In This Article

I lost $40,000 on a flip once because I stopped opening my own spreadsheet. I built that file myself. Then I closed it, and the deal decided what it was going to be without me. The numbers were telling the story the whole time.

A midyear review is not just for your boss coming in to act like “casual Fridays” was their idea. It is opening that same file back up while there is still time to change the ending. Every summer, I go property by property. It takes one Saturday, and it is the highest-paid Saturday of my year.

Looking for a second opinion? The great team at Mynd is offering complimentary midyear portfolio reviews for rental property investors. Their team will review your portfolio’s performance, upcoming lease renewals, local rental market conditions, and operating strategy to help identify opportunities to improve returns before year-end.

1. Compare Performance Against Your Original Investment Plan

Most people compare this year to last year. The right benchmark is the underwriting you did the day you bought the thing. Pull that document up. Yes, you should know where it is and not be scrambling to make sure your child didn’t throw it in the trash (or is that just me?).

Get current on NOI, cash flow, cash-on-cash return, operating expenses, maintenance, vacancy, delinquency, and capital expenditures. Then ask these questions:

• What is beating the model? 
• What is missing it, and why? 

The “why” is the whole exercise. Everything before it is bookkeeping.

Here is what mine looks like. My Conroe houses are new construction, bought between $200,000 and $220,000, and renting for $1,900 to $2,000 a month. 

I underwrote maintenance to be boring, and it has been. The model missed on the other side. Property taxes and insurance moved, and neither one cares how your cash flow is falling. My rent line held. My expense lines are where the underwriting aged.

That is the pattern for most people. The revenue assumption holds, and the expense assumption quietly does not.

2. Review Every Lease Expiring Over the Next 120 Days

A lease is one price you set once and then live with for 12 months. There is no fixing it in October when you realize you were too low. 

Pull every lease expiring in the next four months. Look at current rent, what comparable homes actually rent for today, payment history, expiration date, and renewal probability.

My last renewal is a good example of restraint. Property taxes went up, so I raised rent 5%. That is about $98 a month. It covered the tax increase and nothing else. The market probably supported more.

This small rent raise was nominal compared to what it would have cost to turn over the unit. Turning that unit costs me $2,500 to $3,000 before I count a single empty day. Add three weeks of vacancy, and I am out more than $4,000. Pushing another 5% would have earned me roughly $1,170 over the year.

I am not risking $4,000 to make $1,170. Residents who pay on the first are also not a renewable resource.

Run that math before you get brave. And if someone is clearly moving out, start marketing the unit now. Vacancy is the only expense that gets worse while you ignore it.

3. Look for Opportunities to Improve NOI

Rent increases are slow, capped, and require somebody else to agree with you. Cutting an expense takes a phone call and is worth talking to a customer service rep for 30 minutes.

Go line by line: 

• Insurance 
• Maintenance and repairs 
• Vendor pricing 
• Home warranty coverage 
• Landscaping, pest control, and every autopay that renews without asking

Insurance is where I find money every single time. I am quoting a project right now, and the range came back between $1,900 and $3,400. It’s the same property with the same coverage. The only thing different was the underwriter. That is $1,500 of NOI hiding inside three phone calls.

Then there is the stuff that creeps and makes you question your sanity. Mine was electric, and I didn’t realize how much a 0.01 or0 .02 increase per KWH added up. A little bigger every month, and nobody sends you a letter when that happens.

4. Evaluate Whether Your Management Strategy Is Supporting Growth

I spent eight years selling houses to investors, so I got a long look at how other people run their rentals. The ones who struggled were bad at the 200 small decisions after buying, not the initial sale.

New construction is the easiest version of this job. Almost nothing breaks, which means nothing forces me to check whether my process is any good. That is the trap. Easy doesn’t last even with new construction, and every door you add multiplies the decisions, not just the doors.

Here are things to watch:

• Leasing 
• Maintenance 
• Inspections
• Resident communication
• Rent collection 
• Compliance 

If you have not hired anyone, it is you, and free labor is the most expensive in real estate because it never shows up on the P&L.

Check your days on market, maintenance response times, rent collection, resident retention, and the hours you hand in every week. Self-manage or hire it out, but pick on purpose. Most people are not self-managing; they are just not managing.

5. Create an Action Plan for the Second Half of the Year

A bad review ends with a feeling, but a good one ends with dates. Pick three things you will finish before December, such as: 

• Reprice the renewals your comps support. 
• Schedule preventative maintenance before the season turns. 
• Requote your insurance. 
• Finish the capital expenditures you keep pushing.

Small operational fixes compound, and that is the entire business.

Don’t Wait to Improve Performance

Most investors learn how they did in April, sitting across from their CPA, holding a number they can no longer do anything about. I already hate tax time, but it becomes really stressful when I have no clue what I am walking into.

That’s why Mynd is offering complimentary midyear portfolio reviews for rental property investors. During your review, the team will help you evaluate:

• Year-to-date financial performance and cash flow
• Upcoming lease renewals and rental pricing opportunities
• Local rental market conditions
• Opportunities to improve occupancy and strengthen long-term returns

Whether you currently self-manage your properties or work with another property manager, you’ll receive practical, data-driven recommendations designed to help you maximize the performance of your portfolio during the second half of the year.

Schedule your complimentary midyear portfolio review today, and head into year-end with a clear plan to maximize your rental property’s performance.

In This Article

We know the narrative: The housing market is too expensive. That, however, appears to be changing.

Data from Parcl Labs shows where the ice is cracking. Sellers are beginning to blink, face reality, and cut prices. In doing so, they hope to gain a competitive edge in markets where listings are accumulating.

That’s great news for investors, who have grown frustrated by not being able to make the numbers work for flips or buy-and-hold deals, and for potential homeowners trying to get on the property ladder.

The three parcel maps—showing price changes, the balance between supply and demand, and where motivated sellers are—examine the changing market from different angles. Together, they reveal where seller pressure has started to translate into lower home prices.

One overriding fact becomes apparent: The U.S. housing market is not monolithic. It differs markedly depending on where you live. In parts of the Sunbelt, notably Florida and Texas, as well as the Mountain West, sellers might be willing to strike a deal as their leverage lessens. However, in parts of the Northeast and Midwest, the market remains tight, with sellers less willing to negotiate.

How the Data Works

For investors, the map Parcl Labs calls its Motivated Seller Index (MSI) is an invaluable barometer for gauging what kind of offer to make. It runs from 0 to 10 and is based mainly on sellers’ price-cutting behavior, namely, how frequently sellers reduce asking prices, how large the reductions are, and the speed at which sellers make them.

Scores between 5 and 7.5 indicate motivated sellers, while anything above 7.5 can be considered—if you excuse the unfortunate topicality for West Coast markets—fire-sale territory.

Viewed through a national lens, motivated sellers are clearly clustered around Texas, Florida, and the interior West, with Austin as one of the strongest examples. It has an MSI of 7.22, which puts it very close to the fire-selling threshold.

An alarming 53% of listings have seen a price cut, and one-third are new construction. That means builders and individual homeowners often compete for the same buyers as demand becomes more selective, creating a race to the bottom on price to lure would-be homeowners.

The pattern extends way beyond Austin into other parts of Texas. San Antonio has an MSI of 7.11 and price cuts on approximately 54% of its listings. Tampa is at 7.01 and Dallas at 6.98. Sellers are also motivated in Denver and Colorado Springs, which have MSIs of 6.84 and 6.81, respectively.

That doesn’t mean buyers should immediately head to those markets, as, irrespective of what you bid, the numbers still have to work. But buyers seem more likely to accept your offer—a notable change from the bidding wars of the pandemic-era market.

The contrasts between different parts of the country can be striking. Rochester, New York, is an area where sellers are displaying little wiggle room. Out of 3,448 listings, the MSI is just 2.25, classifying it as a neutral market. Price cuts are on only 16% of listings, which are roughly 1% higher in price than a year earlier.

The Supply-Demand Gap Helps Explain Why

Seller motivation tells us what sellers are doing. The Supply-Demand map helps explain why. It measures the difference between year-over-year (YOY) supply growth and YOY demand growth.

Parcl Labs defines supply as the total number of homes listed for sale and demand as completed sales. It compares both with the previous year, smooths the figures over three months, and measures the gap between the two. Green areas indicate markets where supply is growing faster than demand; red areas indicate markets where demand is growing faster than supply.

The geographic pattern is revealing. Much of the Northeast and parts of the Midwest appear red on the supply-demand map, meaning buyers compete for tight inventory and sellers gain an advantage even in high-cost markets.

Head West and South, however, and the picture starts to change as supply increases relative to demand in parts of Texas, Florida, Arizona, Utah, Colorado, and the Mountain West.

That changes the game for sellers as they contend with more listings. Many Sunbelt homes are brand new, and builders are incentivizing buyers with concessions and rate drops. New construction comprises 34% of Austin’s listings, 32% of San Antonio’s, and almost the same number in Dallas.

That matters for investors. Population growth, employment, and good schools and amenities can only carry us so far if new inventory comes to market faster than buyers can absorb it.

Where Seller Pressure Is Already Showing Up in Prices

The third map completes the picture by showing where seller leverage has moved the needle and begun to affect home values.

When tracking one-year price ranges, green areas on the map represent appreciation, and red areas represent declines. Markets where three signals overlap are particularly compelling: motivated sellers, supply outpacing demand, and falling prices. This is where the buy box starts flashing red.

Austin displays all these characteristics. Its MSI is 7.22, with over half of its listings having experienced a price cut; home prices are down 9.6% YOY and roughly 32% below their recorded peak, showing the full extent of its price reset.

Similar, though less extreme, is Colorado, with Denver prices down 7.3% over the last year and Colorado Springs down about 8.6%. Both markets have MSIs approaching 7, with price cuts on over 50% of listings.

In San Antonio, prices are down approximately 6.2% YOY, while Tampa has fallen about 4.5% and Dallas 3.2%. These numbers don’t scream housing crash; they indicate a market shifting to one where buyers now have the upper hand.

A map indicating motivated sellers does not necessarily correlate to falling prices. Some counties appear green on the price-change map despite weakening seller behavior. Elsewhere, the opposite is true: falling prices with particularly motivated sellers.

This divergence is a useful tool, suggesting that three metrics could capture three different stages of the market readjustment. Parcl Labs’ research tends to show that sellers might be the first to crack before appreciation slows—by seven to eight weeks.

For investors trying to identify turning markets, that lag would give them a strategic advantage over buyers looking for markets where prices have already fallen. However, many markets differ, and the data shows that the maps should be read in conjunction to signal an overall shift and long-term price declines.

What This Means for Buyers and Investors

The opportunity in this data is not simply to pinpoint the reddest county on the map. Falling prices are undoubtedly a strong sign that a market might be turning—but they could also indicate other issues, such as rising crime, taxes, and insurance costs.

Rising inventory might create bargains, but if the rate of increase is slower than the buyer would want, the market might remain competitive. Motivated sellers might also indicate something else is wrong with the market rather than simply a reality check on pricing.

However, viewed collectively, certain assumptions can be made: A high MSI, plus supply outpacing demand and falling prices, is a strong indication that prospective buyers will have negotiating leverage.

Conversely, a low MSI, with demand outpacing supply and rising house prices, indicates that sellers are still in the driving seat. Parcl Labs’ data offers an early-warning tool to signal key market shifts for investors, most notably that the urgency to transact has shifted from the buyer to the seller.

Interesting markets are those where all the signals haven’t lined up. For example, an increasing MSI has just started, or weakening supply/demand has not yet affected prices. These are where potential deals could lie.

The data is not a fail-safe, however; it is a helpful screening instrument. Due diligence on all the other factors (taxes, insurance, jobs, crime, development, schools, commuting distance, etc.) still needs to be undertaken before any offers are tabled.

Dave:
Do you want to know which markets offer the steepest discounts and the best deals for investors in 2026? Of course you do. And a great place to start that research is to try and identify where there are motivated sellers who are willing to negotiate and meet your price and terms. But knowing which markets and asset classes have the most motivated sellers is hard. That is until now. Just this week, I uncovered a brand new motivated sellers index that pinpoints which markets have the most motivated sellers, what asset classes you should target, and it even tells you what discounts you should expect to build your offer around. It is a absolute treasure chest of data for real estate investors looking to take advantage of the buyer’s market we’re in. And today on On the Market, we’re digging in.
Hey everyone, welcome to On the Market. I’m Dave Meyer. Today we have a very fun episode because we have brand new data and information about the housing market that I have never seen before. A company called Parcel Labs. It’s a real estate data company. They’ve developed a motivated seller’s index. And over the last couple of days, I have been having a field day with this information, having a lot of fun incorporating this into my own strategy. And I wanted to share it with all of you because it’s really, really valuable. So today on the show, we’re going to talk about why you should care about motivated sellers in the first place. We’ll go through that quickly. And then we’ll get into the index and understand where there are motivated sellers and how you can best use this brand new information to your advantage. So let’s just start and talk about what a motivated seller is.
You probably have heard this term before, but if not, it’s exactly what it sounds like. It’s someone who lists their home for sale and is very eager to get rid of that property. They’re not sitting around waiting for the perfect offer or the perfect terms or the perfect price or anything like that. They’re typically willing to work with the buyer to get something sold relatively quickly. And as a real estate investor, you can probably see that this is a very advantageous position to be in. If you work with a motivated seller, you have a lot more negotiating leverage to get your terms and your price. Now, motivated sellers come from all sorts of situations. You often seen them come from sort of the unfortunate situations that arise, like from probate or divorce. But you see these just with regular people too. Someone gets a new job, they have to move across the country in two weeks.
Whatever it is, they’re motivated to get rid of the house. Now, I would forgive you and understand if you’ve never had the great chance of working with a motivated seller because during COVID there weren’t many of them or maybe they were motivated, but there was just so many buyers that they could still get their price anyway. But right now, I think just the way market dynamics are working is we have more motivated sellers. I’ve talked about it at length on the show. It’s not really from delinquencies and foreclosures, that’s up from the last couple of years. But from a historical perspective, it’s not crazy. We’re just getting back to a regular level of motivated sellers where there are people who want to get rid of homes. And since we’re in a buyer’s market and days on market are going up and things are sitting on the market longer, people are getting a little bit itchier.
Unless you can afford to be patient and have nothing to sell for, there are more and more motivated sellers in the market. And this comes with discounts, it comes with concessions, it comes with better terms. So knowing where to find motivated sellers is super, super valuable. And that’s why we’re going to identify key markets and trends that can help you pick markets, can shape your offers, and help you land incredible deals. So for that, we’re going to turn to this motivated sellers index. It’s super cool. We’ll put a link to it in the show notes. Of course, you can check it out at Parcel Labs as well, but I’m just going to talk through how this Motivated Sellers Index, I’m going to just call it the MSI, is created and what you can do with it. So the way Parcel Labs is doing is they measure three different things to determine if sellers in a given market are motivated or not.
Those three things are days on market, price cut frequency, and price cut magnitude. So days on market is something we talk about all the time, but it’s just how long has it something been sitting on the market because time creates pressure and a listing that is aged past the local norms. People see their carrying costs go up, they start to worry that their listing has gone stale. They maybe see a little less foot traffic when they do an open house, there are less showings. That increases pressure. People get a little bit nervous. Maybe they get a little more motivated. The second thing is price cut frequency. So how often are they cutting? This is something that is super valuable. Anecdotally, I’ve done this in the past, but if you see someone cutting one weekend and then the next weekend and then a third weekend, that person is pretty motivated, right?
So that’s the second thing that’s measured there. The third thing is price cut magnitude. So how deep are those cuts? Because some people maybe just cut 1% to get it to the price drops filter on Zillow or Redfin or whatever. But if you’re dropping 10%, that shows a little bit of desperation. I should say motivation, maybe desperation. We don’t know. But when you combine these things, this makes sense to formulate the motivated sellers index. We got days on market, price cut frequency, and price cut magnitude. And by combining these three things into just a single number, you can actually evaluate which markets are the most motivated, which markets are the least motivated. And even if you’re not shopping markets right now, this information can really help you formulate your offer. Because you might be investing in your backyard and if things are really motivated, if people are just fire selling deals, that’s going to change what you should offer.
You should try and extract as many concessions as possible in some of the episodes we’ve been talking about, how effective asking for concessions are. You can formulate your strategy around that. If you’re in a neutral market, you can’t do that. They’re going to ignore your offer. So this information really matters to all investors. And it’s very difficult, at least in my experience, it has been very difficult to look at days on market and price cut frequency in depth on your own and try and say, “What is going on here?” That’s a lot of information to aggregate yourself. You can’t do it. I mean, you could if you had a data feed, but it’s difficult. So having this one number really does help. And the way they’ve done it, Parcel Labs has done it is they’ve basically made it a one to 10 score with one being low, like neutral, people aren’t really motivated, 10 being the highest, and they actually break it down into four different buckets.
And if you’re watching this on YouTube, I’m actually just going to pull this up right now. I’m going to just show you this. You can see the URL, you can go look at this yourself too. But basically between zero and 2.5 is neutral. Between 2.5 and five is stubborn. So people aren’t really trying to sell, but they’ll do it a little bit. Between five and seven and a half is motivated. And then between seven and a half and 10 is fire selling. So those are the most motivated markets in the country if you’re between seven and a half and 10. And if you look at the national housing market right now, the whole United States, it’s slightly motivated. Five is the line between stubborn and motivated. And on a national basis, we’re at 5.1. So a little bit motivated. It’s been trending up a little bit, but not that much.
But of course, this national average really hides the information that real estate investors want to know. We want to know what’s happening in my market, what is happening in my asset class. And we’re going to get into that right after this quick break. Stick with us.
Welcome back to On the Market. I’m Dave Meyer. Today, we’re going over a new motivated seller index that I found from Parcel Labs. Before the break, I broke down the index itself. It’s from zero to 10 and told you that in the United States on a national basis, it’s at 5.1. But let’s look at what’s happening regionally. Now, again, if you’re watching on YouTube, I’ll actually just scroll down and show you some of this and how this is ranked. But right now, the number one most motivated market in the country is Sherman, Texas, where we’re at a seven. So it’s really important if you go back and look at their categorization, anything above a seven and a half is fire selling. And so there’s really no markets in the country that are at fire sales status. And this sort of jives with what I’ve seen, at least anecdotally in the market.
Tell me in the comments if you’re wrong, but I’m not seeing fire sales. I’m seeing big discounts as an investor, which is great, but I’m not seeing people paying 70 cents on the dollar for things, at least on market deals. You don’t see that. And I think that’s good. As investors, we do want discounts. A buyer’s market is to the advantage of anyone who’s trying to acquire and to build, but you don’t want fire sales. The risk of catching a falling knife is higher in those situations. So Sherman, Texas is number one. Tampa, Florida is number two, also at seven. Punta Gorda at 6.9. Austin at 6.9. San Antonio at 6.9. So those are the high end. You’ll also notice here, it’s kind of cool. They have a breakdown between single families and condos. I don’t think a ton of investors invest in condos. I personally don’t, but it actually breaks it down.
So in Sherman, Texas, for example, single family index is a little bit higher. It’s 7.2, but for a condo, it’s lower, 6.4. That’s weird. I would’ve thought condos were higher, but right now people are holding onto their condos a little bit more, except in San Antonio. In San Antonio of a 7.3% for condo and single family. So hopefully you’re already seeing how useful this can be in your market, but let’s just talk about the other end of the spectrum, the least motivated markets. So we have Rochester, New York, crazy. I’m just still shocked at how strong Rochester was. I went to college there and the market was awful, but it’s been so strong for five years straight. Their motivated sellers index is at 1.7. So don’t try and negotiate if you’re going to Rochester, New York right now because people are not motivated. That’s a good, strong seller’s market still.
Lincoln, Nebraska at 2.3%. Hartford, Connecticut, we’ve talked about that market a lot so far this year at 2.5. Syracuse at 2.5. Another Western New York. And then Atlantic City is also at 2.5. So those are the total opposite end of the spectrum there. And again, we’ll put the link to this so you can look this up. I’m just going to pick a market. Denver, I’m about to list a property for sale in Denver and I am motivated. I’ll just tell you right now, not expecting to get the best price on that one. So let’s just see what’s going on in Denver. Denver right now, motivated, 6.4 and it’s climate. It’s actually down from where it was a year ago, but it’s been going up, and this sort of jives with my own motivation. I just think about, I’m putting this property for sale. I sold a very similar home, almost exactly the same, two blocks away in 2022.
And I got an amazing offer on that. And I was pretty firm on my terms. I did not really give up much in terms of an inspection objection. I’m selling this property. I’m going to be willing to work with a seller if I can get something, a buyer, if I can get something under contract. So this sort of jives with my situation. I’m selling a single family, 6.7. I’m not going to sell it if I can’t get a decent price, but I’m willing to give up a little price to get rid of this property. So you should definitely go check this out. If you are curious about how your market is performing, or if you are looking for a market to invest in, check this out. The URL is too long, so I’m not going to read it. Just click on the link in the show notes or in YouTube, we’ll put it in the description so you can check it out there.
But go look at your market. This is super, super valuable. And we’re going to talk more in a minute about how you can actually take action with this because the data’s interesting on its own, but there are deliberate things that you can be doing with your portfolio with this information. And we’re going to talk about that in a second, but I first just want to talk about institutional sellers for just a second. Because like I said, no market in total is fire sale status right now, but there are definitely individuals who are at fire sale status.That’s the best situation for you to find if you can get a good discount. But Parcel, I was digging through their data and they’ve been tracking institutional single family portfolios. And in some of these markets, these sellers are dumping a lot of listings, potentially dozens or hundreds. And so if you could find things like that, to me, that just seems like a dream scenario.
They’re probably good assets. Most of these institutional buyers don’t buy really old things, or if they have, they’ve probably fixed them up. So they’re probably in decent shape, don’t need a ton of CapEx and repairs. And they’re probably very motivated. Just think about the logistics to sell tons and tons of deals, potentially hundreds at a time. And these are in good markets. They’re in Dallas and Houston and Atlanta and Tampa. And if you’re wondering why they’re dumping them, these businesses work differently. They might be willing to sell and they’re going to re-up in a different market. They might be huge hedge funds and they want to allocate some money out of real estate. Maybe they’re not able to operate efficiently at the scale that they are at, but a small landlord who’s self-managing might be able to make this into a great deal. And so it’s hard to find these things, but talk to your agent and see if you can find these things.
There’s an example. There’s a company called First Key Homes. They have literally hundreds of active listings, and they are seeing the average cut running 20% off original asking price. And they’re cutting every 20 days. So if you can find something like that where these institutional sellers are trying to just get rid of deals, super interesting opportunity if you can find them. So talk to your agent, especially if you’re in one of these markets that are really hot or were hot a couple years ago, Phoenix, Atlanta, Dallas, San Antonio, the Southeast. These places, you might be able to find something. And this is kind of like what we’ve been talking about previously on the show about new construction. We’ve talked about how new construction, most builders, they’re motivated sellers right now. New construction, they want to get rid of that inventory. Similar to institutional investors, their business model does not allow them to be patient and to sit around and wait for deals to sell at the perfect price.
So think about taking advantage of that business model and being a solution to them because you can operate these deals better than they can. So that is one thing you can do in your own portfolio with this information. But I want to just talk a little bit more about once you’ve identified a market or you look at this information for your market, what you should do about it. We got to take a quick break though. We’ll be right back.
Welcome back to On the Market. I’m Dave Meyer. Today we’re talking about the Motivated Sellers Index, and I want to talk a little bit about how to use this information. So first up, I think the obvious thing here is using this to pick a market. Now, not everyone is looking for new markets all the time. If you’re new, maybe. But if you are looking for a market, this is pretty good information. I think as someone who invests in multiple markets, invests out of state, that this is kind of gold. Because the way I think about it and the thing I would do if I were you, is to combine data about fundamentals of the market with this information. Because if you can find a market that has motivated sellers, but has really good long-term fundamentals, that’s really valuable. Think about Austin or Nashville. They’re struggling right now.
Good markets. We don’t know when they’re going to recover. But if you can buy 10 or 15 or 20% below current asking price and comps, that gives you a lot of cushion. You are walking into equity even if the price goes down another 5%, which most markets are flat. They’re not even going down that much. So that is an amazing thing that you can do, is just go out and use this for market selection. The second thing that you can do is actually use this to identify specific properties. Now, full disclosure, this is a paid feature of Parcel. And I just want to say Parcel, they are not paying for this. This is not an advertisement. They did give me an account to check this out. They did not ask me to make this video. I am just making this video because I found it really interesting.
I just met them and they sent me all this data. I was like, wow, this is really cool. So this is a paid thing, but again, I am not being paid to say this. I am just choosing to say this because I think it’s really cool. In addition to looking at markets, which is free on their website, you can actually just go and download the active listings. I haven’t done this yet. So if you’re watching on YouTube, I’m doing this for the first time. I don’t even know what this is going to look like. So I’m going to download motivated seller properties. I think this is going to come. All right, it’s in a CSV. That was really quick. Okay. So in Denver itself, I can get exact property addresses, property type, like single family, condo, townhouse. It’s got all this information in here. Square footage, all the property features, bedrooms, bathrooms, new construction, purchase date, last price.
So I’m going to just scroll over here. They have all this cool information. And then you can see for, this is, I think it was like 17,000 listings. For 17,000 listings in Denver, I can get a score right here in this column you can see here, neutral, stubborn, neutral, stubborn. So I’m just going to go and see if I can filter this. Let’s just do this. Let’s filter this by, I’m going to see fire sale.
How many are there? There are 1,914 properties in Denver that are considered fire sale status. So again, you have to decide if this is worth the price for you, but this is an amazing way to target properties. And this is on market. These are on market deals that you can target using this information. So again, I don’t want to make this into a commercial for parcel, but this is really cool. I am pretty impressed by this. This is something I personally am going to probably start to use. So that’s the second thing you can do here is literally go and identify properties based on this index that they’ve created. So the first one was like picking markets. The second one was identifying properties. The third thing is really about making offers. Because like I said, I sort of teased this in the beginning, and we’ve talked about this with concessions before, but the more motivated the seller, the more aggressive you can be in your bid.
So that is either asking for discounts on price, that’s for asking for better terms, that’s asking for things like seller financing if they’re into that. That’s asking for concessions and rate buydowns and covering closing costs. And so knowing in your market alone, again, that’s the free thing. Knowing in your market alone how motivated people are relatively can help inform your bid strategy. If you’re in Chicago or Rochester, you’re probably not making super aggressive bids. But if you’re in Texas or Florida, you should be making super aggressive bids. You should be low balling, asking for tons of concessions. Absolutely. Now, those are the obvious examples for most of us. What’s going on in my market in terms of motivation for sellers is less obvious. So go look it up. That part’s free. And yeah, if you choose to pay for that, maybe you can target more motivated sellers.
But even if you don’t, talk to your agent. If you pick out a property that you like and you can tell that they’re motivated, you should be offering more aggressive. And this is a simple, you can go on Redfin and filter for price cuts or days on market. Go do both. Go filter for Redfin for price cuts and days on market. Then you don’t even need to pay for the parcel labs. I’m a spreadsheet guy, so I like that kind of thing. But you could go do that and look around on a map and find your own motivated sellers that way. So even if you don’t use the parcel data, use this information and try and assess for yourself how motivated people are in your market and how motivated individual sellers. So that’s my advice, the playbook for you. Now, before we go though, a couple of just things to watch out for because I just want to make sure, number one, just because a seller is motivated does not mean it’s a good deal.
Sometimes they’re sitting on market and their price cuts because that’s a bad deal. And there’s hair all over it. There’s structural problems, whatever. A deeply cut house can still be overpriced if it started at a crazy level. Even if they’ve cut it 20%, don’t just buy that. That’s your job. You can use data and your agent and everything to figure out which ones to target, but you got to make sure it’s still a good deal. Anchor it to real comps. Buy below real comps, not the size of the discount. That is something I see people making mistakes with these days. Oh, it’s 10% up. Well, maybe they listed it for 20% too high and it’s still 10% too high. So focus more on your own comps and your own underwriting than the size of the discount. Because remember, motivation can signal a problem. Knowing a seller is motivated means that they’re probably willing to talk.
That is not enough to make a deal work. You got to do the underwriting correctly. But I think this is super cool. I think it’s super fun information. It’s something I really got excited about. And you probably know this, but I look at all the data for the housing market. It’s pretty rare that I come across something new that I think is really useful. And I genuinely learned about this and wanted to share it with all of you. Use it if you want, but I think it’s really cool. Even if you don’t use this particular data, I think the mindset of going after these motivated sellers and adjusting your bid strategy and building your buy box around getting those deep cuts in the great stall, in the upside era that we’re in, that is a winning strategy. So hopefully this will help you in that effort.
So all right, that’s our show for today. Thank you guys so much for watching this episode of On the Market. I’m Dave Meyer. I’ll see you next time. Thank

In This Article

Cost segregation gets talked about like it’s a magic button: run the study, get a huge deduction, and lower your tax bill. And for the right property, that’s a pretty fair description.

But not every property is the right property. Before you spend money on a study, it helps to understand what actually drives the benefit, because it isn’t the same for every asset class or price point.

Short-term vs. Single-Family vs. Multifamily vs. Commercial

Single-family rentals 

These can absolutely benefit from cost segregation, but the dollar impact is usually smaller, simply because there’s less building to work with. A $200,000 single-family rental has far fewer components to reclassify than a $2 million apartment building. 

That doesn’t mean it’s not worth doing. It means the benefit needs to be weighed against the cost of the study itself.

Short-term rental properties

A short-term rental can also benefit from cost segregation, especially when it includes furniture, appliances, flooring, outdoor improvements, and guest amenities. Vacation homes with features such as pools, patios, landscaping, and upgraded interiors may have a larger pool of assets that can potentially be reclassified into shorter depreciation periods.

As with any smaller rental property, the numbers still need to make sense. A high-value short-term rental with substantial improvements may generate meaningful tax savings, whereas a modest condo or cabin may not yield sufficient additional depreciation to justify the cost of a full study.

Multifamily properties 

These tend to be a sweet spot. More units means more of everything: appliances, flooring, parking, site work, and common area finishes. All that adds up to a bigger pool of assets that can be reclassified into five-, seven-, and 15-year property instead of sitting on the standard 27.5-year residential schedule.

Commercial properties 

These often see the largest benefits, especially properties like retail, office, self-storage, and industrial buildings on the 39-year schedule. Because commercial buildings depreciate over a longer period to begin with, pulling components out into shorter lives creates an even bigger gap and a bigger deduction.

Renovations vs. New Builds

A brand-new construction project is the cleanest scenario for a cost segregation study. Every cost is documented, every component is traceable, and the study can allocate the cost basis with a high degree of accuracy.

Renovations are a little different, but they can be just as valuable, sometimes more. When you renovate a property, you’re often replacing exactly the kind of components that qualify for shorter depreciation lives: flooring, cabinetry, appliances, lighting, and site improvements. A cost seg study on a renovation can capture both the original acquisition cost basis and the renovation costs, which means two layers of potential reclassification instead of one.

The key difference is documentation. Renovation studies lean more heavily on contractor invoices, permits, and detailed scope of work, so the paper trail matters more here than it does with new construction.

Value Thresholds Where It Becomes Impactful

There’s no hard rule that says a property needs to be worth a certain amount before cost seg makes sense, but there are practical thresholds where the numbers start to work strongly in your favor.

Generally, properties priced $300,000 to $500,000 and up start to see a study pay for itself many times over. Below that, the fixed cost of an engineer-based study can eat into a meaningful chunk of the benefit, especially on a single small rental. Above that range, and especially once you’re into multifamily or commercial assets worth $1 million or more, the deduction generated typically dwarfs the cost of the study many times over.

This is also where portfolio thinking matters. If you own several smaller properties, some investors run a study across the portfolio rather than property by property, which can make the economics work even when no single property would justify it on its own.

Why Not Every Property Needs It

Cost segregation is powerful, but it isn’t automatic or free. Here are a few situations where it may not make sense:

The property has a small cost basis

Very low-value properties may not generate enough reclassified basis to justify the study fee.

You don’t have income to offset

Depreciation is only useful if you have income (or gains) to offset. If you’re already in a low tax bracket or running passive losses you can’t currently use, the immediate benefit shrinks.

You’re planning to sell very soon

Depreciation you take now can affect depreciation recapture at sale. If you’re flipping the property in the near term, the math can look different than it does for a long-term hold.

The property is close to fully depreciated

There’s simply less remaining basis for a study to work with.

Final Thoughts

All this means cost segregation is a strategic decision, not a default one. The right move is running the numbers on your specific property before committing, which is exactly the kind of analysis a firm like Cost Segregation Guys can walk you through before you ever pay for a full study. Getting that qualification clarity upfront is what turns cost seg from a guess into a genuine strategy.

In This Article

BiggerPockets Pro members can save $500 for every home they onboard with Mynd, up to $10,000.

Managing rental properties well takes time, systems, and local knowledge that most investors don’t have the bandwidth to build on their own, especially as a portfolio grows past one or two doors. Screening tenants, coordinating maintenance, collecting rent, and keeping books straight all add up, and the cost of doing it poorly (meaning vacancies, late payments, and deferred maintenance) is usually higher than the cost of doing it well.

That’s the problem Mynd is built to solve. BiggerPockets is excited to welcome Mynd as our newest Pro Perk partner, and the timing lines up well: More investors are adding doors, expanding into new markets, and looking for full-service property management they can trust without hiring an in-house team.

What Mynd Actually Is

Mynd is a full-service property management company built specifically for real estate investors. Instead of handing off a single task, Mynd covers the full life cycle of managing a rental, all backed by local teams who know their markets: 

• Marketing and leasing
• Tenant screening
• Rent collection
• Maintenance coordination
• Financial reporting

For investors, that translates into a few practical benefits:

• Fewer vacancies, thanks to dedicated leasing and marketing support
• Maintenance issues handled by local vendors without you fielding the call
• Rent collection and reporting handled for you, with visibility into performance
• A management partner that can scale alongside a growing portfolio

The platform is built to support portfolios of any size, whether you’re managing a single rental or dozens of units across multiple markets.

Why This Matters for Real Estate Investors

As a portfolio grows, the time cost of self-managing grows with it. What worked for one property often breaks down at five or 10 doors, and the investors who scale successfully are usually the ones who know when to hand off operations to someone built for it.

Professional management isn’t just about convenience. Done well, it protects your asset, keeps tenants satisfied, and gives you back the time to focus on your next deal.

That said, property management is still a relationship, not just a service. It’s worth understanding how a manager communicates and handles maintenance requests, as well as how their fee structure works before signing on. But for investors who want reliable, tech-enabled management without building an internal team, it’s worth evaluating.

The Pro Perk

Here’s where this partnership gets interesting for BiggerPockets Pro members: For every property you onboard with Mynd, you’ll save $500 on property management services per property, with the potential to save up to $10,000 during your first year.

It’s one of a growing number of Pro Perks we’ve added because our members told us they wanted more than education and tools. They wanted partnerships that make running their portfolio easier and more affordable.

Why It’s Worth Your Time

Mynd joins the lineup of Pro Perks built to help members manage and grow their portfolios more efficiently. If you’ve been considering handing off day-to-day management or you’re adding properties and need a partner who can keep up, onboarding with Mynd could save you time, money, and frustration.

See how much you could save with Mynd.

Ashley:
Jake spent years listening to BiggerPockets through his headphones while working in the indoor rock climbing industry. He understood the strategy, but knowing how a flip should work and putting real money behind one are two very different things. At age 23, Jake decided he was ready to find out whether all that learning would hold up once the walls came open.

Tony:
The first project pushed Jake Antizette harder than either of them expected, but it also launched a partnership that has now completed roughly a dozen flips. The surprises haven’t stopped, but what’s changed is how Jake prices the risk, decides what to do himself, and responds when a deal refuses to follow the plan. And today we’re breaking down the decisions that took him from the climbing coach to a real estate investor, along with the lessons a rookie should understand before taking on a renovation.

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

Tony:
And I’m Tony J. Robinson. And with that, let’s give a big warm welcome to Jake. Jake, thanks for joining us on the podcast today, brother.

Jake:
Oh, absolutely. It is an honor to be here on the legendary BiggerPockets Real Estate Rookie Podcast. Long time listener, so excited to be here.

Ashley:
Well, Jake, I can’t wait to hear more of your story, but take us back to the beginning. When did real estate really become something you started thinking of and what did your life look like at this point?

Jake:
Sure. This one might be a little weird, but I knew real estate was my future from a young age. I started researching real estate, YouTube podcasts, books all the way back in high school. I knew from then that eventually I’d make my way as a real estate investor. Obviously, I didn’t start right away. I went through college, had a different career first, but I ended up making it here around the age of 23, 24.

Ashley:
Now, after all these years of learning, what was the thing that finally made you take action?

Jake:
Sure. Well, what I call my first property was actually a house. My then girlfriend, we got engaged the day we bought the house, but we bought it together to live in, to renovate. I called it a long-term burr. It’s now a rental property. But basically that was our test property is we bought a house, we renovated it, and we thought if we can do this for our own house now we should go out and we can do this for real.

Tony:
And just out of curiosity, Jake, you said you started listening to podcasts when you were in high school. How old were you when you bought the first deal?

Jake:
It was five days after I turned 23, I believe. So I was 23 years old. Yeah.

Tony:
That’s incredible. You said that it was a long-term burr. Just out of curiosity, had you done any renovation work prior to owning that house?

Jake:
You know what? My dad owned a painting company and I worked at it here and there. So I did a little bit of painting growing up and I worked for a cousin of mine who was a contractor for a summer here and there. So a little bit. I had some great help from my dad who’s now my business partner on these flips and a lot of learning as I go. And that is still how we do it. We learn as we go.

Ashley:
Now, why did you decide to do this investment and buy this property with your dad?

Jake:
Well, this first one was just me and my girlfriend. We moved into it to live in it. So it was our first house, but I knew that –

Ashley:
So it would be your next one, but your first flip you did with your dad?

Jake:
Yes. Yes.

Ashley:
So I guess the question is why did you do the flip with your dad and not your girlfriend for the first flip?

Jake:
You know what? She’s always a partner. And actually she did help out a little bit with the labor on the first few until she was pregnant and got mad at us.

Tony:
Let’s take it then, Jake, back to that first home. You said that it was a long-term burr. I guess first, just for rookies who are listening, what does burr mean? And what do you mean when you say long-term burr?

Jake:
Sure, sure. So typically when you burr, and there’s a lot of people that do a lot more than this than I do, of course, but you buy, you renovate, you rehab, you refinance, and then you repeat. Now we didn’t do the repeat, but we bought this, we renovated it for ourselves. We moved in. We lived there well below our means. We refinanced and we refinanced again when rates were really low in 2020. And now it’s been a rental property ever since we moved out in 2023.

Ashley:
Jake, I have to ask, what was the interest rate when you refinanced?

Jake:
Yeah, we’re at 2.99.

Tony:
Yeah, the twos are bringing. It gives me chills just hearing that right now.

Jake:
I wish we’d see that again.

Tony:
Yeah. Who knows? We’ll see it in our lifetime again, but it worked out well when we had it. For the property though, you said it was a long-term burr. How long did it take and how much of that work did you do yourself?

Jake:
Sure. Between my dad helping us, me and random family coming in for a few hours here and there, we did all the work. And again, we just learned as we went. I had a full-time job at the time, so it was three or four months of nights and weekends. Yeah. Yeah, it was kind of crazy. But then we lived there from about four or five years before we decided to move on and rent it out.

Tony:
I mean, three to four months actually isn’t, I would’ve assumed actually longer. You put me by myself with all my kids and my family in a house to renovate and it took me three or four years.

Jake:
Well, we were young. There was no kids yet, no pets yet. It was a lot easier then.

Tony:
What was the scope of the renovation and how did you actually go about educating yourself? Because you mentioned a few times, hey, we learned as we went, but what does that look like in practice? Are you going to YouTube University? Are you just truly figuring things out? How many Home Depot runs did that take? What was the scope and how did you educate yourself?

Jake:
Sure, sure. A little bit of asking whether it was my dad or somebody else that might’ve seen it in the trades before, asking, “Hey, how do you do this?” A little bit of YouTube and a lot of trial and error. So the scope was we did kitchen, we opened up. Basically, it was a house from the ’70s that had never been updated. So it was a lot of cosmetics, but kitchen as well, knocking down a wall, but just a lot of trial and error. It’s scary, but I always tell people, as long as you’re not going to hurt yourself, you can try it. You can shut the water off, you can shut the power off, you can try things. Just be careful.

Tony:
What was the full scope? If you look at the entire scope of work for the renovation, what did it all include, Jake?

Jake:
Yeah, so we opened up a wall to make it open concept up on the top floor, kitchen, living room, dining room. New kitchen cabinets, countertops, appliances, new flooring throughout the place. And then the bathroom, just new toilets, new vanities. So nothing too crazy, but for first project, it felt like

Tony:
A lot. And just ballpark, how much do you think you spent all in to do the renovation?

Jake:
Yeah, I actually remember it was about 12 grand, just material.

Tony:
That’s amazing. Did you get any quotes, Jake, before you did it? How much do you think it would’ve cost you had you hired someone to actually do all that work?

Jake:
I did not. It wouldn’t have mattered. We couldn’t have afforded it. We were first time buyers. My wife’s a teacher. I was a climbing coach.

Tony:
It’s like I dn’t even waste my time going to talk to you. I guess last couple of questions around the renovation for the burr. Of all the work that you did, what was surprisingly easier than you thought it was going to be? And what was surprisingly harder than you thought it would’ve been?

Jake:
Easier would probably be the kitchen cabinets, to be honest. It’s my favorite. I still do it in our projects to this day. I just love hanging cabinets. I don’t know what it. You can just get a good amount done in a day and stand back and be like, “Wow, this looks better.” That’s probably easier than I thought.

Ashley:
I love that too. When I show up one day, there’s no cabinets, and then I arrive the next day and they’re all in.

Tony:
You can say that for everything, Ash. You just show up the next day and the work’s always done.

Ashley:
Actually, I did stand and watch them this time when they just did cabinets and I was like, “Oh my God, this is too much math.”

Jake:
That’s funny. There’s a lot of prep work in other painting or flooring, whatever. There’s a lot of prep. It takes a lot of time. But cabinetry, it can go in fast and all of a sudden you got a new kitchen.

Ashley:
You must have had level walls then. I need a shim here, a shim here. That’s what I saw a lot of going on.

Jake:
The hardest part, which is actually pretty simple, but I’d say finishing after you move in, that’s for sure the hardest part. We had our closet doors, they never got painted. And I kept saying, my wife wanted them painted, of course. I kept saying, “Oh, next time we’re working on a property, I’ll bring them while we spray the doors.” I just always forgot. So the doors got painted after we moved out.

Tony:
You live and you learn. And then I guess last question on the burr, you guys, lots of four months of labor, 12-ish grand of expenses. What did you buy it for? And when you did that first refinance, what did it appraise for?

Jake:
Oh, sure. I mean, we bought it for, and this was back in 2018, so before prices started going up during 2020, 2021. But we bought it in the 130s. We got all our money back out. I remember that. I don’t remember exactly what it appraised for, but we definitely got our money back out.

Ashley:
So that’s great. That’s awesome. So then when you decided to move out four years later, what did you rent it out for and how much did you end up cashflowing on the property?

Jake:
Sure. We rented it out originally for 2,200 and great tenant. He stayed, I don’t remember if it was one or two years, but he left and then we replaced it with another amazing tenant who’s been there since and is about to sign another lease, fortunately. I love note vacancy, but we’re at 2,300. I definitely am one of the nicest units and one of the lowest rents at this point, and I should raise it. I know that, but I love the tenant and I don’t want to ruffle feathers.

Ashley:
I am on board with that. I have a tenant in a property that has paid $700 per month, which is way low, but they have lived there for about 13 years. So I do not want them, and they take great care of the property and maintain it. So I’m on board with that happening sometimes as long as you’re still cash flowing and it works for you. Now, what do you end up cashflowing on this property after your expenses are paid?

Jake:
Sure. So originally we were around 606 a month when I crunched all the numbers. So very good. Again, low interest rate. You’re not going to find that if you buy a property today, unless you just put a large amount down. But since, of course, our taxes have gone up, our insurance has gone up. So that number’s come down a bit because I haven’t raised rent, but we’re very happy with it.

Ashley:
Coming up, Jake explains why his next investment, his first flip doubled both the budget and timeline, why he chose to call the village instead of hoping no one would notice, and how he handled water entering a finished property during an open house. That’s right after this. We’ll be right back. Okay, welcome back. We are here with Jake. So Jake, as we learned, your first flip, you actually partnered with your father. So what made you decide to do a partnership with your dad in the first place?

Jake:
Sure. Yeah. My dad, I always remember he always wanted to flip houses. And maybe that’s why I knew from a young age I wanted to do it too. He owned a painting business for a long time, so he’s comfortable around the trades, but he didn’t understand the real estate side of things. Around the same time I started investing, I got licensed. I’m a full-time real estate agent. I own a brokerage. So I understood the real estate side of things. It was a natural fit. I definitely had to drag him kicking and screaming into the first one, but I was going to do it and I wanted it to be with him. I’m glad it worked out because we’ve worked together on every flip. We’ve learned how to work well together and wanted to leave each other alone. And there’s been ups and downs, but it’s worked out great.

Ashley:
What was it that your dad brought to the table that you thought he would make a good partner? And not just opportunity, but was there a skillset or something like that that you were maybe lacking that’s why you wanted to partner with him on the deal?

Jake:
Oh man, sure. I mean, a lot of things. I’m more numbers and business. He spent his life in the trades, painting specifically, but when you’re in the trades, you kind of learn a lot of things. So he’s a lot handier than me. We also just have very similar mindsets of wanting to do things the right way, wanting to have a good product. We really pride ourselves on that. So I mean, it honestly is just a natural fit. And I’m a big fan of working with family, so I couldn’t have asked for a better partner.

Tony:
Jake, I think that’s my big question here is that you said you’re a big fan of working with family. There are other people on the internet who say never work with family. Why was that your preference? And I guess how did you enter into that partnership to make sure that business didn’t make things difficult being family members as well?

Jake:
Oh, you’re asking the tough questions here. That’s a good question. And definitely I would say it depends on the family. We had a good relationship. We have a better relationship now because we work together. We’ve had our arguments, of course, but again, we just want to do the right thing. We want to do right by each other. And we have worked through them. And I’d say we’re on a five, six property streak where we haven’t argued at all. So that’s good.

Tony:
Just kind of strategically, Jacob, what made you want to get into flipping as opposed to just doing more of the long-term burrs? Because you had the strategy that worked well for you. Why not just continue to replicate that? Why add flips into the mix at all?

Jake:
Yeah. And that’s a good question that honestly, over the years I’ve gone back and forth. Should I buy some more rentals? Should I dip into short-term rentals? Should I diversify? But when we started, it was to build capital. We didn’t have much. I already mentioned I was a climbing coach and my wife is a teacher, so our funds were limited and we just wanted to build capital. But then we really enjoyed providing a great home for people. And we’ve gotten better and better at it, so we just want to keep doing it.

Ashley:
Now, how were you guys financing these flips and specifically the first one?

Jake:
Sure. Yeah. The first one, and we still use this, but the first one was purchased using a HELOC on my dad’s primary residence, the house I grew up in. So that was kind of terrifying because it’s not just money on the line, but his house. So that’s how we purchased it. And then I funded the rehab, which was somewhere between 15 and 20 grand.

Tony:
So you guys are using the HELOC from dad’s primary, and you funded the renovation costs. Was that, Jake, just money that you had saved up from working or how did you fund the rehab portion?

Jake:
Yeah, I mean, I guess you could even say it was from refinancing our residence when we took the money out because it was a combination. It was money we saved, but also when we refinanced and took our capital back out of our townhouse where we lived, that capital was now available to reuse.

Tony:
I just want to ask you a few rapid fire questions on the first flip. What city are you located in, Jake?

Jake:
Sure. I’m in Bolingbrook, Illinois. It’s the southwest suburbs of Chicago.

Tony:
And where was the first flip?

Jake:
Yeah. So the first flip was here in Bolingbrook where I am. It was maybe a half mile from my house and three, four miles from my parents’ house. So where my dad was coming from.

Tony:
And how’d you find it, Jake?

Jake:
It was on the market. And since then we’ve done. We’re on our 12th, we’re buying our 13th right now. It’s been a mix, probably fifty fifty on market, off market.

Tony:
Interesting. Now, a lot of rookies listening say that, and a lot of investors online say that the MLS is where deals go to die and there’s no good deals on the MLS. What made this one such a good deal? Had it been on the market for a long time? Was it just priced appropriately? Did you have to do anything special to get it or was it just like, hey, you opened up Zillow one day and you’re like, “Hey, this one actually makes a ton of sense.”

Jake:
Sure. I actually think, and I’ve helped a lot of investors as their agent buy properties off the MLS. I think there’s a lot of opportunities on there. You really have to get clear with your buy box. Most of the time to buy a property on the MLS, you’re buying it right away. At least in my market, you’re going out to see it in the first few days it’s on the market. And that was the case here. So we went and saw it in the first day or two it was on the market and we paid a little bit over asking price for it. We’re a little crazy. I don’t recommend this to any of my clients, but we do wave inspections and we pay cash, which makes our offers stronger. We let people leave whatever they want in the house. They can pick the closing date.
So we try and make it as clean and desirable of an offer as possible. It doesn’t always work, but sometimes the seller’s needs match ours and it works out.

Tony:
I just want to make sure I’m tracking. Y said you let the sellers pick the closing date. I’ve actually never leveraged that before. It’s like, hey, so is it typically faster timeframes or do you actually get people who want longer closings as well?

Jake:
It depends. Everybody’s situation is different. So I’ve had people that want 90 days to get out and I’ve want people that want it tomorrow and it’s like, “Well, I need at least 10 days. Slow down.” But yeah.

Tony:
I’ve never used that tactic before of just letting the seller pick the closing date. I’ve usually offered faster closings, but I’ve never just offered like, “Hey, you pick the date.” Have you done that before, Ashley?

Ashley:
I feel like it never happens anyways, even when you do put a date on the contract in New York State. So it doesn’t seem to matter. Basically, especially if you’re using financing, whether it’s me or somebody buying a property from me, it really just depends on the loan commitment and when the attorneys can actually get together to close. And especially if you’re doing a loan, then you got three attorneys involved. So yeah, I would say I don’t even know what dates are put on any of my contracts because it doesn’t usually matter anyways and it’s never stuck in stone. Yeah.

Tony:
That makes sense. Very New York specific, maybe channel.

Ashley:
I mean, maybe I’ll try it in case somebody believes that it actually matters.

Tony:
All right. So we got some creative offers going out. And you said you went over ask. What was the ask price and what did you actually close at?

Jake:
It was actually really similar to our burr that we bought. It was in the 130s and we bought maybe four grand over asking price, something like that. I was going to say just not a ton, but enough to make it different from any other offer they might’ve got that day.

Tony:
And was it the HELOC that you guys used to also fund the whole purchase?

Jake:
Yeah, the HELOC paid cash for the property.

Tony:
Got it. Got it. Okay. And then in terms of the actual renovation, I’m assuming that you guys did all the work again yourselves on this one as well? Or how did the actual renovation go?

Jake:
Yeah, we did hire an electrician to do some work on this one and hired a contractor to replace some glass and some windows, which went terribly wrong. But no, we did. This renovation was crazy. We worked seven days a week, about 14, 15 hours a day. I mean, as you can imagine, you probably remember your first deal. It was really stressful. We were terrified. Nobody knew what was going on in the market. This was 2020. So we were just trying to get it done and back on the market. So it took us about five weeks to do the renovation, just nonstop work. I remember too much caffeine and stress. My eye was quite literally twitching for weeks. Yeah.

Tony:
And were you guys able to get the renovation done on budget or this being your first flip? A lot of investors, they find themselves going over budget.

Jake:
This one, we’ve stayed relatively close to budget. Our next one, we blew our budget out of the water.

Tony:
Okay. So on the first one, walk us through the end state. After you guys finished the renovation, what did you guys list for? What was the net profit at the end of the day?

Jake:
Sure. So on this first one, we listed at around 200. We ended up sitting on the. We needed three buyers to close it. We had people lose financing, people back out for whatever reason. But we ended up sitting on the market waiting for closing longer than it took us to renovate it, which is never fun. But we ended up making a profit around 25 grand, which not bad. We were on top of the world. We just wanted our money back. We were excited. We got to learn so much. And before we even sold it, my dad was on top of me who I had to drag kicking and screaming into the first one. He was on top of me saying, “When are we doing another one? When are we doing another one?” So we did actually put another one under contract and we were ready to close basically right after we finished the first one.

Tony:
Fantastic. It’s always great. The first one kind of gives you this proof of concept, but I think it also. I’ve shared the example before. The first time that we ever sent out mailers trying to do our own direct to seller marketing, literally the very first phone call that we got back from these postcards we sent out, we ended up closing on that deal and we wholesaled it for I think 30 grand. The very first time I picked up the phone. And I was like, “This is easy. Why isn’t everyone sending out mailers and making $30,000 on every postcard they send?” And then we didn’t hear anything for six months from anyone else. We didn’t get another deal for six months. So sometimes that first deal, I think when it goes smoothly, it’s great that you get the proof of concept, but it can also, I think, maybe give you the sense of it’s maybe easier than it actually is.
And it sounds like, Jake, your second deal is going to be that reality check for you. So maybe walk us through what some of those differences were between the first deal and the second deal.

Jake:
Sure. Yeah, it was definitely a reality check, that’s for sure. So the second property we bought was also here in Bolingbrook. It was a single family home. Yeah, not too much higher of a price point. We bought it in the 150s, but it needed more work. So this one, kitchens, bathrooms, fully updated flooring, all that fun stuff. But as we started to open it up, we realized very quickly we were in over our heads and we needed professionals to come in and do this work. For example, we pulled up a shower base and we saw their drain was, it was flexible garden hose is what they had under their shower base. And it was inside of. Actually, when they installed this shower base, they put it inside of a vent. So they destroyed the duct in the ground.

Tony:
Sorry, Jake, I just want to make sure I’m understanding. They had an actual garden hose?

Jake:
Like a black drainage hose that you’d have outside. Yeah.

Ashley:
And that’s something that won’t come up in the inspection.

Jake:
No, no, not that we did an inspection anyway, but no, nobody would’ve found it. You just never know. And it did drain. We were warned they don’t use it often because it drains slow, but it did drain eventually. So anyway, on that property, once we opened it up and saw how many surprises were there and how it was kind of over our head, we couldn’t handle this, the plumbing, the electric, these kinds of renovations ourself. The first thing we actually did is we decided, you know what? Let’s call the village out here. We want to make sure we’re doing things the right way. We want the inspectors to come look at it, which I know a lot of investors, they don’t like to get the municipality involved, but we just thought, let’s call them, make sure we do it right, make it so we can sleep better at night selling this to somebody else and everything’s inspected and everything.
And that’s the way we’ve been ever since.

Ashley:
Yeah, I think that’s the better path. When you’re starting a project, we have done a couple rural properties that have done where we don’t necessarily need permits for a bunch of stuff because they are so rural. But it’s like you get the code enforcement officer’s cell phone is on the website, you just call. We still have him come to the property and just say, “This is what we want to do. What do we need a permit for? What do you want from us?” Things like that. And most of the time it’s like, “Well, unless you’re doing this or that, you’re fine. You don’t need anything.” And it’s very different in the rural areas. Like a roofer, I did a roof last year and he went to the village office to get the roof permit and he had it four hours later and started work on the roof.That does not happen a lot of places, but I agree it’s better to have code enforcement and to get your permits in place rather than get the, what is it?
The red tagged on your door. Yeah.

Jake:
I know a lot of investors that take that red tag, it’s like a pride thing. They finally got stopped. I never want to see it. I don’t want one.

Ashley:
Okay. So Jake, with this property and dealing with permits, was there anything that actually surprised you maybe during this permit process? And how much more did this actually cost you to get these permits in place?

Jake:
Yeah, the permits themselves here where we are, the permits aren’t that expensive depending on the size of the job, like 500 to a thousand bucks for the permit. But what did surprise us was the cost of plumbers and electricians. You get that state license and you are very, very expensive now, which now we’ve just budget in. From then on, we just budgeted it in and we know that. But our remodel, we doubled our budget. We went way over. It was complete surprise, but we bought that one in, that was in early 2021. So just as prices were going up. So we got lucky there that we just got good market timing that it made up for our lapse of judgment estimating the rehab.

Ashley:
What did the numbers end up being then on this property once you sold?

Jake:
Okay. Yeah, the numbers on this one, we bought in the 150s and our renovation ended up being around 40 grand. And we sold for at 270. So we did profit around 50, 55.

Ashley:
Not bad for going over budget.

Jake:
Yeah. It ended up being a home run. I know. Again, we got really lucky with market timing. We really did. And then we weren’t planning on that ARV at all. It ended up being a record sale for the neighborhood, which we’re grateful for.

Tony:
Jake, I guess I’m curious because you mentioned market timing a few times, and obviously the market has changed pretty dramatically since the days of the super low interest rates. How has your strategy changed since then? Is the market that you’re in still moving strong? Have you seen days on market increase? What changes are you making today to still flip profitably?

Jake:
Yeah, sure. Here in Chicagoland, it’s actually still a seller’s market today. So prices, I don’t want to say they’re. We’re not getting a ton of appreciation still, but it’s not like we’re losing value. So not too much has changed, to be honest. I’ve always been conservative when it comes to my ARV, so I just keep it that way. I’d rather have a happy surprise than a bad surprise. But yeah, we’re just keep on as we have been.

Tony:
Jake, one more question I have just to give Ricky’s context. When you actually go through the city, the local municipality to pull permits, just generally walk us through what that process actually looks like. What type of work did you need to pull permits for? What type of work was fine without permits for the work that did need permits? How was that process? Did you have to submit plans? How quick were the inspections? Just give rookies a sense of what it actually feels like to go through the official permitting process for renovations through the city.

Jake:
Sure. And every town’s going to be a little different on how they do this. But in general, the way we like to do things is we like to do what’s called a consult. So we want the inspectors to come out, we want to show them what our plans are, and then we want to know from them based on what we’re doing, if there’s anything extra they might require. Sometimes they want us to add insulation to the attic to bring it up to a certain R value. Or sometimes they want, if we’re opening up so much drywall, they want the electric replaced here or the plumbing replaced here. So we just want to be upfront with them and walk them through everything we’re doing and see what they have to say about it. And we kind of like that too because it allows us to bring the house up to closer to current code.
So when we go to sell it, there’s less that it’s going to come them up. Even if it’s an area we weren’t planning on touching, I will say we never plan to put insulation on a property, but if they make us do it now that the buyer has new insulation, then it’s not something that’s going to come up in their inspection. And I like to do that even in towns. We’ve worked in towns where they don’t typically do consults, but I still, I got them on the phone and I talked them into coming because I just would prefer a face-to-face meeting with the inspector so I can actually get a relationship going, build some rapport, show them we’re trying to do things the right way kind of thing. The timeframe depends on how fast you can get them the paperwork they need. Typically, they want to know who your contractors are, whether that’s plumbers, electricians, roofers, general contractors.
They want their information, they want them registered, they want them bonded. Plumbers they typically want a letter of intent from. So once you can get them that information here, they’re pretty quick, two or three weeks after you get them all the needed information. They recently started requiring floor plans, which is funny, but no problem, I can do that if that’s what they want. And then as far as the inspections go, once we get that permit and the work gets going, two, three days, you make a call and they come out to inspect and we can move on.

Ashley:
Now, are the contractors handling most of that for you? Because around here pretty much you’re hiring the contractor, they take care of the permits or did you have to do a lot of that yourself?

Jake:
No, I still do it myself. I act as the GC. We still do a lot of work ourselves. We hire out kind of more and more on each property, but we hire out all the licensed trades every time. We have to pull a permit. We can’t touch a water line. We can’t touch an outlet once we pull a permit. So same with roofing. We hire all that kind of stuff out. But yeah, I personally do pull all the permits, which is time-consuming, but it also leaves it in my control. I find the biggest delay is typically getting my contractors to register with the village. That’s usually the longest delay. All

Tony:
Right. Don’t go anywhere because Jake is closing out with the reality of learning DIY skills, what to expect when hiring contractors, and why his busiest flipping year requires him to spend more time saying no to deals. We’ll be back in just a few minutes.

Ashley:
Okay, Jake, before we wrap up here, there’s something I’ve been dying to talk about, and this happened during your open house that you had at one of your flips. Tell us this story and what this experience meant for you.

Jake:
Oh, yeah. What a disaster. I am an agent. I sell my own properties, but I don’t like to sit my own open houses. So I had a colleague sitting in open house for me. I was 45 minutes away. I was in the city, and it was raining like crazy. It had rained eight days prior, and it was just downpouring this whole day. I’m strained up, the roads are flooded where I am. And I get a call from this agent that’s at the open house saying, “Hey, there’s water coming in your house, just so you know.” And there’s no basement. There’s nothing below grade. This is a house that is slab on grade. There’s no reason we should have been getting water in it. So of course I’m like, “You got to cancel it.” And I call my dad who’s around the corner because he lives right there and he’s going to go pump it out and try and dry everything out.
So this whole property, this was the same one we doubled our budget on. So we learned a ton on this. And one of it was how to deal with stress because this was just absolutely terrifying for us. Now we have all our money wrapped up into this thing and it’s getting water. What are we going to do next? But I learned a few things. One is that problems come with the territory. You can’t avoid them. You just have to get better at solving them. So that’s the first thing I learned. The second is that talk about your issues. We had this issue and I was talking to one of the village inspectors about it, and he said, “Why don’t you call the village engineer? The village has a program for homeowners that have issues with water coming into the property because it’s kind of that whole older side of town.
There’s quite a few homes with water issues.” So I call the village engineer and he comes out just two hours later to look at the property and we make a plan and all of a sudden the village is going to help out me and the neighbor. And they agreed to dig a swale in between the two houses to help prevent the water from entering the houses again, help route it around the houses. And it really, it saved our deal. The buyer was comfortable knowing the village was committed to doing this, and we were able to sell the property and move on. And from then on, I was always open to talking to people about our problems and looking for solutions on how to solve it.

Tony:
Jake, I love that what probably would’ve terrified you on before becomes a solution that’s now solvable. And it’s like, all right, if something like this were to happen, at least now we have a plan of how to move forward. And I think that’s why the battle scars in real estate investing are so useful because every deal that goes wrong or every moment that doesn’t go according to plan, we learn from it, we recover, and it makes us a better investor moving forward. So I appreciate you sharing that story with us. One last question on my side, Jake, is just on the contracting side. You mentioned earlier that electrical, plumbing, roofing, you have to hire contractors in order to get those permits pulled. But how does a rookie go about actually finding trustworthy contractors? As I’m talking and having these conversations, well, first, how do I find them?
And then once I find them, how do I have the right conversation to vet a good one versus a bad one?

Jake:
That is probably one of the toughest questions. And this is something we go through. We’re on our 12th property now. And being an agent, I refer a lot of contractors to my clients too because they need work on their homes. I have found great relationships with contractors, but they didn’t come easy. It took going through some bad ones to get to some good ones. And the biggest thing I’ll say is you want to ask people you know for good experiences they’ve had. So if you call your neighbors up and say, “Hey, I saw you had a plumber at your house. How did that go? Did they do a good job? Would you call them again?” That’s a big one. Would you call them again? That’s huge. I don’t want to work with anybody if you wouldn’t call them again. So that’s a big one is word of mouth.
Actually, some of our contractors, they have no online presence at all. They’re purely word of mouth. My HVAC guy, I have a hard time finding his number. If I can’t find it in my phone for whatever reason, I can’t find it online. I have to call somebody else to get it. But I call him and it’s taken care of. I don’t have to worry about it. So those are the best contractors. Another way we found a few contractors is just at, and you’ve heard this before, but at hardware stores. Our roofer, I saw him at Menards and he was just talking to my kitchen guy and the kitchen guy introduced us and I’ve been working with him ever since. And again, I can call him and problems are taken care of. I don’t have to worry about it. But it takes time and the relationships go both ways.
We don’t beat people down on price. Everybody has to get paid fairly, and we understand that. It’s a win-win situation for everybody.

Ashley:
Now, Jake, when you started investing in 2021, the market was very different compared to now. What are some of the things that you are going to do different going forward that is different from when you started real estate investing?

Jake:
Yeah. Again, our market here in Chicagoland isn’t too different. Our appreciation has slowed down, but it’s still a seller’s market. Days on market are up a little bit, but I’m just underwriting a little bit more conservatively, but I’ve always been conservative. So my approach hasn’t changed too much except for since we’re trying to hire a little bit more out and we’ve got wounds that tell us how much things cost and that surprises come with every property. We do plan a little bit more on the budget for surprises. But yeah, not too much has changed.

Ashley:
We recently had this, my dad’s friend, he offered help to install flooring in my new house and just said, “Yeah, I’d love to do your dad a favor and I’ll come over and help.” And I felt bad. He’s an older guy. I’m like, “I don’t want him on his knees and stuff, having to put in this flooring with us. We can pay for someone.” Man, did I get sticker shock when I saw how much it was? It was $12,000 to install the flooring. And I had somebody that was offering to help for free to actually come and install the flooring. And I turned it down and I’m like, “Oh my God.” But yeah, I think I definitely agree too, back to your point of contractors that they don’t advertise because they’re already too busy. They don’t need an online presence. And then also my market is kind of similar to yours in the sense that it is still days on market for starter homes or good conditioned properties that aren’t outrageously priced, are selling really fast, the going pending.
Tony, what about your market right now? Maybe not specifically where you live because you’re not investing there, but maybe in one of your short-term rental markets?

Tony:
Yeah, I mean it’s a bit of a mixed bag depending on where we’re at in the country. Our market in California, that one’s on a resale side. It’s probably still pretty slow, very much a buyer’s market. Our East Coast side is more so like a seller’s market still. So I feel like it depends on what market we’re in and how things are going, but I think that’s always true. Real estate is very local and specific. Where I live right now, I’ve mentioned, I think on a previous episode, we’re shopping for a new primary. And even now, even where we live, it’s more of a buyer’s market right now as well where we have leverage. The new primary that we purchased, I got a 30K reduction on the purchase price. I got another $32,000 in seller credits. So we’re able to negotiate those things right now that it’s a lot harder in other parts of the country.
And Jake, I saw your eyes bug out when I said that. I’m assuming that’s not the case for you guys right now.

Ashley:
Well, also too, the price point, the credits that you got, Jake and I could actually buy a house with a 30K discount at 32 seller credits.

Jake:
My houses aren’t that cheap. They’re not that cheap. But yeah, no, man, that’s really unheard of around here. Again, there’s some properties that are sitting and it’s easier to buy now than it was the last five years, but it’s still a seller’s market. And my clients, if they get five, 10 grand off, I’m ecstatic for them because it’s hard to find anything.

Ashley:
My agent was telling me the other day that she’s seeing this with a lot of properties and it’s actually starting to make her really mad is agents are listing them lower to attract more buyers, get people in the door, and then they’re selling for $50,000 over asking because they were priced low. And it’s working, I guess. The houses are selling.

Jake:
It’s an interesting strategy. It’s a strategy that terrifies me because what if you get one? I have a buyer that benefited from that recently actually, because they only got two offers and his had an escalation clause. So it kind of only went as high as that one offer wanted to go. And the agent told me, “Oh, we priced it low on purpose.” I was like, “I’m sorry. I don’t know. You don’t have to accept it if you have something else.”

Ashley:
Well, Jake, thank you so much for joining us on Real Estate Rookie. Where can people reach out to you and find out more information about your journey?

Jake:
Yeah, absolutely. Probably Instagram is the easiest. I share information on our flips and my brokerage here in Bolingbrook in the Southwest suburbs. Instagram, Jake McBay, Bolingbrook Realtor is probably the easiest way to get ahold of me.

Ashley:
Well, thanks so much for taking the time to join us today and to share your journey. And next time you’re going to have to bring your dad on since he’s a partner in doing these flips. Thank you everyone for listening to this episode of Real Estate Rookie. If you’re not already, make sure you are subscribed to our YouTube channel at RealEstateRookie. Every Friday we feature a rookie reply episode and you can head over to the BiggerPockets Forums, post a question, and we may feature it on an episode. I’m Ashley, he’s Tony, and we’ll see you guys next time.

 

Henry Washington:
Today’s guest owns four rental properties that generate over $6,000 in monthly cash flow. And get this, he’s been investing in real estate for only eight months. People keep saying it’s just too hard to find real estate deals in 2026, but Joe Crocker is clearly proving them wrong. He’s not finding these properties by building lists or cold calling or even sending mailers. These are regular deals right off the MLS, deals that you or I or anyone else can find. He buys a property, adds some value, pulls his money out, and buys the next one. That’s it. Nothing complicated, nothing flashy, just a simple strategy that works. Plenty of people are sitting on the sidelines convinced they can’t get into the game. Meanwhile, Joe has already completed multiple deals this year, and he’s about to close on his best one yet. He’s even on track to quit his W-2 in the next two years, trading a grueling 70-hour work week for the thing most investors are chasing.
A cash flowing rental portfolio that gives you more money, time, and freedom. Hey everyone. I am Henry Washington here, co-host of the BiggerPockets Podcast. And today we’re bringing you an investor story with Joe Crocker from Houston, Texas, who just started investing, but is already well on his way to replacing his income with real estate. Let’s bring him on. Mr. Joe Crocker, welcome to the show.

Joe Crocker:
Hey, thank you.

Henry Washington:
Well, Mr. Joe, why don’t we start off and tell us a little bit about your background and what got you into real estate in the first place?

Joe Crocker:
Sure. So my background is long. I’m not a young man, but I’ll give you the highlights. I have a W-2 job that keeps me on the road a lot. Due to that, I had to relocate recently, end of last year. Came down to the Houston, Texas area and started researching real estate. I started studying the Burr method particularly was kind of what I honed in on. And I work with my mom and my wife both help me out because I’m on the road a lot. And so mom came down, we went and looked at some property, said, “Hey, let’s do it.” And so we closed our first transaction in December of last year.

Henry Washington:
Why don’t you tell us what traveling a lot means to you? Because I think it’s important to your story.

Joe Crocker:
Okay. Yeah, it is. So traveling a lot for me means I’m on the road about 300 nights a year.

Henry Washington:
That’s wild.

Joe Crocker:
And I work six 12-hour days.

Henry Washington:
You work six twelves and you travel 300 days a year?

Joe Crocker:
Correct. Yeah.

Henry Washington:
There’s a lot of people that are listening that want to get into real estate and they think they don’t have the time to fit this into their schedule.

Joe Crocker:
Well, my mom helps me a lot, so you need a good mother.

Henry Washington:
Yes, yes. Everybody does it with some sort of help. That is very true. For sure. So you said you moved to Houston and you started researching real estate, but why? What made you look into real estate at all? Why was that even on your mind?

Joe Crocker:
So it’s been on my mind prior to being in my current career. I worked in commercial construction. So I’ve been around real estate a lot throughout my life and have done well on personal properties. And so part of it also is with that lifestyle I just described, I’m getting older. I don’t want to do that forever. So I had kind of a backup plan, I guess you would say, is trying to plan my exit. And so I had to come here for work and I saw some opportunities and decided to jump in with both feet, so to speak.

Henry Washington:
Did you have a goal getting started or did you just want to jump in?

Joe Crocker:
Well, yes, to both of those things. I would look on Zillow and for about two months probably, I would go every night and I would just go drive properties that I saw and just check out the areas, see what I liked, and just kind of get familiar. And then I think it got to a point where we just went, “Hey, you know what? You got to pull the trigger.” And so we made offers on several properties and ended up with actually buying two at the same time. And so yeah, so we definitely jumped in with both feet.

Henry Washington:
It’s one thing to say making offers, but it’s another thing to be making the right offers. So you have to know how to analyze the deals and what makes a good deal in the first place. So was all that new to you or were you studying and analyzing prior to just making offers?

Joe Crocker:
Definitely studying and analyzing prior to making offers. I spent a couple months probably of actually driving every day and looking at things. I listened to your podcast and some other things, so it was familiar to me, but I really got serious about it. I would say I spent about two months of almost daily looking at properties, doing my own analysis, watching them, MLS properties, but you could see them. The ones I think are good deals, they all sell right away. Then that makes you go, okay, maybe that was a decent one. And so I spent about two months, I would say, before making offers.

Henry Washington:
Well, why don’t you tell us about that first one? How did you find it and what was the goal with it?

Joe Crocker:
The first one was on the MLS. It was a listing that had been up for a long time. One observation I made is that sometimes when things are listed for a long time, nobody looks at them anymore. The price goes down and the seller gets super motivated. So this was, I think, kind of one of those situations. And what it was was an estate sale where the guy was mid-flip and passed away. Oh, wow. So what was attractive to me about it is number one, it was two homes. It was a house and an ADU on the same property. So my goal was to hold it as a rental. So what attracted me to it is it was pretty easy. The cabinets were in, but there was no countertops, needed some trim work. The bathrooms were tiled but not grouted. As it turned out, I had to totally rip that all out.
But anyhow, it was a fairly light one. And so that was my thought on it was, hey, for the first one, I don’t want to go huge. I want to try and go as easy as I can. But anyways, we bought it for 134,000.

Henry Washington:
134,000. When did you buy this property?

Joe Crocker:
End of December of 25.

Henry Washington:
So this isn’t some five-year-old deal. You paid 130 some odd thousand dollars for a house in Houston, Texas.

Joe Crocker:
Yeah, and a guest house.

Henry Washington:
And a guest house. And you found it on the MLS.

Joe Crocker:
Correct.

Henry Washington:
There’s probably tons of people in Houston right now talking about, “I can’t find a deal. There’s no deals to be found. There’s too many investors here. You can’t do anything here.” So it can be done is what you’re telling me.

Joe Crocker:
It definitely can be done. So we’ve done three this year. I bought two of them were MLS deals, and I have one that we’re closing next week that’s also an MLS deal. So they’re there.

Henry Washington:
So tell us the rest of the numbers. You paid $134,000. How much work did it need, if any?

Joe Crocker:
Total budget was about 44,000, and I actually came in a little bit under that.

Henry Washington:
So

Joe Crocker:
I think we spent about 40.

Henry Washington:
So you’re all in at 175, and I’m assuming this was a rental because you said you honed in on the Burr strategy. So were you able to refinance this one already?

Joe Crocker:
We did. So we refinanced it right at 90 days. I did the refi. 161,200 is what our new loan was. So that was a successful Burr. It’s rented for 2,350 between the two units.

Henry Washington:
Not a perfect Burr, but that’s okay. I don’t think you need to pull off a perfect Burr. It looks like you pulled out about $13,000 and you were able to rent this for 2,300 on a loan of 161,000. That sounds like a pretty decent cashflowing deal that you found on the MLS basically in 2026. So I don’t want to hear anybody saying you can’t do this or you can’t do it in cities that are very investor heavy. Houston’s one of the most investor-heavy markets in the country. It

Joe Crocker:
Is.

Henry Washington:
And you walked in the door, found something sitting on the MLS. I love everything about this. I love how you found it. I love how you took it down. I love that you did everything people say you can’t do right now in 2026, all in one deal. Perfect. But you did say prior to telling us about this first one that you bought two at the same time. So I’m very curious what the second deal looked like, but we’ll dive into that right after the break. All right, we are back on the BiggerPockets podcast. I’m here with investor Joe Crocker, who pulled off a pretty decent Bird deal in Houston, Texas for his very first deal. Get this in 2026, and he found it on the MLS. But you also said you bought two at the same time. So I’m very curious what the second deal in this two-deal package looked like.

Joe Crocker:
All right. Well, get ready for this one. So I said I bought two, but they both had two separate units.

Henry Washington:
The second one had an ADU too?

Joe Crocker:
It had two full homes. Oh, wow. Yeah. So I bid off a lot, let’s put it that way. But that one was an MLS deal too. And I’ll tell you that the way that I found that one, and I’ll go through the numbers with you, but that one was one that was tenant occupied, so it was impossible to see. There was no sign in front. It showed terribly. I couldn’t even hardly get ahold of the realtor. And then the square footage was wrong on the MLS. And the big thing on that one is the tax assessment. I paid 295 for it and it was tax assessed at 780. So the taxes in Texas are huge. So the taxes were 13,000 a year.

Henry Washington:
Geez.

Joe Crocker:
Yeah, it was crazy. So especially for an investor that’s buying rental properties, that kills your cash flow.

Henry Washington:
See, everybody’s like, “Come to Texas. There’s no state tax,” but the property tax is crazy.

Joe Crocker:
But here’s the opportunity there. Since then, I appealed those taxes and I got them lowered to 5,000.

Henry Washington:
Whoa.

Joe Crocker:
Yeah. That was a big cashflow pickup.

Henry Washington:
Before we get there, I got to know the numbers on this deal.

Joe Crocker:
So

Henry Washington:
Tell me about it.

Joe Crocker:
There’s two homes. So the front home is about 1,500 square feet. It’s a three-bedroom, two bath. And then the rear home at the time was a two-bedroom, one bath. The front home was vacant, the rear home was occupied, and I paid 295 for the whole package. And the rear house at the time was occupied. He was paying 1,200 a month for the rear house. And the front house had been rented for 2,000 for quite a while. And so I was kind of looking like 1%-ish, and it seemed to work. So we ended up converting the garage in the rear house, so that’s now a three bedroom.

Henry Washington:
Nice.

Joe Crocker:
And then we redid the front house completely. It’s two blocks from the beach, so we’re going to end up doing it as an Airbnb and doing the short-term rental.

Henry Washington:
You said two blocks from the beach, so I assume this is Galveston.

Joe Crocker:
Yeah, down in Galveston. Yep.

Henry Washington:
Man, that sounds like a screaming deal. What kind of condition were these properties in? I mean, people were living in one of them, so I assumed that it was okay condition.

Joe Crocker:
Well, so it was decent condition. I mean, we ended up spending, partly because we’re doing a short-term rental, we ended up spending about a hundred fixing it up. We ended up just doing a DSCR loan out of the gate. We just put 20% down and got no prepay and just paid cash for all the improvements. So we’re in it right now, probably about 395, rough number. And it should be worth somewhere between six and seven.

Henry Washington:
Whoa. So you got somewhere between 100 and $200,000 of equity

Joe Crocker:
On

Henry Washington:
A deal you found on the MLS in 2026. That’s incredible, man. Congratulations. Congratulations. And so one of them’s a short-term rental, you’re keeping the back unit as a long-term rental?

Joe Crocker:
So I think our plan right now is to short-term rent both of them.

Henry Washington:
I’ll

Joe Crocker:
Tell you, my analysis you asked about that is I wanted to have multiple exits. So number one, could I sell it? If things didn’t go my way, can I sell it? Yeah. Two is, can I long-term rent it? Because the short-term, I mean, you said it worked down there in Galveston, 4,500 short-term rental permits. It’s pretty competitive. So my plan was I’ll try to short-term rent it. If that doesn’t work, then I’ll just put in long-term tenants, and if that doesn’t work, I’ll sell it.

Henry Washington:
That is a huge tip for anybody that’s listening, especially if you’re going to do short-term rentals. I don’t mind short-term rentals. I have, I think, four short-term rentals, but every single one of my short-term rentals, with the exception of one that I sold recently, could be a long-term rental. And the one that could not be a long-term rental, I had so much equity in it, I could sell it. Because short-term rentals aren’t like it was before, where you could throw furniture in anything, stick it on the market, somebody was going to rent it, it was going to make money. It’s not like that now. Most of the people who don’t know how to operate short-term rentals have exited the market or are actively exiting the market. So who does that leave in the short-term rental space? Professional operators, people who are very good at this, people who know exactly what their customers need, exactly where their customers want to be, provide them the exact experience their customers are looking for.
So if you’re going to compete with that, you have to be good too. And if you’re new, you may not be able to be as good, but you may not find that out until you get to start operating and it doesn’t produce the results that you’re looking for. And so if it doesn’t produce the results that you’re looking for, what do you do? Well, if you bought it and the only exit strategy you have is to keep it as a short-term rental, well, you’re in a world of hurt. If you can’t sell it and make money or break even, and if you can’t long-term rent it and make money or break even, then you’re going to lose money. It’s just a matter of when and how much. And so I always say buy with two exit strategies for every deal. If you’ve got two exits for every deal, you’re better protected.
It doesn’t guarantee you that you won’t lose money, but it makes it harder. And so you kind of already mentioned that you’ve already bought a third deal that you are short-term renting. So did you go specifically looking for one that you would do as a short-term rental now that you had found the other two?

Joe Crocker:
I’ll tell you what happened. If I was on Facebook one day in the investor group or whatever, and I see somebody had posted the wholesaler that had posted a condo for sale at this place. So I was in Michigan at the time. So I call my mom, I go, “Hey, can you go check out this condo?” So she goes over there, she goes, “Yeah, it’s good.” So the guy’s on the phone with me, he was asking, he started at 99,000 and it needed some work. So I said, “Hey, I’d be a buyer, but not at that number. I can’t make it work. There’s no way.” Because I treat it like a flip. So I’m kind of old school, 70% minus repairs is the most that I’m going to buy. Dude, me

Henry Washington:
Too.

Joe Crocker:
I still

Henry Washington:
Do that. I still analyze everything as a flip, even if I’m going to keep it as a rental because I buy it cheaper that

Joe Crocker:
Way. Maybe I learned that from you. I don’t know, but that’s definitely what I do. So as time ticks, he’s going, “Well, what will you do?” So I paid 73,000 for

Henry Washington:
It. Did you pay cash or did you get a loan?

Joe Crocker:
I just paid cash for it. Here you go. Here’s 73,000. And that was beginning of June, end of May. So since then, I’ve already rehabbed the whole place, furnished it. It’s been rented for 22 days in the month of July we have on the books.

Henry Washington:
Are you going to refi out of this thing?

Joe Crocker:
I already did. So we already got all our money back out of that one and it appraised at 143.

Henry Washington:
Nice. That was higher than you expected.

Joe Crocker:
Yeah, it was good. So I ended up being in it all in, including furniture and everything, about 90-ish, and it appraised at 143. So we ended up refinancing it at 60%. So we got most of our cash back. I think we had 83,000 was our name. So that’s good. And the kicker on a condo is the dues are 611 a month. And so you combine that with a couple hundred bucks in taxes and then your electricity because you’re paying for that. Everything else is included, but you pay for electric. And then your debt service, the payment principal and interest is about 600. So it seems like it’s going to be pretty good, but time will tell.

Henry Washington:
Color me impressed, man. Three pretty amazing deals in 2026, no less. In Houston, Texas, no less. And now you said, I heard you earlier, you said you had one under contract right now, so I’m assuming that’s your fourth deal. So come on, give it to me. Tell me

Joe Crocker:
About this

Henry Washington:
One.

Joe Crocker:
All right. So the fourth deal, I haven’t done the whole thing yet, but we’re going to close the next couple days. So again, two houses because that seems to be my thing. So it’s got a five-bedroom house in the front and then a two unit in the back. And there is section eight rented. So two of the three units are occupied. So I got under contract at 355. The front unit currently brings in 2,800 a month. And then the rear units are 1,400 apiece. Well, it gets better though.

Henry Washington:
So you’re bringing in 2,800 in the front, 2,800 in the back.

Joe Crocker:
5,600.

Henry Washington:
$5,600 gross

Joe Crocker:
Rents.

Henry Washington:
And you paid 350. 350.

Joe Crocker:
355.

Henry Washington:
My brain can’t even hold onto the numbers.

Joe Crocker:
So my plan with that one, we paid 355. We got about 75 in our construction budget to just bring everything up to nicer finishes. We’re going to put in quarter, even though it’s section eight. It’s going to be a nice place for people to live. And then actually the rents, when we do that, we can increase the rents. The section eight limits are higher, so we’ll be able to go up to 3,300 on the front unit. And then the rear units will go, one of them will be 1,730 and the other one will be 2,328. So we should be at about 7,300 a month cashflow.

Henry Washington:
So for the people listening, first and foremost, if you have a stigma in your head about Section eight, get it out of your head. There are good tenants and bad tenants in every price class. I don’t care if it’s top tier $3,000 a month rent or if it’s bottom of the barrel under a $1,000 a month rent. There are good tenants and bad tenants everywhere. Our job as investors is to be great at tenant selection regardless of the class of unit that we have. And so section eight can be very cashflow positive. And not only is it very cashflow positive in some markets, but obviously you get the guaranteed rents or a good chunk of that rent is guaranteed through the government. So in larger cities, places like Houston, typically section eight will pay higher than market value rents. In other words, you can get more rent out of a section eight rented house than you could if you took that house off section eight and just rented it traditionally.
And the amount of rent the government is willing to pay per house goes up based on the number of bedrooms. So if you can add bedrooms, you get more rent. So it sounds like the one you’re getting 3,300 on, that’s probably the, was it a five bedroom?

Joe Crocker:
Five bedroom. Yeah.

Henry Washington:
That’s fantastic. So if you’re in a larger city and you’ve already got rentals, you may want to call down to the housing authority and see what they pay for rents and see if it’s higher than what you’re currently getting, man. I love that. So 3,300, 1,730, 23, 28. And what’s your debt service on that?What are you paying for mortgage taxes and insurance?

Joe Crocker:
So I haven’t purchased it yet, so I couldn’t even tell you exactly what the payment will be, but probably about four grand a month, I’m going to guess.

Henry Washington:
I mean, that’s probably about right. Somewhere between 38, 42. But you’re bringing in after you fix it up, 73. Wow. That’s cashflow, folks. That is cashflow. Was this an MLS deal too? It was. Geez, man. Geez. Man, oh man. I don’t even got to do the math to know that that’s a screaming deal. Man, that’s awesome. And you’ve done it by using some of your own cash, but pulling it back out. I mean, these are just traditional things that people talk about, but I love hearing how people take these methods that we talk about and they implement them in their business, man. Fantastic deal. Why don’t you give us a summary? How many deals and/or units do you have, and what’s that putting in your pocket every month?

Joe Crocker:
So we have currently five, about to be eight once we get this next one closed. And I think that should cashflow us at about 6,000 a month net after all expenses.

Henry Washington:
I’ll take that all day long, my man. That’s incredible. And like I said, you were using some of your money, but it looks like you’ve been able to pull the majority of your cash back out.

Joe Crocker:
I would say by the time we finish up this round, I’m going to call it, we should have all of our cash back and probably then some.

Henry Washington:
So all your cash back in your pocket, plus you’re getting $6,000 a month in net cashflow. And sounds like we’re just getting started. All right, Joe, I do have a couple of questions for some of the newer investors who are listening who maybe want to be where you are 12 months from now. I’m sure you’ve got some lessons that you can share with them and we’ll dive into those right after the break. All right, we are back on the BiggerPockets Podcast. I’m talking with investor Joe Crocker, who has been killing it over the past 12 months doing multiple real estate deals that frankly anyone can do. And so I would like for you to share with our audience maybe some lessons that you’ve learned over the past 12 months because you’ve done a lot. It’s not just that you bought these eight units, it’s that you’ve renovated them and you have refinanced them and you are operating them.
And so what was maybe something that was a lesson on a deal that you weren’t expecting or maybe something that did not go to plan?

Joe Crocker:
So lots of things didn’t go to plan, so I don’t want to give the impression that this is easy. It’s definitely not. The hardest challenge for me has been the financing piece because I’m ready to move really quick. And I haven’t had the right lending relationship is how I’m going to say that. And I’ve tried a few different ones. So I’m still trying to work that out. That’s probably the biggest piece I would say. And then the other thing is sooner or later, you just have to do it. And that’s going to be your lesson. So for me, the first one, it was only $135,000 purchase. So I figured what’s the worst thing that’s going to happen? It’s not going to be worth zero. So my risk is fairly limited and it worked out good. But I think just my best piece of advice would be if you’re ready, just do it.
You got to do one. And it may not go perfect, but that’s how you’re going to learn.

Henry Washington:
If you’re starting with a single family home, I mean, as long as you’ve done enough analysis to at least have a general understanding of what kind of discount you need to be buying properties at, just buy it. Real estate, very rarely is it ever going to go to zero. You’re right. So your risk isn’t that you’re going to lose all your money. Your risk is that you might lose some money. You might have to deal with some headaches, but you’re going to learn something in exchange for that. And if a single family home not going well is going to put you in the poor house, then I’d say you’re probably not financially ready to invest yet. You need to save up some more cash before you jump in. That’s why it’s important that you take your bumps and bruises on a deal where your risk is limited.
So just be careful, protect yourself. I love that. Any other lessons or things that you wish you would’ve done different?

Joe Crocker:
I think the short-term rental, one thing I will say there, that looks really good at first glance, but there’s a lot to it. You hit it right on the head. You can’t just give people a bed. Nowadays you got to have this house, we end up putting in a hot tub and a fire pit and all this kind of stuff. And we do little, you’ll appreciate this. We do little gift baskets where we give them customized gear and a Bluetooth speaker and try and make it really an experience. But the Airbnb side, the other thing I didn’t fully anticipate is how much it costs to furnish a complete house. And people think it’s not very much. And I’m like, when you do three or four bedrooms, and I’m talking, you got to do everything, three sets of bedding, the bed, the mattress, the TVs, all that stuff.
You could spend 30 grand in the blink of an eye furnishing a house, especially if you want it to be nice. So that was one thing I kind of under anticipated a little bit. All

Henry Washington:
Right. Before we get out of here, I wanted to revisit something. You said that your second deal, which was the two SDRs on one lot, had $13,000 in annual taxes, and you were able to get that reduced to $5,000. How did you do that?

Joe Crocker:
So I anticipated that. That was one of the things. Just to give you a flavor of MLS, I called the realtor and I go, “Geez, the taxes are 13,000. Is that right?” And she goes, “Yeah, if that’s what it says, that must be what it is.”

Henry Washington:
Thanks, lady.

Joe Crocker:
Instead of saying like, “Yeah, hey, but you could appeal that and get it way knocked down.” So to me, I went, “That doesn’t make sense. I wonder if I get that knocked down.” So I did some research and you can do it here. It’s once a year and you get a pretty tight window. So I anticipated that as part of my buy was that I’m going to get them knocked down. So what surprised me, Henry, is how easy it was.

Henry Washington:
It’s so easy. People do not realize this. It’s so easy.

Joe Crocker:
Listen, here’s how easy it is for everybody listening, at least where I am. I filled out the form and then I went down to the place in person. So I sit down in the lobby for 10 minutes and the girl goes, “Yeah, come on back.” And she goes, “Tell me what’s going on.” And I go, “Well, hey, I just bought this property for 295 and it’s tax accept at 780, and that seems bananas.” And she goes, “Oh, okay. How’s your day?” “Oh, good. “She’s typing away. And then she goes,” Okay, are you good if we just drop it to 295? “And I go,” Yeah, I guess. “And she goes,” Yeah, your tax will be like 5,000. “I go,” Okay. “So that’s how easy it was. So it’s shocking. So I don’t know why you wouldn’t do that. I’m like lessen to myself every time I’m going to go down there.

Henry Washington:
Every year, folks, find out what your window is. In some cities, it’s a longer window. In some cities, you can do it whenever you want. You just need to figure out when you can do this. But yeah, you can challenge your property taxes. So a lot of times what happens with investors, guys, is you buy something and then you renovate it, and then you refi it. And then maybe a year down the road, six months, depending on whenever they do their inspections and assessments, you’ll get a letter in the mail that says, Hey, your property taxes are now why? And what most people do is they just say, “Man, that sucks. Okay, I guess there goes my cashflow.” But you don’t have to do that. You can challenge them. Some people, you have to provide comps to show that, hey, this property is similar and its taxes are lower.
And sometimes you just go down there and say, “Hey, I don’t think this is fair.” And then they just look on their computer and go, “Okay, how’s this sound?” And then your taxes are lower. But it’s very easy process. There are companies that will do this for you, but you don’t need to do that. You can literally negotiate these things yourself. And most of the time they will reduce your tax bill. Not always, but most of the time you can get a reduction, which is going to save you money and put more cashflow in your pocket. This is something everybody should be doing every year, but most people don’t do it at all.

Joe Crocker:
I agree. All

Henry Washington:
Right, Joe, thank you so much for coming on the BiggerPockets Podcast. I love that you’ve had so much success really in a seemingly short period of time. I’m curious though, have you had more or less or as much success as you thought you would in your first year of real estate investing?

Joe Crocker:
I’ve had a lot of road bumps along the way, getting all these projects done. But at the end of the day, I think it’s gone really good. So I think that probably now, if I look at it as going, here’s the portfolio and here’s what’s in there, I go, geez, yeah, we’re killing it. That’s great.

Henry Washington:
So what’s the goals moving forward? Are you going to continue to buy more? Are you going to just focus on paying off what you’ve got? Where are you headed?

Joe Crocker:
Oh no, I’m definitely not going to sit still. So my first goal is to get to 10 and trying to figure out our lending relationships. I think that’s the one thing that’s holding me back right now is you only have so much cash. And so working that piece out over the next year. And I think once I get over 10 projects completed, that door will really open up. So no, I want to keep grinding. I think 30 is where I need to be just in my head to maybe shift away from my W-2 employment and into doing this full-time. But if it keeps going like this, yeah, I’ll keep rocking it. It’s fun.

Henry Washington:
How much longer do you think it’s going to take you to get to where you want to be in terms of being able to not travel 300 days a year and work six 12s?

Joe Crocker:
I think somewhere between one and two years from when I started, I’ll be at a point where I will have replaced my income.

Henry Washington:
Hey, that’s pretty incredible, especially for starting in literally the last month of 2025 and getting this far now. Congratulations, man.

Joe Crocker:
Thank you.

Henry Washington:
We talked a lot about these amazing deals, and I think it almost gets lost that you’ve done all this while traveling 300 days a year and working six twelves. So if you are listening to this and you have been hesitating jumping in to investing in real estate because you don’t think you have enough time or you don’t think you have the resources or you don’t think you can find a deal, I hope you find some inspiration in this story because none of those things are true. You can absolutely do this. You just got to do it. And I know that sounds cliche, but just talk to Joe. You just heard him for the last hour telling you he just did it. This is not an easy business. It is challenging and scary and uncomfortable, but it’s a simple business. Buy something that you can add some value to, add the value, monetize it at its new higher price, rinse and repeat.
If you do that, you’ll look up in 10 to 15 years and realize you’re pretty wealthy. And that’s super stinking cool. Thanks for sharing, Joe.

Joe Crocker:
Welcome. Thanks for having me.

Henry Washington:
All right guys, thank you so much for listening to this episode of the BiggerPockets Podcast. And if you, like Joe, have a pretty amazing real estate investment story and you’d love to come on the podcast and share it with us, then go to biggerpockets.com/guest and fill out the form. Maybe we’ll get to interview you on the show and you can share your story with our audience. Thank you so much for listening to this episode. We’ll see you on the next one. All

 

Ashley Kehr:
So you’re ready to start investing, but the next step can look very different depending on your situation. Maybe you’re 21 and trying to house hack in an expensive market. Maybe you’re about to inherit a large amount of cash, or maybe you’ve made an offer and suddenly need proof of funds.

Tony Robinson:
Today’s questions come straight from the BiggerPockets starting out for them, and they’re all about slowing down just enough to make the first move the right way.

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

Tony Robinson:
Carroll. And I’m Tony J. Robinson. With that, let’s get into our first question for today. So question number one comes from Brandon and he says, “I’m currently in college and very interested in getting into real estate investing. I’m in a local networking group where I have a few real estate investing people, and that’s how I discovered BiggerPockets in podcasts, which I’ve used as my main resource. I’m very interested in house hacking as I feel that’d be my most realistic way to get started. Has anyone gone down this path? And could you share any thoughts, advice, et cetera? I’m in New Jersey. The market is extremely high, which is my biggest concern about getting into it, but I’ve built good credit, which I know is useful. Thanks everyone.” Now, first, before we jump in, let me just clarify for those that maybe don’t know, what do we mean when we say house hacking?
So basically house hacking is you buy a property and instead of living in all of that house yourself or all of that property yourself, you’re simply renting out in the additional living space. It could be you buying a big single family house where you’re renting out other bedrooms. It could be you buying a house with a walkout basement. It could be you buying a small multifamily. It could be a house with an ADU. There’s a lot of different forms that house hacking can take, but the essential idea is that your primary residence, you leverage that extraditional space to turn into a rental. So just clarifying what the strategy is. Ash, you’ve never house hacked before, right?

Ashley Kehr:
No, I haven’t. I mean, besides my college dorm, I guess. But I didn’t own it, I guess. So it’s just paid rent.

Tony Robinson:
I haven’t either, but we’ve interviewed a ton of guests, a ton of ton of guests on the podcast who got their start in house hacking. And I mean, you’re just asking for advice. I’ll give you my take from all the stories that we’ve had on the show is I think for someone in your position, it is the absolute lowest barrier entryway to get started. Like Ashley just said, she already had roommates when she was in college. And say you are to buy something, you’ve probably already got roommates right now. So you’re just transitioning from you and your roommates paying some landlord to now all of your roommates paying you. And I think that is the easiest transition. You literally take all the people you’re living with and say, “Hey guys, you want to come with me and we’ll get this nicer place and I’ll maybe charge you guys a little bit less?” And that’s how you can get started.
So the benefits of house hacking are that typically your cost sign into the deal are going to be a lot lower, 5% down, 3.5% down, sometimes 0% down if you can get the right loan. And it allows you to live in a place that’s maybe more expensive like New Jersey and still reduce your own living expenses by having someone else cover that cost. So all in all, I think it’s probably one of my favorite strategies for someone in that specific situation.

Ashley Kehr:
I think you really emphasized a key point as to reduce your living expenses because I think sometimes there’s this theory that in order to be successful at house hacking, you are paying $0 to live there and you’re getting all of your expenses covered. That doesn’t necessarily make it the successful deal. Even if you reduce what you would go and pay rent somewhere else, you’re able to save that little extra money. So you’re already making out. Even if you were to pay $2,000 towards your house hack mortgage, and that’s the exact same amount you would be paying for rent somewhere else. It seems like a wash, but it’s not because you’re getting equity in that property. You are getting mortgage pay down, you’re going to get depreciation on it when you turn into rental, and you’re going to actually have an asset that you own compared to if you were paying rent.
And if you’re buying in a high cost of living area and has seen a lot of growth, a lot of appreciation, that appreciation can be big money even if you are paying the same amount or similar that you would in rent because you’re having a tenant pay for at least part of your mortgage payment. So I think don’t get too caught up in having a successful deal of not having to pay anything to live. A great deal could just be that you are paying the same amount you would in rent somewhere, but you’re having a bigger place, you’re having some of your utilities paid or whatever it may be, sharing with the other person you’re house hacking with. But really just that appreciation, that equity you’re building from appreciation and mortgage pay down plays a lot into building wealth in the long run.

Tony Robinson:
Let’s just clarify next steps because just to give a bit of an action plan here. I think the very first thing that you need to go do is go talk to a lender to see what can I actually get pre-approved for. I remember long before we bought our first primary residence, I went and I talked to a lender and I’m in Southern California and she was like, “I can approve you for like $275,000.” And for me in California at the time, that truly couldn’t buy me anything in the city that we lived in. So I was like, “Okay, I’m still a few years away from actually being able to own something in the area that I live in.” So I think just going there first to get an idea of what can you currently get approved for. And you might be surprised, maybe you get approved for a little bit more, maybe you get approved for a little less.
But either way, you walk away with some clarity on what you need to do next. Because if you are approved for an amount that actually gets you into something in that part of New Jersey, well, now you can start using that to build out your buy box to, okay, well, what kind of property do I actually want to purchase? Then you go start talking with agents and you build your buy box and you submitted offers and you can go down that path. And if the lender’s like, “Hey, you’re 21. We can’t approve you for anything, but here’s what you need to do in order to get that approval.” At least now you have a roadmap on what to focus on next to get you there.

Ashley Kehr:
And I think that’s a great idea too, because you’ll be able to talk to the lender about having that renter in your unit as additional income because a lot of lenders won’t actually take 100% of the rent and actually allocate it as income. Sometimes only take a percentage of it. So that’s something to talk about with your lender because if you plan on, okay, I’m going to have somebody pay a thousand dollars, that’s a thousand dollars I don’t have to worry about for my debt to income, but sometimes they’ll only take a percentage of that and not the full amount for your primary residence. So make sure you ask the lender about that too and when you’re going to get pre-approved as to see what amount you actually need to charge in rent to make it work because you don’t want to get pre-approved for an amount and then realize that it’s not going to work out because the tenant isn’t going to be paying the amount of rent that you actually need because they only take a percentage of that.
Okay, so coming up, we have a rookie investor who is inheriting $700,000 and wants to know if it’s enough to go full-time in real estate investing. We’ll be right back after a word from our show sponsor.
All right, so we talked about getting into a house hack. Now let’s look at a different rookie situation. Someone’s having a large amount of cash come in and wondering what’s the best way to use it and how they can actually go full-time real estate. So this question is from Andre. “I want to build a real estate portfolio to replace my income from my jobs. As the title states, I’m very lucky and likely inheriting roughly $700,000 by the end of the year. I earn about $4,000 per month and not for my job. Since I was 13, I would watch Brandon Turner and Meet Kevin videos on the Burr strategy and house hacking. It might finally be the time to make it a reality. Is it possible in LA to make this my full-time thing already or is $700,000 not enough? Thank you. Okay. Well, first of all, Andre, I’m glad that you are planning to use this lump sum of cash that you are getting very wisely instead of going out and buying your very own Lambo.
And also awesome that you’ve been learning about real estate investing since you were 13. That’s great. So you’ve already got a lot of knowledge and I’m sure and done a ton of research on this. So I guess Tony, I’ll take this more from you, but as far as living costs and cost of property, I know LA is a high cost of living area, but ideally could $700,000 buy you one property? Would you recommend splitting it up into different down payments? I mean, in my market, $700,000 would get you several properties, decent rentals, but what about in LA market?

Tony Robinson:
I mean, you could get a property in LA for that amount. So I don’t know if investing all of that capital necessarily into the LA market would be the right play if we want to focus on cashflow. Now obviously there’s a lot of different strategies that we can focus on to get you there, but I think if we just look at the facts around the table, we’ve got $48,000 a year in income that we want to replace. We’ve got a 700K kind of pile of cash that we can go work with. There are several real estate strategies today that can get you at least a 10% cash on cash return. And even more that can get you higher than that. And even at 10% on 700K, that’s $70,000 a year, which is more than the $48,000 that we need to replace. We still got some room to up there.
So I think the very first thing that I would do here is first just try and identify what cashflow focused strategy do I feel aligns best with who I am, how I like to operate? And I would maybe narrow down the strategy first. Again, we’ve had the good fortune of interviewing a lot of people on this podcast who’ve done a lot of different things. You can rent by the room. We actually just interviewed Han Stone who did, not too far from LA, but he was doing assisted living facilities. And he was making almost what you make in a year. He was making that per month with his assisted living facilities. Could you do something like a sober living facility? Could you do short-term rentals? Could you co-host for other people where you’re managing? There’s a lot of different strategies. So is the pile of cash enough to replace $48,000 a year?
I think absolutely yes. But the bigger question is what strategy do you want to focus on to actually execute that? But is buying just like a traditional long-term rental or even a house hack in LA, is that going to be the best move? I don’t think so. There’s probably some other players we can go focus on that’ll get you there a little bit faster.

Ashley Kehr:
Okay. So I’m going to take a little different route on this. I got two different options for you. One option, you throw it all into a brokerage account in the stock market. If you got 6% just in one year, that would be $43,000 in interest. That basically covers your salary. So you could keep that $700,000 in the stock market and just pull out that $40,000 each year and you would continue to have 700,000. If it earns more, I think I actually looked at one of my retirement accounts and so far this year I’ve had a 20% return, even more. So that is also an option. I love real estate, but I also like index funds and brokerages. Okay. Next option is you do a mix of both of those. So the first thing is you’re going to take some of that money for a down payment to do a house hack.
I’m assuming probably don’t have a property now. There was no mention in it if he has a primary residence or not. If you do not have a primary residence, I would buy a property, use part of the money as a down payment and start house hacking. Then I would take the rest and I would put it into a brokerage account and let that money grow. Then I would get your house hack going and I would continuously do a new property every single year. So live in it for a year, move out, rent it out, go to the next property. I would take money out of your retirement account, or not your retirement, your brokerage account to fund the next property purchase. And this may not be the best way to actually go full-time real estate investing, but I think that if the longer you can work your W-2, it’s going to be easier to get pre-approved for loans.
Maybe you could cut down to part-time because now if you’re house hacking, you’re having a lot of your living expenses covered for you. So that’s what I would do. I think I would do a mix of both of those. I wouldn’t go and blow it all on real estate investing in the first year at least.

Tony Robinson:
That’s a great point, Ashley. I like that approach of just sticking it in somewhere to the market or wherever it may be and letting it grow. There are even just high yield savings accounts right now that are still paying 3% just for leaving it in a savings account. So that’s a good point. I guess there are a few options here.

Ashley Kehr:
Yeah. And I think just starting out too, you’re going to be a better investor if you take your time. And if you have this large cash, instead of taking all of this and investing, putting all your eggs in one basket, I like the part of breaking it up and house hacking every single year and doing that for the next five years, you can accumulate some really nice properties and a good sized portfolio.

Tony Robinson:
I think the other thing too is that I wonder, because a lot of people talk about wanting to leave their jobs and sometimes maybe it’s not necessarily that you want to stop working. Maybe it’s just a change of the work that you’re doing. And maybe that 700K gives you some flexibility to maybe you go work with a big flipper or a wholesaler in Southern California. I’m sure there are a lot of them who would love someone who can help project manage or do things like that. So could you even just transition into something that’s maybe more real estate related? And even if you’re making a little bit less to begin with, that’s where you can use the 6% that’s coming off of the 700K to help tie things over while you build that up. So lots of options here, but I like that we’re at least having this conversation about how to use the money the right way.

Ashley Kehr:
Yeah. And the last thing I would add is look at the market that you’re looking and buying in and see what appreciation has been over the course of 10 years, and then compare that to how the money would do in the stock market too. So I would look at both of those and kind of compare and make sure you take into your account your mortgage pay down that your tenant would be paying as part of that calculation too.

Tony Robinson:
All right. We’re going to take a quick break, but when we’re back, a rookie has an accepted creative offer and needs proof of funds by Monday. We’ll talk about what proof of funds really means and why rookies need to understand financing before they write the offer. All right guys, our last question today comes from Jehoo, and this is a good one for any rookie tempted by creative finance because what happens when you get a deal under contract before you know exactly how the money will show up? So here’s the question. Jahu says, “I’m looking for some guidance from experienced investors. I have an accepted creative offer on a triplex in Winston-Salem, North Carolina. I need proof of funds by Monday. I’m a newbie and I’ve never heard of proof of funds until now. So here’s the offer structure. The price is $445,000. The cash at closing is $385,000.
There’s a due diligence cost of 2,000. Seller financing for 60, 7% interest, 30-year amortization, a 24-month balloon. There’s a promissory note, and the seller will contribute up to 5K towards closing costs. Jehoo says,” I’m exploring private capital to fund the 385K needed at closing. For those who have structured deals like this, how do I provide proof of funds by Monday? What’s the best way to raise the capital on a tight timeline? Would hard money make sense here or would you avoid it? I’m open to advice, introductions, or potential partners. Thanks in advance. “Well, first let me say, for all the people that I’ve met who want to get started in real estate investing, their typical blocker is analysis paralysis. Is that they look at a million deals, but they never actually pull the trigger on anything because they’re like,” I have to figure everything out.
“So Jehoo, even though you may be in a little bit over your head right now, I still love the fact that you found what you thought was a good deal and you took action, you’re kind of figuring out along the way, because even if for whatever reason you can’t get proof of funds by Monday, I still think the learning experience of trying to make this whole thing work is exponentially more valuable than probably even the deal itself. So I just want to start with that. But I think, Ashley, let’s just kind of lay out the details of this offer. So the purchase price is 445,000. The seller is willing to finance 60,000. So the other 385 has to come from somewhere. The 60,000 that the seller is financing is being offered at a 30-year amortization, which means they’re spreading out those payments over 30 years at a 7% interest rate.
However, there’s a 24-month balloon. So 24 months after they closed, Jay, who’s got to pay back everything that’s owed on that 60K that was lent out.
So there’s a few things that come to mind for me I think to be able to really guide which way makes the most sense. But I think I’d want to know, Ash, what is the business plan with this deal? Is this a turnkey rental where tenants are already in there, they’re paying, there’s no upside renter at the top of the market? Or is this like a hoarder house where you’re going to have the ability to really go in there and fully renovate the place and either flip it or sell it or flip it or rent it? Because I think the exit strategy kind of defines what method you should take because if it is a big value add play, then yeah, I do think that maybe bringing in hard money could be the quickest fix because they’re going to be able to give you the cash that you need to renovate the place as well and then hopefully pay this guy off in 24 months.
But if it’s just like a turnkey deal, I don’t see a super easy path forward to be able to have proof of funds by Monday and kind of execute the business plan. But those are my initial thoughts. What are you thinking Ash?

Ashley Kehr:
Yeah. The best bet, if it is a turnkey thing and you can’t find a private or a hard money lender is going after a private money lender. So basically contacting anyone and everyone you’d know over the weekend. And basically if you find someone that would be interested in lending you that money for this deal, then basically they will show that they have enough funds and they are going to lend you the money. So oftentimes it’s a letter from their bank stating the amount. Sometimes it’s just a bank statement showing the amount of funds they have in their bank. But typically when sometimes a buyer, I’m sorry, sometimes when a seller accepts an offer, they want to make sure that they’re accepting the offer from somebody who has the money to actually close. Because this is an example, your situation right here that if you go out and you end up can’t find anyone to actually fund this deal, you’re going to have to back out of the deal.
And that’s something they want to make sure there isn’t any risk to that happening or to lower the risk of that happening by showing that you already have the money and can show where you are getting it from. So I would say reach out to as many people as you can this weekend. Post your deal in the BiggerPockets forums. Reach out to friends and family and not even say, would you be interested in this deal? But ask them if they know anyone that would be interested in this opportunity. And then if you had an idea of how you were going to structure that, so you need the 385,000 and it’s a 24 balloon note on the 7% interest that you’re doing for seller financing. So how would you structure this other set of financing? Would you also do it for 24 months? And then you’re making sure you’re going and getting a full mortgage to pay everybody back in those 24 months.
Kind of have an idea of the amortization and the terms and any balloon payment that would make this deal work for you. So however you ran the numbers, I would assume you ran borrowing 385,000 at X percent over a certain amount of time to make sure that the deal makes sense for you and put that into the opportunity for somebody to invest with you kind of what you’d be willing or able to pay them in interest and for how long too.

Tony Robinson:
I think the other thing that comes to mind too, Ash, is just like, do you need creative financing on this deal? I feel like to your point, that 24-month balloon, it’s going to complicate whatever other financing you get as well. And oftentimes a lot of even hard money lenders, they won’t want you to have any sort of second mortgage against the property. They’ll want you to have some skin in the game is what they call it where you’re bringing some form of capital to the table as well. I just wonder, if you go to maybe a credit union or local small regional bank in Winston-Salem and say, “Hey, I’ve got this deal that I think is a really good deal. Can you take a look at it?” And maybe the interest rate is a little bit higher, but if they’re giving you a nice 30-year fixed mortgage, you don’t have to worry about the balloon or all those other things.
So I think that might be one thing that I look at as well as like, “Hey, are there other maybe more traditional types of financing that will work better for your situation given that you don’t have necessarily the proof of funds to move forward with it?” Now, as a last resort, I don’t know how well connected, Jay, who you are in that market, but if you know any wholesalers, maybe you can go present it to them. And if you don’t necessarily have the cash to take it down yourself, can you connect with one of these wholesalers and say, “Hey, look, I’ve got this under contract. Give me a portion of the assignment fee if you can find someone else to go take this deal down.” So you don’t get the deal, but at least you get some sort of financial benefit from having done the work of putting the contract together and the wholesaler’s going to go push it out to their market to see, hey, which of their buyers can actually move by Monday to get the deal taken care of.

Ashley Kehr:
Well, thank you guys so much for joining us for today’s episode of Rookie Reply. I’m Ashley He’s Tony. And if you’re not already subscribed to our YouTube channel at RealEstateRookie, make sure to subscribe and comment on this video if you have questions that you want us to use in our next rookie reply. We’ll see you guys next time.

 

Dave Meyer:
Do you want to rent out your house and start producing passive income? If you do, you can go two different paths. The first path is what most people do. They don’t want to sell their home, so they post a listing on Zillow, except the first tenant they find and forget about it until of course their property is trashed, they’ve lost money, and then they swear that they will never try real estate again. The second path, the path that I’m teaching you today is when you do it the right way, you find great tenants, you get paid rent every month like clockwork, and you control a property that can add hundreds of thousands of dollars to your net worth. And with just this one property, you can put yourself on the path to financial freedom. This is what I did 16 years ago. I had no experience, but I bought a property and needed to rent it out.
Years later, that one property allowed me to buy a second and then more and then more. And today I’m 38 and financially free. In this episode, I’m sharing the tips I really wish someone had told me when I first got started, and I’m going to walk you through the steps you need to take to rent out your house successfully so that you get wealthier instead of work.
All right, so here are the steps that you need to go through if you want to rent out your house and become a first time landlord. The first question you should ask yourself is should I actually be renting out this house in the first place? Because a lot of people assume they can rent out their home and make a lot of money. And a lot of them are right, but some are just wrong. Luckily though, you don’t have to guess. You can actually do the math and figure out if your home makes a good rental. The best way to do this is just to analyze it like it was a rental property that you were going out to buy. And this is super simple. You can run your numbers through a rental property calculator like the one that we have at BiggerPockets. You can check it out at biggerpockets.com/calculators and see if it cash flows.
See if it will perform better than other things that you can do with your money. Because let’s just imagine you’re living in a home and trying to figure out whether you want to sell it or rent it out. There’s probably a lot of money. You probably have equity trapped up in that house. And so you need to decide, am I better keeping my money in this home and renting it out? Or should I sell it and put my money in the stock market, buy some bonds, buy some crypto? Whatever it is you would do as an alternative, you do need to weigh those two things against each other. So if it won’t perform better than the alternative options, you should do those alternative options. You should sell and put your money elsewhere. But if it does perform as good or ideally better than those alternatives, then you should rent out your house.
And I’ll explain exactly how you do that in just a minute. But first I kind of just help everyone do this analysis for themselves because the trick to this analysis is not the math. You can do that with the calculator. It’ll do all of the math for you. The thing you need to focus on and get right are your comparables. You need to understand what you can actually rent your property out for because the number that you put into the calculator is super important. If you’re just guessing that you could rent your house out for 2,000 bucks a month, that’s not good enough for this analysis because you might find that you’re not cash flowing down the line if you don’t make that rent. So I want you to do something else instead. Go and find rent comps, rent comparables for your specific property. And this isn’t hard.
There are a couple of different ways that you can do it. The first is using some sort of automated system that uses an algorithm to pull your rents. We have a BiggerPockets rent estimator. There are other products out there that can do it as well. Or the other two ways I recommend you doing this is one, asking a real estate agent, make sure it’s an investor-friendly agent because they’ll understand rents more than just a run-of-the-mill real estate agent. Or ideally, ask a property manager. Call a property manager in the area, say, “I’m thinking about renting out my home. What do you think this would rent for?” Or talk to renters in your neighborhood and ask them what they are paying for rent. Getting a good estimate, an accurate understanding of what your rents might be is the most important part of this analysis because it’s going to help you decide definitively if you want to rent.
And it will also help if you decide to go out and rent knowing what you can charge. It’ll make listing easier. It will help you understand the quality that your property needs to be in to get the best rents. If you go out and look on Zillow and see that everything that’s renting for $2,000 is in nicer condition than yours, you can start to think about, do I charge less or do I bring my property up to that better condition that my competitors have? And if you do all this, you’ll learn whether or not to rent out your home, but it’ll also help you get a great tenant quickly by pricing your property accurately. The other thing you need to do and put into the calculator other than your rents are your expenses. And luckily, this should be really easy for you. It’s your house, right?
You should know what most of your expenses are. Just gather your mortgage information, your tax information, your insurance information. That might all be together in one payment. If so, even easier. If not, gather all of that information and put it into the calculator alongside a couple of other expenses you might not know off the top of your head because if this is a home you’re living in, you know all the stuff I just mentioned. But if you are a first time landlord, you’re going to need to figure out what repairs and maintenance costs, how much you need to keep and set aside for things like vacancy, what a property manager will cost if you’re going to use a property manager. And for most people, you can use rules of thumb because you’re not going to know precisely what each of these things is going to be.
I think that on an average home, if it’s in decent good shape, you should set about 10% of your rent every single month aside for repairs and maintenance. I personally like to use 8% for vacancy, but if you’re in a single family home in a good neighborhood that’s going to have high tenant demand, if you’re going to have families that want to stay a longer time, you could go down to six or maybe even 4%. If you rent to young professionals or young folks, they move more so you might have higher vacancies. So those are things that you should keep in mind, but usually between four and 8%. If you want to self-manage your property, that’s great. It will save you a lot of money, but if you’re going to hire a property manager, eight to 10% is what most of them charge. So you can just put those directly in the BiggerPockets calculator, press the button, and you will find out whether or not you should be renting out your home.
Once you see the results of the calculator and do this analysis for yourself and see all these numbers, here’s some things that you should look for to make this decision. First and foremost, I think your property should cashflow. It does not make sense in my opinion, especially if you’re a first-time landlord, to hold onto an asset that doesn’t cashflow. So I think you need at least a two or 3% cash on cash return. If it’s in a good neighborhood and you think it’s going to appreciate two, three, 4% cash on cash return, good enough. At least in my opinion, I think that is good enough. If you’re in an area that’s probably not going to appreciate, and you should be honest with yourself about this, but if it’s not going to appreciate that much, I would want you to see a cashflow number that’s going to be six, 7% cash on cash return.
So just think about that and do that analysis for yourself. The other thing to think about is whether or not holding onto this deal will get you better returns than an alternative investment. If you only have a 3% return on equity, and the BiggerPockets calculator will show you this, but if you only have a three or 4% annualized return, that’s not good enough. The stock market returns eight to 10% on average. So why would you hold onto this property, do the work of being a rental property investor if you could make more money elsewhere? Go to the stock market or sell the property and go buy a rental property that earns a better return than your home. Just because you already own this home does not mean that this is necessarily the best real estate investment for you. And so that’s what you’re trying to figure out in this analysis.
The other thing is there’s a non-math component to this because if you want to keep your property for personal reasons, that’s fine. If you’re like, “I’m moving for a job and I might move back in three years,” hold onto the property. That’s fine. That’s a totally different thing here. But if you’re looking at this from a financial perspective, you want to make sure it cashflows and you want to make sure your aggregate return when you add up the tax benefits, the cashflow, the amortization, the appreciation, when you add all of that up, it should be better than alternative investments like the stock market. Personally, I like to use a 12% return as my benchmark for that. So you want to see 12% or higher for your average annual ROI. So at this point, once you’ve done the calculator report, you should know for sure whether or not renting out your house is actually a good idea.
And if it is, I’m going to show you exactly how to do this in the right way. We’ll do that right after this quick break. Stick with us.
Welcome back to the BiggerPockets Podcast. Today in the show, we’re talking about how to rent out your house. Before the break, we talked about how to do this analysis like an investor, thinking about it in terms of math and deciding for sure whether or not it is actually a good idea for you to rent out your house. Now let’s turn to how you actually do it. If the numbers make sense and you think this can be a good investment, a good financial decision for you, let’s talk about the things you should do to make sure this goes well. Step one is fixing up your property. So you live in your home, you probably love it. Maybe you don’t care that there’s some splotches on the wall, that there’s some dirt under the baseboards, stuff like that. You live in a house for a long time, these things happen.
Tenants who have a choice of where they want to live are going to see those things. So spend a little time, spend a little money getting your property into a presentable condition to be listed. For some homes, this is as simple as a deep cleaning, which you can do yourself or you can pay someone for. Paint goes a really long way if you’re willing to do that. In some places you might want to put down some luxury vinyl plank flooring to make sure that it’s really resilient, ripping out carpet because that stuff gets really dirty when you have tenants. Those decisions are up to you, but I recommend you make those decisions based on two things. First and foremost, those comps that we talked about before. How are you going to be competitive in your market? Because yeah, you could just throw something up on Zillow or apartments.com, but tenants have choices and you should figure out how you want to position your property compared to everything else they might be seeing.
The second thing is cost efficacy. You want to make upgrades that number one will help you generate good rents. Number two will be safe quality products for your tenants and they’re going to love living in their place. And three, are durable and hopefully are going to last a long time. Now it can be tempting and easy to spend a lot of money on that. You want to do that in the most cost-effective way. But if you’re in this for the long run, if you want to rent your property out for several years, making those investments upfront really does pay off because you’re going to get higher rent, you’re probably going to have lower vacancy, and you’re going to have fewer headaches rather than one-off fixing things and improving things. If you just do it now, it can save you a lot of hassle over the next couple of years.
So that’s step number one, getting your property rent ready. Step two is actually going out and listing your property. This is marketing your place to tenants. And there’s two ways that you can do this, and this is sort of where you have to make this decision. You can either self-manage, this is sort of the DIY approach where you just go post it on Zillow, post it on apartments.com. It is super easy. I’ll tell you, it takes five to 10 minutes presuming that you have pictures. You can take pictures with your iPhone. Make them good pictures though, by the way. Take a couple of minutes to make them look nice. But if you spend 15 minutes taking pictures thoughtfully, you can definitely do this yourself. But with self-management also comes property management, right? You have to do all the coordination, the lease signing, you have to answer maintenance requests and calls.
You need to do all that stuff. Self-managing is great. I did it myself for 10 years, and it can be a great way to save money because you’re keeping eight to 10% of your income that you would normally be paying a property manager to do, but you have to do the work. Now, if you’re just managing one unit, if this is your former home and you live nearby, that amount of work is not that much. I will be honest, it will probably be a couple of hours a month at most. And for a lot of people, it is worth that time to increase their income. If you are interested in this approach, doing this DIY sort of self-management approach, check out a book we have. It’s called The Self-Managing Landlord. It will basically teach you everything you need to know. But don’t worry, people are so dramatic about how hard property management is.
It’s really not that hard. If you want to do this yourself, if you’ve got five hours a month, you absolutely can do it yourself. And it can be really helpful early in your investing career to build up some reserves, to build up some cashflow, and to learn the business. Honestly, if you want to be in real estate for the long run, doing self-management is so valuable because you learn everything about tenant management, everything about asset management and managing the repairs and maintenance on your project. And eventually, most people down the road in their investing career wind up hiring a property manager. But by self-managing first, you know what to look for in a property manager. You know who to hire, who’s going to be a great steward of your home and who might not do the best job. And so this is a great option.
The second option for going out and listing is going out and hiring that property manager right off the bat. This is also totally fine. If you are busy, if you just don’t like dealing with tenants and people, if you know nothing about property maintenance and repairs, go out and hire a property manager. It will cost you eight to 10% of your rents every single month, but you’ll regain time. And I’ve found that by hiring a property manager, it can also make your business more scalable. If you want to go out and buy more rentals, you’ll have more time to do all the other work that real estate investors need to do because the property manager, they’re going to do the comp research for you. They’re going to figure out what to charge for rent. They’re going to market it to tenants. They’re going to communicate with those tenants.
They’ll do the lease signing, they’ll handle repair and maintenance calls, they’ll do renewals, they’ll do all of it for you. So if you want to err on the side of more passive real estate, go out and hire that property manager. Now, whatever option you choose, whether it’s self-management or hiring a property manager, they’re probably going to use the same tools to market it. It’s not like property managers have some secret database of tenants that they’re going out and finding like you’re going to go and put it on apartments.com. You’re going to put it on RentReady, you’re going to put it on Zillow, Avail. These kinds of companies, they will put it across all of these websites. And when you’re doing it, spend a little time on the listing, right? Whether you’re approving something your property manager wrote or writing it yourself, be specific. Be thoughtful about the amenities and benefits of renting your property because you have competition.
Is it close to schools? Is it close to a grocery store? Is there high walkability? Is there off-street parking? Is there a really nice yard? What is it that you love about the property that you think tenants will love about the property? You can use ChatGPT if you want, but I recommend editing that and just really putting some thought and care into it. People want to rent places that feel special or unique or that they’ve found something that has all the amenities that they really, really love. So make sure you highlight what yours have. If I were a tenant, I would want to rent from a property manager who cares enough to take good photos, who cares enough to write a good description. When I see these one-line descriptions, I’m like, “This person is not going to be a good property manager. I don’t want to live in their home.” So just spend a little bit of time.
Again, 30 minutes, an hour, making sure that your listing is as good as possible. Once you’ve done that, you can move on to step three, which is evaluating and screening tenants. If you have done your listing right, you are going to get people contacting you. You’re going to schedule tours so people can come see the property in person. And then the crucial part of the process comes, which is finding the right tenant for your property. You cannot control many things about rental property investing, the economy, eviction timelines, all of that, but you can control how you screen tenants and make sure that you find tenants who are a good fit for your place. Now remember, you absolutely have to follow fair housing laws, but you can also implement some of your own requirements. For example, a lot of investors have criteria similar to this. These are a good place for you to start.
Number one, having a minimum credit score of 650. This is usually a benchmark. Some people use 625, but having some credit score in the mid 600s or above is what many investors do. The second thing is having an income-to-rent ratio of at least 30%. So most budgeting experts recommend that renters spend maximum 30-ish percent on their rent. And so you want to see if their income will cover their rent in that sort of proportion. Because if someone is saying, “I want to rent your property,” they could be great. But if they’re going to have to put 50% of their income to your rent, that’s not good for anyone. That is not good for the tenant. They’re going to be stretched on their budget. You don’t want that because that means the likelihood that they pay on time and as agreed is lower. You don’t want to put yourself or the tenant into that situation.
And so go and check their rent to income ratio. Third, you definitely want to call references. So many people skip this. Do not. Don’t just call their last landlord. We’ll tip about the industry. If you just call the last landlord and they’re a bad tenant, that landlord might tell you that they’re a great tenant because they just want them out of their property. So don’t just call their last landlord, but you should do that. Call their two landlords ago. Call three landlords ago. So make sure that part of your application process for renting out your home is that they list the names, phone numbers, and emails from their past three landlords. Call them and ask them. And then the last step is to pull any sort of report. So pull a credit score, you can pull eviction background, you can pull criminal records. Again, make sure that you are following all local laws and regulations about doing these things, but go and learn as much as you can about your prospective tenants and pick a tenant who can afford to live there, but also really wants to live there.
I find that when people are really excited about living in the property, they tend to be great tenants. They take good care of the place. They usually renew. You have lower vacancy. It really can work out. So be patient and diligent about this. There’s nothing really that hard about it. It’s just kind of doing a little bit of research and some common sense. You can absolutely do this. Once you’ve done that and pick the right tenant for you, this is when you go through the lease. I really recommend you get a professionally made lease. You could do this by going out and hiring an attorney. Or if you are a BiggerPockets Pro member, we actually have leases for all 50 states. They’re updated by attorneys every single year to make sure you’re compliant with all rules and provide maximum amount of protection for both you and your tenants.
It creates a mutually beneficial document that everyone can agree to. You can check those out at biggerpockets.com/leases. Now, once you have your lease in place, you need to do a walkthrough of that lease with the tenant. And you can do that in person. You could do it over the phone. What I usually do is send the lease to the tenant a couple days ahead of a meeting, and then I meet them in person at the property or at a coffee shop and just walk them through it. I find that sitting with someone and talking to them about the lease dispels a lot of this legalese that goes on through the lease. I think when you send someone this five-page document with a lot of big words that are super hard to understand, it’s legal mumbo jumbo. It’s hard to understand. It can often feel for a tenant like, what are they trying to hide in here?
What if I don’t fully understand it? I sit with tenants and I go through paragraph by paragraph, this is what this means, this is what this means. I send it ahead of time too. So if they want to run it through ChatGPT or talk to an attorney or talk to a friend or whatever, and they have questions, I can answer them. And I think the main thing that I always try to convey to tenants is that this document is here to protect both of us. It’s here to protect the property owner so that people pay on time that the property is taken care of. But in the leases, there are also provisions that protect the tenants and make sure that their privacy is respected, that their security deposit gets returned on time, that landlords don’t just barge into their property without announcing themselves. It is a mutually beneficial document.
And so talking through it person to person, face-to-face, I think really helps establish a good relationship between the property manager and the tenant. So if you are self-managing, I really recommend doing this in person if you can. Once you’ve done that, pretty simple, sign the lease, then keep a copy of it, make sure that both of you sign it and that both of you have copies, and then collect the security deposit. In your lease, you will say when the security deposit is due. Usually it’s on the first day of the lease, but sometimes you can do it like a week before or if it’s far out, you can ask for a deposit a couple months ahead of time. Get that deposit, but then I need you to do something here. Take that deposit and do not put it in your checking account. You need to create a separate bank account for your security deposits.
This is really important. A lot of people miss this, but that is not your money. A security deposit is not revenue. It is not income. It is actually, if you want to get into the accounting of it, it is a liability on your balance sheet. It is money you actually owe the tenant back. So you should not put this in your checking account. You are not legally allowed to, so you should do this. Go open another savings account, stick it in there, and don’t think about it until the tenant moves out and you have to figure out whether you’re going to return the full amount or not. So that is just one step that a lot of people miss that you need to do. Next, step five, another thing so many people miss here is you have to switch your insurance. Your normal homeowner insurance will cover some things, but is not sufficient.
It just is not enough for a rental property owner. You need landlord insurance because it covers things that landlords have to think about where normal homeowners don’t need to think about. So the number one thing I notice in this is loss of rent. So I’ve made this mistake. I’ve had landlord insurance that didn’t have loss of rent. They might call it business interruption insurance is another thing that it’s often called, but I want this crazy story. I had someone break into one of my homes and damage the water heater. I had to move the tenant out. I put him up in a short-term rental for, I think it was like a month. And I didn’t make the tenant pay because I couldn’t provide the service that he was paying for. He was paying to live in my unit. He wasn’t. So I had to come out of pocket for that.
And I didn’t get my rent that month. And so that was sort of a double hit. If you get business interruption or a rent insurance, the insurance company, when something like that happens, actually pays you your rent so it can help make you whole. So I really recommend you go out and get a good quality insurance. It’s honestly not that much more expensive than normal homeowner’s insurance. It might be a couple hundred bucks a year, but in my experience, man, it is well worth it. If you want a recommendation for a good insurance company, I use steadily. And if you’re a BiggerPockets Pro member, you can actually get increased insurance coverage and 5% off your premiums just by being a BiggerPockets Pro member. So if you’re a Pro member, go check that out. Or if you need landlord insurance, maybe go check out Pro and see if the package of perks, which are many, are worth it for you.
All right, so those are all the things you need to do before the tenant actually moves in, before you collect that first rent check. But there’s still stuff you need to do once the tenant is in the property. We’ll cover that right after this break.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer talking to you about how to rent out your home the right way. So far in the show, we’ve talked about whether or not you should rent out your home. And if you do decide to do it, what you need to do prior to a tenant moving in. These are things like creating your listing, screening your tenants, getting your lease written, and getting the right insurance for your property. Now comes the fun part, right? Now the tenant is moving in, you’re going to start collecting those rent checks, but you got to figure out how you’re going to do that. That is step six here. Figure out what system you want to put in place to collect your rents. I laugh at myself all the time thinking about how I collected rent when I first started being a landlord.
I had people mail checks. This was 16 years ago. All right? So it’s not like we had all these systems, but there were so many better systems. And sometimes I would literally lose the rent checks and I would have to ask my tenants to write them again. It’s so embarrassing. It was totally my fault. So figure out a system better than that. And there are many of them, right? There are digital management platforms like RentReady or TurboTenant or Avail. This is much more convenient for the tenants too. It allows them to pay digitally. Tenants don’t have to pay for these things, and you just get all of your income coming in. You also get a lot prepared for taxes and for accounting all at once. It just makes the system so much easier. You’re watching a YouTube video. I can’t imagine this is hard for you to conceive of, but using a digital system is better than analog.
So go check out a couple of these management softwares. We have some on ProPerks. You can go in BiggerPockets and read reviews and see which one is right for you. Most of them are good. A lot of them can meet your needs, but they have individual differences. So go check them out and figure out which one is right for you. If you are using a property manager, I should mention, they will have their own digital system. So the way it usually works is you’re not going to collect rent directly. They’re going to play the property management company and then the property management company is going to give you distributions monthly. So I have some out-of-state rentals where I have a property manager and the way it works is that every month they collect the rent for me through their system. I honestly don’t even know what it is.
They use some digital system, but it works. Then they take out one, their fee, and they also take out any repairs that came up that month, and then they give me the difference. They send me an ACH, they just deposit it directly in my bank account at the end of the month. But either way, it’s all automated. That’s really what you want for your rent collection system. Hopefully this shouldn’t be hard. This should take, again, 15, 30 minutes to set up. It’s really not that hard. And then you move on to the long game. This is where you manage your property and make sure that you’re taking care and optimizing your financial performance. Because now that you’ve got a tenant in place, you need to do the work. They are paying you for a service. You need to provide that service. You need to keep up with proactive maintenance, make sure things aren’t falling apart.
I find that one of the best ways to keep tenants is to show that you care about the property. You should care about your property and you should be going over there, looking at the outside, making sure that things are looking good. If something’s on the verge of breaking, fix it before it breaks. These things go a long way. If a toilet breaks and someone’s without a toilet for a day, that’s super inconvenient. But if you replace it proactively, they will be like, “Wow, I I love living in this place because they take care of problems before they even come to fruition. So try to be proactive about maintenance. Even when you do that, it is absolutely inevitable that you are going to have problems come up. Reply to them quickly. That is the number one thing you can do. Sometimes, unfortunately, you can’t fix the problem overnight.
I have unfortunately had problems where heat goes out and I can’t get a tech there for three days. So number one, be communicative. Be understanding. Don’t get defensive. Say, “I know this sucks. I’m sorry.” That’s true, right? You don’t want your tenant to not have heat, but sometimes things break. What do you do? Ask them what they need. Do they need space heaters? Go to Home Depot, buy a couple space heaters, go bring them over. Show that you care. Show that you really want them to have a good experience in your property. It will mean a lot to them and it will help you in the long run. I know buying three space heaters is going to cost you a couple hundred bucks, but I bet you, you have a much higher chance of keeping that tenant at the end of their lease if they saw that you were willing to do what it takes to make their experience as good as possible.
Now, one thing you can do and really should do from the start to minimize these interruptions is to build up your vendor list. This honestly, it took me years and it’s a constant battle. It’s something you always have to be doing, but you should know before something goes wrong who the good HVAC people are, who the good plumbing people are, who the good contractors are, who the good handymen are. You want to be able to call these people right away because honestly, speaking from experience, it is a bad feeling when something goes wrong, when there’s a leak, when the heat goes out, like I was explaining before, and you’re just calling around to a million different people and you don’t know who will actually show up. And the best way to do this in my experience is ask for referrals. Ask for referrals from other investors, other homeowners.
It doesn’t need to be from investors, but investors usually know cost-effective people. You don’t want to buy the cheapest person. I promise you this. It is such a big mistake people make is to go with the cheapest contractor. You also probably don’t want to go with the most expensive one. You want to search for value. Who is going to answer the phone? Be communicative. Show up on time and charge a fair and reasonable price. You need those people in your business. And again, I think the most important ones are HVACs, plumbers, electricians, and a handyman. If you can get those people, have a good reference, put them in your phone, who to call if something comes up, that’s going to make your life so much easier as a landlord because people, I think, dramatize the difficulty of being a rental property investor because like, oh, there’s a toilet breaks.
Oh, you don’t want to deal with that? No, I’m not going to go change the toilet myself. I’m going to pick up the phone. I’m going to call a plumber that I trust and say, Hey, I need a new toilet. And they’re going to go take care of it. I’m going to pay for it and everyone’s fine. It’s not that hard if you know who to call. So just spend a little time asking around and build up that list of people. And ideally, think about getting a primary and a backup because some people are on vacation. Some people are super busy that day or that week. So have two HVAC people, two plumbers that you can call in a time of need. And that’s really it. That is what you need to do to manage a rental property effectively. But there’s one more thing I do want to mention here, which is taxes.
Because if you’re going to go through the effort in doing this, the passive income is great, but there are a lot of tax advantages to renting out your home that you do not want to miss out on. A lot of newer investors don’t take full advantage of the tax code and the advantages that are written into it for people who hold onto real estate and rent it out. So this is not tax advice, but you should talk to a CPA about the following things. Number one, writing off your interest on your mortgage, right? This is what you can do with your primary. You could do it with rental properties as well. Depreciate the property. This will allow you to not pay much or any tax on the rental income that you generate each and every year. This is amazing. You do have to pay depreciation recapture when you go and sell the property, but most tax advisors recommend you do this and it could be really great for generating more cashflow.
Third, make sure you’re writing off expenses, right? Create an LLC. I’m a fan of creating an LLC. I know there’s a huge debate about this. I like creating LLCs. Every property I buy is in an LLC, and I don’t think it is worth the risk for like 400 bucks or whatever it costs to create an LLC. If you’re going to invest in this giant asset, protect it. Protect your financial life by putting it in an LLC. The other thing is if you open an LLC, you can open a business banking account and you can write off your expenses easily. So driving back and forth to Home Depot. If you need to go buy a tool to make a repair yourself, these are write-offs that you can charge against your business that will save you money as well. Also, if you have to do any big capital expenditures like replacing a roof, you could depreciate that as well, and that will lower your overall tax liability.
So I guess that’s a bonus step is go talk to your CPA. If you’re going to go rent this out, go talk to a CPA about what tax moves you should be making to ensure that you’re optimizing your performance. So that’s it. That’s how you rent out your home the right way. First thing to do, make sure that your renting out your home is actually a good investment. Go do the analysis. It shouldn’t take you that long, but figure out if this actually makes sense and it’s worth your time and effort. I think for a lot of people, especially people who have really low locked in mortgage rates over the last couple years, it is worth it. And if it is worth it to you, make sure you follow the steps that we’ve outlined in this episode so that you do it the right way.
You protect yourself, you maximize your opportunity to make money, and you provide a high quality place for your tenants to live. If you do all that, renting out your home can be a phenomenal investment that can really genuinely be a launchpad to your financial freedom. That’s our episode for today. Remember, if you are interested in doing this, our pro memberships, specifically our pro perks, have tons of benefits that you can take advantage of. Discounts on insurance, discounts on mortgages, discounts on property management software. So if you’re going to go out and do this, check out BiggerPockets Pro. It is designed for people who are managing their own rentals and can give you a huge leg up and help ensure that you’re successful when you go out and rent your home. Thank you all so much for watching this episode of the BiggerPockets Podcast. I’m Dave Meyer.
I’ll see you next time.

 

In This Article

You’re about to get schooled on where to invest—literally. Turns out one of the best places to park your real estate investment dollars is near the halls of higher education. But not in just any college town, however; the best investments are in inland towns. 

Why so specific? That’s according to the data experts at Redfin, who have crunched the numbers and seen some startling trends.

Yingqi Xu, Redfin’s senior economist, said in the Redfin press release:

“Many of the college towns with home prices rising the fastest are also among the most affordable places to buy a home right now. That combination is attracting buyers who have been priced out of larger metros, while universities continue to provide a reliable foundation of demand. Meanwhile, many of the most expensive college towns are experiencing price declines as high mortgage rates and elevated home prices make buyers there more cautious.”

College towns bucking national trends include Morgantown, West Virginia, home of West Virginia University; Syracuse, New York, where you’ll find Syracuse University; and Tuscaloosa, Alabama, where the University of Alabama is, all of which are anchored by large universities and have enjoyed double-digit home price increases, according to a Redfin analysis of MLS data from the three months ending May 26.

The criteria analysis was as follows:

• A U.S.-based college town with a minimum student population of 10%.
• Students must be enrolled in a four-year, accredited university.
• It must be at least 30 miles away from a metro with a population of over 1 million.

Other college towns that made it to the top of the list include State College, Pennsylvania (Pennsylvania State University), where homes went under contract in just five days, compared with 49 days nationwide. The double-digit home price increases (State College saw a 10.6% year-over-year gain to $459,050 in May) mean that in many places, affordability is getting squeezed.

Why College Towns Are So Appealing

Part of the appeal for towns hosting major colleges is the high rate of enrollment. According to a March 2026 student housing market update from real estate consulting firm Capright, total U.S. college enrollment reached 19.4 million students in fall 2025, a 1% year-over-year increase and the highest level since 2018.

Consistent enrollment translates into ongoing demand for housing, with 52.3% of student beds across Capright’s tracked campuses already leased for the 2026-2027 academic year, up from 45.6% from the previous year. This doesn’t include the off-campus accommodation often preferred by non-freshman students and those studying postgraduate degrees, as well as the many staff employed by the universities and numerous tertiary businesses based around the campuses, such as retail and medical centers.

This was reinforced by real estate software management company RealPage, which tracks student housing nationally. It found that properties more than a mile from campus had 39.3% of beds pre-leased by January.

“Things are really looking up for some of the largest universities in the country, especially in the South,” Capright director Jonathan Rivera said in a March student housing update. “You’re seeing a lot of population growth, which has helped to grow a lot of universities. Student housing is a subset of housing generally, and it will continue to be in high demand while the amount of housing continues to be constrained.”

Parallels With the National Housing Market

The most affordable college towns in the country share a parallel with the national housing market, where the best deals are to be found in the Midwest and South. 

According to Redfin’s July 2026 report, Dayton, Ohio (Wright State University and the University of Dayton); Syracuse, New York; and Mount Pleasant, Michigan (Central Michigan University), all have median house prices under $185,000, although only Syracuse has enjoyed 12.5% home sale growth, while the others have seen declines.

Part of Syracuse’s growth may be due to technological and manufacturing investment. Micron, a designer and manufacturer of computer memory and data storage chips, has agreed to invest $250 billion in the area through 2035. This is largely fueled by the rising demand for memory in the AI era, the company says. 

Policy Shifts and the Opening for Small Landlords

The recent government policy shift to bar corporate investors that own over 350 single-family houses from buying homes has been criticized in some quarters for not moving the needle enough on single-family housing, as small investors already own the majority. However, student housing is where the policy could have an effect.

For smaller buyers, the practical effect means that deep-pocketed institutions will be constrained from snapping up single-family homes in tenant-heavy college towns for buying and holding. Though they will still be allowed to buy, fix up, and sell, this leaves a gaping opportunity in many markets.

The Strategy for Mom-and-Pop Investors in Inland College Markets

Redfin’s college-town study is a good place to start looking for future investments. Pinpointing affordable markets with high price growth and planned development (such as Syracuse), along with studying stats from RealPage and Capright, allows landlords to gauge occupancy over the next year. This enables a fairly accurate projection of cash flow targets.

Capright estimates that national student housing cap rates currently sit in the 5.5% to 6.5% range, roughly 25 to 50 basis points higher than conventional multifamily, which translates into better yields for small investors comfortable with managing yearly turnover and leasing cycles attuned to the academic year.

Part of the appeal for single-family student housing is the ability for small landlords to rent by the room, thus boosting cash flow beyond usual single-tenant occupancy. It requires specialized leases, parental guarantees, and careful property management to ensure all tenants pay their way and those who don’t can be replaced or have their feet held to the fire by contacting their parents or evicting.

Don’t Conflate High Demand with a Good Investment

One thing many student housing reports fail to mention is that a university’s enrollment is often tied to its academic success, so investors need to look at academic trends, outside corporate investment (for example, Alphabet and Nvidia are investors in Carnegie Mellon’s computer science program) or collaboration with major companies, as well as stats on grads who find high-paying jobs.

However, be careful about conflating high-performing, high-demand universities with being good investments. A city like Boston, for example, has numerous noted universities, and housing is always in demand. However, the city’s real estate prices make these places bad cash flow buys if you are leveraging.

Final Thoughts

For savvy landlords who can offer a well-furnished, curated student experience akin to a quality Airbnb, provided they screen meticulously, there may be an opportunity to capitalize on the malaise facing conventional crowded student accommodation. 

The recent third annual State of the Student Housing Industry Report by StarRez, an on- and off-campus student housing software solutions company, highlighted housing-related stress and tenant conflicts affecting mental health as major concerns in standard student accommodation. Jason Day, CEO of StarRez, said in a press release:

“Today, student housing teams are being asked to do more than ever: manage buildings at higher occupancy, support increasingly complex student needs, and make smarter financial and operational decisions, often with limited resources. What this year’s research makes clear is that the path forward is not simply about adding more capacity. It is about giving housing teams better visibility, more connected data, and the right technology to operate more proactively, reduce administrative burden, and create a stronger residential experience for every student.”

For landlords who can offer a “home away from home” living experience for responsible groups of student friends, they might be able to rent to students who want to guarantee a soft landing for their academic year—and might be willing to pay slightly more for the privilege.