If you want more Airbnb bookings without spending money on ads (and without dancing in front of your property on TikTok), this is for you.

I’ve grown to more than 100,000 followers across multiple platforms, helped several of my own Airbnbs go viral, and built a business that now gets around 75% of its bookings directly. These strategies work whether you run a glamping site, a cabin, a lake house, or a city condo.

If you’re a visual learner, here are the two video versions:

• Part 1: 15 Social Media Marketing Tips For Your Airbnb, Pt. 1

• Part 2: 15 Social Media Marketing Tips For Your Airbnb, Pt. 2

Let’s get into it.

1. Use Instagram Trial Reels to Reach New People

Trial Reels only go to non-followers, which guarantees you fresh reach. Post your central reel, copy the caption, then post a trial reel. This doubles your exposure instantly and helps Instagram test your content with new audiences.

2. Trade Free Weekday Stays for Content

Invite micro-creators to stay Sunday–Tuesday, when you’re rarely booked anyway. Ask for:

• Vertical videos
• B-roll you can reuse
• A collab post

Creators often give helpful feedback, too, without the risk of a bad review.

3. Don’t Run Paid Ads Until You Have an Organic Hit

A video that doesn’t perform organically will not magically perform as an ad. Let organic posts test themselves. When you have one that hits 50K to 100K views, it becomes your winning ad.

4. Invest Once in High-Quality Video

Hire a videographer for one great content day. Get vertical footage, drone shots, and all raw files. One single shoot can fuel your marketing for a year.

5. Prioritize Video Over Photos

Photos are great for your listing, not for growth. Reels and TikToks bring reach and visibility. I’d rather see rough videos than perfect photos that get no traction.

6. Use On-Screen Text That Hooks the Right Guest

In the first second, tell people who you’re speaking to and where the property is:

• “Couples retreat near Houston, Texas”
• “Pet-friendly lake cabin in Austin”

People stop when they feel the content is specifically for them.

7. Study What’s Already Viral

Look at your competitors’ highest-performing content once a month. Copy the format, angles, hooks, and text style, but film it at your property. Creators copy trends constantly. It’s how marketing works.

8. Never Boost Ads From Your Phone

Boosting from your phone gives weak targeting, fewer tools, and extra fees. If you’re going to run ads, use Meta Business Suite or TikTok Business Center.

9. Use ManyChat-Style Keyword Automations

Post things like: “Comment COUPLES, and I’ll send you a discount code.”

ManyChat automatically sends them the code + your direct booking link. You also collect emails and track which platform converts best.

10. Schedule Your Content

Use Buffer, Hootsuite, or Meta Planner. Sit down once a week and load all your videos. The algorithm rewards consistency way more than perfection.

11. Run Quarterly Giveaways

Give away a weeknight stay with explicit rules:

• No weekends or holidays
• Must be used within X months
• Security deposit + ID still required

Giveaways reliably get two to three times your normal reach, often leading to long-term followers.

12. Optimize Your Link in Your Bio

Set your link in this order:

• Join the email list for 10% off
• Book direct and save
• Airbnb links 

You want visitors to flow toward direct bookings without feeling pressured.

13. Turn On Instagram Auto Replies

People DM “How do I book?” even when the link is in the bio. Automate the top five questions to free up time and offer instant answers.

14. Use Text Replacement for Fast Replies

Set up shortcuts on your phone (like typing “GO2”) that expand into a full message with pricing and booking links. This saves hours over time.

15. Post Twilight and Nighttime Content

Nighttime content (hot tubs glowing, LED lights, fire pits, string lights) performs incredibly well. It feels magical and emotional, which is exactly what sells stays.

16. Optimize for Watch Time and Shares

• Use hooks like “Wait for the ending.”
• Deliver a payoff: a view, a transformation, a surprise feature.
• Right before the reveal, prompt a share: “Send this to a friend who always books the worst Airbnbs.”

17. Make Videos From Guest Reviews

Screenshot reviews, overlay with matching footage, and add a story. People trust real guests more than hosts. These mini-testimonials convert extremely well.

18. Use Before-and-After Reels

Renovations, landscaping upgrades, and tiny improvements all tell a story of progress. Transformation content builds trust and makes people root for you.

19. Go Big or Free With Influencers

• The middle tier ($500–$1,500 creators) often underperform.
• Micro creators = free stays for content
• Large creators = professional campaigns with real reach

Pick one lane and commit.

20. Tell Stories Instead of Pushing Bookings

Stories like “This couple surprised each other with…” perform way better than “Book now.” People buy into emotion and relatability, not pressure.

21. Don’t Wing Paid Ads

If you want to run ads properly, hire someone for a few consultations. You’ll save yourself hundreds (sometimes thousands) by avoiding rookie mistakes.

22. Hook Viewers in Two Seconds

Start with curiosity:

• “I had two guests arrive at once…”
• “This almost ruined our five-star rating…”

Curiosity keeps people watching, and watch time drives reach.

23. Film Reset Day & Cleaning Content

People love behind-the-scenes cleaning, restocking, organizing, and resets. It proves you care, and it builds trust.

24. Pin Your CTA in the Comments

Pin a comment that says: “Book direct at the link in my bio.” Even when you get hundreds of comments, your CTA stays at the top.

25. Add Manual Subtitles

Use larger fonts and highlight keywords like “hot tub” or “lakefront.” Most people watch muted. Strong captions stop the scroll.

26. Collaborate With Local Businesses

Film “48 hours in [Town Name].” Tag local coffee shops, restaurants, trails, and boutiques. They often repost, bringing you fresh local traffic for free.

27. Film Guest POV Videos

Film as if the viewer is staying there: walking in, turning on the lights, making coffee, lighting the fire, and stepping into the hot tub. POV content makes people imagine themselves in that situation.

28. Try a 30-Day Posting Challenge

Post daily for one month. You will learn faster, improve faster, and the algorithm will treat you as consistent, which equals more reach.

29. Use Meta Inbox Automations

Meta Business Suite has free automation features that behave like a basic chatbot. Instant replies = fewer lost leads.

30. Use Emotional CTAs

Instead of “Book now,” use:

• “Tag your travel buddy.”
• “Save this for your next weekend getaway.”
• “Send this to the friend who needs a break.”

Engagement fuels virality, which fuels bookings.

Final Thoughts

You do not need a giant budget or complicated software to grow your Airbnb. You just need to show up, stay consistent, and keep experimenting. Start with a few of these strategies this week, and add more as you get comfortable. 

The momentum builds quietly at first and then suddenly. When it does, the right guests will find you, and your property will become the kind of stay people talk about long after they leave.

Dave:
2025 is winding down and so much has changed, but somewhat frustratingly, some things have not changed at all. I’m Dave Meyer, and today I am joined by Brian Burke to wrap up the year, cut through the headlines and talk about opportunities that are going to exist for investors going into 2026. We’ll touch on where the opportunities have opened up, what risks are getting bigger and how to avoid them. And generally just how to position your portfolio for the next 12 months. This is on the market. Let’s get into it. Brian Burke, welcome back to On the Market. Thanks again for letting us drag you back here,

Brian:
Dave. It’s always fun to be here. We always have a fun conversation.

Dave:
I agree. It is always a good time having you here, so thanks for helping us close out the year here. That’s kind of where I want to start is maybe just looking back at 2025, how would you describe or characterize this past year?

Brian:
Well, I would call it a bit of a year of some turmoil and chaos I suppose, and chaos breeds opportunity and the more of the former you have more the latter you get. So I think it’s been a year that’s going to set people up for some really good things down the line, but for some it’s been a bit uncomfortable as any tumultuous year would be. So it certainly has been interesting to

Dave:
Watch. Would you describe that for both residential and commercial markets or one more than the other?

Brian:
I think it’s actually applicable to both. I think residential markets at the beginning of the year, I expected that they would do better than they have. I mean, of course it’s all regional, right? But what I’ve seen kind of on a macro level has been a little bit of a slow residential market or slower than I would’ve expected, and commercial was almost non-existent for the first half of the year. It’s starting to pick up a little bit in the second half, but I think that might even be misguided a little bit.

Dave:
And do you attribute that to rates, at least for the residential side? Do you think it’s still just the financing climate?

Brian:
I think that’s part of it. I think there’s an inventory problem in some areas. I know, especially where I live here in Northern California, we have an inventory problem. There’s too many houses on the market for buyers that are in the market. And partly I think that’s because of two things. One is you don’t have a lot of move up buyers because anybody who owns a house with a 3% mortgage isn’t selling. That means they’re also not buying something else. So I think that’s part of it. And then first time home buyers are struggling with large down payments and higher interest rates and just overall difficulty in buying. So I think that’s slowed down. Buyer traffic for 2025,

Dave:
Was there any bright spots you saw or was it just all ugly in 2025?

Brian:
Well, the only bright spot I found was in senior housing and we made a pivot to senior housing assisted living, skilled nursing and memory care earlier this year. And that’s been a total bright spot. But outside of that data centers I hear is a really good spot to be, but I think it’s dominated by the major players in the industry. It’s not really an individual investor play, but outside of those two specialties, I haven’t seen a lot of extraordinary opportunity or anything to get all that excited about in any real estate sector this year.

Dave:
Well, we appreciate you keeping it real. That’s why you’re here. We don’t want any fluff. If it was an ugly year in 2025, I actually maybe in the last two months have noticed better deal flow. I feel like the numbers when I analyze a deal are looking a little bit better on the residential side, not fully great across the board yet. Have you noticed any of that though, or are you just sticking to There’s no silver lining at all. Everything’s miserable.

Brian:
Well, that’s been a good theme for me for the last two or three years. If you recall my past appearances on this show.

Dave:
Yes, we know what we’re getting with you.

Brian:
Yeah, you do you know what you’re getting? Is there a silver lining? Well, I’m starting to see some threads of a silver lining. Interest rates have fallen a few tenths of a percent, not anything major, but I think that might be helping a little bit. I think pricing is starting to ease in some places because some sellers are just having to come to grips with reality that the property, whether it’s a house or whatever it is, isn’t worth what they thought it was or isn’t worth what it may have even been a few years ago. And so they’re having to get real with, okay, if we’re going to move on, we got to meet the market. And I think some sellers are meeting the market and some buyers are having the ability to step up, and that’s creating a little bit of a silver lining over the last few weeks. But I don’t see a major title shift just yet.

Dave:
No, it’s frustrating, especially in commercial. I think you’re much more of an expert in commercial than I am, but I’ve keep waiting for this distress to come to a head and it feels like it just doesn’t. I know it’s trickling and prices are down, but we’re not seeing what I would think the inventory levels or the transaction volume that I would’ve expected a year or two ago given how stressed how much stress there is in the multifamily market, for example.

Brian:
Yeah, well at first that may seem unusual, but when you really start to dig into the details of why that’s happening, I think it makes complete sense. So prices have fallen dramatically in the multifamily side and worse perhaps than even the 2008 great recession from peak to trough. So if you’re a lender in that space and you started out with a call it 80% LTV loan that also supplied a hundred percent of capital improvement financing, you’re dramatically upside down as a lender. I mean, forget about the owner and how upside down they are. The lenders themselves are upside down. So they’ve been so-called kicking the can down the road and saying like, Hey, I know your loan is due, but we’re just going to forget about that for now and give you another year. And the owners are like, great. We got to stave off foreclosure for a year.

Dave:
We’ll take it.

Brian:
You guys are wonderful. Thanks for taking care of us. Forgetting completely about the fact that really what the lender’s doing is protecting their own balance sheet, right?

Dave:
Oh, you mean the banks aren’t just doing it out of the kindness of their hearts?

Brian:
Oh, of course they are. They always operate that way

Dave:
If you can. That’s how banks

Brian:
Work. Yeah, provide me an example of that. I would love to see it. But the banks are waiting for better markets to sell into and really they’re the ones that are in control. I mean, the owners who think they’re in control aren’t really the ones in control when there’s a loan maturity that’s in play. So the lenders will at some point say, enough is enough. We’re not giving you another extension you need to sell. Now, even if that’s at a complete loss to you and a small loss to us, that’s when the distress is going to hit the market. But it’s going to be when prices actually come up a little bit because the lenders don’t want to sell at the bottom either. So that’s why you’re not seeing this big so-called wave. And that’s also why I think, and this is just my opinion, it may be wrong, but we’ll see that the wave is going to be a long slow wave that you could ride for a really long time, not one that’s going to last 20 seconds and it’s over. This is going to be a bit of a recovery process that’s going to take a period of years, not a period of weeks or months.

Dave:
And when you’re saying that wave, obviously that’s challenging for existing operators, but does that mean the buying window will be longer for people who want to get into the market?

Brian:
Yes, that’s my point. Exactly. And that’s also why I haven’t bought a multifamily asset in what, three and a half years now. I guess because there’s been no reason to and there’s still no reason to, and I’m still not buying. And once the market starts to improve, then maybe I might start buying, but I know that I’ve got plenty of time. I don’t have to be in a rush to say, I have to exactly time this bottom because I’m going to miss it and it’s going to run out without me. That’s not the risk. The bigger risk in my opinion, is that you get into early and you have to sit through this long level period of this, the bottom of the trough for a long time before the value starts to creep up, and your time value of money erodes your returns. I think that’s the bigger risk.

Dave:
I think you’re talking specifically about multifamily right now,

Brian:
Right? Yeah, large multifamily. Now, we had a conversation on your other show recently about small multifamily and as a wealth building tool for individual investors that are casually buying properties. Occasionally, I think there’s a real opportunity for life transforming wealth over the long term, but for those who are buying commercial, multifamily, larger assets, especially those who are doing so with capital, they raise from other investors would find this to be a very tough period to produce the type of outcomes that their investors would be happy with.

Dave:
The difference being if you’re not trying to satisfy LPs and other people who are raising money, the risk of getting into early is less. Is that kind of the theory there?

Brian:
The theory is is that if you’re a casual investor who might buy one or two properties a year, this might give you the opportunity to buy five or six properties because you can only buy a few properties a year. For professional investors at commercial real estate who I’ve bought 19 properties this year so far in the senior housing space now, if I did that in multifamily and had 19 assets, that’s a lot of real estate that’s going to sit there languishing in value for a long period of time with a lot of investor capital that just wouldn’t really have that great of an outcome. It’s just two completely different investing strategies. And one thing about investing in real estate, there’s not one strategy. There’s different strategies and different strategies require different tactics.

Dave:
We got to take a quick break, but we’ll have more with Brian Burke right after this. Stay with us. Welcome back to On the Market. I’m Dave Byer here with Brian Burke. Let’s jump back in. Well, you’ve been talking about it all year that you still think the buying of small multifamily makes sense. And are you seeing prices go down for those as well?

Brian:
Yeah, pricing is easing, especially when you look at peak, peak to trough pricing and peak being, I would say second quarter of 2022 was what I’d consider to be the peak of the multifamily market space. And if you look at pricing today relative to that small window, it’s definitely cheaper to get in now than it would’ve been to get in then and a lot less risky.

Dave:
The only thing that discourages me a little bit, not in the two to four unit, but in that four to 20 unit, is rent growth just seems really slow right now in most markets. Is that something you are thinking about and seeing and does that offset some of the opportunity in the mid-size multifamily space, that five to 25 unit range?

Brian:
Yeah, it does. If you’re momentum playing, if you’re arbitrage playing, then maybe not so much. And again, every strategy requires different tactics. So if your strategy is to buy deeply discounted, heavily distressed, multifamily, even in a mid-size, you can go in and extensively renovate and improve and boost rents and improve the income, then you’ll be fine. The rent growth isn’t this big of a deal as your entry basis is made with the rent growth prospects in mind and you’re not thinking like, okay, well I’m going to pay this price because I think I’m going to get 10% rent growth. If you’re not doing that, then you’ll be fine. So I don’t see that as quite that big of a risk. But if you’re a momentum player where you’re buying stuff basically turnkey, maybe a class B plus class, a newer mid-size multifamily with the intent of just riding the wave of multifamily rent growth, you might be disappointed in that strategy or you really are looking at it as a generational wealth play and not as an immediate return play, in which case it may work out fine, but as an immediate return play, I think it would be difficult.

Dave:
Yeah, last year when I was trying to figure out what I was going to do talking about on the show, I was hoping that right now in this point in 2025, we’d start to see the tide turning on rent growth a little bit just because we’d be working our way through the multifamily supply glu. But unfortunately I just don’t see that happening in 2026. I just think we’re still at least a year away from, like you said, the momentum play. That doesn’t mean you can’t do value add and drive up your rents, but if you’re just hoping for the macroeconomic forces to drive up rents, I think it’s going to be another slow year for that in 2026.

Brian:
You’re right, and the statistics bear that out. So in October of 2025, we saw the largest rent decline of any October over the last 15 years on a national

Dave:
Level.

Brian:
So there has actually been rent declines and a lack of rent growth. And that certainly is a factor. And I think when I’m looking at a sector of real estate to invest in, the momentum does have a lot to do with the decision. And there’s a lot of things that are working against multifamily right now, such things as low birth rates. Renters remember is the younger demographic. So you’ve got low birth rates, you’ve got low immigration, and you have high construction. And to your point a minute ago about construction levels have remained unexpectedly elevated. Everybody thought be 2025, it’s all going to taper off, the building is going to be done, but yet it still keeps coming and that’s fighting against these other factors of low birth rates and low immigration and all of that stuff is just creating lackluster rent growth for the time

Dave:
Being.

Brian:
Now that won’t continue forever. The tide will shift and it’s always darkest before the dawn, so we will see what happens.

Dave:
The construction thing sort of confounds me. I started my investing career in Denver, still own property there, and it’s getting hit pretty hard right now, even in the single family and residential space, prices are down, rents are down, and it’s one of these classic overbuilt cities. If you look at all of the data, you just see that there’s been way too many deliveries. Absorption is low. And then I was reading something that was like new construction, multifamily starts in Denver, second highest in the country. I’m like, what the hell are people doing? Why are they doing this? And I guess they’re just expecting three years when these things are completed that will have worked through this backlog. But man, it is a little confusing why this is still going on.

Brian:
Well, I think there’s two reasons at play. One is that construction and development takes an extraordinarily long time, and so from concept to shovels to vertical construction, you’re talking about periods of years, not days, weeks or

Dave:
Months.

Brian:
And so a lot of these projects were past the point of no return and are just now finally getting to fruition and they can’t really put the brakes on without losing tons of money. So they’re like, well, we’ll just hope for the best and maybe our timing will work out so the projects keep going. That’s one reason. And another reason is you still have some developers who are like, Hey, the construction glut is going to wane in 2025, so by the time we’re done, the timing’s going to be perfect, so then there’s too many people thinking that way and you end up with too much product still. And so I think we’re stuck with both of those things happening at the same time.

Dave:
Do you think any of that will spill over into the residential space either in terms of rent growth or demand for housing? Because if rent is relatively cheaper than buying a home like it is in the vast majority of places in the US right now, do you think that’s going to sort of hamper or weigh on the residential market?

Brian:
I don’t know. I’ve got a lot of class A apartments in Atlanta, still about a thousand units, and there are two reasons that we experience move outs. One reason is that people have financial difficulties and have to downscale whether they’re moving back in with family or whatever, but the other largest reason is they’re buying a home. And so surprisingly, it still seems like the American dream of home ownership is still alive and well, it may have needed supplemental oxygen for a while, but I think the patient’s going to survive.

Dave:
It’s still a priority for people. The desire for home ownership certainly hasn’t changed, even if the affordability and the challenge of actually accomplishing it has changed a lot of it in the last couple of years.

Brian:
It has. And I think anybody listening to this show especially would on a personal level, relate to wanting to own your own home and somewhat having control of your own destiny and maybe the prospect of someday owning it free and clear and not having a payment to provide you with long-term financial security into your later years. I mean, I think a lot of people listening to this show would understand that.

Dave:
So does that mean you’re not a fan of the 50 year mortgage?

Brian:
Well, it’s interesting. I see some benefit to the 50 year mortgage as it opening the door for people to an extent, but the challenge is it has to be used responsibly. If you could get in with a 50 year mortgage because you can’t afford the payment, but as your income increases, you consistently increase how much you’re paying on your loan and then you end up paying it off in say 20, 25 years, it could be a remarkable tool for someone that’s responsible and disciplined enough to do that.

Dave:
Totally.

Brian:
I think there’s a segment of the population that maybe doesn’t possess that level of discipline, and in that event they’ll be paying interest for 50 years and maybe they benefited from it and maybe they didn’t. It’s hard for me to say,

Dave:
Yeah, I know. I think as an investor it’s just not worth it. I did the math, I did an episode on it for an average price home, it just saves you 200 bucks a month. It’s not that significant. A savings and the amount of interest you pay over time is enormous. So if your dream is to own your home free and clear, it just makes it so much harder. But I do agree that there are some use cases. I would just worry that I think this already happens. This happens in car sales, it happens in home sales that people focus really on their monthly payment and not what they’re paying in total for an asset or for anything. And I would just hope people aren’t making that decision uninformed if this even comes to bear. We don’t even know if it’s going to be a thing at all.

Brian:
Well, I mean if I look at my own personal situation, when I bought my very first house to live in 35 years ago, $200 a month would’ve been a big deal to me, and that would’ve really helped me get in. But if I look at my income now, that payment would be a rounding error. It would be nearly nothing. So if I continued to increase how much I was paying in connection with how much I was making, I would’ve paid that loan off far sooner than 50 years, but it would’ve been really useful to me in years one through five,

Dave:
But

Brian:
It really just depends on how you use it, and I think a lot of people use debt very responsibly, but there are people who use debt irresponsibly and would use it to just buy more than they can really afford, and they’ll end up paying interest for 50 years because they won’t increase their principal pay down as their income grows. They’ll just buy more boats and things like that.

Dave:
When we return more insights on the year end playbook, we’ll be right back. Thanks for taking with us. Let’s continue the conversation with Brian Berg. Let’s shift focus a little bit. I want to talk about 2026, and I know you were just negative about 2025, but I want to hear how negative or if you see if there’s opportunities in 2026. So I’m going to tell you the name of an asset class or a strategy, a niche in real estate, and why don’t you give it a score A to F with high school grades here, 4, 20 26, single family rentals,

Brian:
B minus,

Dave:
B minus. Okay. What about small multifamily,

Brian:
B plus

Dave:
Large multifamily

Brian:
C?

Dave:
That’s not as bad as I thought you were going to say. Maybe a C minus. C minus. Okay. Well, I know you like senior living, so what do you score Senior living

Brian:
A

Dave:
A? I like that. Okay, let’s go to some of the other niches. What about self-storage? Do you know anything about it?

Brian:
Yeah, I used to own a self storage facility. I’d give it a B.

Dave:
Okay. Not bad. All right, and what about build to rent?

Brian:
Oh, that’s getting flooded. C plus to B minus probably C plus.

Dave:
I don’t know if you want to invest in things you’re grading a C in a given year, but yeah, I mean is B plus good enough for you like a small multifamily, it sounds like?

Brian:
I think that it depends upon your strategy and if your strategy is a fit, I think this is a good time to do small multifamily for a long-term generational wealth building strategy for the casual investor. Absolutely. If you’re going to tell me that you’re going to start a hundred million dollars fund to go buy thousands of duplexes, I would think that that might not work as well.

Dave:
Well, that’s a good point. So let’s talk a little bit about strategy. What is the right strategy? What is the kind of deals that you should be looking for if you want to go after those small multifamilies next year?

Brian:
I think you’re looking for the tired landlord that just wants to exit maybe long-term owner that just has to get out, or maybe a newer term owner that’s in foreclosure or distress properties where you can make some improvements to the asset to improve its income and rents and something that you would be comfortable holding for 20 to 30 years and just using it as a generational wealth tool. For those folks who are trying to build a portfolio like that for a secure retirement, this is a great time to start building something like that because building a portfolio like that for generational wealth, especially for smaller casual investors who don’t have this huge bucket of investible assets, takes a lot of time. And I think that’s what you have right now is this wide window to be able to accumulate this portfolio at really attractive prices not to be like, I have to time the bottom exactly, and we’re going to buy a hundred fourplexes all within a three month window because that’s the bottom, and that’s when you got to get in because if you do own it for 30 years, you’ll have long forgotten 30 years later when you bought those things and what you paid for ’em. It’s not going to matter

Dave:
A hundred percent. That’s honestly how I’ve been thinking about growing myself. I was like, I think we’re going to be in a pretty stagnant market for a couple years, and I know that scares some people. If you’re a flipper, that might be a little bit difficult, but I think for me, I’m like, I just get to sit back and be more patient than I’ve been able to for several years because I’m buying for 10 to 15 years from now. I’m going to just look for small multifamily, put on a 15 year note and be patient, and I care what I buy it for, but I actually think right now I’m going to be able to get better prices. And I think the sacrifice is the cashflow and the rent growth might not be amazing in year one, but I don’t need it to be amazing in year one. I care more right now about getting a great asset at a great price, and then I just need it to perform in 10 years, which is I have a high confidence that it will.

Brian:
Well, those who follow your roadmap that you just outlined are going to have life-changing transformational wealth that will happen over a period of years and decades. Contrast that to somebody who followed that roadmap and let’s say 2021 and began accumulating a portfolio like that 20 21, 20 22, and then it immediately falls off the cliff.
It doesn’t mean that, oh, the whole thing’s never going to work out. It just means it’s going to take a long time to get back to zero. But if you keep doing it and you do it through this period, it’s going to provide extraordinary opportunity for you later on in life, and this is a really great time to do it. This reminds me a lot of the early 1990s, from about 1991 or 92 to about 1997, prices didn’t move at all. I mean, they just stayed completely flat. And there was this long period of time where you had to accumulate assets, and if you did that, boy, by 2003, you were making a killing and granted it went up to oh five and then it fell down in oh eight. But by 2013 it was right back to where it was before and even

Dave:
Higher. And I think even in oh 6, 0 7 when things started to fall apart, they didn’t go back to 90, 97 levels, did they?

Brian:
Some of ’em did. Yeah.

Dave:
In fact,

Brian:
I bought some properties in 2009 and 10 that I looked up their transaction history and they last sold for prices I paid in the 1980s.

Dave:
Oh, that’s not great.

Brian:
That’s, it’s not good.

Dave:
It’s not what you want.

Brian:
It’s not what you want. But if you hold a dividend stock and the price fluctuates, but you’re collecting your dividend, you don’t really care if you’re going to own that dividend stock for 50 years,

Dave:
Hundred percent.

Brian:
If you bought it at the very top, it’s going to be a lot more painful than if you kind of bought it at the bottom, rode to the top, wrote it back down and then wrote it up again. That’s a much different story because you don’t have to get a big increase just to get back to zero, right? So I think that’s what makes a difference. And accumulating now means that if prices go up and then later they go back down, you’re still above zero and this is a much better time to invest than if you did it in 2021 where they went down and now you’re below zero and you got to wait to get back to zero.

Dave:
What do you think about the best debt structures right now? What’s holding people back a lot is, I think it’s just high mortgage rates. Curious where you think things might be heading. We won’t hold you to it, but if you had to guess today, where do you think rates might go next year?

Brian:
I think long-term rates are going to remain relatively flat for a while. I don’t really see major movement one direction or the other, maybe a half a percent one way or the other. And I couldn’t even say which direction that half a percent is going to be. Short-term rates I think are bound to come down, so I think we’ll see a little bit of an easing in especially the SFR, the secured overnight financing rate. I think we’re going to see that come down a little bit as the Fed continues to ease really in the residential space is driven by the 10 year US treasury bond because that’s what drives pricing on 30 year fixed rate financing. And I think as far as any financing package goes, there’s no better financing package than the fixed rate fully amortized 30 year residential mortgage loan.
There’s nothing else better than that in all of real estate investing in any sector, it’s a fantastic vehicle because if rates go down, you can pay it off and refinance with a lower rate loan, and if rates go up, you’re protected and you’ve got 30 years to pay it off. And if the 50 year loan thing does pass, it’s kind of the same thing except longer and more interest, but depends on your level of responsibility. In the commercial space, you don’t have that luxury. You have to choose between one risk or the other interest rate risk or yield maintenance risk or prepayment penalty risk. So that’s a whole different

Dave:
Discussion. Yeah, yeah. Well, I’m glad you said that. I was wondering because you’re saying, and I agree with you that short-term rates are going to go down. I mean, I think that seems pretty clear that there’ll be some downward pressure there. I agree. Long-term rates less likely to move. It might become appealing for people to look at arms again because the spread might get bigger, but I personally think there’s as good of a chance that in five or 10 years rates are higher than they are today, than they are lower. And I just don’t want to take that risk. And so I like the way that you said it, that you still have the option to refinance, but you are protected against that downside risk. And I just still recommend to people, even though you’ll pay a little bit higher interest rate right now, the ability to control your downside risk is so incredibly valuable when you’re pursuing the strategy that Brian and I have been talking about, accumulating wealth for the long, long-term, knowing what you’re going to pay every month and not having any risk to that is kind of essential in my mind to taking this long-term approach because otherwise you’re exposing yourself to risk five to seven years down the line.
That’s just not necessary to take. If you’re a residential investor,

Brian:
There’s only one downside to the fixed rate mortgage, and that’s that it might cost you a few more basis points in interest rate than an arm. That’s the only downside. But you can completely that downside at the onset, so you know what you’re getting yourself into, what the cost is for that peace of mind, and it’s a peace of mind insurance premium. And believe me, you would pay that for fire insurance on your house for the peace of mind of knowing that if it burned to the ground, you could have it rebuilt. So this is the same thing. The difference between the arm interest and the fixed rate interest is your insurance premium for the peace of mind of knowing that your mortgage may never burn to the ground, but if it did, you’re totally covered. Interest rates could go to a hundred and you’re still fixed.
And there’s zero other downside because if rates drop, you can easily refinance. That’s what’s different about commercial. Commercial, if you want to go fixed rate in commercial, there are other downsides beyond what you can immediately quantify and prepayment penalties and yield maintenance and those kinds of things that make you choose which risk you want to have. But in the residential space, residential one to four, and in some small balance multifamily, you can buy a 10 or 15 unit on a fixed rate mortgage, fully amortizing from local banks. When you can get that kind of a financing package, there is very little downside and you would almost be self-inflicted wound to yourself to not do

Dave:
It. All right. Well, Brian, as usual, this has been super helpful. Thank you. Is there anything else you think the audience should be thinking about as we head into 2026?

Brian:
Well, I think you should be thinking about building that portfolio as we’ve been discussing here today. And if you’re a passive investor in syndications of larger commercial assets, I think that you can be patient and you can wait for the right opportunities because there’s no need to jump in too soon too fast or go all in because you’re not going to miss the runup in the market. It’s going to take time for that to materialize. So this, I think is the season of patience.

Dave:
Thank you so much, Brian. We appreciate you being here. As always.

Brian:
Thanks for having me.

Dave:
That’s it for today’s episode of On The Market. Big thanks to Brian Burke for the year end read and the game plan for 2026. Make sure to follow on the market wherever you get your podcasts, or if you’re watching on YouTube, hit that subscribe button so you never miss an episode. I’m Dave Meyer, I’ll see you next time.

This article is presented by Rent To Retirement.

Let’s look ahead to 2026. Mortgage rates are still making investors wince, even though they have fallen throughout the year. TikTok is still promising “financial freedom in 90 days.” And somewhere, a first-time investor is arguing in a Facebook group about whether cash flow or appreciation is the absolute path to wealth.

You don’t have to pick one metric to count on forever. In 2026’s market, understanding the difference between cash flow and appreciation and how they work for you and your investment properties could be the thing that keeps your portfolio growing while everyone else waits for the perfect time to invest (which never comes).

The Tale of Two Investors

Jordan invests for cash flow. They love spreadsheets, steady income, and watching rent checks roll in. Their properties may not be glamorous, but they pay the bills and fund a few vacations. 

Meanwhile, Alex invests for appreciation. They chase high-growth markets, buy new construction in fast-growing cities, and proudly tell friends, “I don’t need cash flow because I’m building equity.”

In 2026, both of them are right, but only if they understand the full picture of their methods.

Cash Flow: The Reliable Sidekick

Cash flow is the monthly income that stays in your pocket after all expenses (mortgage, taxes, insurance, maintenance, and management) are paid. It’s usually not super flashy, but it provides consistent returns. Think of it as the reliable sidekick that keeps your portfolio running while your other investments aim for higher appreciation values.

Let’s look at an example: A property that rents for $2,000 per month and costs $1,500 to operate nets $500. Over the course of the year, that is $6,000 in real income. In states like Indiana, Alabama, and Ohio, where Rent To Retirement offers turnkey rentals, investors are earning 8% to 10% annual cash-on-cash returns, even in a high-interest rate environment.

Cash flow is what keeps you calm when interest rates rise or Zillow says your property value dropped. It pays you to wait, which in real estate is often where the real wealth builds.

Appreciation: The Patient Power Move

Appreciation is the long game play for many investors. It means buying in a market that grows steadily, then letting time and demand do the work for you. If you bought a home in Texas through Rent to Retirement back in 2021 for $350,000, chances are it is worth well over $400,000 today. That is the quiet power of a strong appreciation market—and a patient investor.

Appreciation works best in places with population growth, job creation, and limited housing supply. Texas, Florida, and Georgia continue to show all three factors. These markets also offer decent rent ratios, allowing investors to benefit from both steady income and long-term equity growth without having to choose one or the other.

The 2026 Market: A New Middle Ground

The wild price runs of 2021 and 2022 are long gone, and with it the chaotic bidding wars and extreme shortages. Builders have adjusted, rents have stabilized, and the market has settled into something investors have not seen in a while: balance.

This is not the time to gamble on short-term price jumps. It’s time to collect steady cash flow in stable, affordable markets that still have room to grow.

Rent to Retirement’s 2026 data shows that the best-performing states for balanced investing have home prices under $400,000, rent-to-price ratios between 0.7% and 1%, and population growth above the national average. That includes markets like these, all of which have Rent to Retirement teams and available inventory:

• Indianapolis, Indiana
• Ocala, Florida
• Houston, Texas
• Huntsville, Alabama

The Hybrid Strategy: Why Not Both?

The smartest investors in 2026 are not picking sides. Rather, they are building hybrid portfolios that blend cash flow (in markets like the Midwest) with appreciation (like the Sunbelt markets).

Imagine:

• A duplex in Indianapolis rents for $1,800 per side on a $250,000 purchase. That creates a highly dependable income stream.
• A single-family home in Ocala, Florida, rents for $2,700 on a $400,000 purchase. This creates that long-term growth play.

One property can pay the bills today, while the other builds your net worth for tomorrow. Together, they make you both Jordan and Alex, without the debate of whether cash flow or appreciation is better. Why not both? 

Rent to Retirement makes that balance simple through its turnkey model. Their team identifies the right markets, builds or renovates the properties, connects you with management, and provides financing. You can own properties in multiple states without juggling contractors or late-night maintenance calls.

Why 2026 Is the Year to Move

Every investor loves to say they are waiting for rates to drop. But by the time that happens, prices and competition always climb right back up. The investors who will win in 2026 are the ones who move now, when builders are still offering incentives and rents continue to cover solid returns.

Rent to Retirement is already expanding across more than 90 markets, focusing on areas with population growth, strong job creation, and above-average rental yields. Their simple goal is to help everyday investors find properties that actually perform in real life, not just on spreadsheets.

What to Ask Yourself Before You Buy

Before you pick your next property, ask yourself three simple questions:

1. Do I need income now or equity later?
2. Can I handle a little volatility if the payoff is bigger over time?
3. Do I want to self-manage or have a team manage the property for me?

If the last answer is no, turnkey properties through Rent to Retirement are built for you. They come with management in place so you can scale your portfolio without losing your sanity.

Final Thoughts

Cash flow is your safety net, and appreciation is your wealth builder. The best investors in 2026 know how to combine the two.

And the best part is, you don’t have to predict the market. You just have to pick the right market for success. The most successful markets are where the population is growing, jobs are steady, and rents stay strong. The places where your property works, even when the headlines are dramatic.

Rent To Retirement continues to help investors build those portfolios. From cash-flowing duplexes in the Midwest to appreciating new builds in Texas and Florida, their system turns long-term investing into a strategy anyone can follow.

The real estate market has flipped from where we’ve been in recent years, and there is loads of data to show it.

Rent To Retirement’s research team has evaluated hundreds of deals, looking specifically at rent-to-price ratios, landlord laws, and appreciation trends. The goal is to find states where your money works harder without you needing a hammer, a spreadsheet, or a 2 a.m. call about a water leak.

Let’s walk through what the numbers are saying.

Why Yields Matter

Seasoned investors know that wealth is not built on flashy “what it might be worth someday” numbers, but on yield, the steady income your property actually produces right now.

Yield is your return after rent, expenses, and surprises (I’m looking at you, water heater). It is what remains after the mortgage, taxes, insurance, and maintenance are paid. Think of it as your property’s paycheck to you.

For example, let’s say you buy a home for $300,000, and it rents for $2,100 per month. In this case, you would have about a 0.7% monthly yield, or 8.4% annually before expenses. The higher the yield, the better your cash flow is right now, and the less you rely on home prices increasing (and eventually selling) to make your money.

Yield is what keeps your portfolio healthy when interest rates rise or prices cool off. It is the difference between owning an investment that pays you each month and one that only looks good on Zillow.

The Top States For Yield

Texas

Everything really is bigger in Texas, including the rental market. The state added almost half a million new residents in 2024, according to the Census Bureau. Dallas-Fort Worth alone created more than 140,000 new jobs.

For investors, that means steady population growth, rising rents, and no state income tax. Median home prices hover around $345,000 as of June 2025. Average monthly rents are about $2,400. This would create a 0.7% monthly yield before appreciation or tax benefits.

Rent To Retirement investors are finding opportunities in cities like Waco, San Antonio, and Houston. Builders are offering incentives, tenants love new homes, and investors are collecting consistent rent without constant repairs.

Florida

Florida is the state that never seems to cool off. In 2024, the Florida Chamber of Commerce forecasted that Florida would gain between 225,000 and 275,000 new residents. The population is more than just retirees and your classic snowbirds these days. Remote workers, young families, and business owners are all chasing sunshine and opportunity.

Median home prices are around $415,000, and average monthly rents are near $2,300. That gives investors a healthy return while property values continue to grow.

Rent To Retirement highlights cities like Ocala, Cape Coral, and Jacksonville. These markets are affordable, expanding, and in high demand from long-term tenants.

Indiana

Indiana may not make flashy headlines, but it consistently delivers results. Median home prices are around $251,000, and average rents are about $1,450. 

Indianapolis, Fort Wayne, and Lafayette have become reliable cash flow centers thanks to stable jobs in healthcare, logistics, and manufacturing. For investors who like predictability, Indiana is quietly one of the strongest performers in the country.

Georgia

Atlanta often grabs attention, but Georgia’s smaller metros are outperforming this major metro. Cities like Macon and Warner Robins offer home prices near $169,000 and rents around $1,400. 

Georgia ranks high on Rent To Retirement’s list due to strong job growth, continuous population inflow, and a balance of affordability and rent strength. For investors looking for stable, long-term tenants, Georgia checks every box.

What These States Have in Common

Each of these markets shares three traits that separate it from the rest of the country:

1. Population growth. Texas and Florida alone made up more than one-third of total U.S. population growth last year.
2. Landlord-friendly laws that allow investors to manage efficiently and protect their assets.
3. Affordability and healthy rent levels that make properties cash flow from day one.

Rent To Retirement focuses exclusively on markets that meet these criteria. Their goal is to find states where properties perform and investors can scale their portfolios confidently.

Why Turnkey Matters

Some investors love the challenge of a fixer-upper. But if you’re investing out of state (or even in-state), you may be sitting on your asset without making returns as you wait to finish your project. The BRRRR model is tried and true, but it can be extremely stressful if you’re hoping to cash flow right away. 

Rent To Retirement solves that problem with its turnkey model. Every property is newly built or fully renovated, professionally managed, and tenant-ready.

Investors benefit from:

• Immediate rental income, with no rehab delays
• Professional local management teams
• Financing options through RTR’s network
• Accurate rental projections backed by data

This approach turns real estate investing into something repeatable and scalable. You pick the market, and Rent To Retirement handles the heavy lifting, so you can start earning income without trading your time for maintenance calls and lengthy fixer-upper projects.

The 2026 Playbook

Real estate headlines may be filled with panic about high rates or affordability, but the numbers tell a different story. Across Rent To Retirement’s network, investors are earning annual cash-on-cash returns between 8% and 12% in select markets.

As you look to grow your own portfolio, it’s important to invest where the math makes the most sense—not where the hype is the loudest. The Midwest, Southeast, and Sunbelt remain the best regions for combining affordability, rent strength, and long-term growth. These are the places where your money works while you sleep.

Going into 2026, investors are winning in states like Texas, Florida, Indiana, and Georgia. Yields are strong, tenants are plentiful, and growth is steady. Rent To Retirement is already positioned in these markets, helping investors build portfolios that generate real cash flow and long-term appreciation.

Working with Rent To Retirement is real estate made simple. No stress, no guesswork, no late-night phone calls about broken faucets. Just modern homes in high-performing states, managed by experts who understand how to turn data into dollars.

Dave:
Do you think living in a big expensive market means you can’t invest in real estate? Think again. Today’s guest works at demanding travel heavy day job, so he’s building a rental property portfolio as a backup plan and he’s doing it in and around New York City. This is not a story of an already rich person buying properties in cash. It’s about using hustle and persistence to build towards financial freedom, even in one of the country’s most expensive markets, Ben was even willing to sleep in the office he was working in to kickstart his investing career. And although that type of sacrifice isn’t for everyone, it might just be for you.
Hey everyone, I’m Dave Meyer, housing market analyst and head of real estate investing at BiggerPockets, and today we’re bringing you the story of an investor named Ben Chester and I’m super excited to talk to Ben because he’s one of the very few people I’ve ever met who’s doing basic rental property investing in New York City. Ben isn’t buying giant apartment buildings for millions of dollars. He’s also not buying really risky properties in suspect areas. He’s found a way to acquire one bedroom apartments that cashflow in some of America’s most expensive zip codes. So on today’s episode, Ben’s going to tell us the exact formula he found that makes these deals work even when starting with six figures of debt personally that he had. He’ll tell us the story of how he turned Billy Joel’s house. Yes, actually Billy Joel’s house into a cash flowing investment property, how he can offset almost all the taxes from his W2 career with real estate investments and he’ll give us his advice for other investors who want to stay local but live in hyper expensive markets. Let’s welcome Ben. Ben, welcome to the BiggerPockets podcast. Thanks for being here.

Ben:
Thanks so much for having me.

Dave:
Alright, well let’s jump into your backstory a little bit. Tell us a little bit about the circumstances that led to you getting started as a real estate investor.

Ben:
So a lot of people I graduated school didn’t get. The best job was making $30,000 a year, which in New York City is basically the poverty line and I was spending all my time at the office, but all my money was going towards rent. So trying to run this experiment where I actually decided to secretly move into my office full time. Hold on. Where were you working? So I mean when I say office, it wasn’t too bad. It was actually a sleep clinic. I was doing medical research for pharmaceutical trials.

Dave:
Oh, okay. So there were beds in these?

Ben:
There were beds and the beds were not always a hundred percent occupied. So there’s a lot of nights where I actually had a pretty cozy hotel room in midtown Manhattan.

Dave:
Wait, were your employers aware of this experiment?

Ben:
No, they thought I was a hard worker. So this is 2012, so shortly after I got the job Hurricane Sandy hit and I was the only one that actually showed up at the office that day, so they thought I was a super hard worker. They’re like, oh my god, Ben came in Armageddon and the hurricane, it turns out I was just living there so I had nowhere else to go, but I got promoted and kind of moved up pretty quick after that, which was awesome.

Dave:
As far as I know, that is the first time hearing this on the show. I feel like that’s something you see on TV or in a movie where someone moves into the office to save money on rent, but you really did it. Say you gave up your apartment, you need to know how you pulled this off.

Ben:
I was in a lease so I couldn’t actually just pack up and leave, which it was my original desire to do, but because I was on the hook for that rent, I actually put it up on Craigslist and started renting it out. Furnace rental, stay as long as you want. I thought I needed to cast a wide net to get someone interested in the rent, but there was crazy demand actually for a furnace, flexible housing there

Dave:
I imagine.

Ben:
And so I kind of hung onto the job as long as I could at the sleep clinic, but that experiment kind of ballooned into an actual full-time massive business where we got venture capital investment for it and we were trying to pitch it as a tech company to get the better valuation, but what ended up happening was we were getting crazy pressure to grow super fast and so we were taking on lots and lots of inventory, but those of you that are in medium term rentals or any seasonal rentals, it’s very ebbs and flows in terms of demand. So we would grow crazy quick and then have these big troughs of vacancy, which ultimately killed the business. I actually left that business with over $120,000 worth of personally guaranteed debt that I put under that business and it was gone. So I was basically starting from nothing with, I mean less than nothing. I had 120 k of debt that I had to recover from.

Dave:
Oh wow. What a roller coaster. I mean what do you do at that point?

Ben:
Yeah, so I mean it was pretty devastating. Not only that, it was the debt, but also I had spent years of my life building this business and it basically imploded so needed to basically figure out how to survive and I didn’t want to leave New York, which was like my dream was always to live there in the first place. So I definitely didn’t want to leave the city, which I think a lot of people end up having to do.
And so what I do is I got a W2 job. I really had no other choice. I had to do it just to pay off this debt over time. And then I also got an apartment. I had this whole skill set of how to rent apartments. I knew how to work with landlords in the city from that experience. So I found a one bedroom apartment with my girlfriend at the time. We moved into a one bed and then we had the landlord reconfigure it to basically turn it into four. It was like, I’ll call them rooms, but I used

Dave:
Spaces in New York

Ben:
And then we rented, we had got three roommates, so it was my girlfriend and I and then three roommates and so we have five people in a one bed, one bath. But what was great about that and we did that for about a year and a half, what was great is it covered all of our housing expenses, so we literally weren’t having to pay to be there, we just had to coordinate roommates, which can kind of be a pain, but it was worth it. And then all my W2 income was basically going towards paying off debt and also a little bit towards retirement and stuff like that.

Dave:
I grew up in the New York City area. I understand what you’re talking about when you said a one bedroom just magically turns into four bedrooms, but maybe you could explain that to people who aren’t familiar with that

Ben:
Particular one. We had actually the super was also a contractor and he built temporary walls basically, so it felt nice. It was actually sound privacy and stuff a little small, but it was livable. And then there’s other situations where there’s one where I literally lived in a walk-in closet with my co-founder. This was prior to that, but when we were launching the first business, we lived in a duplex on fifth Avenue, which was amazing, beautiful be place, but we rented the rest of it out and then we stayed in the walk-in closet together. Unbelievable. I love it.

Dave:
Alright, so you sort of got back on your feet doing this strategy. It sounds like something you knew from the business you had started kind of replicating that for yourself personally. Did you then at any point scale to a traditional real estate portfolio or did you just keep doing this kind of hustle mentality going forward?

Ben:
Well, the goal all along was to basically do this just to get out of debt and basically graduate to the next level, which was going to be ownership. And so I saved up about a year and a half of saving and paying off debt aggressively to get to the down payment. One thing that’s really helpful, when you mentioned finding a job that you can live in, one version of that a lot of people have access to is a travel job. So if you’re in a job where you’re getting put up in hotels and they’re paying your expenses, which that was, I was able to not only get my rent cover, but also I was able to get food and I wasn’t spending a lot when I was on the road. So combination of that, I basically aggressively put close to everything towards saving for an apartment, got my first down payment, moved into a New York City, which is not easy to do, got rejected from a few because they had seen my history with all these apartments I had and the press from having this business.
They’re like, are you going to do this in this apartment? I was like, no, no, no. Which wasn’t trying to build a new tech business there and bringing strangers and all that. But what I did do is I found a one bedroom apartment in and I say one bed. It was basically a closet in Hell’s Kitchen. You probably know it in one of the grungier areas. In 2019, my girlfriend moved in, also my brother move in. So we have three people now, which felt like luxury. We had our own place. We’re spending probably $750 each to live there, which is super cheap for New York. That’s unheard of. The principal payment on every single mortgage was about the 700. So I was pretty much from a net wealth perspective breaking even though I was paying into it now, I was paying off that mortgage. I was at least neutral on

Dave:
Housing. Everyone, we’ve got to take a quick break, but we’ll have more with Ben right after this. So I found this thing called the Lennar Investor Marketplace, and honestly it’s kind of genius. It’s built by Lennar, one of the top home builders in the country, and it’s a new platform for investors who want turnkey new construction homes. These are professionally built reinspected and rent ready. From day one, you can browse properties across more than 90 markets. You can see verified rental comps, neighborhood data, and even handle financing, title and insurance all through Lennar’s in-house network. It’s everything you need to make data-driven investment decisions in one place. Go to biggerpockets.com/lennar and explore the homes available right now. Welcome back to the BiggerPockets podcast. Let’s jump back into my conversation with Ben Chester. I’m curious though, this is a common question that I get a lot and I think is pretty common in the real estate investing community, whether it’s New York or LA or San Francisco or any of these pretty expensive markets. Why did you choose to buy a home versus say, continuing to rent and investing in either midterm rental, short-term renters, whatever you want somewhere else if you wanted to get in real estate? What about this approach made sense to you?

Ben:
I had no idea. I just knew I just need to buy real estate and so first step was I got to live somewhere. If I can find a place I can hang onto. I also viewed as every month or every year landlords are raising rent. So there’s always this kind of unsettling feeling. If I want to stay in New York forever, there’s a chance I could get priced out. I won’t be able to afford here if I’m renting. But if you buy, you’re pretty much locked in. Of course co-op fees can go up, but it’s not like a landlord raising rent on you. So if I could just lock in a place and have a 30 year fixed rate and at this point it’s still below 3% too, I knew I’d be set basically where I could make sure at a minimum I’d be able to afford New York as long as I wanted to stay there.

Dave:
Oh, that’s great. Okay. I like that approach. And so it sounds like that worked for you.

Ben:
It was fantastic. Again, this is 2019, the first apartment basically locked in. I viewed it as I’m set, I’m going to be able to stay in New York no matter what and then COVID hits. Meanwhile, I’m still making W2 income. I’m still traveling all the time. I didn’t really care if my living conditions were terrible. I was like, as long as I have a place back in the city to stay in, it’s okay. But I started looking, it was like the world’s changing right now interest rates are still pretty low at this point. I actually started looking in Texas and I discovered that I would save on taxes if I moved to Texas during COVID. I also could find a lot of really great quadplexes and houses there that would basically cashflow if I bought the old fashioned house hack, you move into one unit, rent the other three out, you can basically cover all expenses. But then with the tax savings on my W2 income, I actually would come out ahead even if that property only broke even. So house hacked with a friend there for a short period of time during COVID. It was like a great experience.

Dave:
Did you know what you wanted to buy? Were you looking for a duplex or are you still just doing the roommate thing?

Ben:
I had no money still everything was still going towards, I had some of that debt left and also was still not making any cashflow. So all the income that’s coming in, I was saving it for a down payment and at that point I had only maybe 20, $30,000 saved up and my friend was in a similar boat, which is enough for a down payment. So we ended up using an FHA loan, which now you can do this with a conventional 5% down, which is amazing. But we use a 3.5 with a higher interest rate FHA loan in Dallas. And so we paid, it was like 30 to $40,000 total to get into this property cashflow from day one with the unit that we were living in. And it basically created this springboard where the tax savings, even though it was making a small amount of cashflow, it was just we were saving on taxes. And then on top of that, we were also basically able to start to build equity in there and get the tax benefits and everything over time.

Dave:
So what was the place? Tell us about

Ben:
It. So it was a quadplex still have it today. It was four units all next to each other, basically four townhouses in a sense, all combined under one roof. So it was super nice. It was an area in northwest Dallas that was appreciated a bit and then became a good source of income and also for tapping in for equity for some of the later purchases that they ended up making.

Dave:
And what happened after that? You left Texas or what was the next move?

Ben:
So now rates are starting to move back up at this point. So I had basically acquired a couple properties I had with this one in New York that had a rule where you could rent it out after a certain period of time. So I got it as a long-term rental and then I was going back to New York and looking for another place to live, and so acquired another co-op through a similar method. This time I was with my brother who was going to move to New York for residency and also another one who’s an architect, two of them. So we’re all going to basically live in a place that I could find together and kind of house hack, which we did. And now the snowballs are really starting to take off. And so every couple of years I’m getting a new apartment in New York and then I’m also starting to get enough cash where I can start thinking about down payments outside of the city for more conventional rentals. You’re pulling off something

Dave:
That’s pretty tough, which is by most people struggle to just pull off a single acquisition in New York, but you’re pulling off multiple. So when you move back from Texas, what is your financial situation? Are you making a lot of cashflow off the other two rentals? Is that helping you with the down payment or how did you actually finance this third purchase?

Ben:
Yeah, so the main thing I’m always looking for is just I want the property to break even because keep in mind, I’m planning to keep this W2 job, so I have enough money coming from that. If I can break even on the properties with conservative underwriting, I don’t want to expect me or kohl or anything, but as long as a conservative will break even with the tax benefits of appreciation, I’m happy. So at this point there’s not really much cashflow spinning off the properties. Everything’s breaking even and there’s enough for reserves, so lose a water heater or stuff. I could handle that without flinching, but I wasn’t living off of it at all. What was good though is I had this W2 job, so I was having enough where I was getting a little bit of savings starting to go. So there were some creative strategies I later used to tap into those retirement funds, but basically I was coming back to New York with enough to put down a down payment on another co-op essentially.

Dave:
Do you mind sharing us with us the price point of these new co-ops?

Ben:
Yeah, so at this point I’m still looking at it about entry level, so half a million dollar range, which is entry level for New York.

Dave:
Okay, that’s not as bad as I thought you were going to say. I mean that’s close to the median home price in the US right now. That’s not like crazy New York pricing where everything’s $2,000 a square foot.

Ben:
This is true. But keep in mind these are one bedroom apartments with something wrong with them at that point. So if they’re

Dave:
Right, you’re not getting the luxury apartment at 500 grand

Ben:
Like the toilets in the living room. Yeah, exactly. There’s something not quite right about the place.

Dave:
All right. So you’re back in New York, you had your stint in Dallas. Now three properties sounds like six units. Where do you go from there? Still buying more in New York City,

Ben:
Basically looking for anything. So again, I don’t really have a form strategy yet. I kind of dabbled in New York and the multifamily, so I was kind of looking everywhere to see what would stick. The problem was in New York City was getting harder and harder to find those units that would make sense. Not impossible still. And I actually did end up buying another one we could talk about later, but I was still just looking around New York at this point. One thing that happened too is I got my license as a realtor to try to basically stretch the money further. I was like, if I can get paid a commission at the same time of acquiring these, it kind of offsets the acquisition costs. It could be a good strategy. And I started to look around MLS and then also just on Zillow, everywhere around Manhattan, Manhattan wasn’t making a lot of sense. And also the cashflow, it’s not very interesting. Even if you could find something that makes sense, it’s still just breakeven. So I started to expand my search and one hour radius of the city and I found a lot of really interesting waterfront properties, particularly where they’d be same price point, half a million dollar houses needed work. So they’re not beautiful, ready to go houses, but they’re on amazing pieces of land.

Dave:
Are these far from the city or they vacation destinations? What kind of locations were you looking in?

Ben:
So I knew that the property themselves, as long as they’re close to the city, I felt like people would probably go as long as the house was a destination in and of itself. So to me, I was like my friends and the people I know, they probably would travel an hour to go to a lake house and it doesn’t necessarily matter where that lake house is, as long as it’s nice enough and it’s accessible, you’ll probably get eyeballs there. And it was kind of just a gut thing. There weren’t any comps at the time. There wasn’t really any sort of clear data that it was a good decision. I was just like, I think we can make this work.

Dave:
And your plan was to renovate them though it sounds like you hadn’t really done that yet at scale, you’ve done kind of putting up these walls, but now you’re talking about taking something that’s not very nice and turning it into a destination that’s like a pretty big

Ben:
Shift. It was massive. It was way more than I expected too. And at this point I started listening to BiggerPockets where it’s always about value add and people are dealing with contractors and stuff. So I’m like, okay, it seems doable, but oh my god, it’s way harder than you think. And also I had no idea how to price out properties either like renovations and rehabs, but I did know that this was a beautiful lot. I found this lake house that was on a double lot on a lake that was within an hour of the city and it’s just like, okay, it needs a new bathroom, probably needs some updates to general updates to the outside and some safety stuff, electrical way more than you would normally get for a normal house. But it was lendable. I could basically finance it and I was like, you know what? Worst case scenario, now I have enough W2 income coming in that even if it takes longer and it implodes, I can at least sustain the mortgage on this and have it. Worst case scenario, I could just rent it as a long-term rent.

Dave:
How about financing the furnishing? Because that, I joke about this on the show, but I think the worst underwriting mistake I’ve ever made in real estate is just totally missing how much it was going to cost to furnish

Ben:
Short-term

Dave:
Rental, especially if it’s a big one that you’re trying to make a destination, you got to spend money to make it cool. You can’t just throw Facebook marketplace stuff in there. How do you pay for that part of it?

Ben:
Yeah, so actually this is another creative financing that I found along the way almost by accident. I know you’ve mentioned before on previous shows, the 0% credit card hack with you can get a 0% intro a PR on a business credit card. Well, so I basically did that and I was thinking I got a 20 k limit on the card. So I was like, okay, that’s great. At that point, I had a new LLC for every single property that I had acquired. So I had a couple LLCs with cards that I never used 0% intro on, but they had credit lines. And a cool hack that you can use, at least with Amex and Chase is you can actually take credit lines from those other businesses and put them onto the 0% card and it’s free. They let you do this, you just call ’em up, it takes like six minutes. So I turbocharge that intro 0% card to basically fund the entire rehab. And so I didn’t pay any, I think between 12 and 18 months I didn’t pay anything at all in terms of interest and I just paid it off by the end.

Dave:
Alright, time for the disclaimer though. This is a great idea. If you can pay this off. Using this kind of loan can be a very effective strategy. I hear people do this most commonly in short-term rentals. I think this is kind of a common approach to doing this, getting the 0% interest. It’s a way to get pretty much free financing, but if you don’t have a plan for repaying that back and it’s got to be a good plan, this could be really dangerous. So it is one of those things where you kind of want to use these when you don’t really need it. If you are like, I’m banking everything on using this 0% interest rate credit card, I wouldn’t do that personally if I were you. Ben has a W2 job, he has other resources, he has other assets so that if something goes wrong, he can take care of that. We talk about this a lot on the show, there are different kinds of debts. There’s good debt, there’s bad debt. Credit card debt is bad debt. If you’re not paying it off, that is super expensive debt. It can really snowball into a trap. So you just want to be careful with that. But again, if you know what you’re doing and you do it carefully, it can be a good option for you. So how’d this one work out? Big shift in

Ben:
Strategy. So I bought the property for a little over 500 K, ended up expecting 30 K, 40 K total to put into it. That was a new bathroom, electrical updates that I didn’t even realize were that severe. That ended up being more complicated than I thought. And then I put in new HVAC system in it ended up costing more like 150 K for all the rehab plus the holding costs plus also the furnishings because I overbuilt it more than I needed to. And also I probably did more work than I really had to, but as a result it ended up being, and again, my goal was just to break even, but it ended up cash flowing a ton and it ended up being a really amazing entry point into the Airbnb market around New York City.

Dave:
How are you managing it? Did you do all this stuff yourself?

Ben:
Yeah, so I was doing it myself just by default. I was like maybe I’ll put a manager in eventually. And I started interviewing property management companies, but through BiggerPockets I actually stumbled upon this short-term rental loophole and I was like, you got to be kidding me. This can’t be real. This is unbelievable. And so I read the books on it. I went through three or four different accounting firms until I found one that was like, yeah, well let’s do this. And so basically, as long as you’re working a W2 job and you’re self-managing your Airbnb, you can take the losses including depreciation, including any bonus depreciation that you’re using, which could be substantial. Take all that and apply it as a loss against your W2 and come to effectively, you can get close to paying no taxes, which is insane. That’s when I was like, oh my God, this is the new strategy.
It makes sense. I’m going to keep my W2 job. I’m going to acquire as many Airbnbs as possible and just to make sure that I’m maxing out those losses every single year on paper so I can basically offset my taxes. Remember, I’d started out thinking, I want to control my housing costs. I thought that was the biggest expense that a person would have, but really the biggest expense no one thinks about is actually the tax side. I’m like, this is a game changer. Not only am I not really paying for housing, I could also completely undo my taxes or not have to pay them and offset them if I do this the right way.

Dave:
Stay with us as we take a quick break. We’ll have more with Ben right after this. Welcome back to the BiggerPockets podcast. Let’s get back into my conversation with investor Ben Chester. I think the sort of journey and evolution of philosophy and strategy about investing is common, that you don’t really start for the tax benefits, but eventually you get to a point where you realize that if you maximize your tax benefits, it can significantly increase your returns. I’m not talking about 1% or 2%. It can make five 10% difference in your rate of return each year, which is amazing. That’s better than buying bonds sometimes. That could be better than investing in the stock market just from the tax benefits that you get.

Ben:
It is insane. And I think about it, my job is commission based largely sub in a tech sales job where I can put more effort in and get more pay. And the amount of effort I put into getting more pay is way harder than just saving on the tax side. So you can end up going a lot further by saving on taxes and having to go get a second job or just work 40 more hours a week or something like that.

Dave:
Can you give us a number? How much do you think one of these saves you in taxes per year?

Ben:
So there’s a limit. If you’re single in taxes, you can do up to $305,000 of tax offset per year. That’s the limit that you can’t do anymore in that against your W2. I’ve maxed it out every year with a lot more carrying over.

Dave:
Yeah, just for everyone understanding what Ben’s saying is if your salary, I’m just going to make this up, Ben, is 250,000, but you had that $305,000 of losses, you can carry over $55,000 in losses into the next year.

Ben:
Exactly.

Dave:
Yeah, it’s pretty amazing. Yeah, it’s great.

Ben:
It’s insane. You can do that.

Dave:
Yeah. So you’re essentially offsetting all of your W2 income?

Ben:
Yeah, essentially,

Dave:
Just so everyone understands, to get a hundred grand in depreciation offset, what kind of property do you need to buy?

Ben:
So it’s actually not that crazy. A hundred grand in depreciation offset. Now again, there’s the tax deduction and there’s actual, with the tax savings you’re making, so you really need to figure out your effective tax rate. Most people are probably between 30, 40% if you’re in that range. And you can buy, let’s say a million dollar property with a cost segregation study. You got to separate land, you got to make sure it’s the right type of report that you build. So there’s a whole thing that goes on where you have to hire an engineer to do it and make sure you have the right type of separation of the asset to figure out what’s bonus depreciable. Generally, you can get at least 20, 30% of the purchase price back is a straight eligible for bonus depreciation. So if you just want a hundred K, you buy a 300 K property, you’re looking pretty good at getting a hundred K write off.

Dave:
And so that’s giving you a hundred K write off. And if your tax rate is let’s say 33%, you’re saving $33,000 in taxes by buying a property. I’m curious, what’s your read on short-term rentals as a strategy right now as we’re entering 2026?

Ben:
The problem with short-term rentals that you don’t get with the long-term stuff is it’s nice. You can still pair in long 30 year fixed rate debt, which is the only type of debt I use other than the intro to credit cards and stuff like that. But really the substantial mortgages, I’m only looking at 30 year fixed rate. I think it de-risks the long-term horizon. But the problem with short-term rentals is you’re also locked in not just to steady long-term rents, but you’re really relying a lot on the economy. People having disposable income to travel. The region can change a lot, lot more dynamically than 12 month leases tend to change. So one thing I look at, and this is partly why it makes a lot of sense around New York City, is I want an area that people will travel to my house, not to the area.
A good example is the most recent purchase I made was, this is unbelievable, back to maximizing purchase price and finding something that would make sense within an hour radius in Manhattan. On Zillow. I kid you not Billy Joel’s house was listed on Zillow and it was listed for $2 million. And I’m like, well, that’s a lot. I did the math. I’m like, that’s a lot of bonus depreciation and I could get a lot of write offs for that. So I underwrote it, looked at it and dug into the history. It turns out it was owned by JP Morgan. There’s this huge history around the house and super interesting, really unique thing on Hudson River, pretty close to Manhattan. And so I bought it.

Dave:
Wait, you bought Billy Joel’s house?

Ben:
I bought Billy Joel’s house. It’s literally up on Airbnb. That’s awesome.

Dave:
How did we not get to that scooter in this episode? That’s the coolest thing I’ve

Ben:
Heard. So this is what it culminated in, which is great. So I bought Billy Joel’s house, it’s like up on Airbnb again. I did a pretty big rehab project on it, but I was able to use, again, intro credit cards. So I used that to make sure I could front the rehab on it, bought it for 2 million, put about 300 K into it. That’s now worth about 2.6. This is only a year later. And with the tax savings that I got, it was close to a million dollars in tax savings that are going to

Dave:
Carry over for multiple years. Oh my God, that’s

Ben:
Unbelievable. That was from last year. That was still 60% of the bonus appreciation. So if it was even six months later, it would’ve a hundred percent have been even more. But

Dave:
Wow. That’s incredible. Ben, congratulations. You really figured out a very creative strategy. You’ve obviously gone and taken what you learned from your business, which isn’t exactly short-term rentals, but I’m sure you learned a lot about just maximizing space, extracting value out of properties and applied it to a really cool way of making money in an area of the country where people constantly say, you cannot be a real estate investor. And I just want to commend you for being so creative and obviously hustling very hard to figuring out the right way to do this.

Ben:
Thank you. I think each deal is kind of in a vacuum. It doesn’t matter where it necessarily is. If it can pencil out, it makes sense. And I think New York, you got to be a little bit creative. It’s not always one size fits all. It’s not going to be a print and repeat type of a place, but you can definitely find unique properties and unique deals. And even on the apartment side, there’s still tons of things you can find to limit down payments, to figure out how you can use leverage or work with the landlord seller financing. There’s things you can still do to make sure that you’re buying into the market you’re interested in.

Dave:
So before we get out of here, Ben, as we enter 2026, what does your portfolio look like today?

Ben:
So right now I have about eight properties. Most of those are in the state of New York, three Airbnbs including Billy Joel’s house, which is the big one. It’s

Dave:
Awesome.

Ben:
It’s the

Dave:
Coolest thing you could say. That’s such a good bragging point.

Ben:
Thank you. And I hung on to my W2 jobs, so still focus on that and kind of building that company at the same time. Also looking for more Airbnbs. So

Dave:
Awesome

Ben:
Strategy out into future years is to keep maximizing this loophole. It looks like it’s going to be around for a while longer, so I’ll keep exploiting it as long as I can and just keep building the empire.

Dave:
All right. Well, next time I’m in the northeast to visit friends and family, I want to stay at Billy Joel’s house.

Ben:
You’re welcome. Anytime it’s called Craig’s.

Dave:
Craig’s an estate. Thank you. Awesome. All right. Well Ben, thanks so much for being here. We appreciate it.

Ben:
Thanks so much for having me. It’s been a dream to be here.

Dave:
And thank you all so much for listening to this episode of the BiggerPockets podcast. I’m Dave Meyer. We’ll see you next time.

Ashley:
Tony, I love when we get to talk to rookies who have jumped into not just one, but multiple strategies early on because let’s be real, most of us start with one deal and slowly branch out,

Tony:
But today’s guest went from lending to flips to rentals, all while balancing a W2 and navigating some tough rookie lessons. And that’s what we’re diving into today. How to diversify as a rookie and what you learn when things don’t go according to.

Ashley:
Welcome to the Real Estate Rookie podcast. I’m Ashley Kehr.

Tony:
And I’m Tony j Robinson. And let’s give a big warm welcome to Shalom. Shalom. Thanks for joining us today, brother. Thank you so much for having me. I’m super excited to be here.

Ashley:
So Shalom, how did you get first started in real estate and what pulled you towards real estate investing in general?

Shalom:
Okay, that’s a loaded question. Let’s rewind back to COVID. I was in college. I went to brewery college, had no idea what I wanted to major in, but my friend did this internship in real estate. He’s like, Hey, if you want to learn more about it and maybe get paid while you’re sitting at home doing nothing, try it out. And so I applied. I got in and it was amazing. I learned so much about institutional real estate, what it means to underwrite a deal, look at gross rent, net rent, what does vacancy mean? What are building expenses? How do you value building with a cap rate? And OI, and I just loved that sphere. I felt that I’ve never actually applied myself in anything so hard as I did with real estate. And so I loved it so much. I changed my major to real estate finance and doubled down on learning as much as I can about real estate.
After that, I’ve interned at many different companies within real estate, private equity with Mac Real Estate group. I’ve worked at different public REITs doing retail work and underwriting deals, development deals, and then couldn’t find a job at real estate no matter how good my resume looked like. When I graduated school, I was looking for a job in New York, but I couldn’t find one real estate job in New York. That’s when my first real estate deal landed in my lap. The phone rang and it was a deal I couldn’t refuse. We jump into that in a minute, but that was my first private money lending opportunity.

Ashley:
So first of all, I want to get into how private money lending was actually your first insight into real estate investing, but I want to mention the fact that your major was real estate finance. I didn’t even know that was a major and I want to go take a community class now to learn about real estate finance, but I think that’s awesome, but that must have set you up for some kind of success. What did that major actually entail? Is that deal analysis? Is that how to structure the financing on a deal that set you up for becoming a lender?

Shalom:
So this major essentially is getting me ready to work at an investment, think like JP Morgan, Wells Fargo on their real estate underwriting teams or at a private equity firm where I am underwriting either value add deals or development deals or managing a large portfolio of thousands and thousands of units. So it’s a very high level and once you get into these fields and you intern in these places, you get very, you’re a professional in one certain aspect. You only do asset management.

Ashley:
It’s very niche.

Shalom:
Yeah, very niche, yeah. You’re only doing property management or you’re only underwriting construction costs or you’re only underwriting different value add deals, not development deals. So that’s what the major prepared you for. It taught you a lot about how Fannie and Freddie Mac work. What does the national mortgage market look like and different ways that institutional real estate moves. Whenever you want to finance a skyscraper in New York City, it’s very different than when you go in and get an FHA loan and putting down 3.5% your rate on a skyscraper is probably a floating rate. It’s probably tied into a bond that several pension funds and then life insurance companies are investors of versus when you’re putting down three and a half percent FHA property, it’s a lot simpler of a deal, but it’s also okay, this loan gets lateralized with a thousand other loans and then gets sold in a bond to bond investors.
So I learned kind of the theory of real estate, but never practicing the real estate. I also noticed that a lot of people who I network with back in the day that are working at these real estate companies have golden handcuffs where they don’t want to do a deal themselves because they always do an analysis paralysis, they analyze a deal to the very t and oftentimes you guys know this very well when you’re dealing with single family or 2, 3, 4 unit properties, it’s really, really tough to get every single expense underwritten to the cent value. So where your NOI is going to be. So that’s kind where I started with my college and then kind of grown into, made the transition into real estate investing myself.

Tony:
Sham. It’s interesting because you started at the most advanced version of real estate investing as it exists, which is the large institutional type investing, whereas most people solely kind of graduate up to that level. So I’m curious, was that experience, what led you to think of private lending as your first deal? Because a lot of new real estate investors, I don’t even think they understand or comprehend what it means to be a private lender, let alone have the confidence to make that their first deal. So how, if at all, did your experience working in private equity lead you into becoming a lender on your first deal?

Shalom:
So yes and no. It kind of gave me the idea of private lending because I saw private credit funds invest hundreds of millions of dollars into the residential space across the nation and I saw that that was an opportunity, but I didn’t think it was an opportunity for me. I don’t have a hundred million dollars. I don’t know about you, Ashley and Tony, but I don’t have a hundred million dollars just lying around the bank and I didn’t think it was an opportunity for me. Certain life circumstances came about where I couldn’t commit to a rental property and I was looking for an investment that was very similar to one with the return without the commitment to one. Because whenever you buy property, you have closing costs, you have transaction fees, you have to manage the property, you kind of getting married in this scenario and then if you want to exit out of it, it’s also a hassle you got to put on the market.
You got to wait to find a willing buyer. There’s going to be concessions and negotiations. It’s just too much if you have to get in and get out With private lending, it’s a very short term investment, but it has a very similar return as to rental property. If I compare my very first rental to my very first private money deal, I think the returns of the private money deal are actually more than my first rental. But I was looking for that where I can invest my money into four or five months. I may need that chunk of change in four or five months and then that’s where private lending came about. My first deal was, I dunno if you guys want to jump into that.

Ashley:
Yeah, yeah, please. I’m intrigued.

Shalom:
I dunno if you guys know this. She’s a BiggerPockets author, grace Guten. Yeah,

Ashley:
We know Grace.

Shalom:
And she called me up, she’s like, Shalom, I’m closing on a property in Tucson, Arizona. I need 300 grand tomorrow. You in or you out? I’m like, huh, I’m a 22-year-old kid, I don’t have 300 grand lying around. I’m like, okay, send me the details. I’ll take a look at it and give me a day to figure something out and I’ll get back to you. So send me the deal and the deal penciled really well. She was buying the property at 275,000. She was putting in 60 into it, and the a RB was in the mid four hundreds, like four 20 to four 30 around there. And the deal made sense. She had a clear exit strategy of how she was going to refinance out of the deal and she was offering me an 11% interest for six months, but there was an option to pay off earlier without a penalty.
And the deal really, really made sense. I would have a first lien position on the property, I wouldn’t be giving a hundred percent financing, she would put 10% down for the construction costs and I would only give her the other half the construction costs. And so it was like, well this deal really makes sense financially. Now let me see how I can figure out the money. And I was actually at BP Con listening to Matt Faircloth keynote and he was telling us how to raise private money in this challenging kind of market and I copied his method without knowing it was what he taught because after he mentioned it, I went and I researched how many people own their house outright. And over 40% of people in the USA today don’t have a loan on their primary residence according to us census. I mean that is an astonishing amount.
So if 40% of people are like that, Ashley, Tony, we all know somebody probably in our lives whether we know it now or not, but we probably know somebody in our lives who has a house that’s paid off that has equity there and might be willing to invest it. For example, a lot of people follow a Dave Ramsey method of paying off debt as soon as possible and then throwing everything at your house. That’s a great pool of people in our country who could have equity to invest with you. And so my parents fell into that category. They came to America in the early nineties and they worked their butts off in order to create financial freedom for themselves. They partially is paying off their mortgage. My dad paid off our 30 year mortgage in 15 years and we had a property that had equity in it. So I approached my mom and I’m like, mom, I don’t have the full 300,000, I have 50 of it. Do you want to come in as a private money lender and give me the other two 50? And she’s like, pitch me the deal. And so I had some good experience in private equity pitching deals to MDs and directors and associates and whatnot. And so I laid it out in front of her and she’s like, this sounds like a no brainer. Let’s pull the trigger. And that was our very first private lending opportunity.

Ashley:
I love this story. I have to go back to the beginning as how did you get connected with Grace where you were in a position that she gave you the phone call to say you in or you out? How does someone do that type of networking to get connected with investors who are looking for lending?

Shalom:
Yeah, social media is very, very big. I mean you guys know it best and something I’m working on right now in order to get out there and more and more on social media. But I felt Grace for a long time. I don’t know how I found her, but I was into real estate and she was posting a lot about real estate and I was stalking her page 24 7 looking at her lips and I already know how many units she owns and what she does in Cedar Rapids and different kind of flips she does and whatever. And one day she was like, Hey, I’m looking for partners on this deal. She was going to do a 20 unit in Cedar Rapids and I’m like, Hey, I don’t have the money, but maybe if the opportunity is good, I could find the money. So I was like, okay, let’s get on a call and just talk about it. So I built up a story and I never say no to an opportunity ended up she never did the deal. It wasn’t for my appetite, but we got in contact and that is what now. She was able to reach out to me if she needed something and so we kept in touch and when she needed money, she knew who to call.

Tony:
Shalom, I think it’s an interesting story and I love how it all came together, but I think maybe one more nuanced part of this that you partnered with family on this first deal as well and we’ve had a lot of conversations. Ash and I even wrote a book on real estate partnerships about partnering to buy real estate, but I don’t know if we’ve ever had a discussion on partnering to lend for someone else to buy real estate with that money. So how did you and your parents structure this partnership with them bringing two 50, you bringing the other 50? What did that structure look like?

Shalom:
We were on the mortgage and on the promissory note and we owned a portion of that note proportion to a portion of the money we had in the deal. So my parents owned what would that be, a six six of the deal and I owned one six of the deal and we were on the note together, which meant we kind of had risk together and there I wasn’t guaranteeing them some kind of return. I showed them the deal and I said, these are the risks that could happen. Worst comes to worst, we foreclose a property that’s worth more than we have into it because they’ll be doing construction and the ARV is there or we go and we finish the business plan and then sell the property, right? There is a few exit strategies here, but on that first one, it was a true partnership. It was like we eat together or we starve together, but in one way we’re getting in and out of it together.

Ashley:
Today’s show, it’s sponsored by Base Lane. They say Real estate investing is passive, but let’s get real chasing rents, drowning in receipts and getting buried in spreadsheets feels anything but passive. If you’re tired of losing valuable hours on financial busy work, I’ve found a solution that will transform your business. It’s Base Lane, a trusted BP Pro partner Base Lane is an all-in-one platform that can help you automate the day-to-day. It automates your rent collection and uses AI powered bookkeeping to auto tag transactions for instant cashflow visibility and reporting. Plus they have tons of other features like recurring payments, multi-user access and free wires to save you more time and money, spend less managing your money and more time growing your portfolio. Ready to automate the busy work and get back to investing. Base Lane is giving BiggerPockets listeners an exclusive $100 bonus when you sign up at base lane.com/biggerpockets. Okay, so I want to know how you’ve structured this deal with Grace as far as the private money lending. So we have a rookie listener that maybe wants to go out and do a private money lending as their first deal. How did you structure the actual payback of that loan? Was it monthly payments of principal and interest? What did this look like and would you do it again?

Shalom:
For sure. I mean the way we did the deal was it was my very first deal, so Grace dictated a lot of the terms and in hindsight, I could have charged more if I wanted to, but I didn’t know what the market was. So it was an 11% interest annualized and she would be making monthly interest only payments throughout the period until she refinanced the property and then pay me back the lump sum. I gave her the money for the purchase of the property and then initial $30,000 in construction costs and then she would bring in the other 30,000 in construction costs to get the project finished to where it has to be. She agreed to send me monthly emails or biweekly emails on updates that are happening. So I knew when the new roof came on, when the landscaping was done, when the bathroom the kitchens were in and what kind of trouble she was having. Additionally, I knew when she was starting to refinance, it was before all the construction was done and she kept me on updated along the way. This allowed me to know what our money’s coming back. So our deal was for six months, but she really paid me off in four, so I knew my money was coming back earlier and I could probably plan to do something with that money when it comes back, whether invest into that loan or buy a property or go buy a Lamborghini. I don’t know.

Ashley:
We don’t recommend that. But one follow up I have to that is was there any kind of extension, did you know what would happen if six months came and maybe she couldn’t refinance or if it was somebody doing a flip the house in itself? Was there any kind of contingency or anything put into your contract or your agreement? The promissory note that stated what would happen if the six months came due and she couldn’t pay?

Shalom:
This was two years ago, so I can’t tell you exactly. I’m pretty sure we had something in there. If we go past six months as a 1% extension fee or half percent extension fee, all these things are negotiable and for those out there that want to land private money, I really recommend it and I stand by it because I’m still doing it today. So kind of goes to question would I do it again? Absolutely, I still do it today and all these things negotiable. So the interest rate is negotiable. Your origination fee if you want to charge one is negotiable. Extension and prepayment penalties are negotiable. Everything that it is your deal, it’s your money, so you should be comfortable with the terms that you’re putting out there for borrowers to use and work with.

Tony:
Now shalom, this first private money lending deal sounds like it went pretty well, but have you ever had a situation where you lent money to someone and it didn’t go according to plan? I think the worst case scenario is is you’ve got to take a property back. But I guess did they all go smoothly or have you had any situations where maybe the operator didn’t execute the way that you would hope they would?

Shalom:
For sure. I mean this one went really well because of the quality of the borrower. I’d want to say Grace is amazing what she does. She has a lot of experience and there’s a lot on the line for her to lose. I don’t think she would just run away with my money if she had the opportunity, but there was one time when I got a little bit naive and kind of went on a deal and it did kind of go wrong. So someone came to me, they were an experienced investor as well, but their credit wasn’t as good. That’s where they couldn’t go to typical hard. My lender, they came to me, Hey Sloan, we want financing on these two properties that they’re buying in south New Jersey. It’s my backyard. So I kind of know it pretty well and I said, Hey listen, I’ll finance these properties for you.
Here are the points I want to charge. Here’s interest rate and here are my terms. They agreed to it. We signed off on it for the first three months. Everything was great. They were doing renovations, they were making payments and then payments just stopped. I called them up and I’m like, Hey, what’s going on? He’s like, I’m going through this happened and I’m a little bit of a softie, so I’m like, okay, I’ll give you a little bit of slack, won’t do anything. But two months went by, no payments, three months went by, no payments. I’m like, okay, now we have to act and do something. Me and him agreed that, Hey, you don’t want two foreclosures on your properties. It was two separate loans on two deals. I don’t want to pay 30, 40 grand to a lawyer to get these properties from you.
So if you want to just hand me back the properties and I canceled the mortgages, then we can kind of do a cash for keys. But there was no key. Just give me the properties and walk away and I’ll figure out what to do these properties afterwards. What saved me was I didn’t give him all the money. So I had some equity in these properties and they were in good rental markets, so I didn’t have enough equity to go on the foreclosure auction, sell them and walk away with either my principal or some profit, but they did, they were almost done. So I finished the construction, I put them up as rentals and now they’re my rental portfolio and they cashflow pretty well. The cashflowing thing, like 200, 300 bucks a unit and there was some other stuff in there with some stop work orders and construction delays, but that’s a story for a different day.

Ashley:
I think that’s a really interesting exit strategy. As a money lender, you usually think like, okay, I’m going to have to take back the property and then I’m going to have to sell it, put it up for auction, do whatever through the whole foreclosure process, but you actually finished the deals and rented them and you made it work for you. So I think anyone that’s maybe scared of that happening, here’s another aspect you could look at when you’re underwriting a deal to lend on is, okay, worst case scenario, could I use this as a rental too? And on the piece how you said you didn’t give them all the money. Were you doing draws with them for the rehab?

Shalom:
That’s right. Yeah. So for the rehab they would need a complete, we did it in separate phases. So I guess phase one was demo, phase two was flooring. Phase three was some plumbing and electrical kitchen. As these things were done, we would release the money for those things. So they would say, okay, materials cost me five grand, labor costs me three grand. Okay, so give us an invoice for that and we would see release $8,000 in a wire and we also to confirm these things were done. So whenever we have larger things that require permit, say electrical and plumbing, an inspector will come out there in order to view that these things are actually done and to code. And if it’s something cosmetic doesn’t really require a permit, a simple picture or a few detailed pictures, send them over to me and then, okay, I see there’s new vinyl there I I’ll release the draw.

Tony:
Shalom. Based on what you learned from this deal going sideways, what are you doing differently now as you are looking at borrowers and projects to lend for

Shalom:
Fair question. Yeah, I’m looking at the borrowers as a whole and the deal as a whole in order to say, okay, worse comes to worse, do I want to own this property or what’s my exit strategy out of it if I have to foreclose on it, right, there’s an option of selling it as a non-performing loan because there’s a lot of investors out there and they were a VP that buy these non-performing loans. That’s what they do. That’s their business model. Another thing is I could charge my default interest and take it to the sheriff’s auction and sell us a foreclosure or I could take it back, keep his rental. If I would foreclose on Grace’s property in Arizona, I probably would not have kept his rental on the other side of the country for me and to manage a rehab that far away, something I wasn’t comfortable with at the time, but a property in New Jersey where it’s maybe like a two hour drive from me, it’s easy.
I can go there with my brother, we can hang some drywall, we can do some paint, we can figure it out. It’s a lot easier for me to justify keeping that property as a rental. We pull credit for all of our borrowers now and we are more conservative with these deals, so we require borrowers to come with more equity as a down payment or bring us deals that are bought at a better basis. So if your A RV is, ideally we’re looking at 65% of loan to cost. So whether you buy it right or you’re really good with construction, you’re doing a lot of the work yourself and only buying materials, some kind of balance there in order to get some more equity out of the deal.

Ashley:
Now shalom, besides those two rentals that you got from somebody not paying you, do you have any other investment properties in your portfolio or is it purely the private money lending?

Shalom:
I do. I own three doors in New Jersey and I own six doors in Milwaukee. So we started buying, I want to say in two weeks we’ll be a year and in a year. Well, I accumulated nine doors total.

Ashley:
Congratulations.

Shalom:
Thank you. Thank you.

Ashley:
I guess we need to pivot there because we’ve touched a lot on the private money lending, but how did you end up in Milwaukee?

Shalom:
And so this kind of ties it all in together in November of 2020? Actually, no, a little before that. One of my long loyal clients who now became one of my friends, we were eating dinner together, we just closed the property and he’s like, Shalom, I’m going to stop doing business with you if you don’t own any rentals. I’m like, what? Are you crazy? He’s like, you got to diversify because as real estate investors, we have our, back then I was in my W2 job, so we have our W2 income, our active income. We also need diversify with rental income. I knew back then that I wouldn’t be financially free from just one or two duplexes, but it is diversifying my income. I’m getting money through appreciation. I’m getting some money through cashflow. I’m getting the money from my W2 and some loans. So if something were to unplug and my one source of income would just stop, I could still live from the other three or four sources of income I had.
And that kind of gave me an alarm like, Hey shalom, you need to buy a rental. Let’s start figuring out where and how. I live in New York City, so I’m not touching a duplex here for 1.1, $1.2 million. That just is not feasible for me. So New York City can’t do it. New Jersey doesn’t have the best landlord tenant laws, and that didn’t make me feel too comfortable. I mean, unless I was getting these properties, I kind of didn’t have a choice, but so I’m like, okay, for now, New Jersey is not going to work out. The prices are also higher there. The places where I was finding a lot of what I liked in a market was in the Midwest, think Kansas City, Chicago, Milwaukee, a lot of cities in Oklahoma and Texas. And so I did what I think on a few podcasts ago, Tony, you flew down somewhere to the Midwest to go look at a market.
So exactly what I did, I hopped on a plane, I went there, I got out of here like four o’clock in the morning. I flew to Milwaukee, I walked the area. I met with a couple agents, met with some property managers, and then I flew back the same day. I didn’t even book for a hotel. I came back at 11:00 PM but it really taught me a lot because now I knew more about Milwaukee, where the good areas, where are the bad areas and what I could do there. I looked at least 20 or 30 deals from different wholesalers and the MLS before one fell in my lap. I’m like, okay, this one makes sense. I’m buying it under market value. I have tenants who are paying market rent or slightly below market rent. There’s some value to add here. It’s nice three bed, one bath apartments.
Families live here and they lease for a long time. So I was really comfortable with it. After I bought the first one, I’m like, okay, this is not so hard. I thought it was going to be this big thing where you’re going to have people calling you 24 7 is like, someone broke my window, toilet is not flushing, or I’m getting this flooded or whatever, and I’m like, oh, this isn’t too bad. I could probably do another. And so my next deal I found was on the MLS and I used the DSCR and loan to buy that. So I put down 20% and it was great because my property manager who is managing my house, that first duplex said, Hey, one of my clients looking to sell, do you want to buy it? And I’m like, okay, let’s do it. He already knows the building, he already manages it. So it’s easy kind of transition. And yeah, those was my first two first two rental deals.

Tony:
Shalom, I think there’s something to be said about just hopping in a car or plane or whatever and just going to see and get a feel for it. Now obviously you can invest remotely and you’re proof of that. I’m proof of that. You can do it remotely. But the same reason I went to KC is because I just want to get a lay of the land and you can look at it on a map and I think get a decent sense of what the city looks like and how it feels. But when you’re actually there, you can really clearly identify like, okay, once I go through this underpass, the neighborhood changes a little bit. So on the map it all looks the same, but let me make sure that I’m north of this overpass. Let me make sure that I’m on the east side of the airport, not on the west side because it looks very different on both sides.
So for all of our Ricky’s that are listening, when I went to OKC, I did a very similar thing. I left super early on Monday morning, stayed Monday night and then left super late on Tuesday night. So I was only there for one night, but I got two full days, met with contractors, met with agents. I aimlessly drove around town. Literally I was just driving up and down random streets just to kind of see what the neighborhoods look like and it gave me so much more confidence to say, yeah, I actually am looking at the right place. So I love that approach. But as you went into this new market, shalom, what did your buy box look like? I think you mentioned a duplex. Are you focused on small multifamily and if so, why? How did you define what your buy box looked like?

Shalom:
Yeah, so right now I’m looking at one to four units and I’ll look at some small commercial, just putting my lender hat on as well. I know that small commercial is harder to finance, so it’s like I’m playing a seesaw there a little bit. I like the one to four unit space and I’m very particular about what I want to buy. For example, when I went there, I know that whenever you have a side yard or a really big front yard, people dumping garbage is a big problem. And if the city drives by and they see garbage in your front lawn, you’re getting a fine really quick. And those fines add up pretty fast too. So I said, okay, I want as minimal front yard as possible, maybe even no backyard. There’s street parking. So I don’t necessarily want a garage if I don’t have to have one.
And my first property meant all those boxes where I literally have zero front yard, zero backyard, there is no lawn to cut or barely any snow to shovel just that little bit of sidewalk in the very front in the house. And if I didn’t go there, I wouldn’t know that. I also figured out that I don’t want to be in these one or two zip codes. I found that out very quickly because I personally didn’t feel safe walking on the street in those zip codes. But on the outskirts of those zip codes, beyond where the houses are really nice and trading for 300 grand versus where the houses are trading for 60 grand, there is that little sliver in between where appreciation is maybe coming in the future, you can still get cashflow, still get quality properties for a good price. And it’s the best of both worlds in a way.

Tony:
Now we have to take a short break, but when we come back, we’re going to dive into some advice that Shalom has for other rookie investors looking to get started. And we’ll hear that right after a word from today’s show sponsors. Alright guys, welcome back. Now, Shalom, I want to get into some rapid fire questions that I have for you, but before we do that, I know you mentioned that you’ve almost raised a fund now for your private lending, and I think it is obviously a slightly more advanced strategy, but I do think that there are lessons to be learned in how you put this together. So what does it mean that you have a fund now for your lending? Who are the people that are inside of it and how do you structure it so that the people who are giving you the money, they get paid that you’re able to generate some revenue? What’s the structure of this fund look like?

Shalom:
Yeah, so with our fund, we have a preferred return for our investors beyond preferred return. The interest rate gets split between the general partner. I mean there’s no deal there. So being the general partner of the fund and the limited partner of the fund, then origination fees have their split. Any profits on selling any loans, they have their split. And right now all of our investors are friends and family. All my family came from the Soviet Union in the early nineties and they figured out a way to become successful and financial free, but they stopped working tomorrow. They don’t have any security. They’re all maybe doctors, nurses, lawyers, architects, but they don’t have anything else besides their job. So I feel like it was my job to go ahead and figure out, okay, how can we still keep our wealth? But if we don’t work tomorrow or someone gets sick or something happens, we still can eat the fruits of our labor. And so real estate is an easy answer for me there, but also diversifying into stocks and all that kind of stuff. But you have to say more about the fund. So that’s kind of how the fund works. You have a minimal return that we’re aiming to give investors, plus the rest is split between the GP and the LP in certain ratios based on what that activity is.

Tony:
Yeah, I love that concept, man, because as we talk to more and more people who are in the private lending space, it really does feel to me that it is maybe one of the best vehicles for passivity, but also outsized returns. So it just really got my head spinning on like, man, I feel like I should almost start a debt fund because worst case scenario, I can use that debt fund to fund my own deals. If there’s no pipeline, I can just fund my own deals with the money that I’m raising and the system that feeds itself. So let’s get into the rapid fire question. Shalom first one is, what’s the biggest lesson that you took away from your rookie deal?

Shalom:
Low leverage is really, really good on that first rookie deal, I bought it all cash. I mean, I was getting private money from my family, so the same money that paid off Grace, that’s what we used to buy that duplex, but I didn’t have a bank weighing over me. So my agreement with my mom was, once we refinanced this property, I’ll give you your money back plus the interest. And I didn’t have a bank weighing over me. So when three months in, one of the tenants didn’t pay rent and I had to do an eviction, I wasn’t sweating and be like, okay, how am I going to pay this lender back? And so a lot of people these days, they want to do a hundred percent financing deals, whether it’s a fix and flip or a rental, and I’m like, that sounds really scary for me.
I want to put down 20 or 30%. And my goal for my portfolio is to have about a 60% loan to value across all my properties. I mean, some will have higher loan to value, some will have less because of where they are in the payback period and how we bought the deal and all that kind of stuff. But my goal is I think 60% is a sweet spot. And when you compare this to what institutional prayers are doing, they’re not financing their deals at 90 or 85% loan to value. They’re pretty conservative on development deals and on value add deals, they’re closer to 50 or 60% loan to value. So if the guys who are doing hundreds of millions of dollars are borrowing less, I think I should follow in their footsteps because they know a thing or two. Right.

Ashley:
What’s one piece of advice you’d give a rookie that wants to get started as a private money lender?

Shalom:
I’d say do your research about the borrower and the deal. Make sure it’s something that worst case scenario, if you had to own your comfortable with it and if the deal went wrong, then you have a clear exit strategy. A good way to do that is educate yourself, learn what are non-performing loans, how does the foreclosure process looks like? What does a default interest rate and when can you charge it? In addition, I would have a lawyer do your loan docs because they put a lot of that stuff in that you wouldn’t think of. I would never think of, okay, Ashley, New York is a really bad foreclosure state, so if I’m doing a private money loan to you, I also want to have the right to your LLC. So if I have to foreclose on you, I could probably get rights to your LLC and reassign your LLC to myself pretty quickly and take control property that way versus taking you to the foreclosure court and doing it that way. So a lawyer would know that, but a typical person doing their first loan wouldn’t. So shell up to two grand and get a lawyer to do your loan docs

Tony:
Shalon. Last question. When evaluating a borrower or a deal as the lender, what is the most important thing to focus on?

Shalom:
That’s a tough one. I mean, we look at a lot of things. Look at experience, we look at credit, we look at the way that you communicate with me. If you send me stuff and you’re all over the place and all messed up when you send me docs, I can only imagine how you are on a construction site dealing with contractors and subs and paying invoice and all that kind of stuff. So if you communicate to me in email like, Hey, Shalom, here’s the docs you requested. Here’s LLC information, my credit information and the deal review and the appraisal and all that kind of stuff, all in one email by folders in Google Drive. I’m like, whoa, that’s pretty cool. They’re organized, they’re great. They communicate really well. When there’s a problem or something comes up in my review and I have a question about it and you’re kind of evasive about it, it makes me like, what are they hiding? So be honest and be organized because that’s a big thing that I can’t measure with a credit score or with your experience, but it does hint to me what kind of borrower you’ll be like for a second, third deal as we do it.

Ashley:
Well, shalom, thank you so much for joining us today. We really appreciate having you on the podcast, sharing your journey, sharing your experience. I think this might be the first time we’ve had a rookie on that was a private money lender for their first deal right out of the gate. So where can people reach out to you and find out more information?

Shalom:
Yeah, this is awesome. You can find me Instagram at Envy Investment GP. You can also find my website, envy investment grp.com, and if you want to call me or text me, feel free to do that. My number is 9 7 3 7 3 7 9 9 0 5.

Ashley:
I am Ashley. He’s Tony. And thank you guys so much for joining us for this episode of Real Estate Rookie, and we’ll see you on the next one.

The saying “what doesn’t kill you makes you stronger” applies doubly in real estate. Investors have proved themselves to be a hardy lot, not knuckling under against the headwinds of high interest rates, insurance costs, and house prices, forgoing short-term profits for long-term success, according to a new study.

The Q3 2025 Investor Sentiment Index released by RCN Capital and CJ Patrick Co reveals that most real estate investors retain a healthy dose of optimism about the future. Almost 50% believe that the housing sector will improve over the next six months.

“Market conditions for real estate investors continue to prove challenging, with stubbornly high financing rates, rising labor and materials costs, and soaring insurance premiums taking a toll on investor profit margins,” Jeffrey Tesch, CEO of RCN Capital, said in an RCN Capital press release.

That said, Rick Sharga, CEO of CJ Patrick Co., distilled the resilience of smaller investors—who comprise 90% of the residential investment market: “Compressed margins can be the difference between a comfortable lifestyle and financial distress.”

Pivoting From Flips to Ownership

To survive, the modern-day investor has pivoted from flipping to ownership, according to the study. While flipping homes makes for glamorous TV shows, rising costs have been a reality check for many investors who have chosen to ride the wave of unpredictability by holding on to their assets. 

The Investor Sentiment Index found that 44% of respondents now identify primarily as rental investors, a marked increase from previous years, followed by flippers at 38% and wholesalers at 17%. Over half of the surveyed investors reported shifting their main investment approach, preferring stable cash flow from assets that they could deploy later.

Higher Costs and Regulation

Rising costs have been identified as the main concern for investors, according to the study. Home prices continued to rise in 2025, reaching new heights and slowing home sales, making refinancing difficult for investors trapped in higher-interest loans and flippers hoping to find homebuyers who remained out of the market. 

Short-Term Rental Restrictions

Compounding the complexity of rising costs have been increased regulations by cities on short-term rentals, which have stripped landlords of an alternative outlet to conventional long-term rentals. It’s proven to be a contentious issue because landlords rely on the extra income to survive. At the same time, opponents of STRs claim they are depleting local housing stock. 

New Orleans recently overturned a decision that outlawed “whole house” vacation rentals by absentee homeowners. “The neighborhoods are split on this,” New Orleans city council member Freddie King said at a hearing where a law was passed allowing only one house per block to rent to short-term guests, a decision made by a lottery. 

“You might put me in a lotto and, just like that, I could lose my retirement income,” one woman told the city Council, adding that her financial survival depended on renting part of her house to vacation guests, which is more lucrative than having long-term tenants. “If I have to go back to long-term rental, I will have to sell my house.”

Insurance Costs

Rising insurance costs have been one of the biggest issues for landlords, particularly in rural areas and lower-income, vulnerable communities. “If it spreads further, it could threaten to end affordable housing development as we know it,” Frank Woodruff, the executive director of the Community Opportunity Alliance, a trade group representing nonprofit housing developers, told the New York Times.

Embracing Technology and Sustainability

With cash flow squeezed, using all available tools to eke out fine margins of profitability has been an essential feature of the modern-day small real estate investor. Increasingly, that means leveraging artificial intelligence (AI)-powered tools to help landlords and property managers streamline operations and identify opportunities more quickly. 

A survey by management platform Baselane found that half of property management professionals either currently use AI tools or plan to by the end of 2025, with rent collection being a particular area of interest. Here, AI can help to streamline payments, improve cash flow reliability, and lower the costs of doing business.

Showdigs.com reports that large management software companies like Yardi Resident Screening and TransUnion’s ResidentID use AI to screen tenants.

In addition, larger apartment buildings have increasingly been embracing green technology upgrades and eco certifications to appeal to prospective tenants. An Emerging Trends report by commercial brokerage JLL found that cost pressures, along with concerns about reliance on fossil fuels amid tariffs, were prompting landlords to push for more sustainable energy sources.

According to Showdigs, smart energy management systems can achieve 10% to 30% savings in energy costs, but require a significant upfront outlay in older buildings. 

Belt-Tightening Strategies for Smaller Investors in Turbulent Times

Run numbers conservatively

• Leave the fantastical repair and cash flow predictions for the wholesalers trying to sell you the deal. Run your numbers conservatively with worst-case scenarios in mind.
• Buffer in higher insurance costs. Old-school insurance numbers are old news. Get quotes before buying a deal to make sure your numbers still work—especially if you’re in a high-risk area. If the numbers don’t work, consider buying elsewhere.

Prioritize tenant retention and operational efficiency

• Strategize to maintain the tenants you have with longer leases, incentives for renewal, and staying in regular communication.
• Streamline maintenance routines and use tech tools like rent automation, mobile maintenance requests, and tenant portals. Continually examine expenses, and look for ways to improve them.
• Analyze your local market for rent growth, job creation, and property supply pipelines, and adjust accordingly. 
• Setting investment criteria such as net operating income (NOI), cash-on-cash return, capital expenditure reserves, cap rate targets, and expense buffers will help you continually adjust your numbers to meet your goals. Don’t go into this blind.

Consider green tech to lower costs

• For some reason, eco-friendly or green tech is often seen as “too trendy” for small investors to consider. However, simple adjustments such as solar-powered irrigation and lighting systems, energy-efficient HVAC systems, smart locks, mobile payment systems, and even artificial turf can help reduce expenses.

Final Thoughts

Being disciplined, data-driven, and adaptable are the keys to surviving in any business right now, and real estate is no exception. The great thing about real estate is that demand never wanes. If there is an attractive product, there will be someone interested in renting it. Making all the numbers work is where these components come into play. 

There is no one-size-fits-all solution for investors, as each has their own unique set of circumstances: a family member offering a low-interest loan with flexible terms, an institutional lender with defined criteria, or self-managing rather than outsourcing. If you can strategize how to survive the tough times, the good times will follow.

Is every asset class in a bubble? 

Whether you think so or not, the fears are all too plausible. Despite the longest government shutdown in history, reheating inflation, continuing tariff fears, a weakening labor market, and fraying geopolitical ties, the S&P 500 just recently notched a record high and remains close to it as I write this. The index has soared 19.6% over the last year. 

Big tech and artificial intelligence (AI) stocks look particularly bubblicious. Nvidia’s stock has skyrocketed 416% over the last two years, and the industry keeps announcing circular deals among the same few companies. 

Then there’s gold, up over 102% over the last two years, more than doubling its prior record. And that’s supposed to be the safe-haven asset. 

Even single-family home prices (averaging around $364K) continue hovering near record highs (~$366K) from earlier in the year. That comes in the face of a supply surge, longer days on market, and weakening income growth compared to inflation. 

As for cryptocurrencies, which run on pure speculation, the word “bubble” is never far from investors’ lips. 

Yet I can think of at least one asset class that isn’t in a bubble: multifamily real estate.

Multifamily’s Bubble Already Burst

There was a bubble in multifamily real estate in 2020-2022—and it burst. 

Over the two years from the second quarter of 2022 to the second quarter of 2024, the Fed’s Multi-Family Real Estate Apartment Price Index fell 25.2%. That’s not a correction; it’s a crash. No, worse than a crash: a bear market. 

When single-family home prices fell a similar amount in the Great Recession, people panicked. But the multifamily collapse barely made the news outside financial circles, because so few Americans own an interest in multifamily properties. 

Prices reached a bottom in the second quarter of 2024, and over the next year rose 5.5% (the most recent data available). Freddie Mac’s Apartment Investment Market Index shows 7.6% growth over the last year. 

(embed graph from: https://mf.freddiemac.com/aimi) 

Look at multifamily prices (the blue line) versus net operating incomes (the orange line), leading up to the Financial Crisis. They diverge far apart, then converge closer together after the correction. That’s the same pattern that is playing out right now. 

Multifamily prices and NOI haven’t been this close together since 2012, creating a bargain for investors. “We’re seeing a healthier equilibrium between income and valuations,” real estate investor Austin Glanzer of 717HomeBuyers told BiggerPockets. “For long-term investors, this looks like a rare asset where you’re buying after the bubble, not before it.”

Opportunities for Distressed Sales

Far too many operators overpaid in the bubble of 2020-2022, and bought with floating interest bridge loans. Those loans have been coming due, or driving cash flows underwater, and it’s forcing many operators to sell at a steep loss. 

As a real estate investor, you know the best bargains come from distressed sales. I don’t need to belabor the point. 

I will say that I have seen this firsthand in our co-investing club. We’ve invested in multifamily properties over the last six months, when the operator bought the property at a huge discount because it was in foreclosure. 

Why Multifamily Is Poised for a Rebound

Multifamily real estate has had a rough few years, while stocks, gold, crypto, and single-family homes kept soaring. 

That’s precisely why multifamily is poised for recovery. Developers have pulled back on building permits in multifamily. Redfin reports a 23% drop since the pandemic peak in apartment building permits over the last year. With less new supply hitting the market, rents will likely resume their upward march after stalling in much of the country over the last year. Concessions will likely ease, and NOIs will rise. 

People need a place to live, after all. And reduced new supply will help drive values higher. 

Options for Investing in Multifamily

You could buy an apartment complex by yourself, of course. But most of us don’t have $10 million just sitting around collecting dust. 

Alternatively, you can buy shares in REITs. On the plus side, you can buy shares with small amounts, and they’re liquid. But the problem with REITs is that they share too close a correlation with the stock market at large, which defeats the purpose of diversifying into real estate. 

You could also invest in multifamily real estate syndications, which come with their own pros and cons. The greatest downside: They come with a huge minimum investment ($50,000 to $100,000). 

If you invest by yourself, that is. Personally, I invest as a member of a co-investing club, where we meet on Zoom every month to vet a new passive real estate investment. We can each go in with $5,000 or more if we like that particular investment. Best of all, we get the benefit of each other’s expertise in vetting the risk together. 

Lastly, you can invest in private equity real estate funds. Most don’t allow non-accredited investors, however. 

Where Is Multifamily Headed?

The multifamily market is finally stabilizing after sharp swings during and after the pandemic. 

In the pandemic, eviction moratoriums effectively froze rents at artificially low levels. When moratoriums lifted, the rubber band released, and rents shot upward. They rose too far, too fast in many markets, even as construction of new apartment buildings flooded those same markets with supply. 

In the last 18 months, rents cooled and even dropped in many markets—a rare occurrence. Rents are now entering their winter rest period, poised for stronger growth in 2026. “Rent growth is normalizing after a post-pandemic whipsaw, expense pressures have begun to stabilize, and construction starts have slowed to pre-pandemic levels,” real estate investor Oren Sofrin of Eagle Cash Buyers told BiggerPockets. 

Personally, I don’t time the market. I practice dollar-cost averaging with my real estate investments: investing $5,000 a month, every month, through the co-investing club. 

But when people ask my opinion on the multifamily market right now, I actually think it’s one of the few asset classes that looks like a bargain. Sofrin agrees: “From a risk-adjusted standpoint, multifamily may be one of the few corners of real estate where future appreciation potential exceeds embedded downside risk.”

This article is presented by RentRedi.

When I first started managing my rental properties, maintenance requests would throw off my entire week. A tenant would call, text, or email about something being broken, and I would drop everything and scramble to find the right vendor, follow up for updates, and track receipts for bookkeeping.

This scramble was not sustainable, and I realized I needed a better system if I was going to continue self-managing my rental properties.

Creating a standard operating procedure (SOP) for handling maintenance requests is one of the easiest ways to streamline your property management and take the guesswork out of emergencies. An SOP is simply a step-by-step document that outlines how a specific process should be done. The SOP is a repeatable checklist that anyone on your team (or even a virtual assistant) can follow to keep things running smoothly—and keep you out of the scramble mindset.

Without a clear maintenance SOP, small issues can spiral into big problems. Requests can get lost in your inbox, vendors might forget to send invoices, and repairs could drag on longer than they should. 

This can be a problem, not only for you and your schedule, but for your tenants as well. Tenants might feel like they are being ignored due to maintenance delays. This could lead to more complaints and potentially higher turnover. 

For you and your finances, a lack of SOP can create problems. It becomes harder to track expenses, forecast budgets, or prove repair history for insurance or tax purposes without clear documentation in place. The result is a lot of unnecessary stress and inefficiency that could be avoided with a simple, repeatable process.

Why You Need an SOP for Maintenance

1. Consistency

When every request follows the same process, nothing slips through the cracks. You’ll know exactly where things stand with each repair, whether it’s a leaky faucet or a broken furnace.

2. Time savings

An SOP eliminates repetitive decision-making. You won’t waste time figuring out what to do next, because you’ve already mapped out your process for any request. This becomes especially valuable when you start adding more units or hiring help.

3. Better tenant experience

Tenants notice when you respond quickly and keep them updated. A clear maintenance system makes you look professional, builds trust, and encourages lease renewals.

The Step-by-Step Maintenance SOP 

RentRedi makes the tenant maintenance request process easy because everything can be handled directly inside the app, from the moment a tenant reports an issue to closing it out after repairs. Use this as a template or guideline to create your own SOP for your rental properties. 

1. Request submission by tenant

Everything starts when your tenant submits a maintenance request through the RentRedi app.

Tenant actions:

1. Opens the RentRedi app and selects Maintenance Request
2. Uploads photos or videos of the issue
3. Describes the problem (location, details, urgency)
4. Submits the request

Automatic system actions:

1. The request appears in your Maintenance Dashboard in RentRedi.
2. You receive an instant notification via email or app push.

This system eliminates the back-and-forth communication that often happens over text or email, and keeps everything documented in one place. 

2. Review and initial triage

As soon as the request comes in, review it carefully to decide how urgent it is and what kind of repair it needs. Having the tenant send photos and provide more detail as an option in their portal gives you so much more to work with in order to diagnose the issue and know who to call. 

My maintenance person always wants to know what tools and materials he needs to bring. Having all this information helps cut down the back-and-forth questions.

Steps:

1. Navigate to Maintenance > New Requests and open the submission.
2. Review the tenant’s notes and attachments.
3. Assign a priority level:
   • Emergency: Leak, no heat, broken exterior door lock (immediate response)
   • High: Affects habitability, but not an emergency (within 24 hours)
   • Routine: Minor issues (within three to five business days)
4. Add internal notes (for example, “Tenant reports leak near water heater. Photo shows minor drip.”)

Documenting maintenance requests the right way ensures that emergencies are handled fast, while less urgent tasks don’t get lost in the shuffle. 

3. Assigning a vendor or maintenance tech

Once you’ve reviewed the request, it’s time to send it to the right person. RentRedi gives you options for either assigning your own vendor or using their integrated 24/7 service.

Steps:

1. Click Assign Vendor, and select from your saved vendor list.
2. Additionally, you can leverage RentRedi’s full-service maintenance program to source vendors and repairs.
3. Add access details (for example, “Enter via garage code” or “Tenant home after 5 p.m.”).
4. Confirm the vendor receives the request and any attachments.
5. Message the tenant using the Maintenance Chat to acknowledge receipt and share the next steps, e.g., “Thanks for reporting this, Sarah. We’ve reviewed your request and have a vendor scheduled for tomorrow afternoon.”

4. Track progress

Now that the request is assigned, your job is to make sure it stays on track.

Steps:

1. Vendors can mark jobs as In Progress, Awaiting Parts, or Completed.
2. From the Maintenance Dashboard, filter by In Progress to view all open jobs.
3. Follow up if there’s no update after 48 hours for high-priority issues.
4. Use in-app chat to send progress updates to the tenant.

This keeps everyone informed and avoids unnecessary phone calls.

5. Completion and verification

When the work is finished, verify that the problem is actually resolved before closing it out.

Steps:

1. Vendor marks the request as Completed.
2. Vendor uploads before and after photos, and any invoices or receipts.
3. Review the images and confirm completion.
4. Update notes (for example, “Leak repaired by ABC Plumbing, replaced valve on 10/21/25.”)
5. Tenant receives a notification to confirm satisfaction or reopen the request if needed.

6. Recordkeeping and expense management

Good recordkeeping protects you during tax season and helps you track property performance. Keeping clean, accurate records of your maintenance expenses is just as important as getting the work done. Without organized bookkeeping, you can easily lose track of repair costs, overpay vendors, or miss valuable tax deductions. 

Proper tracking helps you see patterns, like which properties are costing the most to maintain or which systems need replacement soon, and it gives you a clear picture of your portfolio’s performance. It can also protect you during tax season or audits, since you’ll have documentation for every expense tied to a specific property.

Steps:

1. Attach invoices or receipts directly to the request.
2. Assign an expense category (for example, Plumbing, HVAC, Electrical).
3. Verify the cost appears in Properties > Expenses.
4. Export data for your accounting software.

Keeping these expenses organized in RentRedi saves hours of bookkeeping work later. 

7. Close and archive

Once everything checks out, close the request and move it into your completed file. 

Steps:

1. Mark the request Closed.
2. Move it to Completed Requests for historical tracking.
3. Review any maintenance analytics to get average response times, recurring issues, and cost trends.

This data helps you catch repeat problems before they turn into major repairs.

8. Follow-up and prevention

Finally, use what you’ve learned from past requests to plan preventative maintenance.

Steps:

1. Schedule annual or seasonal inspections.
2. Add recurring reminders in RentRedi’s calendar tool.
3. Keep your preferred vendor list updated for quick assignments.

Final Thoughts

Preventative work is almost always cheaper than emergency repairs, and having it built into your SOP ensures it never gets overlooked. A $75 HVAC filter change can prevent a $5,000 system replacement. Regular gutter cleanings can stop roof leaks and foundation issues before they start.

Beyond saving money, proactive upkeep protects your property value and keeps tenants happier, because problems are solved before they even notice them. When you build preventative tasks into your SOP, you protect your investment and create a smoother, more predictable operation.

If you’ve ever felt overwhelmed managing maintenance across multiple units, this process changes everything. Building an SOP forces you to think through every step once, so you don’t have to reinvent the wheel every time something breaks.

Whether you’re managing one property or 50, RentRedi’s maintenance tools give you the structure to respond faster, stay organized, and keep your tenants happy.

Ashley:
What if your very first offer gets rejected, not because of price, but because you insulted the seller.

Tony:
Today we’re breaking down three questions every Ricky investor needs to hear from partnerships to low ball offers, to avoiding classic beginner mistakes.

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

Tony:
And I’m Tony j Robinson. And with that, let’s get into today’s first question. Okay, so our first question today comes from Jackie in the BiggerPockets forms. Jackie says, I’m new to real estate investing. I currently have one long-term rental and I’ve been wanting to get into short-term rentals. I have a friend who is looking to move from her rental home to her first home to purchase and I wondered if we could buy a small multifamily home with her living in one unit and then short-term rent. The other units we have just started talking about this and she’s very interested in doing it so far. Also, we both have W twos, so we could split the workload and both potentially benefit from the tax advantages and income. We would have a lot to talk about and a lot to learn and research to do before embarking on this.
But I’m looking forward to the process. My question is, if we buy this together, how should it be structured? I’m presuming the partnership should be in some form of LLC since she would be living in one unit. Could we get a mortgage for a primary residence with the structure? Could we both qualify as materially participating? As long as we both put in the hours? Alright, so a lot of questions here, right? So there’s questions on how should it be structured, what are the limitations if the friend is living in this as a primary residence and then material participation. So I guess let’s talk about the structure first. And actually maybe you can start right, because you and your sister did something similar where it was her primary residence, but you guys both bought the deal together. How did you structure that with hey, primary residence plus joint real estate venture?

Ashley:
Yeah, and there actually is a very big difference between buying with a friend and buying with a family member. So especially if it’s going to be the primary residence. And the way this worked for me and my sister is, and I think it’s along the lines of how Jackie wants us to work with her friend, is that we bought the property together, it would be my sister’s primary residence and then rent out the other unit. My sister was going to live there, so she went and got an FHA mortgage on the property. It was only her going to be on the mortgage because she was the only person that was going to be living there. Me and her both went on the deed. My contribution was the down payment and my sister would be living there paying the additional amount in the mortgage. The benefit to her was she didn’t have a down payment.
The benefit to me was I was getting into a house for three and a half percent down and I didn’t have to come up with 20% down to actually buy this house and I was getting 50% equity. The difference here is if your friend is using an FHA loan is that they have to show where the funds came from for the down payment and I was able to gift my sister the down payment money. So I had to write a letter saying that at no time my sister has to pay me back that $14,000, which is true, she doesn’t have to. And so I was able to gift her that money and then she was able to go ahead and get the loan with gifting funds. It has to be a close family member. I can’t remember specifically, but like a sibling, a parent, like maybe an aunt and uncle or grandparent.
I can’t remember the rules exactly, but you couldn’t get the money gifted to you from a friend. So that’s where I think the complication would come into play as to when she went to get this loan for her primary residence, they would look at where all the funds coming from and so would your friend be okay with providing all of the capital for this deal? And then still putting your name on the deed of the property too and giving you equity in it. I think that’s one hurdle you would have to overcome is that it’s not like you both can bring 50 50 of the capital that you need to purchase the property because as their primary residence, they’re going to want to see where that money is coming from to purchase the property. If that’s it. I guess I just want to clarify that FHA loan, because I don’t know, is it conventional loan too that you would have to

Tony:
Make a great point Ash about it. Be an FHA and I’ve never done FHA before, but I believe, and obviously guys go talk to a lender, go talk to multiple lenders. Actually, I think that’s the advice here. First is Jackie, you and your friend should go shop around and talk to multiple lenders, explain what it is you’re trying to accomplish. You guys want to buy a small multifamily, let her live in one unit. You guys both kind of contribute financially towards the purchase, but is her primary residence and let them guide you on what the best loan product is because maybe it’s not an FHA loan for the reasons that Ashley mentioned, but I believe, and again, connect with your lender. I believe if the money has been in your account long enough, if it’s seasoned long enough, then they’re not as concerned about where the money came from.
Now I could be wrong, definitely go double check this, but I feel like when we were buying our primary residence, I feel like I remember hearing that at one point, but say you give her your a 50% today and you guys say, Hey, our budget is $50,000, so you give her 20 5K, it sits in her account and say it’s been a year. I think if the money’s been in there that long, I’m not sure if they’re going back to checks here. I think there’s a seasoning period like hey, if it’s been in there long enough that we’re not as concerned, but go talk to lenders. So I think that would be the first piece of advice is go shop it around,

Ashley:
Wire me 20 5K and in a year I’ll buy us out.

Tony:
We’ll be able to get an answer to that question.

Ashley:
I’m already seeing red flags of this because you’ll need to have something very concrete in writing besides just giving your friend money and say, let’s wait a year or two. Yeah, that side of things too.

Tony:
Totally agree with that as well. Right, and I think that gets into the structure, how you guys put this together. What is the agreement state? So usually if you’re going to buy a primary residence, it’s not going to be able to be purchased an LLC or an LLC is a business entity for business use and your primary residence is exactly that. It’s personal use. So again, lender can check me here if I’m wrong, but I doubt you would be able to buy a primary residence under any circumstances and have it deeded to an LLC.

Ashley:
Just on that, no. Real quick is what you could do is just buy it in the LLC and still live in the unit. You would just have to get LLC financing, which is usually on the commercial side of financing and you’re not getting the lower interest rate. Usually not the 30 year fixed unless you are doing A-D-S-E-R loan. But A-D-S-E-R loan usually requires it to be investment property only and you actually cannot live in the property where there is some kind of commercial lending or conventional loans where you could buy it in your LLC and live in the property technically if you wanted to, but you’re not going to get as good financing at all.

Tony:
So we’re seeing a lot of then that’s for this, right? But I think it’s because there is a lot of nuance to this question, but I think again, going back to the structure of the partnership, I would still make sure that even if it’s not necessarily owned in an LLC that you guys still have some sort of contractual agreement between the two of you about what this partnership looks like and 50 50, obviously that’s the easiest thing to do, but think about all of the other responsibilities to go into this. She’s going to be living there. Is she also going to be the property manager? If so, does 50 50 still make sense, right? Is one person bringing all of the capital, right? Are you bringing all the capital and she’s just getting the debt in her name? Maybe there’s a different structure that makes sense. So just look at what everyone’s bringing to the table and think about everything from the acquisition to the closing process to the management. Think about all those different pieces and divvy up who’s doing what, and then make sure that your partnership aligns with those responsibilities.

Ashley:
And I think too, one thing that me and my sister didn’t talk about is what happens when my sister moves out of the property? So when you rent the property out, is it then the cashflow is split 50 50? Is your friend that lived in the unit, is she getting all of that cashflow because she took care of the property and lived there and it’s her primary? So I think thinking down the road too as to what happens when she moves out of the property, what if your friend has trashed the place and it needs this big costly turnover before you can even rent it out? Is that the responsibility of both of you to bring capital to make those repairs and things like that? So I think thinking down the road too as to how to structure it, but you can go to biggerpockets.com/lender finder to get yourself connected with a lender, especially an investor friendly lender, even though those would be a primary residence, since it would be an investment for you, you can find a lender that would be able to tell you different loan options that are available in that market for you.
Okay, we’re going to take a quick break, but coming up, what happens when you submit a low ball offer, which I’ve done plenty of times, let’s just say not everyone takes it well. We’ll break it down right after this quick word from our show sponsor. Okay, welcome back. Our next question comes from Henry in the BP forums. I wonder if this question is from Henry Washington, one of our favorite BiggerPockets host here. So I am a real estate investor and a licensed realtor. I don’t know if Henry is a licensed realtor, so it might be a different Henry. I have clients who are interested in making lowball offers on various listings. They aim to have the seller cover the buyer’s agent commission as part of their strategy, their approach resemble, their approach resembles the bur method. For example, we have a three bedroom, two bathroom home and fair condition requiring less than 20 K in cosmetic repairs that has been on the market for over one year.
The price reduction has been minimal and the current listing price is 300 K. My clients want to submit an offer of 230 K. This is the Texas market. As a sellers or buyer’s agent, how would you respond to this situation? Okay, so this is coming from the real estate agent who has clients that want to actually submit this low ball offer. So to recap, it needs 20 K in repairs. The price is currently at 300 K. There have been a couple of reduction to get to that 300 k and they want to spend an offer of 230 K and it’s been on the market for over one year. I 100% low ball, low ball, low ball offer. If I had a property sitting on the market for a year and I’m getting close to that point, it’s under contract, not quite a year yet, we haven’t closed yet.
I would take a significant reduction to get rid of it. And of course it really depends on the seller’s motivation. The first thing that I do when I am looking at a property that’s been sitting is I use prop stream and I’ll go into stream and I will look at on most properties that have financing, they’ll tell you when a loan was taken out of on the property and then they’ll also tell you an estimated balance due. So I think this estimated balance is determined by if they made every single payment on time after 10 years, this is what it would be based on the mortgage they originally took out. And then it’ll show if there’s any other HELOCs or anything like that on the property. And I love to look at this to see if maybe there is the opportunity to get a price reduction because say on this three K property, I see they only owe $50,000 on the property, but if I go in and I see it’s estimated they owe 290,000, like okay, there’s probably way less chance of them taking a low ball offer.
But also I try to look at too if there’s an opportunity for seller financing if they don’t owe on the property or they owe very, very little where I could cover that with the down payment to pay off the property. So an additional option is doing the seller financing where maybe you can get closer to the price they actually want by offering seller financing. The last thing here is I’ll point out is that I don’t think that you should be afraid of submitting low ball offers. I think that is one of the biggest complaints from investors is that they don’t want an agent who won’t submit the low ball offers that they want an agent who is going to be okay with doing that because it’s uncomfortable in the first place. But I think that you should go ahead and submit the low ball offer.
First of all, I think this is a perfect example of when you should submit a low ball offer when it’s been sitting on the market for over a year to see what you can get. But yeah, I think as an agent, if you want to work with investors, you have to get comfortable with submitting these low ball offers and what’s the worst that will happen? They will say no. And my agent always does this, does a verbal offer first so you’re not wasting time drawing up a contract. Things like that, especially what are the chances that it’s been sitting on the market for a year and all of a sudden two investors submit their offers at the same time and now it’s a rush to see who gets in and gets the better offer. Most likely not happen. You can take your time, you can do a verbal offer and if they say yes, actually we would do that, then you can go ahead and submit the full offer, the full contract.

Tony:
And Asha, I think context matters here as well. If we were having this discussion when interest rates were 2.5%, then yeah, low ball offers aren’t going to get you anywhere in most markets, right? Because there’s just too much buyer interest. They have their pick of the litter for what offer they want to accept today. Very few buyers. And I think the competition isn’t nearly close to what it was two or three years ago when rates were a lot lower. So I think we have shifted toward a buyer’s market where buyers have more leverage in negotiations today than the sellers do because the sellers just simply don’t have as many people submitting offers. And what that means is that you don’t have to come 10 K over asking with no contingencies and giving up your firstborn child to get a deal accepted. Now you can say like, Hey, there actually are some issues with this house and I don’t think your price is a reasonable or fair expectation or representation of the value of this property and here’s my offer that’s significantly below you’re asking for. So I think the context of where we are at in the real estate cycle is an important thing to consider as well,

Ashley:
You know what? That actually gave me a really great prank to do on my kids this next house that I’m trying to buy. If I get it under contract, they’re going to be excited about it. I’m going to tell them I’m going to read them rumple still skin and I’m going to say, but I had to give one of you up and this is what’s going to happen. You’re going to go live with Rumpel still skin

Tony:
And that’s like the PTS that makes your kids hate real estate investing. Like my mom, mom stole me away for a good deal

Ashley:
If you guys haven’t seen it. Or a real recently came out of me at BP Con, I guess by the time to say is not so recent, but Turbo Tenant interviewed me at BP Con and they were asking me different questions and then one was, who was your favorite child? And they wanted me to tee it up as turbo tenant and then it pans to my kids that were there just shaking their head at me. That Turbo tenant was my favorite and not them. So they’re used to it by now.

Tony:
I think the last thing I’d add to you is just there are ways to maybe make your offer more competitive aside from just pricing. I think first, feel free to justify your offer. If they’re asking significantly more than where that deal makes sense, then walk them through your math. Say you’re asking for 500 K, but this kitchen and bathroom hasn’t been renovated since the eighties. There’s mold, the roof needs to be repaired and the house next door that was fully renovated sold for four 80. So there’s a disconnect here, Mr. And Mrs. Seller, here’s the scope of work that I need to do to be able to bring this house up to 2025 standards. Here’s what it’s going to cost me to do that. And yeah, I’m an investor, so I’d like to make some level of profit. So here’s the justification behind my figures.
And then there are ways you can kind of sweeten the offer. Maybe you close faster, tell them they don’t have to worry, but you’re not going to ask for any repairs during the closing process. There’s no contingencies around financing, whatever it may be. But those are the ways that you can justify your low ball offer to make you feel even more confident as you go to submit it. Alright, Hey guys, we’re going to take a quick break before our last question, but while we’re gone, be sure to subscribe to the Real Estate Rookie YouTube channel and you guys can find us at realestate Rookie and we’ll be back with more right after this. Alright, let’s jump back into our final question. This one comes from Grant. Grant says, I’ve heard people saying that they’ve got their first seven properties in like 11 months, some even crazier.
I currently have five properties, but I’ve used all of my money to purchase these properties at 25% down and now I’m renting them out. I would like to have 30 rentals. I have the deals, I just don’t have the capital to move on all of them at once. I know there’s private money lending that can fund some of these new construction deals, but I don’t want to sell them for a profit either. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage over that long period of time? What do you guys think I can do to get to three properties per month? So first Grant, congratulations to you said you’ve got properties, you’re better than 99% of the people living in the United States right now. But I think let’s break down some of what you’re talking about. First, you’ve got this goal of 30 rentals and I think my first question to you is why? What is it about 30 that makes you believe that’s the right number for you? Is it because 30 gets you to a certain amount of cashflow? Is it because 30 gets you to a certain amount of equity? Is it just 30? Sounded like a nice neat round number? Are you like Ashley, where you want to get 30 before 30? What? I

Ashley:
Was waiting for you to say that.

Tony:
So what is it, right? What’s driving that? Because, and Ash and I, we’ve talked about this a lot as we’ve grown both of our portfolios, but scaling for the sake of scaling isn’t always the right option. And sometimes 10 rental properties, they’re just like punch above their weight class could be better than 30 mediocre properties. So I think the first question is why is it that 30 is the right number for you and do you actually need to get to 30 or is there some other number lower than 30 where if you could just produce more cashflow, you could still achieve the same goal? The second thing that I’d say is I think you’ve hit the nail on the head when it comes to private money, but you don’t necessarily need the private money for long-term debt. It sounds like you are looking to do maybe new construction or some combination of new construction in burrs.
And that is actually a great scenario for using private money. So the way that it would work is, say you’ve got a deal you’re trying to go take down and between your land acquisition and your construction, it’s going to cost you 300 K, but those will appraise for 400 when they’re done. You could go out, raise a 300 k fund, all of your land acquisition and your construction, say it takes you 12 months to do that. At the end of the 12 months, you now have a property that’s worth 400 K that costs you 300 to build. You go out, you refinance that, you get, call it, I don’t know, 80% of the appraised value, 80% of $400,000 is $320,000, right? So you have three 20, you only owe 300, you can pay them off with their interest and now you own this property free and clear or not free and clear, but without any cash out of pocket.
So that is a very repeatable process to build your portfolio using other people’s capital and then still paying them back every six to 12 to 18 months. So they’re getting their principle and their interest back. So if you have the ability to raise private capital and you’ve got the skillset to do new construction or burrs, that is probably the approach that I would take. It sounds like you’ve got the deals, you’ve got the capital, you just got to marry those two things together and structure it in a way that allows you to pay them back quickly.

Ashley:
Yeah, I think the thing that would stand out to me the most when you first read this question was I was thinking about paying off the properties or paying down the properties. I’d be interested to see how the numbers would compare as to taking that cashflow and taking your savings or whatever you build up over time to invest into another deal is if you were to pay off one of those properties, how would that change your cashflow compared to investing into a new deal like three years ago when you were getting low interest rates? I definitely wouldn’t have recommended this. So I guess it depends too as to what the interest rate is on your properties that if you’re two 3%, then it doesn’t make sense to pay off the property. But that’d be my only recommendation is to looking in that in addition to what Tony mentioned too. Well, thank you guys so much for joining us today. For this rookie reply. I’m Ashley. He’s Tony, and we’ll see you guys on the next episode.