The saying “give the people what they want” resonates for a reason. In real estate, what people want—tenants, specifically—is low rent. 

That doesn’t always gel with landlords who want higher rents to cover expenses and turn a profit. However, as counterintuitive as it may seem, there are places where rents of $1,000 or less give both landlords and tenants some satisfaction.

In the South and Midwest, $1,000 a month is not uncommon, according to Zillow research. The data and analytics team at the listing giant found that 13 metro areas among the 100 largest in the U.S. have more than one-third of apartment listings priced below $1,000. That’s in direct contrast to popular East Coast markets such as New York, Boston, Washington, D.C., and Miami, where generally, less than 2% of apartments rent for under $1,000/month. 

However, in smaller metros like Wichita, Kansas, and McAllen, Texas, this number is over 50%. In Little Rock, Arkansas, Toledo, Ohio, Oklahoma City, and Tulsa, Oklahoma, it is nearly that. 

In Wichita, the $1,000 rents are made possible by the affordability of some houses. This two-bedroom, two-bathroom home, which needs minor repairs (the third bedroom is available for a flipper), is currently listed for $92,000—with an estimated PITI payment of $604/month.  

Another two-bedroom, one-bathroom home, in need of light rehab, is available for $80,000, with an estimated PITI payment of $525/month. Buying this type of home, fixing it up, and renting it out would allow an investor to quickly build a portfolio of cash-flowing rentals. If investors want to spend more money in exchange for higher rents, the potential selection options increase. 

However, there are many factors beyond low prices and rents to consider when determining the viability of a rental investment, as we’ll see.

Bucking the Trend

These smaller metros in the South and Midwest buck the trend for much of the nation, which is mired in an affordability crisis. 

“?The thing that I think we learned is that federal housing policy is stuck in a really weak equilibrium,” Jared Bernstein, who led President Joe Biden’s Council of Economic Advisers, told Ezra Klein of the New York Times. “There is just far too little asked of cities and states. They won’t do much to push back on the barriers that are blocking affordable housing.”

While the explosive rent growth of the last decade—rising 50% between 2015 and 2025 in many markets—is not debatable, neither is the rising cost of being a landlord. Insurance, utilities, and financing have also seen sharp spikes, eating into a landlord’s bottom line. According to property management platform Baseline, 85% of landlords increased rents in 2024 to offset operational expenses, with one-third of these raising them by 6% to 10%. 

All this makes the $1,000 rental scenario all the more astounding. It’s like time-traveling to a bygone era.

People Are Moving Because of Housing Costs

The cost of housing is the primary reason Americans move, according to MoveBuddha. Unsurprisingly, they’re heading to the Midwest or South, making it a good place for real estate investors with limited budgets who want to start building their portfolios.

Some of MoveBuddha’s findings are as follows:

States

• In 2025, South Carolina had twice as many people moving there as leaving.
• Some states were markedly up on 2024’s stats as far as inbound searches go. Wisconsin (+79%), Mississippi (+55%), and Minnesota (+40%) were among the most prominent.
• In terms of interest in total inbound migration, North Carolina, South Carolina, Texas, and Tennessee had the highest online search volume.

Cities

• The top city for moves in 2025 is Myrtle Beach, South Carolina, with 2.41 inbound moves for every outbound one, fueled by Baby Boomer retirement interest.
• Many of the inbound cities are mid-sized or retirement-friendly areas, with smaller, affordable communities.

Strategies for Investors to Build a Low-Cost, Low-Rent Investment Portfolio

Target the right markets

This might seem obvious. However, it’s easy to be led astray. Use the following to help in your research:

• Median rents below $1,200
• Steady wage growth
• High renter populations
• A surplus or stabilizing supply of homes

Examples: 

• Midwest college towns
• Secondary Sunbelt metros
• Rural-adjacent Southern metros
• Older inner-ring suburbs 

Use data tools like:

Buy below replacement costs, and don’t over-renovate

Affordable rentals work best when you are competing with land costs higher than what you will pay. The following are good examples:

• Older single-family homes
• Small duplexes and triplexes
• “Ugly” but structurally sound properties
• Houses requiring a rehab rather than a complete renovation
• If you buy low, avoid overspending on renovation so you can still cash flow. “Low cost,” “durable,” and “practical” are keywords.

Research operating costs

Low-priced homes are not much use if they come with high property taxes and insurance. Sometimes homes are priced low for a reason: No one is buying them. 

Don’t believe the agent or wholesaler’s hype. Do your own research.

Screen for stability

Just because your rents are low doesn’t mean you have to be in a sketchy neighborhood, relying on increasingly imperiled government programs for your rental incomes. Plenty of rock-solid tenants live in working-class neighborhoods. Look for those who prioritize affordability and stability, as they are likely to stick around, and you avoid turnover churn. The returns might not be earth-shattering, but over time, these properties can be winners.

A reliable tenant pool can come from:

• Teachers
• Hospital staff
• Government workers
• Long-term service sector employees
• Seniors on fixed incomes

Let rents catch inflation

Even if you start renting for below $1,000, modest 2% to 4% annual increases, coupled with low vacancy, stable tenants, and basic maintenance, can yield strong long-term growth when tax advantages, debt paydown, and appreciation are factored in. These workhorse properties have made many investors wealthy over time.         

Final Thoughts

All this said, just because a city offers low housing costs and rents doesn’t automatically mean you should invest there. Case in point: Wichita, Kansas, which this year had more people leaving than coming in, according to MoveBuddha data, despite being highlighted by Zillow Research.

So, in determining a good place to invest, do an overall analysis that factors in house prices, rents, net population inflows and outflows, and expenses. Analyze data regarding:

• Jobs
• Insurance
• The attraction for retirees (low state income taxes, warm weather, community activities and amenities, and space—often found outside larger metro areas)
• Development projects
• Crime stats
• Transportation

This article is presented by Connect Invest.

The multifamily real estate market has, without a doubt, been through some tough times over the past few years. Rising interest rates and a falling demand following a multifamily building boom compounded to make multifamily less of a safe investment than it once was. 

However, according to the most recent CBRE Multifamily Underwriting Survey, there are signs that confidence is returning to this segment of the real estate market. 

What is behind the optimistic sentiment uptick, and should this confidence translate into multifamily investment action if you’ve erred on the side of caution so far?

Rate Cuts + Expected Surge in Renters = Improved Buyer Sentiment

The latest federal interest rate cuts in September and October are a major factor in the survey’s optimistic prognosis. In Q3, 64% of core-asset buyers expressed a positive outlook, as opposed to just 57% in Q2. Value-add buyers had the highest levels of confidence at 70%, up from 62% in Q2. 

Lower interest rates make any real estate investment more viable, and they are particularly helpful to investors who cannot rely on sharp rental growth, as is the case in the current climate. Investors are feeling confident despite the fact that underwriting assumptions of annual asking rent growth for value-add properties actually decreased in Q3, to 3.2%. 

Rent growth deceleration is by now a stable trend. Internal rate of return (IRR) targets have been going down for value-add assets for seven consecutive quarters. For core assets, underwriting rental growth predictions for the next three years are at a modest 2.8%. 

Overall, the actual market figures are pretty stable, with mostly unremarkable variations in both going-in and exit cap rates. 

The point is that the direction is positive, with the average multifamily going-in rate showing a decrease of two basis points. The possibility of another interest rate cut in December is, without a doubt, keeping the mood buoyant in anticipation of further incremental cap rate compression.

Southern Demographics Boosting Investor Confidence

Interest rates, as much of an immediate relief as they are, do not sway markets alone. So, what’s keeping buyer sentiment buoyant? 

For one, those positive sentiment percentages are boosted by a trend-bucking increase in IRR targets for core assets in Sunbelt markets, notably in places like Dallas and Austin—the very locations that have experienced the most dramatic ups and downs in their respective multifamily sectors over the past few years. An unprecedented increase in demand following the much-documented “Sunbelt Surge” resulted in a construction boom, which eventually dampened demand (and rental prices). 

Why, then, despite continued rental growth deceleration and increased construction, are investors feeling positive? Because it now appears that the localized construction booms have not fixed the housing shortage in these—or any other—regions. 

According to JLL, there is a shortage of 3.5 million housing units in the U.S. This, combined with an unprecedentedly high (and rising) cost of homeownership, means that many would-be homeowners will remain renters in 2026. This is causing the uptick in multifamily investor confidence.

Paradoxically, the new multifamily construction that has decelerated rental growth has also made renting a more affordable and therefore attractive option for many people. Rather than buying an overly expensive home with an exorbitant mortgage (interest rates are still high), many renters are expected to renew their leases instead. 

Investors are, correctly, banking not on sharp rental growth, but on steady demand. And current demographic statistics are showing that the South in particular, is experiencing a population boom, with suburban Dallas emerging as the fastest-growing city in 2024. 

Demographics are a long game, but investors cannot ignore the shorter-term moving trends that can unfold over a few short years—as was notably the case with the boom-and-bust fate of Austin during the past five years. Currently, people are moving South more than to other U.S. regions, but we need to be more specific here: Renters are moving not just anywhere in the South, but to attractive job hubs like Miami and Dallas. 

Bidding Activity Also Up

Rising investor confidence is reflected not just in percentages of positive sentiment but also in bidding activity, which is showing an uptick, especially in the multifamily sector, according to JLL’s Global Bid Intensity Index.

“As capital deployment accelerated during the third quarter, institutional investors are signaling increased confidence in the market, even as uncertainty persists,” said Richard Bloxam, CEO of capital markets at JLL, in a press release. “We expect business confidence will continue to improve and pave the way for continued capital flow growth into 2026.”

Get In on These Trends With Connect Invest

Want to make the most of multifamily real estate investing while mitigating some of those market uncertainties? When you invest with Connect Invest, you’re investing in high-yield, short-term investments across a diversified portfolio of residential and commercial real estate. That way, you can maximize the advantage from current market trends—without compromising your long-term portfolio health.

This article is presented by Connect Invest.

“Predictable” isn’t exactly the most exciting qualifier for a real estate market, but it’s the exact word that investors in the multifamily sector have been longing to hear for years. The era of huge market upheavals brought by the pandemic seems to be finally, truly over, with rent growth and supply-and-demand balance returning to pre-pandemic patterns. 

It can be difficult to accept, but the fact is that the 2% rent growth rate by 2027—a prediction from Yardi Matrix executives Jeff Adler and Paul Fiorilla—is in line with normal, pre-pandemic rates. In fact, this is what the real estate market should look like. Here’s why.

Why “Slow But Stable” Isn’t a Bad Thing

The double-digit growth rates of 2021 will not return again; these were a historical anomaly brought about by a singular convergence of factors, namely: 

• Pent-up demand from people who could not buy a home during lockdowns.
• An unprecedented housing shortage caused by people not selling, and a lack of building supplies disrupting new construction.
• Brand-new migration patterns creating housing hot spots.

None of these conditions were ever meant to last, but many investors understandably were building their business strategy around these anomalous market spikes. For a few years, an investment plan along the lines of “This metro area has the highest rental growth right now” could deliver impressive short-term results. 

What was wrong with this picture? Nothing, on the surface of it, in terms of aligning your strategy with market conditions. But there was another variable aside from rental growth fluctuations that began creating an imbalance: construction. 

Construction booms inevitably cooled red-hot markets, most notably Austin’s, which “went from red-hot to best avoided in the blink of an eye,” according to Bloomberg, as a direct result of its post-pandemic-era construction surge.

It seems like there’s nothing positive here, but there is. 

We know that new construction lowers the overall cost of housing across a metro area, including old inventory. This kick-starts a game of musical chairs of sorts: An overall fall in home prices means that some existing tenants will move out and become homeowners. Landlords sitting on empty units then often have to lower rents in order to fill vacancies, meaning that lower-income residents can move in. Theoretically, this can continue indefinitely. 

To succeed long term, an investor needs a very different landscape: Healthy, steady demand for rental units in areas where the overall ratio of homeowners to renters is unlikely to change dramatically any time soon. To put it simply, you want an area where people are comfortable enough renting and are, say, five to 10 years away from buying a home. This can change much faster in boom-and-bust areas, where a surplus of new construction suddenly makes homes more affordable and increases vacancies at an unusual rate.

Now that construction and demand are coming into alignment, as per the Yardi report, investors can focus on refining more traditional-looking business plans and investing in areas with stable, predictable renter population movements rather than in migratory spikes. You might only be looking at 2% rent growth for the foreseeable future, but you’re also not looking at having to deal with unexpected multiunit vacancies. 

What Investors Need to Think About in 2026 and Beyond

According to the Yardi report, as markets return to normal, investors will need to adjust their strategy. What that looks like in practice is an emphasis on cost control in existing markets, as opposed to scouting out new ones. 

The biggest challenge investors will face is shrinking margins amid high operational costs, especially insurance. Testing prospective investment locations for stable occupancy rates will be paramount. According to CRE, “Household formation, while soft in the near term, is expected to rebound mid-decade, offering a firmer demand base just as new inventory comes online.” 

The questions will be: Where do these newly formed households want to stay until (and if) they are in a position to buy? Where do families renew their leases consistently, instead of passing through and moving on? 

In many ways, investors will have to go back to the strategy drawing board, performing meticulous research into each potential lead and assuming that margins will be very tight. 

Another Investment Option

Don’t want to deal with all that? You have other options. For example, you can invest in real estate short notes with Connect Invest. Essentially, you’ll be investing in a diversified portfolio of real estate at every stage of construction: no need to worry about picking the right metro area! 

What’s even better is you can lock in at 7.5%-9% interest earned on your investment, with a minimum investment amount of as little as $500. 

You can invest for a period of six, 12, or 24 months, which mitigates the risk from that ever-present potential of market shifts. It’s a great way to dip your toes in the water and find out if real estate investing can work for you without having to do all that work yourself.

Dave:
You’re probably ignoring the single most important part of your investing strategy. It’s fun to talk about door count and markets and strategies, but what are your goals? Why are you putting your time and money into real estate in the first place? If you can’t answer that question with a clear vision of where you want to go, nothing else really matters. So today I’m going to help you set your financial goals for 2026 so you can find better deals, see better returns, and accelerate your path to financial freedom. Hey everyone. Welcome to the BiggerPockets podcast. I’m Dave Meyer. Thank you all so much for being here. I want to ask you all a question to start this episode, and I want you to be honest. How many of you actually have a specific financial goal? I’m not just talking about, oh, I want to be financial free.
I’m talking specifically like I want $10,000 a month in cashflow by 2035. How many of you have that level of goal? I think if we’re all being honest with each other, it’s like basically none of us, maybe 2% of you have actually gone out and done this, and that’s okay. It took me probably eight years of investing in real estate and being really into personal finance before I figured out that I really mattered whether or not I had a financial goal, and that might be okay at the beginning of your investing career to be perfectly honest. But if you want to build a portfolio of low risk, high upside investments over a sustained period of time, you need to have a plan. You need to have a strategy, and in order to have that, you need to have good goals. So today what we’re going to do is talk about goal setting and how to do it the right way.
I’m going to break this down into three really actionable parts and you all should just follow along. I’m actually going to break out the whiteboard and show you some really simple tools like actual things that you could do either as you’re listening or later today when you go home, go and actually do this so that you have these financial goals, especially as we head into a new year, you can have these specific goals and build a plan backwards from those goals. The three parts we’re going to go over are first the long-term goal, and this is the most important. We’re going to spend most of our time here figuring out why you’re doing this in the first place. Where do you want to be 10 years from now, 15 years, 20 years? I know everyone has this vague notion of being wealthier or having more time.
That’s not good enough. What you need is a specific goal, and I’m going to help you get that today. The second part is defining a one year goal because once you’ve figured out the long-term vision, then you need to sort of back into more achievable, more actionable things that you could do in the next year. And then part three is a three year vision, so we’re going to do long-term big picture, then one year, then three years, and as you’ll see, even though very few people have actually done this, it’s really not hard. By the end of this podcast episode, you’re going to have these three numbers and I promise you it will help you a ton as you formulate your strategy as an investor. So let’s get into it. First up, we’re going to be talking about our long-term financial goals, and there’s basically two different questions that I want you all to answer by the end of this section here.
Number one, how much money do you want? And number two, this is the one that people miss is when do you want it? Bach? The key to doing this the right way is finding something that is tough. You want to be a little bit uncomfortable. You don’t want to be, oh, for sure I’m going to be able to hit that number, but you want to feel like if I execute my plan well, if I’m diligent, if I work hard, I’m going to be able to hit that number. That’s sort of the magic balance that you’re looking for here. So these are the first concepts. The first question is how much do you want to have? And the second question that we want to answer here is how long, right? Those were the two things I said. So let’s start with how much. There’s different ways that people can answer this.
You could answer this through net worth. You can answer it through cashflow through your portfolio. For me, the way that I think about it is the after tax money that I need to support my lifestyle. So I recommend that people think about it this way after tax income because all of us are going to be taxed differently. Real estate has a lot of tax advantages, so if you’re using real estate for a lot of your income, you might not need to earn as much as you would in a normal job because you’re going to have those tax advantages, which is why I prefer this after tax income thought. Now, for those of you who don’t have a budget or don’t really understand what you’re spending is right now, that’s probably a good place to start. I would recommend you have a budget or go onto your banking app.
It doesn’t need to be super complicated. Most people, if you have online banking, go and look at your online banking and figure out what your average spend is per month, and this is a great place to start when you’re figuring out what you want your income to be, and I want to be clear that you can’t just make this number up. You could, but I don’t recommend it. It would be easy to just say again, I want $30,000 a month in after tax income. That’s a ton of money, and maybe you do aspire to that, and if you’ve thought about this hard and come up to that number, that is okay, but there is risk in overshooting here because if you say 30,000 and all you need is 20,000, that means you might work in a job or build your portfolio longer than you actually need to.
We want to find the balance of getting what we want out of our lifestyle and making the most time for ourselves. And so if you are working unnecessarily to achieve an income that you don’t actually need, that kind of goes against the purpose. And so I really recommend just starting rooted in what you’re actually doing today. Now, I expect for some people who are listening and watching the podcast right now, they might be okay with their current income. If you are established, you like your lifestyle, that’s really all you have to do is figure out your budget and average spend. If you’re comfortable staying at this level, if you are not and you want to expand your lifestyle in some way, I would just say try and be specific about that. So if your budget right now is $5,000 a month, I wouldn’t just randomly say $10,000.
I would just spend 20 minutes thinking about the things that you would want that you don’t have now, and how much more that costs. It’s really not that hard. I actually have as part of my book start with strategy. There’s a Excel file that goes through this and that actually helps you calculate these numbers. So you can do that or you could just do it on a piece of paper. Honestly, it’s not that hard. So I’m going to assume that our budget and what we want is $7,500 per month, but there is one more advanced move that we need to do, right? We want $7,500 a month in today’s dollars, and I know this is going to get a little bit nerdy, but this is I think truly the number one mistake people make in setting their financial goals is not accounting for inflation. This is a big picture stat, but the value of your dollar on average gets cut in half every 30 years.
Just think about that for a second. So if you are near my age, I’m 38 years old, I probably will be retired at 68, hopefully in 30 years, if I was making $10,000 a month, it would be the equivalent of having $5,000 a month today. Now, this is a big problem that a lot of people face in retirement, and I don’t want all of you to face that problem, so I want you to adjust upward. Your goal to account for inflation. For us in our example here that we’re following along with our goal is going to be $10,000 per month. We’re going to adjust up for inflation from 7,500 because we want to make sure that our spending power stays at that $7,500 level well into the future, and in the future, you’re likely to need at least $10,000 to be able to do that.
I’m not doing this in a very precise way. I’m doing $10,000 because that’s a nice round number, but adjust upward your goal to account for inflation. That’s the main thing here. So that’s step one in figuring out how much you need is what actually you need to fund your lifestyle. Step two is going to come where we figure out what our equity goal is in our real estate. So we need a real estate equity goal because even though the way that you’re going to replace your income long-term is through cashflow, I personally believe that it’s easier to think about this by thinking about how much equity you actually need. Now, I’m not one of those people who think cashflow is important. I only buy deals that cashflow, but I am not focused on cashflow early in my career because what I believe and what I know based on all of the analysis I do is that the best way to have cashflow later in your investing career is to have a lot of equity.
Once you have equity, once you have money, cashflow is super easy. So I’m going to extrapolate our goal out from we had $10,000 a month, but for this calculation, we need to do annual. So what I’m going to do is say that we want $120,000 per year in cashflow, and then the next thing I need to look at is what cash on cash return do I realistically believe that I can get 20 years from now? And I know that’s hard to project, but it’s going to be somewhere between five and 8%. I’ll tell you that that’s the number you should be picking. I like 6%. I think we’ll be able to do better than 5%, eight percent’s a little bit higher. This is not deals that you’ve held onto for a long time saying you can go out and buy off the MLS. You can buy an apartment building and get this number.
This is equivalent to what anyone who’s familiar with commercial real estate would call a cap rate. And so I believe 20 years from now, I’m still going to be able to buy six caps and that’s a 6% cash on cash return. So all I’m going to do is divide my annual goal of 120,000 by a 6% cash on cash return. And what I know from that is that I will need $2 million in equity to be sure pretty much a hundred percent sure that I could get the cashflow I need at the end of the day. So for me, this becomes my goal as a real estate investor. I’m sitting here in 2025 thinking, how do I get $2 million in equity by the time I want to retire? This is obviously just one example. If you said you wanted, I don’t know, $150,000 a year in income, but you’re a little bit more conservative and you think that you could only get a 5% cash on cash return, then you’re going to need $3 million for example in equity.
Or if you only need a hundred thousand dollars and you’re more confident that you’re going to be able to get an 8% cash on cash return, what does that come out to be? That’s $1.25 million. Whatever these numbers are for you, this is the financial goal I want you all to come up with. How much equity does your portfolio need to be worth? I’m not saying the value of your properties. That is not what I’m saying. It’s the equity you actually own in those properties. That’s what you need to be calculating. So if it’s $2 million, $3 million, $1 million doesn’t matter, figure this out for yourself. Okay, so now we have answered question number one. Remember we started by saying how much do you need and how long? We now know how much we’re going to use $2 million as our example, and we’re going to get to how long now, which is what we call your time horizon, and this is super important thing that not a lot of people think about, but your time horizon is really going to dictate your investing strategy. I’m going to explain that more right after this quick break. This week’s bigger news is brought to you by the Fundrise Flagship Fund, invest in private market real estate with the Fundrise Flagship fund. Check out fundrise.com/pockets to learn more.
Welcome back to the BiggerPockets podcast. I’m Dave Meyer going through how to set good quality financial goals that will help you formulate a great investing strategy heading into 2026 and honestly for the rest of your investing career. Before the break, we talked about just needing to know how much you want and I recommend thinking about that in terms of equity. There’s a couple of steps to that. As a reminder, figure out the after tax income that you want. Adjust it for inflation, divide it by the cap rate you think you can get, and that’s going to get you that equity number that you want. We’re going to be using $2 million as an example. Now the question then becomes how long, and this one is a little bit more of an art than a science because most people will just say ASAP, right? You want to be retired in three years or five years or seven years, and for some people that might be realistic if you were just trying to replace your income without any additional lifestyle enhancements, I would say that the average there is eight to 12 years, you could probably replace your income assuming that you have enough capital to buy your first property today.
So I think a lot of people are in that situation, so eight to 12 years could be a good timeframe. That’s for doing pretty plain vanilla kinds of deals. If you’re willing to be a little more active, maybe take on a little bit more risk, which we’re going to talk about in a little bit. You can speed up that timeline, but for most people, I think we’re going to be talking about something around 8, 10, 15 years and they might feel like a long time, but I have been doing this for 15 years and I promise you it is really not that bad and it is so worth it. Taking 15 years to achieve financial freedom is amazing. I am sorry that people on the internet lie and say that they do this in three to five years. Maybe some of them do, but I promise you the average person, it takes 10 to 15 years unless you want to take on a lot of risk or you’re pouring 60 hours a week into this business, 10 to 15 years, totally doable.
You could probably do it in eight to seven if you’re going to be even a little bit active in your portfolio. So just think about that for yourself, where you’re starting out and where you want to get to. I’m going to just assume for the purposes of our example that we’re going to start with, let’s call it $75,000 in savings that we can invest today and that we want to retire within 15 years. Now, I understand that some people want to do it faster, and that is definitely possible, and this is the time to dictate that. If you want to go faster, you need one of a few things to happen. One, you need to be starting with a lot of money. I know that sounds really silly, but it’s true. If you have a million dollars, you’re probably going to be able to do it pretty fast.
That’s a lot of money to start with. The second thing you could do is try and increase your income. I did this by deciding to go to state school and go back to college for a master’s degree and try and increase my income to accelerate my financial freedom through real estate by making more in my day job. Some people might want to do that. The third option is to do it through real estate. And I know this is a very common question on here, but it’s not required. But if you think that you could go and flip houses and make a ton of money, that might be something to consider. If you think you can wholesale in addition to your job or you can wholesale and make more money than you do today, also a decent option. If you think that you would be a great real estate agent and would be able to make more money than your current job, that’s another way that you can do it too.
And then the fourth option is to do value add real estate investing. And so that would be, I think for the majority of people listening to this podcast, probably doing something like the Burr method because that’s going to allow you to invest in relatively safe rental properties but also build equity at the same time. And so just think about which, if any of those things you want to do, if you don’t want to do renovations, you don’t want to change your job and you’re kind of just want to coast, that’s totally fine, but it’s going to take you probably 10 to 15 years if you want to shorten that to let’s call it seven to 10 years. Think about which of those things you can realistically do. Can you get more income or are you willing to put in the time and effort into doing things like the bur method to grow your equity faster?
For the purposes of our example, I’m going to say that we have $75,000 to invest today and that we’re going to shoot for, let’s call it a 12 year time horizon. So that’s what we got. That is step one of our long-term goal. That’s all it takes. I’m blabbing about and explaining this, and we did this in like 15 minutes so you can do this in your own time. Take 10, 15, 20 minutes and figure this out. We know now that our goal as a real estate investor, the thing we need to be focusing on when we set our tactics, when we pick what deals to do, what markets to invest in, our goal is to have $2 million in equity in 12 years. That’s the goal that you need to set, and if you have this, I promise you, everything is going to get so much easier.
It sounds so simple and it is, but everything will get easier if you start to think about your portfolio in this way. Now, before we move on to the one year goal, which we’re going to do in a minute, just do a gut check and make sure that this sounds reasonable. If you want to do the math, you could do that. I would recommend that, but if your goal is like, I need $5 million in five years and I’m starting with 50 grand, I’m sorry, that’s just not going to work. If you are a rental property investor, you can expect your money to compound at somewhere between 10 and 25% depending on how involved you want to be. If you’re just buying regular deals, 10% is probably 12% is probably where you’re going to be. If you’re going to do the burr, you could probably do 20, 25, maybe 30%, and so think about that and see if you’re within that realm of possibility.
If your goal is way bigger and you’re going to need to compound at 50 or 60 or 70%, honestly, you can do that, but you’re going to have to flip houses. It’s the only way you can earn those kinds of returns in real estate and that comes with risk and a lot of time that doesn’t make it wrong, but that’s how you’re going to have to do that. So think to yourself, is it worth it to me to do flipping and take on more risk and commit more time, or should I just back out my goal a couple of years and take on less risky, less time intensive kinds of strategies? That’s totally up to you, but just think about that before we move on to our one year goal. So that’s step one of your financial goal, and then we’re going to move on to our one year goal because obviously having that 12 year vision isn’t good enough.
You need to start now backing into what you have to achieve this year to make sure that you’re on track for year two, for year three through year four and so on. The place that you need to start for your one year goal is by doing something what I would call a resource audit, and this sounds fancy and corporate, but it’s not. It’s just a question of how much time do you have to commit to real estate in the coming year and how much money? Everything comes down to these two questions. Our first year goal was what amount do you want in what timeframe? Our one year goal is going to come down to those same sort of variables that we’re dealing with. Now, we already answered the question for our example, which is $75,000, but for all of you out there, I really, really encourage you if you haven’t done this yet, think about what are your investible assets right now, right?
Investible assets are not your total net worth. It’s how much money you can responsibly put into real estate today. So let’s just use an example and say you have $50,000 saved up. You shouldn’t invest all of that. You can’t invest all of that because budgeting experts say you need three to six months of emergency funds to weather a storm. We’re going into a difficult economic period I believe, and so you probably want six months of emergency funds, and if you have kids, that might be even longer. That’s up to you, but you need to set aside some money. So it’s not just the number in your bank account, that’s not your investible assets. What you need to figure out is how much money you can responsibly put into real estate. So figure that out for yourself. But for our example here today, we’re going to use $75,000 as an example.
Now, time is another really important variable here because again, if I wanted to grow as quickly as possible, I would flip houses. That is the best way to earn a lot of money quickly in real estate, but I don’t have that time and in the example that we’re going to use is going to say we don’t have that time. We though are willing to put in, let’s call it 10 hours per week for real estate to me, 10 hours a week, you’re going to be able to do a lot in real estate investing. You’re going to be able to find great deals, you’re going to be able to do value add, you’re going to be able to to do a lot of things that you might want to do to maximize the early years of your investing or whatever the next years of your investing if you put in 10 hours a week.
And so figure that out. Honestly, for yourself though, if you don’t have 10 hours a week, be honest about that because if you buy a deal that requires 10 hours a week of a commitment and you only have five, you’re not going to operate that deal. Well, and this is exactly why you have to go through this process because I see so many investors going out there and just buying whatever deal. They buy a short-term rental and they don’t have a lot of time to furnish it, and then it just winds up being kind of a crappy short-term rental and it doesn’t perform, and then what’s the point of doing that in the first place? So be honest with yourself about how much time you’re going to be able to commit because that’s how we’re going to pick what deals that you should be doing in the next couple of years.
So for me, if I’m trying to take a medium aggressive approach, which is what I recommend to most people, is like you don’t need to be really passive and really conservative. You don’t need to be super aggressive, but if you want to do things like a burr or cosmetic rehabs on rental properties, those are fantastic ways to pursue financial independence. If you have 10 hours a week, you’re going to be able to do that. So think about this for yourself once you have an answer to that. I think sort of paths kind of start to diverge here because what your answers are are going to really depend on what you’re going to do in 2026. So I’m going to draw up actually a little quadrant here about the two different variables that we’re talking about. So on one axis, if you’re listening on the podcast, I’m drawing a quadrant on the horizontal axis.
I’m drawing time and on the vertical axis, money and where you fall in which quadrant, which box you fall in is going to really dictate what you should be doing in your first year. So if you’re low on time, but you have lots of money, so you’re in this first quadrant here, what I would invest in here is I would think about rental properties. You don’t have a lot of time. You’re not going to be able to flip. So I would think about rental properties low leverage because you have money and so you’re not going to need to put five or 10% down. So I’d say put 25% down and then if you have time, I do cosmetic rehabs because you’re not going to have time to do a big rehab because again, you’re falling into this low time bucket. That’s what I would look for if you’re just asking me and you fall into this bucket, you have money to invest.
Not a lot of time buy rental properties, put 25% down, do a cosmetic rehab, don’t that hard about it. This is going to work. Next quadrant that you go into is a lot of time and a lot of money. This is obviously a good place to be in, but what I would do is heavy into burrs If I had both time and money, that makes a lot of sense to me because that’s going to grow my equity as quickly as possible. But if I did a heavy burr or a heavy value at Burr, that is going to take up a lot of time. But if you have time and money, I would go heavy into these bur the next one is high on time and low on money. The things that I would look to do are things like potentially wholesaling. I don’t have a lot of experience in that, but if you wanted to, this is a good way to make money.
I would try and partner on flips and see if you can use sweat equity or I know this is going to be controversial, make more money. I know that sounds silly, but if you don’t have a lot of money, but you have a lot of time, go make more money. Whether that’s doing a side hustle, investing in your education so you can increase your income, becoming an agent on the side, I don’t know, but if you can make more money with that extra time that you have, that’s probably going to be the best way to help your investing career at this point. So think about that. Then we go into the last bucket, which is low money and low time. This is a tough place to be, right? If you don’t have time and you don’t have money, real estate investing is going to be very difficult for you, and I just want to be clear about that.
I know there are tons of people on the internet who like to say, you can get into this industry with no time, no money. I’m sorry, but that is not true or it is very, very rare and I don’t want to discourage you. If you fall into this bucket, you can get from where you are today to becoming a real estate investor, but making a real estate investment is probably not the next step in your journey. What you need to focus on is one, either freeing up time so that you can do those other things I just talked about or earning more money, spending time, saving money. You can still educate yourself as an investor. You can save money and then invest maybe in a year or two. Your goal is to get your foot in the door, and so if you’re in that fourth quadrant, figure out a way your year one goal is find a way to get your foot in the door, and when we get to our three year goal in a little bit, you’re going to be able to have a little bit more exciting goal.
Don’t worry about that, but year one is going to be just getting your foot in the door if you’re in these other quadrants. The way I would think about it is try and figure out one, how many deals you can realistically do and at what point, so if you’re in quadrant one, you’re doing these rental properties with low leverage, putting 25% down for cosmetic jobs, I would say maybe you could do one of those, right? Is a realistic goal. One deal at I’m going to target a 15% annualized return. I do deals like that all the time. If I don’t have a lot of time right now and I find a decent deal, 15% annualized return, that’s fantastic. The stock market averages to 9%. It’s having a good year this year, but eight to 9%. If I can make 15% on a low effort deal, I’m pretty happy about that.
That’s just an example. That would be one goal. I would say if you’re going to do burrs, I would say maybe try and do two deals and try and get maybe a 40% annualized return because you’re going to be able to hopefully do a burr. Maybe you do two of them. They take six months each. Maybe they take nine months each. So let’s just say you get into two deals at an annualized rate. You might not realize all of that in one year, but just say an annualized rate of 40%, or if I’m wholesaling and I’m in this third quadrant, remember that one is with low money, but high time, I would try and figure out how much more money you can make, how much can you save would be my year one goal. Not necessarily how many deals I can do, but if I’m in quadrant three and I have 20 grand, my goal would be something like $50,000 to invest next year.
I know that doesn’t sound as exciting as going out and buying a deal, but I promise you if you save 50 grand next year, you’re going to be able to do a great deal and it’s going to accelerate your career probably faster than it is then trying to get a little piece of a random deal or doing a really risky flip. That’s my honest advice. That’s what I would do if I were in that situation. Now, going back to our example of having $75,000 to invest and 10 hours a week, I’m going for the burr. That’s what I would personally try and do, and so my one year goal would be two burrs, and then on my first bur, I think I’ll only be able to sell that first one or refinance that first one in the year. Maybe I’ll do my start my second one within one year, but realistically at 10 hours a week, I can only do one at a time, so I’m going to think about that’s probably a nine month project, and I’m going to say I want to earn at least 40% on that deal.
I want a 40% annualized return on that first deal. That’s huge. 40% is awesome. That actually would come out to, for $75,000, that’s a $30,000 return, so already in year one, we’ve gone from $75,000 in equity that we need. We’re trying to get to 2 million and we’ve already gone up to 105,000. That may not sound like a lot, but if you’re able to do that, I promise you, you are going to be able to hit your goal and I will do the math for that when we come back from this quick break. Stick with us.
Welcome back to the BiggerPockets podcast. Now that we’ve done our long-term goal and our year one goal, let’s just extrapolate this out because you can basically do the strategies that I just said well into the future, and I know like I said, you’re going from 75,000 to 105,000 in your first year. I hope that sounds like a lot. That’s an amazing return. If you’re making a 40% return, you should be super happy, but I just want to extrapolate this out a little bit because there’s this kind of magical thing in math called the rule of 72, and this says that if you take the number 72 and you divide it by your rate of return that you’re earning, that’s how many years it will take your money to double. If you take the number 72, you’re earning on average an annualized return of 10%, it’s going to take you 7.2 years to double your money.
Now, if you’re doing the burr or cosmetic rehabs, which is what I think the majority of our audience should be doing, I think hitting 24% annualized returns is very practical. It’s not going to take so much time. You’re going to still need to be able to put in some work, find great deals, but if you can get, let’s just round it to a 30% annualized return, that’s going to take work, right? You’re going to need to do cosmetic rehabs. You’re going to need to do burrs to earn at 30%. You can’t just go buy a regular rental property and 30%, but I’m just going to show you this is what I would do if I was starting with $75,000. I would just try and target this 30% annualized return every single year because I’m starting in year zero with 75,000. Then in year three, we’d have 150 k.
In year six, we’d have 300 k. In year nine, we’d have 600 k. See how this thing starts to compound, and then in year 12, we’d have 1.2 million, and then in year 15 we’d have 2.4 million. So this is actually a really good example. I set our goal arbitrarily earlier. I was just coming up with this example as we go, and what I came up with is I said, I wanted $2 million in 12 years. Well, now I’m looking at this and I’m thinking that’s probably a little unrealistic In 12 years, even if I earned a 30% return, which is good, I would be at just $1.2 million in equity. That’s still a great place to be, but it looks like my time horizon is going to be closer to 14 to 15 years. That’s still awesome, right? I’m talking about being able to replace my income and earn $120,000 in after tax income.
That’s just 10 grand to spend every single month in 14 to years. I’m just starting with 75 grand, which takes time to build up, but it’s not like you’re starting with a millionaire’s amount of money and I’m only putting in 10 hours per week into these deals. If you want to accelerate this, you can find ways to make more money and put more investible assets, save more money. Remember this, what I’m doing right here, 14 to 15 years assumes I put no new money into my investments. I’m taking the 70 5K, and I’m just extrapolating that, but for most people, you’re going to be able to save money every month, put more money back in, that’s going to help you get to 12 to 15 years, but that’s what I want you to do at the end of this exercise is to be able to say, yeah, I gut GutCheck this and I think that this is reasonable for me.
I would say now at the end of this exercise, my long-term goal is $2 million. I’m actually going to say still in 12 years, because I said 14 to 15 years would take it with no new money into it, but I think I’m going to be able to add some new money into it, so I actually do think 12 years is realistic. That is my long-term goal. My one year goal is going to be I’m going to round to a hundred K in equity and my three year goal, remember, I think that I want my money to double in three years. My three year goal is going to be $300,000. That’s my example. This is what I want all of you to get to know these three numbers for yourself, because once you do, you can already start to figure out what deals you should be doing, right?
If these are my goals, I know that I can’t just go buy on-market MLS deals. I am not going to be flipping. I probably don’t want to do short-term rentals because although they can offer more cashflow, my goal is building equity. I know that my goal is building equity, and so that allows me to hone in on projects where I can do a burr or a cosmetic rehab, see how this is already helping me set my strategy just by knowing these numbers. There’s so many great ways to make money in real estate, but I know my goals. I know I’m going to do burrs and cosmetic rehabs, and I’m going to look for a market where I can do that for my 70 5K because I have enough money to get into a deal, and so I’m specifically going to look for markets where I can put in $75,000.
For me, that’s probably going to be somewhere in the Midwest or southeast. If I put 25% down, I’m probably going to target a deal that is like $250,000 with a $50,000 rehab. That is something you can go out and achieve today. So I’ve basically backed into my buy box for next year. I know that if I want to hit my goal, I’m going to look in the Midwest for a burr cosmetic deal that is in the 200 to $250,000 range with a $50,000 cosmetic rehab. That’s amazing. So many people spend so much time trying to figure out what their buy box is, all these different strategies. I’m coming up with this example in real time just using these numbers that I’m making up. I already was able to figure out my buy box just by backing into where I want to be 20 years from now, and this is why I say that knowing these financial goals is the number one key thing that investors need to do that most of them miss.
Spend 30 minutes right now figuring out what these numbers are for yourself, and I promise you, your plan for the rest of 2025 and 2026 and the rest of your investing career is going to become so much easier. Now, I think in this podcast episode, I’ve given you enough to be able to do this, but if you like this concept and you really want to get a crystal clear vision of where you want to go in your investing career, I’m going to be a little bit of a pusher and recommend my book Start With Strategy. Literally, the whole book is kind of about this idea that if you set your long-term goals, well, you can back into the right strategy. So if you want to go deep on this, you can check out my book on BiggerPockets. It’s called Start With Strategy. It’s also on Amazon, but hopefully this has been enough for you to just do this by yourself.
The book is just for people who want to go a little bit deeper. That’s what we got for you guys today. If you have questions about this, please let me know, or if you want to hear more content about this kind of stuff, we always talk about tactics and strategy, but I think this stuff is so important, which is why I wanted to do this episode today. If you want more content like this, please let us know in the comments or hit me up on Instagram where I’m at, the data deli. Thank you all so much for listening to this episode of the BiggerPockets podcast. I’m Dave Meyer. I’ll see you next time.

Ashley:
Let’s be honest. Figuring out how to partner with a contractor, navigating tenant leases or scaling a short-term rental portfolio isn’t something you learn from a textbook.

Tony:
I mean, these are real life curve balls that rookie investors are facing right now. And today we’re answering three questions straight from the BiggerPockets form to help you avoid these common pitfalls.

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

Tony:
And I’m Tony j Robinson. And with that, let’s get into today’s first question. Alright, so question one comes from Steve in the BiggerPockets forms and Steve says, I found a partner that I like to start flipping houses with. He’s very well qualified and he actually reached out to me to partner up. Our goal is the same started flipping business. He used to own his own contracting business for six years and is now the onsite manager of a construction company that built apartments and subdivisions. I’m bringing the capital, he’s doing some of the labor himself and charging me nothing for labor, anything he can’t do, he will charge me book cost for a specialist labor and cost for materials. He offered me a 70 30 partnership. I figured instead of a private loan, 70% sounded pretty appealing. I’ll also get to help out and learn some trades with him.
My main concern is he doesn’t have enough cash now to have any skin in the game or cover any upfront fees. I asked if he’d give me a personal guarantee on a private asset around 10 K. He said he doesn’t own anything outright that’s worth 10 k. Does anyone have protection recommendation? So I can sleep a little easier. I’m getting cold feet since I’ll have the skin in the game Financially, if something goes south on the flip and he doesn’t have enough to pay me back or we lose the money, how will he pay me? Alright, this is a great question. I think first Ashton might be beneficial just to discuss the different types of partnerships. So there’s a debt partnership and then there’s an equity partnership. Steve, for you, it sounds like what you guys are pursuing is an equity partnership. If you really want to make sure that you are protecting yourself, then maybe a better scenario here is for you just to be this person’s private money lender where you give them a loan and with that loan now you get a lien against the property.
You get a promissory note that outlines how much he’s supposed to pay you back, and if for whatever reason he doesn’t repay you, well now you’ve got a means to go after the property and try and recoup some of what was invested. That is the way that a debt partnership works. The equity partnership on the other hand is like you guys going into this deal together. So there really isn’t, I mean, and again, you can set up the partnership in a way that you want, but typically in an equity partnership, you guys are sharing in both the upside potential of that deal and the downside potential of that deal. So if things do go sideways, there is no, he’s paying me back, Hey, I brought in the capital, he’s bringing in his time and this is kind of the risks that we’re taking is that, hey, maybe he doesn’t finish, or maybe this does go wrong. So I think in an equity partnership you get more of the upside, but part of what you’re accepting is that downside risk as well.

Ashley:
I think one of the things that I noticed at the end of the question as to he’s asking if he can have a lien on some personal property that the contractor has or how will he make sure that he’s paid back if the flip goes south? And that’s one really important thing about being an equity partner is they have no obligation to pay you back just because they’re the other partner in the deal. You are partners on this. If it goes south, you guys eat the loss. Your partner has no liability to have to pay you back for what went south on the deal. So I agree with Tony, maybe being a debt partner is actually better for you or you could do both. My very first deal, I had a partner who was an equity partner and the debt partner, so he actually got monthly payments every month, five and a half percent he was making on his money and he was also 50% owner of the property.
Now this was a very good deal for him. I probably wouldn’t recommend doing that for your first deal. It’s like giving up that much equity, but also you’re on the side that my partner was where you’re getting all of these benefits. So maybe instead of 70 30, you actually do the 50 and then you are making five and a half percent interest and you get monthly payments to yourself or you wait until the end of the deal and actually pay yourself interest or pay yourself off at the end of the deal. So when you sell the flip, your balance is repaid to you, the capital is repaid to you, then maybe you’re even if it’s a small amount of 3% interest or something like that. So I think be very confident in the difference between the responsibility of being a debt partner compared to being an equity partner.
But I think in this scenario that you have the opportunity to be both. So you could put the lien on the property as the debt partner so that when the property goes to sell, you are getting paid first before you and your partner get a capital distribution from any profit that is paid out. So I would try this way out for your first deal together and then maybe if it goes well and down the line you can just say, you know what? I don’t need to do the debt partnership part. Let’s just do full on equity.

Tony:
Yeah, I think, yeah, you bring up a really good point Ash, and again, it goes back to what we say often is that there’s no right or wrong way to structure a partnership. It’s really more about what the two of you feel most comfortable with. But I think that maybe one of the questions that you guys should answer amongst yourselves is, well, what happens if your contracting partner doesn’t fulfill his duties? What happens if he misses a lot of, or maybe just isn’t showing up to the job site or the work that he promised to do isn’t being done? What then can you do as a money partner to kind of course correct this deal? And maybe it’s like, hey, if you miss deadline by X number of weeks or certain milestones aren’t met within a certain timeframe, then maybe you as the person who brought the capital, has the ability to swap him out with someone else, or maybe he loses his 30% equity in that deal and now there’s something else.
So it feels like maybe there’s some solutions here, but honestly, I feel like the best solution if you’ve already asked some question marks, is just to be a straight up debt partner That’ll simplify this in a way that I think allows you to sleep a little bit easier at night. You get more of a guaranteed return because there’s that note there and you don’t necessarily have to worry about like, Hey, what happens if the deal doesn’t go according to plan? Because if it doesn’t, you’re still obligated to get that return. Now, will you actually get it is a different story, but at least you have that obligation there that he’s supposed to pay you back.

Ashley:
We’re going to take a short break, but when we’re going to come back, we’re going to go over a scenario where someone’s purchasing a duplex that has a tenant in place, but they also want to live in the property. We’ll be right back. Okay, welcome back. Our next question is from Isaiah in the BiggerPockets forums, I’m planning to make an offer on a duplex listed around 455,000 here in Raleigh. I’m planning to live in one unit and rent out the other. So owner occupancy is a must for my FHA loan. One side is vacant. The only wrinkle is that the tenant on the other side has a lease that runs until July, 2026, about eight months from now. My goal is to have vacant possession at closing or as soon as reasonably possible after without putting pressure on the tenant or making the seller’s life difficult for those who’ve been in similar situations.
What’s the best way to structure this in the offer? So it’s fair for everyone, seller, tenant and myself. Should I ask for the seller to provide notice to the tenant right after due diligence ends request delayed possession until lease end and possibly negotiate a rent credit, reduced purchase price to offset holding costs include a vacant possession clause contingent upon lease termination before closing. Any examples of how you worded this in your own offers or leases would really help? My goal is to keep this deal smooth and respectful, but still align with the FHA owner occupancy rules. From what I’ve learned on the BP podcast, inheriting tenants can sometimes be more trouble than it’s worth because they’re used to the previous owner’s way of doing things. I want to make this transition as smooth as possible and avoid stepping in as the bad guy trying to change rules or expectations. So one thing I want to clarify here, Tony, and tell me if you understood it the same way. Is he thinking that he needs to have the whole property vacant upon possession or he just wants to have it?

Tony:
Yeah, my understanding is that he just wants to have a clean slate when he steps in because one side is already vacant for him to move into. But yeah, it sounds at the bottom down there, right? From what I’ve learned, inheriting tenants can sometimes be more trouble than what it’s worth. I want to make this transition as smooth as possible and avoid stepping in as a bad guy. So it sounds like he’s just got maybe some fear and hesitation around inheriting tenants and just wants a clean break.

Ashley:
Yeah, he said my goal is to keep this deal smooth and respectful, but still align with the FHA owner occupancy rules. So just to be clear, if anyone did think that you can have one unit rented out, you just need to have at least one unit for you to live in. So this property as is does comply with FHA rules. You don’t need to have the whole thing vacant for you to move into when you close on the property. So inheriting tenants, I’ve had the good and I’ve had the bad. I’ve had one lady that I inherited and when I inherited her, she lived there for 30 years and it’s been eight years and she’s still living there. Wonderful, wonderful tenant. Also had people where we’ve evicted them within the first six months of taking over the property. So definitely is difficult because you aren’t the one that screened the person.
So you don’t have the background, you don’t know what their credit score was, you don’t know their background check, and you didn’t get to decide who’s moving in or you into the property. So I can understand where this person is coming from is wanting a clean slate. So when you are negotiating with the sellers on this, understand that, I don’t know North Carolina laws, but in there anything like New York, that’s very, very hard to get a tenant out for just because you want them to move out with no significant reason. So usually that’s nonpayment of rent or if the lease is up for renewal. But if they do have a lease in place, it’s very, very hard to get someone out. The thing that I could offer you to suggest is to do a cash for keys situation where you ask the sellers, you could ask them first if they would be willing to have the property vacant.
Maybe the sellers already know a way to make that happen by offering cash for keys or they know some way to get the tenant out of the property. You could put that in. If they say no, they’re not going to do that, then see if they would be willing to have you offer cash to the tenant to vacate before they move out of the property. So the only problem is with this is if I was the seller of the property, I would be very cautious of getting the property completely vacant because what if we don’t close on the property and now I’m stuck with a vacant building with no tenant in place and we didn’t close on the property. Now I have to start the whole sales process all over again. And who knows how long that could take? And now I’m sitting vacant. So also think about the seller side of things, but another thing you could do is just wait until you have ownership of the property and you could serve notice that you are going to terminate their lease at the end of their lease and it’s not up for renewal.
And again, this is dependent on state laws. I’m pretty sure California can’t even do that. You have to offer renewal unless it’s something crazy like you’re demoing the property or you’re moving a family member in something like that. So make sure you know your state laws, but worst case scenario, you put something in place so the day you take ownership, you’re working towards making sure they know that their lease is terminated at the end of the eight months. So step one, just ask the sellers, ask if they would be willing to have it vacant. The next step is to offer a cash for keys, see if they would be okay with that, that you offer cash for keys to the tenant that’s in the property to move out by the time you close on the property. And then third is have a plan in place for when you take ownership for when that lease does expire, that they are vacating the property.

Tony:
Ash, let me ask you a follow-up question. I think in my mind part of it comes down to how good of a deal this actually is. Because if you’re getting a really killer deal, even if this tenant doesn’t pay for eight months, if you plan to hold this thing for the next 5, 10, 15, 20, 30 years, eight months out of that timeframe is a relatively small percentage. So I guess the question that I want to ask you, Ash, is let’s say that maybe the current owner tells this new buyer, man, these tenants have been a real pain in the butt, actually hate being their landlord, but they complain about everything they pay on time, but they’re just hard to deal with. Would you, if it was a really killer deal, still buy that and knowing that it’s an eight month lease?

Ashley:
Yeah, I would because I also look at it as like, okay, here’s one of the other things he said was what if I do delayed possession where we wait for closing and then they’re getting a credit for holding costs or whatever during that time. But you as the buyer of the property, if they know this property is sold, but you’re taking delayed possession of the property until that person is moved out, are they going to care about the property? Are they going to, I’m buying a house right now where I saw it in the spring, we just went under contract. So this is almost six months later, the gutters are falling off. I was looking at pictures from the spring compared to how it looks now and just from it’s sitting for six months of them just knowing they’re going to sell the property and not really, they didn’t put it on the MLS, anything like that. It’s like I cannot believe how dilapidated it looks just for the six months from nobody living there, nobody taking care of it. That’s what I would worry about too, is that delayed possession as in they’re not going to take care of the property. And just as a seller too, I would just want to offload the property. There’s a reason I’m selling it and I don’t want to wait eight more months for the buyer to take possession of it too.

Tony:
Yeah, that’s true. My oldest son is a senior in high school right now, so we’re having a lot of talks about senioritis and it’s almost the same thing. It’s like when you can see the finish line is so close, you kind of take your foot off the gas. So yeah, I didn’t think about that from the seller’s perspective, but I mean, yeah, I think if it’s a good deal, Isaiah, I would say still move forward with it. Don’t let a good deal slip through your fingers because there’s a tenant there and you don’t even know how great of a tenant it is. And again, in a worst case scenario, maybe just underwrite, Hey, what happens if they didn’t pay for the next eight months or even the next 12 months? You’ve added some additional time to evict them if you need to, but if they didn’t pay for 12 months, what does this deal look like?
If I had to float this by myself, since it’s a house hack, there’s a chance that maybe whatever you’re paying for your new mortgage is the same that you’ve been paying in rent anyway. So I think that there’s maybe some other elements to consider about whether or not you should or should move forward with this deal. Let me ask, right, you did say that you had one tenant, you inherited, lived there for however many years, others that you wanted to evict on day one. Were there any maybe red flags during the closing your due diligence period that you maybe overlooked where now you’re like, okay, I know I’m always going to look for this to see if I get another bats in it?

Ashley:
Yeah, there actually was one, and it was actually a five unit before residential, and the first red flag was when we went to see the property, we couldn’t get into that unit the person was working. The next red flag was that while we were during the closing process and under contract, one person was already evicted from that property. Then the third red flag is in my final walkthrough inspection, the morning of closing, we still can’t get into that other unit. And my real estate agent said, yeah, you’re not getting into it. He’s not allowing access. The seller isn’t pushing it, you’re not getting into it. And it was that circumstance where it was a good enough deal that it didn’t matter. We had already baked into our numbers. We were rehabbing every single unit in there.
One thing too was we were under the impression it was a one bedroom, but it’s actually a studio, but it gets crazy amount in rent, so it wouldn’t matter, I guess. But they paid for a while and then they stopped paying and then we had to go through the whole eviction process with them. But I think the fact that they were giving trouble to get into the unit and that was another red flag, and then just the owner didn’t even really know that that wasn’t a one bedroom. So it was just all of those little things and somebody else in that property was already, this was pretty run down when we bought it. So I guess there was the red flags of this isn’t the greatest building to live in, so why would a really good quality tenant want to live here? I guess. So I think as long as you are setting yourself up for the expectation that you may need to clear house and get other people in there, or if you are not knowing the condition of units, making sure that you’re baking it into your numbers, that this could be a full rehab of that apartment too, not knowing the condition of it.
So there were those little red flags.

Tony:
So I mean, at least Isaiah, you know what to look out for and hopefully it still works out for you. And then we’ll bring you on to the podcast as a guest and you can talk about how great this story was. Or maybe we’ll bring you on as a guest. You can talk about how horrible it was and the advice we gave you was not great advice. So either way, it’ll make for a good story. Alright guys, we’ve got one question left and we’ll hit that right after A quick word from today’s show sponsors. But while we’re gone, if you’re not yet following us on YouTube, there is a real estate Ricky YouTube piano. You can find us at realestate Ricky. You can see mine and Ashley’s smiling faces, but you guys can be a part of the community on YouTube as well. So we’ll be right back after we’re from today’s show sponsors.
Alright guys, welcome back. We are here with our third and final question, another question from the BiggerPockets forums, and this one comes from Jacob. And Jacob says, is anyone successful in scaling a short-term rental portfolio? If yes, how many properties do you have? And are you still growing? Or is the current market too unfavorable? It seems that being so much more hands-on that they’re a little bit harder to scale. But I’m curious what people who actually built portfolios think. That’s a great question, Jacob. So 1000%, it is true that managing one single family short-term rental is going to take more time, effort, and energy than one single family long-term rental. With a long-term rental, you’re signing a lease for 12 months. To Ashley’s point on the last question, you might get someone who stays here for decades with a short-term rental, your average data ratio is probably between two to three to four days, depending on the size of the property in the market.
And you could have multiple people coming through on a monthly basis typically. So just that sheer increased volume of foot traffic through the property, the different personalities you’re dealing with, the expectations that people have when they’re booking a place for their vacation, it just in and of itself is going to require more work. Now I think that, and I don’t know if you saw this actually, she asked yesterday, but there’s a short-term rental company called Sonder. Have you heard of them? So Sonder is, to my understanding, probably the biggest company that operates and manages short-term rentals. They’ve got, I believe it was like 9,000 listings. Their model was more of an arbitrage model where they were leasing out nice apartment complexes in a lot of places, but they had like 9,000 units, but they just yesterday basically filed for bankruptcy. And they’re immediately ceasing operations.
And I think part of the reason that that happens is because it is a little bit more difficult to scale short-term rental operations than it is long-term rental. It’s part of the reason why companies like Evolve or Vac Casa have maybe seen their stock prices take a hit over the last couple of years because the quality of their listings decreases when you’ve got 30,000 listings that you’re managing. So when you talk about scale at that level, I think it is difficult now for most of the people listening to this podcast and we talk about scale, we’re not talking about 9,000 or 30,000 plus listings. We’re talking like five or 10, maybe 15 or 20, right? If you’re really, really crushing it. And I think that level of scale is very much doable, very much feasible if you set up the right tools, systems, and processes to support that. Is it more work? Yes. But is it possible? Absolutely. You just got to make sure you put the right pieces in place.

Ashley:
I think one thing that I’m noticing is that having these unique experiences and things like that really make you stand out that it is the people that have the blah, the standard Airbnb. And I was one of those people, I had two Airbnb arbitrages that were just boring apartments. They had cute bedding, cute furniture, cute decor on the walls, but you can’t add an amenity to an apartment. So I think that was what was really limiting and just they’re become so many Airbnbs that the markets have just become so saturated that you’d need something unique to stand out. And also, I am wondering too, and I have no data to back this up, this is all just my personal preference and maybe other people are feeling the same way. And that’s why some of these Airbnbs aren’t being successful. I would rather stay in a hotel.
I have decided I do not staying in an Airbnb. I like my room cleaned. I like in fresh sheets on my bed. I like to have a restaurant. I like the amenities. I like having a gym, all of these things that a hotel offers compared to an Airbnb. But if it’s something unique and we have our own sauna or have a big pond or it’s on a lake or things like that, then I’m all for it. Or maybe if you just have a huge family and you all want to stay together, but if it’s just me traveling or just me with my kids and it’s just like we’re already doing something, we just really need a place to sleep, 100%. I am picking the hotel or the Airbnb. I don’t want to have a checklist of things to do in the morning, take out the garbage. I don’t want ’em to bring my own toilet paper if they only supply one roll for two weeks. So maybe there is other people like me that this shift has happened also. But I just feel like also in a lot of markets, it’s not that big of a price difference. I felt like for a while Airbnbs were actually a better price than getting a hotel. But now when I compare and look going somewhere, it’s not really that big of a difference at all.

Tony:
Ash. I do think that’s why Airbnb is really, I dunno if you’ve seen some of their, they’ve been spending a lot on marketing and advertising lately, but one of their commercials, it’s like a group of girls who are sharing one hotel room and there’s one bathroom, one mirror, and then they do the split screen where it’s the same girls, but they’re in a four bedroom house and everyone’s got their own bathroom and it’s like a bachelorette themed thing. And I think that’s maybe where Airbnb has a bit of a leg up. There was another commercial where it was like a couple who had went on vacation to get away from their kids and they’re hanging out at the pool at the hotel and there’s a bunch of kids running around and they’re like, we came here to get away from the kids. And then the split screen is them at their own private Airbnb with their private pool and enjoying it that way. So I do think that there are definitely a percentage of folks who just like the amenity to come along with the hotel and what that experience is. But there’s definitely still, I think a growing group of people who like the privacy, the experiences that you mentioned. And then also the ability if you’re going with the big group, grandma, grandpa, the cousins, the kids, just to have one big place that you guys can all stay

Ashley:
All set and hang out. Yeah,

Tony:
I think there’s always a market for that too. And I guess that kind of leads to the other points of Jacob’s question. Is the market too unfavorable? I mean, you could ask that for every single real estate investing strategy right now. Is it too unfavorable for flipping? Is it too unfavorable for single family long-term rentals? Are there challenges now in terms of interest rate, in terms of affordability? Absolutely. But does it mean that the strategies themselves are no longer working? No, it just means you have to tweak and adjust your strategy and how you’re executing to fit the reality of today’s environment. So people are always investing in real estate as a market’s done, whatever it’s done over the life of the United States, people have always invested in real estate. And it’s worked out because over time it still tends to be a good investment.

Ashley:
And I think exactly what you said is what you have to consider to see if the strategy will work in your market. So if you are going into a market where there are a ton of Airbnbs and just having a plain Jane apartment doing Airbnb arbitrage or just getting a house that has no amenities, are there a million others? Just like that? And do you to have something unique and something to stand out to. So really look at the market that you want to go into and see what is going to make yourself stand out from all the other listings too, or what type of property is always booked? Is it one that has the bar with all of the different glam sets for the girls to do their makeup for the bachelorette parties? So really doing your market research on what people are actually looking for and want and why they would choose you over another Airbnb. Airbnb or over a hotel to come to that market. To

Tony:
Episode 6 48, which released on December 3rd. We interviewed John Bianchi and Jamie Lane, two folks from the short-term rental industry who are experts in the data side of things. And if you want more insights on what to look for, how to do that market research, again, go check out episode 6 48.

Ashley:
Well, thank you guys so much for joining us for this week’s rookie reply. I’m Ashley. He’s Tony. And we’ll see you guys next time.

Dave:
Americans are divided and no, I am not talking about politics right now. I’m talking about economically, financially. Some Americans are doing great seeing their portfolio soar and they’re optimistic about the future, but at the same time, others are struggling just to make ends meet and are deeply concerned about what comes next. This is the so-called khap economy. And today on on the market, we’re diving into what this term is all about, what’s happening with American pocketbooks right now, what this means for the housing market, and I’ll share my opinions about what might come next. Hey everyone, welcome to On the Market. I’m Dave Meyer. Thanks for joining us. It’s pretty hard to read any sort of news right now and avoid headlines with this term, the quote unquote khap economy from social media to major newspapers, to cable news networks. It’s the term everyone seems to be using to describe the very unique economic moment that we’re in right now.
But what does this term actually mean? Is this a real thing? And if so, what trends is it actually trying to describe? What does a khap economy mean for you and me, for investors and Americans in general as we head into 2026? So that’s the plan for today. We’re gonna dive deep into this topic, so let’s get into it. First of all, I think that this term, khap economy in general is an attempt to try and talk about an economy that is pretty hard to describe right now. If you listen to the show often, you’ve probably heard me say this a lot, but I believe that the word recession is honestly pointless at this point. It doesn’t actually even have a definition. I know people think that it’s too consecutive quarters of GDP growth, but if you look at the actual definition of the United States, there is no definition.
It’s just completely subjective. And the reason it is subjective and it doesn’t have a definition is I think that economists and politicians in general want some wiggle room in trying to summarize something that is very complicated and nuanced in a binary way. The economy is just more complicated than that. And I know everyone wants a really simple way of describing things, but unfortunately that’s really not always possible because even in great economic times where everything’s growing, there are typically still areas of the economy that are struggling. And the opposite is true as well. Even during years of slow growth or quote unquote recession, some areas are still growing, some areas are probably still booming. And so that’s why I personally just think this like binary, good, bad recession, new recession is kind of silly. And it’s also why I think a lot of analysts and economists often try to come up with different ways of describing the economy in ways that make sense to people, different ways to visualize the way that the economy is performing.
And for some reason, people have just latched onto this idea of using letters, right? You may have heard of a V-shaped economy or a U-shaped economy or an L-shaped economy. The idea here is that they’re trying to project growth, economic growth onto a graph. And it might look like a V for example, that’s like when the economy tanks for some reason, but then rebounds really quickly. The best example of that being COVID, right? Like in April of 2020, everything went down, right? People were super scared, the stock market tanked. But then just like a couple of weeks or months later, there were stimulus, some things were starting to reopen. The economy rebounded really quickly. A lot of people were calling that a V-shaped economy. If it takes a little bit longer, they’ll call it a U-shaped economy. If things are just really bad and not recovering at all, they’ll call it an L-shaped economy because they’re not growing right Now, this new letter that’s really picking up steam recently is K.
It means that the economy is moving in two directions at once. Just think about a K, right? There’s the vertical line. I don’t know what that has to do with anything that don’t think about the vertical line. We’re really just talking about the upward part of a K and a downward part of a K. That is what economists and analysts are trying to say, right? That there is one part of the economy going up while the other part is going down. So you can probably imagine what’s going on here, right? A K is describing a bifurcated or a split economy where one section of the economy’s doing great, it’s going up the other section of the economy not doing so well. It’s going down. So which group is which? I am guessing you probably already are aware of this, but people who are already wealthy or who are high income earners continue to do well in the current economy.
They are the upper leg, we’ll call it the upper leg of the K. And although there have been some high profile layoffs, you see this in tech, you see this in finance and that probably will continue in my opinion. These people own stock. They tend to be asset holders, they tend to have retirements accounts. And yes, people who own real estate, they tend to do well because even though we have challenges in our economy, one of the bright spots has been asset prices, right? We see that cryptocurrency is doing pretty well. I mean, as of today, it’s December 1st, I’m recording this. Bitcoin has fallen 20, 30% all to off of its high. Bitcoin’s still been on an amazing run over the last couple of years, ha as have a lot of cryptocurrencies. The stock market continues to be near all time highs. Real estate in nominal home prices hasn’t fallen on a national basis.
So the wealthy who tend to own assets continue to do well. They’re sort of that upper leg of the economy. The downward arm of the K is lower wage workers, gig workers, service workers, people in hospitality. And honestly, the middle class like this is not necessarily just lower wage people, it’s just what I would call ordinary Americans who work for a living and who are just trying to get by that group of people. And that is a very big group of people tend to not be doing so well right now. If you look at pretty much all the data of how they’re spending money, their consumer sentiments, their savings rates, all of the data shows that this very large majority of the US population is struggling right now. And this split the fact that wealthy folks, high income earners are doing well while the middle class and lower class are not doing so well is on the mind of the Federal Reserve.
It’s on the mind of the administration and policymakers. In fact, in one of his most recent statements, fed Chairman Jerome Powell said, quote, consumers at the lower end are struggling and are buying less and shifting to lower cost product, but at the top people are spending at the higher income and wealth bracket. So this is a real thing, like when you see people talk about the quote unquote khap economy, in my opinion, it’s real. We are really seeing a big split in behavior, in sentiment, in spending power. And those things do really matter. And again, I just wanna reiterate why I think this is a reason why the word recession is kind of useless, is because right now, GDP is how a lot of people measure recession. Again, that’s not actually how it’s measured, but a lot of people use that as a benchmark and it is a useful benchmark, don’t get me wrong, but GDP is not the entire economy we are seeing right now that GDP is going up, but the majority of Americans are saying that they’re struggling, their sentiment is down, they can’t afford expenses in an emergency.
Those things are a problem that are not reflected in GDP, which is why we’re digging into this topic in the first place because whether we’re in a recession or not is not gonna tell you what’s actually happening with ordinary people. And as investors and just ordinary people, Americans, we actually wanna know what’s going on with our own pocketbooks, what’s going on with our tenants, what’s going on with our buyers and sellers? And so this K shaped economy, I think actually does a better job right now describing what’s going on than the idea of recession or no recession. So that’s my take on the khap economy, but we gotta get into what this actually means for the future of the economy, where things can go from here, what this means for the housing market. We’re gonna get into that, but we do have to take a quick break. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer talking about the khap economy. Before the break, we went over what the khap economy is. It basically means that by a lot of measures, not by every measure, but by a lot of measures, the American economy is split. We have an upward leg, which is wealthy folks who continue to do well in the economy. And then there are normal folks, people who are in the middle class or lower class who are generally struggling right now. And I’m guessing that if you follow the news, you’ve heard some stories about this, right? I’m sure this is not a shock to everyone, that the wealthier doing fine spending as usual and the rest of the US is starting to pull back one particularly notable. And honestly it is, this is hard to even conceptualize the stat. This is so crazy.
The top 10% of Americans, just 10% of all people who live in this country now account for 50% of spending. And according to economist and former guest on this show, mark Zandy of Moody’s, he said quote, their financial situation is about as good as it’s ever been. Now, if you are in that group, you might resonate with this and say, yeah, things are actually going really well in the economy right now, but if you’re in the middle class, you’re not in that group. I’m guessing you don’t resonate with that and are not feeling like the economy is working particularly well for you. Now, uh, we’ll get into this a little bit more, but I just wanna call out. The reason this stat is so crazy, I’m just going to rattle off a few things for you right now. But American consumer spending makes up 70% of GDP.
So all of the economic activity in the whole country, 70% of it is just normal people spending their money. I know a lot gets made about government spending or business spending, but in the United States, we are very much a consumer economy. 70% of GDP is consumer spending. And what I just told you before was that 50% of consumer spending is going to just 10% of Americans. So if you put those two stats together, that means that this spending behavior of the wealthiest 10% of Americans is 35%. One third of our entire economy is dependent on this 10% of Americans and just the everyday decisions they are making with their money. And we’re gonna move on to sort of why some of the things in the K shape economy are happening. But I want you to remember that stat as we go on and talk about what this actually means for the future of the housing market and the economy in a couple of minutes.
So let’s first though, talk about why this is happening. There are a lot of things going on here, but I’m gonna just pick some of the big buckets that have been going on. So first and foremost, it is inflation. That’s the thing that’s really on people’s mind. Now, there are some structural long-term things that have been going on for even further, which I will talk about in a minute. But when people answer surveys about why they’re not spending, why they’re worried about their financial future, inflation is largely the answer that they give. And it’s important to note that inflation is a lot better than where it was in 2021 or in 2023. We haven’t gotten our reading of September yet. It’s December now because of the government shutdown, but as of its last reading, it was about 3%. It’s supposed to come out this Friday actually.
So I think the day after the show comes out, we will get that inflation print. There are some advanced, you know, studies into this. People think it will go up a little bit Again, that would be the fifth consecutive month where it goes up. But it’s important to note, we’re not at 9%, we’re not at 8% where we were in 2021 and 2022. But I think what’s going on here is it’s the aggregate, right? It’s five straight years of inflation from 2008 to 2020. We really had very low inflation in the US historically low, lower than normal, right? 1% inflation, like we saw many of those years is not normal. But people got used to that, right? People got used to prices staying relatively stagnant in an aggregate way. And then all of a sudden over the last five years, the CPI, the consumer price index has risen 25%.
That’s a lot. In five years seeing prices across the board go up 25%. And although in the last year or two we have seen wages keep up, if you just look at the last five years, wages have not kept up. So in real measurable ways, people have lost spending power like that is just how it works. Even though most people have seen their paychecks go up over the last five years, inflation is higher. And so when you actually talk about how far your dollar goes, how far you could stretch your paycheck, it has gone down in the last five years. And this is honestly a trend that has been going on for decades. Yes, during the 2010s to 2020, we had a reprieve from this for a while. But if you look at real wages, how well wages have kept up with inflation for the last 41 years, since 1984, which is as far back as I have good data since 1984, real wages, which is just ingested for inflation have only grown 12%.
And so when I think about this, I often just think about the aggregate for 40 years. Yeah, up 12% fine. That’s not great, right? We’ve seen the economy just absolutely explode in those 41 years and the average American’s only getting 12% better spending power in 41 years of economic growth. Like that’s terrible. Like if you wanna know, in my opinion, the real reason people are mad about the economy, everyone’s mad about the economy, right? Uh, except if you’re in that top 10%, right? The the real reason is this, right? People’s wages are not keeping up with inflation and their spending power is going down. Like this is terrible in my opinion, for economy as robust as ours. And I just wanna call out that yes, it has been particularly pronounced for the last five years. And I think it, most people were asked, why are they mad?
Why are they concerned about the economy? They’d say the last five years, which I get it because it’s a big change from where we were in the 2010s. But this has been a problem with our economy for over four decades. I just want to call out that when I talk about the aggregate impact, this is sort of what I’m talking about. This is a longstanding problem. But yes, it is true. It has become more acute and people are particularly stretched right now. So this is happening across the board. Like everyone feels inflation, right? But this is probably self-evident. Those who have less wealth or lower wages are less able to withstand the challenge of high cumulative inflation for five straight years, right? It’s not hard to imagine that, right? That just kind of makes sense. Like the bottom 50% of households control only 2.5% of total household wealth in the United States, they have less cushion.
That 10% that they were talking about, that just 10%, they hold 67%, two thirds of all the total household wealth. And so inflation for these people at the top who have all of this wealth is not gonna impact them as much. Yeah, they still pay higher groceries, but they just inherently have more discretionary spending. Their asset prices are up. And so for them, continuing to spend is generally not as hard. But for those with lower incomes, lower wealth, who have lower disposable income, when prices rise, they have less cushion to dip into to pay for everyday expenses. So this is the main reason in my opinion, why we have this khap economy is that wages are not keeping up. Things are too expensive because of inflation. And even though the inflation rate has come down, it’s still above the fed target. It has grown for four consecutive months and it’s the cumulative effect of the last five years that is really starting to wear on people because they’ve been making things work for five years and it’s getting harder and harder to do it.
So that’s the number one. The second thing though, of course, I sort of alluded to this before, is just asset prices, right? Wages have stagnated. Like I said, I think that’s one of the main areas, but asset prices have certainly not, right? Because even though for 40 years we’ve seen somewhat stagnant wage growth, stock market and just the last decade is up 200% housing is up 50% depending on who you ask, 40, 60%, somewhere in there. So people who have owned and held onto assets in previous expansions are still doing really well. This is why, again, we’ll talk about this in a minute, we’re not seeing for selling in the housing market. This is why people who own stock are continuing to spend and feel good about the economy. And more and more people have been starting to own stock, which I think is a good thing given the way our economy works right now, things like Robinhood and EFTs and low cost index funds like these things have made the stock market more accessible to the middle class and to normal people.
But still, this is another crazy stat. 1% of Americans own 50% of all the stock. And so again, this is why you see this concentration of belief and spending in the economy. At the top, it’s people who own assets. The third answer that I think we need to talk about besides just stagnant wage growth and asset prices is debt. And even though debt is used throughout our entire economy, we have a lot of debt in this country. Most of the quote unquote bad debt is concentrated in lower income households. This is stuff like credit card debt, student loan debt, auto debt. If you don’t wanna default, you really can’t scale back on those things, right? You gotta pay your student loan debt, you gotta pay your auto debt, you should be paying your credit card debt. Those interest payments need to happen. So consumers get squeezed elsewhere, right?
They hold back on spending in other areas of their life because these groups tend to have more debt. So when you look at these things in aggregate, it kind of makes sense, right? Between inflation, the difference in asset prices, the difference in types of debt that people own. It sort of makes sense that there is a khap economy. I wanna be clear though. I’m not saying that just because it makes sense that this is a good thing or I like this or I want this to happen, it is the opposite. I think it is a stain on our economy that only one part of the economy, the wealthiest part of our economy is going well and everyone else, the other 90% of people are not doing as well. I don’t think that’s good. I’m just saying when you look at the data and you measure it, that is what is happening in the United States right now. That is what is reflected in the data. And if you dig into it, you can make sense of why that is. So that’s the detail. That’s why this khap economy is emerging in the United States. But what does it mean? What are the implications for the housing market and for real estate investors? We’ll get into that right after this quick break.
Welcome back to On the Market. I am Dave Meyer here talking about the khap economy that we’re seeing in the United States. We talked before about what it means, some of the causes for the khap economy, but I wanna turn our attention to the implications for the housing market for real estate investors. And we’ll start actually by just talking about what this means for the American economy in general. My view generally speaking is that this shows an unstable economy, the growth that we are seeing GDP growth, right? The thing that we keep looking at that economists like to point to that. Analysts like to point to that politicians like to point to and say, Hey, look, the economy’s doing well and it is GDP went up, I think 3.8% last quarter. People say it might go up 4% in Q4. That’s good growth. Like don’t get me wrong, that is good GDP growth.
But it is really concentrated in just two areas. First is consumption from high net worth people that we’ve been talking about, right? I did the math for you before over one third, a massive, massive amount of our GDP comes from the spending of just top 10% of people. The second thing is AI infrastructure. That’s a whole other show that we should talk about. I’ve been doing some research on AI potential bubble there, but a lot of GDP growth, if you look at this, is really concentrated on infrastructure spending, data center spending, hiring by companies that are in the AI space. Now, I’m not saying that’s wrong, like the fact that we have two areas that are growing is probably beneficial. It’s just not the diverse robust economy you wanna see. We can actually sort of draw a parallel or comparison here between what’s going on nationally and something we talk about a lot on the show in the housing market.
I often pick on Las Vegas when I’m talking about this, and I’ll use it again, sorry, Vegas, because it is a market, it is a region of the country that is heavily dependent on one industry, tourism, hospitality, right? If tourism declines in Las Vegas, Vegas as a city can suffer and that makes it a little more brittle, right? It’s easier to break when there’s just one leg of the stool. If you had five or 10 different economic foundations that were supporting the economy of a city, you’d probably feel pretty good because even if one area was not doing well or faced some setback or was in some challenge, the other nine would do well. But if you only have one, it’s kind of risky. It’s a boomer bust kind of thing. And that’s kind of what’s going on with the entire US economy right now.
We are dependent on AI infrastructure spending, which again, whole can of worms, let me just call it. There’s a lot of reasonable concerns that that can’t keep going at the same rate that it was. And then the second thing is we’re dependent on the just personal decisions of 10% of consumers to keep fueling growth, but they could change their behavior at any time, right? If the stock market declines, if crypto goes down, people just decide that they don’t wanna spend as much. We could see the entire US economy getting worse. And the thing that worries me about this is I just don’t see how that changes right now, right? I don’t see something in the immediate horizon in the next couple of months, let’s say, where the middle class and lower class all of a sudden start to do better. The solution in my opinion, is higher real wages or for prices to come down.
But frankly, I do not see prices coming down that is very rare. I might do a show about this as well. Let me know if you’re curious. But the idea of deflation prices going down, consumer goods, consumer services going down doesn’t really happen. I gotta say in aggregate, it doesn’t happen. There are things like TVs, yeah, individual goods sometimes get less expensive. Asset prices could go down. But when you look at goods and prices, generally speaking over long periods of time, they don’t really go down. And like I said, asset prices could go down, stock market could go down. Housing prices I’ve told you I think will go down next year. But that actually doesn’t improve everyday expenses, right? There’s a reason asset prices are not included in inflation. And some people argue with that. But the reason is that because that doesn’t really impact your day-to-day expenses, right?
Housing may be a little bit, but like if the stock market went down 20%, right? If the stock market went down 20%, would that change how much money you’re spending at the grocery store? No. This is why they keep it out of inflation data. And so even if those things crashed, it’s not making it more affordable for the people who are struggling right now. And in fact, it could just stop the people who own a, a lot of the stock top 10% who are fueling a lot of our growth from spending more. So like that is another reason why it feels like the economy is a little bit flimsy right now. And unfortunately I’m not happy about this, but I do think times are gonna be kind of tough for the average Americans going forward. I think this is kind of reality. I don’t see what comes around and changes this.
The labor market, it’s slowing, and that will, as it always does, put downward pressure on wage growth. That’s the thing we need. We need wage growth. But when the labor market is weakening, that gives employers more leverage in wage negotiations. And so wage growth tends to lag in economies like the one that we’re in. We’ve already seen wage growth go from where it was a year ago at like two or 3% now to about 1%. And so it’s already on that downward trend, and I think that is probably going to continue. Uh, companies could just elect to pay their workers more, but I don’t see them doing that, especially big corporations. They like to protect their all time high profits. So that’s probably not gonna happen. Labor union participation’s super low, so they’re probably not gonna be able to collectively bargain for higher wages. So unfortunately, I just don’t see a light at the end of the tunnel.
Of course, something could come up. I hope something does a new policy idea, maybe just a shift in consumer behavior or sentiment, but right now it doesn’t seem like it’s coming at least in the next few months. So that’s the first takeaway that I have in all this data in doing this research, is that I am expecting low consumer sentiment, low consumer behavior. Even if GDP keeps going up, even if AI spending keeps up, even if the stock market stays up, I think spending patterns for average Americans are going to stagnate. And that has implications for us as Americans of course. ’cause 90% of us fall into that bracket, and so that’s going to matter for us. But it also, this is a real estate investing show matters for real estate investors and the housing market because just like in the broader economy, there is an upward arm and there is a downward arm in the housing market, and we’re probably going to see that for a little while.
Redfin actually just came out with a recent study that showed that luxury homes in the United States, I bet you can guess they grew way faster than average priced homes. They grew 5% year over year last year, which is three times higher than non-luxury homes. So you see this emerging, right? The folks who have a lot of money whose stock portfolios are doing well, they’re still buying homes, they’re buying luxury homes, and prices of those homes are going up. So as an investor, that’s something to keep in mind. Not saying you should go and buy and invest in luxury homes, but it is something to, you know, on the show. What we try to help you understand is some of the nuances of the housing market, not just say the housing market is up, the housing market is down. There are different areas of the housing market, like there are different areas of the economy, and the luxury segment is actually doing well right now.
Whereas when you look at, for example, starter homes or first time home buyer areas, it’s not doing as well. That’s in the lower arm of the K in the housing market. There’s actually been this stat that’s been going around a lot in the media and on social media right now showing, in my opinion, just how messed up the housing market is. The median age of a first time home buyer is now 40 years old. 40, 40 years old for the median age of a first time home buyer. That is insane. Back in 1991, it was 28 years old. That seems right to me. Late twenties buying a home, that seems about right, even just five years ago in 2020 was 33. That’s a little bit later. But you know, it’s still in the realm of reason 40. Like that to me isn’t good. I think this is just terrible for the housing market.
It’s not good for our society. It kind of undermines the whole idea, the American dream and home ownership. If you have to wait till 40 to buy your first home, that just seems wrong. And again, there’s so many reasons for this, it goes back so long. But I just want to stress that this shows us that a huge segment of the population is currently priced outta the housing market, right? You know, let’s just say working adults start at, I don’t know, 20, so I’m just rounding up to 40. It’s like 20 years. All these people that is Gen Z, that is a lot of millennials, which is our biggest demographics in the United States right now, are clearly priced out of the housing market. If the average first time homeowner is 40 years old, and this is one reason I think that going into 2026 sales are going to stay slow.
I do think they’ll pick up a little bit because I think mortgage rates are gonna come down a bit. But unless rates really fall into like maybe the low fives, high fours, I don’t think we’re getting back even to normal average levels of home sales next year. And this is something I want everyone on the show to remember, that we might have a pretty slow year in the housing market again, unless we get some quantitative easing, unless there’s a big, you know, decline in bond yields, which I don’t see coming right now, but it certainly could happen. There’s so much uncertainty in the market right now. So that’s the second thing. You know, I think sales are gonna be really slow, especially in that first time home buyer segment. I still favor and really like affordable homes, but I just wanna call out that clearly what we’re seeing is people in this segment of the housing market are not going to be as active until something changes.
The third thing I wanna call out is the lockin effect. We have been waiting for this thing to break for years, and I think that if this khap economy continues, it’s going to be increasingly difficult to break the lock-in effect, because middle class people who maybe want to move but are struggling with day-to-day expenses are not gonna be in a position to give up their low rates, even if rates come down to 5.5%, right? If they’re sitting on a 3% mortgage and a ton of equity, maybe they want to move. But if you are stretched in non housing categories, I think it’s gonna be tough for people to give up a 3% mortgage rate, even if that just saves them a couple hundred bucks a month. If this trend continues that we’re in this khap economy, those couple hundred bucks a month matter, they matter a lot to a lot of people.
And so that’s going to impact the housing market as well, and could constrain a little bit of supply. And along those same lines, I just wanna say, I’m not sure if rates come down to six, right? You know, there are six and a quarter right now. If they come down to six, if they even come down to the high fives, I am not sure people are going to jump into the housing market as rapidly as other people are saying. Even if rates come down, it will bring some demand. Like I said, I, I have no doubt that it will come, bring some demand, but there are people on social media saying if rates fall, we’re gonna see a flood of people entering the market. Maybe, maybe, right? But if people are struggling to pay their bills, they’re not gonna be go eager to change into a new home or buy their first home.
Like yeah, it will prove affordability a little bit. But unless prices come down too, I don’t think we’re gonna see some massive influx. We also might see some more supply. So I don’t think prices are necessarily gonna go crazy. I don’t think we’re gonna see a frenzy like we did in COVID. Conditions were just different back then. There were stimulus checks. There hadn’t been five years of inflation eroding, people spending power eroding their savings. Were just in a different world. So I just want to call that out as well. I’m not trying to be super negative here, but I wanna just be realistic about some of the realities that we’re seeing on the ground. The last thing is, even though I’m telling you some negative economic things right now, I still don’t expect panic selling, right? Because homeowners are still in good shape, and I think people who have good housing situations have locked in their homes and have a predictable mortgage are not gonna want to get rid of that.
That’s one of the last things that they’re likely want to get rid of. So those are my expectations for the housing market. I, I just think that we are going to see a continued bifurcation. Luxury homes continue to do well. I don’t think we’re gonna have a lot of activity in the first time home buyer segment unless we see a combination of prices really falling and rates coming down a lot, which I don’t think is the most likely scenario in 2026. And so I think we’re gonna see another relatively slow year heading into 2026. Of course, things can change, right? Like I’m just kind of talking about the first quarter of next year, the first half of next year, because so much is up in the air, it’s hard to see past, you know, the next six months. But that’s what I’m expecting, at least for the next six months.
Once we get a new Fed chair, everything can change. And so we’ll obviously keep you posted on what’s happening there. Generally speaking though, just to sum up this episode, I am, you probably can tell a little bit concerned about the economy. I think if the stock market stays strong, maybe these top 10% of consumers keep spending GDP keeps growing and maybe things stay okay, but honestly, like I don’t personally really care if GDP is going up that much. If 80% of Americans are financially strapped and struggling, and this is why I think that we’re in for a tough couple of months, at least I expect the housing market to get a little better next year because I think affordability will improve, but not that much better unless affordability really starts to improve across the board, not just in the housing market. We need peoples to start feeling better about their savings, about their financial position to fuel the housing market.
And I don’t think that’s gonna be coming in the next couple of months. I’m not saying this as a reminder to scare you. I actually think when you think about some of these broader conditions, it does provide opportunities. It creates better buying opportunities in some areas of the country in some segments. I have been flipping higher end homes right now, even in this kind of weird, funky market, and that’s been working. And I’ve said before that there are other kinds of opportunities that come in these kinds of markets. The reason I tell you these things, not to fearmonger, I just wanna tell you truly, I spend all day researching the economy and looking at these things. I try to be as unbiased as possible, and I see some risk in the broader economy. That doesn’t mean risk in the housing market, but I wanna share with you the ones that I’m seeing in the broader economy and how they could translate into the housing market. So you can make smart and educated decision about your portfolio. There are opportunities out there, but to capitalize on those opportunities to make sure that they go really well for you, you have to understand where the risks are and how to properly mitigate them. Hopefully this episode has been helpful to you in that effort. That’s all we got for you today on this episode of On The Market. I’m Dave Meyer. Thank you all so much for watching. We’ll see you next time.

Veteran investors have always touted that attaining true wealth in real estate is about playing the long game. Sage advice—but the long game doesn’t always have to be that long.

Six Years That Transformed Investors’ Fortunes

Since 2019, investors in some small cities have seen their net worth skyrocket, according to analysis from Realtor.com in its Top 10 Cities Where Home Values Have Boomed report. Investors have almost doubled their money in Knoxville, Tennessee, with 86% appreciation, adding $190,000 to the value of an average home between October 2019 and October 2025, putting it at the top of the list.

Close behind is Fayetteville, Arkansas, with 84.5% appreciation—up more than $195,000—and behind that, Charleston, South Carolina, with 81.3% appreciation, an increase of over $300,000. Also in the top five are Scranton, Pennsylvania, and Syracuse, New York, both of which have enjoyed appreciation of 78%.

Other metros with over 70% appreciation follow a similar pattern: They are in the Northeast or the South. These include:

• Portland, Maine
• Rochester, New York
• New Haven, Connecticut
• Charlotte, North Carolina
• Chattanooga, Tennessee

Room to Grow

If you haven’t invested in these markets, there is apparently still some room to grow. According to the National Association of Realtors (NAR) latest quarterly report, home prices increased in 77% of metros in the third quarter of 2025, and are still rising.

“Home sales have struggled to gain traction, but prices continue to rise, contributing to record-high housing wealth,” NAR chief economist Lawrence Yun said in the report. “Markets in the supply-constrained Northeast and the more affordable Midwest have generally seen stronger price appreciation.”

Regionally, NAR found that the country is divided into median existing single-family home price changes year over year as follows:

• Northeast: +6% 
• Midwest: +4.2% 
• South: +0.5% 
• West: -0.1% 

The NAR report names these 10 large markets with the largest year-over-year median price increases:

1. Trenton, New Jersey (+9.9%)
2. Lansing-East Lansing, Michigan (+9.8%)
3. Nassau County-Suffolk County, New York (+9.4%)
4. New Haven-Milford, Connecticut (+9%)
5. New York-Jersey City-White Plains, New York-New Jersey (+8.1%)
6. Manchester-Nashua, New Hampshire (+8%)
7. St. Louis, Missouri-Illinois (+7.9%)
8. Bridgeport-Stamford-Norwalk, Connecticut (+7.8%)
9. Toledo, Ohio (+7.7%)
10. Cleveland-Elyria, Ohio (+7.7%)

Winners and Losers

The good news does not translate to the entire country, however. Using data from Zillow, Fortune found that half the country actually saw values decline at some point last year, as affordability—through interest rates, prices, insurance, and income— took a hit.

Treh Manhertz, senior economic researcher at Zillow, said in a statement:

“Homeowners may feel rattled when they see their Zestimate drop, and it’s more common in today’s cooler market environment than in recent years. But relatively few are selling at a loss. Home values surged over the past six years, and the vast majority of homeowners still have significant equity. What we’re seeing now is a normalization, not a crash.”

Weakening house prices led to nearly 85,000 sellers delisting their homes in September, an increase of 28% year over year, as 70% of listings sat for 60+ days and endured multiple price cuts, CNBC reported, citing Redfin data. However, owner woes are likely to be short-lived, according to NAR’s predictions, as the organization foresees a modest 4% uptick in home prices in 2026.

“Next year is really the year that we will see a measurable increase in sales,” NAR chief economist Lawrence Yun said at a conference on Nov. 14. “Home prices nationwide are in no danger of declining.”

Supply, Affordability, and the Advantage for Landlords

For investors looking to get into the market in 2026, the main issue will be affordability due to limited supply, which in turn will affect cash flow. It’s not just mom-and-pop landlords who are feeling the crunch; large-scale institutional landlords are, too. 

“We’ve probably made housing unaffordable for a whole generation of Americans,” Sean Dobson, CEO of Amherst Group, which holds Main Street Renewal under its umbrella, one of the country’s largest institutional landlords, told ResiClub’s Lance Lambert. He cites the massive COVID-19 stimulus package and interest rate hikes as the main drivers limiting supply, and thus, affordability. By Dobson’s estimate, it will likely take 10 or 15 years of steady income growth to restore affordability to equilibrium, as measured against 2006 norms.

“Affordability has probably never been as bad as it is today, the way that we measure it,” Dobson said. “You’ve got to be very, very careful.”

Ironically, this could work in many investors’ favor, provided they have the cash to buy rentals so they can cash flow. Dobson told Fortune that “rental is going to have to become a part of the solution,” giving people a place to live while affordability returns to the real estate market. “In reality, the problem is that homeownership is too difficult to reach, and there aren’t enough homes—across all types and price points—to meet consumer needs,” he added.

An Amherst rep told Fortune that PITI (principal, interest, taxes, and insurance) on a 97% LTV FHA mortgage equates to about 42.9% of median income.

The Next Affordable Cities Most Likely to Boom 

For investors looking for the next smart place to put their cash, a few candidates have shown the same early patterns that Knoxville, Fayetteville, and Syracuse have shown. 

Columbus, Ohio

National and local forecasts and market commentary note below?average prices and major job growth tied to Intel’s semiconductor “megaproject,” offering attractive rent?to?price ratios.

Indianapolis, Indiana

This is frequently cited in Midwest outlooks such as RealWealth’s medium?term predictions as a fast?growing job market with strong logistics and tech employment, producing stable renter demand and investor?friendly yields.

Grand Rapids, Michigan

The city is identified in long?range housing forecasts (revolving around $1.3 billion in development projects) as an affordable market with a diversified economy and historically steady mid?single?digit appreciation rather than boom?bust swings.

Buffalo, New York

Zillow named this wintry city the hottest major housing market for 2025 and 2024. There’s little to dissuade experts from predicting the city will maintain its allure in 2026, combining improving job trends, below?national average prices, and growing national interest in affordable cities.

Greenville–Spartanburg, South Carolina

The area is cited in regional and national outlooks as a lower?cost alternative to Charleston, with manufacturing and logistics growth, strong in?migration, and relatively little institutional competition.

Scranton-Wilkes-Barre, Pennsylvania

Often mentioned as an affordable market in the Northeast, Scranton-Wilkes-Barre has been booming economically, with single?family rentals still cash flowing at current prices and rents.

Manchester–Nashua, New Hampshire

This metro is highlighted in the joint Realtor.com/Wall Street Journal Emerging Housing Markets Index as a top spillover market for Boston?area buyers, with mid?$500,000s prices, lower taxes, and strong commuter demand. While the sticker price isn’t “affordable” by midwestern standards, it certainly is for New England.

Worcester, Massachusetts-Connecticut

This area is featured in the same emerging markets index, capturing Boston commuters and expanding medical/biotech jobs, with mid?$400,000s to mid?$500,000s pricing that supports steady rent growth. While these prices, like Manchester and Nashua, seem high when compared to Boston and its surrounding areas, they’re a major discount for an area poised for growth.

Final Thoughts

Despite the expected economic ascent of some cities, prospective landlords who plan to buy with mortgages will not see a sudden surge in cash flow, as interest rates are not expected to change much. ResiClub reports that Fannie Mae and the Mortgage Bankers Association (MBA) both now forecast only small moves in mortgage rates—Fannie Mae sees the 30?year fixed at about 5.9%, and the MBA predicts it closer to 6.4% by late 2026. 

So if you plan to leverage, practice careful buying and meticulous management, and knuckle down for the long term, while enjoying tax benefits and appreciation, that seems to be the best playbook to follow.

For other investors who can buy with cash, you can enjoy cash flow, but overall appreciation is not expected to mirror the frenzied post-pandemic years. For flippers, opportunities will remain hard to come by. 

So, overall, stick to the old-school rules of real estate investing 101: Buy well, and play the long game.

Remember when buying a house meant sprinting to a showing, writing an offer in the driveway, and praying the seller liked your handwriting? 

Thankfully, 2025 is nothing like that. The frenzy is gone, the math finally matters again, and investors can actually think before they make an offer on a property.

Higher rates have slowed down the frenzy, giving investors something they haven’t had in a long time: leverage. And when the market cools even slightly, new construction becomes one of the clearest, most predictable paths to getting a great deal. Investors are now seeing reasonably priced entry points in high-growth metros, which hasn’t always been the case.

Now let’s walk through three markets where the math actually works, and why each is becoming a quiet favorite for investors who want cash flow now and appreciation later.

San Antonio, Texas

San Antonio continues to be a profitable place for real estate investors year after year. The city added nearly 24,000 residents in the most recent annual count, ranking among the fastest-growing cities in the U.S. In a market, more people equal more households, which leads to a higher demand for rentals. At the same time, median home prices hover around the low-$300Ks and are expected to inch upward, not vault.

The rental data suggest opportunity, as average rents were near $1,825/month for single-family homes as of September. New-build homes can help investors lock in maintenance and repair risk at lower levels.

Tampa, Florida

Tampa used to feel like a bidding-war theme park due to its beaches, events, vacation transfers, and lack of state income tax. In 2025, things look different. With more inventory on the market and a slower pace of sales, buyers finally have options again. That availability is creating real opportunities to lock in competitive pricing, especially with new construction.

Additionally, the underlying rental fundamentals remain strong. As of October, average rent in the metro is around $2,200/­month, vacancy is ~4.2%, and rental yields are ~6.2%.

Atlanta, Georgia

Atlanta’s fundamentals remain incredibly strong: population and job growth, along with robust in-migration from other states, continue to drive long-term housing demand. But unlike the high-pressure market of the past few years, today’s environment gives investors more breathing room. Inventory has improved, pricing is stable, and days on market have returned to healthy levels. This is creating a window for investors to enter quality neighborhoods at competitive terms. Rentals remain consistently occupied across the metro, and the combination of solid demand with more accessible purchase prices is improving overall yield potential.

How to Use Lennar’s Investor Marketplace Correctly

The beauty of Lennar’s Investor Marketplace is that it cuts out all the noise around finding an ideal investment property. You won’t have to scroll through weird MLS photos, guess rental comps, or wonder why someone took a picture of a ceiling fan at a 90-degree angle.

Instead, you open the Marketplace, filter for San Antonio, Tampa, or Atlanta, and instantly see new-construction, rent-ready homes with the data investors actually need, including projected rents, neighborhood stats, HOA details, estimated expenses, and even school ratings. It’s like getting the “investor version” of Zillow, but without the emotional pricing or the homes that require sage smudging. 

From there, you can drop the numbers straight into your BiggerPockets calculator, knowing you’re underwriting with real comps and brand-new construction that won’t surprise you with a $12,000 AC replacement three months in.

Once a home passes your numbers test, the Marketplace makes the rest extremely simple. You can line up financing, property management, insurance, and closing services directly through the platform, making it a one-stop shop designed to get you from browsing to cash-flowing without juggling 18 different vendors. 

In Tampa, that means you can confidently model higher insurance costs while still targeting those strong $2,200 rents. In San Antonio, you get lower entry prices and solid rent-to-value ratios that actually pencil. And in Atlanta, you can shop value-priced suburbs that are already corrected, while still pulling in stable demand. 

The entire experience removes the friction investors hate and leaves you with clean deals, precise numbers, and far fewer surprises after closing.

Pick your lane

• Want strong cash flow + lower entry price? San Antonio
• Want growth + lifestyle appeal + strong rents? Tampa
• Want big metro scale + value entry + long-term stability? Atlanta

Use Lennar’s data-rich inventory

The platform offers new-build homes, builder warranties, and rent-ready assumptions; use them as anchors. Cross-check with local comps.

Model conservative returns

Don’t chase 10%+ yield unless you’re doing value-add work. Accept 5%–7% yield with upside via appreciation and low surprises.

Stress-test risks

Higher interest rates, rising insurance (especially in Tampa and all of Florida), tenant turnover, and capex spikes: New construction helps mitigate many of those.

Final Thoughts

San Antonio, Tampa, and Atlanta aren’t firework markets right now; rather, they are power plants. They’re affordable (in the context of large metros), growth-oriented, and rental-friendly. If you buy new (via Lennar Investor Marketplace) and underwrite wisely, you can build a portfolio that works.

Pick one of these three markets this week, run a deal through the numbers, and you’ll likely find a deal that actually pencils out. Not hype. Not a fantasy. Just smart data and solid positioning in markets where people keep moving and renting.