Dave:
We are only halfway through October and it has already been a wild one for the housing market. We’ve got a government shutdown, we’ve got signs of recession, we’ve got more sellers jumping into the market, but are buyers biting? We’ll cover this and more on today’s episode of On the Market. Hey everyone, welcome to On the Market. I’m
Dave Meyer. I am just getting my voice back after four amazing days in Vegas at BP Con 2025. Hope some of you were there because they’re all great. Every BP Con has been fun, but this one was special. There was just an amazing energy this year. I think if you were there you would know that and I was there of course, but so were the rest of our panelists. Henry did an awesome workshop on deal finding, but he also lost to me in golf just slightly, which was very fun.
Kathy participated in a pitch slam for deals and also single handedly started a 1500 person dance party at the closing party. Jane did a great session on flipping tactics and probably closed five deals while on stage and I gave a keynote about the realities of investing in 2025 and got absolutely wrecked playing craps. It was all excellent. I had the time of my life and I can’t wait for next year, which happens to be in Orlando. We announced it the last day of the conference, so if you didn’t make it this year, definitely check out next year’s conference. I promise you’ll have fun. By the way, before we get into today’s episode, I wanted to mention that we are thinking about doing more sort of small and local events for BiggerPockets in the coming year, so I would love to know in the comments if that’s something that you’re interested in and what format you’d want.
See. Do you want meetups? Do you want presentations, networking workshops? What would you value most if on the market came and visited a town or city near you? Let us know so we can plan more community events and get togethers in 2026. Alright, now let’s talk about all of this stuff that has been going on since BP Con started. There’s a lot going on of course, but today we’re going to focus on a couple things. We’ll look at new housing market data of course, and how really the market is reacting to the slightly lower mortgage rates that we’re seeing. We will also talk about how the government shutdown is actually impacting the housing market maybe more than people realize, and we’ll also talk about how there are signs that the economy in general is softening. Let’s jump in. First up, let’s talk about housing prices because we just got the case Schiller National Index for July and what it showed is that home prices nationally are up 1.7% year over year, so they’re still up, but they are showing continuous signs of softening because just in June, the month before we had them at 1.9%, and this is basically just a continuation of the trend that we’ve seen.
We’ve actually seen month over month home prices fall five consecutive months and just as a reminder, back in January, the year over year number, which is now 1.7% was at 4.2% and February is 3.9%, March 3.4, April 2.7, so it’s basically just been trending downwards closer and closer to flat throughout the year. Now, I personally have been saying this for a while now, but just as a reminder, I’ve been saying that I do think that we’re in a correction because the important thing to remember about the case Schiller index, which is the data we’re talking about today and there’s tons of different price data, they’re all kind of showing the same thing, but the thing that’s unique about the Case Schiller index is that it lags a couple of months. We’re in October, we’re talking about July data, and so if you extrapolate out this trend where we were starting the year at 4.2%, now we’re at 1.7%, we’re probably going to be very close to flat by the end of the year, and that’s not just inferring from the existing data that we already have.
Like I said, there are other data sources that you can look at that are a little bit more current and those also show just continuing signs of the housing market cooling. A new report last week came out from Redfin and showed that new listings of US homes rose 2.3% year over year, so this is just people who choose to put their property on the market. That’s up year over year and it’s not up crazy 2.3%, but it’s the biggest increase we’ve seen in over three months. Actually over the summer we saw fewer and fewer people choosing to list their home on the market. I think that’s probably because rates were still high and we’re entering this correction and sellers were just thinking, you know what? I’m not going to sell into this adverse market. I’m just going to wait it out. But now that we are in the middle of October, I’m recording this on October 10th and just a couple of weeks ago, the fed cut rates rates are about 6.35% as of today, but they did dip a little bit closer to 6.1, 6.2, and so I think what happened is a lot of sellers listed their home in September hoping that those lower rates would bring in additional buyers that weren’t really materializing over the summer, but unfortunately that’s not what’s happening.
In fact, pending sales, the number of contracts basically that have been formulated over the last couple of weeks actually fell to 1.3% from a year ago, so not crazy, but again, it’s the biggest decline in five months. We also saw that days on market, the average time it takes for a property that gets listed to sell is up to 48 days, which is a week longer than it was last year. It’s also longest it’s been since basically before the pandemic since September of 2019. And so when you look at all these things together, if you look at the case Schiller data that I started off with and you move onto this Redfin data, what you see is a market that is trending nationally towards basically a flat neutral market and it could turn into more of a buyer’s market where prices are going down on a national level.
I actually think at this point that is probably pretty likely. I haven’t yet made my predictions for 2026, but if you remember my predictions for 2025 is that we’d be pretty close to flat and it’s looking like that one’s going to be spot on. I know that can be scary for people in the industry like agents, lenders or investors, but I just want to remind everyone that this is okay. This is normal. This is part of a normal housing cycle and actually there are some benefits to this. If you are a buyer right now, it means that there’s more inventory for you to choose from and you are going to have more negotiating power when you’re talking to sellers because they’re going to be competing for a limited pool of buyers. The second thing is that things are going to be on sale. You might be able to actually get properties for cheaper than you have over the last couple of years.
And the third thing that is I think extremely important for the housing market is that affordability is actually getting better in the housing market. I know it’s not a lot better, but if you see that prices are relatively flat, they’ve been, wages are going up, they have been, and mortgage rates have come down even just a little bit, that means that we’re seeing minor improvements to affordability and we have a long way to go, do not get me wrong, but we got to stop somewhere. We got to see the tide turn and it has a little bit, and I know that’s not great for on paper when everyone’s seeing the equity value of their homes, but if you want to get back to a housing market that’s healthy, which I certainly do, I think this is actually something that’s relatively positive. Personally, I’m okay with relatively flat prices if it means that we get more affordability back into the housing market long term because that’s going to get us back to more predictable investing conditions and home buying conditions, which is really what I think we all need. So that’s the update on the housing market that we’ve had over the last couple of weeks. We got to take a quick break, but when we come back, I’m going to talk about how the government shutdown is actually impacting the housing market in ways you might not realize. We’ll be right back.
Welcome back to On the Market, Dave Meyer here talking about recent updates in the market just gave you my housing market data. Now moving on to government shut down. I know that these things happen and sometimes you’re unaffected by it and I think probably for the average American who’s not looking to make a major purchase or doesn’t work in the industry or is of course not a government employee who’s directly impacted by the shutdowns and furloughs, you might not really feel the impact of the shutdown, but there is some data that shows that the housing market is being impacted. First, I’ll just share with you a survey that Redfin just did with Ipsos, and it shows that 17% of Americans are saying that they’re delaying a major purchase like purchasing a home or a car. 7% are saying they’re straight up canceling plans to make a major purchase, and then actually 16% said that they might make a major purchase sooner than expected.
So that’s a little bit conflicting, but I just want to call out that basically 24% of Americans are saying that they’re going to cancel or they are going to delay making major purchases like buying a home, and that sort of makes sense because when you look at how the shutdown is playing out, pay has been suspended for about 2 million federal workers. There are three quarters of 1,000,700 and 50,000 who have been furloughed and the rest are expected to work without compensation. Normally, I think during previous shutdowns we’ve seen that those people will get back pay once the government reopens, but the White House has said that they’re considering not paying furloughed federal employees for the time they didn’t work during the shutdown. So all of these things have really led to a lot of uncertainty for these federal workers, and I’m sure there are other people who aren’t federal workers who are just looking at the chaos in Washington right now and are saying they don’t want to make a major purchase.
Given all this uncertainty, there’s also a ton of other Americans who work for private companies, but they don’t get paid. They don’t go to work because their work relies on government projects. So all these things are combining to impact the housing market very directly. That’s the first thing. There’s a second thing though that I’m not sure everyone has noticed, but when the government shut down on October 1st, the National Flood Insurance Program lapsed meaning that the government sponsored flood insurance is no longer issuing new policies, they are not doing renewals. If you have an existing policy that’s ongoing that is not being canceled, but no new policies, no renewals, and that is pushing people into the private market for flood insurance, which is much, much more expensive. I was just reading an article that showed a woman in Florida who had previously had a quote for $4,000 for annual flood insurance for two bedroom ranch already pretty expensive.
Now, the two quotes she got for private carriers were $9,000 and $12,000. So for one, the cheaper one more than double for the more expensive one, it was triple the government program. Because of this increased cost and uncertainty, NIR is estimating that this is going to prevent or delay 1400 closings a day across the country. Now, on a national level, of course, 1400 closing a day is probably not going to really show up in the data, but what’s interesting and unfortunate about this is that the areas of the country that are in these floodplains, and it’s actually more than you think about 8% of all properties in the US are in areas that require this kind of flood insurance from most lenders, but most of those 8% of properties are in states that are on the Gulf Coast, right? You see Florida, Alabama, Louisiana, Texas, and these are areas of the country that are already getting hit by a housing correction, and so when you combine these things together, right, when you look at the correction that’s already going on, it’s pretty bad in Florida right now in Louisiana, other places are seeing more modest corrections, but it’s definitely going to cool the market further, 1400 sales in Florida right now is actually pretty significant, and the sellers who have had their properties listed for months and are really eager to close and actually sell their homes, these delays and these cancellations are going to be particularly painful.
Hopefully, the government will reach an agreement soon and the National Flood Insurance Program will restart issuing policies and renewals, but in the meantime, it could get a little ugly there, especially if you need to get private insurance even as a stop gap for the time being while the government is shut down. Now, I was reading that in some instances it is possible for current homeowners to assign their flood insurance to a buyer. So if you’re one of these people who are in a situation where the buyer’s backing out or wanting to delay because they can’t get flood insurance, I would recommend looking into this, call your provider and see if you can assign it over because that might be a way that you can actually get through this shutdown and actually close on a property. You could do this if you’re a buyer too. If you are a buyer and you want to actually close on these properties, see if you can get the seller to assign you their insurance program.
Again, it doesn’t work in all instances, not all carriers are going to do that, but it’s worth exploring if you happen to be in this unfortunate circumstance right now. So we’ll have to just see how this plays out, but as of now, these are the two main ways the shutdown is impacting the housing market. We got to take one more quick break, but when we come back, I want to talk about just a couple of data sets I’ve been looking at recently that show more signs of economic weakness even outside of the labor data that we’re getting and what this might mean for the market. We’ll be right back.
Welcome back to On the Market. I am Dave Meyer. Now let’s just talk about a couple signs of economic weakness. Now, I fully admit the economy is totally polarized. There are signs that the economy is strong. We’re seeing the stock market near all time highs. Gold is really high, which you could argue is not a sign of economic strength, but asset prices are high. Bitcoin is near all time high too. Some people think that’s because of its hedge. Some people might say that’s economic strength, but again, there are all sorts of mixed signals in the economy right now, but a couple things came out this week, the week of October 6th that just show a couple things that I think are a little concerning in terms of the overall economy, and I just want to talk about them and how they might impact the housing market and economy in general.
The first up is car loans. Now, I’ve said on the show lots of times, and it’s still true, the average American home buyer remains in good shape. We are not seeing big upticks in foreclosures or delinquencies. They’re very minor for the most part. They’re well below pre pandemic levels. We do see some upticks in VA and FHA loans, but nothing at a concerning level right now. But when you’re looking at the strength of the economy, you often want to look at the quality of the debt that is out there because what often leads to recessions is when people can no longer service their debt, they go bankrupt, they default. That causes these ripple effects throughout the economy, so these are things that you always want to keep an eye on. The car loan data is getting just a little bit worrisome. It is not crazy or anything like now, but what we’re seeing is that the portion of auto loans that are 60 days or more overdue that are subprime hit a record of more than 6%.
That is the highest they have been in any of the data that I’ve seen going back to 2000, and that includes the financial crisis when they peaked a little bit below 5%. Now, it’s important to note that subprime auto loans are not a huge portion of the market right now, but prime loans, which is basically loans made to more qualified buyers are also going up. They’re not at all time highs, but they’re sort of back near pre pandemic levels and they’re on an upward trajectory, so both trending in that direction. We also see that an estimated 1.75 million vehicles were repossessed last year. That’s the highest total since 2009, and it looks like car dealers are actually lowering their credit standards, which is something I always worry about having come into the economy and the housing market during the great financial crisis, I never like seeing lenders lower their credit quality standards, but we’re seeing right now the percentage of new car buyers with credit scores below six 50, which is close to subprime, was nearly 14%.
That’s one in seven people. It’s the highest it’s been in nine years, and so it just shows an overall weakening of the American car owner, and I’m not super concerned about this right now because it’s still a relatively small portion of the market, but these are trends that we should watch out for when we’re evaluating the economy. But there was one stat that I had to share with you all. This is actually insane. New car prices are just, they’re wild right now. The average monthly payment in the United States, the average for all people is more than $750. That is absolutely wild. That is a crazy amount of money. That is $9,000 in post-tax money per year going towards the average car. No wonder people are struggling to make these payments that is so expensive. Maybe I’m just old and my expectations of what car payments should be is like $350, but man, that seems high and nearly 20% of loans and leases, car payments are now above a thousand dollars in monthly payments.
That just rubs me the wrong way. It just makes me a little bit concerned. Again, I’m not trying to be alarmist, but this is something I’m definitely going to keep an eye out, especially among some of the other data that we’re seeing. Student loan delinquencies are up, we’re seeing credit card delinquencies up a little bit, so this is just adding to the picture that we’re seeing across the economy right now. For the most part, American consumers, their feelings about the economy are down from a year ago, but they haven’t really changed over the last couple of months. There is this index of consumer sentiment. I talked about this a lot because it can be an indicator of where the economy is going and what it’s showing right now is that consumer sentiment was basically unchanged month over month. It actually just went down slightly from September, 2025 to October, 2025, but really big decline year over year.
So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% decrease year over year, which is down a lot. We see the index of consumer expectations of the economy dropping 31% year over year, so obviously Americans compared to a year ago feeling worse about the economy. Now, this study is actually put out by the University of Michigan, and they put out this really interesting chart that I thought was kind of fascinating and wanted to share. It shows that sentiment and expectations for people who have no stock holdings are just plummeting. Meanwhile, people who have large stock holdings are actually starting to feel better and better about the economy, so it just continues to show that in the United States right now we have sort of two different economies going on. People at the very top of the income bracket tend to be doing well.
We’ve seen data that shows that 50% of spending in the economy right now are coming from the top 20% of the market, and their expectations are fine. They’re feeling good about the economy. Meanwhile, other consumers sort of in the lower end of this socioeconomic bracket, they’re not feeling good about the economy, and that could be a sign that they are going to pull back on spending even more in the coming months. So this is another thing that we need to watch out for. Lastly, this is just quick, but I actually saw this interesting data on realtor.com that showed that 22 states, so nearly half of all states are either in a recession or in a higher risk of a recession. These are states, they’re honestly just spread out throughout the country. You see some in the northeast, like in New England, you see some in the middle of the country, Wyoming, Montana, South Dakota, Illinois, a couple in the south in Mississippi and Georgia up in the Pacific Northwest in Washington and Oregon.
They’re pretty spread throughout the country except the southwest of the country. That seems to still be a bright spot. Not all of them are growing. We see California, Nevada, Colorado, New Mexico. They’re sort of treading water. Same thing with some other states like Missouri, Tennessee, Ohio, New York, and then there are a lot of states that are continuing to grow. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All still continuing to grow, but it does again show that a lot of the country, when you see all this confusing economic data, it’s because it’s all really segmented. It depends on what state you’re living in. It depends on where on the income bracket you’re in. It depends on how much stock and gold and Bitcoin you own, so if you are feeling really disconnected from the headlines that you’re seeing, it makes sense because the headlines are broad generalizations and it’s really hard to make broad generalizations about the economy right now.
It is totally different depending on who you are, where you live, what your job is, what kind of things you invest in, and so just remember that you got to go a level deeper in the data. But I’m bringing this all up because some of this recession risk could be reflected in mortgage rates going forward. Again, as you may know, when there is risk of recession, that generally pushes down mortgage rates, which could bring back some more affordability to the housing market, but if that happens, and how much that happens will largely depend on inflation data, because if inflation data goes up, it will probably counteract this recession risk. Mortgage rates will stay the same, but if inflation starts to level out and we see more of this recession risk, obviously no one wants a recession, but the one silver lining of that might be slightly lower mortgage rates in the weeks or months to come.
That’s why I wanted to bring this up, and it’s something we’ll keep an eye out for here on the market. That’s my update for today, October 14th. Thank you all so much for listening to this episode of On The Market. Don’t forget, if you want to see more on the market events in your local area, make sure to leave us a comment either on YouTube or Spotify. We would love to hear what you would like to see out of on the market events. We’d love to see you in your local market. I think it’d be a lot of fun, but we just want to figure out what exactly that should look like. Thanks again for listening. I’m Dave Meyer. See you next time.

If you’re tired of evictions, repairs, and city inspectors, but love the idea of passive income, tax breaks, and appreciation, self-storage might be the investment play that’s been hiding in plain sight, while you’ve been chasing the next cash-flowing residential rental.

That could be about to change, because self-storage has been growing faster than a batch of toadstools after a rainstorm. Over the past decade, the U.S. self-storage sector has expanded from about 1.4 billion to almost 2 billion rentable square feet, increasing by over 500 million square feet. According to Yardi Matrix data, the expansion has been closely linked to the rise in Sunbelt multifamily housing development in burgeoning cities such as Houston, Dallas, Austin, and Phoenix.

Granted, self-storage is not as “sexy” as residential real estate. There’s no interior design, and no HGTV shows. Still, if you are looking for something steady and predictable without the drama of being a landlord, self-storage could be worth considering. 

It goes in tandem with multifamily real estate because as apartments have been stretching far and wide across the Sunbelt, apartment sizes have been shrinking, ushering in the need for more self-storage. “Houston apartments built from 2015 onward have shrunk by 44 square feet on average …while 5.3 million square feet of storage were added locally,” a recent analysis from national storage space marketplace StorageCafe finds. 

It’s a pattern that repeats across the Sunbelt in cities in Florida and Texas, where, along with North Carolina, RentCafé reports that self-storage inventory is expanding at the fastest pace since 2014, with some markets quadrupling capacity. 

Amid a housing boom of shrunken apartments, Americans are proving stubborn downsizers. “Self-storage has quietly become the backbone of this new reality,” a StorageCafe analyst told The Real Deal.

A Stable Investment

Like much of the real estate industry, self-storage experienced a post-pandemic surge and has now returned to a more stable, sustainable growth, according to Yardi. Owners of self-storage units in 2020 and 2021 saw occupancy rates drop below 3% vacancy, while rents shot up 40% in some areas, said commercial brokerage CBRE. This trend occurred as remote working gained in popularity and employees left their homes for other locations.

In 2023-2024, the market stabilized amid higher interest rates and slower housing turnover, and this year, signs of normalization have emerged. In Q1 2025, CRE Daily reports that self-storage transaction volume climbed 37% year over year to $855 million due to renewed investor appetite. 

However, self-storage is still vulnerable to market conditions, with cap rates currently around 5.5% to 6.5% and development pipelines thin due to tighter borrowing conditions and increased development costs, according to commercial brokerage Cushman & Wakefield, which stated that “elevated construction costs and a lack of debt liquidity have pushed down new development levels to more normalized levels,” indicating that the market is finding equilibrium again.

Why Self-Storage Still Appeals to Investors

Self-storage is not a new concept. It’s been around for decades, and despite fluctuations in the residential real estate market, it has proved to be perennially popular. Here are some of the reasons for its staying power.

Diversified use

Demand is not limited to relocation, new babies, divorce, or death. Many people with storage units choose them to alleviate clutter in their homes and garages. Indeed, 1 in 3 Americans now rent a storage unit, and a further 18% plan to do so in the future, according to StorageCafé—offsetting the lulls in short-term and mid-term rental housing. 

Flexibility

As storage leases are typically month-to-month, landlords can adjust prices quickly to accommodate demand, setting it apart from conventional commercial buildings.

Low overhead

There is little ongoing maintenance compared to residential real estate or retail buildouts. Repairs are daily and predictable and do not require delicate negotiations around tenant occupancy.

Fewer headaches

Tenant disputes are rare due to the type of asset class self-storage falls into and the straightforward lease agreements. 

Room to Grow

The Sunbelt dominates U.S. self-storage markets. Atlanta led the charge, with new deliveries, topping 1.5 million rentable units in H1 2025, according to Multi-Housing News, with Phoenix, Los Angeles, Tampa, Houston, and Chicago also making the top 10 in new inventory additions.

Investing in Self Storage

Large REITs such as CubeSmart, Public Storage, and Extra Space Storage are dominant in the self-storage space and offer the lowest barrier to entry. Investing is like buying any stock. 

However, if you want to buy and set up your own self-storage space, there are several loan options, such as a conventional commercial loan, an SBA loan, and a CMBS (commercial mortgage-backed security) loan, which is turned into a security or bond and sold to investors on the secondary market. Rental opportunities are always featured on commercial listing sites like loopnet.com or crexi.com under “industrial.”

An Ongoing Attraction for Small Investors 

Small investors have flocked to self-storage in recent years as an alternative to residential real estate. Needless to say, several gurus with courses and training programs, such as Mike Wagner’s Storage Rebellion and AJ Osborne’s SelfStorageIncome.com, are ready to accommodate the ever-growing legion of interested parties looking for an alternative to conventional landlording.

Final Thoughts

Self-storage was invented by mom-and-pop investors, who took commercial spaces and added doors to them. Now it is dominated by Wall Street titans, and opportunities tend to be thin on the ground. However, the continual demand for storage space makes it a growing asset class.

As older mom-and-pop investors age out and developers and investors construct new facilities, opportunities arise. However, as with any investment, choosing a market with high demand, obtaining municipal approval, avoiding overleveraging, and quickly filling units are the keys to success. 

This article is presented by Invest 5S.

It’s 11:47 p.m. on a Tuesday, and you’re hunched over your laptop, frantically searching for a plumber who’ll take an emergency call. Your tenant in the duplex has been texting nonstop about a burst pipe, and you’ve already spent two hours tonight coordinating repairs, reviewing invoices from last week’s HVAC issue, and updating your rent roll spreadsheet.

Sound familiar?

If you’re self-managing your real estate portfolio, this scenario probably hits close to home. You got into real estate investing for financial freedom, but somehow you’ve created a second job that demands your attention at all hours.

Here’s the brutal truth most investors won’t admit: The time you’re spending “saving money” on management fees might actually be costing you more than you think.

While you’re busy celebrating the 8% to 12% you’re not paying a property manager, you’re potentially sacrificing something far more valuable: Your time. Your energy. Your ability to scale. And, ironically, your overall return on investment.

Most investors can tell you exactly how much they spend on repairs, utilities, and mortgage payments. But ask them to calculate the hidden cost of their own time spent managing properties, and you’ll usually get a blank stare.

That hidden cost? It’s quietly eating into your profits every single month.

The Real Numbers Behind Self-Management

Let’s put some hard numbers to this time investment. According to industry data, self-managing landlords spend an average of eight to 12 hours per month per property on management tasks. For a modest five-unit portfolio, that’s potentially 60 hours monthly.

Break that down by activity:

• Tenant communication and issue resolution: 15-20 hours
• Maintenance coordination and vendor management: 12-18 hours
• Financial tracking and rent collection: 8-10 hours
• Property inspections and showings: 6-8 hours
• Legal compliance and paperwork: 4-6 hours

Now, here’s where it gets expensive: If you’re a working professional earning $75,000 annually (roughly $36 per hour), those 60 monthly hours represent $2,160 in opportunity cost. Suddenly, that 10% property management fee on $8,000 in monthly rent ($800) looks like a bargain.

But the math gets worse when you factor in the stress multiplier. Emergency calls don’t always happen during business hours. Tenant disputes escalate on weekends. That burst pipe at 11 p.m.? It’s not just costing you sleep— it’s stealing time from your family, primary career, and mental health.

Studies show that 65% of self-managing landlords report feeling overwhelmed by the time demands, and 43% admit it has negatively impacted their primary income source. Meanwhile, properties with professional management see 23% less tenant turnover and 31% faster resolution of maintenance issues.

The opportunity cost isn’t just financial. It’s strategic. Every hour spent coordinating repairs is an hour not spent analyzing new deals, networking with other investors, or scaling your portfolio.

The Specific Time Drains You Don’t See Coming

Beyond the obvious tasks, self-management involves dozens of hidden time sinks that add up fast. These are the activities that experienced property managers handle systematically, but catch DIY landlords off guard.

Tenant screening rabbit holes

What starts as a simple tenant background check turns into hours of phone tag with previous landlords, employment verification calls, and income documentation reviews. First-time landlords often spend three to five hours screening per applicant, only to discover the “perfect tenant” has three evictions they didn’t disclose.

The maintenance coordination maze

A simple repair request triggers a cascade of time-consuming tasks. You research contractors, gather multiple quotes, coordinate schedules, supervise work, inspect completion, and process payments. What should be a 30-minute fix becomes a multiday project management ordeal.

Financial tracking nightmare

Rent collection seems straightforward—until tenants start paying partial amounts, sending payments to wrong accounts, or disputing charges. Reconciling bank statements, tracking security deposits, and preparing year-end tax documents can consume entire weekends.

Legal compliance land mines

Housing laws change constantly. Fair housing regulations, security deposit rules, eviction procedures, and habitability standards vary by state and city. Compliance requires ongoing education and documentation that most investors underestimate.

Emergency response fatigue

Water heater failures, lockouts, and HVAC breakdowns don’t follow business hours. Each emergency interrupts your day, requiring immediate attention and follow-up. The average landlord handles six to eight emergency situations annually per property, each consuming two to four hours of response time.

These “invisible” tasks compound quickly, especially as your portfolio grows. What feels manageable with one property becomes overwhelming with five.

The Scalability Problem

Here’s where self-management becomes a growth ceiling rather than a cost-saving strategy. Every successful investor eventually hits the wall where time constraints throttle their ability to scale.

The portfolio bottleneck 

Most self-managing investors plateau around three to five properties because they simply run out of bandwidth. While competitors are analyzing deals and expanding portfolios, you’re stuck fielding tenant calls and chasing contractors. 

The irony? You’re saving 10% on management fees, but missing 100% of the growth opportunities that would dwarf those savings.

Career impact creep 

Property management doesn’t respect your 9-to-5 schedule. That important client presentation gets derailed by an emergency repair call. Your focus at your primary job suffers because you’re mentally juggling tenant issues. Many self-managing investors find their performance in their main career declining, often resulting in missed promotions or reduced earning potential that far exceeds any management fee savings.

Opportunity cost multiplication 

Every hour spent on property management is an hour not spent on higher-value activities. Instead of researching emerging markets, networking with wholesale dealers, or analyzing potential acquisitions, you’re arguing with contractors about invoice discrepancies. The deals you miss while managing existing properties often represent 10x the annual savings from self-management.

Decision fatigue and burnout 

Managing multiple properties creates constant micro-decisions that drain mental energy. Should you approve that $200 repair? Which contractor quote is best? Is this tenant complaint legitimate? This decision overload leads to poor choices, delayed responses, and eventually, complete burnout.

The most successful real estate investors understand a fundamental principle: Your highest value is in deal-making and strategy, not day-to-day operations. Self-management keeps you trapped in low-value tasks while opportunities slip away.

The Solution: Systems-Based Efficiency

The answer isn’t necessarily hiring a property management company. It’s implementing systems that eliminate chaos and create predictable, efficient workflows. Smart investors are discovering that the right operational framework can deliver the time savings of professional management while maintaining control and maximizing profits.

The breakthrough approach comes from an unlikely source: the 5S methodology. Originally developed in Japanese manufacturing to eliminate waste and maximize efficiency, 5S has proven remarkably effective when applied to real estate portfolio management.

Here’s how the five pillars work:

1. Sort: Remove unnecessary tasks and eliminate redundant processes that consume time without adding value.
2. Set: Organize remaining activities into logical, repeatable workflows that create consistency across your entire operation.
3. Shine: Maintain clean, up-to-date systems through regular reviews and automated updates that prevent small issues from becoming major problems.
4. Standardize: Establish uniform procedures and templates that work consistently across your entire portfolio, regardless of property type or location.
5. Sustain: Build monitoring systems and habits that maintain peak efficiency over the long term without constant manual intervention.

While the methodology is proven, most real estate investors struggle to implement systematic efficiency because they’re trapped in the very chaos they’re trying to escape.

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Rather than teaching you to organize your existing chaos, Invest 5S offers pre-systematized real estate investments with defined two-to-three-year exit strategies. You get the cash flow and appreciation benefits of real estate without any tenant calls, maintenance coordination, or operational headaches. Their systematic development process—built on three decades of experience and over 4,000 lots developed—delivers consistent returns, while you focus on your primary career and family.

For busy professionals drowning in self-management tasks, Invest 5S represents the ultimate systematic solution: passive real estate investing that reclaims your time completely.

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Government shutdowns, the dollar falling 11% in the first half of 2025, its fastest decline in 50 years, record numbers of lawsuits against the executive branch, and fears and fights over tariffs, stagflation, and the Federal Reserve’s independence. 

It all speaks to political instability, which creates economic instability. 

It doesn’t matter whether you identify politically as red, blue, purple, green, or polka-dotted, the U.S.—and much of the rest of the world—feels politically and economically unstable. 

So how do you protect your money from political risk and instability? 

1. Inflation-Resilient Investments

In January 2025, the CPI inflation rate was 3%. It fell to 2.3% in April, before steadily rising again to 2.9% in August (the last month available). 

Anyone who thinks elevated inflation is beaten is deluding themselves. It remains a very real risk. The Federal Reserve acknowledged it even as they cut interest rates in September, opting to prioritize the job market over inflation. 

Oh, and the devaluation of the dollar that I mentioned earlier? Consider that another huge red flag for inflation. 

So, which investments defend your portfolio against inflation? 

In a word, real assets (I guess that’s two words, but you get the idea). 

Real estate, commodities, precious metals, and infrastructure do well during periods of high inflation:

Stocks don’t do badly either, although they don’t perform as well as real assets. Real assets have intrinsic value, so people just pay the going rate, whatever that is in today’s currency pricing.

I keep around half of my net worth in stocks and half in passive real estate investments, although I’m increasingly carving out some money for precious metals. 

2. Recession-Resilient Investments

You think Congress did the economy any favors by letting the government shut down? Workers sitting around twiddling their thumbs hardly creates a booming economy. 

Oh, and we had a shrinking job market before the shutdown. Job openings have steadily fallen for months now, and last month saw negative job growth. 

I’ve written about recession-resilient real estate investments. In the co-investing club that I invest through, we’ve vetted and gone in on many recession-resilient investments over the last year, including:

• Industrial properties with years of backlogged orders
• Rent-protected multifamily properties
• Mobile home parks with tenant-owned homes
• Self-storage facilities

In the case of multifamily properties, we’ve gone in on some properties that designate a certain percentage of their units for affordable housing. These units have a waiting list, and the properties often get a property tax abatement in exchange for the rent protection. When operators do this right, they get an immediate bump in net operating income—without having to do a single unit renovation. 

You can also invest in recession-resilient stocks, such as utilities, consumer staples, and other defensive stocks. 

3. Cash-Flowing Real Estate

The better a property’s cash flow, the better it can ride out political and economic instability. 

Besides, cash flow doesn’t require the market to improve for you to see returns. You can measure cash flow right now, in today’s market. 

If inflation and rents go up, cash flow only gets better. If a massive recession hits and occupancy rates dip, at least the property has plenty of margin for error. 

Many deals our co-investing club have vetted and invested in this year already cash flowed well from Day 1. Sure, the operator plans to renovate some of the units to add value and raise rents. But the properties don’t require it to pay high distribution—they already throw off plenty of cash. 

4. Invest Internationally

Worried about political instability here in the U.S.? Diversify to include more overseas investments. 

Admittedly, that’s much easier to do with stocks and REITs than it is with other real estate investments. You can buy shares in a sweeping index fund like Vanguard’s All-World ex-US Shares ETF (VEU) to get broad exposure to the rest of the world’s stocks. I own shares myself. 

But active or private equity real estate investments? That’s a tougher nut to crack. In the co-investing club, we’ve looked for reputable operators who own international real estate, and haven’t yet pulled the trigger with one. 

5. Get Legal Residency in Another Country

I do some financial writing for GoBankingRates, and my editor assigned me an article on the money moves that the wealthiest Americans have made in this year’s political environment. I spoke with one CFP whose answer surprised me: His wealthiest clients are securing second residency visas, but aren’t actually moving abroad. Rather, they want a hedge against political risk—an easy exit if they ever need it. 

I found that fascinating, in part because I myself spent 10 years living abroad. My daughter has dual citizenship in Brazil, and my wife and I have long-term residency visas there through 2030. 

The good news for everyday people? You don’t need to buy a golden visa or second passport. You can quickly and easily move abroad with a digital nomad visa, available in 73 countries. Some require you to show a certain amount of income each month; others require you to show a certain amount of money in the bank. But they’re designed to be pretty painless. 

The bad news: They’re also designed for short-term stays, typically one to four years. After that, you’ll probably need to apply for long-term residency. 

Fight Instability With Flexibility

I don’t know which way the winds will shift. But I want to be ready to throw up my sails to catch them, no matter which direction they blow. 

I’m not the only investor with an eye on hedging geopolitical risk right now, either. Look no further than the price of gold, which exceeded $4,000 an ounce in October for the first time ever. Gold skyrocketed a dizzying 52.6% over the last year, a sure sign that investors are worried about geopolitical risk and currency devaluation. 

Historian Neil Howe makes a troubling argument in The Fourth Turning Is Here that every civilization in history has experienced a predictable four-generation cycle, culminating in a major crisis. The last of those crises was the Great Depression and World War II, which puts us on schedule for the next major crisis within three to seven years. 

I plan to keep my wealth intact no matter what comes down the pike, and increasingly, that means hedging against political risk.

Ashley:
Real estate investing feels out of reach, like something people with money do. This episode might change that. Sebastian Rodriguez was sleeping in his car, had maxed out his credit cards and barely spoke English, yet he was able to build his own rental portfolio in just six years.

Tony:
That’s right. Sebastian started from zero, but now he owns 13 doors that bring in roughly $4,000 a month in cashflow. And today we’re uncovering exactly how he got there and how you can do the same no matter your starting.

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

Tony:
And I’m Tony j Robinson. And let’s give a big warm welcome to Sebastian. Thanks for joining us today, brother.

Sebastian:
Thank you guys for having me here. Happy to be here and happy to share my story.

Ashley:
Yes. So take us back in that moment when you were working jobs just to survive and at one point, even sleeping in your car, what was going on through your head about money and just the future in general?

Sebastian:
Yes. Wow. What was in my head going in my head, I was in survival mode. I got to do what I got to do. I feel like it was yesterday. I can still see those days and feel that no time has happened in between, but I was focused on my number one priority was only to learn the language I needed to understand where things are located. I just moved here. I didn’t have any network, any language was a big barrier for me. So I needed to understand how to move around, how to talk to people, how to get a job, how to get a house, and it’s really scary when you can communicate properly. So my biggest focus again, was understanding and learning the language. I did everything possible to just pick up the language as fast as I could. Two years down the road, I was able and I took the leap of faith to start talking to people to quit the jobs when I needed to just be in the back washing the dishes and not talking to anyone.

Sebastian:
I wanted to be in the front facing the, at least making the mistakes. I said it wrong, it doesn’t matter. I will learn how to say it. So back then again, it was so focused on how to survive, how to stand on my own feet. Also, I had a little bit of the victim mentality because this is hard. This is difficult. Why did I do this? Why did I move? I had a good life. I was comfortable in my country. But I believe that all of that took me through a better position when I could start learning and seeing that the future wasn’t just like that. It was just the stepping stone and what I needed to do in that moment. So I think that the struggle was worth it and it taught me a lot. But yeah, my focus number one was just to learn the language and understand the city where to go to get stuff.

Tony:
Sebastian, when you first moved to the States, where did you land? What part of the country were you in?

Sebastian:
Yes, I arrived to Boston, Massachusetts. Actually. I arrived to a place, a town here called Wooster. It’s about an hour from Boston, and this is exactly what I say. I arrived there. I didn’t know anyone, so I thought I was close to Boston. I got a job in Boston. I was working at night. So the transportation was extremely difficult. I didn’t consider that. So I was working in Boston, leaving so far away, I had to take the train every night. I had a situation there where again, I didn’t understand the maps and how the train works. Everything was completely new. So unfortunately I had to stay one night on the T station because I missed the train and I didn’t know how to ask for help or I didn’t know how to afford at Uber $50 because it was too far away. So things like that is what I go back and say again. I say I was just focused on how to stand on my own feet, how to understand where I’m living, where things are located. After that, I moved closer to my job. I start living in the same place, in the same area. So things got a little bit better. But yeah, that’s Boston, Massachusetts,

Tony:
And Sebastian. Crazy story that you had to sleep in the train station. But I guess what was that turning point for you that took you out of I’m just trying to survive and learn the language into actually thinking about building wealth.

Sebastian:
The goal, the priority was always to get a better life, to improve the life. When I was able to jump into the bank again and enroll into my banking career and be able to speak a little bit better, I realized and I start paying attention again to the money. So I was able to build a little bit of comfort in terms of the income and that gave me time. So it’s only wait three times to get value in life time, money or knowledge. So I built the time. So I started learning about real estate. I started understanding more how the money works, the cycle of the money, going through books and podcasts you guys every single day. And that gave me the vision of like, okay, this is not it. It’s a better path. It’s a better way to do things. So that turning point was probably when I, as Ashley mentioned, maxed out my credit cards, lost my apartment, I was sleeping in my car, I had nowhere to go and I had no family.

Sebastian:
I can’t just go and call my cousin, my aunt, Hey, can I crash into your couch? No, I can’t. So that moment I was like, okay, I need to do something. At the same time, I found my life partner and when I got engaged, things got serious and I’m like, okay, I can’t just provide, I can’t just live like this. I need something that is going to give me a better future. Whatever it takes, I’ll do it. So that’s when I, after struggling and understanding stocks and other type of investments, I used to lend money, but real estate was the best way that I found that was real. That was something tangible, something that you can play a long-term game, not just something that you’re getting and on quickly. So that’s when I understood and I decided to go all in into real estate.

Ashley:
Now that you’ve realized that and you’ve come to that point in your life, what were some of the first action steps you took when you decided real estate was going to be your wealth generator?

Sebastian:
Many. One of the first ones was to delete the victim mentality and changing the typical, I’m coming back from work, I’m tired, I just need to go to my couch and watch Netflix. No, that needed to change. I could also watch Netflix, but an hour prior that I could just analyze two deals. So one of my rule number one since long time ago was to analyze two deals every day. I will go through MLS, I go and pull two addresses, see the market and then start understanding. I didn’t know anything, but little by little I was like, oh, I kind of know what a house will go from that area. I kind of know what the taxes look like. So those type of small habits, the change in my day by day, oh, I’m tired, just going to go home and sleep. No, you need to put 110%.

Sebastian:
Now the schedule is way different. So now I can relax a little bit better, but back then it’s all in. I dunno. Another really good habit is like reading. I was never the person who used to read and take a book and it wasn’t my biggest, I dunno skill, but after reading a few books and paying attention to the podcasting and stuff, I’m like, wow, this book is like the recipe. Just follow it, follow exactly what it’s saying and it’s going to work. It’s going to happen. So I believe those two habits were big, big in my, I dunno, back in the time when I was struggling.

Ashley:
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Sebastian:
Just before going into the deal. I will say that that was the struggle. Number one, while I was analyzing deals, I realized that I couldn’t afford a house in my market. So that was my first big wall that I had to figure it out how to overcome. Because of that, I start saying, okay, this is not it. I need to find a way to invest somewhere else. And the good thing about the states is that you guys can do things over the phone. You don’t need to go there. It is really good in that sense. So I found the book, long-term, long distance investment and I just follow what the book said. I found I picked a few markets, found Philadelphia as the one that is as good in my research and then I start putting offers there. So it was another, I will say another level because you start analyzing against something out of state.

Sebastian:
So now your picture, your satellite view is even bigger because it’s not only just the house and you can fix everything because you’re right there. You need to trust the agent, you need to find the contractor. So things get more complicated. But the deal, how it looks like we bought, we land on our first property on MLS $64,000. The property was just full of trash and smell. But here’s one of my rookies, I don’t know, advice smelled like money. The house was full of trash, full of bad stuff. It smells bad I know. But once we clean it up, it was in great condition. We put only $7,000 we rented out right away. That was through the pandemic time. So we got an excellent rate, like 3%, something like that. The rent was around $950 and the mortgage back then was around $450. Today the property RV is probably around a 180. The rent is $1,200 and we still hold a note and I’m going to hold a note forever. I’ll never refine on that note. That was my first deal.

Ashley:
You’re renting this property two today for $1,200 and your mortgage payment is five 50 and I’m assuming that’s escrow too. So insurance and property taxes.

Sebastian:
Correct.

Ashley:
Wow, that’s incredible. And you only put $7,000 into the rehab of this property too?

Sebastian:
Yes.

Ashley:
Well, that’s a great first deal. Did that get you addicted then to this market?

Sebastian:
Absolutely, absolutely. But also really big learning lessons from that deal. It’s the first door that we bought and through this door we learned how to evict someone, how to help someone. One of the tenants passed away and we had to deal with all, I didn’t have any of those situations even close to my worst case scenario. So again, it’s not only, this is what I always say, perfection, speed, beat, perfection, I didn’t know. But if I wouldn’t bought it back then I probably wouldn’t have it today and I wouldn’t experience all of that and I wouldn’t learn and earn all this I knowledge. So I think that’s the most important is take action and do it right. As long the numbers look well look good, and you’re safe, just take it and learn. You’re going to learn a lot.

Tony:
On that note, Sebastian, and you’re kind of hitting it on my next question. There are a lot of rookies who are listening right now who have listened to the podcast, who’ve watched the YouTube videos. They read the same book that you read. They’ve analyzed deals, but they’re still stuck in analysis paralysis. What do you think you did that allowed you to go from not only only investing in your backyard, but investing long distance, but being able to find the deal and actually pull the trigger on something? What were you saying to yourself to say, I’ve actually got to move forward. I got to stop just listening and watching.

Sebastian:
One of the first things that I will say is everyone has to be able to measure their risk. I am a risk taker person, or at least I able to manage some type of pressure and risk. Other people can’t. That’s completely okay. But when you’re in the analysis paralysis, you probably know ready to pull the trigger because you’re scared of something. So measure the risk, run the numbers, see what’s the worst case scenario and think about that. Never be super positive, oh, this is going to run three times higher because my renovation are going to be better. Probably not be conservative, be positive, but be conservative. So if anything goes south, you still okay, you still able to learn and move on. The most important thing is make sure that this is when you say, Hey, you going to be a real estate investor? You want to buy a property?

Sebastian:
Feel that hell yes, that fire in you. Yes, I want to do it. If you do it like that, no matter what challenge you face, you’re going to be able to fix it, work around. But since the beginning you feel like, yeah, maybe no, maybe this is not my right. You clearly is something. There is some type of risk that you don’t want to take. Don’t take it. Maybe you can be, I know a silent partner in a syndication, you can always find a strategy or a way to invest, but if you feel stuck there and you can’t pull the trigger, maybe step back and see what other options you have. Where do you feel more comfortable taking some of the risk and work around. Maybe down the road you’ll be more willing to take risk

Ashley:
Going forward. Did you have to change your buy box or any of your criteria because maybe you would find that golden deal and that wasn’t working anymore? Explain those kind of next steps. Explain those next steps to explain your buy box, your strategy going forward after that first deal.

Sebastian:
Yes, that’s a great question. Something really, really important that I will, if anyone can take something out of this conversation is understand your market. You need to know where you buy, even if it’s far away you can’t see it. So you need to understand where you’re buying through these five years, six years of investing. At the beginning we were just forcing to happen. We were all in. We were like, buy any property, we don’t know, we don’t care, we just just want to do it. But I realized that that’s not the right approach. You need to understand what you’re buying. You need to run your numbers. So if you are focused on your buy box now today I only buy raw single family house under 1300 square feet, three bed, one bath with a basement in a specific zip code, 1 19, 1 44. Those that to reach that point, it took me five years because before I was just, okay, it’s a deal here, but maybe here and also here and my contractor was going all around. All of that counts. So through these years of investment investing, you will find better markets if you keep repeating the same. So stay on the same single family house for quite a while. Don’t go single family house, 20 unit building, commercial building. I probably wouldn’t recommend that. Some other people do it and it work for them. That’s amazing. But if you want to do it a little more conservative, understand first what you’re buying, building the buy box. That’s my number one priority.

Tony:
And Sebastian, I appreciate you saying that it took you five years to land on the very specific buy box that you have right now because I do think that your buy box will change and adjust and get tighter as you do more deals. And for all of the rookies that are listening, you don’t necessarily need to start with a buy box that’s as specific as what Sebastian has right now where he said, row house, single family, three bedrooms, one bath, basement, this very specific zip code. If you can, great, but just know that you can build that specificity as you start to do more. And Sebastian, I’m assuming that the reason that you have such a tight buy box is because you spent enough time looking at other deals and you found what actually works in your specific market. So I think that’s the lesson for the rookies that are listening is the more you do, the easier it becomes to identify what your buy box should be.

Ashley:
If you guys need help creating your buy box too, we actually have a worksheet for you with just a huge list of all the things you should think about. Do you want a pool or not? How many bedrooms is your range? What age of house do you want? All of these things to kind of give you an idea of what to think about when you’re building out your buy box. And you can go to biggerpockets.com/rookie resource and you can find it in there, the buy box template.

Tony:
So Sebastian buy box is one of the things that maybe was not necessarily a mistake, but something that’s evolved for you. But I guess were there any other mistakes from that first deal that have changed the way that you’ve invested since then?

Sebastian:
Yes. The other one is not be prepared for what it comes. So I was only focused on like, okay, I want to close in a property. I want to make sure that we close and once we close what didn’t have the contractors line up on time? I didn’t. So it took me a lot of time working through that property. So buying the materials, we had to hire two different general contractors and things started going south and all of that cost me money holding costs every month I have to pay for that mortgage, I have to pay for that property. So the ability to understand, to see or have a vision of what you’re going to do, but have a specific plan and a step by step is really important. Okay. Building SOPs. We closed today, we just closing a property last Wednesday. We closed on Wednesday by Thursday we need to get a new locks. It’s the SOP no, next week, no, the next day. The first time we didn’t do that. So contractor calls they like, oh, I’m sorry, someone came to the house and I stole everything. How do you know? Sure, that happens. It’s a hit on me. But again, it’s a learning experience. Oh, okay. I’m not going to do that twice. So having a specific building those SOPs or step-by-step what to do when it’s also really important for the business. No, just focus on let’s put the property and that’s it.

Tony:
So Sebastian, you touched a little bit on like hey, having the crew lined up on as soon as you’re closing on a property. What else has maybe changed about your rehab process from that first deal to how you operate today

Sebastian:
In terms of the rehab process? This is funny because the first time we used to, for example, paint being clean and do other stuff before we do the electrical. So stuff like that is where we need to understand how to do it, what goes first. So electrical, HVACs, pulling permits, all that stuff has to go first before you even start working again. I learned that through the hard way and we had to pay some fines and got fine from the city some violations. So that also, again, it’s more like thinking what’s the business after, not just focus on the property. So you need to have buy the materials in bulk that will save you a lot of money. Understand the timeline, the time that the property is going to be sitting after you list it for sale or how the refinance process works or who’s going to be your hard money lender or the person who’s going to so many, I will say everything changed. I do not operate as the first property that we bought that was far away.

Ashley:
We have to take a short break, but when we come back we’re going to find out more about private money machine that actually started to fuel your portfolio right after this. We’ll be right back. Okay. So Sebastian, you’ve proven the model works, but scaling from one deal to 13 doors requires something bigger and that’s capital and relationships. So what was the very first conversation you had when you tried to raise private money? How did you approach it?

Sebastian:
That’s a great question. It’s something really interesting. As I mentioned before, it’s only three ways that you can add value to someone. Money, knowledge or time. Back then my first door and up to today, we still are partners, but we started being friends. So back then I was just had the time. So I started getting the knowledge. I had zero credit, zero money, nothing. But my partner had everything else. So I start analyzing those properties, I start finding the opportunities and then I show it to him. He says, yes, let’s do it. I didn’t approach, and this is what I always say, you can’t approach this conversation as like I’m begging you for money. You have to understand what you’re doing, be confident on yourself, but also showing us an opportunity. This is the opportunity. Do you want to take it another big lesson here?

Sebastian:
If it’s No, it’s okay. Think as a no yet more nos that you go through closer to the yes. So 20 people will tell you no, the 21st or the 21, I’m going to tell you yes. So be real. Having those conversations is typically scary because the approach is like, oh, would you lend me some money? Do you think you can help me with this? Those were the conversations at the beginning. But again, because I was clear, transparent, honest with this friend, he was seeing what I was doing and he saw the value in me and I gave him what he didn’t have the time he was working crazy hours. So we match up and we say, okay, it’s an opportunity here for both. It’s a win-win, let’s move on. And since then today we have a great portfolio. We still do business together. We still put properties under his name, under my name now that my credit is better. But to be honest, I bought probably the first four or five properties. Everything with his money, his down payment, his credit, everything was him. So those conversations are, I don’t know, just confident that yourself, believe in yourself, you’re doing something good.

Tony:
Sebastian, you just said that this partner funded your first four or five deals, all of their capital, their credit, but you also just told us that you came to this country not speaking the language you knew absolutely no one slept in your car. How did you go from that to actually meeting someone who had the means and the willingness to fund your deals? Where did you find this person? Because if you could go from where you started to in a very few short years, having someone fund your deals, and there is literally no excuse for any other person listening to this podcast to not be able to raise money. So how did you find that person

Sebastian:
At the bank where the money is? So this is the thing of relationships. So once you know what you’re doing, you start helping talking to people and you share what your thoughts are, what your approach is. So I had the ability of, my unfair advantage was being in the bank, you could come to me, I could see how much money you have in your account, what’s your credit, what’s your, I could see everything. So if I see that you were successful, I’d be like, how do you make this money? What is your business? What did you do for work? And I was able to ask them those questions because they needed me. So it was like a unfair advantage. I start working with them asking a majority of the people, real estate, real estate, real estate. And I’m like, how do you do it? How? Let me understand your transactions. And I just focus on these people. Quick tip, where to find these people. I had so many good conversations at the gym with wealthy people because someone, a mentor of mine taught me that it’s better to pay a little bit better monthly membership if you go and have this conversation with these people. So it’s also surrender yourself with, you could find money, you understand, take your phone. It’s a really good book from you guys.

Sebastian:
How to raise private capital. That’s my number one. One by

Ashley:
Matt Faircloth, I think.

Sebastian:
Yes. And I had the opportunity to talk to him in a mastermind class that we had in. It’s just true. You go, I go through my phone, I get an opportunity, I go through my phone and I start looking number by number one by one. If I present this to Ashley, what she will say, well maybe yes, no, maybe no. Okay. And then take these people and the opportunity, someone will say yes. Like many times the big scarcity I will say is the money in my head. The scarcity is like, I want to keep this relationship and it’s fine if I pay you the money, even if I lose your money, you can sue me. You can have a real estate asset that you can get. You’re not going to lose. But my goal is to have you as relationship. We could do really good things.

Sebastian:
So it’s not just the money, it’s that what else you offer to this person. It’s many people in the bank industry, not only in the bank industry, but because I make them there that they don’t have the time. They have tons of money in their accounts, they don’t know what to do, and they prefer to put it in a CD for 18 months at 4%. And I’m like, think about all their things. FDIC, insurance, all this stuff. Why do you hold all your money there? But again, that person doesn’t know that you know what you know. So you need to always tell everyone what you’re doing, share what you’re doing and be truthful. Don’t get advantage of anyone. That’s the most important.

Tony:
Sebastian, sounds like part of what you’re saying is just getting into the right rooms with people. And you’re saying you were fortunate because in your just work that you did, you got to have a lot of conversations with wealthy individuals. You joined a more expensive gym. We’ve interviewed guests in the past, you joined country clubs and they would play tennis and golf there, and that’s how they met some of their private money lenders. But you meet these people, how do you actually go from, Hey, we’re having a conversation about, oh, you’re successful. You are a wealthy individual to can we potentially partner on something? So the very first time you reached out to that partner, what did that look like? Was it at the bank where you guys were just there in the office? Did you exchange contact information? And what did that very, very first actual solicitation for partnership look like?

Sebastian:
Yeah, we were friends at the bank level. We worked together at the bank level. He was higher in position than me. But the approach, again, the approach was never like, Hey, I need some money, or my approach was always like, my goal in life is this. I’m working to get there and this person could see it, just see it next to me. I wasn’t even asking him or telling him, would you be interested? I was just sharing who I am and be truthful. But if you want a specific example, this is something important through another bank friend, he recommended me, someone that I didn’t know this person. She didn’t know me. We had coffee once I shared all my information, all my portfolio, show her everything that I did, and this woman gave me a hundred thousand dollars. I didn’t know her again, I didn’t even go to that meeting asking for money.

Sebastian:
I was like, Hey, she might be interested in what you do. I’ve been talking about you a lot, blah, blah. I’m like, oh, thank you. Let’s have a conversation. It’s more like I was like, Hey, let me help you. What do you want? What are your questions? She’s just like, Hey, I love what you’re doing. Would you let me be part of this? And I’m like, ah, sure, why not? Right? So again, it’s probably the vision. How we see it is like, oh, I need this, I need this. No, you don’t need that. You need to become certain person. You need to have certain habits. You need to be doing certain things. Then the money money’s going to come, then the person’s going to show up. That’s pretty much what I think.

Ashley:
Now that this woman in particular, anybody, I guess when they’ve offered you the money, how do you actually make them feel secure in the deal? What are the next steps after they say, yes, I want to invest with you? What does the deal analysis look like? What information do you give them so that they actually feel secure in the investment?

Sebastian:
Yeah, no, that’s a great question. The most important is, again, transparency. Second, a deep, deep down into the what the property looks like. The numbers, comps, rental comps potentially are the potential rehab or cost on the renovations. The whole project, this person saw it. We had monthly or quarterly calls, depends on what she was looking for. In some point it was quarterly. It just letting her know how the deal goes, what are we doing, what are the next projects coming up? That’s how we handle it. But what I show is everything, to be honest, I don’t try, I even show, Hey, this is how much I’m going to make. Are you okay with it? And that also bring me a really important point through these, a few partners that we had. We understand that not everyone can be the partner, right? Maybe the person was interested at the beginning but it didn’t have the same goal.

Sebastian:
Or they have another idea on how much, again, they get upset of, oh, you’re making all the money. Okay, well you’re a silent partner. You want to be most into the investment. I can do that too. But you have to put in, so sometimes you also understand what vision and what they’re looking for. And at the same time you can say, yeah, maybe we are not the right fit for each other. Maybe we cannot work together. So I think the lessons that we learned, I learned through raising money and talking with people about, Hey, give me your funds. I’m going to do this. Are you comfortable with it? And the number one, I dunno, way that everyone feels comfortable is like these people typically understand who I am, where I live, what my career. Exactly. As you guys say, I came here no long ago, I’m doing this, this, this, this is me. If you feel that you trust me, let’s do it. If you don’t feel that you trust me, that’s okay. Again, it’s a no. Yet you’re going to call me in the future. I’m a hundred percent sure

Ashley:
For somebody who’s listening to this and has no money, no experience, and they want to take their very first step. So what should they be doing today to start building out a private money machine just like yours?

Sebastian:
I will say, changing their habits, becoming a person who, if you are able to talk to anyone, you can add value to anyone. So you need to be an expert in something. You need to understand finances well, or understand, I don’t know, rehab or construction or something. You need to be an expert in something. So that will be my number one. Learn something really well. Be an expert on something. You can share that with someone else. So go to meetups, go to join a mastermind, talk to people and share your goals. That’s also really important. Many times you see people with the same goals. So there we go. You found a partner. You guys can work together maybe if you don’t actually partner up in a deal, but you can be accountable. And that’s also really important because this is a long journey and you need friends, you need the community. You need bigger packets. You can’t do this on your own. It will be impossible. So I think that’s having a budget or understanding what you are in terms of are you bankable? Can you get a loan? Is your credit okay? Is your income good? Oh no. Okay, so find the person who can provide you that. What can you provide for this person? Oh, this person doesn’t have time. I have time. I feel that masterminds and books and changing or becoming the person that you want to become or you want to be is the right approach of anyone could do today to start changing their lives.

Tony:
Yeah, Sebastian, it’s great advice. And I think one of the biggest takeaways from your episode is that it doesn’t matter where you start. You couldn’t have started from a more challenging position. And yet even with the challenges you faced, you were still able to go out, build the network, build the portfolio, and achieve something pretty incredible in a relatively short period of time. And I think a lot of that success comes down to the fact that you focused on, Hey, what is the value that I can provide? First, understanding what your value was, and you said at the beginning it was time and your ability to acquire knowledge. Those are two things that a lot of people listening currently have. Time and the ability to acquire knowledge. And as you did those things, you simultaneously focused on expanding your network. And when you break down that way, time, knowledge, and network, those are the three things that someone needs to build the foundation to then scale their portfolio more quickly. And I don’t even know if you even realize how simple of a formula you’ve built out, but when I heard you going through your story, it’s like, man, if we could just get more people to focus on those three things, time, skills, and network. Dude, I love your story, man. Congratulations brother. It’s amazing.

Ashley:
Well, Sebastian, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out more information about your journey?

Sebastian:
Absolutely. Absolutely. You can find me on Instagram as seba Romy oh nine, I think it’s my, in my email, RS Investment Group, number [email protected]. If you got my phone number too, I don’t care. 6 0 2 3 9 4 4 9 9 9.

Ashley:
Well, there you go. You can go ahead and give him a call or shoot what text. Well, thank you guys so much for joining us today. Sebastian, thank you for bringing your knowledge to the rookie audience and sharing your story. I’m Ashley, he’s Tony. Thank you guys so much for listening.

Dave:
This investor buys houses for only a hundred thousand dollars just outside a major city. He fixes ’em up, he rents ’em out and repeats the process. It’s only taken him six years of using this simple formula to grow a portfolio that’s now cashflowing $9,000 of passive income every single month. There’s no big secret to his success, and in fact, he’s helped dozens of other investors buy almost identical properties and start their own journey towards financial freedom. Today he’s sharing exactly how he’s done it so you can follow the same path too. Hey everyone. I’m Dave Meyer. I’m the head of real estate investing at BiggerPockets, and I’ve been a rental property investor for more than 15 years. Our guest on the show today is agent and investor, Joe Hamill, who lives and invests outside of Detroit. Joe only got into real estate six years ago, but he’s managed to buy 24 properties which generate over a hundred thousand dollars in cashflow every single year. And on the show today, he’s going to explain how he scaled such a profitable portfolio with very affordable properties, why he’s converted to this slow burr strategy. Love that, and his best advice for other investors looking to do these exact same types of deals. Let’s bring on Joe. Joe, welcome to the BiggerPockets podcast. Thanks for being here.

Joe:
Thanks, Dave. Thanks.

Dave:
Great to meet you. Yeah, super excited to have you on and hear a little bit about your store. So give us your background. Where are you from and how do you find yourself getting into real estate investing?

Joe:
Well, I’m originally from Ohio. I now live and invest in the metro Detroit market, and I signed my first lease, it would’ve been about five years ago exactly to today. It would’ve been on October 1st, 2020. Since then, my wife and I, we have bought 24 properties. It’s 31 doors and where cash flowing, it’s 115,000 a year after budgeting for vacancy maintenance at CapEx.

Dave:
It sounds like an incredible portfolio to do in five years. And you’ve also done that across two really different markets starting in 2020. Fast forward to today, totally different landscape that we’re in. So I’d love to just break down how you’ve done this, but would first just want to understand sort of your goals and motivation for being an investor in the first place. I was working

Joe:
In a factory. It was in manufacturing, and I quickly realized that’s not what I wanted to do for the rest of my life. So when I was kind of searching, trying to figure out what I wanted to do, I was talking to my buddy Jake Graff, and he’s like, Hey man, you need to listen to their pockets. And so for many of us who have done that, it flips your world 180. He was house hacking at the time, so he explained that to me. And so I went down the rabbit hole of multiple podcasts a day, watched all the YouTube videos, I read all the books, I was in the forums, and so that’s when it really triggered like, this is what I’m going to do either full-time side hustle, I’m going to figure this out.

Dave:
Oh, absolutely love hearing that that BiggerPockets has helped you hone your vision and figure out how to get into real estate. What is it about real estate that’s resonated with you that previous careers in manufacturing wasn’t doing for you?

Joe:
It’s the common man’s path to wealth, right? It’s just the greatest investment when you look at how much money you can make in cashflow and then appreciation, loan pay down and your tax benefits. It’s just you can’t compete with it as an investment vehicle. So just dump all my money into it is the best place for it to be.

Dave:
I love that approach. I’ve never heard it described specifically that way, but it makes so much sense to me actually. What makes real estate so interesting that I love is you don’t have to invent anything. It’s a path to entrepreneurship where you’re not having to come up with some new genius business model. This is just a repeatable formula that pretty much anyone can follow, which is super cool. So how did you go about financing finding your first deal and what kind of deals were you looking for off the

Joe:
Bat? Yeah, so I had done two deals in Ohio where I bought land, I bought a house and I sold those when I moved to Michigan. And so that was where I initially had some capital. I made like 40 k, 20 K on each of those. And then by working, I came to Michigan, I had like 50, 60 grand. And so my first property, I was really looking for a house hack. I was doing what I was trying to do, what I was supposed to do, but coming to Michigan, that was a bit overwhelming. I didn’t know how to recognize what a good house hack was. So I ended up going with a safe bet, which was I just picked a single family home and it backed up to a nice neighborhood. It was on a busy street, but I got it for $103,000. I was going to live there for a while and I knew eventually my wife and I, we’d get married and we’d buy another house and that’d be my first rental property. And so that ended up being the first property. I bought it for 1 0 3, I put 15 K into it. It’s worth like 190 today and I thought it was going to rent for like 1300 a month, but I ended up signing a two year lease at 1600 a month. And so it’s cashflow six, $700 a month for five years

Dave:
Straight at this point. That’s incredible. Well, it sounds like you did pretty well figuring out where to buy the first one. This podcast is a long history with Detroit. I don’t know if you know this, but Josh and Brandon, when they first started, Josh loved to hate on Detroit, but I’ve heard that it’s one of those markets where if you know the market well, you can do really well, but it’s not for people who are maybe out of state or haven’t spent the time researching it. Do you think that’s true?

Joe:
I mean, I say this in good fun. There’s two types of people who dog on Detroit and it’s people who have never bought a property there and people who did it wrong.

Dave:
Yeah, okay, that’s fair.

Joe:
Because if you do it right, you can really make a lot of money and we’ve really identified what doing it right looks like. We call ’em bread and butter deals, and if you buy those, they’re just a great balance of price, rent, ROI, location, and we see a lot of success with them. That’s great. So what are those

Dave:
Bread and butter deals?

Joe:
Is it similar to what you bought on that first one? These properties? There’s your suburbs, bread and butter, and then there’s your Detroit bread and butter Suburbs are going to be a little higher price, a little lower ROI and a little easier experience, and that’s the difference between suburbs versus Detroit. And so to break it down as concisely as possible, it’s going to be an 80 K to $130,000 house. They’re going to rent for 1100 to 1500 a month. They’re one to 1.4% rule deals, cash on cash, six to 12% cashflow, $5,300 a month. They’re good appreciation. We grade properties A to F, and so these are what we call C plus B minus.

Dave:
So what is your definition of a C plus? Describe the neighborhood for us.

Joe:
Well, yeah, so my portfolio is a great example. I have 30 plus doors and in five years I’ve had two evictions and I’ve had maybe five or six tenants stop paying and I’ve had to send ’em a notice to quit and get rid of ’em. Somebody stole a trashcan once and somebody kicked in a garage door or the only two crime that I’ve dealt with in,

Dave:
Yeah, I have way more than that.

Joe:
And then vacancies another one that people will look at. I have very little vacancy. I have one unit vacant right now just because the tenant moved out a week ago. So that’s what I’m calling a C plus B minus market. What condition are the properties in? So I do a lot of light to medium sweat equity and probably favoring the medium sweat equity. So I’m doing the cosmetic plus type rehabs. Now again, you can find the turnkey at the higher price range of the bread and butter. I’m staying lower price range with more sweat equity.

Dave:
And what does that deal look like? So you said you’re buying it for what, 80 a hundred grand and putting how much into it?

Joe:
In 2023, my average single family home purchase price was $80,000 and my average rehab was probably 15, maybe touching

Dave:
20 k rehab. I’m asking these questions about the specifics because these seem very approachable kinds of deals. Even if you’re putting 25% down with traditional financing on an $80,000 property, it’s 20 grand down with a reno of 1520 K, you need closing costs, you need reserves, $50,000, obviously a lot of money, but more palatable to a lot of people who maybe don’t want to go to the house hack and put three point a half percent down or live in a super expensive market. This just seems quite achievable for people who are thinking about or comfortable with out-of-state investing presuming you don’t live in Detroit. The question I think you hear about Detroit that I just curious your opinion on Joe is like what about the appreciation? It seems like cashflow is pretty solid post. We’re going into sort of a flatter market. What do you think appreciation goes from here? I’m sure you’ve looked at the data,

Joe:
But recently we’ve done really well, especially in the post COVID era. I mean we’re in the top 2023, we were number one at least by some sources and ever since we’re still six, 7%, even just 2024 to 2025, which most markets they can’t say that. And I think it comes down to one major thing. I think it’s affordability. I think the other markets that are struggling, it’s because of affordability and the reason why Detroit isn’t is because we still are a low enough price point that we have room to grow.

Dave:
I agree. It’s kind of been my whole thesis is just that these markets that are affordable, people are going to still keep transacting, whereas other markets I invest in, it’s just unaffordable and you see the market coming down. There are obviously still people doing stuff, but the number of transactions is just really low and we’ve just reached the point where we can’t stretch affordability, people are not able to pay and maybe when things get a little bit cheaper, they’ll jump back in. But these markets, Milwaukee, obviously Detroit, Cleveland, a lot of the Midwest, this is where things are happening because it’s where people who live there and work there and have normal jobs are still able to participate in the housing market. That’s a healthy housing market I think bodes well for those types of markets in the future. So this is fascinating. Love hearing the specificity of the kinds of deals that you’re buying here. I’d love to hear a little bit about your story though, how you’ve evolved your own portfolio. Let’s get into that right after this quick break. Welcome back to the BiggerPockets podcast here with investor Joe Hamill who’s been growing his portfolio in Detroit for the last five years. We heard a little bit about your first deal where you bought a house hack. How did you grow your personal portfolio from there, Joe,

Joe:
I bought that first one rented out in 2020 and then in 2021 we bought, I think it was five deals. And the funding for that came from that original 50 60 K that I moved to Michigan with. And I also 2021, I was able to pull out my 401k penalty free using the COVID, whatever that was. So that was more funding. I did a couple of the soft burrs. You’ve been calling ’em a slow bur, we call ’em a softer whatever you want to call.

Dave:
Yeah, let’s use slow bur we got to standardize this

Joe:
Slow

Dave:
Bur is what it is. I

Joe:
Agree. It’s a better name than software. So it was be able to pull some out there. And then my wife, she had a good income and we both determined, hey, let’s live 100% off of your income. And then everything that I make through my job and as an investor, we’re going to reinvest all that cashflow. So that was the funding. Every time I hit a certain threshold of money, I would go look at the market and I’d pick out a

Dave:
Deal and execute. So you would have one going, you would do the renovation, rent it out, get rents up to market rate, and then you would refi. So you would basically take some or all of that money, combine it with your income to finance the next

Joe:
One. Exactly. And most of the time it was some of the money I did hit one. Perfect bur wow, that’s awesome.

Dave:
Wow. I am asking that because if you listen to the show, you’ve heard me talking about the slow bur and I like this because it’s more realistic and it’s just a little less pressure in today’s day and age. And just want to reiterate that doing the quote perfect bur where you can refinance a hundred percent of your cash is just pretty rare these days. I’m sure it still happens, but it is pretty rare. And I really just think in the new realities that we’re facing, having appropriate expectations is super important and not expecting to achieve returns that just don’t exist anymore. That doesn’t mean they’re not still life-changing events that are going to help you move towards your financial goals. It just means we’re not in this free money period where everything was perfect. So I just want to make sure people understand that the bur still really works, these perfect burrs. Were just there at a certain time and place and is not what we should all be expecting. So you keep doing these same deals for five or six years. How have you avoided this shiny object syndrome that I certainly get in real estate? I think a lot of people do where you want to try everything I do short-term rental, you want to flip, you want to do creative finance, you want to do everything. How have you and why have you just stuck to the same approach?

Joe:
I think you said it in terms of haven’t you had shiny object syndrome? I think I was aware of not having it. That was a very conscious decision I made early on was don’t do that. Get good at something and get bored with it whether it’s your job or investing. And I had something, I hit success on my first 1, 2, 3 deals, and so I was just clear the slate and repeat the same thing 20 times. That’s awesome.

Dave:
It seems like even though the market has been hot, finding deals hasn’t been hard.

Joe:
No, I would say in 2024 was kind of a shift in my strategy. That was an extreme seller’s market interest rates were higher then than they are today. So I really went from an average price in 2023 of 80 K to an average price of 120 5K in 2024. I’m still getting six to 9% cash on cash RO, but I really made those changes for a couple reasons. The one was the market adjustment I had to, the $80,000 house was now a hundred thousand dollars house to get the same profile of property, I had to go up in price. So that decision was kind of made for me. And then the second reason why I really went from a hundred to 1 25 was my personal strategy change. I already had 15, 16 to 17 bread and butter, really good cashflow. They were 2 1 3, 1 sided houses, maybe a little bit of character. And so now I was like, okay, let’s go up a notch. And I was looking for brick, I wanted a basement and a garage. I didn’t want any character. And so that just took me up then to the 1 25 price point. So all four of my deals in 2024 looked exactly the same with that 125 price

Dave:
Point. Okay. I mean I assume it’s gone up a little bit, but those kind of deals are still available to you.

Joe:
Yeah, I mean, like I said, shoot fish in a barrel. I could probably pick a couple out right now.

Dave:
That’s pretty incredible. So let’s talk a little bit about specifically what to look for because obviously not everyone is going to invest in Detroit, but I think this model that you’ve created is somewhat repeatable in a lot of markets. Obviously if you’re living on the coasts it’s probably pretty expensive, but if you’re investing somewhere in the southeast or in the Midwest, there’s a lot of these kinds of deals. So let’s just talk characteristics, not just price point. Are there certain bedroom counts you’re looking for and how do you try and identify that sweet spot of value add? I think that’s a big question for a lot of people. What one person calls a cosmetic renovation could be totally different from what another person calls a cosmetic renovation. So what are the kind of properties and upgrades that you’re trying to target?

Joe:
So a lot of these are two ones and three ones, which a lot of people, they really want the three two, but I think the ROI is higher on the 2 1 3 1 because less people want ’em. Your price to entry is lower.

Dave:
So you’re doing these 2 1 3 ones, which makes sense to me. Are you doing kitchens, bathrooms, floors? What’s the scope of the renovation you’re trying to do?

Joe:
The lighter ones are painting and fixtures. So you go in and you paint and you do new light fixtures, new knobs, new faucets, and the whole house looks great. That’s your light version versus your medium one is like, okay, we’re going to replace all the toilets, all the fixtures we’re painting, we’re refinishing the floors, we got to do all of our landscaping outside, maybe replace the furnace. Something like that is what I consider medium versus large is you’re doing a gut job and I think that’s when your risk goes through the roof when you take on those big ones.

Dave:
Yeah, literally it goes into your roof a lot of the time doing that. But yeah, I think that makes a lot of sense. And is that sort of what you recommend for newer investors is taking on that kind of fixtures paint kind of thing first? Yeah, definitely. It’s

Joe:
Why I am really cheering on your slow messaging right now because it’s just so much more realistic to hit the lighter sweat equity and get your feet wet on those. And if you want to go more aggressive after that, do it. But to start out, just take on the lighter stuff. But I do like taking on some sweat equity because that’s how you’re going to force ROI in a property.

Dave:
If I had my druthers, I would pay a little bit more and buy a stabilized turnkey property that had solid cash on cash return, not amazing. And those still exist sometimes in some places, but the juice is just better on a light cosmetic rehab right now, you will get better cashflow and you’re going to build equity. And I think that’s the real important thing. People look at burr and they say, oh, I can build equity. That is definitely true, but a lot of times that’s how you have to generate cashflow too because if you look at a property with the rents that it can command in its existing condition, you’re probably not hitting that six to 9% cash on cash return. I don’t see it anywhere. You could maybe get three or 4%, which is okay for some people. That’s fine if you just really want to do nothing. But if you’re trying to hold onto something for a long time, that’s why the slow burner works because you can do it sort of at a slower pace, but then you get the equity but you juice up those rents and provide a really high quality experience for your tenants that they’re going to want to stay, that they’re willing to pay for. And that just sets you up for a more successful long-term hold period in my opinion.

Joe:
Yeah, I couldn’t agree more.

Dave:
We got to take a quick break, but stick with us. We’ll be right back. Welcome back to the BiggerPockets podcast. Let’s get back into our conversation. So tell me a little bit about managing these renovations an agent as well. Are most of the people you’re working with local or out of state?

Joe:
The majority is out of state. It’s like 65% out of state versus 40, 45% local.

Dave:
And how do you coach and get people comfortable with the idea of doing renovations from out of state?

Joe:
So something started building from the very beginning was our resource list and it’s at this point it’s 200 plus names and phone numbers of CPAs, attorneys, contractors, electricians. And so that’s really been a huge ticket to, hey, you can build your core four with this resource list. And I think that’s broken down a lot of barriers, finding contractors. One of the hardest parts for me at the beginning of course. So I ended up getting my builder’s license and starting a small handyman slash general contracting company just to help myself do a lot of these rehabs and obviously clients can use them as well.

Dave:
So what do out of state investors do they find a contractor on your list and then they manage the whole thing themselves? Or how are they developing a scope of work and overseeing the project while they’re out of state?

Joe:
So we do a lot of boots on the ground for outstate clients. So we’ll take a really good walkthrough video most of the time before purchase, and that’s how they’re closing these properties. And so then after they close, they have that video and they can either hire a GC to just do the whole thing or if they want they can pick off one person at a time, hire my painter, my floor person, and just do what needs to be done.

Dave:
As an out of state investor, that is tough. It is tough to run subs yourself out of state. I think it’s easier to do it with a GC or the way I’ve done it. I don’t know what you recommend, but the way I’ve done it is my property manager has a lot of subs and sometimes I will have them run the subs through and help me work on the scope of work. Do you see people do that as well?

Joe:
Yeah, I’d agree. The GC is the more popular route. And then as well as having the property manager gc, if especially for the outstate, that’s typically what they’re going to favor.

Dave:
And then do you see most out of state investors before they purchase with you, do they come and visit?

Joe:
It’s like 50 50. We have a lot of ’em that will close without ever seeing it, and then some of ’em will want to fly in for closing.

Dave:
But do they ever even come to Detroit and get to know the market at all, even if they buy the property site unseen?

Joe:
Yeah, sometimes. Sometimes they’ll want to come in and just confirm that they want to buy here, and then we’ll usually set up some sort of tour from on that weekend. They come in, we’ll go see 10 houses and go from there.

Dave:
That’s my favorite thing to do. I love going to markets and touring around. It’s the best. I really recommend people do that. If you’re an out of state investor, I’ve closed on property site unseen, but going to the market and just getting a lay of the land generally where these properties are going to be, you like this area, you don’t like that area, it’s worth it. It really is worth a thousand dollars or whatever you’re going to spend. I know that’s seems like money you could be putting towards a property and you can, but it’s just money that you need to spend to invest into your business for the longevity of it. I just know myself, I sleep easier at night investing out of state knowing that I’ve been there and I have a general sense of I really like this neighbor. I trust this neighborhood. That’s a good place. Recommend that people take that approach as well. So Joe, tell me you’ve succeeded and had this pretty incredible portfolio that you’ve built up over the last couple of years. What comes next for you? What are your goals now?

Joe:
It’s a good question because obviously I hit some numbers that were my lifetime goals, so it’s kind of surreal at 31 that could be done. But my wife and I talk and we both believe in God’s purpose for our life and he let us know that we’re not allowed to go sit on a beach. So we’re brainstorming some philanthropic ideas. We’re going to keep investing. Oh, that’s great. Keep investing and keep growing. Work on a couple side projects with a FinTech group and hopefully have some cool things for investors at some point there. But yeah, we’re just going to keep going and try to make the world a better place.

Dave:
Oh, that’s awesome. I love to hear that. And I think that’s one of the under-discussed parts of real estate investing. That’s so cool because I’m on board with you. I am not someone who could sit on a beach and not work, but it’s so cool how real estate investing when you reach a level of financial independence just allows you to take on projects that are philanthropic or just have personal importance or meaning to you. Or people often say they want to spend more time with their family, which is a common one, which is great, but if you have other professional interests or philanthropic interests, it allows you to take that on as well, which is super cool. So highly respect that. That’s how you’re thinking about spending your time. Joe,

Joe:
Thanks.

Dave:
Well, Joe, thank you so much for being here today. It’s been great meeting you, hearing your story. Congratulations on all the success. Make sure to keep us posted on your next steps. Awesome. Thanks a lot Dave. And thank you all so much for listening to this episode of The BiggerPockets. We appreciate you listening. We’ll see you next time for another episode in just a couple of days.

Landlords are likely to choke on their morning cup of joe—Starbucks is leaving neighborhoods en masse, and the repercussions could echo around the rental real estate market.

Rental property owners usually breathe a sigh of relief at the sight of Starbucks’ familiar green-and-white awning in a neighborhood they have invested in or are considering. A popular train of thought is, “If Starbucks customers can afford to pay $5 for a cup of coffee, they can afford to pay me rent.” Landlords can also be confident that, in addition to regular rental income, their property values will increase. 

That’s not idle speculation. There’s a term for it: the “Starbucks Effect,” coined by Zillow after a 2015 report found that between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96%. Of course, home values throughout the country appreciated during that period, too, but by 60%, not 96%.

Why Starbucks Is So Influential to Real Estate Values

Starbucks is considered a reputable company with upscale clientele. When one lands in a neighborhood, it’s as if the real estate gods have given the area a seal of approval, signaling for other brands, residents, and investors to follow suit. 

Hannah Jones, senior economic research analyst at Realtor.com, explained it this way:

“The presence of the café could then add to the area’s appeal, along with the other factors that convinced the company to open the location to begin with. Put differently, Starbucks doesn’t cause home values to rise on its own; instead, it tends to open stores in neighborhoods where other factors, such as economic growth, rising demand, and increasing property values, are already at play.”

Todd Drowlette, a former exclusive Starbucks real estate broker who now represents competitor Dunkin’ Donuts in New York, concurs, telling Realtor.com: 

“People consider a neighborhood’s total package. Having amenities in close distance adds to the desirability. Everyone wants convenience today. Whole Foods still brings with the brand a feeling of an upscale community because people know the type of neighborhoods they are located in.”

Why Starbucks Is Closing Stores

Money, what else, is at the root of the closures. Starbucks has decided to shutter 400 of its nonperforming retail stores, cutting around 900 corporate jobs. CEO Brian Nicol explained in an open letter that the closures target stores “where we’re unable to create the physical environment our customers expect or where we don’t see a path for financial performance.”

Worried landlords, expecting a drop in business, might find solace in the fact that Starbucks still has 18,000 physical locations operating in the U.S. and Canada, and that the closures are not spread evenly. However, landlords in dense urban areas in the Northeast, such as Philadelphia, Northern Virginia, Baltimore, and Washington, D.C., could have cause for concern, having already witnessed a flurry of closures. 

Philadelphia alone saw the closure of five Starbucks locations recently. Northern Virginia has seen a cluster of 16 stores close across the DMV (District of Columbia, Maryland, Virginia) area—including nine in Washington, D.C.— which were confirmed to be closing, according to WUSA9.

“Many of the closures listed are in city cores or densely built commercial corridors,” says Jones. “That matches reporting that Starbucks is shutting ‘some high-profile urban locations’ as foot traffic in central business districts remains depressed.”

The Starbucks Exit Effect

Just as Starbucks moving into an area signals desirability for other businesses, retailers, and landlords worry that its exit could have the opposite effect.

“One closure might not cause lasting damage…If it begins the downward spiral with two or more, it will hurt surrounding property values” Drowlette said.

Other Brands That Boost Property Values

Starbucks is not the only brand that boosts real estate values in a neighborhood, but its presence has the most dramatic effect. Zillow’s 2015 survey found that neighborhoods with Dunkin’ Donuts experienced an 80% increase in property values.

A 2022 survey by real estate data and analytics company ATTOM found that grocery stores Trader Joe’s, Whole Foods, and ALDI were likely to have a considerable positive effect on home prices, with homes near an ALDI experiencing a 58% increase over five years, Trader Joe’s 49%, and Whole Foods a 45% increase. Properties near these locations were also likely to be favorable for house flippers.  

ATTOM’s Rick Sharga said in the report: “It turns out that being located near grocery stores isn’t only a matter of convenience for homeowners, but can have a significant impact on equity and home values as well. And that impact can vary pretty widely, depending on which grocery store is in the neighborhood.” 

Your Neighborhood’s Ability to Recover From a Retail Setback Can Determine Its Fate

Losing a tenant like a Starbucks does not have to sound the death knell for a neighborhood. If a vacant storefront is filled quickly by a desirable local or national brand, the damage can be mitigated. 

Usually, national brands can pay more rent than smaller local companies. However, many high-priced municipalities have bylaws restricting national brands, enhancing their local community atmosphere and sense of exclusivity, which in turn can boost property prices. 

The trend nationally, however, has seen national brands dominating the retail scene as high rents force smaller retailers out. While most landlords and tenants want to feel they own and live in a unique location with a specific character, rather than a homogenized neighborhood that could be anywhere in America, the presence of larger retailers probably means greater stability for a neighborhood, which is far more preferable than vacant stores. 

Possible Wider Ramifications Following the Starbucks Closures

Starbucks closures could carry implications beyond commercial real estate. Analysts at Forbes have drawn a correlation between them and signs of evolving consumer and worker values, skepticism about premium pricing in a time of affordability challenges, and demand for different store experiences. Rising operating costs from labor to rent to supply chain issues have squeezed profitability from retail and dining chains, according to GlobeSt.

Should more closures of other upscale brands follow, not only will the job market be affected, but so will the affordability for workers and renters to live in once-thriving neighborhoods.

Final Thoughts: What Landlords Should Watch For Next

The upcoming months will indicate whether the Starbucks exit marked the beginning of something larger, and what impact it could have on rental markets. Here are some of the things landlords should look for when evaluating a place to invest that has recently experienced retail closures:

• Cluster effects: Are retail closures limited to specific areas, or are they happening nationally in different regions?
• Tenant replacement rates: How quickly can former Starbucks sites get repopulated with quality tenants?
• Residential price movement: As stores close, what is the effect on home and rental prices? 

The Wall Street Journal pointed out that, in the face of inflation and rising costs, Americans generally can no longer afford restaurant and coffee prices, and are generally eating out less. 

Thus, the Starbucks closures are more than a coffee story. They mark the convergence of commercial real estate, consumer behavior, and the viability of upscale retail amenities that could have a profound effect on residential landlords, tenants, and investors.

This article is presented by Steadily.

If you own rental property, you already know that landlord insurance doesn’t come cheap. In fact, premiums are typically higher than what you’d pay for a homeowner’s policy on the very same property. 

The reason why is simple: Insurers view rentals as riskier. Tenants may not maintain a home as carefully as an owner would, and claims from storms, accidents, or liability issues can be more frequent.

For landlords, that extra cost can eat directly into your bottom line. A few hundred dollars more per year might not sound like much, but across multiple units, or over many years, it adds up fast. And in today’s market, with rising property taxes and maintenance costs, keeping insurance expenses in check is a critical part of protecting your cash flow.

The good news? You have more control than you might think. While you can’t avoid carrying landlord insurance, you can make strategic choices that help bring premiums down without sacrificing the protection your investment deserves. Think of it as playing defense: You’re not cutting corners—you’re finding smart ways to lower costs while keeping your coverage strong.

We’ll cover practical strategies landlords use every day to reduce insurance premiums. From property upgrades to deductible choices and bundling opportunities, these moves can add up to meaningful savings, without exposing you to unnecessary risk.

Smart Ways to Save on Your Insurance Policy

One of the most effective ways to lower your landlord insurance premiums is by upgrading the property itself. 

Insurance companies reward landlords who invest in making their rentals safer and more resilient, because these improvements reduce the likelihood of future claims. In other words, the better shape your property is in, the less risk the insurer has to carry, and the more savings you could see.

Common upgrades that pay off

• Roof replacements: An aging or damaged roof is one of the biggest red flags for insurers. A new roof not only protects your investment from leaks and storm damage, but it can also qualify you for a lower premium.
• Stormproof windows and doors: In areas prone to hurricanes, hail, or high winds, installing impact-resistant windows or reinforced doors can reduce risk and may lead to policy discounts.
• Plumbing and electrical updates: Outdated wiring or old plumbing increases the risk of fire and water damage. Modernizing these systems not only helps prevent costly repairs but also positions you for lower insurance costs.
• Fire safety systems: Smoke detectors, sprinkler systems, and fire-resistant materials can all earn you discounts while giving everyone more peace of mind.

Double benefit: Protection + savings

The beauty of these upgrades is that they work on two levels. They make your property safer for tenants, reducing emergencies and liability, while also potentially qualifying you for premium reductions (not to mention bonus depreciation). If your property needs these improvements anyway, you might be able to offset part of the cost through insurance savings.

Confirm before you commit

Before making a major investment, check with your insurer to see what discounts are available. Every insurance company has its own criteria, and you’ll want to know upfront which improvements will actually lower your costs. This way, your capital improvements aren’t just protecting your property—they’re working to protect your bottom line too.

Rethink Your Deductible

Another lever landlords can pull to lower insurance costs is adjusting the deductible. Your deductible is the amount you agree to pay out of pocket when you file a claim, and it directly impacts your premium. In general, the higher the deductible, the lower your monthly or annual premium will be.

How it works

Think of it as sharing risk with your insurer. By committing to pay more upfront if a claim occurs, you’re signaling that you’re less likely to file small claims, and insurers reward that with lower premiums. For example, moving from a $1,000 deductible to $5,000 could trim a noticeable percentage off your annual cost.

Questions to ask yourself

• What’s in your reserve fund? If you keep healthy reserves for repairs and emergencies, you may be comfortable with a higher deductible.
• How often do you expect to file claims? If you maintain your property proactively and rarely file claims, a higher deductible makes more sense.
• What’s the break-even point? Run the math. If a higher deductible saves $600 a year, but you’d only face that extra cost once every 10 years, it may be worth the trade-off.

A word of caution

While increasing your deductible is a great way to save, it’s not for everyone. You don’t want to leave yourself exposed if a big storm hits or a tenant-caused accident requires immediate repairs. Always balance the premium savings with your ability to comfortably cover the deductible if the worst happens.

Landlord policies often offer more flexibility in deductible levels compared to standard homeowner’s insurance. Take advantage of that flexibility, but make sure your choice aligns with both your cash reserves and risk tolerance.

Bundle and Layer Coverage Wisely

Bundling isn’t just for cable bills and phone plans—it can also help landlords save on insurance premiums. Many insurers offer discounts when you buy multiple types of coverage from them, such as auto, umbrella, or multiple-property policies. For landlords with growing portfolios, bundling can make a noticeable difference in annual costs.

How bundling works

• Multiple properties: If you own several rentals, putting them under one insurer often leads to volume discounts.
• Auto + landlord policies: Insurers may reduce your rate if you carry both your personal auto and landlord insurance with them.
• Umbrella coverage: Adding an umbrella liability policy not only increases your protection but may also earn you a bundling discount.

Don’t cut the wrong corners

While bundling can save you money, it’s important not to sacrifice essential coverage just to shave a few dollars off your premium. A bare-bones policy that leaves you underinsured could cost far more in the long run. Always confirm that the bundled package still provides the protections you need, such as:

• Loss of rent coverage in case a unit becomes uninhabitable
• Liability protection for accidents or injuries
• Property coverage for damage from storms, fire, or vandalism

A long-term layering strategy

Bundling is just one part of a broader insurance strategy. Think of your coverage in layers:

• Base layer: Your landlord insurance policy
• Second layer: Umbrella liability or specialized endorsements
• Third layer: Tenant-required renter’s insurance or tenant damage protection plans

When structured thoughtfully, this layered approach helps you reduce premiums while making sure no major risks slip through the cracks.

In short, bundling can be a smart cost-saver, but only if it aligns with the real-world risks you face as a landlord.

Don’t Forget Tax Advantages

When evaluating the true cost of your landlord insurance, it’s important to remember that premiums are tax-deductible. Since rental property is considered a business activity, insurance is treated as an operating expense. That means every dollar you pay in premiums reduces your taxable rental income, lowering your overall tax bill.

Why this matters

At first glance, a $2,500 annual premium might feel steep. But if you’re in the 24% tax bracket, that deduction effectively lowers your net cost to around $1,900. Stretch that across multiple properties, and the savings can become significant.

Examples of deductible insurance

• Standard landlord insurance policies
• Liability coverage
• Flood or earthquake add-ons
• Umbrella policies that extend your protection

Keep good records

To maximize these benefits, always maintain clear documentation. Save invoices, receipts, and policy statements for each property. Not only does this simplify tax time, but it also strengthens your case in the event of an IRS audit.

You can’t eliminate premiums entirely, but when you factor in their deductibility, the effective cost of landlord insurance is lower than it looks. That perspective helps you see coverage not just as an expense, but as a strategic business investment that safeguards your income and assets.

Why the Right Insurance Partner Makes All the Difference

Cutting costs is important, but as a landlord, the real goal isn’t just saving money; it’s protecting your income stream and assets. You want premiums that are fair, yes, but you also want coverage that will respond when disaster strikes. That’s when the insurer you choose makes all the difference.

Too often, landlords chase the lowest possible premium, only to find out later that their policy excluded the exact type of loss they experienced. Or worse, they end up in claims limbo, waiting months for reimbursement while repairs and tenant issues pile up. That’s a recipe for lost cash flow, frustrated tenants, and unnecessary stress.

Why Steadily stands out

Steadily was built specifically for landlords and real estate investors. Unlike traditional insurers who treat rentals like an afterthought, Steadily’s entire platform is designed around the unique needs of property owners. That means:

• Tailored coverage: Policies structured for all rental types, from single-family homes to multifamily buildings to short-term rentals like Airbnb
• Fast, digital quotes: Get coverage options in minutes, not days of back-and-forth paperwork.
• Risk-reduction tools: From recommending upgrades to offering insights on deductible levels, Steadily helps you actively lower both your risk and your premiums.
• Nationwide availability: Whether your properties are local or spread across states, you can streamline your coverage under one provider.

Balancing affordability and protection

Steadily understands that landlords are running a business. Their goal isn’t just to write policies—it’s to help you stay profitable by minimizing risk while keeping premiums competitive. And because your insurance premiums are tax-deductible, the value of a policy that actually works when you need it far outweighs a few dollars saved on a weaker policy.

If you’ve been thinking about revisiting your coverage, now’s the time. The right insurer doesn’t just reduce your premiums; it reduces your stress, strengthens your business, and keeps your rental income flowing, no matter what challenges come your way.

Protect your investment with Steadily today. Get a fast, customized quote at Steadily.com and see how much you could save while upgrading your coverage.