In This Article

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

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

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

Why Airbnb’s Dominance Is Also Your Most Significant Risk

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

Here are some risk factors:

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

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

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

The Great Backups

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

Booking.com

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

Expedia Group

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

Google Vacation Rentals

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

Niche Platforms Quietly Printing Money

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

Whimstay

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

WeChalet

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

Plum Guide

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

Glamping Hub

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

Hipcamp

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

BringFido

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

VacayMyWay

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

Mid-Term, Corporate, and Quiet Cash Flow Platforms

Furnished Finder

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

Corporate housing networks

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

Insurance and displacement housing

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

TikTok/Instagram

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

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

Final Thoughts

Distribution is a strategy, not chaos.

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

Henry:
This might be the smartest real estate portfolio strategy we’ve ever heard. $1 rental properties, infinite returns, free down payments. The best part, it’s all legit. I’ve used all the methods today’s guest talks about and they work. Seven years ago, Joe Mean was a basketball coach making $30,000 a year, working 90 hours a week. That’s right, 90 hours for $30,000. So he had to get creative. Joe used widely overlooked strategies to scale his portfolio on a lower income with not a lot in savings, and he did it all buying on- market properties. Now he’s got 11 cash flowing rental units, works for himself, and has complete financial freedom. You probably thought that wasn’t possible in 2026, but Joe’s coming on to prove that it works. Mr. Joe Mean, thank you for joining us on the show.

Joe:
Yeah, thanks for having me. Happy to be here.

Henry:
So as we always get started, we want to hear about your background. So what were you doing when you first decided to do this real estate thing?

Joe:
Yeah, I guess I’ll start right out of college. I was actually going to go to medical school and then I got a contract to play basketball overseas in Switzerland. So it was quite the switch up on what I was about to do. Did a year of that and then got hurt and came back and was like, “All right, I’ll try college coaching and maybe get back into it and rehab a bid and start playing again.” And I just ended up coaching for nine years. But the first two years, I made $10,000 a year. What? I worked about 90 hours.

Henry:
No. You made 10 grand a year working 90 hours a week.

Joe:
Yes.

Henry:
Wow.

Joe:
And that’s not uncommon in the basketball world. Some people are working for even less than that. It was definitely lower on the amount made and higher on the hours, but that’s kind of unfortunately what it takes to move up in that industry. You start just really scratching your way to the top and then hopefully get to a stable spot. Bucknell was a much more stable spot where I ended up. So I was coaching college basketball at Bucknell University in Lewisburg, PA. And I’d been there for about four years and started to think about purchasing a house and had a friend who had some rentals, had some success with them, and started to talk to me conceptually about the house hack. We didn’t call it a house hack, didn’t know that term at the time. But from there, I was like, “Well, that makes a lot of sense.
Instead of paying $900 per month to rent, could possibly live for free.” So then I found a duplex that was on the market for a long time and started doing some math in my apartment, which is hilarious. I still have the sheet of paper with just the most basic math ever. Didn’t know capital expenditures, vacancies, maintenance, anything like that.
But I could tell it’ll basically cover my mortgage and that’s all I knew. And so I kind of just jumped in and then three, four months into it, I was like, “Oh wow, this is pretty cool.” This actually

Henry:
Works.

Joe:
Yeah.

Henry:
What year was this?

Joe:
This is 2019.

Henry:
Okay.

Joe:
So August of 2019 was my first purchase.

Henry:
Okay. And about what’d you pay for that duplex?

Joe:
It was right around 250. I think it was 247.5.

Henry:
Okay. And what were you able to rent out the other unit for?

Joe:
So the other unit was already rented for a thousand per month, which I deemed a little lower than market. And my realtor helped me with that at the time because I didn’t really know what I was doing. And then I had a roommate as well who paid 500 and that was right around what the mortgage was.

Henry:
So you did a double house hack. You rented out the unit and then you rented out part of your side as well?

Joe:
Yeah, precisely.

Henry:
So I’m assuming you did this using some sort of conventional or FHA loan?

Joe:
Yeah. So it was in 2019. I graduated from college in 2012.

Henry:
So you were making more by this point?

Joe:
I probably made $30,000. And then my fourth year, I made 30 and then I made a little bit more that fifth year, sixth year that helped me at least have 15, $20,000 lined up. And then yeah, I leveraged, I was able to put 5% down on a five-year arm.

Henry:
Oh, so it wasn’t a conventional. You did an adjustable rate, you did an arm. Was that with a community bank?

Joe:
Yeah, it was with a community bank. And also the seller’s assist I utilized on that.

Henry:
What’s that mean?

Joe:
So basically you can typically go up to 3% back from the seller for your closing costs. So I’ve done this several times where even like, okay, say we come to the terms at 250 being the price and then you can get 3% off of that 2,500. So say 7,500 max, you go to them and say, “Hey, can we change the price to 257,500 and then add the seller’s assist of 7,500 so that you can put less down.”

Henry:
Okay. So you up the sale price to include some of your costs and then the seller basically provides that to you via closing so you don’t have to bring it to the table.

Joe:
Yeah. So anything to not put as much down at closing is what I did as much as I could.

Henry:
So you had to get creative. You used your 10 to $15,000 you saved up for your down payment, you were able to house hack, kept it, rented out to the tenant that was there, and then you brought in a roommate. So that brought you enough to cover your mortgage. So you went from paying whatever you’re paying about 900 bucks a month in rent to now you’re living for

Joe:
Free. Correct. And then that tenant actually ended up moving out and I was able to rent it for 1,500.

Henry:
Oh boy. So you were bringing in two grand a month. You were making money to live.

Joe:
And then I actually brought in my now fiance to live on my side as well. And then all of a sudden I was making a little bit and living there.

Henry:
So you were making about 500 bucks a month. I mean, that’s almost close to your 750 a month you were making. You were making 10

Joe:
Grand. Yeah, I was amazed. Like I said, I didn’t really know anything going in and all of a sudden I was like, “Oh, this is great.”

Henry:
Oh man, that’s super cool. And so I wanted to kind of backtrack on that story and get more details because one of the things we often hear from people is, “I don’t have enough time or I don’t have enough money.” A lot of the times people make those claims without actually doing the research to figure out how much time or money they need. If you were working 90 hours a week and you were able to still find the time to go through and buy this deal, and if you were making somewhere around 30 grand a year at this time, that’s not a ton of money, but you were still able to get creative with your purchase, scrape up enough cash to do a deal. So that in itself is an accomplishment. And then you’re making money in your first house hack. You did a double house hack.
This was 2019, you said. So where did you go from there?

Joe:
Already by the end of 2020, it was December 2020, I bought my next house.

Henry:
Okay. So you had the bug, you were ready. Yeah. You were ready.

Joe:
Yeah. I was saving money, making money, and then my salary went up a little bit at Bucknell as well. So I was able to gather another like 15,000 or so. And then the next purchase is really kind of what set me up here to really move forward in the real estate business. So it was a main house and a mother-in-law suite. They were selling them together and it had been on the market for a year, off the market, and then back on. So I talked to my realtor, we walked through and I was like, “Is anybody else looking at this? What’s going on here?” Because it was like 400,000 for a 3,200 square foot house and a mother-in-law suite.

Henry:
And what city was this?

Joe:
This is Lewisburg as well where Bucknell Universe is. Yeah. And so I ended up getting it for 360, but they were on two separate tax parcels.

Henry:
So that mother-in-law suite was detached since it was on two parcels. Okay.

Joe:
Detached, lofted an apartment with a carport, separate tax parcels. So I purchased one for 360 and then I purchased the other for a dollar.

Henry:
Nice.

Joe:
And so that’s kind of what really helped me moving forward because then I fixed the mother-in-law suite up, rented it and put a HELOC on it.

Henry:
Oh, so smart. That is an interesting strategy, man. That’s super smart. So for those of you guys that are listening, he had a single family home. It was being sold altogether, but the tax records indicated that these were on two separate parcels. And so what you were able to do, because when you go get a loan for a property that’s on two parcels, sometimes it’s challenging when you get that conventional or FHA loan because they only want to do one loan per parcel. And so when you’re trying to buy two parcels, it can be a problem. So what you did to get creative was you did one loan for all of the purchase price on the main house. And so you were able to get traditional financing on that property and then you basically paid cash of a dollar for the second parcel. So technically the mother-in-law suite you own free and clear, you’re paying the mortgage on the single family home, but you supplement that mortgage with the income you get from the mother-in-law suite.
That’s a super cool strategy to be able to take that down. Amazing. And so what were you renting that mother-in-law suite out for?

Joe:
So originally 1,100 and I was doing long-term and then the main house was a live and flip. Oh,

Henry:
Okay. So you were working on fixing that one up.

Joe:
Yeah. So I lived in that, worked on it, construction zone, and then the mother-in-law suite, I then turned into a medium term rental and did the traveling nurses and stuff like that.

Henry:
The cool part about structuring this financing the way you did is you can sell the single family. I don’t know if you have or not, but you can still keep the completely paid off rental. Is that what you did?

Joe:
Yeah. So as we progress here, that’s- Game changer. I love it. I love it. So for the next house hack, I ended up moving into that one, obviously, but I rented out that main house

Speaker 3:
For

Joe:
About a year. And then when I left college coaching, which is mid 2022, that’s when I sold it. And that allowed me to leave coaching and do what I was going to do next, which were the multiple burrs.

Henry:
Okay. Again, fantastic strategy, because now you have the option of selling that property and keeping the rental and the rental is paid off. So that’s just pure cashflow. But let’s talk about the numbers on the live-in flip. So how much did you end up having to spend fixing that place up?

Joe:
Not a ton. Probably about 25, 30,000, maybe even less than that, 2025, because most of it was just painting and drywall stuff. And it was a 3,200 square foot house

Speaker 3:
And

Joe:
A lot of wood paneling. It was an old, old house. So you got to use the certain type of paint and then paint over it like four or five times. And

Speaker 3:
Like

Joe:
I said, I was working a lot of hours. We’d have practice at like 7:00, get done at 9:30, 10:00, and then I would go home and paint for an hour and try to get it done. So it was not as much money into it as it was just sweat equity. What did you end up being able to sell it for? 420.

Henry:
You bought it for 360, put about 25 in it, so you’re all in it for 385, and then you sold it for 420?

Joe:
Yeah, with about two and a half years of rent pay down.

Henry:
Yeah. So you pocketed a little bit of cash and we were able to sell that property, but the bonus is basically you househacked your way into getting a free rental property is the way I’m looking at that. You got paid to get a free rental property. That is an amazing thing to be able to do, to buy a property on two parcels, put the loan all on one parcel, fix it up, sell that one, put a little bit of cash in your pocket, keep the rental, plus keep all the rents you were making at the time you were living there. So bam, free house. That’s super cool. Yeah. We’re going to learn more about Joe Mien and how he’s investing and buying free houses right after the break. As a real estate investor, the last thing I want to do or have time for is to play accountant, banker, and debt collector.
But that’s what I end up doing every weekend, flipping between a bunch of bank apps, bank statements, and receipts, trying to sort it all out by property and figure out who’s late on rent. But then I found Baselane and it takes all that off my plate. It’s BiggerPockets official banking platform that automatically sorts all my transactions, matches receipts, and collects rent for every property. My tax prep is done, my weekends are mine again, plus I’m saving a ton of money on banking fees and apps I don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp. BiggerPockets ProMambers also get a free upgrade to Baseline Smart. That’s packed with advanced automations and features to save you even more time. All right, we’re back with investor Joe, and he just got finished telling us about how he essentially used househacking to get a free rental property.
But now we’re going to dive into what came next. You’ve done a couple of house hacks now. You’ve managed to be super creative with how you did both of those deals. You’ve got the real estate bug, so what was the next move?

Joe:
Yeah, so that HELOC, I was able to purchase my next house hack. I call it a house hack, but I actually had to use 20% down normal financing on that one. So I purchased a fourplex right down the road with the HELOC, moved into that. The good thing about this one was that it had an extra lot. So the fourplex was two separate addresses, and then the separate lot had its own address as well. And it was a full lot that you can build on. So what I did a couple months after I moved in was sell the lot next to it and paid back my HELOC. So basically got that one for very little as well.

Henry:
That’s cool. So you used the HELOC that you had on your free rental property essentially. And did you pay all cash for the Quaplex or did you just use that for your down payment?

Joe:
Just the down payment. Yeah.

Henry:
Okay. So you went and got a conventional loan, put 20% down, you used the HELOC for your 20% down, but because the Quadplex had an additional lot, you were able to sell the additional lot to essentially pay back the money to your HELOC. And tell us about that. What were you able to sell that for?

Joe:
The additional lot was about 35, 40, so it didn’t cover 100% of the down payment, but a good portion of it. Yeah. This is great.

Henry:
This is great. And I know people are listening thinking like, “Man, this guy got lucky and just found all this property with all this additional value.” But that’s not necessarily the case, guys. This is actually something you can look for. So for those of you who are listening who are like, “Man, this seems cool. It’s a great way to sort of supplement your investing.” You can actually do this. I do this when I’m buying off market, but you can also do it on market. You can have your realtor search for properties that are available that come with additional lots. So sometimes in the description, they might say that, “Hey, this property has an additional lot,” or sometimes there’s multiple parcel numbers that are tied to properties that are on the market. So just tell your agent what you’re looking for. You want to buy a property that has additional lots.
So that gives you options. I do this all the time. I’ve purchased several deals that come with additional lots and I’ve structured them in all kinds of cool ways, but I usually always structure it to where all of the money for the deal comes from the property with the house on it so that the additional parcel I end up getting to keep when I sell the property. And now I have free and clear land and it gives you the option to do things just like what Joe did. You can either sell that land. So I bought a duplex that had an additional lot. I did the same thing. I had to put 20% down. And so I put the 20% down and then I actually ended up calling a builder because I saw that right next to my lot was a brand new construction home.
So I called the builder who built that house and said, “I’ve got a lot right next to one you already built. What would you pay me for it? ” They told me 15 grand. I said, “Great.” I bought the property and I sold him the lot on closing day for 15 grand and that covered my down payment. And so I’ve also done it to where I didn’t sell the lot and I’m building a house on one of the lots that I have, the free lots that I have right now. So I’m doing my first new construction project. And so you can keep the lots, you can build on them, you can sell the lots, or sometimes you can even increase your sale value on your property by offering the lot to whoever buys your flip. And you can say, “Hey, I’ll sell you. ” You’re buying the house for 250 or whatever.
If you throw in another 20 grand, I’ll sell you the lot next door and then all of a sudden you’re getting more profit. So these are things that you can look for. Just make sure you tell your agent in your search that you’re looking for properties with additional parcels, man. That’s super cool, Joe. So you bought this quadplex. Tell us the numbers. What’d you pay for the quadplex and did it need work? If so, how much?

Joe:
Yeah, so I purchased for 260. It was in good shape. It wasn’t in great shape. It was just some painting here and there though, nothing major. I guess the biggest part about it was they had tenants that were in there for a long time and were paying $350 for rent, like crazy low numbers. So that was similar to the first duplex. I just knew like, okay, I’m not going to kick them out or raise the rent, but when the time comes, when they want to leave, it’s going to be a really good deal. So the rents right now are 900, 900, 700, and then one of them is a medium term. The one I used to live in, I changed it into a medium term and that one’s 1,295. And then it has a garage in the back for 400.

Henry:
That’s $4,100 a month coming in on this property. What’s your mortgage on it?

Joe:
About 1,500.

Henry:
Hey. I don’t know if you’re doing the math, folks, but I call that a deal. Awesome, man. Awesome. So this was one that was just listed on the market as well?

Joe:
Yeah. And it had been sitting there for a little bit just like the other ones. So I guess if you see the bright light at the end, others aren’t, just have confidence in closing on the deal.

Henry:
I like this story, Joe, because it’s more of a story where it’s like one deal at a time and each deal has its own unique characteristics and you were able to capitalize on each deal individually. People want to rinse and repeat formula. They want to be able to go find X, add Y, sell it for Z, but it doesn’t always work like that. Sometimes each deal is a little different and the way you have to capitalize or monetize on those properties can be a little different. And I want people to hear a story like this because what people should really be focused on is, can you go out and get that first deal? Can you go out and get that next deal? And then look at the deal you have, look at the financial situation that you’re in, and then monetize that deal in the way that makes the most sense for the property and for your financial situation.
And then you can focus on what comes next. This is more of the story of an everyday investor. We don’t all need to go out and build a portfolio of 50 to 100 doors, rents and repeat, but you can do this one deal at a time. And it sounds like each deal kind of got increasingly better in terms of how you were able to financially capitalize on it. And so this is super cool. So you were living in one of the units, you midterm rented. So that’s three house hacks, boom, boom, boom,
Love it. And then after the three house hacks, you then pivoted. It sounds like that’s when you focused on Burr. So what did that look like to you?

Joe:
Yeah, so this has kind of coincided with my departure from college basketball. So it was kind of hitting that burnout of crazy hours, not sleeping in your bed a whole lot of days throughout the week. And it just started to get to me a little bit. And so-

Henry:
It’s funny how things at work start to get to you a little bit once you start making a little bit of money in real estate. It didn’t bother you working 90 hours a week, making $10,000 a year when you didn’t have a backup plan. But now that we got a little bit of real estate money, we’re like, “I don’t know about all this work stuff.”

Joe:
Yeah, I blame it on bigger pockets. And now you’re thinking about financial freedom and that cash flow and you’re like, “Why am I working 90 hours a week if I … ” That

Henry:
Tune changed.

Joe:
Okay. Okay. Yeah. But yeah, it just reached a point where, because you literally get no days off, maybe a couple throughout the year. So it’s pretty crazy. It was a great experience, but for me just at that juncture was like, all right, it’s time. And so that’s when I was like, all right, I’ll try to do real estate full time, got my license and then found my first burr in New Jersey.

Henry:
Why New Jersey? Why change markets?

Joe:
So I’m from the Philly area, and if you’re from the Philly area, typically for vacation, you go to the Jersey Shore, the South Jersey Shore, not the South Jersey Shore, big difference. I just knew the area, could see there weren’t a lot of rentals. The properties were cheaper, but the rents were still pretty good. So good place for a burr.

Henry:
Okay. So you leveraged your kind of insider knowledge about visiting the Jersey Shore and realizing that there wasn’t a lot of opportunity for rentals. And with your newfound experience as a real estate investor, you said I’m going to go capitalize on that, but it’s great to have the idea, but what did the actual application look like? What did you find? What did you buy? What did it cost?

Joe:
Yeah, so I had a really good relationship with my realtor there. Ended up finding a bank owned for about 110. I think the purchase price was single family and it was in shambles. It was in really bad shape.

Henry:
So you found an REO, a bank owned property, but it was on the market? Did your agent bring it to you? Yeah. Okay, got it.

Joe:
Yeah. And so walked through it and was like, “Let’s give it a go. ”

Henry:
What year was this?

Joe:
This is 2022 in September of 2022.

Henry:
Okay.

Joe:
About four

Henry:
Years ago. Bank owned property, got it for a hundred grand.That’s pretty impressive. How much did it cost to fix it?

Joe:
About another hundred.

Henry:
Oh, wow. Okay. I assume you weren’t the one putting in the work on this one.

Joe:
So I was partially. So I was still technically living in Lewisburg at that fourplex, but I had a friend who lived down there at the Jersey Shore. And so I would go back and forth two, three weeks at a time and work on the house myself. And then I had a contractor who would do the more serious stuff, the electrical, the plumbing, the kitchen renovation, but three, four months of sweat equity on that house just to … Again, I had left my W2.

Henry:
You had time. You had time.

Joe:
I had time. I’m like, I might as well try to save some money here. My contractor doesn’t need to do the breakdown the floors and all that. I’ll just do it for free.

Henry:
Well, not completely for free. How long of a drive is it?

Joe:
About four hours.

Henry:
Four hours each way?

Joe:
Yeah.

Henry:
So you were driving eight hour stints there and back to do a little bit of work. Okay. So for the record, folks, this is definitely not free work. That’s gas money, that’s time, that’s effort. Yes, saves on the bottom line for the P&L, but definitely will weigh on your emotional battery and your spiritual battery and your financial battery because that still does cost some money. But awesome. Still, you were able to pull it off. You spent about a hundred grand. And was this a short-term rental? Was it a midterm rental? Was it a long-term rental? What’s the scoop?

Joe:
Long-term. So that was one of the big things for this area too, is that it’s a lot of short-term with it being a vacation area. And so the long-term rental was the part that was missing in the area in my evaluation.

Henry:
So how did it go? Did the numbers work?

Joe:
Yeah, so this one ended up appraising for 290, and so that’s about a $200, $3,000 loan.

Henry:
So you pulled all your money out?

Joe:
Yeah, yeah. I mean, that’s the whole goal of the Burr, the Infinity ROI. So yeah, the first one ended up, it was up, down, up, down, up, down, but ended up working out pretty well.

Henry:
Okay. So you’re able to pull all your cash back out. Is the property covering itself in terms of what it rents for?

Joe:
Yeah. So this one, it has a pretty good rental on it, so it’s 2,600.

Henry:
Oh, wow. That’s awesome.

Joe:
Yeah. And believe it or not, it’s at a 9.25% interest rate.

Henry:
What? Why haven’t you refinanced that thing again?

Joe:
I’ve been waiting. We can get

Henry:
To that, but I’ve been waiting. If you’re making money at 9.25%, what do you see the seven and a half you’re going to get when you refinance that thing?

Joe:
Goodness, man. Yeah. So the mortgage is about 2,000 at the

Henry:
Time. Yeah, good. So you’re covering, you’re covering. It’s probably about a breakeven property when you consider maintenance. That’s pretty cool. All right, Joe, I want to know if you were able to pull this off again. Great way to find a property in a market that needs some long-term rental, so we’ll dive into that right after the break. All right. Well, back with investor, Joe, who found another great niche of Burring rental properties in a vacation rental market. So you did your first one, pulled all your cash out on the refinance. So you executed a full Burr. Did you find more or was that the only one you were able to do?

Joe:
Yeah. So up until this date, I’ve done two more in New Jersey and then one in North Carolina because that’s where I live now.

Henry:
And how did you find these properties?

Joe:
All just on market.

Henry:
All on market deals.

Joe:
Just evaluating on market. Yep.

Henry:
Okay. So you did two more in Jersey. Were the numbers similar, similar price points, similar? Are these heavy renovations?

Joe:
Yeah, again, heavy renovations. The second one purchased 190, put about 120 in,

Henry:
Appraised

Joe:
For 425. So the loan value at 315.

Henry:
What’s the interest rate on that one?

Joe:
Not good. 8.25.

Henry:
Okay. Okay. Okay. Another one ready for another refinance?

Joe:
Yeah, the

Henry:
Time’s coming, I hope. Did you pull your money out with that one as well or did you leave some in?

Joe:
I took it out with that one in so I can-

Henry:
All right. Two for two on the full Burs. All right. And the next one, tell me about it.

Joe:
So the next one sequentially was actually the one in North Carolina. I live on a Lake Norman area, one of the lesser expensive towns in Lake Norman and found a good deal and just did another Burr there that worked out pretty well and it’s rented right now ready to go. So did that one and then did one more up in Jersey from afar. Another big renovation, purchased for 285, put about 90 in, appraised for 455, and that one still has … I left some in that

Henry:
One. So cash in that one. Okay. What year was that?

Joe:
That was last year, 2025.

Henry:
2025. Okay. I mean, even a partial bur in the year 2025, the year of real estate butt kickings, because a lot of people got their butt kicked in 2025. If you still executed a bird and pulled some of your money out, I’d say you’re doing okay. Man, I love this story. I think it’s just a good story of using the knowledge and expertise that you have, taking meaningful action, taking every deal on its merit, and then leveraging some creative strategies to help you continue to finance your real estate investments. One thing that I wanted to ask you about is now that you are a full-time real estate investor and you’ve left the coaching world behind, what is it that you’re focused on now? What is real estate allowing you to be able to do?

Joe:
Yeah. And like we touched on earlier, has allowed me to pursue what’s really been my passion for a long time, and that’s human health and helping people in general. And so I’d started a company called Optimavita, and it’s a health consulting firm that both helps people one-on-one client services and does partnerships with companies and specifically real estate companies to help provide educational workshops online to their employees and agents, and then can help work with them one-on-one as well.

Henry:
This is the stuff that I love about real estate investing. Real estate does not have to be your passion, but it can absolutely provide income for you so that you can go focus on your passion and do the thing that you’re called to do and not the thing that you have to do for money. And I think a lot of us have passion projects or things that we’d want to be able to focus on, and sometimes we just can’t. A, because we have a job, we’ve got to go work 90 hours a week for, or because starting a business is hard. And sometimes it takes a few years before you’re profitable and some people just can’t afford to be taking a loss for a few years. But if you have real estate as a foundation where you know that’s going to provide you the income you need to feed yourselves and feed your family, then you can start these passion project businesses and give them the appropriate time and effort that they need, whether they’re profitable or not on the front side, that you get to pursue your passion and do the thing you care about.
So it’s super cool that you’re able to leverage real estate to help you pursue something that you’re passionate about. And the thing that you’re passionate about is helping people be healthier, which is amazing. Amazing story. Thank you, Joe.

Joe:
Thank you.

Henry:
Before we get out of here, Joe, just kind of give us the story. Where are you now? How many units are you up to? Are you still buying or are you just kind of done with real estate? You’re going to focus on paying them off and work on Optimavita?

Joe:
Yeah. So right now I’m sitting at 11 units and like I said, I have probably about five properties with higher interest rates, but also equity. So The next step is a refi across the portfolio, bring the interest rate down, cashflow up, and then take some money out and then evaluate where should I redeploy? Should I go back into my one to four units? Should I try a bur? Should I try something else? AI is pretty important these days apparently. So real estate wise, that’s where I’m at.

Henry:
I love it, man. Thank you so much, Joe, for coming on the BiggerPockets podcast and sharing this story. Hopefully you guys listening, we’re inspired by this. We’re inspired by somebody who is in a position that maybe a lot of you are in, maybe not making the kind of money you want to be making, maybe spending a whole lot of time working in those hours, but still was able to purchase real estate and use real estate to truly obtain enough freedom so that you can focus on the thing that you’re passionate about. And I think that that’s really what everybody wants to do is they want to be able to live life on their own terms. And Joe’s story really is a testament to that. So thank you so much, Joe. Thank you so much to everybody listening. Also, if you want to hear another story like Joe’s, then check out episode 1078 with Connor Anderson.
He’s another young investor who started with the series of house hacks and totally transformed his financial future. That’s BiggerPockets Podcast episode 1078. We’ll link it right here on YouTube too. Thank you everybody for watching. We’ll see you on the next episode.

 

In This Article

Any guesses which cities are at the top of RentCafé’s hottest rental markets at the start of 2026? Miami? Phoenix? Austin?

Try Cincinnati, Atlanta, and Minneapolis. They indicate a quiet shift toward affordable, job-rich metros that small investors can also buy into and possibly cash flow from. While the coasts boast luxury living and high-end jobs, early data indicate that the best opportunities for workers and investors over the next few years could lie in the Midwest and interior South.

What RentCafé’s New Rankings Really Show—and What They Don’t

RentCafé based its ranking system on renter behavior on its platform. To collate the list that gauges renter demand, the site examined four specific areas and ranked markets accordingly: 

• Apartment availability
• Favorited listings
• Saved searches
• Page views

Cincinnati rose to the top spot on the back of some impressive stats. The number of apartments favored by prospective renters jumped 81% year over year, while saved searches climbed 14% by late 2025, and page views climbed 3%. Atlanta’s second-place spot was driven mostly by prospective renters from New York and across Georgia, suggesting ongoing in-migration from pricier markets.

Minneapolis had been a previous RentCafé top spot holder, and at the time the data was collected, favorited listings were up 29% year over year, fifth for total saved searches and ninth for page views. However, this was collected before the ICE immigration crackdown in the city, which caused unrest and affected rental real estate occupancy and the pace of new builds, according to reports in the Star Tribune and Multifamily Dive.

Overall, RentCafé’s report showed that the Midwest accounted for 11 spots and the South accounted for 10 spots on its annual list, reflecting primarily affordability, livability, and the amenities available in rentals and surrounding areas in traditional blue-collar cities like Minneapolis, Cleveland, and Detroit, as well as in Western markets like Santa Ana, California. 

That’s not to say that high-demand big metros like Dallas, New York, Chicago, and Miami are flagging. In fact, even with 500,000 new apartments coming to those areas, data shows that finding a vacancy there remains a challenge.

Why Middle America Is Surging

The affordability crisis is at the crux of Americans’ need to move to cheaper markets. According to The Wall Street Journal, overall living expenses in several Midwest metros are about 8.5% under the U.S. average. 

A WSJ/Realtor.com Emerging Housing Markets Index for winter 2026 found that Midwest markets with reputable universities, strong medical infrastructure, and manufacturing hubs were particularly resilient. Matching those attributes with affordability, median home prices were largely between $240,000 and $400,000, and the cost of living was below national norms.

According to a recent LendingTree study, Americans are paying “hundreds of extra dollars in rent”—about 40% more for one- and two-bedroom apartments—than even five years ago, while wages have not kept pace, putting a tremendous squeeze on renters and ushering a migration to more affordable cities.

The housing industry has responded by bringing thousands of new apartments to the rental market, increasing residential construction starts 5.2% month over month to 1.428 million units as of July 2025, with new apartment construction up by more than 50% across two months in mid-2025, according to the Commerce Department’s Census Bureau data, as quoted by Reuters.

Still a Chronic Shortage of Housing

The National Apartment Association and the National Multi-Family Housing Council released a joint statement on the eve of President Trump’s State of the Union address, citing the need for more housing to ease the affordability crisis, saying:

“Neither one speech nor one single federal policy is going to solve the housing affordability challenges we face. Instead, alleviating the housing shortage requires a sustained commitment to building housing of all types, backed by public and private investment, through public-private partnerships and freed from outdated rules that slow construction and drive up costs. It also requires the administration to lean into what we know works—building more housing—and resist repeating mistakes of the past.”

Reading the Data for Smaller Investors

Clearly, cheaper, more affordable markets around employment hubs are an essential play for smaller investors seeking stable rental income. A recent report from Bank of America showed that the exodus of residents from high-cost areas such as Los Angeles and New York to smaller Southern cities is fueling out-of-state migration, concluding that “affordability and climate remain the two biggest magnets—and the two biggest push factors.”

‘The Straw That Breaks the Camel’s Back’

Minneapolis presents a cautionary tale for investors. In the turbulent political climate, cities with high immigrant populations that face deportation drives by ICE could have severe repercussions for landlords. 

Chris Nebenzahl, vice president of rental research at John Burns Research and Consulting, told Multifamily Dive that in some buildings, immigration enforcement “could be the straw that breaks the camel’s back,” particularly for owners facing loans originated in 2021 that are coming due amid higher vacancies and lower rent rolls.

Nebenzahl added that the combination of past supply issues and now a demand shock from immigration policy “is really putting some folks in a bit of a lurch from an occupancy perspective.” Other landlords in Florida and Texas told the outlet that they have also seen detrimental effects on leasing and occupancy when ICE enforcement intensity is particularly high.

It is still too early, amid continuing ICE raids, to see how long it takes for leasing activity to return to previous levels after enforcement activity in an area rescinds.

Final Thoughts

The rental market remains highly fluid in the U.S., with the shifting economic climate having a pronounced effect on rental activity, particularly with the advent of remote work, which means many people are less likely to stay in an expensive city for a job. There has been a shift toward more affordable, climate-friendly areas. 

RentCafé’s list is interesting because it’s not one documented after the fact but one based largely on online activity, which is an indicator of future movement. That’s why it’s good to combine RentCafé data with rent growth data to see how interest translates into action.

According to research firm Arbor Realty Trust, Minneapolis finished 2025 as the second-strongest multifamily rent growth market in the country, with 2% growth and an average rent of about $1,497 per unit. 

For small landlords, the play is simple: Follow the money. Larger apartment buildings are being built at a clip, but not everyone wants to live in a building with hundreds of other people.

Consequently, single-family rental houses in these markets are coveted, according to National Mortgage Professional, which reports that just 13.7% of single-family rentals are occupied by renters—a decade low. Finding pockets of available single-family and small multifamily properties in these markets should ensure strong demand.

Dave:
Four rentals by 40 years old. That’s all you need to cement a comfortable retirement or even retire early. If you can achieve this, you’ll be significantly wealthier, and I’m talking millions of dollars wealthier than the average American. Plus, you’ll have passive income to support yourself in retirement instead of just a social security check. Getting to four rentals is a huge deal, and today I’m going to share the four-step plan anyone can use to build a small but powerful rental portfolio that accelerates their timeline to retirement, or at least makes them a heck of a lot richer. In the example I’m sharing today, buying only four rental properties, even if you stop there and do nothing else, would increase your net worth by $3.3 million by the time you’re ready to retire. And if you’re already 40 or you’re over 40, don’t worry, you can follow the same steps and map out your own retirement timeline using the walkthrough I’m going to share with you today.
So you don’t need a dozen properties. All you need is four. This is how you get there.
What’s up everyone? I’m Dave Meyer, Chief Investment Officer at BiggerPockets. Today on the show, I’m showing you how acquiring only four rental properties by age 40 can completely transform your financial trajectory. We’re going to dive right in with an example of how this works step by step. And this is a plan almost anyone can follow. And actually, it’s pretty similar to the types of properties and the timeline I personally followed on my own journey to financial freedom. And I’m sure there are some people out there listening to this who want to scale all the way up to dozens or even hundreds of properties, which is cool if you want to do that. But I think four properties gets most people where they want to go by retirement. So we’re just going to talk through the first four steps. And if you want to keep growing from there, great.
But these four steps will set you up for a successful career whether you want to go big or not. All right, let’s jump into our first property. My recommendation for almost everyone out there is to buy an owner-occupied property for your first deal. The idea behind this first deal is not to hit a home run or to get a huge amount of cash flow. The idea here is to set yourself up so that you’re saving additional money and you’re starting to build equity in your home. And you’re going to use those two things, your increased savings and the equity that you build in this first deal to go buy your second deal, your third deal, and your fourth deal. So don’t think that you’re going to have to save up a new down payment for each of these four properties. Each deal that you do should help your next deal become easier.
So again, for this first deal, you’re going to want to do owner occupied. This is going to give you access to better financing. Loans where you can put as little as 3.5% down, you’re going to get better interest rates, and it’s just the easiest way to get into the game. Now, there are generally two different types of owner-occupied deals that you can consider. The first and largely the most popular is known as house hacking. This is where you buy either a single family home, live in one bedroom and rent out the other bedrooms to roommates. That’s an option for people. Some people don’t want to live with roommates. So the other option is to buy a small multifamily. This is either a two unit, a three unit, or a four unit property. You live in one, and then you rent out the others. And the key is here, you got to stop at four because if you buy something bigger than four, you lose that owner-occupied financing, which is what you really need on this first deal.
So I recommend to most people if you can find them and if they’re available in your area, look for a duplex or a triplex and invest in that, live in one unit and then rent out the others. The benefit of doing this, again, is that you don’t necessarily need to cash flow. If you can find a cash flowing house hack, that’s great. But your key here is to save money. If you buy a house hack, you live in it, and for example, you spend $500 less per month on housing, that’s a win. Even if you’re coming out of pocket a couple hundred bucks a month for your housing, as long as it’s less and significantly less than what you were paying in rent, that’s still a win. You’re going to use that saved up money for your next property. It also is going to help you learn the business of being a landlord and a real estate investor.
And if you’re doing it right and you’re buying the right kind of deals, you’ll be building equity as the value of your property increases over time. That equity is something you can tap for your second, your third, or your fourth deals. So those are the basics of house hacking, but I also want you to remember, a house hack doesn’t have to be this two to four unit. It doesn’t even have to be a single family home. With roommates, you can do it by adding an ADU or a mother-in-law suite. Where I live, a really popular thing to do is people buy split level homes. They do a lockoff into the basement and they turn their single family into two units. That’s not available to everyone, but the point here is get creative. There are ways to make house hacking work that might not appear immediately obvious on Zillow, and often those are the best deals.
So that’s it for step one. Save up your money, invest in an owner-occupied strategy so you get that owner-occupied financing. Find a deal that’s going to allow you to save money and build equity that you can invest in your next deal. And being on site is a great opportunity to get good at being a real estate investor. Get good at working with tenants, get good at property management. Those are the three goals of step one. So let’s walk through an example here. Let’s just imagine that you’re 30 years old, you’re going to do this house hacking strategy, and you find a home for $400,000. In some markets, it’ll be cheaper, some will be more, but that’s the median price home in the US today. Now, if you get this owner-occupied financing that I’ve been talking about using 3.5% down, your down payment is only going to be $14,000.
That is enough. Like I said, if you save $20,000 up for this first deal, you’ll still have some money for closing costs and for cash reserve. So this is a realistic deal. Now, I look at deals all the time, and for deals like this, depending on the market you’re in, it is realistic to believe that you could save $500, maybe more, $700, $800 in some examples, off of what you would be paying in rent. So now, as opposed to renting, you are saving $500 per month in cash. On top of that, you’re also getting amortization, you’re getting tax benefits, you’re getting appreciation, but just the cash savings alone is $6,000 per year. So if you save that after three years, you’re going to have close to $20,000 saved. That’s enough to just do this deal again. So as you can see, buying the first deal and doing that right leads to the second deal.
And the second deal will lead to the third and the third will lead to the fourth. But the key is to find a good deal that’s going to build you that equity and help you save that money. So that’s the first deal. But the second property is where things really start to ramp up and take you from a homeowner to a real investor, which has huge impacts on your net worth and retirement timeline. We’re going to talk about the second deal that you should be looking for and how that’s different from your first one, but we do have to take a quick break. We’ll be right back.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer giving you my step-by-step plan for getting four rentals by 40 years old. Before the break, we talked about your first deal being an owner-occupied house hack that allows you to save money and build equity so that you have enough money to go out and do this again. Now, property two is going to be a little bit different. Now that you have some experience and hopefully some money from house hacking, we’re going to look for a deal that has a little bit more meat on the bones, got a little bit more juice because we want to build equity. That’s the thing that’s going to build our net worth and really secure our retirement in the long run. Now, the way you do this is by finding what is known as a value add property. So this is finding a property that’s not in the best condition and doing some sort of renovation.
It doesn’t need to be a full burr. You don’t need to tear out all of the walls. This could be anything from a light cosmetic deal, or if you want to, you can do one of my personal favorite strategies. I call the slow burr. You could do a full gut rehab. That’s where there’s a lot of equity to be gained. But the point here is property two is going to be a value add project where you actually do a renovation on a property to build lots of equity. Now, depending on who you are, you should decide how intense of a renovation that you want. So if you don’t have any experience with renovations, I would look for something that’s more of a light cosmetic or a light rehab that’s something like renovating kitchens, painting, putting in new floors, but you’re not doing anything structural. You’re not moving walls, you’re not popping the top, you’re not doing anything like that.
Unless you have experience with renovations. If you have experience or work in construction or know someone who could help you with that process, you could do a bigger project. But for deal two, I would recommend most people stay on the lighter side of the renovation. It will reduce your risk and there’s still significant upside in these kinds of deals. The next thing that you need to look for in your deals are, one, in today’s market, you should be looking for deals that have been sitting on the market for 60 days or more. We are in a buyer’s market right now, which means that buyers have leverage. And if any seller has a property that’s been sitting on the market for 60 days or more, they’re going to probably be pretty motivated to negotiate with you. So look for those deals because that’s where you’re going to be able to buy below current comps and that’s going to give you even more equity throughout the course of your deal.
On top of just looking for things sitting on the market 60 days, I think two key things that you want to look for in your deals are areas where you think there is going to be rent growth, so where there’s going to be a lot of demand for renters, that is always helpful as a real estate investor. And the second is a place that’s in the path of progress. You don’t want to invest in a place where properties aren’t going to appreciate or there’s not going to be demand if you want to sell it. So look for places where people want to live, where the government is investing. Those are great ways to take your deals from a single or a double to a home run over the lifetime of your investment. So those are the things to look for in the deal. And just as a reminder, the goal of this deal is to build equity as much as you can and to get a cash flowing rental.
All right, so let me just give you an example of how this works. You go out and buy a property worth $300,000, then you’re going to need to put money into it. Let’s say you have a rehab budget of 50 grand, which is a generous budget, right? That’s enough to make significant improvements to a property. So your total all- in costs are going to be 350,000 for this deal. And what a lot of people do for a Bird property is take out what’s known as a hard money loan. These are loans that are designed specifically for these types of projects where you don’t just borrow the money to buy the property. You also borrow the money that you need to do the renovation. And oftentimes with a hard money loan, you can put as little as 10% down. So because your total costs are 350,000, you’re going to need $35,000 to get into this deal, which after a couple years of saving up your money from your first deal plus building equity, you should be able to do this within two, three, or maybe four years, you should have that much capital.
Now, you go into this deal, you buy it for 300 grand, you add value to it. After putting in 50 grand, hopefully this property is now worth, let’s just call it 450,000. So you put in 350, now it’s worth 450,000. And then know that might sound like magic, but it’s not. You can absolutely put 50 grand in and build $100,000 of equity. That happens all the time. That is a relatively normal type of return that you can expect on a good Bird deal. So you build that equity, which is great. Obviously, your net worth just went up, but the real magic of the Burr property is that you can take some of the equity that you built out and apply it to property number three. So you’re going to take out a new mortgage. You’re going to have to put 25% down, which is about $112,000.
You’re going to need to pay off your old mortgage, right? You still owe the hard money lender $315,000, but after those two things, you can take $20,000 out of this deal. So you only put 35 in, right? Remember? And now you’re pulling $20,000 out of this deal for your next deal. Now, some people want to do a perfect Burr where they can pull out 35,000. That might be possible. But even in this example, you’re pulling out 20,000 that you can go use for your next deal. You’re more than halfway to your next deal. That’s what’s so powerful about the Burr strategy. And on top of that, you should also have a cash flowing rental property at this time, right? Because the key is even after that refinance, you need to make sure that this deal is going to cashflow at least modestly. Doesn’t need to be tons of cashflow.
It doesn’t have to be the highest cash on cash return. Remember, the main goal of this deal was to build equity, which you have done, and to get at least breakeven, I would recommend three, 4% cash on cash return minimum for this kind of deal. Now, once you’ve done that, you have 20 grand already. You’re saving six grand a year from your house hack. Now you’re making, let’s call it $3,000 a year in cash flow from deal number two. And so in two years, you should be able to get deal number three, right? You have 20 grand in equity, plus you’re saving nine grand a year in cash flow. That will get you $38,000 in just two years. And this deal we just did only cost us $35,000. So in two years, you can get to deal number three. So that brings us to property number three.
And the goal of this property is to generate as much cash flow as you can. You still want to buy a great property. You don’t want to be buying something that’s never going to grow, but you want to prioritize cash flow and cash on cash return here over equity appreciation. So we’re not necessarily doing a Burr or a house hack here. We are trying to find a cash cow. So the way that we’re going to finance this is through the equity from our first two deals. Presuming both of those properties continue to appreciate at a modest rate of 3% per year, that’s about average, and you add that to the equity that you built in the Bird deal, that was a significant amount of money, plus you’re saving $800 a month. If you waited, let’s just say two years between your second deal and your third deal, you’re now 35 years old in our example, you should have, just from doing those first two deals, another $60 to $70,000 to invest, which is more than enough to invest in this third property.
Now, I know for some people, or if you watch a lot of social media, real estate content, you might think waiting two years for your next deal is a long time or waiting five years from your first to your third deal. I don’t actually think so. It took me six years to get to my third deal and three properties. I had eight units at that point, but it took me three years, and that has been totally fine. By 15 years of doing this, I have become financially independent. And so I promise you, you can follow this timeline. It can absolutely work. Your goal, remember, is to get to four properties by 40, and you’re already at three by 35 on this timeline. Now, there’s sometimes a trade-off between cashflow and appreciation, not always, and you honestly want to find a little bit with both. I personally never look for deals that just maximize cashflow.
You can buy something, maybe it’s in a D class neighborhood or a market that’s never going to grow. Maybe you can get a 12 or 15% cash on cash return in those markets. I don’t personally like those kind of deals. For me, I need to at least be able to believe that these deals are going to grow at least on average appreciation and that there’s still going to be good assets sometime in the future. They’re still in a desirable place where there’s going to be demand, but I am willing to give up buying in the best possible neighborhood in order to get my cash on cash return up to eight, ideally closer to 10% on this kind of deal. Now, if you have 70 grand to invest, which you should by this point of your investing journey, you should be able to buy something for about 300 grand.
Now, that’s not going to buy cash flow in every single market in the United States, but I think this deal is an example of a good time to go out of your current market unless you live in Western New York or the Northeast, parts of the Northeast or in the Midwest. If you live in some of those areas or even Tennessee, some areas in the South, you can buy a cashflowing duplex for like 250 grand or 300 grand. But if you don’t live in these markets, you can just invest in those markets. I know it sounds intimidating to invest long distance, but if you’ve done two deals at this point, you’ve already done a BER, you’ve already done a house hack. I promise you, you can invest long distance. I have done it. It is not that much harder. And in a lot of ways, it forces you to develop some of the skills and systems that are going to make you a better investor over the long run.
So I would personally not shy away from that. Once you’ve found a market where you can actually do this realistically, again, lots of places in the Midwest and the Southeast, some places in New York or in New Hampshire, places like that, this is definitely possible. The things I would personally target on this deal is an 8% cash on cash return or better after stabilization. Now, we’re not going to prioritize a big equity bump on this. We’re not going to do a big Burr project, but sometimes, and honestly, oftentimes in today’s day and age, you got to fix up the house a little bit. You got to throw some paint on there, put in some new floors, make a couple of improvements, and then once you have gotten rents up to fair market value, that’s when you need the 8% cash on cash return. So even if the rents today and the Zillow price don’t give you that 8% cash on cash return, that’s actually fine.
That’s quite normal. What you need to do, the job you have as an investor is to project out, what’s my cash on cash return going to be when I’m done fixing up this property? And if it’s 8% or better, that’s what I’d look for. Then I would look for at least two to three upsides on these deal because 8% cashflow is great, but you obviously want the deal to perform better and better over time. And so I like looking for areas where there’s likely to be rent growth if it’s in the path of progress or I also love places with zoning upside. Now, I just want to say one more thing before we go back to our example that there are a lot of markets in the Midwest that you can buy these kinds of deals, but I recommend looking for ones that still have good appreciation.
I said it before, but I want to reiterate here that as a real estate investor, you do not want to see your property values going down. So look for places like Milwaukee or Indianapolis or Grand Rapids or even Detroit over the last couple of years. These are markets that are growing and they have good, strong fundamentals, but they’re still really inexpensive. That’s what you want to look for. You don’t just want to find deals that are cheap because they’re cheap. A lot of times if they’re in a mediocre market and they’re cheap, it means that they’re probably not going to appreciate you’re going to miss out on a lot of the benefits that you should be getting from holding onto this property long term. So presuming that you find this, you get a $300,000 deal with an 8% cash on cash return. If we return back to our example, now we’re getting 750 a month from property number one because rents have been growing at 3% a year, 350 a month from property number two and 420 per month from property number three.
That is over $1,500 a month in tax advantage cashflow, which is closer to earning $2,000 per month like in a job that’s going to get fully taxed. Now you’re only five years into this, but hopefully you’re starting to see that these things start to compound. What is not a lot of cashflow in the beginning gets a little bit more and a little bit more and a little bit more. And it’s not just when you acquire new deals. Just by owning these properties, you’ve already gone from modest cash flow and deal number one to 750 a month on property number one. Now you’re up to 350 a month on a BER deal that was prioritizing equity growth over cashflow, but you’re still getting cashflow. And as you’ll see in our next property, the longer you hold this, every deal continues to get better. It’s not just about acquiring new properties, it’s about allowing every deal that you own to mature over time.
And just like wine or many other things, most deals continue to get better and better the longer you hold them. So now that we’ve done property number three, let’s move on to our fourth property that you should be targeting before the time you turn 40. We’re going to get to that, but first we have to take one quick break. We’ll be right back.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer. We’re going through how to get four rental properties by the time you’re 40 years old. All right, so now that you’ve done your first three properties, you’ve done your owner occupant, you’ve done the Burr, you’ve tried a cashflow play. Step four is to pick your fourth property. And for your fourth property, you can honestly just decide which of these things that you like doing. If you want to do another owner-occupied strategy, moving from house hack to house hack is a super powerful strategy. If you were comfortable doing a BER and like doing a value add, you can absolutely do that again. Or if you’re progressing through your investing career and kind of want to be hands off and want to buy in more turnkey kind of rental property that’s more focused on cash flow, you can absolutely do that too.
The great thing about building a portfolio over the course of six, eight years like this plan has you doing is that you have options now. You’ve built up enough equity. You have cash flow coming in that it’s easy to get more loans. You can repurpose equity from one of these first three deals into your next one, and that allows you to expand and build your portfolio in the way that you want. The key things to know though are that if you want to grow the most net worth, you got to focus on equity. So I would say either doing a house hack or more likely a BER, if you want to build that net worth as quickly as possible, if you want to do as little work as possible, which is a totally worthwhile goal, I would focus more on the sort of cash flowing deals.
And if you want to take the least amount of risk as possible, I would do another house hack. You refinance that first one into being a regular rental property, then do another house hack. Now for me, personally, if I was making this choice, I like the BER because I think it gives you a little bit of both, right? It allows you to build equity at the same time as you’re building cashflow. So to continue our example, let’s just assume I’m going to go out and do a BER again. This time I’m going to take a little bit of a bigger swing. I’m going to buy a property that needs renovation that’s $400,000. Remember, the first Burr we did was about 300 grand. We put 50K in. I’m buying something this time, 400K, taking a bigger swing by doing an $80,000 renovation. If I do a hard money loan at 10%, that means I’m going to have to put about $48,000 of equity into this deal, and we should have that two or three years after doing deal number three.
So again, you’re not necessarily having to put much more money into this. From the cash flow you’re building through deals one through three, plus the equity you’re building, you should be able to afford this deal about eight years after starting. So in our example, you’re about 38 years old at this point. So on this deal, you buy for 400, you put in 80, the ARV is going to be about 650, which is totally reasonable here. I think a lot of times a good rule of thumb is your equity growth should be about double your renovation costs. That’s an efficient deal when you’re doing a kind of Burr. So this is realistic that you can get your ARV up that high. And that means that even if you don’t refi any money out, like if you do four deals in stock, which is the plan that we are giving you here today.
So even if you don’t take money out to do another deal and you factor in your holding costs and the debt costs that you’re going to have to pay while you’re doing the renovation, you’re going to build about $120,000 in equity just from this deal alone. And hopefully by renovating your properties, you can drive up your rents and get an 8% cash on cash return, which I think is totally reasonable. That’s not like the highest end. I think that’s a realistic return you can generate. So from this fourth deal alone, you’re getting 120K in equity and an 8% cash on cash return, which means over $10,000 a year in cash flow. So those are the four steps. Those are the four deals that I would recommend anyone do if you want to get to four rental properties by 40 years old. Now, I understand that just doing these four deals and the numbers that I’ve been using so far may not seem like the most exciting thing in the world.
It may not sound like those people who are buying thousands of units on Instagram, but let me just take a minute here and explain how just these four deals will help you stack up against the average American. At age 30, when you start this, you’re saving $500 a month, you’re going to have a $400,000 home that’s appreciating rapidly. You’re getting amortization and you are getting huge tax benefits that will help you save more money to grow. By age 33, you now have your second property. You’re generating more than $10,000 a year in cashflow, and you have $119,000 of equity just from these two properties. Now, might take you two or three years to get to that next deal, but by the time you’re at age 35, your cash flow is now up to $16,000 a year and your equity value is 214,000. Then by the time you’re 40, you bought your fourth deal.
You’ve been holding onto it for two years. You have $30,000 in tax advantage cashflow. That’s more like earning $40,000 a year in your career. And your net worth just from these properties is up to a whopping $490,000. Your equity after 10 years, $490,000. Compare that to the median 40-year-old in the United States whose net worth is $76,000. So by buying these four properties alone in just 10 years, your net worth will be five times the median 40-year-old. And from there, the benefits only start to compound. By the time you reach a more traditional retirement age of 60, actually 65 in the United States here, but just by 60, now you’ll start paying off the mortgages. You’ll be done with property number one. Your cash flow is going to skyrocket at that point to $75,000 a year. Again, because of the tax advantages, that’s more like making $100,000 a year, and your net worth at 60 years old just from these properties will be $3.3 million.
This is the power of real estate. You don’t need to buy a lot of units. You need to buy them and hold on. As you can see, the benefits just continue to compound more and more and more. Like I said, you have a little over six grand in cashflow at age 60, but once you start paying these things off, it gets even better. At 63, it’s 8K a month. At 65, it’s 10K a month. At 69, it’s 13K a month in tax advantaged cashflow. Now, I know that seems like a long way away, but this is a much better recipe for retirement than anything else out there. I don’t know anything, including a 401k that could come even close to touching this in terms of how much passive income it generates and the net worth that you generate. So if you’re out there looking for a way to build wealth, to pursue financial freedom, this is the exact plan I would follow.
It’s very similar to the plan I did for the first eight years. Now, of course, this is just an example. I don’t know if it’s going to take you two years between deals or three years between deals, but this rough outline can get you to a successful retirement. And of course, I did all this in this example, four properties in just eight years. If you want to keep going after that, by all means, you should. You have 20 years of working potentially to keep building that portfolio, build more cash flow, build more net worth, but for the average American, just four deals can be completely life changing. As you can see, building more, more and more units, it can help, but it’s not necessarily. Personally, I like to keep my portfolio relatively small because it’s enough for me to comfortably retire without having to add any additional work or stress to my life.
To me, that’s the beauty of real estate investing, that there’s disproportionate benefits for the amount of work that you have to put in, especially over the long term. And it’s also something that so many Americans can do. They just haven’t taken the steps to try. But as we’ve shown you in today’s episode, you can start with as little as $20,000 and build a massive portfolio worth millions of dollars starting in your 30s or your 40s. Hopefully, this gives you a game plan that you can follow in pursuing financial freedom. If you want to learn more about any of these topics, dive deep into how to be a great house hacker, how to pull off a great Burr, make sure to subscribe to the BiggerPockets YouTube channel. Thank you all so much for watching. We’ll see you next time.

 

In This Article

This article is presented by Dominion Financial.

Here’s something most real estate investors figure out the hard way: The best deals don’t go to the highest bidder. They go to the fastest closer.

You’ve probably seen it happen. A solid rental property hits the market. You run the numbers, they work, and you put in a strong offer. And then a cash buyer swoops in, not necessarily higher, just faster, and the seller takes it without blinking.

It’s frustrating. And it feels unfair. But once you understand why sellers behave this way, you can start using that knowledge to your advantage, even if you’re financing every deal.

Because here’s the thing most investors don’t know: Financing has finally caught up to cash. There are lenders (like Dominion Financial) who can close a DSCR rental loan in 10 days. Not 30. Not 45. Ten.

So the question isn’t whether you can compete with cash buyers anymore. It’s whether you know how.

Why Cash Wins (and It’s Not What You Think)

Most investors assume sellers prefer cash because of the money itself. No appraisal contingency or bank to deal with—just a clean, straightforward transaction. But that’s only part of it.

What sellers are really buying when they accept a cash offer is certainty. They’re buying the confidence that the deal will actually close, on time, without drama. 

According to the National Association of Realtors, a significant portion of sellers rank the reliability of closing as a top priority, often above the final sale price. Think about that for a second: Sellers will take less money for more certainty. That’s the dynamic you’re up against every time you submit a financed offer with a 30- or 45-day closing timeline.

And the longer your financing takes, the more uncertainty you’re injecting into the deal. Every extra week is another week the seller is wondering if you’ll come back with a price reduction after the inspection, your lender will ask for more documentation, or if the deal will fall apart entirely.

Extended timelines aren’t just inconvenient. They are a negotiating disadvantage built into the financing itself.

So when investors ask why they keep losing to cash buyers, the honest answer usually isn’t price. It’s time.

The DSCR Advantage Most Investors Are Leaving on the Table

DSCR loans were supposed to solve this problem.

If you’re not familiar, DSCR stands for Debt Service Coverage Ratio. It’s a loan structure designed specifically for rental properties that qualifies you based on the property’s income, not your personal tax returns or W-2s. 

The property pays for itself, so the underwriting process should be simpler, faster, and less invasive than a conventional loan. And in theory, it is.

But in practice? Most lenders are still running DSCR loans through the same slow, manual processes they use for everything else. You still end up waiting 30 days or more and find yourself chasing down documents, waiting on appraisals, and hoping your loan officer actually returns your calls.

The structure of the loan is fast. The lender’s process is not.

This is the gap that’s costing investors deals every single day. DSCR was built to give rental investors an edge: flexible qualification, property-focused underwriting, and the ability to scale without getting strangled by your debt-to-income ratio. But if the execution is slow, you’re still showing up to a knife fight with a loan estimate and a prayer.

The investors who understand this are doing something different. They’re not just shopping for the best DSCR rate. They’re shopping for the best DSCR process.

What Competing With Cash Actually Looks Like in Practice

Imagine two buyers walking into the same deal: A rental duplex, priced fairly, with solid cash flow in a market with strong fundamentals. The seller wants to close quickly and move on.

• Buyer A is a cash buyer. They can close in 14 days.
• Buyer B is financing, but their lender can close in 10 days.

Who wins? Buyer B. And the seller probably never even asks about financing because the timeline speaks for itself.

That’s the conversation that’s starting to happen in markets where investors have figured out how to weaponize their closing speed. When you can close faster than a cash buyer, you stop being “the financing offer” and start being the sure thing.

And the advantages compound from there. Faster closings mean faster rent collection. Your capital isn’t sitting in escrow for six weeks while the property generates nothing. You close, you tenant, you move. And then you start looking for the next deal, while slower investors are still waiting to get their keys.

For anyone trying to scale a rental portfolio, this matters enormously. The bottleneck isn’t usually deal flow. It’s execution speed. Every week you’re waiting to close is a week you’re not deploying capital, earning rent, or building toward your next acquisition.

Speed isn’t just a competitive advantage at the offer stage. It’s a portfolio growth strategy.

What to Look for in a Lender If Speed Is Your Strategy

Not all fast lenders are created equal, and this part matters.

Some lenders will promise you a quick close and then deliver the same slow process with a more optimistic timeline attached to it. Speed without process discipline is just a sales pitch.

When you’re evaluating lenders on execution speed, here’s what to actually look for.

1. Process-driven timelines, not just promises

Ask the lender specifically what happens between application and closing. Where do deals typically get stuck? What have they built to prevent that? Vague answers are a red flag.

2. Pricing transparency

A faster close should not mean a worse rate. If a lender is charging a premium for speed, that’s worth knowing upfront so you can run the actual math. The best fast lenders don’t treat speed as a luxury feature. It’s just how they operate.

3. Track record with rental investors

A lender who primarily works with owner-occupants is going to approach a DSCR rental loan with an owner-occupant mindset. You want someone who does this every day and has built their systems around it.

4. Straightforward documentation requirements

One of the biggest sources of delay in any loan is back-and-forth on documentation. Lenders who know exactly what they need and ask for it once, cleanly, close faster than those who drip requests over weeks.

Get clear answers on all four of those before you commit. Because the lender you choose is either an asset or a liability in every deal you make.

How Dominion Financial Is Closing DSCR Loans in 10 Days

So what does this actually look like in practice?

Dominion Financial built its Express DSCR Rental Loan around a simple premise: Investors shouldn’t have to choose between financing speed and pricing discipline. You should be able to get both.

Their Express program closes in 10 days, not as a rush service or with a premium tacked on. That’s just the timeline they’ve engineered their process to deliver.

Dominion Financial streamlined its documentation review, underwriting, and closing coordination into a single, friction-reduced workflow. They’re not a legacy lender with a stack of manual processes bolted together. They designed this program specifically for rental investors who need to move at market speed.

And they back it up with a DSCR price-beat guarantee. If you find a better rate on a comparable DSCR loan, they’ll beat it. So you’re not trading a good rate for speed. You’re getting both.

For investors who’ve been frustrated watching cash buyers walk away with deals that should have been theirs, this changes the math completely. You don’t need an all-cash portfolio to compete like one. You need a lender whose process works as fast as the market does.

The practical impact is real. You can submit stronger offers with shorter closing windows. You can tell sellers with confidence that you’ll be done in 10 days. And in a market where that’s faster than most cash buyers, your financed offer stops being a liability and starts being a weapon.

Who this is built for: Active rental investors, buy-and-hold operators, and portfolio builders who are tired of losing deals to slow financing and want a DSCR process that matches how they actually invest. 

If that’s you, it’s worth a look. Click here to learn more about the Express DSCR Rental Loan from Dominion Financial and find out how fast you can actually close your next deal.

In This Article

This article is presented by Proper Insurance.

As a real estate investor, you likely already know quite a bit about the importance of landlord insurance for your rental properties. You also probably know that landlord policies are separate and different from regular home insurance.

But what about when you decide to branch out into short-term rentals? You might be comparing policies and wondering if Airbnb rentals will be covered if you decide to go down that route in the future, or only occasionally, or you may be considering a complete business strategy switch to short-term rentals.

Regardless of the exact circumstance, there’s one point that will apply to you in most cases: You will need to dig deeper into your current policy specs rather than assuming your short-term rental will be adequately covered by your current policy. Many investors only discover coverage gaps after a denied claim, which is why providers that specialize specifically in short-term rental insurance, like Proper Insurance, emphasize reviewing your policy before you ever host your first guest.

If you haven’t bought your policy yet but are thinking about going into short-term rentals, here are the things you need to think twice about when buying insurance.

Can My Landlord Policy Cover Short-Term Rentals?

The short answer is: it depends — and that uncertainty alone is worth investigating. Landlord/Dwelling insurance is not designed to cover the vast risks of short-term rentals, but that’s not always obvious. Some insurers market DP-3 policies as short-term rental products, but underneath, they remain standard landlord policies with the same limitations.

The most significant of those limitations is liability and guest-caused damage.

If you’re renting your investment property as a short-term rental, a Commercial Homeowners policy is the appropriate product. Unlike Landlord insurance, a Commercial policy is a business policy built to cover business operations, with Commercial General Liability that extends beyond your property line, and without the exclusions that can leave property owners and investors exposed.

Equally, if you’re completely switching over your rentals to STRs, you can’t just keep your current landlord policy and hope for the best. There is a mechanism for writing the occasional short-term stay into the homeowner’s insurance for your primary residence. In this case, the insurer can simply add on what’s known as a “rider” to your existing policy. But an investment property that has been rented out on a long-term basis (12+ months is the standard lease term for LTR) will not be covered. 

What a Landlord Policy Will Not Cover When It Comes to Short-Term Rentals

Let’s take a more in-depth look at what won’t be covered and why relying on a landlord policy for a short-term rental can lead to unexpected costs when something goes wrong.

For an insurer, deciding how to structure an insurance policy and how much coverage to offer boils down to the specific risks associated with the activity that’s being insured. And while to a beginner investor, STRs and LTRs seem like similar activities, they are actually subject to very different risks—hence the different coverage types required.

The most significant coverage gap is in liability. Landlord insurance protects investors by covering lawsuits for tenants’ personal injuries while occupying the property. But what if it turns out that the “tenants” suing for personal injury were only staying for the weekend and are not the tenants named on the long-term lease? The insurer most likely will deny coverage. Most Landlord policies include a “business pursuits” exclusion. Your insurer has the authority to determine that short-term renting is a business pursuit; your liability coverage could be voided entirely, even for incidents that do occur on the premises.

The same goes for if a guest slipped and fell in front of an outdoor hot tub or got injured while kayaking in a nearby river in a kayak you provided as a host. Certain activities, amenities, or off-premises exposures may require separate coverage or specific endorsements and are often excluded unless explicitly insured. Without appropriate coverage, even a single accident involving a hot tub, pool, or recreational equipment can quickly escalate into a six-figure liability exposure.

Next, if a guest steals something of yours during a weekend stay, landlord coverage will not be of help here because landlord policies assume that nothing in a rental property is your own personal property, with most LTR properties offered on an unfurnished/partially furnished basis. Theft is especially problematic if you offer an STR that is elaborately furnished or “themed” with knick-knacks and unique decor. 

Be careful with this, though: Even short-term insurance plans often won’t cover the cost of expensive items like artwork or jewelry; if you really feel like leaving these in a property you’ll be using as an STR, you’ll need to add a special add-on plan for valuable personal property.

Hot water heater, air conditioner, refrigerator, circuit panels, heating, or smart home system stops working? If an appliance breaks due to mechanical failure, landlord insurance generally does not cover replacement unless a specific equipment breakdown endorsement is in place. Landlord insurance typically responds only to damage caused by a covered peril such as fire or storm. And if you are forced to cancel a booking due to the equipment that broke down, without this coverage, you’ll have to shoulder the loss of income from that booking and any other impacted booking as well. 

What if one of your guests accidentally brings in bedbugs via their bags? A pest infestation can make an STR uninhabitable for weeks while pest control deals with the issue. 

Landlord insurance does not cover pest infestations because they’re considered preventable with proper maintenance. Some short-term rental policies, on the other hand, will cover this problem due to high guest turnover, which can make such infestations impossible to prevent in short-term properties. 

When bedbugs or similar infestations occur under a landlord policy, the financial impact is twofold: the owner is responsible for extermination and remediation costs and must cancel upcoming reservations while the property is out of service. Because landlord policies do not include loss-of-revenue protection, the lost booking revenue during this downtime is typically uninsured.               

All these exclusions amount to a fundamental assumption about the key differences between STRs and LTRs: Long-term renters, as a rule, tend to take better care of the properties they occupy than short-term renters. They are also less likely to sue their landlords because they want to stay in their home, so you have less of a risk of someone filing a claim opportunistically. Long-term rentals are just subject to fewer unpredictabilities. 

For all these reasons, short-term rentals require their own kind of insurance with higher liability limits, broader property protection, and business income considerations, coverage structures that contemplate hospitality-style operations rather than long-term tenancy.

When a Rental Becomes a Business

There’s one more important thing investors need to know about switching to short-term rental insurance: What you’ll be switching to is actually a form of commercial insurance, combined with elements of home insurance. 

In the eyes of an insurer, a short-term rental stay is considered a “business activity.” In this, the insurers follow IRS guidance that deems active hospitality, where cleaning, concierge services, and amenities are offered as part of the stay, a business activity rather than passive income, as in the case of traditional real estate investing. 

This is important not just because this designation as a business activity may automatically exclude you from LTR landlord policies, most of which come with a “business pursuit exclusion” clause, but also because you may need a lot more than you think as an STR landlord, including a business permit, a local STR registration, and any other licensing required specifically of short-term rentals in your local area. 

The precise guidelines vary, and you’ll need to do your own research, but, as a rule of thumb, if you’re planning on using your investment property for stays that will be, on average, seven days or fewer, you almost certainly will fall into the category of a short-term rental “business,” with all the legal implications. 

Final Thoughts

For a short-term rental landlord, there’s far more to think about due to the higher-risk and more unpredictable nature of this rental strategy.

If you’re planning on renting through Airbnb or Vrbo, it can be tempting to rely solely on the OTA guarantees these companies advertise.

Resist the temptation to skip the fine print. Standard platform protections come with significant limitations. For example, Airbnb’s host coverage is not a policy with your name on it, meaning you forfeit all policy rights. They are in complete control of the process, how long it takes, if you get paid, and how much for any experienced loss. 

The strongest protection strategy is a policy designed specifically for short-term rentals and customized to your property’s risk profile. Working with a provider that specializes exclusively in STR coverage, such as Proper Insurance, ensures your policy reflects the realities of operating a hospitality business, not just owning a rental property.

Dave:
There is a ticking time bomb in the US housing market that no one seems to be talking about and this isn’t clickbait. I genuinely believe this is one of the biggest risks to real estate investors and one of the biggest questions about the future of our entire industry. So what is it? Population decline, population and household growth drives demand for housing and rentals, but our population is not going to be growing much longer with lower immigration and quickly falling birth rates. Is housing demand at risk of drawing up in the future? Could we go from an undersupplied market to an oversupplied market in just the next couple of years? The answers to these questions are massively important to real estate investors and in today’s episode of On the Market, we’re digging into this question about population growth, how it’s going to impact real estate values. We’ll learn lessons from other countries in similar situations, and of course we’re going to talk about how you should position your own portfolio. I promise you this is an episode you do not want to miss. This is on the market. Let’s get to it.
Hey everyone, it’s Dave. Welcome to On the Market. We have a great episode for you today. It’s actually one that I’ve been wanting to make for a while. It’s definitely one that I’ve been researching for a while. We are talking about a potential declining population in the United States and what it means for real estate investors. And to be honest, this is an uncomfortable topic. I was a little nervous actually to dig into this topic because I think there is a bit or maybe more than a bit of an existential threat here. For real estate investments to perform, you need demand and for as long as we have had a country, demand has always grown as the population has increased. But what if that stops? What happens then if population in the US stops growing? This isn’t some hypothetical question. The data actually suggests it is going to stop.
In fact, by 2031, only five years from now deaths in the United States are supposed to outpace births. That’s only five years from now. And of course immigration also plays a role. It’s not just birth rates, but as you probably know and we’ll discuss in more detail, immigration is also declining. So this question of where the population is going and what it means for real estate is a legit question and it is something we frankly just need to discuss as uncomfortable as it may be. So that’s what we’re going to do in today’s episode. We’re going to talk about first the current balance between supply and demand and where we’re starting from. Then we’ll talk about forecasts for population and housing demand into the future. Then I’m going to dig into how housing markets in other countries with declining populations have behaved. Because this is not just a US phenomenon, this is happening all over the world.
We’ll talk about when and where risks actually exist for real estate investors and we’ll finish up with just how I think you might want to position your portfolios given this information going forward. That’s the plan. Let’s get to it. So first up, let’s just start where we’re at. You all probably know this, but we need to do a little review to set the stage for this entire conversation. There are two sides to the housing market. There is supply number of homes that exist in the United States, number of homes that are for sale at any given time. That’s the supply side. And then there’s demand side. How many people want to buy a home or who need to rent an apartment? And generally speaking, when there is more demand, then supply prices tend to go up and that is where we are today. You’ve heard this, but we are in a supply deficit in the United States.
It really depends and varies widely how big that supply gap is, depending on who you ask. The National Association of Home Builders, they have the smallest estimate at 1.2 million units. Then we have NAR, the National Association of Realtors. They’re saying it’s all the way up to five and a half million units, different methodologies. I think for real estate investors, I kind of just average all of them and assume that we are probably three to 4 million units short in the us and this supply gap has existed basically since the great financial crisis. We talk about that on the show all the time. A lot of builders went out of business, they couldn’t get loans. We had underdevelopment for over a decade. That’s how we got in this situation. And the interesting thing here is that it is actually getting works even though a lot of attention has been called to this situation over the last couple of years.
If you just do some basic math, it looks like the gap is not closing and is probably getting a little bit bigger. As of right now, we’re on track for about 1.6 million new housing units added per year in the United States, which is decent. It’s not terrible, but it is not enough to cover the estimated 1 million new household formations that is new demand, new people who need housing, right? That’s 1 million. Then on top of that, there’s demand for about 200,000 secondary homes or investment homes who’re at 1.2 million. And then the thing that people often forget about is that about 400,000 homes per year just become obsolete and are demolished or they’re left vacant. And so that gets us to about 1.6 million. So either we’re slightly improved closing that gap or it’s getting slightly worse, but it’s about even right now, just as an example, in 2023, there was only 1.4 million homes added, but there is an estimated 1.8 million new households formed, meaning that in 20 23, 1 of the years we had a lot of deliveries relative to recent years.
We still went net negative by 400,000 housing units. So we won’t go into this in any more detail, but just remember that we are starting at a deficit. This is a really important part of the analysis of what’s going on with population because as we now start turning our conversation to birth rates, immigration, how this is changing in the future, we basically need to think through how these changes in birth rates in immigration will impact the current deficit that we are already in. We need to frame our conversation in terms of how demographic changes will impact current trajectories. So to do that, we got to look again at both the demand side and the supply side going forward, and let’s just start with the demand side because it’s the scary part and we need to get this part out of the way. There are basically two pieces to the demand picture, birth rates and immigration.
Let’s just start with birth rates. There is an acronym TFR, which stands for the total fertility rate that hit an all time low for the United States in 2024. The last year we have data for it was at just 1.6 children per couple. Now, something I’m going to mention a couple of times in this episode is something called the replacement rate, which just basically means that you need two adults to make a baby and in order for the population to grow, the average couple of two adults need to have 2.1 children to have the population grow, right? If it’s exactly two, then the population will stay flat, right? Two parents create two children, population stays flat. Now what falls is anytime that this total fertility rate or the birth rate falls below two, that means that population is probably going to decline at least domestic born population.
We will get to immigration in just a second. Now, the fertility rate in the US, like I said is 1.6, meaning that we are well below the replacement rate and that our population of domestic born citizens is going to decline. This trend of fertility rates falling is pretty dramatic Since 2007, the fertility rate has fallen 22% and this is happening with all sorts of people. Every age group under 35 is declining. We’re actually seeing a small increase actually in fertility rates for women over 40. People are generally just waiting longer to have kids, but it is down a lot and there are government organizations that study this and they’re projecting that it stabilizes around 1.67 to 1.7. So a little bit up from where we are, what they’re basing that on, I honestly don’t know. They seem to think that people are just waiting and that there’s some pent up demand for having kids.
I don’t really know. It’s been falling in the United States for decades. It’s actually been falling all over the world for decades. We’ll talk about that in a little bit, but they think it’s going to get better. Now, why are birth rates falling? Well, when people are asked, the government tracks this kind of stuff, all sorts of think tanks track this kind of stuff and what they’re seeing is number one, economic anxiety. It is really expensive to have children. There are also cultural shifts just generally speaking where people are having fewer children, but the mostly commonly cited thing is just it’s too damn expensive to raise kids. Now we’ll see if people stick with that or maybe it’s just delayed and we’ll see a birth boom in the next couple of years. But I think it is unlikely and I have not seen any studies that suggest that is likely we are going to get back to that replacement rate.
Even the more optimistic forecast, say we’re going to get back to 1.7, not to 2.1, which is where you need to get to have a growing population. Now, I just want to mention that there are pros and cons to a growing and shrinking population, but economically speaking, most economists believe that a falling population is a problem for the economy. Basically to figure out GDP, you take the total number of people in the workforce, you multiply it by productivity, generally speaking, that’s how much economic activity you have in a country. And so when you have a falling population, that means there are economic risks. Now, there are good chances that productivity gains like stuff from AI will offset a declining population. We don’t really know, but I just wanted to call out that a lot of economists believe that a falling population is an economic problem.
This is probably why you see a lot of business people calling attention to the falling birth rate. Now, I’m not suggesting that birth rates or people should make decisions about their own families based solely on economics. I’m not saying that at all. There are plenty of other variables here, but this is an economics podcast. So I am just trying to frame the conversation and make clear that I am talking about this in economic terms because this is a real estate investing podcast and my goal in this episode is to understand how a potentially falling population impacts real estate. Okay, so that being said, I just want to reiterate that this trend of falling birth rates is not an American phenomenon. It is happening all over the world. There are very, very few countries where birth rates are actually going up. Some of this is likely due to just a wealthier world.
Research shows that as countries become more wealthy, less children are born, but whatever the reason this is happening everywhere. The global birth rate has fallen 50% since 1950 and western countries are seeing real population declines. It’s happening in Japan, in Canada, in Germany and Spain and Italy. It’s happening everywhere. Birth rates are below replacement rates. So for our conversation, unless something changes radically, we are going to have far babies in the United States and maybe something will change, but this is a long developing trend and there is no evidence is going to turn around soon. So I am personally counting on this continuing at least for now. Now population wise though, birth rates are just one angle. We also have to talk about immigration because that is a big factor in the total population and total housing demand in the United States, and as you know, immigration policy has changed a lot in the last couple of years. We’re going to talk about how that impacts demand for housing, but first we have to take a quick break. We’ll be right back.
Welcome back to On the Market. Today we’re talking about a somewhat uncomfortable topic. What happens to real estate if the population in the United States starts to decline and before the break, we just talked about this through the lens of the fertility rate in the United States, which is declining, it is below the replacement rate and it is very likely that we’ll have fewer and fewer babies and smaller domestic born populations in the United States going forward. But as we mentioned before the break, there’s also immigration that is a major factor in population size in the United States, so we’re going to dig into that Now. We went through from 2020 to 2025, a really large surge in immigration. We actually had 11 million, over 11 million immigrants arriving from 2020 to 2025, 3 million alone in 2023, which I believe is the largest annual total ever. That is a combination of both legal and unauthorized immigrant populations.
We actually saw the unauthorized population hit a record in 2023 of 14 million. We’ll talk about this in a minute. Now the trend has completely reversed, but I just want to call out that we had a big surge in immigration over the last couple of years and that has actually been the primary driver of population and household growth in the economy and in the housing market. Like I said, we’ve been the below the replacement rate for births in the United States for quite some time, and so the main driver of our population growth has been immigration. You actually see this. It’s very regional, but I was just looking this up and you see in some of the fastest growing metros in the entire country, you look at Houston, you look at Miami, you look at Phoenix, you actually can see that over recent years, immigration has accounted for at least 50% of their population growth, if not more.
Now since January, 2025, there has been a really big reversal. January 20, 25, a little over a year ago, immigrant, total immigrant population in the US was 53.3 million. By June, 2025, it went down to 51.9 million, a decrease of 1.4 million in just six months. That is actually the first decline in US immigrant population since 1960s. And if you look at estimates for the total of 2025, and this is both, this is for both legal and unauthorized migration. There are studies that show that net migration last year in the United States was negative. It could have been negative by several hundred thousand. Now, I don’t want to get political with all this, but I did just sort of look into try to understand how this is happening and what I found is there was an estimate of 310 to 315,000 deportations in 2015. So that actually suggests that the bigger driver of lower net immigration is actually a slowdown in new arrivals.
So yeah, deportations are contributing to this, but also fewer immigrants are actually coming to the United States. Now the big picture here is that the CBO is actually just revised their population estimates for August, 2025 and they’re estimating that in the US in 2035. So they were looking 10 years out, they actually revised down their estimates for us population by 4.5 million. That’s a big difference. I mean it’s not crazy. It’s like one 2% of population, but that matters even on a national level and it’ll definitely matter on a regional level, which we’ll talk about in just a minute. So in aggregate, when we look at lower birth rate and we look at lower immigration, I think it’s hard to argue that demand is going to be sustained in the housing market. I think we have to accept the fact that demand is going to fall, and I know that can be scary.
It is a little scary. I will totally admit that, but there’s a lot of other variables that we need to account for. So let’s just go through those things. First things first though, let’s just remember from a birth rate perspective, babies born today, they don’t form households. They’re not going and renting apartments, so the stuff that’s going on with the birth rate is still probably 5/10/20 years out. We are actually still in peak millennial household formation. These are millennials right now are ages 26 to 42 depending on who you ask. Everyone has a different definition of everything that is the biggest cohort in history and the birth rate sort of falling off a cliff that is actually more likely to impact the housing market in sort of like the 2040 to 2050 kind of range. It’s kind of like a water pipe when you sort of turn off the faucet, but the water continues coming out for a while.
That’s kind what’s going on. The water pressure has been turned down, but we still have a lot of water coming through the pipes for the next couple of years at least. And so the way I have been thinking about this and I’ve been mapping this out and looking at demographic data and all that, basically from 2026 from where we’re today to 2030, I do not believe there is going to be an effect from birth rates on the housing demand. I just don’t think that’s going to impact us. Are still in peak home buying for a giant population bubble we have with millennials and older Gen Z. Then in 2030 to 2040, I do think demographics are going to start impacting real estate in a potentially negative way. We have the smaller Gen Z cohort starting to buy. They buy a lot of measures are not doing as well as millennials financially might not be able to afford to buy.
At the same time, I am not someone who believes in the silver tsunami that we’re all of a sudden going to see a ton of boomers selling their homes, but they are going to sell their homes. That transfer is already starting and is going to continue in the 2030. So I think in the 2030s to 2040, we’re going to start to see some demographic headwinds in the housing market and then what happens in 2040 to 20 beyond, I don’t really know. It’s really hard. I don’t really even pretend to be able to forecast 15 years from now, but that is when we will see the impacts of lower fertility rates. That is going to be a major variable in 2040 and beyond. But as you know, there are so many other things that will impact what’s going on 15 years from now. For example, immigration.
Immigration policy can change. We saw it change very dramatically from 2024 to 2025 and I don’t know what will happen in the future, but it is possible that it will swing back in the other direction and we don’t know what’s going to happen with supply, which we’re going to talk about in just a second. I just want to go back to that timeline though where I was saying twenty twenty six, twenty thirty, I don’t think birth rates are really going to be impacted. Immigration though is going to be impacted immediately. This is something that impacts the market right away. If there are fewer immigrants, we have fewer new renters, we have fewer owner households, and we are seeing this in a lot of areas. If you look at, I’m picking on Houston because there’s some studies about what’s going on in Houston, but Houston’s low rent apartments are seeing more vacancies, fewer applicants.
We see a 24% year over year drop in Houston home searches from international users. So we’re seeing that in Houston and if you look at these studies, Harvard put out a study, they are sort of modeling out what they call a low immigration scenario where we have 420,000 immigrants per year instead of 870,000 baseline. They’re just saying straight up that there’s going to be lower housing demand over the next decade. Now of course that is going to be regional. It is not national, but the market’s most exposed are ones with large immigrant populations, Houston, Miami, Phoenix, la, New York City, other immigrant dense metropolitan areas. So it reasons that we are going to have lower demand for housing because of lower immigration in the next couple of years. But there are two things that I think we need to remember here before people start freaking out.
Remember that we are starting from a deficit. I started this episode by framing that we are in a large deficit in the United States, and so having lower demand for housing overall does not mean we are going to see the market crash, but it is one of the many reasons I’ve been saying that I think we’re in for probably several years of a housing market correction because I think we’re going to get closer to balance between supply and demand. I think that the lower immigration will probably eat into that supply deficit that we have if construction keeps up, which is a big if because that brings us to the other thing I wanted to mention is that lower immigration is also going to negatively impact supply. We’ll talk about that in just a minute, but immigrants make up a quarter of construction workers so that mitigates some demand weakness and we could see lower construction rates because there just isn’t enough workforce or we are going to see rising cost of construction because that’s what happens when there is less labor, that labor demands more wages, that increases the cost of construction and that in itself could slow down the pace of construction.
Even though lower immigration we know will lower demand, it will probably also lower supply, not proportionally, I don’t think it’s, but that lower supply impact will mitigate some of the softer demand. Okay, what does this mean for your investing, right? We covered a lot of the demand side, but we need to also look at the supply side before we draw any conclusions and we’re going to do that right after this quick break. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer. We are now going to turn our discussion about potential population declines and what it means for real estate investors to the supply side because everyone always misses the supply side, right? Everyone always talks about demand, but they miss the supply side. Now remember, we’re in a shortage right now, but will the demand decline softening demand erase that? Could we go from a supply shortage to a supply glut? Let’s discuss. Well, first of all, like I said, we’re actually in the supply glut that actually might get worse before it gets better. I ran you through the numbers, but roughly we’re at 1.6 million units right now and that’s about what demand is and so depending on the year, we might actually get a little bit worse and at best it’s getting a tiny bit better. So even with lower immigration, I do not think that it’s likely that we’re going to see a shift from a shortage to a glut in the near future, but that’s really going to depend on immigration in the short run, if it really just gets huge net negatives that could change, but based on numbers that we saw from 2025, I don’t think in the next couple of years we’re likely to see that shortage get erased.
But what about in the long run with declining birth rates? Won’t we inevitably see a glut? This is the question people are always asking me when we talk about population is that if we have all of this housing and even though we have an oversupply right now, the population keeps declining and declining, won’t we eventually have too much housing for the amount of demand that we have? There could be. That is definitely risk. That is why we’re talking about this today. There is a risk to that, but I want to just remind everyone that there is sort of this hidden variable in supply that is often forgotten that is obsolescence, that is that every year obsolescence a demolition remove 400,000 units from housing supply and that happens regardless of population growth. Everyone always forgets that nearly half a million homes get destroyed each and every year, and we have a lot of old houses in the United States.
Actually nearly 50% of all of our housing stock is built in 1980 or earlier. The median age of owner occupied homes right now is over 40 years old. That’s up from 31 years old in 2025. So this trend is absolutely going to continue and it matters because it sort of creates this floor on the amount of construction that we need that doesn’t go away. Even if population growth slows as more and more housing stock ages replacement demand could actually go up from 400,000 to 500,000 and 600,000. So the inevitability of a supply GT is not really true, but it’s going to depend a lot on construction trends. If we have a declining population and construction keeps growing at 1.6 million units per year, yeah, we’re probably going to be in a supply glove, but I do think the construction industry is likely to adapt. They’re not dumb.
They know what’s going on. These are big sophisticated companies and so they will probably have to adjust maybe not in the next five years, but 10, 15 years from now, we will probably see big shifts in what is being built and where in the construction industry in this country. So I do think some of that obsolescence will and presumed adjustments on the construction side will offset some demand issues, but there are demand issues. I don’t know how else to say that. I just think that is going to happen, but this isn’t necessarily a disaster. It does not mean you can’t invest in real estate. We just kind of need to put this all together and figure out what this means for real estate investors and to do that, I’m going to sort of just break it down into three different segments. We’re going to talk about near term, which I’m going to just define as 2026 to 2030 just to the end of the decade kind of makes sense.
Then I’m going to do medium term, which is like 2030 to 2040, and then we’re going to do long-term, which is 2040 to 20 50, 60. I don’t know, long term longer than we can imagine right now. So let’s just start with that. Near term 2026 to 2030, what I think we’re going to see for the next couple of years, the most likely outcome is diverging markets and the great stall, this thing that I’ve been talking about for years, my opinion has not changed for the short term. We still have a national housing shortage that is very large and it is probably not going to get resolved even though we have lower immigration rates, we’re actually seeing construction capacity going down due to immigration enforcement, so that will probably slow construction. We also just have really undersupplied big markets, New York, Boston, dc, Seattle, undersupplied markets, and that is going to continue and so I think prices are going to be somewhat flat nationally.
This is what I’ve been saying for a while and I still think that is likely in the medium term. Now, I will say that for markets that are immigration heavy, I think we’re going to see demand moderate, right? We’re probably going to see some rental softness, especially at the lower end. These are in cities. I’ve called out a bunch of them in Texas, in Phoenix, in Miami. These are immigration dominant kinds of cities and we’re probably going to see lower prices. These are markets that are already seeing some of the biggest corrections in terms of home prices in the United States, and I think that is likely to continue, but I also think for any investors who operate in these kinds of markets, you probably want to count on lower rent growth or maybe negative rent growth because there’s going to be lower demand. That said, I’m not freaking out about the short term.
I still think there are great deals to be bought out there. I think rentals in any of these markets that are a bit supply constrained have strong economic growth. All the fundamentals that we talk about on the show all the time, those are still true and personally, I plan to keep doing what I was doing before I did all this research, so I’m not immediately worried. I did say at the beginning, I think this is a big question for real estate investors and there are risks in the housing market and that is true. I really do genuinely believe that, but I think they’re more medium term to long term. I don’t think they’re coming in the next couple of years, but that’s just my opinion after doing all of this research. So with that, let’s talk about the medium term. Again, this is kind of like 20, 30 ish, 2040.
These aren’t exact dates. Everyone, I hope you realize that I’m just kind of generally talking about the medium term. Let’s generally say it’s 2030 to 2040. Now, I think that’s when things, the question marks really start to come up because we basically have two different things. We’re probably going to work our way through this massive glut of millennial home buyers and start to get into the Gen Z peak home buying age, and they are a smaller generation and we don’t know what their financial picture is going to look like in five years. So I think that’s one thing that could create some headwinds for the housing market. The second thing is that the boomer transfer is going to continue, I think it is already started. I do not think it’s going to be some cliff that causes a crash, but I do think it could provide sustained downward pressure or moderating pressure on housing prices.
If there is more and more inventory on the market because this demographic group is selling, that will put down more pressure on pricing, right? If we have lower demand and higher supply, that is downward pressure on pricing, does that mean they’re going to be a crash? No. Does it mean prices are even going to fall? No. But when we talk about the direction of the housing market and where prices are going, we need to think about all the different things that impact prices, things like inflation, demographics, interest rates, all of these things. What I’m saying is that there will probably be demographic headwinds for the housing market, whereas over the last 10, 15 years we have had demographic tailwinds. The demographics in the US were helping us in the housing market in terms of appreciation from 2010 to now, and I think that will continue probably till 2030 after 2030.
I think that’s a much bigger question mark, and it’s something that we need to recognize as real estate investors. Now, this won’t actually hit in 2030 to 2040, but studies are projecting that in 2031 we will see deaths start to exceed births, which means that starting from that point going forward, we are very likely to see decreasing population unless there is some policy change in terms of immigration. Now, in terms of what markets actually become at risk for 2030, because I do not believe this will cause a national crash that is five years out, I make my predictions one year out, so I’m just saying right now from what I understand about the market, I don’t see anything that says, oh my god, now everything’s going to decline. But I do think certain markets will be more at risk during this demographic shift. I think instead of seeing immigration dependent markets suffering, I think the questions are going to be areas of the country where there’s just older people.
If you look at places in the northeast or the Midwest, they’re largely in the suburbs. A lot of them are coastal metros, just older populations. We are going to probably see more and more inventory, which could again lead to slower appreciation. It could also lead to slower rental demand. We just don’t know, but those are the kinds of things that I would start looking for is those kinds of demographic indicators as you look at and potentially select places to invest. That is of course, if you’re looking to hold onto them for 10, 20 years if you’re flipping, probably doesn’t matter right now, but if you’re looking at something to buy for five to 10 years from now, I would start looking at this. In fact, it’s something I wrote down after doing this research as one of the metrics I look at it, but to pay more attention to is the age of the average homeowner age of the average renter, because I think investing in places where there’s a younger population is probably going to be a good risk mitigation strategy going forward.
For example, some of the sunbelt metros that are struggling right now may seem really good recoveries because these are areas with strong employment, they are attracting a lot of domestic migration people moving within the us, a lot of them are moving to the sunbelt areas, and so that is going to matter, and I just want to say that in every market, some people see, hey, new inventory from boomers being an issue, it’s also probably going to be an opportunity, probably going to get a lot cheaper cash flowing kind of deals in this next era of real estate investing that will probably start somewhere around the 2030. So just remember this doesn’t not mean that you cannot invest, but it does probably mean there is going to be a shift in strategy that is necessary when these demographic trends make their big shift in the next couple of years.
Now, lastly, let’s just talk about long-term 2040 and beyond. I’m just going to be honest. I don’t know. I do not know, but I will just say if fertility stays where it was, we are going to have structurally lower immigration in the United States unless we really change policy on immigration and start having a lot of immigration. So we don’t know any of that’s going to happen. It is almost impossible to predict, but I did just want to call out that there are some lessons we can learn, or at least there are some indicators from other countries that are facing similar issues, right? In Japan, they have had a declining population for a while. There was not a national crash. One of the reasons I don’t think that there is a national crash, but what you saw is that a lot of rural and suburban property value did decline when the population started to decline.
There was not enough demand to sustain prices for every type of asset class in every market, but you saw prices go up in major economic hubs in major cities. I think that is a potential avenue that could happen in the United States. United States I actually think is even more insulated from a national crash than Japan because it just has a bigger deficit right now. US obviously is the biggest economy in the world. There’s a lot of economic dynamism and resilience in the United States, not that Japan isn’t resilient, but I think the US has that going for it as well. And so my guess just looking at this, I also looked at Germany. I looked at Italy too, and basically what you see is that economically powerful metro areas that attract talent and internal migration continue to win. It is probably suburban and urban areas in secondary and tertiary metro areas that will decline.
So let’s just talk about big picture Demic. Graphic declines in my opinion, are probably coming unless there’s a massive change in policy, which I can’t predict, right? I think demographic declines are probably coming and we are probably going to see a shift from demographic tailwinds that support appreciation and rent growth to demographic headwinds that put downward pressure on appreciation and rent growth. Now, I do not believe that is going to create a national crash, but I do think it will create more variance between markets. We are going to have more differences between how one market performs and the other. So to me, this is really a lot about what this show is about, which is market research. You need to be in the right places if you’re buying for the long term, you need to dig deep into population and demographics. If you’re a buy and hold investor, and I’ll just be honest, researching the show has made me think pretty hard about where I want to invest going forward.
I’m probably going to put a lot more waiting on population and age and birth rates in specific areas going forward because it’s going to be increasingly important. But remember, many, many markets will still prosper, but there are some that are going to stagnate or decline. I feel pretty strongly that that is going to happen if these trends continue. Now, of course, you can still invest even in declining markets. People do it all the time. It’s more of a cash flow play or a tax play, right? You’re probably not going to want to do a burr in that kind of market, but there are still ways to invest in those markets, but it’s just super important to recognize I’m investing in a growth market. I’m investing in a cashflow market. Here are the strategies that work in those markets that is going to be increasingly important, maybe not in the next year or two, but when we look 5, 10, 15 years out, it’s going to be more and more important.
Now, of course, I am saying this if current trends continue, and there are of course some questions about whether they will to me, I think there’s a couple big wild card questions that we need to keep an eye on and we will keep updating you on the show. Number one I’ve said a bunch of times is just immigration policy reversal. This is the biggest variable We’ve seen different presidents, different administrations have totally different immigration policies that could happen again in the future. The second possibility is potential fertility rebound. I don’t see that happening, but people are talking about baby bonuses or tax credits or helping Americans with IVF stuff like that to try and get the fertility rate back up, but personally I think it’s unlikely we get close to that replacement rate and it’s just really a question of how quickly our birth rate and domestic born population starts to decline.
Other options are more on the supply side. If we see much like a housing construction boom, well that will obviously impact things. I think that is unlikely. And then the last one, which we haven’t talked about at all is inflation, and I think this is a really important thing because this is one of the big things that could put upward pressure on pricing. We’ve talked mostly in this episode about things that will put downward pressure on pricing, but there are plenty of other variables and inflation if we choose to print our way out of our debt just as an example, I don’t know if that’s going to happen, but that is a potential. If that happens, that will probably put a lot of upward pressure on housing too, and there will be appreciation in almost every market if that happens. So there are more things than just population demand.
We have to look at the big picture, and although we’re focusing on population in this episode, we have to look at these other things like inflation. This is a big question in my opinion. So bottom line, next couple of years, shortage is real in the housing market. It’s massive and durable. I personally think the great stall is still likely, and I still think there are going to be good deals for people to buy who are looking for long-term upside in 2030 to 2040. I think we shift from demographic tailwinds to demographic headwinds, and it is going to be increasingly important for people to pick strategies that work in their kinds of markets. There are going to be cashflow markets that probably have declining appreciation, but probably have decent cashflow. Then there are going to be growth markets, and they’re probably not going to be markets that have really strong in both.
That’s what things used to be like, and I think that’s what they’re going to be. Again, 2040 plus, I don’t really know, but I do think we’re going to see lower demand, and so we’re just going to have to track supply and how fast demand is declining over the next 10 years before we could really realistically forecast what’s going to happen 2040 and out. So that’s how I see things overall. Doing research, doing the show, it’s given me a lot of things to think about, but overall, I still believe in real estate investing. I’m still going to keep looking for deals. I’m just going to think about hard about where I want to buy, the type of assets I want to buy and make sure my strategy is aligned with the type of markets that I’m investing in. I’m probably going to underwrite generally for low appreciation like I probably will underwrite for deals that I think work and are solid even without appreciation at all.
I think that makes a lot of sense. Still going to focus on value add. I think that’s going to work even if there are populations to decline. So just remember, even though this is a little bit scary, there are some big questions out there. There are absolutely still ways that you can invest in real estate. You just need to know this stuff is coming, so you pick the right tactics, the right markets, the right portfolio moves for yourself. Hopefully this episode has been helpful for you. This is something I’m going to keep thinking about and researching, and I will definitely provide updates whenever we get information. I think this is just a huge question we should all be talking about on the market community. If you think someone else would benefit from this research, please share with them and make sure to subscribe to on the market wherever you listen to this podcast so you don’t miss any updates that we have. Thank you all so much for listening. I’m Dave Meyer. I’ll see you next time.

In This Article

Okay, so liar loans and the opportunity to buy a home in a deceased relative’s name might not be coming back anytime soon. However, the wild-and-windy lending days of the pre-2008 crash are moving a little closer to mainstream America as banks aim to make mortgage lending cheaper and easier.

The Dodd-Frank laws, put in place to prevent the kind of rampant fraud and bad lending practices documented in the movie The Big Short, are not going anywhere. That means qualified residential mortgages (QRMs) must still avoid risky features such as negative amortization, teaser rates, and most balloon payments. Full doc underwriting will also remain in place. 

However, recent comments from Federal Reserve officials and new regulatory reports point to a deliberate effort to put banks back at the center of the mortgage conversation after years on the back foot.

Look Forward to Getting a Loan

Federal Reserve Vice Chair Michelle Bowman said in a speech that the Fed is considering capital changes that would “encourage bank participation in mortgage servicing.” It plans to accomplish this by making it cheaper for banks to service mortgages in-house rather than outsourcing. In banking terminology, that means removing the requirement that banks deduct mortgage servicing assets from core regulatory capital while continuing to apply a 250% risk-weight loss to those assets. Bowman described it as a way to “better align capital requirements with actual risk.”

What that means for investors and flippers is that loan requirements could ease—lower LTV requirements and better underwriting—potentially improving pricing and availability for buyers who can bring more equity to the table, i.e., a higher down payment.

Why the sudden change? It appears that banks realized their bottom line had some wiggle room, as they made it too difficult for homebuyers and investors to get mortgages. In Bowman’s words, financial institutions’ hardline approach to mortgages “has been costly for banks, consumers, and the overall mortgage system.” The Fed’s vice chair added:

“Banks hold substantial numbers of mortgages with low loan-to-value ratios. By requiring disproportionately high capital, we reduce a bank’s ability to deploy capital to support the needs of their community. In light of these considerations, I am open to revisiting whether the capital treatment of MSRs and mortgages is appropriately calibrated and is commensurate with the risks.”

Community Banks Could Have Their Restrictions Eased

U.S. banking agencies have proposed easing the community bank leverage ratio from 9% to 8% and extending the time small banks have to return to compliance, which they say will keep capital strong while giving local lenders more room to operate. That’s vital for mom-and-pop investors who often rely on community and regional banks for small-balance investment loans that larger national lenders often ignore.

What This Means for Buy-and-Hold Investors and Flippers

The immediate benefit for small investors and flippers is likely to be greater access to capital. More lenders competing for your business puts you—the investor—in the driver’s seat regarding loans and terms. 

Industry groups such as the Mortgage Bankers Association (MBA) have said that the current capital framework has discouraged banks from competing aggressively in mortgage origination and servicing, particularly compared to nonbank lenders, including private and hard money operators. Responding to Bowman’s speech, an MBA spokesperson said, “A more appropriately calibrated approach, particularly with respect to mortgage servicing rights and mortgage loans, will strengthen banks’ ability to serve creditworthy borrowers while maintaining safety and soundness.”

Banks Can Afford More Risk

Banks are flush with cash and can afford to take some risks by lending money in situations they would have previously backed away from. U.S. banks generated about $300 billion in profits in 2025, a record level driven by higher interest margins and relatively low credit losses, according to the Financial Times. By loosening lending criteria while keeping Dodd-Frank protections in place, banks hope to thread the needle between viability and responsibility.

Why Community Banks Are Still the Go-To Source for Investors

If an investor prefers to partner with a bank rather than a hard money lender or private money lender, a community bank is still one of the best places to borrow money. These are bedrock investor loans, which tend to have lower rates than mainstream banks.

1. Conventional investment mortgages (one to four units)

For single-family rentals, duplexes, triplexes, and fourplexes, conventional lending requires a 20%-25% down payment, fixed 30-year terms, and is based on your credit score, income, and the subject property’s rents. Community banks are somewhat more flexible with investments than mainstream banks because they are in the market and might be more forgiving with a quirky property, especially if they keep the loan in-house.

2. Portfolio loans

Portfolio loans are usually kept on the bank’s books rather than sold to Freddie Mac and Fannie Mae, allowing the bank greater flexibility in property type, borrower profile, and structure. They are useful for buildings that need work and small multifamily properties with over four units, as well as mixed-use buildings, and for investors with multiple existing mortgages that do not fit strict agency limits.

3. Rental portfolio and “blanket” loans for multiple doors

Once you own multiple doors, doing one loan per property becomes cumbersome. A rental portfolio, or “blanket” loan, offered by a community or regional bank, is useful in these situations. Banks will usually finance $300,000 to over $6 million with 20% down on new purchases and 75% LTV. They allow an investor to free up equity for more deals while maintaining a single point of contact who understands your business strategy.

4. DSCR-style loan—where the property qualifies for the loan

Debt service coverage ratio (DSCR) loans have become an investor buzzword in recent years. Unlike conventional loans, it poses the question, “Does this property’s rent cover the mortgage and expenses?” 

A 2025 DSCR overview explains that lenders typically want a DSCR of about 1.1 to 1.2 or higher, meaning that the property’s net income is at least 10-20% of the total monthly debt payment, with down payments in the 20%-30% range.

5. Small-balance commercial real estate loans (five-plus units + mixed use)

These are go-to loans for small apartment buildings and mixed-use and business-purpose rentals, typically offering $2 million to $3 million with flexible terms and local underwriting, tailored to an investor’s needs.

Final Thoughts

Now that we’ve established that 2026 won’t turn into a banking bacchanalia, where part-time Uber delivery drivers suddenly start buying preconstruction luxury condos in Miami, sound financials still need to be in place to get a loan. That means good credit, proof of income, and cash reserves. 

However, with those in place, it’s likely you’ll be able to qualify for higher loan amounts than you would have previously, and with fewer hoops to jump through. If you plan to invest in 2026, shopping around with local lenders to gauge their changing loan qualification criteria is a good move while you get your finances together.

In This Article

This article is presented by Avail.

Did you know that if you’re a landlord, February is life’s gift to you in terms of getting your business finances in order? 

Understandably, dealing with the intricacies of real estate tax prep and rental contracts in January is a superhuman ask. But February is your chance to really get on top of everything for the year ahead before ax prep starts, leases are mid-cycle, and peak turnover season (spring/summer) begins. 

These are the seven operational areas you should be zooming in on right now before Q2 begins. 

1. Audit Your True Cash Flow (Not Just Rent In vs. Mortgage Out)

Most landlords overestimate their rentals’ performance out of pure optimism. However, basing your cash flow numbers on a simple “rent in versus mortgage out” equation is like relying on a lab experiment performed under perfect conditions to gauge a real-life situation. 

In reality, every landlord has to factor multiple factors into their cash flow figure, like insurance costs and property taxes. Where many newbie investors go wrong is failing to factor in the more unpredictable, irregular expenses, such as maintenance, capital expenditures, potential vacancies, and other factors that can increase costs. According to a recent survey conducted by our partner, Avail.co, 74.4% of landlords saw property ownership costs rise this year, so if you’re in that midst, you’re not alone.

Another important point to consider is that no matter how great a tenant is, there is always a chance they will move out and leave a unit that requires costly repairs. For that reason, it’s always recommended to plan for the worst by building a rainy-day fund: You don’t know when you’ll need it, but at some point, you definitely will. Factoring in as many potential and ongoing expenses into your cash flow over time will mean you’re much better prepared for a financial challenge when it does come. 

2. Clean Up Tenant Payment Behavior

Understanding the psychology of tenant behavior is more art than science, but you must work out a system to deal with most situations you’ll face regarding late payments. 

Most late payment patterns can be prevented with automated rent reminders and late rent notices that send out at the appropriate time. Tenants really dislike being chased for payments and will avoid paying late again if they know you’re not going to let them off the hook. But what if you don’t remember when payments are due for different properties, since they all have different due dates? You likely will miss the crucial time window for enforcing prompt payments. 

So, now is the time to streamline and standardize all the rent payment processes. Just make all tenants pay on the first of the month, for example. And if they already have a history of paying late? You can have a “late rent notice” ready to send via email, including the grace periods they’re entitled to under local law and what happens if they don’t pay. Landlord-focused platforms like Avail can help you with all of that through automated rent collection, payment reminders, and customizable late fees that handle the follow-up for you.

Of course, as a landlord, you have to use your best judgment, especially when dealing with long-standing tenants. Someone who has always paid on time for years and slipped up once because of a family emergency is obviously not the same as someone who’s just moved in and is already late on their second month’s payment.  

3. Get Your Books “CPA-Ready” Now

If you’re a real estate investor just waiting until March to get your books in order for tax season, you are, unfortunately, a whole two months late. 

Why? Because most rental property expenses need to be paid by Dec. 31 during the year you’re filing for. Otherwise, the expense counts for the current year, and you won’t be able to write it off until you file your return in 2027. That can be a nasty surprise if you just paid a contractor for a rental reno in January and were hoping to write it off in March. 

Many landlords also routinely miss write-offs they’re entitled to, especially when they do maintenance on their rentals. For example, many are unaware of “partial asset disposition,” in which you take your rental and segregate expenses based on what was disposed of and what was added. 

Say you replaced the roof. Many investors know that the cost of the new roof can be written off through depreciation, but not that the cost of the old one they are replacing can also be written off as a partial asset disposition. Of course, you can only do that if the property was “in service” before you made the improvement.   

Another interesting write-off helpful to those who have already fully cashed in their depreciation is that if you convert your long-term rental into a short-term rental, you could then make the improvement and qualify for the QIP (Qualified Improvement Property) write-off (you don’t qualify if yours is a long-term rental).

Obviously, making all these changes and documenting them takes time; it’s not something you can suddenly put in place in March. You always need to plan well ahead for any deductions on your property; in most cases, you’ll need to have made any restructuring moves and paid the qualifying expenses before the end of the year you’re about to file for. Consider centralizing all rental expenses in one place, using platforms like Avail to track income and expenses.

4. Do a Lease Health Check

The more leases you have to manage, the more administrative and market research you have to do. Do as much of that work in advance as possible. If you’ve made updates to your standard template, you can clone it via a platform like Avail that can be adjusted per property and save you some work.

Do your leases comply with the latest local law updates? You should always be aware of any new requirements, like mandatory checks and improvements required by your city/county. These do change, and it is your responsibility to keep up to date with any new requirements. Again, Avail for the win with state-specific, lawyer-reviewed leases that are free to create, saving you hours of research.

5. Perform Maintenance Triage Before Spring Breaks Everything

Winter can feel like the most challenging time for property upkeep, but spring is actually far riskier. Snowmelt (basement flooding!), temperature fluctuations (surprise pipe freeze!), and, eventually, the new season’s storms can wreak havoc on your rental. While you can’t anticipate every adverse weather event, you can do a lot to ensure the rental will withstand most of them.

As a bare minimum, schedule a routine HVAC check and assess (or hire a professional to assess) any plumbing, drainage, and exterior issues with the property. Do this now and protect your profit margin for the year ahead. Leave it until March or later, and you may already be too late.  

6. Do a Vacancy Risk Scan

Another big known unknown every landlord faces is vacancy risk. Even tenants who seem low-risk for nonrenewal can sometimes surprise you by deciding to move midyear, or even worse, before the summer moving rush begins, which greatly increases the risk of the property standing empty. 

What can you do about this? First, if you have a long-standing, positive relationship with your tenants, it doesn’t hurt to ask about their plans. They might actually tell you, putting your mind at rest. In many cases, tenants themselves genuinely don’t know the exact time frame of their plans, but they could give you a valuable indicator of what’s to come, especially if they mention wanting to buy soon. The good news is that, according to the latest Avail.co survey, 36.1% of landlords report that their tenants are staying in their properties longer than in previous years.

Of course, tenants may not want to share their plans with you, especially if they’re navigating a difficult experience like a job loss or a potential move to be nearer a sick relative.

In these cases, it’s worth paying attention to less obvious signs that the tenant might be considering moving out. They might be spending increasing amounts of time away from the property (mail piling up is a good indicator of this), taking less care of the yard, or suddenly getting late with rent payments, even though they always used to be on time. Behavior changes often signal that a bigger change is coming. 

Finally, many tenants decide to move after a rent raise. Be sure to communicate the increase and be very transparent about how it aligns with current market-rate rents; tenants who are satisfied that a rent increase is reasonable are less likely to leave than those who feel it’s been sprung on them. 

And if you’re getting the sense that a tenant might not renew their lease, be proactive rather than reactive. Of course, you can’t start advertising a property before a tenant has communicated that they’re leaving, but you can make informal contact with people in your pool of current tenants. For example, you might know a couple who could be interested in a larger unit—why not have a conversation about whether they’d be interested? Sometimes, a tenant reshuffle is easier to navigate than looking for new tenants. And if you end up having to look for new renters, Avail can post your property to 24 top rental sites for free, speeding up the process.

7. Perform a System Stress Test

The ultimate stress test for an investor might not be only asking yourself: “Am I in a good spot with my rentals right now?” but asking, “Will I be okay if the HVAC in one of my units breaks, if my tenant leaves, or if I add a new unit to my portfolio soon?” Would you be able to cope with the additional expenses, administrative work, and responsibilities, or would your systems break down? 

The solution is always to streamline and standardize your processes as much as you can. 

Many landlords use February to centralize rent tracking, maintenance records, and lease documents in one place so they don’t have to scramble later. Tools like Avail can make that process much easier and more secure. Sign up for free today to check it out and start getting ahead of the peak season!