Ashley:
If you’re busy, if you work 50 hours a week and you have a lot going on, that doesn’t mean you cannot invest in real estate. And today’s guest is going to show us how he works 50 hours a week plus and still has made time to get three deals under contract.

Tony:
So today’s guest, Rashad George, is going to walk through his journey again of being a busy professional who started off buying super easy, almost turnkey properties, graduating all the way up to almost full tear down gut jobs. And you’ll hear his journey along the way and why he decided to strategically partner to help continue to build his portfolio.

Ashley:
And at the end, him and Tony let us in on a little secret of the short-term rental tax loophole and it explains why Rashad is going with a certain strategy. Welcome to the Real Estate Rookie Podcast. I’m Ashley Kerr.

Tony:
And I’m Tony J. Robinson. And with that, let’s give a big warm welcome to Rashad.

Rashad:
Yeah, it’s wonderful to be here. I’m happy to be here and I love listening to you guys.

Ashley:
Well, Rashad, before real estate, you went from debt collection to the Air Force to defense contracting. How did these career shifts shape the way that you think about money, risk, and long-term freedom?

Rashad:
Yeah, absolutely. So starting with debt collecting, it really opened my eyes to people making not necessarily the greatest financial decisions. I got to see everything from people who got down on their luck to people who just thought they needed everything and couldn’t afford it. So it really helped ground my expectations of how I should be managing my money. As far as the Air Force goes, that really helped me understand what it means to truly take control of my path in life. I learned a lot of good stuff from the Air Force. It really helped me learn, more importantly, how to manage myself and how to think of everything in terms of moving forward. As far as defense contracting, it’s pretty much the same thing I did in the Air Force and I love it so much, which is why I’m still doing it, but that’s really helped me gain the income that I need to invest and more importantly, stay connected with the military community.

Tony:
So Rashad, I’m just curious because the debt collection, there’s definitely maybe a stigma around that career path, but I also think that maybe there are some skills that translate into being a real estate investor as well. And I guess just what, aside from just the mindset around the money piece, being in that field, I would assume deals with a lot of rejection, a lot of angry people, a lot of walking the line and kind of building relationships. So I guess was there anything else aside from just the mindset around money that you built from a skillset perspective that you feel has helped you as a real estate investor?

Rashad:
Absolutely. I would say sympathy, and if I’m being honest, a little bit of empathy as well. I came across a lot of people who were just down on their luck and being able to sympathize with them while being necessarily, I don’t know, being firm, but being fair is something else that I learned from that job. And also taking a beat to just go, “Hey, I understand what you’re going through. Maybe not be so harsh.” And I think that’s been very helpful with some of the self-managing that I’ve done.

Tony:
We talk a lot or you hear a lot about debt collectors, but from the other side, the people who are having the debt collected, but we don’t necessarily hear it from the folks who were doing the debt collecting. But hey, there’s still, I think, a benefit on being on the other side as well.

Ashley:
Actually, in one of the towns near me, there was a huge debt collection agency, and that was one of the jobs a lot of people went to fresh out of high school if they didn’t go to college or they did it part-time while they were going to college, was working for this debt collection agency. So it was very interesting to hear their side of things as to how it’s different, but a lot of them made a lot of money doing that. But really, you have described yourself now as a high income tech borough, but your real estate journey started earlier than that. So take us back to that first house and you had a $100,000 gain post- COVID. So what did that moment really unlock for you mentally?

Rashad:
Yeah. Seeing that $100,000 check, just anything over six figures, it just helped me immediately understand there is something to this. Friends of mine had been telling me you should be investing in real estate, but that’s when it hit me. I know it’s an anomaly and I’m okay with that, but still, it unlocked the fact that I can move forward, maybe not with the expectation of making $100,000 each time I sell, but with the expectation of getting some sort of gain and understanding it clearly. I

Tony:
Feel like that first financial transaction as a real estate investor was always a bit of an unlock. I remember the first time I got money deposited from my first rental and because there was a lease up fee with that and I think there was some maintenance involved. It wasn’t even enough to cover the first mortgage payment because the property management company had a lease up fee. And so I was in the negative that first month, but it was still like $684. And I was like, oh my goodness. I actually made money from real estate. And it is, I think, a bit of a mindset shifting moment when you realize, hey, this actually works. But 100K is a lot. So I guess I’m just curious quickly, Rashad, if you can walk us through, how did you net 100K on your first deal?

Rashad:
Yeah. So it all started back in 2017 when I just could not find myself living in an apartment for more than three months. I was in town for maybe 11 days or so. And during that time period, I found myself an agent. I left for two and a half months. Every day I was texting back and forth with that agent looking for a home. I found something, took me a while to really pounce on it, but I found something that I really wanted, bought that home, lived in it, did pretty much nothing to it, then got that $100,000. Of course, I should have been a little bit smarter at what I did with the money. I did kind of recycle it, but I wish I had have invested it. And ultimately, I wish I had kept the house too.

Ashley:
So was this house the brand new build or the brand new build comes next after this?

Rashad:
Yeah, the house that I first purchased was built in, I think 2011. I purchased it in 2017. Then the following property, actually the next property I bought was my next primary residence. But after that, I bought my first investment property and that one was a brand new build.

Ashley:
Let’s go through that experience of why you decided to do a brand new build compared to buying an older property like the first one that you had purchased.

Rashad:
Sure. Yeah. I made the decision to buy a brand new bill simply because I didn’t know as much about real estate investing as I do now. So I wanted something that was a little bit easier from a time perspective. And what I mean by that is I didn’t want to always have to be worrying about fixing something or having a new problem that I did not really have any experience with. So I called up my agent and she put together quite a few different options for me, but the majority of what she put together were brand new bills for that very reason. I made the decision that maybe she’s right, there’s something to this, got the new build. Haven’t really had any trouble out of it. And all the trouble that I have had has been warranted anyways.

Ashley:
So basically you put together your buy box, your criteria, what you were looking for, and then your agent came back to you with these deals. And I think that’s such a great lesson for rookies as to like, that is one thing you should be doing right now. If you haven’t reached out to an agent or you haven’t even got your first deal is really defining the criteria of what you’re looking for and building out that buy box and building out your criteria of what you want in a house. So the people who are searching for deals for you and even you when you’re looking for deals scrolling MLS, you know exactly what you are looking for.

Tony:
Ash, do you remember the guest we interviewed and his entire strategy was buying new builds and he would buy … So for those who aren’t familiar with like the new builds, if you’re buying in like a larger subdivision, they’ll typically release homes and phases. So they don’t release everything all at once. They’ll build out a small phase and then they’ll set the prices there. Then they’ll do their next phase and they’ll increase the prices. The next phase they increase the prices. And there was a guest who we had interviewed where his entire strategy was buying these properties in phase one as a primary residence, living there for one to two years. Sometimes he’d keep it. I think sometimes he’d flip them. By the time he got to phase five or 10 or six or whatever it may be, the value had increased so much that he could sell it for a big gain or do a cash out refinance to get some cash back.
And that’s how he built his entire portfolio. So I actually do really love the idea of the new build as a strategy, but sometimes it is a little trickier to get cashflow positive. So were you making actual cashflow on this deal?

Rashad:
I would love to say that I was making cash flow on this deal. I’m going to go ahead and say no. It pretty much breaks even. And I kind of got a little lucky here because I purchased the property after it had been appraised. So when it was originally appraised for tax purposes, it was appraised as just the land value only. So that’s what I paid for year one. Year two rolls around, I’m paying the taxes on the dwelling as well. That being said, technically you could say I cash flowed, but I didn’t actually pull the money out. I just left it in escrow. So all in all, I’m counting that as pretty much neutral. And I’m okay with that, especially as someone new with no expectations of hitting it right out of the park from the get- go, just give me something new, give me something easy, let me learn from it, and then try again on the next one.

Ashley:
So for rookie listening, what are some of the things that maybe made you feel more comfortable that you were going to break even on this property? And what should a rookie look for or think about before they actually decide, “You know what? I’m okay with doing breakeven.”

Rashad:
So one of the things that made me comfortable breaking even is because I had the cash reserves. Just in case something were to go incredibly wrong, who knows, hailstorm, house gets robbed, any number of things that happen, maybe they all happen at once. I’ve got the cash reserves to sort of mitigate against the risk. If you don’t have the cash reserves, I would say maybe not go the route of going completely negative cashflow or neutral, but if you can partner with someone who can help you on the cash side, that might be a route to go as well. So long as the understanding is this is not a forever thing, and of course you have to do better next time. So

Tony:
Would you do a new build again, Rashad? I guess you talked about some of the pros and cons, but given what you now know, do you feel that’s a good firs step for a rookie investor?

Rashad:
I think it is a good first step for a rookie investor, specifically folks who are looking to invest not necessarily in their local area. If they get something new, it’s a little bit easier to deal with. And I do want to kind of quantify this in a time perspective as well. You are going to spend time managing your assets. There’s no way around that, but for something that’s new, it is a lot less time. For someone like myself who has a weekday or 40 hour a week job, I also get stuck in traffic at least two hours a day. That leaves me 10 hours that I’m already just dedicating to work. So I have to sort of use my time in a wiser manner to make sure it makes sense. So if anyone else is in that predicament, then sure. But if you have more time than you have money, I would say maybe the new build might not be the way to go.

Ashley:
We have to take a short break, but we’ll be right back. While we are gone, make sure to subscribe to us on YouTube @realestaterookie. We’ll be right back. Okay. Welcome back. We went over Rashad’s first deal, the new build, but for your second deal, you actually decided to partner with your sister and form an LLC. So money and family, what conversations did you have upfront to make sure that this partnership was going to work out?

Rashad:
Yeah. So first off, we have an incredibly good relationship. There’s no way I would try this with anyone, whether they’re family or not, if I didn’t have a good relationship with that person. The conversations that we had were, what questions do we need to answer and put in front of an attorney to form our articles of organization? While we both trust each other, trust only goes so far in business relationships and we’ve got the paper to back it up. So pretty much we were asking, what happens if either one of us dies? What if we come into a disagreement? What if I want to sell the property and she doesn’t? Those sorts of things. All of those questions, I think an attorney goes a long way in helping people to get.

Tony:
Now shameless plug here. Ash and I wrote a book, Real Estate Partnerships. You guys can pick it up at biggerpockets.com/partnerships. But in that book, we talk about a lot of those questions like what Rashad just mentioned that you should ask before you get into a business partnership with someone. And another book that I usually like to recommend as well is called The Partnership Charter by David Gage. It’s not specific to real estate investing, it’s more so a general business partnership book, but another one that kind of prompts a lot of those questions to ask to make sure that the partnership stays smooth if things do get rocky. So you guys asked a lot of those tough questions upfront, but I think even before that, Rashad, what made you feel that getting into a partnership was a necessary next step for you?

Rashad:
Ah, I love this question. I got into a partnership for the reason that most people don’t necessarily consider, at least not the investors that I know. It’s for the time and skillset. We both have different time, different amounts of time, and our free time lines up differently. Also, our skillsets are differently. I like to focus on the operations type stuff, and she likes to do what I call the nerd stuff in the back end. Running all the numbers, making sure I don’t go too crazy with operations. From that perspective, I think it works out incredibly well. So really what I look for is skills that compliment each other. Time is another big one, and of course they have to have a great personality if they’re a partner. That’s just something I look for because I don’t want someone who’s customer facing potentially to just have a terrible personality.
And I personally think the last reason to ever form a partnership should be lack of money, especially if someone doesn’t have skill.

Ashley:
So after you formed this partnership, you guys decided to analyze over 200 deals before you actually found the right one. So was this a grueling process and what was your process for actually sourcing these deals? Was it just MLS deals or did you have other tactics to bring deals in?

Rashad:
Yeah, the process itself was, I would say, a learning process. It was not quick and I don’t want anyone to take away that it was quick or that we shortcut because we only did 200 or that 200 is a lot. You never know what the exact number is until you run the numbers enough and you’re comfortable with it. But our process is very lengthy. It essentially boiled down to looking at different zip codes in town for San Antonio and what HUD paid for those zip codes. We were specifically targeting Section eight, so that’s why we were doing that. Once we found what HUD was paying, actually once we found zip codes that paid pretty high, we looked at the price to rent ratio. That was also important. Then we started narrowing down to what fits inside of the amount of cash that we have. And that’s how we pretty much landed on the first property that we found, which would have been perfect for us had the deal not fallen through.

Tony:
So Rashad, first, I appreciate you breaking down your process in such a systematic way. And when you say HUD, you mentioned that that’s what Section eight pays, right? So you’re looking at who by the zip code is commanding the highest rent for section eight rentals, and then who has the best price to rent ratio? I mean, we’re just comparing the rent to the actual purchase prices in those zip codes and whoever has the best ratios where you kind of focus your time. So I love that approach, but were you just sourcing all of these deals right off the MLS? Were you working with wholesalers? What was your process for actually finding these different properties to look at?

Rashad:
Yeah. Initially we were pretty much searching right on the MLS, which worked out pretty good through, I don’t know, a confluence of conundrums. We ended up not purchasing when we wanted to purchase. So we had to wait a little bit longer and that’s when the market was then swinging more towards a buyer’s market. Then we were pretty much solely looking on MLS. We also used our agent who’s been very helpful. She found some off-market deals and she also had some pocket listings. They didn’t quite fit exactly what we were looking for, but they were really good. But yeah, MLS was, it was great. Even now, the MLS is still great.

Ashley:
Rashad, can you explain what a pocket listing is?

Rashad:
Sure. Yeah. A pocket listing is just a listing that an agent has that necessarily … Excuse me. A pocket listing is just a listing that an agent has that hasn’t necessarily hit the market yet. So it’s something that they’re keeping in- house that they can then set you up with before it ever hits the market.

Tony:
And now Rashad, you mentioned that the deal that you found that you were like, “Man, this one really actually does seem pretty strong that that deal actually fell through.” What was the backstory there?

Rashad:
Yeah, I think we got some really bad vibes from the seller and also some bad vibes from the tenant. So we found this property. It was tenant occupied and HUD was already paying the housing choice voucher of Section eight and it was actually paying pretty good compared to what the monthly mortgage would’ve been. We found it, thought it was perfect. The seller did tell us that there was one thing wrong with the property prior to us going under contract. The one thing that he said was wrong was that there was a broken sewer line, which wasn’t the only thing wrong, and I’m pretty sure he knew that. So we then go under contract and that’s when we find out, well, that broken sewer line then translated into a terribly cracked foundation, just awful. That didn’t turn us away upfront. The thing that really turned us away was we sent our inspector over to do an inspection.
He couldn’t even do an inspection because the home was so … It was very occupied with belongings. I guess that’s a nice way to say it.

Ashley:
I’ve had a couple of those houses.

Rashad:
Yeah. We fell out of contract because we couldn’t even get a really good inspection and there’s just no way we’re going to make an offer and follow through with it if we don’t know everything that’s wrong with the property or at least most of the things that the inspector could find. It just didn’t make sense from a business perspective.

Tony:
Just one thing I want to say, Rashad, is kudos to you and your sister for walking away because I think we’ve seen a lot of newer investors who get so emotionally attached when they’ve … Like you said, you underwrote 200 plus deals. You finally found one that checks all the boxes, you’re excited, you’re like, “Okay, this is the one, we’re here, we did it. ” And then you get to your due diligence period and things start to pop up that don’t make sense. And oftentimes we can rationalize those things that are major red flags simply for the fact that we’ve got this emotional attachment to trying to get a deal done, but I think there’s so much more discipline and the better investors. It’s not about how often we say yes, but about how often we say no in our discipline in saying no. And I also appreciate that you said the foundation itself wasn’t even necessarily what made you say no, because maybe that’s something that we can get fixed, but the fact is you couldn’t do an inspection at all could be tough.
Now, I’ve actually never purchased a property that was tenant occupied.That’s just always been part of my buy box. “Hey, I don’t want to deal with the tenants. I want it empty.” But Ash, have you ever had a property where you were maybe in a similar situation where you couldn’t even get the inspection done that you did move forward with? And if so, how did you build that confidence in yourself?

Ashley:
Yeah, I think I went into it knowing that it was going to need a full gut rehab on the property that this was a property that the actually welfare family services had come in and taken this woman out of the home. She was 101 or 103 years old. I can’t remember exactly living there alone and the property was dilapidated. There was so much stuff in there you could barely move. There was no heat except for one little fireplace. So she ended up being removed from the home and then I’m assuming a court appointed attorney or somebody took care of the sale of the house and actually went on the MLS. And so we just bought the property knowing that this was going to be a full project. And we actually got pretty lucky in the fact that it was the first time I use a guy that has dumpsters and then he has a crew for doing garbage removal.
So they’ve done a lot of rehabs for us. And this was kind of the first hoarder house where they were coming in to take us stuff out and they low balled it. And I feel bad because they really, really underestimated the amount of stuff that was in that house and how long it would take them. And looking at what they charge now just for a regular clean out, they definitely undercharged for that property for sure. But I would say to make yourself feel okay, you already have to have the mindset going in knowing everything needs to be ripped out and redone without being able to see what’s happening behind or underneath all of this stuff.

Tony:
So Rashad, what deal did you end up landing on and what issues did you overcome as you went through that deal?

Rashad:
Oh man, where to start with the issues? We’ll start with the deal first. The deal, it was actually one that the agent had proposed to us a while back and we kind of thought, oh, maybe this isn’t the one. We did a little bit more research and the pictures were terrible. There were only four pictures of the exterior of the home and the listing agent wasn’t even really willing to show us the inside of the home because it was tenant occupied until we went under contract. So automatically that just ruled out pretty much everybody that’s not an investor. So we thought, “Ooh, this might be one of those unicorn things that we’ve been hearing so much about. ” So we went under contract. We looked in the house after that. It wasn’t in great shape, but it wasn’t in terrible shape. We ended up closing on it.
I think we offered 94 and they came back at 93. Hold on. It was 93 and they came back at 94. Yeah, that’s more right. So we ended up purchasing it for $94,000 and the home, it has a valuation of 170. That’s one person’s valuation, but still that’s pretty good. So we thought, okay, this actually seems like we need to follow through with it. As far as the issues goes, oh, there’s a mound of roaches in that house. Just however many you’re thinking, go ahead and triple that. There’s that many in there. There is a couple mice in the property. There’s a little bit of mold. On top of that, the tenant was a little troublesome, but she ended up leaving pretty much a month later anyways. The property’s empty now, which is another issue is getting it renovated. So yeah, it’s got some things wrong with it.
It’s also not in the best neighborhood, which is fine.

Ashley:
This property bought it for 94,000. And this was without you doing anything. It was already appraised at 170,000?

Rashad:
Yeah, we did absolutely nothing to it. It’s at 170 as it stands.

Ashley:
And what is your plan for this property going forward?

Rashad:
I am glad you asked. We originally started with a plan that has scoped a little bit further now. It’s a three bed, one bath. We were just going to do some minor renovations, fix the mold, fix everything that could break down, basically mitigate the expenses moving forward. But then we thought to ourselves, no, that might not be the right plan. If we’re already getting it renovated, it has a single car garage, we’re going to convert that to a primary suite since there’s only one bathroom in the house. Then once we do that, the goal is to still get a Section eight renter in place. The rent in that particular zip code for four bedrooms, like 1950 a month, that’s the top, doesn’t mean we’re going to get that, but still that’s a dramatic improvement from the 1,025 rent that the tenant was paying.

Tony:
And what would the cost to be, Rashad, on converting that from a 3.1 into a 4.2? And how do you guys plan to finance that?

Rashad:
Yeah, I’m actually really glad you asked that question. The original plan, making the 3.1 a little bit better, it came in at right at $50,000, which is pretty decent. And I have my contractor coming back over today to finalize the bid, but he thinks it should be around 80,000 to get the conversion and get it completely made over. But I think we can cut it back to 70,000. As far as financing goes, we’re more than likely going to look into a hard money loan. And I also have a community bank here in town that I’m going to approach as well and see what they have to offer, hoping that pans out. But if not, the hard money route’s probably the way to go.

Tony:
I mean, with that much equity baked into the deal, I would imagine that there’d be some local lender, bank, credit union, whoever it may be that would be interested in taking that deal on. And this is me just like if I’m you, that’s probably going to be my first though before I go to hard money because generally speaking, the local banks and credit unions will give you better rates than the hard money folks. So the property right now is vacant as you guys kind of go through this process of getting renovated. And how much time do you guys think the renovations will take?

Rashad:
My contractor can usually get things done pretty quickly. I think it’ll probably be 12 to 16 weeks, but we’ll budget for 16 weeks just to be on the safe side. So another four months of vacancy while it’s getting repaired.

Ashley:
So you had mentioned that you wanted to put a Section eight tenant in this unit when it’s completely renovated. What are some misconceptions that other investors may have about Section eight that maybe you want to debunk for us as to why you’ve decided you want to go that route?

Rashad:
Sure. I grew up in a small town at Shreveport, Louisiana, and I knew some folks who were on Section eight. And just like any renter, regardless of where the funds come from, there’s going to be good tenants and then there’s going to be bad tenants. Just because you have someone on Section eight doesn’t mean they’re terrible for you or your property. All that means is you have to do your due diligence just as good as you would as if they were not on Section eight. The other thing about Section eight that I don’t know if I’d call it debunking, but I want to touch on is typically those folks stay in place a little bit longer because of their situation, which is unfortunate, but sometimes you have people staying in place 20, 30 years versus just your regular turnover. And so I think I want to help people understand that Section eight could be a good option simply because the amount of time that tenants stay in place mitigating the turnover expenses.

Tony:
And Rochado, just got to give you … Go ahead.

Ashley:
I got to say, anyone listening that’s been an OG rookie listener from the beginning, did your eyes just get as big as mine when he said he was from Shreveport, Louisiana because that was Tony’s first deal that he had was from that town and we talked about it forever and forever, I thought it was Freeport, Treeport, like everything but Shreveport.

Tony:
So Rashad, you’re from Shreveport, shout out to the 318, right? But did you ever think of actually investing in Shreveport?

Rashad:
The more I learn about it, the more I consider it. Things that do scare me a little bit there is the property taxes because they’re roughly the same as they are here in Texas, but the average income is lower. So that does scare me. Also, the income of the area is just not the same as it is in other places. Would I invest there short of it is yes, it’s not on my shortlist, but absolutely. There’s some good spots in town.

Tony:
There are. And I had a really good first deal there, a really not great second deal there, but if it wasn’t for the flood insurance, I think that second deal would’ve been great as well, but it’s a market that’s relatively low cost to get into. And even though it’s a smaller market, there’s military there, which has been a pretty constant presence that brings in a lot of military folks as well. There’s surprisingly been investment from people like 50 Cent, trying to turn that into a bit of an entertainment hub as of late as well. So anyway, for anyone that’s thinking, Shreveport might be a place to check out, but I think you might be the first guest that we’ve had that’s from Shreveport, so small world. I love it.

Rashad:
Yeah, hardly anybody’s from Shreveport.

Tony:
It’s a fair point. So we heard about Rashad’s first and a second deal, but when we come back, let’s find out about his latest REO deal. All right, welcome back. We’re here with Rashad and we talked about the first couple of deals, but I want to talk about a deal that you bought solo, which was an REO deal. First, can you explain for folks that aren’t maybe familiar with the term, what is REO? What does that mean?

Rashad:
Yeah. REO is real estate owned, which basically translates to the property was more than likely foreclosed on and is now owned by the bank and probably going to go up for auction.

Tony:
And REO, I think a lot of people, especially coming out of this 2008 crisis, that was a big term. Everyone’s buying these REOs because there were so many of them. I feel like the volume of that has definitely dried up a little bit and you don’t hear about it as much, but the benefit of these REO deals is that oftentimes you can get them at significantly below market value. So how did you come across this REO deal? Was it just, again, listed on the MLS? Was it a pocket listing? Was it somewhere else? How did you find the deal?

Rashad:
Yeah, I actually found this deal in the process of analyzing homes to purchase with my business partner. I found this one on the side and go, oh, I might keep that one for myself. No, I presented it to her and she passed up on it. But yeah, it was just on the MLS and I saw it and I told my agent about it and she told me that, yeah, this one’s going to come up for auction soon. So we pretty much had to go over there on one of my lunch breaks. I didn’t even eat that day, just went over, checked out the house, didn’t even necessarily know 100% what I was looking for. But from my knowledge, it seemed like a solid deal. Of course, I didn’t know what the price was going to be. That was up to me. But yes, that was an MLS deal.

Ashley:
I’ve bought one REO property and it was on the MLS also. And I think it was originally listed at $90,000 and they just kept dropping the price. And this was right before COVID. And then I actually bought it right in the height of COVID, like March and April. I got it under contract. I think I closed in June and I bought it for like $29,000. But it was a very interesting process, kind of like having my agent deal with the bank and their attorney, because in New York State you have to use attorneys, but a very different process, but a very, very good deal that we were able to get the property for.

Tony:
Ash, what was that process? I’ve never purchased REO before, so how does it differ from buying from a traditional seller?

Ashley:
Yeah, honestly, it wasn’t much different. It was more of just the communication aspect of my attorney trying to get ahold of them, the back and forth. My earnest money deposit check got lost, I had to send out a new one. So it was just having to deal with the back and forth between And the attorneys, but they would threaten that there was timelines and these need to be done and stuff, and then no follow through. So it wasn’t more that the process was different. It was just that it was more difficult to actually move forward with the flow of the deal, I guess.

Tony:
And Rashad, what about for you? How was the experience in yourself? Were you able to do an inspection? Could you negotiate in the same way that you can with the traditional seller? How did that process look like for you?

Rashad:
I did get the opportunity to do an inspection, but unfortunately the inspector couldn’t come out in time. So we rolled forward anyways. For me, I found it the day, it was two days before the auction actually. So we just kind of had just rolled through it, just said, “Hey, we’re going to do this thing.” It was just a lot of me talking with the agent, understanding what I wanted to offer, even though it was listed for sale at a certain price on the market. It was just basically doing that communications and letting her know this is my top dollar.

Tony:
So Rashada, I want to compare this deal to the deal with the foundation issues that we talked about earlier. Both of those deals seem like on paper, really good opportunities, but some question marks around, okay, what’s the condition of the property? And neither one could you get in and do a full inspection. But with the first one, you decided to not move forward with the deal, but with this REO opportunity, you decided to move forward with the deal. What was the difference there? Why did you have the confidence the second go around, but not the first time?

Rashad:
Honestly, that confidence comes from listening to a podcast like this one and the OG BiggerPockets podcast, as well as having investor friends out in the community that said, “Hey, this is how you can get in and improve the situation.” And also learning about hard money. That was my first hard money loan, and it actually worked out pretty good. It gave me the confidence to walk in, do a little bit of inspection myself. I could see obviously the foundation needed some work. I could see the roof needed some work. And pretty much 70% of the things that I identified were the same thing that the inspector said, which gave me even more confidence because I did get an inspection, but it wasn’t until after I put the home under contract with no option to back out.

Tony:
So I think the lesson there for our rookie audience, and this is a point that Ashley and I try and drive home all the time. And Rashad, you actually said this earlier, is that the purpose of your first deal and even your second deal is not necessarily to retire you from your day job. The goal of those first few deals is to build your confidence so that your third deal and your fifth deal and your 10th deal become a little bit easier. And it is such a common occurrence where we see the complexity of deals start to increase as you go from deal one to deal two to deal three to deal five, because every deal builds a little bit more confidence than the last one. And even though we’re only talking one or two deal difference, you walked away from the first one because it just didn’t feel right, yet you confidently move forward the second time around because you had built up that confidence.
So I think that’s a really important point for our Rickis to understand. Now, do you feel that you bought it at the right price, Rashad? Given everything that you couldn’t get into it before and was actually the right deal to move forward with?

Rashad:
I think for multiple reasons it was the right deal to move forward with, with price being probably the least important one. I think I might’ve overpaid by about $10,000. Even my agent was signaling to me that maybe this is overpaying a little bit. And she even coached me through the decision I had to come forward with was, am I willing to overpay a little bit to stop the search? And for me, I think it made sense to end my search, even though I did overpay. We talked about it a little bit earlier. I have at least 50 hours a week dedicated towards work and commute. That doesn’t include anything else I do. So that’s time that I’m losing and time itself is in fact money. So moving forward with it did make sense. But for me, the main reason I wanted to move forward with it, and maybe Tony, you’ll appreciate this, is because of the area that it’s in, it is great for short-term rentals and there’s only so many rental permits that the city’s giving out.
And that one actually does qualify for the permit.

Ashley:
Oh, wow. Interesting. So you’re paying the 10 grand to buy the permit. Basically, that’s how liquor license work in New York. They only issue so many liquor license and my liquor store doesn’t make a ton of money, but it’s the fact that I had the liquor license in that area for the only store that can come in, in that area. So that’s the true value of it. So you can also frame it that way as you paid that extra $10,000 to actually be one of the few that has that short-term rental permit. So now with this property, what is the status of it today?

Rashad:
Ooh, yeah. The status of it today, it is week number 17 of the renovations and they are putting the finishing touches on it. I’m actually going to drive by there in probably an hour or so, make sure everything looks good and get ready to refinance it next week. That was hard money, so I’m going to go into a debt service coverage ratio loan with my entity, but yeah, it’s looking good. Did overpay a little bit, but the numbers support it.

Ashley:
So what did you end up buying it for? Again, what was the price for that? And then what do you think it’s going to end up appraising at?

Rashad:
Yeah. So I ended up purchasing at 160, which is slightly higher than what the average was for homes in that zip code in that condition. And the ARV was estimated to be 265. I just had a recent valuation done at 269. The home wasn’t completed. They’re going to do another one at the end of the week. Hopefully it comes in at at least 275, but even if it comes in slightly over the original projections, I’m okay with that.

Tony:
And what did you put in for the renovation costs, Rashad?

Rashad:
So this is also a fun topic. I was estimated to put in 88,000, but as I knew it was going to be a short-term rental, I had a few extra things done, rewiring the electrical, putting in an EV charger, things like that. So I ended up total withholding costs, today I’m at 102. So that brings me from pretty much 160 to 262.

Ashley:
So it’s appraising for right around what you bought for it and what you put into it. So when you go ahead and refinance this property, how much are you planning on leaving into the deal? Is it going to be 20%, more? Yeah.

Rashad:
When I refinance a property, I’m not going to pull anything out of the deal. I think it might make more sense to not be overleveraged. I don’t think I need to at this point in my life and where I stand financially to take any money out. It just doesn’t make sense for me. So yeah, leaving it all in.

Tony:
Yeah. And I just did the quick math, right? Assuming you can get 80% LTV on that 275, I get you to about 220 on your loan balance. So you’d leave about 45K in the deal, give or take. And just like ballpark, so are you committed to this being a short-term rental or are you still open to it being a long-term rental as well?

Rashad:
I am mostly committed to the short-term rental prospect because of where it sits as the first reason. Second reason, I think hosting, I don’t know, I’ve always been good at customer service and I kind of miss it. I’m not customer facing anymore, so I kind of want to get back into it. But also for tax purposes, I’m talking with my accountant and yeah, it makes sense for tax reasons to have at least one short-term rental.

Ashley:
We have to talk about this. Tony, let out the secret.

Tony:
So I’ll give the quick rundown. So what Rashad is talking about is what’s known as the short-term rental tax loophole. And it’s not really a loophole, it’s like written into the tax code, but basically if you own a short-term rental where your average length of stay, so the average amount of time that a guest stays at your house is seven days or less, then it qualifies for this tax loophole where basically you can take all of the paper losses from your short-term rental and apply those against other forms of active income, AKA your day job. So there are a lot of folks who go out and they purchase short-term rentals. They get a big paper loss by doing what’s called a cost segregation study and leveraging what’s called bonus depreciation. And those two things combined oftentimes can significantly reduce or sometimes eliminate the tax bill from your day job.
Now, I’m not a CPA, this is not professional tax advice, go talk to an attorney, but that is a strategy that a lot of folks use to really supercharge their tax savings and their tax returns. Now, there are certain requirements you have to hit to be able to do that. It’s called material participation, but just know, talk with an attorney or with a CPA and they can kind of give you all the ins and outs of it.

Ashley:
So Rashad, before we wrap up here, what is the biggest mistake that you think you’ve made across all of your deals and how has it actually changed the way you think about a deal moving forward and how you’re underwriting and how you’re going to operate the deal?

Rashad:
I still think my biggest mistake was that third deal that we talked about, not fully getting an inspection done before going under contract with no contingency. That was a mistake. I would never do that again. That was risk I was willing to accept one time for the purpose of propelling my finances forward. I would not do that again. I would say to everybody out there listening, make sure you get an inspection done. And more importantly, make sure you understand the things that are in that inspection and what it takes to mitigate the risks from the deficiencies.

Ashley:
Well, Rashad, thank you so much for joining us today. We really appreciated you coming onto the show and sharing your experience and the knowledge that you’ve obtained over the years of your real estate investing. Where can people reach out to you and find out more information?

Rashad:
Yes. If you guys are interested in seeing what I’m up to, you can check out my YouTube. It’s youtube.com/@king_crispy with a K. Outside of that, you can reach out to me on BiggerPockets. I’m Rashad George. To my knowledge, I’m the only one.

Ashley:
I don’t know why, but that YouTube name is making me think Burger King, the King and a crispy chicken sandwich. But I did read when you submitted your guest application that you have been documenting your whole journey of this process and it’s specifically one of your properties, right? Showing the whole process start to finish?

Rashad:
Yeah, I’m documenting it. The documentation of it is not as good as it could be. So the beginning is a little rough, but the ending parts are getting a little bit better. But yeah, I decided to document it, not the work that’s happening, but specifically what it looks like from the investor standpoint. So that is documented and it is on YouTube.

Ashley:
Awesome. Cool. I can’t wait to check it out. Well, thank you again so much for joining us. I’m Ashley. He’s Tony, and this has been an episode of Real Estate Rookie, and we’ll see you guys next time.

California Governor Gavin Newsom has rarely been in lockstep with the federal government recently, but they agree on one issue: stopping corporate investors from buying single-family homes.

Investors in California have quietly snapped up 40% of the fire-scorched lots in Altadena, a Los Angeles suburb, according to a recent Redfin report. Newsom is calling for new state oversight in stopping large investors from buying single-family homes in California.

“When housing is treated primarily as a corporate investment strategy, Californians feel the impact,” a source in the governor’s office said. “Prices go up, rents rise, and fewer people have a chance to buy a home.”

It echoed President Trump’s earlier post on Truth Social, where he said, “I am immediately taking steps to ban large institutional investors from buying more single-family homes.”

Waiting for More Details

There have been no specific numbers on what “large” institutions investors mean, although the president’s use of the word “institutional” would imply Wall Street REITs and hedge funds rather than smaller mom-and-pop investors. Newsom hasn’t offered further details, but a recent statement implies that Wall Street was also the target of his ban.

“These investors are crushing the dream of homeownership and forcing rents too high for everybody else,” Newsom said in a statement. “I think it’s shameful that we allow private equity firms to become some of the biggest landlords in our cities.”

Smaller Investors Own Most of California’s Single-Family Rentals

As with much of the U.S. single-family housing market, corporate investors are not the primary owners in California, where fewer than 3% are owned by companies that own at least 10 properties, according to an analysis by the California Research Bureau.

Only 20,066 homes are owned by firms with portfolios of 1,000 or more, the largest being Invitation Homes, which owns 11,000 in the state, the California Research Bureau says. That is a sliver of the more than 16 million rental units across California, according to Census data.

This information was stressed by Scott Lincicome, vice president of general economics and trade at the Cato Institute, who told CNBC, “Institutional investors are just not the main market movers. It’s mainly a supply issue.” He describes the proposal as “populism 101.”

Are Fire-Damaged Lots a Good Investment?

The combination of federal and state efforts to curb large investors buying single-family homes, when applied to neighborhoods where institutional investment is concentrated, could mean fewer bidding wars against deep-pocketed adversaries for fixer-uppers and rentals. 

However, to buy anything in areas affected by the L.A. wildfires, such as Pacific Palisades and Malibu, you need deep pockets. Mom-and-pop investors in these neighborhoods are already multimillionaires. But for the homeowners, selling their lots is likely a different story.

“In Altadena, there’s a real push around the idea that the community is not for sale,” Redfin agent Sylva Khayalian said in the Redfin press release. “People who plan to stay are encouraging others not to sell because of how much it could change the neighborhood—but for some residents, selling is the only option that makes financial sense.”

Consequently, some are “signing on the dotted line because they’re desperate to sell” due to the cost of cleaning up smoke and ash damage, Khayalian adds, which can run into hundreds of thousands of dollars, especially when remediation and the cost to treat lead exposure and landscape destruction after heavy rains are factored in.

High Outlay

For investors, buying one of these fire-damaged lots means a big initial outlay. Khayalian says that Altadena lots are selling in the $500,000 to $600,000 range, and surviving lots with similar homes might command $1 million or more. Meanwhile, in Pacific Palisades and Malibu, the number is closer to $1.3 million to $1.6 million. 

“There are so many lots sitting on the market that sellers are starting to cut prices to attract offers,” Khayalian said, suggesting that leverage has tilted in favor of buyers here. Still, it’s a heavy initial outlay for an investor, even though they are not bidding against Wall Street behemoths.

Adding Units Through ADUs Could Be a Game Changer

A lot depends on the nature of Newsom’s crackdown. If the legislature adopts tax changes that penalize bulk acquisitions or tighten rules on corporate ownership, it may ease competition and create opportunities for small landlords to buy single-family rentals and small multifamily properties.

If this is combined with Newsom’s already stated interest in alternative construction methods, including modular housing, and with encouragement of ADU construction, smaller investors could benefit by adding units, converting properties, and participating in rebuilding efforts, despite the initial outlay required to purchase lots and damaged homes.

Final Thoughts: Factors Smaller California Investors Must Consider

Investing in a single-family home in California, especially in a fire-prone area, is not a simple process. Khayalian explained:

“The homes for sale that didn’t burn are only attracting offers if they’re priced reasonably and the owner has remediated ash and smoke damage. The most important thing someone looking to buy in this area can do is figure out if they can afford insurance. Mortgage lenders in California require homebuyers to have fire coverage, and premiums have gone up by 35% to 50% since the fires.”

Unfortunately, even if a neighborhood was not recently affected by a wildfire, investors in California could still be affected by one, given the state’s proximity to forests. Most of California is a potential tinder box. 

Deciding where to invest means getting a good deal on homeowners’ insurance. Between 2019 and 2024, more than 100,000 homeowners lost coverage. The California FAIR Plan, known as the “insurer of last resort,” has grown by 155% since 2021, but its coverage still pales in comparison to conventional insurance. For the time being, it’s all that many Californians have, and rental property investors have to decide whether that’s a risk worth taking.

Solo living is no longer a state enforced on a spouse when their other half passes away, but increasingly a lifestyle choice many Americans prefer or have found themselves in when their family lives elsewhere, and the idea of cohabitation doesn’t appeal. 

For landlords, catering to this growing demographic can be a big boost to the bottom line. According to KFF Health News, just under 30% of Americans aged 65 and older now live alone—a dramatic increase from 10% in 1950. Lower marriage rates, higher divorce rates later in life, the decision not to have children, and the post-COVID pandemic desire to live in isolation are some of the factors driving the increase in solo living.

According to Yardi’s RentCafe data, summarized by NAI Global, the number of renters living solo increased by about 1 million, or 6.7%, from 2016-2021. Solo renters are especially prevalent in high-growth job markets such as Salt Lake City and several Texas metros, where in-migration is strong.

In Salt Lake City, the solo-occupant population increased by nearly 25%—about 50,000 people—accounting for 15% of the city’s renter population. Although baby boomers are still the main demographic of solo renters, making up 32.4% of them, per RentCafe data, 29.5% of millennials are flying solo. In addition, millennials’ average salary of $55,973 is more than $22,000 more than that of the average renter, meaning this generation has money to spend. 

The Affordability Issue

Affordability challenges in the for-sale housing market are another reason for the increase in solo renters, as renting is now less expensive than homeownership when mortgage payments, taxes, insurance, and maintenance are factored in. 

However, that does not mean renting is a breeze for solo dwellers, especially for older renters on fixed incomes. AInvest’s recent analysis shows that the share of solo senior households spending over 50% of their income on housing was over 16% in 2020.

An Opportunity for Investors

This year, the oldest boomers will turn 80, Senior Housing News reports. With the boomer population increasing, comprising 64 million people, or nearly one-fifth of the population and rising, the housing industry isn’t keeping up. In fact, the number of senior housing facilities in some markets is shrinking.

This presents an opportunity for landlords if handled correctly. RentCafe’s data shows that, on average, older tenants are willing to pay a premium for privacy, but overall face financial burdens because they cannot split costs with roommates or partners. 

Some seniors realize the need for companionship and cost-cutting and have moved in with roommates. A 2025 senior housing trends report from NIC MAP says the sector will need 560,000 additional units by 2030 to meet the per-capita availability target.

“Many of our communities don’t have the housing that many aging adults can afford, with features that support them, in locations where they want to live,” said Rodney Harrell, PhD, AARP vice president of family, home, and community. “To meet this growing need, we must expand the nation’s housing stock and work to make our communities more livable with an all-ages mindset.”

Interestingly for investors, among those interviewed in the AARP survey, 75% of adults aged 50-plus said they still wanted to live in a single-family home and weren’t keen on living in a community for older people. One in four current homeowners aged 65+ has said they would consider buying or building an ADU.

Cohousing communities have been a way for seniors to maintain independence while still feeling connected to a community. In Silicon Valley’s Bay Area, a three-story building comprising 19 units opened in 2015, The Wall Street Journal reported, and there is a 20-to 30-person waiting list to move in.

Making Regular Rentals Senior Compliant

Most seniors aging in place are not looking to rent two-story houses, but rather small, single-family units with accessible floor plans, step-free entries, grab bars, good lighting, and walk-in showers, according to The National Institute on Aging.

Many of those features can be added gradually to existing small rentals to make them ADA-compliant. However, there are other steps to take if you want to take the process to the next level and convert a single-family home into a residential assisted living home, as documented on this BiggerPockets Forums thread, which can be highly profitable but requires obtaining the right permits and licenses. There are companies that can assist in the process.

Serving the Needs of Single-Tenant Renters: Midwest Cities Where Numbers of Solo Renters Are Soaring

PwC’s and the Urban Land Institute’s 2026 Emerging Trends In Real Estate report shows that senior housing, followed by workforce housing—both heavy single-tenant-based sectors—are two of the most in-demand housing sectors this year. The cities where solo renting is soaring have both a high percentage of boomers and millennials seeking tech-based jobs.

The Midwest, specifically Akron, Toledo, and Dayton, Ohio, has a low cost of living and a higher proportion of older residents. Similarly, Pittsburgh is generally cheaper to live in and has a mix of older residents and younger tech workers centered around big tech companies such as Alphabet’s Google, Microsoft, Facebook, Nvidia, and others.

Why Solo Renters Make Good Tenants

Less damage

Fewer tenants in a rental means less wear and tear.

High demand

As mentioned, between 2016 and 2021, the number of renters living alone increased by about 1 million people to 16.7 million, a 6.7% jump that made solo renters the fastest-rising renter group in the country.

Higher-income tenants will pay a “solo premium.” 

This doesn’t apply to all solo renters, of course, but there are many who have significant savings and assets or are employed in higher-paying tech jobs who can pay premium rents to live alone.

Simpler property management

Fewer tenants equals fewer property management headaches.

Longer-term rentership

This is particularly true of older tenants. They’re not looking to move. They want to find a place they can settle into for the long haul, prioritizing privacy, safety, amenities, and flexible digital services over sheer size.

How to Attract Solo Renters

Design smaller, efficient, and more affordable units. 

According to RentCafé’s 2024 review, “most cities are still experiencing a decline in square footage. For instance, Seattle ranks first among cities with the smallest new apartments, with units completed between 2015 and 2024 averaging 649 square feet. That’s a 57-square-foot decrease compared to older rentals.”

With the country mired in a housing affordability crisis, savings beat size every time.

Emphasize safety and neighborhood feel. 

Safety is one of the top priorities for tenants, especially older residents, along with walkability, according to RentCafe.

Offer strong, photo-rich, easy-to-navigate digital walkthrough tours. 

Almost 50% of 5,000 surveyed tenants from RentCafe said that clear photos and videos of specific units were helpful, while 39% interviewed by iApartments have used self-guided tours, and 26% have said they prefer a tour without a representative around.

Offer layouts that accommodate work-from-home jobs. 

Solo renters are often remote workers. Ensure your rental includes alcoves and areas that can accommodate a desk, creating a work-from-home office.

Provide storage, outdoor space, and parking.

These factors have also ranked highly in surveys for solo renters, especially those who spend long periods at home.

Price rentals with “solo premium” pricing. 

RentCafe reports that solo residents need about $8,600 more per year in income than the average renter. This means solo residents tend to skew toward high-income or older tenants with savings. Ensure your apartment pricing fits within a single renter’s budget.

Market to a solo renter demographic. 

Millennials and baby boomers are your target audience. Phrase your property descriptions accordingly.

Highlight features that support independence, privacy, and low-stress living. 

People often live alone for a reason: They value independence and peace of mind. Stress a responsive maintenance request protocol and clear communication.

Use surveys and feedback to understand what solo renters want.

These can include secure package delivery, modern kitchens, in-unit laundry, and spacious closets.

Final Thoughts

Investors often overlook one or two-bedroom houses, thinking that three-bedroom homes and above will appeal to tenants with kids looking to live in good school districts. Consequently, low-bedroom-count homes are often underpriced and can sit on the market longer—meaning they could be the source of great deals and cash flow. Modify your buying criteria accordingly, factoring in neighborhood safety, walkability, and parking, and you could find you have little competition when shopping for deals.

This article is presented by RentRedi.

When I bought my first rental, I was determined to self-manage. Not because I loved property management, but because I wanted to learn. I wanted to understand tenants, maintenance, leases, and cash flow instead of outsourcing everything right away. At the time, it felt like the responsible thing to do and a way to save money on management fees.

At first, self-managing seemed manageable—a few texts from tenants, a couple of maintenance calls, rent coming in each month. Nothing felt broken. 

What I didn’t realize was how inefficient I actually was. I tracked things in my head, saved notes on my phone, and buried receipts in my email. I wasn’t losing money in obvious ways—I was losing it quietly.

As my portfolio grew, I tried the opposite approach and hired a property management company. While it helped in some areas, it didn’t solve everything. I still lacked visibility and didn’t fully understand how my properties were performing. 

Eventually, I came back to self-managing again, but this time, with systems and the right tools in place. That’s when everything changed. I stopped relying on memory and started using processes.

I’ll be honest, I don’t think self-managing was the mistake. The mistake was trying to do it without systems. If I had used RentRedi earlier, I could have had centralized rent collection, maintenance, leasing, and finances all in one place. Then I would have caught many of these issues long before they started costing me money. 

Looking back, I can clearly see where money was leaking at every stage. Most landlords don’t lose money from one big mistake. They lose it slowly, in places they don’t even realize exist.

1. Poor Tenant Screening (When Everything Lives in Your Head)

Tenant screening is one of the most important parts of self-managing, yet it’s often the least structured. 

Early on, I didn’t have a written process. Each application was handled slightly differently, depending on how busy I was or how badly I wanted to fill the unit.

Some tenants submitted full documentation. Others sent partial screenshots. Sometimes I verified employment. Other times, I trusted what I was told. None of this felt reckless at the moment, especially when an applicant seemed friendly and responsive.

The problem with inconsistent screening is that it introduces emotion into what should be a neutral decision. When a vacancy feels stressful, you start justifying things you normally wouldn’t. You tell yourself it’s better to get someone in than to let the unit sit empty another week.

That’s how late payments start becoming normal and boundaries blur. And that’s how one poor screening decision can wipe out months of cash flow. 

Once I turned tenant screening into a standardized process, everything changed. Applications, documentation, and criteria became consistent, regardless of who applied. That structure didn’t just protect my properties. It protected me from making rushed decisions. 

Good tenants aren’t found by instinct. They’re found by process.

2. Vacancy Drag From Slow Turnovers

Vacancy is one of the most underestimated costs in real estate investing. A single empty week may not feel like much, but those weeks add up quickly over years of ownership.

Early on, I treated turnovers as something I handled after move-out. Lease end dates would sneak up on me. I waited to schedule cleaners and delayed listings. Everything happened in a rush.

The issue wasn’t effort. It was timing.

When listings go live late, you miss qualified renters who are actively searching. When photos aren’t ready, showings are delayed. And when vendors aren’t scheduled early, vacancy stretches longer than it needs to.

Once I started planning turnovers ahead of time, everything improved. Tracking lease timelines allowed me to prepare early, and tools like RentRedi made it easy to list units quickly as soon as notice was given. That speed helped reduce downtime and keep income consistent. 

What made the biggest difference wasn’t working harder during turnovers but having everything in one place. Using a single system like RentRedi can help eliminate delays and remove the guesswork. RentRedi can be used to track lease timelines, list units, and manage communication, which can reduce the need to extend a vacancy far longer than it needs to. 

Vacancies rarely come from a bad market. It usually comes from delayed action.

3. Underpricing Rent (Out of Fear or Convenience)

Underpricing rent rarely feels like a mistake because nothing feels broken. Rent still comes in. Tenants are happy. Everything appears stable. 

But stability can be misleading. Expenses increase every year. Taxes go up. Insurance costs rise. Maintenance becomes more expensive. When rent stays flat, cash flow slowly disappears.

A small gap below market rates might not seem significant, but over time, it compounds: $100 a month becomes $1,200 a year. Multiply that across multiple properties and years, and the impact is substantial.

Rent should be reviewed consistently, not emotionally. The goal isn’t to push tenants out. It’s to ensure your property remains a healthy investment. 

Cash flow is rarely lost all at once. It fades when adjustments are avoided.

4. Reactive Maintenance Instead of Preventative Maintenance

For a long time, I believed I was managing maintenance well because I responded quickly. If something broke, I fixed it. If a tenant called, I handled it. 

What I didn’t realize was that reactive maintenance is almost always more expensive. Emergency calls and after-hours labor cost more. Small issues turn into major repairs when left unresolved.

When maintenance communication comes through texts and calls, it’s difficult to spot patterns. You don’t realize the same system keeps failing, or that one property needs far more attention than others. 

Once maintenance requests were tracked in one place using tools like RentRedi, those patterns became obvious. That visibility made it easier to plan preventative maintenance instead of constantly reacting. 

The biggest shift came from having everything in one system instead of juggling texts, spreadsheets, and scattered apps. This is because all of the maintenance lives in one place, in RentRedi. Problems become predictable instead of expensive surprises. 

Preventative maintenance isn’t about doing more work. It’s about doing the right work, earlier.

5. Overpaying for Vendors (Because You Don’t Have Benchmarks)

Vendor expenses can quietly eat away at profitability when there’s nothing to compare them to. When you self-manage, availability often matters more than price. If someone can come quickly, you hire them. Without benchmarks, every invoice feels reasonable. 

But when expenses are reviewed by property, patterns begin to appear. Some vendors cost more. Some repairs repeat. And some properties consistently require more spending.

Once I began reviewing vendor costs intentionally, I was able to negotiate pricing, build better relationships, and make smarter decisions about whom to call for specific jobs. 

Most landlords don’t overpay intentionally. They overpay because they never pause long enough to evaluate.

6. Not Tracking Expenses Properly

One of the biggest turning points in my investing journey was realizing that a positive bank balance doesn’t mean a property is profitable. 

When expenses are scattered, it’s impossible to understand performance. Receipts get lost. Costs blend together. Decisions are based on feeling instead of facts. Without property-level tracking, you don’t know which rentals are working and which need attention.

Using a system that integrates property management and bookkeeping changed that. With RentRedi’s integrated bookkeeping, income and expenses are automatically categorized by property, making performance easier to review. 

Bookkeeping isn’t about perfection. It’s about clarity. And clarity leads to better decisions.

7. Your Time (The Cost No One Puts on the Spreadsheet)

The most expensive cost of self-managing is time. The late-night messages. The rent reminders. The constant interruptions. 

At first, it feels manageable. Over time, it becomes exhausting. 

What helped me avoid burnout wasn’t stepping away from self-managing; it was removing the need to be constantly available. RentRedi allows you to stay in control of your properties while automating the day-to-day tasks that used to keep me on call around the clock. I could focus on reviewing numbers, improving properties, and growing as an investor instead of reacting all day.

Self-managing doesn’t mean doing everything manually. It means staying in control while letting systems do the repetitive work. 

Your time is your most valuable asset. Protecting it is part of protecting your portfolio.

Conclusion: Self-Managing Isn’t the Problem. Managing Without Systems Is

I’ve self-managed inefficiently. I’ve hired property management companies. And I’ve returned to self-managing with the right structure in place. 

What I’ve learned is this: The strategy isn’t the problem. The lack of systems is. 

Most money leaks aren’t dramatic. They show up through missed follow-ups, preventable vacancy, reactive maintenance, unclear finances, and time slowly draining away.

Self-managing can absolutely work, but only when you manage intentionally. You don’t need to hand everything off to a property manager to be professional. But you do need professional-level systems if you want to scale without burning out.

For me, the biggest shift didn’t come from managing less. The shift came from managing smarter using a single system, like RentRedi, which replaced the patchwork of tools, notes, and reminders I had relied on for years. It allowed me to stay self-managing while bringing rent collection, maintenance, leasing, and bookkeeping into one place. If you’re starting to feel stretched or scattered, it may be worth exploring what managing everything inside one system, like RentRedi, actually looks like in practice. 

Sometimes, the right move isn’t managing less. It’s managing better.

Dave:
… To rent or to buy. You might think it’s an obvious choice, but it actually isn’t. Both Henry and I own dozens of rental units with millions in equity between us, but I spent five of the last six years renting a property, not living in a home I owned, and my net worth still grew a lot during that time. Most people would probably not expect that. You got closer to financial freedom while paying thousands in rent every month. The problem is that every online calculator, every podcast or YouTube video is telling you it’s a rent versus buy decision. That isn’t the case. Today, Henry and I are giving you three scenarios where you can rent, buy, or do a combination of both and grow your wealth in each scenario. So if renting makes more sense in your market, you can rent and still build wealth.
If buying a home is more affordable, you can ensure it’ll pay off when you move out. And finally, we’ll share the cheap code strategy that some of the smartest real estate investors use to make hundreds of thousands of dollars just buying a regular affordable home to live in. This decision could change the track of your financial future and you could be significantly wealthier because of it.
What’s up everyone? I’m Dave Meyer, Chief Investment Officer here at BiggerPockets. My co-host, of course, is Henry Washington. He’s here too. And we’re going to jump right into this conversation about whether it’s better to buy or rent or if that’s really even a decision that you need to make at all. So Henry, if you read the news right now, apparently just buying a home is just a terrible idea. That’s what everyone seems to be saying right now. Are you buying it?

Henry:
No, absolutely not. Buying a home is not a terrible idea, but I will admit that it doesn’t make sense for everyone to buy a home, and it doesn’t make sense for everyone in every market to buy a home. I do believe there are situations where it does make more sense to rent than buy, but I am a firm believer in no matter which you do buy or rent, you should be doing it with thinking about how to invest what you’re saving by not doing one or the other tactics.

Dave:
Yeah. All those articles you see, it’s every day in Bankrate or NerdWallet or anywhere that’s saying it’s cheaper now to rent than it is to buy. That’s a very simplistic and specific scenario. That’s just basically like if you’re a regular person and you’re choosing whether to buy your dream house or rent an equivalent property, that’s actually true. It’s probably better for most people to rent in that scenario. In fact, there’s only one city in the entire country where it’s better to buy than rent right now. Can you guess what it is?

Henry:
Somewhere in West Virginia?

Dave:
Very close geographically. It’s Pittsburgh is the only place right now where it’s actually better. But we’re investors, so we’re not thinking about it this way, like, should I buy my dream home or an equivalent property? We’re going to break down now how you can strategically think about your primary residence and ways that you can use it to grow your portfolio, whether this is your first property, whether you’re looking to do an owner-occupied strategy or not, and you’re just trying to buy rental properties and grow a bigger portfolio. We have strategies for everyone to leverage the choices they make about where they’re physically going to live to help grow your portfolio. So for investors who are trying to maximize the use of their residence where they’re living, what are the different scenarios they should be thinking through?

Henry:
Yeah, it really comes down to about three scenarios with some forms of variation, depending on the scenario. We have the option to rent your primary residence, we have the option to purchase your primary residence, or we have the option to own or occupy your primary residence as an investment vehicle. In other words, some form of house hacking. And when we say house hacking, we don’t always mean just buy a duplex, rent one side and living the other. House hacking to us just means finding a way to monetize your primary residence.

Dave:
Okay. So we’re talking about whether investors should rent, just straight up buy their primary or do an owner occupied. I think people are probably going to get mad about this. I actually think there are uses for all three. I think that renting makes sense sometimes. Grant Cardone’s going to be mad, but I think buying just your primary residence makes sense sometimes. I think owner occupied makes sense sometimes. So let’s just break these things down. I think rent’s going to make people the maddest, but do you agree that there are reasons why even real estate investors, even experienced real estate investors should consider renting a property?

Henry:
I absolutely do. And I say this as someone who owns my primary residence and hasn’t rented in years. And for me, it comes down to what’s the cost to rent each month versus buy each month? And that’s going to vary depending on your market. We’d be foolish to say that there aren’t markets where it costs substantially less to rent a like- kind property. And so if you’re going to end up buying a house that’s going to cost you 4,000 a month in a mortgage payment, and in that same market, you can rent a house that’s going to cost you 2,000 to 2,500 a month for the same kind of property. To me, especially as somebody who wants to take their additional income to invest in real estate, it would make a whole lot more sense for me to rent that property, save myself two grand a month and put that two grand a month aside so that I can buy rental properties where it does make sense for me to buy rental properties.

Dave:
The thing that sort of drives me nuts about either it’s people on social media or even these reputable websites saying it’s cheaper to rent or buy, they only look at the out of pocket cash. They say like, “Okay, my monthly mortgage payment is 2,000, my rent is 1,800, therefore it’s better to rent.” That is not how I would evaluate that because as you know in real estate, there are a lot of other ways that you’re making money. You have to think about the amortization on your mortgage payment, the potential for appreciation, which no one really knows, but over time the average is about 3%, so that really matters. And when you’re leveraged, that really helps a lot. And also tax benefits, right? You have to also think about the fact that your mortgage interest is deductible off of your taxes. And so just think about it that way, but it is the right question to ask.
When you incorporate all those things, if you actually do the math right and you see that renting is going to help you save money each and every month, you should do that. If you’re trying to maximize and not thinking about lifestyle, you should absolutely do

Henry:
That. Yeah. What we’re saying when you rent versus you buy is I’m saving monthly income and yes, I’m giving up the equity and appreciation, but I’m taking that additional income and then investing somewhere else where it makes more sense financially, whether that’s in my backyard in a different neighborhood or whether that’s in a whole nother state, then you are getting the benefits of real estate because you’re investing in a property somewhere else where you can take advantage of those benefits in a more financially beneficial way than you spending substantially more each month and then that hindering your ability to go buy property somewhere else.

Dave:
So what do you do then with the money? If you’re saving money every month, do you invest out of state? Do you buy a property in state or what do you do with the money you’re saving?

Henry:
If you are investing in real estate because you want to build up cashflow over the next five years to help replace your income for your job, yeah, you probably need to be looking at markets where you can get cashflow, where there’s a more favorable rent to price ratio, where you can buy a property and rent that property out and it pays for itself and then pays you some cashflow. There are tons of markets all over the country where you can find real estate that gives you those benefits. And I think it’s just up to us as investors to figure out where that makes sense for us based on our goals, but you should be looking to implement that money in a place that’s going to help you meet your real estate goals.

Dave:
Yeah. I think this is particularly important for everyone who’s listening out there. If you live in an expensive market in California, Washington, the Northeast, wherever, somewhere that it’s super expensive, this is a good strategy. It makes a lot of sense. I talk to a lot of people here in Seattle about this all the time because there’s a lot of people who have some money in tech or whatever and they’re like, “It doesn’t really make sense to house hack even here in Seattle. What should I do? ” I’m like, “Go rent a super nice apartment for three or $4,000 a month. That’s what it costs in Seattle.” But a mortgage payment here is $6,000 a month. So go spend three, 3,500 bucks and take that money. You’re saving two grand a month. You could buy a duplex a year with that savings in the Midwest. You do that for five years, you know, 10 units in another place.
That’s personally what I would recommend for the majority of people. Yeah,

Henry:
I can’t disagree with you because there are markets where even if you were to buy a duplex and house hack, remember a duplex is going to cost you typically more than a single family is. And so if you go and buy the duplex, even if you rent out the other unit, sometimes what’s left on your mortgage is still more than it would cost for you to go rent by yourself.

Dave:
It is. I was doing the math because I’m a giant dork. I made this huge calculator a couple of years ago that measures this. And honestly, I’ve used it every year of my life. It’s free on BiggerPockets. If you want to go to biggerpockets.com/resources, it’s just a house hacking calculator. It shows you whether it’s better to house hack, to buy, or to rent. So you should definitely check that out. But in a city like Seattle, renting is better. Just mathematically, it makes more sense. I get there are personal decisions. I have made all three of these decisions. I’ve bought my primary, I’ve house hacked, I’m doing a live and flip now, I’ve rented and bought in other states, but I’m just telling you, if you want to follow the math in an expensive market, this makes a lot of sense. There is one other scenario for renting instead of buying that I think people overlook, and it’s if you don’t know how long you’re going to live in a specific place.
That’s fair. I’ve lived in a ton of places and I have rented. I rented. When I was in Europe, I rented for five years. I would’ve made a lot more money if I didn’t, but I just didn’t know how long I was going to live in any of those places. And there’s transaction costs. In the US, it’s six to 8% essentially to go and sell. So even if you say, “Hey, I have this primary residence. It’s a great location. It’s going to build a ton of equity. I’m getting at a great price, but I might only live there for three years, probably better to rent, honestly, because it usually takes three or four years of appreciation growth, even good appreciation growth to overcome just the cost of selling.” And so I think that’s something you really need to think about. A lot of times this decision really comes down to like, are you going to live there for three or four years?
Four or five years, you’re probably good buy the house. But if you’re going to live there for less than five years, it’s kind of a toss-up.

Henry:
Absolutely that matters because we’re not in the market we were in 2021 where appreciation was going through the roof in a short frame of time. You’re not going to be able to take advantage of some of the ancillary benefits of real estate in a less than five-year period. And so again, you got to pay attention to that monthly cost. If I’m in a place where it’s very, very expensive, I think in any of those scenarios, it makes more sense to rent.

Dave:
Totally. I live in Seattle. I should, if I was just doing this straight on math, I should be renting right now. I don’t want to even tell you what my markets cost is. It is way more than I could rent an equivalent house for. But what I did choose to do was to buy a primary in a way that I do think is actually a reasonable way to offset. It might not be the most optimal, but it is actually working for my lifestyle. And I do want to talk about when you should buy your primary residence, but we do have to take a quick break. We’ll be right back.

Henry:
All right. We are back with the BiggerPockets Podcast and we’re talking about when it makes sense to rent your primary residence versus when it makes sense to buy your primary residence. And we just covered scenarios where both Dave and I agree, we think it might make a lot more sense to rent your primary residence instead of buy. But now let’s transition, Dave. In what scenarios do you think it makes sense for someone to buy their primary residence instead of renting?

Dave:
I think when you have somewhere close to breakeven on this calculation, like rent or buy, it doesn’t have to be exactly, but when you’re relatively close. So that’s number one. It has to be relatively close. And then I think there’s probably two different criteria I would think about. One is lifestyle decisions. That’s part of it, right? You can’t ignore this. If you would prefer to own your own home, that makes a lot of sense. But I think for me, the real criteria is, could I rent out that primary when I move out of it and make it a good rental property? Because as we were just talking about before the break, you have to hold onto it for four or five years. And if you think, “Hey, I might move out after two or three years,” that’s fine if it’s going to cash flow as a rental.
Just as an example, I guess it was like 10 years ago now, I was house hacking and I kind of just wanted to own my own home and I wound up finding a property that was in the path of progress. I got a great deal on it and we wound up buying it and it did increase my monthly burn because I was househacking in a place I got for super cheap and I wound up paying out of pocket for my mortgage every month, but it was worth it to me because it was a great place for me and my wife to live. And now I still own that as a rental. We moved out of that property six years ago and it’s still a cash flowing rental property in a great neighborhood. I bought it at 450. It’s probably worth 800 now. So it’s been a great investment for me and we lived there for five years really comfortably.
So it worked out as a really good investment.

Henry:
Yeah. I think if you live in a market where your rents or your mortgage payment for the same type of property are about the same or even skewed where your mortgage payment would be less than what it is to rent, you absolutely should buy. This is a scenario you should buy your property in because you’ve now put yourself into a position where you’re not losing money by buying instead of renting. You’re going to spend the same amount or pretty close to the same amount either way. And so now what I’m thinking about as a real estate investor making this rent or buy situation is if it’s going to cost me the same to rent or to buy, that means I have the same money to play with each month to put towards investing in real estate. So I should buy because now I not only have to spend the same amount each month, but I get the ancillary benefits, I get the tax breaks, I get the appreciation over time.
And then I can think about scenarios like you just talked about. When I move out, I can now keep this property as a rental property and then I get the benefit of debt paydown that I’m not actually paying down the debt for that a tenant is. I think this is a scenario where you should consider buying over renting for sure.

Dave:
There’s a key caveat here though. In my example, and I think this is probably true for most people, I didn’t go out and buy my dream home. I mean, if you asked Jane, it was whatever the opposite of dream home is, that’s what it was for her. Nightmare home? Got it. A nightmare. Yeah. We used to play a game just gunshots or fireworks. Often, honestly, total toss up. I’m not saying you have to do that, but I viewed it as an investment. I wasn’t saying like, “This is the house we’re going to live in for the rest of our lives.” I was in my late 20s and I was like, “This is not where we’re going to hopefully raise a family one day.” Where I bought in the path of progress and in a place where I felt like I could really have a good investment.
I think the area where Robert Kiyosaki or Grant Cardone are right, because they are owed, just if you don’t know, two big, famous real estate names who are very adamant that your primary residence isn’t an investment. Robert Kiyosaki even calls it a liability, but where their sentiment at least is right is like if you’re going to go out earlier in your investing career and buy your dream home, often that is not the best use of your money. You could probably either be renting and buying something else or you could be buying more of a starter home, maybe something with sweat equity in it where you could go do that.

Henry:
And I think that this is the caveat that we wanted to make sure that we hammer home with people. We’re thinking about this decision to rent or buy as real estate investors at heart, right? And that’s how we’re talking to you as the audience. If you’re a real estate investor and you’re trying to decide rent or buy and you live in a market where it’s about the same price, we’re saying buying is the right choice in that scenario, but be smart about the buy. If you’re first getting into your home ownership journey, maybe this is your first home purchase to live in, maybe it’s your second home purchase to live in, chances are you’re not picking that home as your forever home yet. You probably just aren’t in that stage of your home ownership journey yet.
So buy something that will make sense as a rental property down the road, because if that’s your goal is to build a portfolio of rental property of cash flowing assets, utilize your owner-occupied loans to buy something that can be added to your portfolio in the future versus you buying something so expensive that you can’t add it to your rental portfolio and you end up having to sell it. And I’m not saying that makes it a bad financial decision because if you keep it long enough, it’ll appreciate. But being able to buy something that can double as an investment property is A, a safe investment, and B, allows you to kind of kill two birds with one stone. You have a safe, comfortable, primary residence, but now you have something that you’ve added to your portfolio. And we all know the key to real estate is the longer you own it, the more financially beneficial it becomes.
So you might as well buy that rental property now.

Dave:
I guess the advice here is if you want to buy your primary residence for lifestyle decisions or for financial decisions, underwrite it like a rental property. Go use the BiggerPockets calculator, treat it like you are going and buying a single family rental and just see where it comes out. If it’s going to be really net negative, that’s probably not the best financial decision. You might be better off doing an owner-occupied strategy or doing the rent and buy strategy. But if it comes close or you’re like, “I’m going to live here two years, rents are probably going to go up and we’ll be cashflowing when I move out, ” that’s a totally good decision.

Henry:
Now, I want to ask you another question about this because I can already see the comments coming on this video is if we’re saying buy versus rent in this scenario, even when it’s close to the same, what about the maintenance issues that you have to pay for as an owner that you wouldn’t have to pay for as a renter? How do you factor that into your decision if you’re in a place where renting and buying technically costs about the same each month?

Dave:
Well, I’ll give you the real answer and I’ll also give you my hot take that’s going to piss a lot of people off right now. My hot take is when I was living in Amsterdam and renting, it was so nice. I loved being a renter. I had great landlords. Every time something broke, I just called someone else and then just went about my day. I didn’t have to go call nine contractors to go fix something, sit at home all day, maybe they’d show up or maybe they wouldn’t. So I actually, I think there’s part of that. But I do think it’s just a matter of underwriting, right? You have to treat it similar to a rental property where you’re assuming there’s maintenance because every home I’ve ever bought and lived in, the maintenance has been higher than I expected. And I actually think you should maybe even budget a little bit more than you would for a rental property because your personal standards are going to be higher.
If you are living with a spouse or you have kids, even if you wouldn’t make that upgrade, that repair for a rental grade apartment, it’s your home.You’re going to want to do it. And so you just really make sure that you’re budgeting for that.

Henry:
Boom. That’s exactly my thought. I think that’s a valid concern. If it costs the same to rent or to buy in a market, just consider the additional maintenance in that decision. That way you can buy understanding that, yes, it’s going to cost me $2,000 a month to pay a mortgage here. It would also cost me $2,000 a month to rent a property here. Let’s call it $2,300 a month because I’m going to factor in the additional maintenance burden that I will take on as the owner of this property versus just calling somebody as a renter. And in that scenario, I think a few hundred dollars you should still own.

Dave:
All right. Well, we have one more scenario which is owner occupy that’s either house hacking or a live-in flip, which I think is a much better option for people than they even realize. We’re going to get into both of those right after this quick break. We’ll be right back. Welcome back to the BiggerPockets Podcast. Henry and I are here talking about the best ways to think about where you live, your personal residence, to maximize growing your portfolio. We’ve talked about when and how you should consider renting. Next, we talked about buying a primary residential living in it, but then there’s sort of a combination strategy, which is owner-occupied. You’ve probably heard us on the show talk about house hacking plenty of times. This is when you either buy a small multifamily, you live in one unit, rent out the others, or you could do the co-living approach where you buy a single family home, live in a single bedroom, and then rent out the other bedrooms.
But in addition to house hacking, you can also do something called a live-in flip. Henry, what’s your feeling generally about owner-occupied strategies?

Henry:
I love them so much. I love them so much. Nothing more to say. Just love them. Same. So what we’re talking about is monetizing your primary residence, right? What ways can you offset the mortgage payment? And that helps you have more money to save for investing or whatever else you want to do with your additional income. But I love that strategy. And technically, I do it today because we talked about I bought a single family with an ADU. We rented the ADU and then the money we were saving from a mortgage payment from before, we just put into a savings account until we had enough for a down payment, and then we ended up buying the home that we’re in now. The other thing that we don’t typically talk about with this strategy is, yes, I lived in a two family, I rented one of the units that offset my mortgage, but then I moved out.
And when I moved out, I now was able to rent the unit I was living in. And so now that created a situation where I have cashflow from that property because rents have gone up over time as well. And so we were making enough to almost cover the full mortgage by renting out the ADU, but now we rent out the main house and that creates a lot of cashflow. And I take that additional cash flow and it pays for about half of the mortgage at my dream house now. So technically my house isn’t an investment property because I’m not monetizing the house that I’m living in, but I am taking the cashflow from my house hack to cover half of my mortgage. So technically it’s an owner-occupied investment strategy, just kind of continuation of that.

Dave:
I think house hacking for most people, I’m going to give a caveat, unless you’re living in a very expensive market like we were talking about, is the best way to go about it. Just on paper, lifestyle decisions aside, it just makes so much sense. You get the benefits of rental properties, you get the amortization, you get the tax benefits, you get the benefits of primary residence, you get owner-occupied financing. There’s just so much good stuff to like about this. And I’m going to be honest, we’ve talked about this on the show before. People say that it’s some big sacrifice from a lifestyle perspective. I just don’t buy it. It’s not. Maybe the co-living thing is, that’s not for everyone.

Henry:
That’s fair. For sure. That’s very true.

Dave:
But if you could go out and buy a side-by-side duplex, right? You got your own yard, you got your own driveway. Frankly, if you want to grow your portfolio, that’s a very small sacrifice, in my opinion, for the benefits that you get from house hacking. So I just think for most people, where there’s good properties to do it, because that’s another caveat. There are some parts of the country where you just can’t find good small multifamilies, but if you’re in a place where you can find good small multifamilies and you’re willing to do this, you should probably just go do it. Anywhere in the Midwest, this is just a no-brainer.

Henry:
Yeah. That’s a slight uncomfortability for the option to build amazing wealth. I’m fine with that. And also, you’re the landlord, so you have some say in who lives next to you.
It’s not like you have absolutely no control over that situation. So small sacrifice to me. And if you live in a place similar to the scenario we talked about where it’s the same price to rent and buy, buying with owner-occupied strategy in mind just kind of doubles the benefit of you buying that property. Because if you say, “Okay, well, I can rent and buy. Well, let me go look at what it costs to buy a duplex, a one to four family.” And then house hack, you’re just multiplying the impact of that buy decision. Or like we talked about, buying something that will make sense as a rental property later or buying something that will make sense as a multifamily later, because in a lot of places in the country, you can build ADUs. And so maybe you buy a single family home on a piece of land that you know has enough space and has the potential for approvals for an ADU, and you can add an ADU to that property down the road and increase your potential.

Dave:
Last thing I want to add on house hacking is that you do not need to cash flow on house hacking. That is great if you can pull it off. It is hard to do realistically in this market, but think about it, how much money you’re saving for that next purchase. I know I gave that example of buying my own primary for the first time in 2016. I had been house hacking. I wasn’t cash flowing even back then in 2016 in Denver. I think I was basically living for free. It would’ve cost me 1,400 bucks a month to live in that apartment. I did that for two years. That’s my down payment on the next house. I wasn’t cash flowing, but I saved so much money that I could go buy the next house, still own that place as a rental property. I got great financing on it that I still have 10 years later and I still have the property 10 years later.
So just think about it as a stepping stone. I think when you meet people at meetups, Henry, I think the people who’ve grown the fastest, in my opinion, for average people who aren’t starting with a ton of capital are people who house hack four to five times in a row.That is the most, I think, proven way to get a good portfolio when you’re just starting middle class regular person.

Henry:
100%. They either house hacked a few times in a row or they leveraged their first primary residence as a rental property after they moved out because that allowed them to have so much equity built up that they could take out a line of credit on that equity and use that to fund their investment career. It gave them a boost and a headstart. Absolutely.

Dave:
So there’s one more we got to talk about, another owner-occupied strategy, which is the live-in flip, which I am in the … I don’t know if I can say I’m in the middle of doing this. I bought a house with the intention of

Henry:
Living- Intent. You have

Dave:
Intent. I intended to do it. I moved in in June of 2025. It is now January of 2026.

Henry:
Give us a percent. Percent done.

Dave:
Zero. Haven’t swung a hammer. Nothing has happened in here. But honestly, part of that was intentional. My wife and I don’t really know how long we’re going to live here. So we were like, “We’re going to live here for three or four months, figure out what we want to actually do to the property.” We now have a plan and I actually, we have contractors line up to start in March, so keep you posted. But I will just sort of explain the concept here. It’s a strategy that mixes the idea of house hacking and house flipping basically at the same time. The idea is you buy a property, you actually move into it and live in it, but fix it up while you’re living there. And you can add value in the same way that you do in a flip, but there are some benefits overflipping, at least in my opinion, that are really, really important for people to know.
First and foremost, you get owner-occupants financing. As Henry can probably tell you, I’ve only been a part of really two or three flips in my life, but man, that financing is expensive. You’re paying a lot of points, you’re paying 12% on a hard money loan. I am living in a potential flip right now and I have a 5.25% mortgage rate. So I’m pretty happy with that. That’s why I can take the time to figure out what I’m going to do. Number two is it reduces your time pressure. To get the max benefit of a live-in flip, you should live in it for a minimum of two years because in the US tax code, you live in your primary residence for two or more years, all the capital gains that you get, those are tax-free. So if I do a renovation on this house, I sell it, I move out.
Unlike a flip where Henry pays normal income tax on that-

Henry:
Short-term capital

Dave:
Gains. Short-term capital gains, I’m paying nothing on that up to $500,000, which if it’s over more than 500 grand, I’m pretty happy to pay that tax because I just made a lot of equity. So I think that takes sort of the time pressure off of it and it allows you to take advantage of the financing. So personally, I can’t speak from experience. I’m doing it for the first time right now, but on paper, I just love the idea of a live and flip. I will say that I’m going to do the baby move and I think we’re going to move out of our … We’re doing a first phase where we’re not moving out, but when we do the big part where a lot of the systems, the windows, those things are getting replaced, I probably will get near BB for a couple of weeks.
So there are ways to mitigate that. You don’t have to live in a construction zone 100% of the time. I think

Henry:
This is Great strategy if you’re in a position where it makes sense to do this. Is it a strategy you can scale big? No, absolutely not. But it is definitely a strategy where you can make a lot of money in a reasonably short period of time. I mean, you’re talking about being able to walk away with 100 to 200, sometimes $300,000 tax-free in your pocket. There are investors who literally do this as their primary resident strategy. They do a live-in flip. They do it about three times and by the third live-in flip, they’re in this amazing dream home and they were able to just carry over these profits into their dream home so that they’re owning their dream home almost free and clear because they’ve just moved the profits forward into bigger and bigger owner-occupied live-in flips. I think it’s a fantastically undervalued strategy.

Dave:
100%. If you know Mindy Jensen from the BiggerPockets Money Show, she does it. This is basically all she does is just do live and flip, live in flip, live and flip. And Mindy’s doing pretty well. So I think it’s worked very well for her. And I will just say, I think this is a really good option for people in expensive markets. In Seattle, I was doing an analysis. I didn’t want to rent just for lifestyle decisions, but this was the second best option for me for financially on paper, how to leverage my primary residence into a good investment. I think this is true in other expensive markets in California, in the Northeast.This is something that could just have huge financial benefits in almost any market. So I think this is something you should definitely consider doing. All right. I think we went through all of our scenarios, Henry.
Any last parting words of wisdom here?

Henry:
Yes. I think the caveat we’re trying to lay out here is no matter what you’re thinking about buying or renting, be thinking about it from an investor’s perspective and pick the choice that allows you to reach your investment goals sooner than later. And if we’re smart about whether we rent or buy in order to take any additional income that we make to grow our investment business, I think it’s going to put you in a better financially sound position sooner than later.

Dave:
Just don’t listen to dogma. Anyone says it’s always better to rent or buy. It’s always better to buy or rent. Just do the math. You can do it like there are calculators in BiggerPockets. I told you about the spreadsheet I made. You can download it for free. Go check that out, do the math for yourself, and you can make a really good decision. Henry and I, I think have both shown that you can get huge benefits. It can be a launchpad to your investing career if you think about this in the right way, and pretty much anyone can do it. So go check it out.

Henry:
Amen.

Dave:
All right. Well, Henry, always fun hanging out. Are you scared of the comments?

Henry:
I mean, I think they’re going to be some spicy ones for sure, but that’s a good thing.

Dave:
Bring it on. We want to hear what you think about this episode. Thank you all so much for listening. We’ll see you next time.

Ashley:
What if the real reason you’re not buying deals has nothing to do with the market and everything to do with how you’re approaching money, deal flow and funding.

Tony:
Today we’re answering three questions from the BiggerPockets forums that hit the exact pain points that rookies just like you are struggling with right now, getting deals without a bunch of capital, finding quality wholesalers to find you the right deals and knowing when to line up your financing.

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

Tony:
And I’m Tony j Robinson. And our first question today comes from Victoria in the BiggerPockets forms and Victoria’s question is, I’m curious about what methods you all are using to acquire investment properties without a ton of capital upfront. There are so many strategies out there partnering with private money lenders, joint ventures, creative financing assignments, subject to seller financing, lease options and more. It would be great to hear from investors actually doing deals right now about what is working in today’s market, which strategies you like best and what pitfalls to avoid when using little to no money down approaches. A few questions to kick things off. What methods have you successfully used to acquire properties without large amounts of your own cash? How did you structure the deals, roles, profit splits, risk and protections? How would you do it differently if you were starting over with limited capital today?
Looking forward to learning from everyone’s experiences. Alright, so the question is how do you get into a deal with little to no cash of your own out of pocket? I think the first thing that I’ll say is that everybody listening probably wants to do a lot of deals without using any of their own money, right? That’s the golden goose for building a real estate portfolio is the ability to leverage other people’s capital. That said, I think a few things have to be in place first before you can successfully do that. Number one, it helps to have some sort of track record. If you can show people that you can be a good steward of maybe your own capital first, it makes it more competent for them to actually give you their own capital in a deal. But if you’ve got zero real estate experience, I’m not saying that it’s impossible, but it is a slightly bigger hurdle to get over if the first deal that you’re doing requires you to get someone else’s capital.
So just keep that in the back of your mind that if you’ve got a track record, even one or two deals, that helps build confidence in other people, then you can replicate that with their own money. The second thing that I’d say is even if you are using someone else’s capital, not your own, there’s still I think a certain level of financial cushion that you want to have in case the deal goes sideways. If you guys go over on your budget, if unexpected expenses come up, whatever it may be, if there’s a month where occupancy dips lower than what you had anticipated, it’s still good to have some form of reserves for yourself just in case things hit the fan. So just two big ideas up front for me. Ash, what are your initial thoughts on the question?

Ashley:
I, one other thing along with finding out your path, your strategy and what you’re going to do is once you at least know your strategy, build your buy box. But when you’re looking at different ways to fund the deal, I think you should have multiple options. Instead of just saying, I’m just going to get a bank loan, I got pre-approved and that’s the only thing I’m going to do is look at other things. So you can submit multiple offers on the deal, so you have multiple opportunities to negotiate. So oftentimes I will submit an offer with bank financing. I will submit an offer with seller financing. I think seller financing is a great opportunity to get a deal with low money into the deal and be able to negotiate the terms so it’s more beneficial for you. And I think if you limit yourself to only thinking about I need to set aside one funding strategy and stick to that is going to limit the deals that you can do.
So try and find out if you can line up a private money lender that maybe you will or won’t use. Look at how you would structure seller financing for a deal. You can do as many different offers as you want. And the thing I love about doing multiple offers is it makes it the buyer’s decision. Everybody loves to make their own decisions. So I’m sorry, the seller’s decision. The seller will get to decide which offer they want to choose, and everybody likes to make their own decision not be told what they’re going to do. So that kind of gives you some negotiating power there.

Tony:
But to answer the question of what methods have you used, I’ve used 100% bank financing. So my first few deals were 100% funded by a local bank that I found, and I know investors today that are still using forms, that form of financing. Now usually that requires finding deals and need some renovation and some rehab. So there’s some margin in there, but call every single bank in whatever market that it is you’re thinking about and see what kind of loan products they offer that are low or no money down. I’ve also used private money where I’ve worked with private investors to fund my acquisition, the rehabs. I know other folks who have used private money in combination with hard money. I just think that if you are going to raise capital from someone else, especially in your first few deals, I would maybe focus on transactional real estate.
So something like flipping where you can kind of get in and get out in six to 12 months and also walk away with a bigger chunk of cash because then that will position you better moving forward to maybe start doing some of your own deals. So the bigger question isn’t does this work or can I get someone else’s money? I think the bigger question that most folks struggle with is how can I go out and identify those people that would be willing to work with me? So I would invest a lot of my time, effort, and energy into building your network, meeting folks who might have the capital but not the time or the desire to do these deals themselves and figuring out how you can align yourselves with them to make it a win-win situation for both of you.

Ashley:
And then to address the question of what would you do differently if you were starting over with limited capital? I actually really like the way that I started. I took on a money partner who funded the whole deal. I set it up so that it was 50 50 equity, but also they were being paid back principles. So the capital they invested into the deal plus five and a half percent interest over a 15 year amortization. So this was a really sweet deal for them and it was my first deal. So I wanted to give someone more sense of a security. So they were getting all their money paid back over time and they were getting equity in the property and 50% of the cashflow of the property, which I will say was pretty minimal at first to start, but it was their first deal and my first deal.
So I think if you are starting today and you’re looking at what to do, the biggest thing is for me that really helped me was not being worried about giving up too much in the deal. If you don’t get a ton of return or you give up equity or you give away a portion of the cashflow, this first deal doesn’t have to be a huge money maker. And even if you’re doing a lot of the sweat equity, which I was a property manager, I found the deal, I did everything for the deal, but I gave up a lot just to get started just to get that first deal. So don’t overcomplicate it and don’t overthink it when you’re purchasing that first deal with a partner that it’s okay if they end up getting the better end of the deal because it’s the way that you got started and you can grow and learn from there.
It’s one deal that you’re doing with them. The next deal, you can negotiate the terms. I still have that first partner and when we do a deal today, it is very, very different. I make out on the sweeter end of that deal because I am the one doing all of the work and I know what my value is because of all the experience and the things that I’ve learned, but they’re still being able to invest in real estate and have to do very, very minimal work. So it still works for them also too. So coming up, everyone says build relationships with wholesalers, but how do you actually find the good ones without wasting months chasing bad deals? We’ll dig into that after a quick word from our show sponsors. Okay, we’re back. And our second question is, I have been investing for two years now.
Since then I did my first project and looking to do multiple ones this year. Congratulations on your first one. And I’ve been trying to connect with solid wholesalers so far. Most of the deals I’m coming across aren’t a good fit. I post regularly in the Facebook groups, check investor lift and stay active in the community, but I’m clearly not reaching the right wholesalers yet. What might I be doing wrong? And where do experience investors usually find reliable wholesalers who consistently bring real workable deals? So I’ve never bought a property from a wholesaler, but I am on a bunch of buyers list they call it, where wholesalers keep a list of their buyers. When they get a deal, they send them out. So here’s the three ways that I would find a wholesaler is one I would go to in-person meetups in your network, wholesalers will be there.
Sometimes they even bring deals in a clipboard for you to sign up if you want to get on their buyer’s list. The second thing is if you’ve ever gotten a text message from somebody who wants to buy a property, maybe your primary residence or maybe the investment property you already have, respond back to them and say, no, I’m not interested, but I’d like to be on your buyer’s list. Most likely they are a wholesaler trying to find deals. So usually I just have to give them my email address and I’m on their buyer’s list. You could also tell your friends and family that they could if they get one of those messages, to send the contact information your way and you’ll go ahead and respond with your information. And then the third thing is Googling. So whatever market you are investing in is Google, sell my house fast, buffalo, New York, or whatever your market is. And all of the wholesalers will usually come up like we do cash offers, things like that. And you’re going to message them and instead of being somebody who wants to sell your house, just let them know you are a buyer and you would like to be on their buyer’s list.

Tony:
Great points. Ashton, I just want to highlight why most rookies might not ever even see all of the really solid wholesale deals. And it’s because what wholesalers really value is certainty in the person that they’re working with, right? They’ve got this property in their contract, they’ve already made commitments and promises to the seller. They want to make sure that whoever they go under contract with has a good chance of actually closing, right? Otherwise they sour that relationship with the seller and they might end up losing the deal. So oftentimes what you’ll see wholesalers do is that before they email out their entire list, they’re picking up the phone, they’re calling or they’re texting, they’re trusted and closest buyers to say, I just locked this up. Here are the details. Are you interested? And oftentimes only if those buyers pass then does it go off to their larger list.
So the question for you isn’t even necessarily, how do I find more wholesalers? Because it sounds like you’re doing all the right things. The question is how do I get into that inner circle so I can be on that short list of what buyers or what wholesalers are actually looking for? And I think there are two ways you can do that. Number one is just continue to build a better relationship with those wholesalers. Don’t just wait for them to send you deals. Just reach out to them every once in a while. Let them know what you’re up to. Give them more certainty on what you’re doing in your business to position yourself. Tell them, Hey, look, I just raised 300 K that I need to deploy. Do you have anything that I can buy right now? Right? The second thing you can do is maybe take a deal that has slightly smaller margins just to build that relationship with those wholesalers.
So if you’ve got a minimum goal on a flip of like, Hey, I want to make a hundred K on a deal, maybe take a deal that gives you 30 k. If it means building a better relationship with that wholesaler. So I think the bigger question is not how do you get more volume, but how do you build a deeper connection with the folks who are already wholesaling in your chosen market? Alright, we’re going to take a quick break before our last question, but while we’re gone, be sure to subscribe to the realestate Rookie YouTube channel at realestate rookies where you can find us and we’ll be back with more right after this. Alright, we’re back and let’s hear. Our last question was come from Brandon and the BiggerPockets forum. So Brandon says, question four, active investors here. Do you prefer having financing options ready before submitting offers or do you secure funding after you have a deal locked in?
Pros and cons to both? Curious to know how you would approach it. My answer is going to be pretty quick and straightforward on this one. Ash. I prefer to know what my purchasing power is before I invest a lot of time searching and hunting for deals. Because what would suck is that you find a great deal, you get it under contract, you try and go get your financing, and they’re like, Hey, this deal is $500,000, but you can only get approved for $200,000. Now you’ve just wasted a lot of time, effort, and energy on deals that you actually had no ability to close. So for me, I feel like one of the very first steps, even before you really focus on a market is understanding what is your purchasing power? How much cash do you have on hand? How much can you deploy into a deal? And what kind of loan amount can you get prequalified for?

Ashley:
It’s definitely so much easier to go that route, to be prepared and to know ahead of time to be able to get your deal done. There definitely have been a lot of times where I’ve found the deal and I’ve then figured out the financing, maybe because I wasn’t planning to buy a deal, but the deal is too good to pass upon or whatever the reason may be, or it came up upon a second deal or something that I wanted to take on at the same time. So it’s important to have options, I would say. So figure out different ways that you can pay for things. And even though you may not use all of them that first deal, at least know what are the steps to take. So getting pre-approved is a great choice. Having somebody that’s lined up as a private money lender, it’s definitely easier to make the offer and get the offer accepted too when you can have proof of funds or proof of financing.

Tony:
And a lot of sellers, they won’t even entertain an offer if you don’t have some sort of pre-approval letter attached to that offer. So I think a lot of times your hand is kind of forced into get into financing, at least somewhat figured out first.

Ashley:
This off market deal that I’m doing right now, I actually got the pre-approval letter and everything when I got it ready to submit my offer, and I was waiting to submit the offer to get the preapproval, and I submitted the offer with anticipation that I would have the proof of funds within the next 24 hours. So when they asked for it, I’d have it ready. They didn’t ask for it, but it still was good peace of mind to know I have the financing lined up or whatever.

Tony:
And just one last point on that too, Ash, you talk about off market. We just had a question about wholesalers. Even for wholesalers, a lot of times they’ll want a non-refundable EMD just to lock the deal up. So if you go out and you put down 5, 10, 20, $30,000 as a non-refundable EMD, and then you try and go get the financing only to figure out that you can’t, that’s a tough spot to be. And so I would strongly encourage every rookie to try and figure out your financing first.

Ashley:
Well, thank you guys so much for joining us on today’s episode of Rookie Reply. If you have questions, you can always join us in the real estate rookie Facebook group, or you can message us on Instagram at BiggerPockets Rookie. I’m Ashley Houston, and we’ll see you guys next time.

Get ready to rumble! There’s an epic fight brewing among real estate portals, with established players facing off against mega-brokerages that are attempting to corner the market and keep exclusive listings for themselves. 

Caught in the tug-of-war are flippers and landlords, wondering where to list their houses and rentals to quickly nab qualified buyers or tenants.

Compass, CoStar, and the New Era of Portal Wars

When it comes down to sheer eyeballs on the screen, Zillow is still the one to beat. However, as HousingWire reports, the recent merger of Compass and Anywhere Real Estate has created one of the largest residential brokerages in the country. Industry analysts say that the firm’s combined scale and emphasis on “exclusive” inventory could reshape the flow of listings across major portals.

Compass’s aim is for consumers to see compass.com as a central destination for listings. As such, the site has been steadily growing a list of private and semiprivate inventory, not available on every rival site.

That move has angered Zillow, which, in April of last year, banned private listings that appeared exclusively on Compass at least 24 hours before they appeared on the MLS. This set off a lawsuit between the brokerage and the listings portal.

It seemed Zillow was getting hit from all sides, because another rival, CoStar, the parent company of Homes.com and Apartments.com, also filed a lawsuit in July claiming that Zillow “stole” and used over 46,000 of its copyrighted property photos to boost its own listings. 

CoStar wasn’t done. The company set out to win over Zillow users by offering to “boost” listings banned by the rival portal.

Google Enters the Fray

As in a scene from Jurassic World Dominion, when a T. Rex is taken out by Gigantosaurus, the same could be playing out in the portal wars. Google has just entered the fray, trialing listings exclusively on its search engine. 

Because of Google’s massive scope, this could prove a major disruptor for Compass, Costar, and Zillow, as viewers will be able to view listings directly on their search engines without having to visit specific websites. It remains to be seen to what extent Google will affect the other listing sites.  

Right now, all the posturing amongst real estate tech’s power players is just that—posturing—because there’s still one clear leader in rental and residential listings: Zillow. However, the race is tightening, and Zillow is not the only option. According to Investopedia’s Best Rental Listing Sites for Landlords and Tenants for 2026, the results were as follows:

According to Investopedia’s analysis, Zillow’s Rental Manager comes out on top due to its large national database, strong site traffic, and integrated features for marketing, tenant screening, and rent collection. Landlords can post a basic rental listing for free in many markets or pay for a premium listing for around $29.99, while renters typically pay a $35 application fee that covers screening reports.

Also included in Zillow’s Rental Manager portal are analytics, pricing guides, tenant screening, a lease builder, online rent collection, and fraud detection systems. There’s also access to professional photography. 

In short, along with a listing on their rental portal, Zillow makes a compelling case for landlords to align with real estate’s online powerhouse.

Zillow’s One-Size-Fits-All Does Not Fit All

However, Zillow’s one-size-fits-all approach does not, in fact, fit all. Investopedia points out that small landlords in smaller markets often have their own methods for highlighting rental listings, and neighborhood-specific categorization is not one of the site’s strengths, especially when tenants are searching by neighborhood or school district.

Hot on Zillow’s tail is its great rival, apartments.com, owned by CoStar, which also owns Homes.com. Investopedia says that the site is best for attracting qualified applicants. It offers many of the same features as Zillow for the same $29.99 price for screening reports and an application, and shows its listings on its own site, as well as Homes.com and ForRent.com.

Social Media: How Smaller Landlords Can Compete

Investopedia’s editors recommend using all four portals together to achieve the best overall reach, with Zillow as the anchor platform. 

For smaller landlords, standing out on these sites means competing with heavyweight rental companies such as AvalonBay, Equity Residential, and Essex Property Trust, which have thousands of apartments. It means being nimble and nuanced, competitively priced, and able to offer concessions. It also means leveraging social media platforms such as Instagram, TikTok, and Facebook Marketplace.

Property management platform RentRedi suggests highlighting your apartment in its best possible light with professional photography and staging and using engaging captions and hashtags to attract tenants.

Using a more personalized approach to properties on social media, through Instagram Reels and virtual tours, can be a winning strategy for smaller companies. RentRedi also recommends constantly analyzing performance metrics to see which platforms generate the most user engagement.

Final Thoughts: Beware of Scammers

In the rush to rent your vacant apartment, listing on every rental portal and across social media, be careful not to leave yourself exposed to scammers. According to the Federal Trade Commission (FTC), $65 million has been lost to rental-related scams since 2020, with Facebook (51%) the most likely place to get defrauded and Craigslist (16%) second.

Scams can take many forms, and it is usually the potential tenant who gets scammed, not the landlord. However, having your apartment used as bait for a con means you have just lost the chance to get an application from a genuine tenant, and you have unwittingly been involved in defrauding an innocent victim.

Ways to deter this from happening include branding every image with a digital watermark (with a website and phone number) so they cannot be used elsewhere, monitoring other platforms with Rently’s Fake Listing Monitoring, and not posting the full address. Because scamming is so prevalent, listing formal photos on major portals rather than on free social media platforms is prudent.

As rhetoric about incoming Federal Reserve Chair Kevin Warsh has investors dreaming about basement-level interest rates, the words of hip-hop legends Public Enemy could be worth remembering: “Don’t believe the hype.”

“We can lower interest rates a lot, and in so doing, get 30-year fixed-rate mortgages so they’re affordable, so we can get the housing market to get going again,” Warsh, a former member of the central bank’s Board of Governors and an outspoken Fed critic, told Fox Business in 2025.

Warsh’s low-interest-rate stance seems to have secured him President Trump’s nomination. “He certainly wants to cut rates, I’ve been watching him for a long time,” President Trump said on Jan 30.

“He will go down as one of the great Fed chairmen, maybe the best. On top of everything else, he is central casting and will never let you down,” Trump wrote on his Truth Social platform.

Only Modest Cuts Expected

There are, however, a few steps to go before Warsh becomes chair in May, and then more steps are involved in lowering rates based on inflation, the economy, jobs, and the housing market. It seems inevitable that there will be some rate lowering, but how much is unclear.

According to a recent Forbes forecast, based on Fed signaling, rates are unlikely to drop much lower for the remainder of the year, with one or two modest cuts expected. It’s a reminder that, despite the hype around Warsh, he won’t be waving a rate-cut magic wand, ushering in a return of bidding wars and price hikes.

Trump’s Expectations vs. Reality

Trump’s full-court press for lower rates will run up against a few realities that could frustrate the president and drag out meaningful cuts far longer than he hopes. Warsh will not chair a Fed meeting until June, the New York Times notes, adding that any aggressive cut agenda would roll out gradually after that.

“He’s going to try to thread the needle of respecting President Trump’s wishes and at the same time, respecting institutional processes,” Dennis Lockhart, a former coworker with Warsh at the central bank when he served as president of the Federal Reserve Bank of Atlanta between 2007 and 2017, told the Times. “Believe me, that’s going to be quite the tap dance. It’s going to be Fred Astaire as central bank chair.”

Inflation: The Numbers Don’t Lie

The Wall Street Journal reports that Warsh essentially has the same priorities as the outgoing Jerome Powell: easing inflation back down to 2%, while shrinking the Fed’s balance sheet, fielding White House pressure, and preserving the Fed’s credibility. While Warsh will be keen to make a fast and favorable impression by doing what’s hoped for with interest rates, the numbers don’t lie, and he will still have to work within a data-dependent framework.

Reuters echoed that sweeping rate cuts may not be on the agenda as the president hopes, recalling that Powell was the president’s pick in 2017—who then, not even six months later, was called “clueless.” Trump’s insults have only worsened since then. 

Trump himself acknowledged the rapid trajectory from praiseworthy to pariah that his Fed picks seem to engender. “Everyone that I interviewed is great,” he said in Davos last month. “Problem is, they change once they get the job.”

And Warsh will not want to sully his reputation by pandering. “Kevin will only push for large interest rate cuts if he thinks they make sense,” Michael Boskin, who works at the Hoover Institution and formerly worked with the George W. Bush administration, told the New York Times. “He’s going to form his own judgments.”

What This Means for Real Estate Investors

Investors will want to formulate a strategy for the next 12-24 months based on mortgage rates and borrowing costs. There is no crystal ball to predict where rates will be because it depends on so many other variables. However, according to experts interviewed by CBS News, there is a path, albeit tenuous, for rates to fall below 5% by the end of 2026.

For borrowers not keen on a wait-and-see approach, the article suggests considering shorter-term options, such as adjustable-rate mortgages, or using a mortgage broker to access wholesale pricing with an eye toward refinancing later.

The argument for gradual rate cuts for landlords

A gradual rate easing is likely a better scenario than a sudden rate slash, which could signal a homebuying stampede. It’s the same scenario that dominated much of 2025: rates easing and buying increasing in a measured way, as Reuters reported, with more expected for the remainder of the year. It means landlords might be able to lower their interest rates as rates decrease while still having a significant rental pool due to affordability challenges.

How smaller landlords should position themselves now

Investors face three challenges heading into the new year, with interest rate cuts expected but not certain:

1. How to finance existing assets
2. How to underwrite new deals
3. How to manage rents and tenant relationships

Warsh’s indications, according to the Journal, that he wants to “support households and small-medium enterprises,” and ease up on smaller banks, suggests that lending and credit will be accessible, with short-term rates possibly drifting lower while lending criteria remain stringent.

All this means that there will be no silver bullet but instead, by staying in touch with local lenders as rates come down, investors might be able to eke out refinances and new loans that make sense for cash flow and stable acquisitions that will enable borrowers to service and pay down debt and enjoy modest equity gains and the tax advantages of owning real estate, while waiting for more sizable interest rate shifts.

Cash remains king

The primo play for those who can manage it in this market is the all-cash one. Whether that means liquidating existing assets, tapping HELOCs, or partnering with private lenders—before markedly lower interest rates cause prices to skyrocket—securing new assets without leveraging up to the gills is the prudent way to go.

Tenant retention

Retaining tenants is key, no matter the rate cycle. However, if rates do drop closer to 5%, as some people predict, some tenants might be tempted to get on the property ladder as homeowners. Landlords will want to ensure that those seeking highly leveraged loans see the benefits of retaining renters through modest rent increases, prompt and efficient maintenance responses, and flexible renewal terms, until they can save more money.

Final Thoughts

Don’t get too excited by the Warsh hype because nothing is certain. Instead, you can only plan based on what you can see directly in front of you—that means modest changes with interest rates and house prices, making affordability an issue for many tenants. However, positioning yourself ahead of the pack, should rates tumble, ensures you won’t be lost in the shuffle, and will also help safeguard your long-term investing future.

Henry:
Financing real estate deals can be one of the biggest barriers to entry when investing. It’s also one of the reasons investors stop scaling before they ever get to financial freedom, and you’ve probably already heard of all the big ones. We all know conventional loans, FHA, loans lines of credit, but what we’re going to share today are five loans you’ve probably never heard of. In fact, these have flown under the radar so well that we didn’t even learn about them until we were years into real estate investing. We’re talking about things like zero down payment loans with no closing costs, 5% interest rates and no credit check or a loan. You don’t even need to go to a bank to get. If you’ve heard of all five of these, you’re probably an expert investor, but if you’re struggling to scale or you need a hand buying your first property, you cannot miss this episode. We’re breaking down all five options so you can decide what makes the most sense for your financial situation. What’s going on everybody? I am Henry Washington, co-host of the BiggerPockets podcast, and I’ve got my other co-host, Dave Meyer here with me today. We’re talking about financing options You might not know about this isn’t FHA loans and HELOCs. We have five ways to finance deals that often go under the radar. So let’s jump into the first one. NAL Loans.

Dave:
I got to be honest, man, I didn’t know what this is when we were creating this show and honestly there’s a whole chapter in one of my books where I just list out every kind of loan and I didn’t know about this one. This is genuinely a cool under the radar, really awesome, powerful type of loan that everyone should know about. Now that I know what it’s

Henry:
Absolutely. So I did know about this one and it is a phenomenal loan option for people. So NAONE stands for the Neighborhood Assistance Corporation of America and it’s a nonprofit and they specialize in helping people who are either in underserved communities or who may not traditionally qualify in terms of credit score or financial situation to purchase a home. And this program provides them the opportunity to do that. And with this loan you can typically get financed, you can get a lower interest rate, so lower than the prime rate, sometimes substantially lower than the prime interest rate.

Dave:
Yeah, the rates for this right now are 4.75 to 5.25, 4.75 outside of COVID. That’s the best mortgage rate you can get. Basically,

Henry:
It’s a cheat code with the terms because yes, the interest rates are great, but you also don’t have to bring a down payment and you don’t have to pay the closing costs. It’s kind of insane.

Dave:
Unreal. It’s crazy. There are other programs out there for lower income Americans like FHA is the most common one, but FHA has PMI, if you’ve heard of this is private mortgage insurance. Basically if you bring less than 20% down on an FHA loan, they hit you with a fee. So your mortgage payment, even if you get a slightly lower mortgage rate, is usually higher than it would be. So it does have benefits. FHA loan is a good product and we talk about it a lot on this show, but this doesn’t have PMI, so you are truly getting that 4.75 or 5% mortgage rate that you wouldn’t be able to get pretty much anywhere else in the market right now. And this is designed to help people who come from a lower or moderate income background. So this isn’t just, there are ways for rich people to get lower mortgage rates, but this is actually a way for people who are just starting their journey for wealth and financial freedom to get that lower mortgage rate.

Henry:
And I know everybody’s listening like, man, this sounds too good to be true. Why doesn’t everyone do it? And there is some caveats. One of the caveats is it takes a long time to get financed. On average, you should assume it’s going to take you anywhere between six months to a year to close your property,

Dave:
But you know what will take longer? Saving up for a down payment and repairing your credit, that’s going to take a lot longer. Fair, and you still won’t get four point a half percent. Exactly. Yeah, you’re still going to get paid 7%. So yeah, I love that.

Henry:
There’s a lot of hurdles to go through with this loan. Obviously one of the main things is you have to sign up to take a workshop to start your process and they only do the workshops at certain times and in certain places, and so you’re kind of at their behest when you get started and then it is going to require a lot of paperwork. A lot of your financials you’re going to have to provide, and I know you have to do this with normal loans, but it can seem or be a little excessive, but if you can get past all of the red tape, you truly can get an amazing loan product. And one of the best parts about this is you can buy multifamily with it up to four units. Matter of fact, they encourage you to buy multifamily with it.

Dave:
I am hesitant to say there is one loan product that’s right for everyone, but if you qualify folks who have more than a hundred percent of the median income for their area face different requirements. But if you fall below the median income in your area, you should absolutely go check this out. And I know people are like, I don’t want to go do training, but it’s probably a good thing, right? They’re probably going to teach you how to be a good landlord, how to make sure that you service this loan, how to make sure you meet all the requirements and get through the underwriting as quick as possible because I’m guessing if you don’t really pay attention, it’s more like one year rather than six months, and that can make a big difference as well. I love this idea of this loan and I was about to ask you who should apply for this, but I’m kind of like anyone who meets the qualifications that I should apply for it.

Henry:
Goodness, I’d do it. I’d do it if I could to get a loan.

Dave:
See, totally one question. Do you know can you move out and keep the loan or do you have to refinance it if you move out?

Henry:
I believe you have to refinance it if you move out. It’s meant for owner occupants, but man, what an amazing opportunity to get into a property, especially if you get into a property and you get yourself a little bit of discount, now you’re walking into a little bit of equity, you’ve got a 4% interest rate. They’ll allow you to qualify for more home if you’re going to buy multifamily because they consider the income the other units produce as more income for you. Oh, that great. So you can buy a more expensive property and then house act that property, and then they’re going to train you, like you said, to help you make sure that you have all of the tools necessary to maintain this loan. It’s a phenomenal product.

Dave:
It seems like they’ve created a really good loan for folks who are on the lower to moderate end of the income spectrum and allow them to get into homeownership. I love it. It’s a NCA loan. Do you know where people go to apply for this?

Henry:
Yeah, you just go to their website, believe it’s nca.com, aca.com, and that’s where you can register and get more information. I also believe they have NACA sponsors or counselors all over the country, so you can potentially reach out to one of them and chat with them first about what all the requirements are going to be so that you can be better prepared for the process. But this is a no brainer to me if you are looking to buy a home anytime soon.

Dave:
Alright, well let’s move on to our second under the radar financing strategy, which is USDA loans. That’s right. The US Department of Agriculture helps people get mortgages. These are the same people who grade your stakes as either prime or whatever else. They grade your stakes as these people are also giving out mortgages. Now, USDA, as you might imagine, US Department of Agriculture, these are mortgages that have to be located in a designated rural area, so these are not in cities, but if you’re thinking, oh, that means that I’m not going to be able to use this. 97% of the US landmass is designated as one of these areas. So this is like most of the country, not by population, but by landmass. And there are a lot of suburban type areas that are within 15, 30, 45 minutes of major cities that actually qualify for this. The other requirements are income related, so similar to the NAPAL loans, most of these income restricted types of loans are based on the median income and for USDA loans you have to have 115% or less of the median income.
So you can make 15% essentially higher than the median income in your area, but no more than that. To qualify for this, and this too, like your NACA loan does have to be your primary residence. You have to live in it. It can’t be your lake house, it can’t be your hunting cabin. That sounds nice. You have to actually live in this property. But if you do, the benefits are that you get a hundred percent financing. You could have zero money down to go out and buy a primary residence or a house hack just like the knack alone, and you can get below market rates. Right now it’s not as low as the NACA loans, but it’s about 5.6%, which in my mind, fantastic interest rate if you could get a 5.6%. That’s the difference between some deals cash flowing and not cash flowing. And honestly, if you’re doing a house hack, you don’t need a cashflow, but it’s just going to keep more money in your pocket every single month so you have that benefit.
The other benefit and why, if you can use this over an FHA loan, I usually recommend it is that there is PMI that private mortgage insurance we were talking about, but it’s lower so you don’t have to pay as much as an FHA loan and the underwriting is pretty flexible, so it’s not going to be, I mean all underwriting’s annoying. Let’s be honest. You’re applying for a mortgage and it’s not A-D-S-E-R loan. You’re probably going to be a little bit annoyed by it, but this is slightly less annoying than other types of mortgages. So even though there are requirements, again, this is one that’s just absolutely worth it.

Henry:
I feel like this one’s under the radar along with RD loans. So the rule development loans, because most people don’t take the time to just figure out if the property they’re considering buying could fit as a rule development or A-U-S-D-A loan, just do a little bit of research. There are so many more homes in your market that would probably qualify this than you would ever think of

Dave:
A hundred percent.

Henry:
So if you’re looking into buying a home and it’s not in a direct giant metropolis, you should look into it and see if it qualifies. And B, if you are a flipper or you’re selling a property, make sure that you go figure this out so that you can advertise to your buyers that it will qualify for A-U-S-D-A or rule development loan so that you can get more buyers that want to buy your property. Very smart. And what I like about this one is you don’t need the highest credit score to qualify like six 20 to six 40 I think is the

Dave:
Minimum

Henry:
That they’re looking for. And that’s pretty good to get a zero down payment loan.

Dave:
I love it.

Henry:
Do the research. It doesn’t take long for you to go figure out if this will qualify. You can literally ask a question and find out if Europe property you’re looking for qualifies for this.

Dave:
Some of the people who have been most successful in this era of real estate that we’re in right now have been small town investors.
And I’m not talking about how I make fun of Henry for being in Arkansas. That’s not a small town that’s like a major city. You’re talking about like 20,000, 50,000 people. Those places have cash flowing deals, they just do and they qualify for these kinds of loans. So this could be a really good strategy for people who live in those areas. I wouldn’t recommend just going out and picking a random small town, but if you’re from a small town, if you’re from a place where you can qualify for these kinds of loans, it’s such a good way to start your career. And unlike the one benefit this has over the knack alone is that you can keep the loan after 12 months. It’s like an FHA loan where you can actually move out and go buy something else and keep that mortgage. This is such a good way to start a real estate investing portfolio.

Henry:
Yeah, I think this is great because if you use A-U-S-D-A loan to buy a property, you live in it for a year, you can then go and use an FHA loan for the next property. You do have to live in it, but it’s a great way to slowly build a real estate portfolio by living in it without having to spend a ton of money, 0% down on your frozen loan, three and a half percent down on the second FHA loan. I mean, that’s pretty incredible.

Dave:
It’s a great, great product that I think most people are missing. How do people do this? I just don’t even know how you contact the USDA.

Henry:
So if you go to the USDA website, I believe they have an eligibility map, so that will help you be able to at least spot check and see if your property is in an area that would qualify. Or you can just search for USDA approved lenders. So search like USDA approved lenders in x, Y, Z, city and state and you should get a list or just call your local credit unions or local regional banks and see if they have somebody in-house who can help you with A-U-S-D-A loan. That’s where I would start.

Dave:
So these are two incredible programs that you should be checking out, but maybe you’re feeling nostalgic for the COVID era interest rates two, three, 4% like everyone really misses right now. After this quick break, we’re going to share two different strategies for you where you can get those mortgages back. Stick with us.

Henry:
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The seller becomes the bank. So this works in situations where you’re buying a property from a seller and that seller owns the property free and clear. And since the seller doesn’t have a loan against the property, technically you can make your loan payments to the seller. So it’s like buying a property in installments directly from the seller. Why is this important? There are a lot of sellers, especially as we get more and more into the silver tsunami where the baby boomers are looking to exit the market, sell off some of their real estate. Well, they have a lot of paid off real estate and if they’re an existing landlord, they already understand the value of getting monthly income, and so a lot of them would like to continue to get monthly income. What they’re tired of is dealing with tenants and toilets. Another reason why sellers would do this is because it allows them to defer taxes. They don’t have to pay a big capital gains hit because they didn’t sell their property outright. They only have to pay taxes on the income they’re making each month, so it slows down the tax burden and kind of spreads it out over time for them.

Dave:
I just love the flexibility of seller financing. It’s just basically like you two people talk to each other, you figure out what works for you.

Henry:
Absolutely.

Dave:
You just kind of can discuss with the person, what should your down payment be? What should your interest rate be? What is the term of the loan, what’s the amortization of the loan? It’s just up to you if you like negotiating or problem solving. If you have the idea of finding mutual benefit, this can be a great option for you and you could really cater it to your specific needs. Some people will use it when they’re like, I have a great credit score but I don’t have a down payment. Or some people are like, I have a down payment, but this deal doesn’t work at conventional mortgage rates, so I need a lower mortgage rate. And you can sort of work with the seller to figure out what makes the deal pencil.

Henry:
What I love about this is you can absolutely get a low interest rate if that’s what you and the seller negotiate. You can get no interest rate if that’s what you and the seller negotiate. So as an investor you can specifically target this. So even if you’re buying homes on the market, you can have your agent help you filter out homes that they think the mortgage is free and clear based on the history. That is something your agent can actually look up on the MLS and then help filter that out for you so that your targeting homes, that would make sense for an owner finance offer. And if you’re buying off market, you can specifically pull lists and just filter out everybody that doesn’t have a hundred percent equity in their home. So now you’ve got a targeted list of deals that may have owner financing potential. What I think about with seller financing is what’s it called? Seller financing. And that means to me, when I’m going to negotiate seller financing, I need to figure out what are the needs of the seller and then I can turn the levers that the seller wants in their favor and then I can turn the other levers in my favor.
And so if I have a seller who’s selling a property and that seller says, Hey, I got to get my price. I’m not selling this thing for anything less than $300,000 and I need $1,500 a month, well then I can go put 300,000 and $1,500 a month in an amortization schedule and then I can turn the other levers in my favor, and so I can maybe buy a property with no down payment and I can buy a property on a 10 year mortgage
In order to help him heat his sell price of $300,000 and a $1,500 monthly payment. And so it’s mutually beneficial, but I think a lot of people look at seller financing in the wrong way. They want to approach it as a, what do I need? But if you approach it and figure out what, because the seller’s only going to care about a couple of things, some sellers are like, I need a chunk of money. And I say, okay, well I can give you a down payment as long as I’m paying no interest or a very low interest rate. And so it is a true negotiation, but you work it out in a win-win situation. If they want all the levers flipped in their favor, then you probably need to go get a traditional mortgage. But if you can 50 50 it and they get some wins and you get some wins, you can get yourself a sweet deal with some sweet terms.

Dave:
The other thing I want to call out about seller financing is unlike NACA and the USDA loans, this doesn’t need to be owner occupied. This is not a house hacking only strategy. This is a way you can build your portfolio indefinitely. Like we were saying, there’s unlimited really options for how you’d use these kinds of loans. So I think seller financing good for everyone. It’s just finding them. That’s hard. You have to be diligent about pursuing them. You have to follow Henry’s advice about deal finding and marketing yourself. If you really into do that, this is a great option for anyone.

Henry:
Absolutely.

Dave:
Alright, that was our third strategy that you are probably not thinking about in 2026. Moving on to our fourth is assumable mortgages. Now, we’ve talked a lot about, this has been in the news a lot recently because there is announcement about the idea of portable mortgages. That is not what we’re talking about here. A portable mortgage is the idea that you have a house, you already own it, you take your mortgage and you bring it with you to the next house. This is kind of the exact opposite of that, whereas the mortgage stays with the house even when the seller leaves. So if you as a buyer approach someone who has an assumable mortgage and they bought their home with a 3% mortgage rate, you can just take over that loan from that, you can assume the mortgage from them. Now, there are a lot of caveats about this and there are different qualifications, but if you can pull this off, this is an unbelievable option because there are people out there with 3% and 4%.
There might even be people out there with 2% mortgage rates that if you can get your Henry asked one, if you can get your hands on that, go get your hands on it. That is unbelievable opportunity. Now, the requirements are that this is also another owner occupied strategy. You do need to actually go live in these house and the type of loan when it was created really matters. It can’t just be you went out to Wells Fargo with Chase and got a mortgage, they’re probably not going to make that loan. Assumable. Most conventional mortgages have what’s called the due on sale clause, which means when you sell it, you got to pay back your mortgage. But if you have an FHA loan or a VA loan, if you’re current or former military member or those USDA loans that I was talking about before, these are all typically assumable mortgages. So if you’re looking at house hack or buy a primary residence right now, honestly, this is great for if you want to do a live and flip too, this is a great way to go do that as well. So I just love the idea of consumable mortgages, kind of similar to seller finance where you have to go hunt them, right? They’re not just out there for any property you want to go buy, but if you’re willing to do the work, it’s amazing.

Henry:
I mean, I think it’s a fantastic strategy. Again, the hard part is finding people willing to do it. There are plenty of them out there, but it’s going to take you some work to do some digging to find the people who would be willing to do that. But yes, you can assume a mortgage, sometimes you got to take some cash out of your pocket, pay the seller some cash and then take over their mortgage. I’ve heard of people doing this without having to pay a ton of cash to walk into it. It just depends on what situation that seller is in and that will determine how willing they may be to hear an offer where you would be assuming their mortgage. But the situations do happen.

Dave:
The big caveat with these kinds of mortgages is that you have to pay the seller full price, right? So
Just for example, if they bought their home at $300,000, maybe they put 20% down, they’ve paid it down, now their mortgage is just $200,000, great. You’re assuming a $200,000 loan hopefully at a really low mortgage rate, good for you. But maybe over their time, if they bought it during COVID, now that property’s worth, let’s just say $500,000. Someone’s got to pay that extra $200,000 between what they bought it for and what you are buying it for. And so you either need to bring that money to the table or you have to go out and get a secondary mortgage. Often even if you get a secondary mortgage that’s still cheaper with the blended rate than going out and getting a conventional mortgage. But they’re not just selling you their mortgage, they’re selling you the house at current market rate, and you have to sort of make good on that gap in equity. So how do you find people like this? I mean, I assume some people are smart like you and are marketing it if they have an assumable mortgage, but are there other strategies for finding them?

Henry:
If you’re looking on the market, the best way is to again, have your agent help you filter out the homes that are financed with one of these types of loans. That is information you can get access to typically on the MLS. Or if you don’t, then you can sometimes look in the county records to find out who the mortgage holder is. But there are options. So you need to find out, first of all, if the loan used to buy it is a type of loan that’s assumable. And then if you’re shopping on the market, really the only way to figure out if it’s possible is to make an offer. And so it’s just going to take some communication between your agent and the seller’s agent because that’s the true magic. You have to make sure that your agent understands this method and can explain it to another agent clearly so that they can explain the value in it to their client. That’s where a lot of the gaps fall apart. And so make sure your agent is educated and make sure you’re able to have your agent talk to the other agent in the language that’s important to them, understanding that, hey, they’re not taking a loss here. They’re still getting their price, you’re still getting your commission. We’re actually probably going to be able to get the deal done a whole lot faster because of this situation. Absolutely.

Dave:
So we got four fantastic options for financing properties, even in a higher interest rate market like we’re in today, but we have even more for you, including loans that are specifically designed for us. They’re designed for small investors. We’ll share that strategy right after this quick break.

Henry:
Welcome back to the BiggerPockets podcast. We have been talking about lesser known financing options, and now we’re about to dive into a very specific financing option that’s made for people like us, the entrepreneurs of the world. So this option is called the Non QM loan, which stands for Non-Qualified Mortgage. Some people also call him bank statement loans. These loans are designed specifically to help the entrepreneur and not just a real estate entrepreneur, but if you think about the person who’s a hairdresser or the person who owns their own tax consulting company, these people struggle sometimes to qualify to buy a home because banks truly value W2 income well over entrepreneurship income, and sometimes you can make a lot of money as an entrepreneur and still not be able to qualify to purchase a home.

Dave:
It’s a really just annoying limitation of conventional mortgages. I just feel bad. There are so many people, even real estate agents, you’re in real estate. You probably, even if you’ve been doing it for years and you make a good amount of money, you’re still limited by these rules that are annoying. They annoy me.

Henry:
It baffles me. When I left my job, I left my job before my wife left hers, and I remember I was speaking to one of my banks and I told them that I was leaving my job and they said, oh no. And I said, yeah, but I make six times in income what I make in my salary as an entrepreneur. And they were like, yeah, but does your wife still have a job? And I’m like, she makes a fraction of what I make now as a salary job. And they said, long as she’s still got a job, you’re good. Right? It’s mind blowing. But if you’re in that boat, we get it. This is a great option for you. Because what they do, they don’t use your W2 to qualify you. They actually will use your bank statements. So they’ll have you send them your bank statements and they’re going to your income and the frequency of your income based on the deposits that have come into your account. And that way, if you are an entrepreneur and you are making money, this type of loan will allow you to qualify because they’re going to consider those deposits as your income and that will help you qualify to purchase a home.

Dave:
Love this approach. This really just opens up a lot of options for people, but there’s many types of non QM loans. So what are some of the variants people should think about

Henry:
In general with non QM loans? I would expect to pay a higher interest rate than Prime, somewhere between one to 3% higher than prime based on how risky your profile is as a buyer. So it’s not all sunshine and rainbows. Yes, there’s going to be some caveats here, but it does give you an option or a pathway into ownership that you may be blocked from.

Dave:
No one’s giving this away for free, right? Lenders are not in the business of lending to be kind to you. No one’s like, oh, I just want to earn less money than I could. But a lot of them say, Hey, there’s a whole business of lending to people who don’t qualify under these very strict rules for conforming mortgages. And I am willing to lend to them, but because they do not, I can’t sell these mortgages as mortgage backed security. Some non qms you can, but because or because they don’t have a W2 job, it’s riskier. And any lender will tell you that the higher the risk of the borrower, the higher the interest rate they need to charge to compensate for that. So you just need to think about that. Any situation, unless it’s like NACA where it’s backed by a nonprofit where they’re not trying to make money or USDA where it’s a government sponsored thing where these are not for-profit institutions.
Anytime you’re dealing with a for-profit institution, if you are looking to make a lower down payment, if you are looking to step outside their comfort zone, their little box that they like to lend in, they might do it, but they’re going to charge you more. Absolutely. And that’s okay. That’s just their business. And it makes sense honestly, if you think about it from their perspective. So you just need to decide if you are willing to do that and or just only find deals that work with those higher rates. That’s just how it’s got to be. And I think everyone’s coming around to those terms right now. Sellers are getting a little bit, are understanding this, and so there are absolutely deals that make sense with these higher rates. And it’s not like they’re 9%, it’s a little bit higher, like Henry said, 1% higher perhaps, or maybe a larger down payment, or there might be other terms in there like prepayment penalties that you really need to look out for because these are ways that lenders are trying to mitigate that

Henry:
Risk. You’re absolutely right, and I think managing your expectations when going into a loan like this is important. And so some of the things to expect, like we were talking about are interest rates being higher than the prime rate. Even if you have a good credit score, expect to pay a point at higher than what’s than prime expect to pay anywhere between 10 to 25% down on average. Could be more depending on the situation, the type of property you’re buying. These are 30 year amortization loans, so that’s a good thing. If you’re looking for more cashflow, there are some interest only options available depending on what you’re doing with the property. So you could be paying interest only so those could come into play. If this isn’t a property you plan on holding for a long period of time, that may end up saving you some money. They don’t have PMI, so that’s positive. That might save you a little bit to offset some of the additional expenses. And the approvals are typically faster than a conventional mortgage or like A-D-S-E-R. It moves a little quicker. So there’s for sure,

Dave:
And there are tons of banks that do this. This isn’t, you have to go hunting for them. If you go to BiggerPockets, there are lenders out there who do these kinds of loans. If you go to networking events, you can definitely meet lenders who do these types of things. It’s a lot of local institutions, smaller banks. So you could just probably Google too, where can I get A-D-S-C-R loan in my area? So check that out.

Henry:
Alright, well hopefully that was extremely helpful for you. Those where five financing strategies that are lesser known that you can be using to help you learn how to invest in real estate. As always, thank you so much for listening, Dave, thank you for all your input and we’ll see everybody on the next episode. I.