correction. I have often called it that because when real home prices are down and have been for a few years, I think that’s a correction. But before we get into what strategies work in the Great Stall, because there are tons of strategies that work in the Great Stall, I think we have more options now as investors that we have.
This market actually works for a lot of different strategies, and we’ll talk about that in a minute. But I do want to address the crash fear because this narrative is just constantly out there. So I understand this narrative because the last time we had a correction in the housing market, it was a crash.That’s what happened in 2008, but that is not normal. And since the Great Depression, we have had one time where the market has really crashed, that’s in 2008, but corrections where real home prices go flat for long periods of time, that is not just something that’s possible. It’s actually quite normal. You can Google this, but you can go look at real home prices over time. Seeing periods of flat home prices is the normal way where affordability is restored to the market. So I just want to say that there is precedence for this.
The other thing I want to say is that there is just no evidence right now that a crash is going to happen. If you look at inventory levels, they were rising last year, they’ve kind of leveled out for right now. New listings, those have leveled out. They’re about even year over year. Delinquencies, a crucial predictor of a crash, remain below pre-pandemic levels. Foreclosures remain below pre-pandemic levels. Credit quality for the average American homeowner is high right now. People are paying their mortgage and demand is actually resilient. The last reading we have for, it’s back into 2025, showed that demand for housing is actually up year over year. I know people say, “Oh, there’s a crash no one’s buying.” That’s not true. We actually had an increase in home sales in 2025 over 2024. The reason I’m telling you this is that the fundamentals of the market are holding up.
They’re not supporting rapid appreciation. I’m not saying that, but the idea that the bottom is going to fall out of the market is not supported by any data. It’s not supported by any information. It is fear that is driving those ideas. And as investors, we can’t make our decisions based on fear. We have to base it on data and information and experience, and that’s what we’re going to do. So we are in a correction, and yeah, some people might see that as negative, but I don’t. I think it means we’re getting assets at better prices, right? And although the risk of a crash is not zero, it’s pretty low and prices will eventually recover. And that’s why I see this as a buying opportunity. I think we’re in a good time to start acquiring assets if you are a long-term buy and hold investor. If you’re a flipper, there’s going to be some risks because selling right now is a little bit hard.
But if you are a buy and hold investor, I see this as a good time and I am not the only one here. So if you’re sitting there thinking about 2026, feeling optimistic, feeling like it’s the time to buy, that it’s a great time to get into real estate, you’re not alone. The aggregate BiggerPockets community is feeling the same way. I am feeling the same way. I get to talk to professional real estate investors all the time and they are feeling the same way. But we got to talk about how you do this right. How do you grow in 2026 in a way that moves you towards those goals that takes advantage of these opportunities, but while still respecting and recognizing some of the risks that are out there, because you got to respect the current market and you got to take what it’s giving you.
And here’s what I think that looks like. I’ve been using a framework or a playbook that I’ve been talking about for a little while now, and I want to share it with you. It basically combines four basic principles. It’s what I’ve been doing since 2025, and it worked for me in 2025, and I think it’s going to work for me in 2026, so I’m going to keep doing the same thing. No need to change it up if it’s already working. Number one is, yes, the market is uncertain. There is chance that it will decline a little bit. There’s chance that we’ll have a melt up, but I think the most prudent decision right now is to plan for the great stall. You got to plan for slow or no appreciation and rank growth in the next few years. Now, I know that doesn’t sound exciting, but if you plan for it, it’s totally fine.
The worst thing you can do is go out and invest, assuming that we’re going to have amazing appreciation and rent growth and basing your underwriting and investing decisions on that. Maybe I’m wrong. Maybe that will happen, but basing your decisions on that optimism is not what I would do. I’m optimistic about the market because I think there’s better deal flow, but I am not particularly optimistic about appreciation or rent growth in the next couple of years, and that’s totally okay. We have to mitigate that risk. We do it upfront. We do it as we’re looking for deals. We do it in our underwriting. If you address it right up here and say, “Hey, appreciation’s probably going to be slow,” then it’s okay. You just don’t want to be caught flatfooted in a year or two and say, “Oh my God, I bought this deal, assuming there was going to be appreciation and there isn’t, and now I’m in a bad spot.” You can avoid that.
You don’t need to take on that risk by planning for the great stall and assuming that appreciation and rent growth are going to be slow. We can absolutely invest around that. That’s what we’re talking about right now. So that’s pillar number one, plan for the great stall. The next pillar of investing in 2026, the framework I’m using is to have modest short-term expectations. I personally think that even in the last couple of years before things started to get better, the biggest challenge in real estate has not been the market or deal flow or high mortgage rates. It has been expectations. People have been chasing returns that are not coming back. Sorry to say it, but the deal you can do in 2018 or 2021, it’s probably not coming back and that’s fine, right? That was a magical time. I call it the Goldilocks era because everything was perfect during that time.
And just because we’ve moved from perfect to normal does not mean that you can’t invest. So what I want people to remember is that having modest cashflow in the first year of your portfolio, that’s normal. Having modest appreciation on an average year, that’s normal. The average appreciation rate in the United States is 3.5%, whereas inflation is two, 2.5%. So when you look at the average of appreciation compared to inflation of long-term, it’s like 1%. That is normal. And these are the expectations that we need to have. And if you’re thinking that’s not good enough, well, real estate investing has worked for decades, for centuries with exactly these kinds of conditions. And even with these modest short-term expectations for returns, they’re still going to beat the stock market. They’re probably still going to beat what else you can do with your money. It’s still the best way to pursue financial freedom.
So I encourage people to adjust their expectations in the short-term, but keep your long-term expectations high. So those are the first two parts of the framework, probably for the great stall, and have modest short-term expectations, but keep your long-term expectations high because that’s the game. That’s what we’re actually going for. The third pillar here is to underwrite conservatively. I’ve been saying this a lot recently, but I know a lot of people say you shouldn’t play scared. I think you should right now. I think that it makes a lot of sense to be very, very picky. This is part of planning for the great stall, but I am underwriting with no appreciation next year. I’m going to underwrite for probably no rent growth, no market rent growth. If I do a renovation and bring markets up to market rent, that’s a different story, but I am not assuming that there are going to be macroeconomic conditions that are going to give me this tailwind to boost my rent, and that’s okay.
There are deals that work with these conservatively underwritten ideas, and those are the ones you want to buy. For me, that’s what gives me confidence in this kind of market, because we’re in a market that’s correcting. Prices could go down next year. They could go down one or 2%. Vacancies could go up this year. Rents might not grow. And again, all of those things are okay if you bake them into your assumptions. If you go into that and say, “My business plan is to buy a great asset, and even if rents don’t grow for a year or two, I’m okay because I’m still getting cashflow and it’s going to be a great asset in five to 10 years,” that’s the right mindset. This is not the market to go in and have rose tinted glasses. You don’t want to go into this and say, “Oh my God, there was this one comp that’s getting $2,600 a month.
I think I can get 2,600 a month too.” No, don’t do that. If everyone else is renting at 23 or 24, put your expenses underwrite at 23 and 24. Be conservative in your underwriting. This is the way that you protect yourself against downside risk that is in the market, but still take advantage of the inventory, the deal flow, the negotiating leverage that’s going to give you good deals this year. That to me is absolutely crucial. The last pillar of my strategy is to focus on upsides, right? I’m not just doing this to get average deals with conservative numbers, right? I am comfortable with those deals because they still make me money. If I underwrite conservatively and I’m doing this right, even in a bad year, quote unquote, bad year in the housing market, I’m still earning a positive return with those conservative deals. That’s awesome.
But I want to give myself a chance to take this from a single or a double to a home run, and that’s where the upsides come in. Those I’ve talked about on the show, I’ve put out multiple shows about what I consider the upside era. These are things like looking for areas where you can build in the path of progress. This is things like areas where you can bring up rents to market rents. That’s a really good upside. These are things like zoning upsides, or my personal favorite right now, which is really buying below market comps. I think this is a real key, a real hack for buying in this kind of market, because if you’re concerned that prices are going to go down two or 3% year over year, reasonable concern, then buy two to 3%, at least by 5%, buy 6% below market comps right now.
This might sound pie in the sky like, sure, everyone wants to buy under market comps, but it’s possible right now. This is the benefit of the great stall. Things are sitting on the market longer. You get to negotiate. Not every seller’s going to do it, but some of them are. And I want to call out, I’m not saying that you should focus on buying below list price because people can list their property for anything they want. You need to do your own analysis, figure out what a property is worth, and buy 5% below.That’s a great hack. And if prices don’t come down 5%, you’re walking into equity. That’s an upside. This is a way both of mitigating risk and gathering upside. But there are plenty of different upsides that you can look at, adding capacity, like I said, path of progress, rent growth, zoning upside, owner-occupied strategies to save on living costs.
These are all ways to take your deals that you underwrite conservatively that have modest short-term expectations and give you that opportunity to hit a home run in the long run. Our long-term expectations stay high. And the way you get a deal that works now in this era, low risk, but you hit those long-term expectations is by focusing on the upsides. So this is the framework that I’ve been using. It’s been working for me for a while, and I’m sticking with it. But within this framework, there’s a lot of different things that you can do. Notice that I didn’t say you got to do Burr or you can’t flip or you can’t do short-term rentals. Many of these strategies are possible. Many of these strategies can work, but some of them may not. So let’s talk about which tactics and which strategies actually fit within this framework because there might be more than you actually think, but we do have to take one more quick break.
We’ll be right back. The Cashflow Roadshow is back. Me, Henry, and other BiggerPockets personalities are coming to the Texas area from January 13th to 16th. We’re going to be in Dallas. We’re going to be in Austin. We’re going to Houston and we have a whole slate of events. We’re definitely going to have meetups. We’re doing our first ever live podcast recording of the BiggerPockets Podcast. And we’re also doing our first ever one-day workshop where Henry and I and other experts are going to be giving you hands-on advice on your personalized strategy. So if you want to join us, which I hope you will, go to biggerpockets.com/texas. You can get all the information and tickets there. Welcome back to the BiggerPockets Podcast. I’m Dave Meyer talking about the state of real estate investing here in 2026. And as you know, since you’ve been listening, I am optimistic about it.
I’ve shared with you my outlook for the market, which is the great stall and my framework for investing in the great stall, which is to plan for it, to have modest short-term expectations, but high long-term expectations, to underwrite conservatively and to focus on upsides. Now, within that framework, there are a lot of tactics that could work, and I want to talk about which ones I think are going to work the best. These are in no particular order, but I’m just going to give you some tactics that I think you should consider in 2026. Number one is value add investing is going to continue to be important. Value add, which some people call sweat equity, some people called it forced appreciation, but it’s basically just the idea of buying something that is below its highest and best use. It’s not optimized and optimizing it yourself. And usually, if you’re doing it right, you can optimize it in a way that you are building more equity than it costs you to make that optimization, right?
This is the entire idea of flipping. You buy a house that needs work, you renovate it, and you drive up the equity buy more than what it costs. And I just think generally speaking, value add investing is going to be important during this year. Now, this can take different forms. This can be in the form of Burr. This could be for flipping. We’ll talk about that a little bit because there are risks in flipping, but I think the Burr is going to be really good strategy here in 2026, but it’s also true for existing portfolios too. If you have properties that you own and you want to optimize them, value add is still a great way to drive up equity and increase your rents for rental property investors. Value add works, I think, in almost any market conditions, but one thing that happens in a correction in a great stall is that properties that aren’t up to their higher and best use, those prices tend to fall.
But the properties that are really good, that are really nice, tend to maintain their value better. And that creates a bigger spread, right? Bigger spread between what you can buy properties for and what you can sell them for or rent them out for. That’s a great tactic for 2026. I think it fits well into my framework. A second strategy that works is some of these cashflow accelerants. Now, cashflow has been hard to come by. I think it’s going to get better for long-term rentals, but that’s going to come slowly. There are some ways that you can sort of supercharge that from co-living and midterm rentals. I think these are interesting ideas right now. The midterm rental market is a little saturated in some places, but there are definitely still markets where this can work. And if you want to be a little bit more active in managing your portfolio, midterm rentals can work.
The other one is either co-living or rent by the room. They’re the same kind of thing, but basically you take a single family home, for example, has four or five bedrooms, and rather than leasing it to one tenant, you lease it to four tenants. They each rent their own bedroom. And this is a way that you can generate more cash, more rental income for your properties and boost your cash flow. This just definitely works. Doesn’t work in every market. You have to find markets where there is demand for this kind of housing, usually big, more expensive markets. You have to be willing to take on a little bit of a management premium. It’s going to be a little bit harder to manage these kinds of properties, but if you want to boost your cashflow, this could definitely work in 2026. Another tactic I really like is looking for zoning upside.
You’ve heard me talk about this before, but I think DADUs, adding ADUs are a great way to go. Here in Seattle, there’s a lot of split level homes. You can take split levels and section them off into two different units. That’s a great way to add value to boost your cash flow, or a lot of cities are completely rewriting their zoning code to allow for more density in their cities, and these are great upsides. If you can buy a property that is cash flowing in day one, but has the potential next year, even five years, 10 years down the road to add another building, to add more units onto it, that’s a great way to take a good deal today and turn it into a home run in the long run. I love that. I mentioned this earlier, but I I personally still think burrs are great.
I think this is just 101 real estate investing. Buy a rental property, fix it up, rent it out, and then refinance it. You know this. If you listen, I love the idea of a slow bur. I do not have the expectation that I’m going to be able to refinance 100% of my capital out of these deals. I’m not even in a hurry to do it. I buy deals where there are tenants in place and I let them live there as long as they want. And when they leave, I will renovate it and bring market rents up to market rate. I might do some structural rehab to make it a better quality property for tenants who want to stay a long time. But it might take me a year or two years to fully stabilize this property, but it takes so much risk off the table.
I can buy these properties using conventional financing. That is such a big advantage. If you do a Burr, there’s no tenants in place. It’s really structurally unsound. It needs a lot of work. You might need to get hard money for that. That’s a 12%, 13% interest rate. You’re going to need to pay two points upfront. You’re paying a lot of money in holding costs. When I buy one of these BERS, I’m getting a conventional mortgage on it. I’m paying six and a half percent. That saves me so much money. It allows me to get cashflow and allows me to take my time because I’m making cash flow. I’m amortizing. I’m getting tax benefits. I’m getting all of that in the meantime while I’m opportunistic about when I do my BER. So if I had to pick one strategy for 2026, that would be it, the slow BER.
So just as a mindset, value add, BERS, midterm rentals, co-living, I like all of these tactics. Other tactics can still work, but I do want to be honest that there is a little bit more risk here. Short-term rentals, people still do it. People are still successful with them, but the short-term rental industry is struggling right now. I think we’ve all seen this. There is a lot of supply on the market right now. It is pushing down occupancy, is pushing down average daily rents. I have a short-term rental. I’ll tell you that in 2025, it did not perform as well as it did in 2024. And I expect that to continue. You also see markets that are saturated in short-term rentals seeing the steepest corrections. Now, if you are a long-term investor, that could mean opportunity, but you have to be careful. So I think short-term rentals can work, but I would really stick to those principles that I said before about underwriting very conservatively.
If I were buying a short-term rental right now, I wouldn’t even count on my occupancy rate being the same from 2025 to 2026. I would assume a decrease in occupancy rate. I would assume a decrease in average daily rents just to be safe. This is an industry that has risk in it. Doesn’t mean there’s not opportunity. Those things go together. Risk and reward go together. But I would be very careful about short-term rentals. The second thing is commercial real estate. We’ve seen crashes here. Prices are good in commercial real estate, right? But there is still risk. We don’t know where the bottom is coming in commercial. And unlike the housing market, which I think has a solid floor, I’d be surprised if we saw national home prices go down more than three or 4% next year. I’d be surprised. But commercial just has more to fall.
There’s more upside here too because it could rebound. So I’m actually personally kind of excited about commercial real estate. I’m going to be looking at bigger multifamilies in the next year, but I am going to be very careful about it. And I recommend people do that as well because there are some really bad deals out there. There are really overpriced commercial real estate properties right now, but I think there will be more and more good deals. So this is something you can consider, but with caution. Same thing for the last strategy here, which is flipping. I flipped two houses last year. I actually knew it was going to be a rough market and I did it anyway because I wanted to learn how to do it. Managed to make some money off of those, so I’m happy about that. But the market is weird right now.
People’s buying demand is up and down every single week. And it’s hard in flipping because you need to be able to sell into a correcting market. And even though I’ve been optimistic this year, the reason I like 2026 and say it’s getting easier is because it’s getting easier to buy. It is not getting easier to sell. It is getting harder to sell. And so that is a consideration that you need to think about if you’re flipping a home. You need to be able to take advantage of what the market’s giving you and buy lower than you have in the last couple of years because when you go to sell it, it could take longer. You might not get the ARV that you were expecting. And so flipping still works, but do it cautiously and again, be really picky about those things. So those are the tactics that I think will work, some that I think are going to be a little bit riskier, but I also wanted to add just a couple other things here too that don’t fall under the traditional buckets of strategy that we talk about.
And that’s just kind of mindset. I really encourage people. What’s going to work right now is a long-term mindset. Thinking about buying assets that you want to hold onto for a long time is great. I’ve sold some assets in the last year that they weren’t performing badly, but I’m thinking, “Hey, how do I stock up on the stuff that I want to own in 2040?”That’s kind of the mindset I’m thinking about right now. When I do a Burr, when I buy a rental property, when I consider commercial properties, that’s the mindset that I’m taking. And I’ve said before, I only buy cashflowing properties. I’m not going to buy something that doesn’t cash flow after stabilization. Not saying that you should go out and speculate, but I am saying look at deals and look at their long-term potential more than thinking about whether they’re going to maximize your cash on cash return in the next year.
Another mindset thing, like I said, buying under market comps, I think that’s a tactic that’s going to be super important right now. And then fixed rate debt. I love fixed rate debt. I know some people will be tempted right now to get adjustable rate mortgages because it comes with a slightly lower mortgage rate. But I’ll just be honest, I think it’s a toss up. If you look five to 10 years from now, it’s a toss up if mortgage rates are going to be higher or lower. I don’t think people think it’s going to be lower, but that’s a recency bias. I just want to call that out. Mortgage rates have been much higher in the past. And if you look at our national debt and some trends that are going on, I think there’s a very good chance that mortgage rates are higher in a couple of years and that’s okay if you plan for it now.
Like I said just a minute ago, my whole approach is long term. What do I want to own 10 years from now, 15 years from now? And the last thing I want is to own a great asset that I want to hold onto. And then when I get my arm comes up and my rate adjusts in seven years, all of a sudden I can’t afford to hold onto that. I don’t like it. I want to buy with fixed rate debt because that way I know I can hold onto it for 10 years. I have no concerns that I’m going to be able to hold onto this 10, 15, 20 years from now. That’s what I want to be focused on. So that’s just another thing I want to caution because people talk a lot about what assets they’re buying. The financing is really important. And I have done interest only loans.
I have done adjustable rate mortgages in certain circumstances. But I think for most people, if you’re buying a rental property that you want to hold onto, heavily consider fixed rate debt. 30-year fixed rate is a great loan product and it is what I recommend to most people most of the time. So those are generally the tactics that I think are going to work. I’ve kind of tell you, but I’ll just reiterate what my plan is. I don’t really have any big reveals year. I’m going to do what I’ve been doing in the upside era so far. Plan it for the great stall. I have low short-term expectations, but I am still buying only things that cashflow after stabilization. I don’t have to have day one cash flow, but after I renovate them, they need to have solid cash flow. And I’m going to be very picky about looking for those deals.
And I target three to four upsides in every single deal. That’s the playbook. That’s what’s been working for me. And I think it’s going to keep working. I’m not a super high volume buyer at this stage of my career. I have a solid portfolio. It’s been working for me, but I look to keep buying. I’m probably going to buy maybe two to four new properties this year, ideally small multifamily properties. That’s kind of my goal. I might buy a bigger property. I’ve been looking at some eight units, some 16 unit kind of things. I would consider those as well. And I’m mostly going to look at slow burs. Might not be sexy to everyone, but to me, that’s what works. I like sticking with what works. I don’t need to take on any additional risk. I just think that’s a low risk, high upside way to invest, and that’s what I’m going to be pursuing.
I may also flip another property or two. I did too in Seattle last year that went pretty well. I allocate some of my portfolio money each year into what I would call risk capital, and I may choose to put that into flips this year, but I don’t need to do them. If I don’t find any deals, I’m not going to be thirsty. I’m not going to stretch for these deals. I’m going to keep playing my long game for sure, but if a screaming deal comes my way, I’m going to take it. So that’s the state of real estate investing in 2026. Things are going to get a little bit easier. The market won’t be sexy. Mainstream people might not see these opportunities, but there will be opportunities. Deals are going to be easier to find. Cashflow prospects are slowly improving. Negotiating leverage is back. You can afford to be patient and it is vital that you are because there is some short-term risk.
There are things that you have to mitigate, but you absolutely can if you follow the framework I’ve put forth in today’s episode. And just keep remembering, the long-term outlook remains strong. There is no such thing as a perfect market. Every market has trade-offs. It is your job to figure out what the market is offering you. And I hope this episode gets you off to a great start to 2026, but rest assured, we are going to keep you updated on what tactics are working, how to mitigate risk, and how to pursue financial freedom in a solid, predictable, but exciting way each and every week here on BiggerPockets for the rest of 2026. Thank you guys so much for being here for our first show of 2026. Remember to tune in on Wednesday. We have a fun and exciting announcement for the BiggerPockets Podcast community. I’m Dave Meyer.
We’ll see you next time.