In This Article

Landlords have more than just rents, mortgage payments, and operating costs to worry about. According to a new Redfin survey, 49% of U.S. residents are struggling to pay their rent or mortgage, and the cost of living is to blame. 

Central to the issue is the soaring cost of food. A shocking 15% of people surveyed said that they had skipped meals entirely to afford housing.

Madison, Wisconsin-based home care worker Bryan Williams, who is living paycheck to paycheck on $17.65 an hour, told The Guardian:

“I know things are worse because I’m living it and I feel it every day. It’s very hard trying to pay rent, pay your bills, buy food, gas, and juggle which ones you can pay [and] which ones you can let go. [I] ask myself which one should I get, when I know I need both, or worrying will I have enough money to get back and forth to work until another payday? Or will I have enough money to pay my light bill?”

Food Prices Have Increased 35% in Five Years

According to Redfin, tenants need to earn $76,020 annually to afford the median rent in America, which is still less than the $111,252 they need to earn to purchase the median-priced house. As of mid-February, the median household income is $86,000.

However, Redfin’s numbers do not factor in the cost of groceries, which have been soaring amid tariffs, higher fuel prices, machinery costs, labor increases, and higher food production costs.  

A report by Nerdwallet states that prices are up by almost 35% since 2019. Meanwhile, the New York Times reports that the Bureau of Labor Statistics found the cost of food at home rose 2.4% overall in the previous 12 months, as of January. Food prices were up 2.9% in January compared to the year before and are predicted to increase 3.1% over the next year, The Guardian reports, citing USDA data. The food insecurity rate spiked to 16% in November, up from 12.7% in January 2025.

“Over the past year, material costs have been driven up by tariffs, and labor costs have been driven up by the deportation of workers—especially for the low-wage work done by recent immigrants,” William Masters, food economist and professor at Tufts University in Massachusetts, told USA Today. “Since wages for most Americans have not gone up as much as prices, purchasing power has declined.”

According to the Associated Press-NORC Center for Public Affairs Research, as cited by Moneywise, only 14% of Americans say grocery prices are not a financial concern. The numbers are even greater for Gen Z and those earning below the national median salary. For landlords, this financial strain means tenants have very little wiggle room when rent and food costs coincide.  

A Crunch for Landlords and Tenants

For landlords, the pressure to increase rents is driven by rising insurance, tax, and material costs and by the inability to refinance amid stubborn interest rates. For tenants, higher utility bills, gas, clothing, and, of course, food costs mean they are being forced to take on side hustles, sell extra belongings, or move back in with their parents, particularly Gen Z tenants.

It means that an extra layer of due diligence should now be applied for landlords looking to invest, forgoing aggressive rent hikes to maintain steady revenue and lease renewals.

Accessibility to Lower-Cost Supermarkets Matter

Landlords also need to factor in the proximity to nearby supermarkets when deciding where to invest. According to the 2026 RE/MAX survey, among 1,000 prospective homebuyers between the ages of 18-65 who plan to purchase a home in the next 18 months, 57% said proximity to shopping was an important consideration. It’s logical to assume that renters felt the same.

It also follows that retailers with the lowest prices are a big incentive. A Consumer Reports study that factored in grocery prices nationwide found that Costco ranked the cheapest nationwide, over 20% lower than the Walmart baseline, while Whole Foods was almost 40% more expensive than Walmart.

A State-by-State Breakdown

According to a recent WalletHub survey, residents in poorer states such as Mississippi, West Virginia, and Arkansas spend the largest share of their income on groceries, about 2.6% of their monthly income, even though food prices in those states are not the highest in the country. 

WalletHub analyst Chip Lupo explained:

“While grocery prices have gone up tremendously in recent years, the states in which people spend the greatest percentage of their income on groceries actually aren’t those with the highest prices. Instead, the median incomes in these states are quite low, so even with reasonable grocery prices, residents end up shelling out a higher percentage of their earnings than people in states with more expensive products.”

As food is a nonnegotiable item, tenants immediately notice a difference in their grocery bills. However, for landlords looking to rent to tenants that remain relatively unimpacted by food prices, they will need to invest in states where house prices are generally high, and cash flow is far from guaranteed.

States where groceries take the largest share of the median income each month are:

• Mississippi: 2.6%
• West Virginia: 2.54%
• Arkansas: 2.44%
• Louisiana: 2.38%
• Kentucky: 2.37%
• Alabama: 2.33%
• New Mexico: 2.3%
• Oklahoma: 2.22%
• South Carolina: 2.21%
• Tennessee: 2.19%

Conversely, the states that are the least impacted by grocery prices are:

• California: 1.66%
• Washington: 1.66%
• Virginia: 1.63%
• Colorado: 1.61%
• Connecticut: 1.61%
• Utah: 1.58%
• New Hampshire: 1.56%
• Maryland: 1.55%
• New Jersey: 1.51%
• Massachusetts: 1.51%

Final Thoughts

Your tenants’ ability to afford groceries can severely impact their ability to make timely rent payments. Starving kids come before angry landlords. 

This is where meticulous tenant screening comes in handy. Higher-earning tenants with less debt and higher credit scores are usually top of the list when it comes to apartment leasing. You may now also want to consider adding those with SNAP and WIC benefits to your tenant profile.

Additionally, landlords might want to consider incentives for tenants who make on-time payments or welcome gifts that help reduce food costs. It can be as simple as a gift certificate to a local restaurant or a one-year Costco membership, although rules apply.

Most forums agree that it’s best to avoid incentives that might muddle your lease or set a bad precedent. However, a Costco gift membership, which a tenant would not consider on their own due to the cost, could wind up saving them money in the long run and help guarantee your rent payment arrives on time.

Ashley Kehr:
Most buyers walk through a house thinking about paint colors and kitchen counters. Ellie Ridge grew up scaling rooftops and crawling through half framed walls with her contractor family.

Tony Robinson:
And today as a top 1% realtor, she’s going to show you exactly what to look for before you ever even sign on the dotted line so you don’t inherit someone else’s six figure nightmare.

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

Tony Robinson:
And I’m Tony J. Robinson. And with that, let’s give a big warm welcome to Ellie. Ellie, thanks so much for joining us on the Riki Podcast today.

Ellie Rigde:
Thanks for having me.

Ashley Kehr:
Now, Ellie, you’ve said you were literally scaling rooftops and walking through half framed homes as a kid. What did that childhood do to you to see a house when you walked through the front door?

Ellie Rigde:
Yeah, my dad’s a contractor, and so that is just about visiting my dad at work. In particular, he’s a roof framer, so I have a special interest in roofs and how they’re framed and framing generally. But it is helpful to walk through a house and know what is behind the walls and what’s underneath the floors because that is where expensive problems often lie. And the piece of homeownership that I think feels very intimidating to new home buyers.

Tony Robinson:
I think the intimidating piece is so correct, right? Because for a lot of first-time investors, maybe the only home they’ve ever purchased is their primary residence. And that’s a very different decision than buying an investment property. And I think there’s Ellie, like a massive gap between what a buyer sees as they walk through a property and what’s actually happening inside the home’s bones. Where does that gap maybe cost buyers the most money, not being able to actually know what to look for?

Ellie Rigde:
Like what system in particular or?

Tony Robinson:
Just generally speaking, where have you seen people get into trouble by not looking at a property with the right lens as they’re doing their walkthroughs?

Ellie Rigde:
Well, where I work, we don’t have any new construction. So all of our homes are about a hundred years old in the Bay Area of California. So it can be catastrophic if people aren’t looking into the systems beyond a remodeled kitchen or a nice backyard. Replacing a foundation or rewiring a home is very expensive. So not budgeting properly for not just what your home will cost, but what it will actually cost to take care of and maintain and live there as a responsible homeowner for very different numbers. So a lot of what I do with clients when we’re initially looking at homes and doing our due diligence is start budgeting for what the next five years will look like after they’ve purchased the home itself.

Tony Robinson:
Let me just ask, because there’s cosmetic renovations and then there’s more structural renovations. What are the things that maybe can lull someone into the trap of thinking that a home’s been renovated properly when in reality it’s maybe just like lipstick on a pig?

Ellie Rigde:
If it looks really beautiful that we’ve all had that emotional experience of walking into a home that has been beautifully renovated and remodeled and people fight the urge to say, “This house has good bones.” And what they’re referring to is that it looks really pretty, I guess. But I mean, it’s not that that’s not important. Redoing a kitchen is very expensive and invasive in your life, and it’s wonderful if it’s already been done for you, but that doesn’t go hand in hand with systems having been updated, obviously.

Ashley Kehr:
For a couple properties that I’ve bought, they were rentals that were sold as completed and renovated. And a lot of the things that you can look at is just look closely like trim pieces not matching up just different things that don’t make sense into the property when you really look closely. So if you’re already seeing that the cosmetic wasn’t done correctly, then there’s even more of a chance you should be digging deeper. But when you’re purchasing the property, you should, at least in New York, you’re getting a disclosure of when everything was last updated on the property, any problems the owner is aware of. And you can look on that sheet too to see when was the electric last updated, when was the HVAC last updated, when was the roof last replaced? And that can kind of help you gauge like, okay, they did this full remodel, but yet it’s saying that the hot water heater is 20 years old, the furnace is old and the electric hasn’t been updated since it was built in 1960.
So I think using the information in front of you and also going and having eyes on the property or somebody that can and kind of using those two things together will really help.

Ellie Rigde:
Yeah. We get reports here too.

Ashley Kehr:
In what state are you in?

Ellie Rigde:
I work in California, particularly in the Bay Area.

Ashley Kehr:
Okay. Okay. And Tony, in California and in Tennessee where you’ve invested too, they all provide disclosures too.

Tony Robinson:
Yeah. Yeah, to a certain extent. But even on those disclosures sometimes, you can just say like, I don’t know or unknown.

Ashley Kehr:
That’s what I put when I fill them out. Or NA or I don’t know. Yeah. Okay. So the next thing I want to talk about is besides walking through the home and looking at the property is you’ve actually built a 255,000 following by teaching people about houses on Instagram. What was the moment you realized that most buyers aren’t knowledgeable about what to look for when they’re making the biggest purchase of their lives almost completely blind?

Ellie Rigde:
Yeah. I started making that page when I was a really, really new agent before I was even licensed. I work with my mom. And so before I had my license, I started going out on broker’s tour with her, which is the day that agents tore all the new property the day after they go live. It’s Thursdays in this area. And I was walking around seeing all these amazing houses and I don’t know if you guys have this experience. Are you guys realtors?

Tony Robinson:
No, neither one of us. No.

Ashley Kehr:
We have no desire for paperwork. We’re too lazy.

Ellie Rigde:
When I first was licensed as a realtor, every house was so amazing and mind blowing to me. And I was in the nicest houses I had ever been in. So I was like, oh my God, it’s so intense. It was so amazing, crazy. And so I started making these little videos genuinely tripping out about the houses I was seeing and how cool they were and all the weird stuff I was seeing. And then that evolved because I think people are interested in weird stuff about houses. And so I sort of backed into it. I made those videos from a place of being excited and curious myself. And then I started noticing like, oh, this could be a really real way that I’m like practice a little bit differently and really help people feel more confident like buying a house because I have a little bit of a unique knowledge set.
And my mom works the same way. We’re both very looking in crawl spaces, looking in attics, talking about systems. And I don’t know other agents that work quite the way that we do.

Ashley Kehr:
So now we know what Ellie is looking at before she walks in the door, but once she’s inside, it’s a different game entirely. After the break, she’s going to walk us room by room through the things that can quietly cost you tens of thousands of dollars and that your standard inspection might completely miss those. We’ll be right back. All right, Ellie, we’re going inside the house now. Let’s do it room by room, system by system. Take us through the things that buyers routinely miss that end up being the most expensive. So let’s start at the foundation and kind of work our way up. What are the things that you’re physically looking at in a crawlspace or a basement and what does it mean if you find those things?

Ellie Rigde:
Yeah, so there’s a lot to talk about before we even go inside the house. So I’ll meet my clients outside and we’ll walk the perimeter. There’s a lot of things that I want to point out depending on the style of the home and the construction methodology of that style and that era. So typically what I’ll look at first is the roof line, and that will tell us a lot about the risk for moisture damage to the framing, depending on if there’s overhangs or if it’s a flat roof or a low slope roof. And then I might talk about what gutters there are, like if they’re integrated gutters or if they’re just standard gutters that hang on the fascia of a roof and that just is a vulnerability or not. So we might talk about that. And then I’ll find the hat, which is the little door that looks underneath the house.
And in this area, we have raised perimeter foundations, not slabs typically and not like post and pier, which maybe you see a lot of in Texas. So we can open a little door and look underneath to like a three foot tall crawlspace. And that shows us the foundation and the condition of the soil and the condition of what’s called the cripple wall, which is the short framed wall between the top of the foundation and the underside of the floor framing of a home. That shows us a lot of things because concrete is very expensive. And so the condition of the foundation is my first concern usually. Also because I live and work in earthquake territory and we’re overdue for a major earthquake along our local fault line called the Hayward Fall. So this is what I always warn my clients up is that it’s very likely that in the time that they own whatever home they’re buying with me, there will be a catastrophic earthquake, not to be a downer, but it’s coming.
And so these homes when they were built originally had very minimal, if any, seismic reinforcement, meaning a house being bolted down to its foundation or being rigidified laterally. I mean, I could go and I don’t know how interesting this is for this podcast, but I could go into a lot of detail about the kind of stress of home experiences in seismic activity. But needless to say, the house doesn’t need to be bolted down and that little framed wall needs to be braced. So I’m looking for evidence of that. Usually it’s not there. And if it’s not, we’ll talk about what that might cost. And the fact that that needs to happen right away before people are sleeping in the home or having their kids sleep in the home and so on. A lot of houses in this area are split level homes. You walk up some stairs to go in and then walk up a half story to go up to a bedroom that’s over a garage.
That’s called a soft story condition and it’s its own kind of seismic retrofit. So we’ll talk about costs there. So these are just common things I observe outside.

Tony Robinson:
Elliot, I just want to pause you there because you just listed off a bunch of things that I never would’ve even thought to ask. How do you start building this knowledge base? Did you get some sort of certification? Is it just you walk so many houses and talk to so many contractors? How does one actually start building the level of knowledge that you’ve accumulated from the work that you do?

Ellie Rigde:
Yeah. Everything I’m talking about is called out in home inspections for the most part in maybe less language with just fewer words and less detail. So if an agent is a student of home inspections, which they should be, a lot of this, you’ll see time and again, and then you’ll start to be able to observe and point out yourself. In particular, my dad, like I said, is a contractor and he himself is a licensed home inspector and just kind of like a building nerd. And so that’s what my dad and I talk about when we hang out. That’s our quality time. I’ll go on inspections with him or visit him at the job site. It’s like something we have in common. So it’s very bonding for us, but it’s also good for work.
And so I have this great resource in my dad, but none of this information is difficult to access if you’re a realtor who is curious and interested. In this area, we have home inspections as part of our disclosures. You guys were talking about seller disclosures. We have cellar disclosures, but it’s also standard of care to provide a home inspection. They’re varying levels of quality. Some home inspections, I could write a better report, frankly. I can call things out that aren’t there and some are really, really great and they’re like the home inspectors that I really trust and admire and have learned from. So anyway, long-winded way to answer your question that read home inspections.

Tony Robinson:
So that’s the basement or the crawlspace area. Let’s maybe go to the electrical panel next.This is one of the things that a lot of buyers almost never look at. What should they be looking for and what are the red flags that could affect maybe insurance or even worse safety?

Ellie Rigde:
Yeah. So starting on the outside of the box, if it’s rusty, that’s already a red flag. You don’t want water dripping down onto your panel, as you can imagine. People should be really careful opening electrical panels because inside the door, there’s what’s called a dead front cover that’s blocking the live drop from the city or county. And if it’s missing and something touches it, you will die. I mean, it will be a really horrible electric shock. So I open them all the time, but just be very careful as you’re opening them. But once you open up inside, you should see a bunch of breakers. Those are the little switches and the amperage is listed on them. Amperage is like the … You can think … I forget the analogy. There’s like an analogy about flow of water

Tony Robinson:
Water. Oh, I was just saying the capacity of how much electricity can flow through, right?

Ellie Rigde:
Yeah. It’s like the capacity. And if there is more capacity flowing through it, then the circuit can handle the breaker will pop. So that’s an overcurrent protection device. It keeps you safe from fault conditions like being electrocuted or like an electrical fire or something. And we have modern devices inside electrical panels called arc fault circuit detectors and ground fault circuit interrupters that can sense misbehavior basically of current like jumping between lines that’s called arcing that can cause a fire or current leaving and not returning to the circuit, which means it’s traveling through your body and talking you, that automatically pops breakers. But when I’m just looking at a main panel, what I’m pretty much looking for is the capacity. If it’s 100, 125 amps or 200 amps, and that just tells me how much capacity is left and if people can electrify further. I don’t know what the discourse around electrification is in your areas, but people talk a lot in Berkeley about electrifying their homes.
So that just tells us, if you want an EV charger, do you need a new panel basically or like a heat pump or these other modern electric dependent ways to service your home. And then I’m also looking for the famous problematic brands, Cinsco, Sylvania, Bulldog, Pushmatic, Federal Pacific. Those all just need to be replaced right away because they have various-

Ashley Kehr:
I bought a house once that was Federal Pacific. It was the second duplex I re bought and right away the inspector’s like, “This is a fire hazard. You’ve got to get this out of here.” And he said too, “Your insurance will probably, if they come and do an inspection, they’re not going to insure you because you have this box in there too.” So that was one of the things that we had switched out right away when we bought it.

Ellie Rigde:
Yeah. My house had a federal Pacific panel, but so that’s just more cost. When I’m walking through with buyers, we’re doing a tally to figure out, can you afford this house and the projects it needs, right?

Ashley Kehr:
It’s like all those little things, like sometimes looking at an inspection, it’s like, “Oh, there’s nothing major. It’s just these little things here and there.” But those little things could start to add up and add up and add up or become bigger issues down the road if you don’t take care of them right away.

Ellie Rigde:
Or the other direction. I feel like the inclination of a lot of buyers is to read a panel, or excuse me, read an inspection and feel really concerned about the things … Because it’s like, of course, you don’t know what is scary or not, you’re doing your best to parse it out, but often the things that feel really alarming in a home inspection aren’t a big deal. And the stuff that isn’t really a big deal and is really expensive is not bolded and highlighted as much. It’s kind of funny, I notice.

Ashley Kehr:
We just interviewed a guest, Justin witted on, and he bought a property that was full of mold. And I guess it was a section of the area that was mold, and it was like $2,000. You think of mold in this big, scary thing, and it was like one of the cheaper cost to his $90,000 renovation. So yeah, I think there is that misconception and you have to go and get your quote and actually know what it would cost. Now, Ellie, what about the roofs? So roofs are one of the most negotiated items after a home inspection. What does a buyer need to know before they’re at the table arguing over who’s going to pay for the new roof?

Ellie Rigde:
Well, that is not the cadence where I work. We typically don’t write with inspection contingencies and then negotiate based on findings. We actually tend to write fully non-contingent offers and do all of our due diligence in advance. So I have never negotiated for a roof replacement. Also, I would never be surprised that a roof needs to be replaced. I can see instantly if it needs to be replaced. So I can’t imagine a scenario where I would be like, “Terrible news. I’m just finding this out. ” But here’s what I’ll say about roofs. They’re not a big deal. It’s not a big deal. It’s over in two days. The roofers come, they do it and they go and they give me the bid in advance. People need to relax about roofs.

Tony Robinson:
Well, Ella, let me ask a few follow-up questions, right? Number one, for you, when you go and see a roof, what are the things you’re looking at to say, okay, this actually needs to be fully replaced versus maybe just patching certain parts of the roof. And then what is the typical … Say we need to do a full roof replacement. Obviously this is going to be very specific for the bay area, but what are you spending right now to replace a roof?

Ellie Rigde:
In this area, it’s like $25,000 for a new roof. So it’s not that it’s not a material cost, but those projects where it’s a set cost that you agree to and one trade comes through and it’s over in a matter of days, to me, that’s very easy to wrap my head around. Signs of failure in a roof. So the most common roofing material in this area is called composition shingle. Is that the case for you guys? It’s the shingles with … They’re like asphalt or they have little porcelain granules on them. They look-

Ashley Kehr:
Asphalt shingles, yeah. And metal roofs are common for me.

Tony Robinson:
Yeah. We don’t have any metal roofs out here, but yeah.

Ellie Rigde:
They’re not metal. They’re a fiberglass and then they have little granules on them. I think that’s probably the most common type roof type in Southern California.

Ashley Kehr:
Yeah. No, I said that we have metal roofs. That’s why he was saying that.

Tony Robinson:
Yeah, sorry. I just wanted to ask you. She said metal roofs in

Ashley Kehr:
Buffalo. We have the asphalt sink shingles, and then we also have the metal roof.

Ellie Rigde:
Oh, not like really? Because it’s nose?

Ashley Kehr:
Yeah. They last way longer, the metal roofs. They’re more expensive, but they’re getting more and more common.

Ellie Rigde:
They’re amazing. Like a standing seam with a flat and then the seams.

Ashley Kehr:
Yep, yep.

Ellie Rigde:
Yeah, they’re awesome. Yeah, so that no side effect, they’ll never fail. They have a 100-year life. But comp shingle, which is what we see most frequently in California, I think it’s the most common roofing type in the country. Signs of failure are cupping of the shingle itself. It’s beginning to cup up, curl up at the edges, cracked shingles, obviously missing shingles, but primarily granule loss. So composition shingles are made of an asphalt butuminous … Bitumen is an asphalt material with added polymers, but anyway, whatever. We can just call it asphalt for our purposes. And then a fiberglass mat and then these little ceramic granules that protect the asphalt from the sun because the sudden UV breaks down asphalt over time and then it starts to crack and then it’s water permeable. So when you see a lot of granule loss, that’s the biggest indication of a roof nearing the end of its serviceable life.
And this is how you can spot it. If you stand back and you look up at the roof and you see it’s glimmering and glinting, that’s the sun showing the fiberglass through. Or if you see a gray sheen on it, we’re seeing fiberglass. So that means it’s time for it to go.

Tony Robinson:
I mean, Ashley, I feel like less of a real estate investor talking to Ellie because she’s just so technical about how she’s breaking everything down. We got to spend some more time together so I can get on your level of explaining these things. So we talked crawlspace, we talked electrical, roofing. Let’s talk a little bit about the plumbing systems next. What are the questions buyers should be asking that never really make it into a standard inspection when it comes to plumbing and drainage?

Ellie Rigde:
Okay. Plumbing will be in a standard inspection because the home inspector can see it and they have to indicate the material type. But shoddy home inspections, when it says material type, they’ll write … Oh, this makes me crazy. They’ll write metallic material. Metallic material is so crazy. So because there’s a major, major difference in what that means, right? Because galvanized steel is a metallic material, but a home with galvanized steel plumbing, that’s a plumbing type with a hundred years, 110 years maybe. And that’s what was used pre-World War II, well, pre- 1950s. So it very much could be coming up on the end of its service life and corroding at the interior, depositing rust and minerals into your drinking water and so on. So you should look under the house or your agent should look under the house and see. And you can see galvanized steel versus copper, which we would be much happier to see.
And if it’s an older home and you see copper plumbing, and by older, I mean pre-1960s, that means someone’s replaced at least some of the plumbing system, the water supply. I don’t see this too frequently, but you might also see PEX, which is plastic, like the red and blue plastic lines.

Ashley Kehr:
That’s really common in my area is the PEX piping.

Ellie Rigde:
Where are you? New York?

Ashley Kehr:
Yeah. Yeah. Buffalo.

Ellie Rigde:
Because they’re worried about freeze, I bet.

Ashley Kehr:
Yeah. And it’s the most flexible that it won’t burst and it’s cheaper too than copper piping. But a lot of the older built houses have the copper, but basically anyone that’s updating will put in pecs or they’ll pay more to do the copper, but it’s pretty common in our area.

Ellie Rigde:
Interesting. Yeah. I don’t see PEX out here. I know it’s huge. I

Ashley Kehr:
Like it because all the microplastics are coming into your body when you drink water.

Ellie Rigde:
Nobody’s doing the microplastics. Okay, here’s what won’t be at home section is an explanation of your subsurface drainage because they can’t see it. And so it’s like they’ll note if your downspouts are depositing into a subsurface line and they’ll probably note clean outs. But do you guys know what a French drain is?

Ashley Kehr:
Yeah.

Ellie Rigde:
So I love a French drain.

Ashley Kehr:
But explain it for the rookie if in case somebody doesn’t know what a French drain is, how it helps.

Ellie Rigde:
So a French drain is a solid, rigid, thick plastic pipe with perforations, like little holes along the bottom of the pipe. And it sits in a little trench with gravel around it and then you’ll backfill gravel or soil or whatever. And the purpose is to gather groundwater and deposit it away from the structure. So you’ll see a French drain in a U-shape around a house often or like an L shape because it’s gathering water from a plane and then depositing it away from the house in the garden or at the curb or something. They’re amazing. It’s like a simple technology, but it really is, in my opinion, the way to mitigate water intrusion under your house, which is crucial for many, many reasons, but people use the word French drain all the time and don’t know what it is, and the home inspector can’t comment on it.
So I made a video about this recently on Instagram, but I’ll kind of reiterate the main points here, which is that there is no way to know what was done unless the homeowner tells you or if they have real invoices from a drainage contractor and drainage contractors don’t even really use the term French drain in their bids because it’s such a widely misused and thrown around term. So it’s wonderful if you have it, but don’t just believe you have it because a well-meaning realtor or a confused homeowner is using that term. Really, that is one to ask for receipts or proof of work. And then if you are in a place like a state or a market where you can do inspections, camera the line and see what it actually is. Because often you just have downspouts dumping into a pipe and that’s not a French drain.
It’s a great subsurface water management system of its own, but it’s not a French drain.

Ashley Kehr:
So Ellie, if a buyer can only ask the inspector three follow-up questions in our fake scenario here during the walkthrough, beyond what’s on the standard report, what are some of these other questions that they should be asking the inspector?

Ellie Rigde:
I’m trying to think what’s not on a report. I mean, it really depends the quality of the report. Some reports are great, but yes, let’s just pretend it’s like a sort of shoddy, whatever, rando report that doesn’t have a lot of information about the foundation or refers it out to a structural engineer. Some things to know are that modern foundations and any modern concrete is full of rebar, which are steel bars that provide tensile strength to concrete. But pre World War II, concrete wasn’t placed with rebar inside of it. So it’s really important to know what area your foundation is from, then you’ll know if it can withstand certain types of forces because it may or may not have interior steel reinforcement. There’s ways to tell, I mean, would you like me to share? There’s ways to tell what area your foundation is from. Okay.
Well, if your home was built before 1910, you may have a brick or a masonry foundation and often they will be what’s called capped or a cap and saddle will be poured, which is concrete that goes on and around brick. In other areas, this is less detrimental, but if you are in an earthquake prone area, it’s really, in my opinion, unacceptable to have a brick foundation. And the way you can tell, I mean, a lot of home inspections won’t comment on it because they just, I don’t know, don’t know. I don’t really know why, but often I will observe it and I notice it’s not on the inspection. If your foundation is so wide, comes in a foot on the interior and then maybe a foot on the exterior, that’s a capped brick foundation. That’s not how any foundation was ever originally poured. So in a 1910s or earlier home, if you see this giant wide concrete stem wall, you know it’s likely was masonry or is masonry that has concrete on and around it.
And then you can just look for random bricks that are scattered around in the crawl space. When I see bricks in a crawl space, it’s like triggering because I’m like, “Why? Why are there bricks down here?” And so that’s something to keep in mind. And then if your home was built between 1910 and 1930, you probably have this very shallow, short concrete foundation that’s straight up and down on the interior and then angled at the, excuse me, straight up and down the exterior angled at the interior. It’s like a chopperzoide shape. And this has other vulnerabilities. It’s prone to tipping and rotation in and cracking, and sometimes they can be retrofitted, sometimes they need to be replaced. So these are two older foundation types to be on the lookout for.

Tony Robinson:
Ashley, what’s the oldest home you’ve ever purchased? 1786 or something in Buffalo?

Ashley Kehr:
Yeah, I don’t want to say it wrong, but yeah, it has the Stone Foundation and everything. Yeah, late 1800, 1870 or something like that. And then the other half of the house was built in 1901, I think, or something that was added on.

Tony Robinson:
I think the oldest house in my portfolio right now is 2005.

Ashley Kehr:
The newest house is only the house I built, which was 2016. And other than that, probably 1960 is the next newest.

Tony Robinson:
My oldest house right now is like a 2005. So I got to start buying older home so I can speak to speak with you guys right now. But this is the stuff that separates informed buyers from buyers who get burned, but knowing what to look for is really only half the battle. So coming up, Ellie’s going to show us how to actually use what we’re finding in our inspections as leverage and how the pre-offer inspection strategy in a competitive market like the Bay Area can be a total game changer. So we right back after we’re from today’s show sponsors. All right, we’re back. So our listeners now know what to look for. The next question is, what do you actually do with all of this information, especially in a hot market where waving contingencies feels like the only way to win? So Ellie, you’re in a very competitive market in the Bay Area.
Buyers are under enormous pressure to waive inspection contingency. So how do you actually help clients get comfortable making a strong offer without feeling like they’re kind of flying blind or maybe stepping into a big issue?

Ellie Rigde:
Well, this is exactly why I work the way that I do and why I structure my practice with buyers as an extremely education forward curriculum. That’s how I think about my work with buyers. I’m bringing them through a curriculum and the goal at the end is to feel really confident writing and empowered and very clean, non-contingent offer because that’s likely what’s necessary to get into the home that they want. So we start out just like you would if you were starting out learning anything, just seeing houses for fun, no expectation that they are writing an offer on anything that we’re seeing. We’re just learning. So I’ll try to show houses across a variety of styles and show them various vulnerabilities, teach them how to look at houses with a critical eye, and we’ll talk about costs. That really makes people feel good to know what things cost to remediate, and then they can have those numbers in their head.
And then when they go to open houses, they can look a lot more critically at the homes that they’re seeing and look past the kitchen and the cute archways and whatever and look under the house themselves and start observing condition. So it’s a very proud moment for me when my new buyers are like, “Yeah, we went to this open house, but definitely needs a retrofit.” And so we’re deducting $10,000 from our budget. And we saw Knob and Tube, which is an antiquated wiring. So I love that when my buyers have learned how to assess a home’s condition on their own. Hopefully when we’ve gone through enough rounds of this and they can really start to wrap their arms around condition of a home, it feels easy to waive an inspection contingency because it’s not that the due diligence wasn’t done or that we’re skimping on due diligence or putting ourselves in a dangerous position by waiving an inspection contingency.
It’s that we’ve already done our investigation, so we don’t need that period anymore because we’ve inspected and investigated. So that is my system for helping people safely waive contingencies.

Tony Robinson:
Yeah. Ali, what about timing, right? Because I mean, I think right now we’re very much more at the time of this recording in a buyer’s market, but we all remember a few years ago, things were just going crazy. And if you didn’t get your offer in within 72 seconds of a listing going live, you had no chance of getting it, do you ever find that maybe the process of doing this deep inspection beforehand leads to people missing out on deals? And if so, how do you try and navigate that?

Ellie Rigde:
Well, I am not in a buyer’s market. It’s very much a seller’s market and there are not enough houses. But first of all, if we miss it because it’s moving too quickly for us to answer all of our questions, that wasn’t the house. I mean, I went far right putting someone in an house where we … One, we wouldn’t get an offer accepted if we retain an inspection contingency, and two, I just could never have people waive it. If there were questions we didn’t know the answers to yet, that would be so unethical to me. But the way that timing is handled here is that we have a 13-day marketing period. So I know the cadence, that my life is structured around that 13-day cadence. Go live on Wednesday, broker store Thursday, two weekends of open houses and offers on Tuesday or Wednesday.

Ashley Kehr:
It is not like that in my market at all. That’s so interesting to me.

Tony Robinson:
So is that a Bay Area specific thing because the housing market is so tight?

Ellie Rigde:
Yeah. And it’s almost a Berkeley specific … That’s how niche this area … I pretty much work in El Cerrito, Berkeley and Oakland, three cities, and that’s it because it’s so intense. I mean, I can’t drive an hour away. I mean, it’s happening right here and now I have to have my finger on the pulse of my area. In Oakland, it’s a little different. Homes will come on maybe on a Friday or something, but for the most part, I’m submitting offers on Tuesdays and Wednesdays.That’s when offers are taken, and the home probably came on about 13 days before. So we have time. We have that week to do all of our investigation.

Ashley Kehr:
Now, Ellie, what about after closing? Are you staying in touch with your clients and are there any things that maybe come up that surprise them that they wish they would’ve known before they purchased the house and something us and our rookies can make sure that we watch out for?

Ellie Rigde:
Well, yes, I do stay in touch with my buyers, hopefully because we’re friends, but also because I want to set them up for success. And that means staying around for the long term to answer questions and be a second set of eyes and connect them with tradespeople and share referrals, excuse me, and so on. Hopefully there are not unanticipated things, right? That’s why we’re doing so much investigation in advance to get ahead of as much as we possibly can. But also I’m a human being and we’re not literally taking off sheetrock and opening walls. And so there likely will be things that it was impossible for us to anticipate. That is the nature of a giant living, breathing organism that is a house that is actively deteriorating. But hopefully we got in front of the priceiest thing so that that is less unsettling when they’re remodeling their kitchen and they open the walls and they find that there’s a lot of dry rot at the interior that nobody knew about or something like that.
So I guess all of that to say, buying a home like any investment is risky. It’s an amazing investment because it’s the only one that eliminates one of your major living expenses, which is your need for shelter and housing. And it’s a built-in savings account, right? It turns a monthly expense into this very high yield savings that you’re doing each month. And on the other hand, it’s important to have respect for structures which are made of organic materials in the United States. We build houses with wood that is actively deteriorating and there is water and rain and in your areas like snow and ice. And so the work is never done. And so I encourage people to have that mindset like, yes, it’s very important to be very cognizant of the condition of your home and the cost that will likely be needed in the first five and 10 years.
And also, it’ll never be finished. You replace your roof and then your furnace goes, and then you have termites, and then you start losing water pressure in your guest bathroom and you have to replace a run of old plumbing. So hopefully it’s fun. And hopefully the process of working … I hope that my buyers get into it and start to enjoy and appreciate their house for what it is and what their responsibility to their house is, and that is something they can be excited about instead of being like, “Oh my God, it’s never ending.” But yeah, it’s never ending, but I love it.

Ashley Kehr:
Well, Ellie, thank you so much for joining us today. Where can people reach out to you and find more information?

Ellie Rigde:
My website is elliridge.com and I am very responsive. So if people reach out to me on the … Send me a message through my website, I’ll be back in touch very quickly. And if you are interested in the stuff I’m talking about, my social media is Ellie Ridge Realtor, and I just share a lot of videos nerding out about all the things that I talked about today.

Ashley Kehr:
Well, thank you so much. You were a wealth of knowledge. We learned so much about what to look at at properties and the inspection process. So thank you so much for joining us. I’m Ashley. He’s Tony, and we’ll see you guys on the next episode of Real Estate Rookie.

 

Ashley Kehr:
What if the biggest mistakes in real estate don’t happen at the closing table? They happen in the three decisions you make before you even write up an offer.

Tony Robinson:
Today we’re answering three questions straight from the BiggerPockets forums that every rookie has to work through before deal one. How to pick a market when your own backyard does a pencil, whether to buy a rental or a primary residence first when you’re just starting out, and what you actually need to know about short-term rental regulations before you bet your strategy on Airbnb.

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

Tony Robinson:
And I am at Tony J. Robinson. And with that, let’s get into our first question, which comes from the BiggerPockets Forums. Now, this is a longer question, so I’m going to paraphrase a bit here, but the question that basically says, “I’m an aspiring investor living in Los Angeles and investing locally is basically out of the question. Even a house hack in this city is tough right now. Anything with an ADU or multiple units in a decent area is well above the $1 million mark. So I’m stuck at the stage of choosing a market. I’m looking for out- of-state opportunities where I can actually cash flow. What criteria should I be using and how do I narrow down from the entire country to one place that I can actually commit to? ” It’s a great question, and it’s one that a lot of rookies honestly get stuck on initially is where do I invest?
Now, I’m just going to talk strategically here for a moment because I think it’s an important foundation to lay. There are over 20,000 cities in the United States, 20,000. So the chances of you finding the Goldilocks city that is the absolute perfect match for you, or like the Cinderella slipper, where it is the absolute perfect city for you. It’s going to be tough. With 20,000 cities, there are probably hundreds, if not thousands of cities that you can invest in that would make sense to help you achieve your goals. So the thing that you should be focused on is not what is the absolute best city for me to invest into. The thing you should do first is ask yourself, what do I want out of a city? What are my investment goals? What boxes does a city need to check to give me confidence to invest into it?
Because when we then start with ourselves and we have a clear set of criteria, all we then have to do is compare our criteria to the cities that we’ve come across. And if they match, well, then we simply add them to our list of places to invest. And if it doesn’t match, we set them to the side and we can do so confidently, and then we move on to the next. So just from a strategic standpoint, I want you to rewire how you think about market selection. Once you’ve got that set aside and you’re okay with the fact that we’re not looking for the Cinderella city, we’re just looking for the cities that match, then there are some basic data points that we can look at. Now, you didn’t mention what strategy you’re focused on, but let’s just assume you’re focused on things like traditional long-term rentals.
And if that’s the case, some of the basic things we’re looking at are population and job growth. Is that happening in the cities that you’re considering? Is it a city where there’s a lot of people leaving or is it a city where there’s a lot of people coming in? Landlord friendliness, right? How easy is it be to actually be a landlord in that specific city? Are you in a place like where me and Ashley live, California, New York, which are some of the toughest states to do that? Or are you somewhere like Texas where maybe there’s a little bit more flexibility or favor towards the landlords? Price to rent ratio, right? The price of the home compared to the rent, is it a healthy ratio? Is it 0.25%, which would be pretty low? Or is it a market where maybe you can still hit the 2% rule, which maybe doesn’t happen as much these days.
But those are the big things we want to look at. What are the data points within that market that suggests if it actually supports the strategy that I’m looking to go after?

Ashley Kehr:
You can also go to biggerpockets.com/markets, and this will actually take you to a market finder that will help you analyze a market based upon your goals and what you’re trying to achieve and basically everything Tony just said. So you can find that at biggerpockets.com/markets. Okay. Coming up, you’ve identified a market. Now the question is, what you actually buy first? Is it a rental or maybe your primary residence? For investors in their 20s with limited capital, this one decision could shape the next decade. We’ll be right back after a word from a show sponsor. Okay, welcome back. So let’s say you’ve done the work, you’ve got a market in mind, you’ve been saving up and you’re ready to make a move. But now comes to a question that trips almost every early 20s investor up. Do you buy rental first and keep renting yourself or do you buy a primary and start building equity in the place that you live?
So this question comes from the BiggerPockets Forums and it says, “My husband and I are in our early 20s and we want to buy a house, but we’re trying to decide if it would be better to buy a rental property instead.” We’re okay with house hacking if there’s a separate kitchen and living space. We want to be financially independent by our early 40s. Should we use a 3% down payment on a rental or buy a house to live in for our first property? For reference, we make about 85K combined pre-tax. Okay. So everyone’s sick of house hacking, I know, but they did ask about it, okay? They’re okay with it. That would be my number one choice, house hacking definitely would be. But it also depends on what markets you’re in. So first, what I want you to do is to look at the purchase price, okay?
What type of property would you be able to buy? So maybe go and get pre-approved and see what your actual spending limit is. Can you even get a duplex for the amount that you want to buy? Could you get a single family home that doesn’t need tons of rehab, it’s completely dilapidated for your price point. So I think right there is a great starting point. Compare your two options. If you took the money that you had and you did a 3% down payment on your primary residence, what would that get you for a single family home? Then I would also take and look and most likely, unless you found some lender I don’t know about, you’re not going to be able to do a 3% down payment on an investment property. It’s probably going to be more like 20 at 25%. And that property, if you’re just renting it out and you’re going to keep renting yourself, what would that money get you and would you be able to save up that type of capital?
So really that’s why I love house hacking is because you’re allowed to use that low primary residence loan with a low down payment to get into a property and to have it as an investment as a rental. So I think that’s a really good starting point. And I want you to think about how much money you’re saving that you would be paying in rent. If you were to live somewhere else, then I also want you to look at appreciation. When you’re comparing doing these different strategies, what house will also give you a lot of appreciation? When I started buying investment properties, they were small, little rinky dang, duplexes that had cosmetic updates, but still were like troublesome properties and they have no appreciation. I sold them for two, three times what I bought them for because I bought them so below market value and because I sold them in 2021 at the height of the real estate market since I’ve been alive probably.
And so that is literally the only reason I made money on them. So look at that too. You don’t want to give yourself a headache. You don’t want to problem property either and get into too much then you can actually take on.

Tony Robinson:
I think they’re in an incredible position, right? To be in their early 20s and they say that they want to retire, be financially independent in their early 40s. Talking two decades of time to work this plan toward financial independence. Actually, I couldn’t agree with you more on leveraging a house hack as their kind of primary vehicle here because it allows them to A, to your point, get into a property with low money out of pocket, but then B, gives them the ability to reduce their living expenses. So I’m just going to give you maybe a sample roadmap of what the next 20 years could look like. Without even being too overly aggressive, let’s say that you buy a property today, small multifamily where you live in one unit and you rent out the other units and through that, you’re able to live not even necessarily making cash flow in this deal, but you’re able to live rent free.
You have no living expenses because the other units are fully covering the mortgages, principal interest, taxes, and insurance, which is pretty reasonable today in a lot of different markets. You do that for two years. So you get to save up, let’s say that maybe you would be paying 2,000 bucks in rent, but instead you get to pocket that $2,000 every month for two years. $2,000 a month over 12 months is $24,000. That over two years is $48,000. So every two years, you get to save up $48,000. If you’re buying a primary residence, and let’s just assume for simple numbers sake that maybe you can put 5% down. You’re not even doing an FHG at 3.5%, but I’ll round up to 50 grand. Let’s say that’s a 5% down payment. At 5%, that’s a massive down payment. Let me even go a little bit smaller. Let’s say 50,000 over maybe like a, let’s go like 20%.
That’s 250,000. I don’t know what market you’re in, but let’s say every year you’re able to buy a house that’s maybe like 400,000 bucks, right? 50 grand, depending on what kind of down payment you can use, that’s pretty reasonable. So every year for two years, you’re buying a property, putting down 50 grand in another primary residence, and then you look up in 10 years and you’ve got five properties that you’ve done that with. Now you’ve had to house hack over that timeframe, but you’ve accumulated five properties. Now maybe you’re at the point where instead of house hacking, you’re just buying single family homes where you go in, you live there yourself, but now you’ve got all this cashflow coming from your first five properties that still every two years you can buy another single family home. So you have five or 10 years of buying multifamily properties, you were house hacking.
Then you had another 10 years of buying single family homes, you lived there for two years, you move out, turn it into a rental, buy another property. At the end of that timeframe, you now have the portfolios of single family homes plus a portfolio of small multifamily homes. And for a lot of people, that could get them to the point of being financially independent. So simple roadmap, but that’s my challenge to you is to work that plan. All right guys, we’re going to take a quick break. While we’re going, be sure to subscribe to the Real Estate Rookie YouTube channel. You can find us @realestaterookie and we’ll be back with more right after this. All right guys, welcome back to our last and final question. This one also comes from the BiggerPockets Forms. And it says, “I’m just starting out and I’m looking at short-term rentals through Airbnb and Vrbo, but I read that Airbnb places a maximum of 90 days that you can rent out your property as a short-term rental and will disable your listing once you hit that cap.
Is this true? I understand each city or county may have their own permitting requirements, but how are people making any return on their investment if it maxes out at 90 days?” This wouldn’t even cover expenses. Do people have to keep switching between short-term and mid-term and long-term rentals to make this work? It’s a great question. And I think that’s why it’s so important for us to do these reply episodes because we can maybe put aside some of the misinformation that’s out there about real estate investing. Airbnb as a platform does not have any cap on usage. There’s nothing on the Airbnb platform that says that there’s any sort of cap on how many nights you can rent out your property. Now, there are certain cities, counties, municipalities that do put limits on usage. For example, I was just looking at a city in Wisconsin, I think it was Wisconsin Dells, that says you can only rent your property out for 50% of the year.
So your maximum occupancy on your short-term rental in the city of Wisconsin Dells is 50%, but that is a city-based ordinance. Airbnb is a platform, does not have any sort of restriction on usage. Now, my strong recommendation to you is to, for whatever city it is that you’re thinking about, instead of guessing or taking kind of secondhand knowledge on what that ordinance says, do the research yourself. If you just type in whatever city you’re thinking about and then you follow that with the word short-term rental ordinance, typically that’ll pull up whatever information you need about that city, that county, and how they regulate short-term rentals. And even better is if you can pick up the phone and call, even better is if you can walk into the office and talk to them in person. And the things you’re trying to understand is, are there any restrictions on usage and occupancy?
Are there any restrictions on zoning? Are there any restrictions on maybe proximity to other short-term rentals? Are there any restrictions on the actual number of people that I can put into my short-term rental? Ask all the questions you have about what do I need to know to legally operate a short-term rental in this market? Some cities have a long laundry list of things you need to do. Some cities say you don’t even need anything. It’s your property, do what you want. So all that to say, there’s no cap on the platform. It’s a city by city, county by county difference.

Ashley Kehr:
Tony, didn’t you once fly to Texas to actually walk into the office to discuss short-term rental regulations?

Tony Robinson:
I did. Now we were already planning the trip. We wanted to go out there to look at these properties, but while we were there, we went into city hall. And quick backstory, we were opening up our first arbitrage units, and this was in Dallas. And literally, I think two weeks before we were supposed to fly out there, Dallas came in the news for effectively banning short-term rentals. And we’re like, “Man, that’s not great.” So we went into City Hall and come to find out, City Hall did pass this ordinance, but they had no set plans yet for enforcement because they were basically preparing for a legal battle in court. And that was, I think, maybe three years ago at this point. And that legal battle is still going on today. So there’s still tons of Airbnbs in Dallas because they haven’t sorted out what that’s actually going to look like.
So yeah, walking in and being able to talk to someone, I’ll never forget, I asked them like, “Hey guys, I saw that you guys, here’s what’s going on. ” And they kind of chuckled because they’re like, “Man, we don’t even know why this is happening and we don’t think this is going to stand.” And that gave me a certain degree of confidence that I could probably sign a one-year lease for the short-term rental and still be okay.

Ashley Kehr:
We have this ski resort town near us where they’ve changed the laws and well, they’ve changed the zoning. And so people who bought houses in 2021 by 2023, they couldn’t do short-term rentals anymore. And so it has really actually crushed the market. There are so many houses for sale because a lot of people bought short-term rentals the height of the market in 2021, and then they went and changed all the zoning. And basically it was something along the lines of like, it has to be your primary residence to be in the village. And then they changed the zoning even. So it included more properties than it originally did and things like that. So it’s really hurt a lot of investors that had short-term rentals in the area. Now the market is just saturated with houses for sale and people trying to sell them because they can’t rent them out.
And also they have less of a buyer’s market because it’s only people that can afford to have a second home in these areas and nobody that actually lives in these towns can afford these houses. So the buyer pool is very, very slim compared to if they would allow you to have short-term rentals. Well, thank you guys so much for joining us today. I’m Ashley. He’s Tony. And we’ll see you guys on the next episode of Real Estate, Ricky.

 

Henry Washington:
She makes money seven different ways on every real estate deal and never even owns the property. Most real estate investors think in deals. They think buy a property, renovate it, sell it or rent it out. One revenue stream per house. In 2022, Chauncey was flipping houses and accumulating rentals doing 20 deals per year. To make more money, she needed more capital and more contractors and more tenants, and that means more headaches. So she built an entirely new model. Now she runs a vertically integrated real estate operation. Her clients put up the capital and they keep the profits, but Chauncey takes the cut at every stage of the project, which can often even be more profitable without all of the risk. This business gives Chauncey a unique view of the entire real estate investing ecosystem. Today, she’s sharing the lessons she’s learned from this rare real estate perspective.
What’s going on everybody? I’m Henry Washington. Oh yeah, and Dave’s here too. What’s up, Dave?

Dave Meyer:
Don’t sound so disappointed. I’m excited to be here. This is going to be a fun conversation with Chauncey today.

Henry Washington:
Yes, I’m super excited too. And honestly, there’s probably a lot of real estate investors out there who have the skills and resources to do something like this and they probably just haven’t done it. Today we’re talking with Chauncey Pham, an investor in the Dallas market, and we’re talking about building wealth through real estate ecosystems, not just properties. Chauncey’s going to show you how to think about real estate as a business with multiple revenue streams, how to source deals creatively without relying on wholesalers, and which pieces of the process you can start monetizing today, whether you’re flipping, buying rentals, or doing any other strategy. So let’s bring her on. Chauncey, welcome to the BiggerPockets Podcast.

Chauncey Pham:
Hi, thanks guys for having me on.

Henry Washington:
Let’s start this off the same way we start off every show. Why don’t you tell us a little bit about your background and what you were doing prior to real estate?

Chauncey Pham:
So my background is hardcore one call close type sales. And then I end up transitioning into a marketing role. I was an account executive for a marketing firm where I worked with a lot of C-stores and fashion chain, so BCBG, BB, Circle K. And I essentially was the liaison between their marketing departments and my company who actually created all of their point of purchase marketing. And so it was really, really cool because I learned the psychology behind marketing in that role. And while I had that job, my husband and I end up buying and selling a couple of primary residences. And our loan officer was like, “You’d be really freaking good if you got your real estate license.” So I got my license, but I legit got my real estate license because I wanted us to go to Disney World and ball out with the VIP passes and pass it.
That’s why I got my real estate license.

Dave Meyer:
So you’re like, “If I sell one house, then I could go to Disney World.”

Chauncey Pham:
I can go to Disney World and fall out. And so that’s why I got my license. But because I had the sales background and the marketing background, within three months of getting in the business, I’d made my entire annual salary in commissions. And so I quit my job and it was off to the races from there.

Henry Washington:
So what year was this when you got your license and then decided to do your actual first real estate deal?

Chauncey Pham:
So I got my real estate license in 2016. And I just was a traditional realtor from 2016 until I picked up my first investment deal in 2019. So after a year of having my brokerage, which by the way, the root word of brokerage is broke and that’s what the hell I was for the whole year and a half at it because realtors don’t sell anything. 90% of them don’t sell nothing. And so I essentially then moved my brokerage, shut it down and went over to the national brokerage that I’m with now and became the top recruiter within the first year that I was there, brought 400 agents underneath me. And that first year was making money off of all of their sales, which then allowed me to get out and start investing. So I started doing that in 2019.

Dave Meyer:
Chauncey, we get this question a lot about becoming a broker, real estate agent before becoming a real estate investor or in tandem with becoming a real estate investor. So what is your advice to people who are considering that path?

Chauncey Pham:
I 100% attribute my successes and my mindset in being an investor to the fact that I was a realtor first.

Dave Meyer:
Really?

Chauncey Pham:
100%. Interesting. And I would recommend to anyone that wants to be an investor to at least explore getting their real estate license, not so that they can go and sell houses, but so that they can understand the basics of the real estate transaction from the consumer perspective. Because when I started flipping, I knew what it was like to take a buyer to see eight, 10 houses in a day, and at the end of the day, ask them which one they want to put an offer on and how 90% of them were completely forgotten because they were all just white, gray, same floor, same trip, same finish. It’s all the same thing. They didn’t remember any of them. And I knew what made them tick emotionally. So I always said, if I start flipping, I’ve got to find a way to be strategic in creating a product that’s going to be memorable for clients and be something that people actually seek out.
And 100%, that is what has set me apart from everyone else that’s in my market.

Henry Washington:
I don’t 100% agree with you on the getting your real estate license first thing, but I totally understand that perspective. And I like the perspective of understanding both sides of the transaction because you’re absolutely right. A lot of investors, purely numbers focused. The amount of times I’ve heard flippers say, just get a spec sheet and flip the same house to the same spec sheets, same colors, same finishes, because it’s better for business drives me up a wall. Every house we do is about what we think the buyer in that neighborhood or that particular market wants, and that’s what’s going to help your houses sell faster. So that perspective on why you should get your real estate license, I think is a pretty cool and unique perspective. And I agree with you. Investors need to learn more about what your customers want. And sure, there’s probably some happy medium between systems processes and repeatability and then still having some form of individuality, but you’ve got to do it properly.

Chauncey Pham:
Correct, correct.

Henry Washington:
I’m assuming as you were doing these real estate transactions as an agent, you were like, “Hey, these investors seem to be making some money. How are they doing this? ” What made you decide I’m going to take the risk and do my own real estate deal? Because it sounds like you were killing it as an agent, right?

Chauncey Pham:
Yeah. So what made me kind of pivot from just being an agent to an investor is I had an investor client. He reached out to me. He had a flip that was in a neighborhood that I had sold quite a few listings and was like, “Hey, can you just go and give me some feedback on this property? It’s been sitting on the market and not getting any showings. Let me know. ” So I went, called him the next day and I said, “Here’s my advice, here’s what’s going on. ” He called me then the next day and said, “All right, I’ve got good news and I got bad news.” The good news is I don’t have to deal with the realtor that had my house listed and the bad news is I don’t have to deal with her anymore because I fired her. And if you don’t take my listing on, then I’m screwed because all my money’s in this house.
And so I took his listing on and I sold it the very next week over asking. And from that point on, I became his agent. So I helped him with acquisitions, I helped him on the consulting side. And then when his flips would go on they’re ready to go on the market, I actually listed the properties. And I would see every single time that we went to the closing table, how much money he was making versus what my commission was. And I also learned his process. He didn’t have one. He didn’t have a duplicatable process. He literally just was like, luck. Deals were falling into his lap and then he would get it and take it down. And when I would ask him, “What’s your process of getting these houses?” He had zero processes. And so for me, I said, “If this guy can do it and he’s making this money, then I definitely can create a duplicatable process and system and plus all of these lips are kind of ugly so I can do it and I can do it better.” And so I actually talked to my husband who was basically a C suite executive and he was our breadwinner, right?
I was making great money, but he has the insurance, he got the job. And I’m like, “Babe, quit your job and join me in real estate and you can open our investing side.” And he was like, “All right, bet.” And he did. Really? And he did. That’s

Dave Meyer:
It.

Chauncey Pham:
Just

Dave Meyer:
Like that?

Chauncey Pham:
Literally, it took him a couple of months.

Henry Washington:
He’s a sales expert.

Dave Meyer:
Do what to say to him. Yeah. He didn’t even know it was coming. And he’s

Chauncey Pham:
A sales guy too. So we always argue about who’s the best closer. And I’m like, who’s the best closer now? And so yeah, got him to quit the job and he started our investment company in November of 2018. And January 2019, we had our first deal.

Henry Washington:
All right, we’ve got to take a quick break, but when we come back, we’ll hear more from Chauncey right after this.

Dave Meyer:
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Henry Washington:
All right. We’re back with Chauncey Pham, talking about vertically integrating your real estate business. Let’s get back to it.

Dave Meyer:
So what

Henry Washington:
Did that first

Dave Meyer:
Deal look like?

Chauncey Pham:
This particular property, we went out and walked it and long story short, we were able to pick it up for $125,000. The lady just wanted enough to pay it off and have a little bit of money to walk away. We bought it for 125. There was nothing wrong with the house. We were going to put about 20 grand into it and sell it at the 215 mark, but instead I threw it on the MLS in coming soon and had an investor that was looking for rentals in the neighborhood, put it in for coming soon at 192, went under contract, sold it two weeks later at 186 and did absolutely nothing to it. So it was basically a wholetal deal and I was able to take that 60,000 and then we just kind of kept rolling from there.

Dave Meyer:
Obviously that sounds incredible, Chauncey. People are probably wondering, is that possible? Is it possible anymore or is that kind of deal a relic of a different time in the market?

Chauncey Pham:
I don’t think that her situation was unique. The way that we were able to capitalize on that was she had previously had the house on the market with a realtor and it had gone under contract.
And when it had gone under contract, the title company popped up with a lien and it was a consumer debt lien. And so when we talked to her, she was like, “Last year tried to sell my house, but this lien is on here. If you guys can just get this lien gone and just get me this much money in my pocket, you can have the house.” And so I think that what was unique about that situation wasn’t necessarily unique. It was the fact that we understood how to solve a problem. And so are those types of deals still out there where you just need to be a problem solver? Yes. All day long, that’s what all of them are. And I just think that far too many people are in the game and they’re not looking at themselves as problem solvers, rather they’re going in with kind of a one trick pony because even when we went to her, it was not, “Let me just buy your house.” It was, “I can buy your house.
I can list your house because I’m a licensed realtor.” That’s another reason you should probably get your real estate license. I can renovate it if you want and then take the cost of the renovation, just put a lien on it and then we can sell it on the market, whichever solution is best for you. And so I definitely think those deals are out here.

Henry Washington:
Yeah, those deals definitely exist. I have one under contract right now that I think we’re paying 180. It doesn’t need any work. We’re going to clean it up, throw it back on the market for 250.

Chauncey Pham:
It’s

Henry Washington:
The situation that’s causing us … It’s called the lady is about to lose it in foreclosure, and so we’re going to buy it. She’s going to make some money instead of just lose it. And then we’re going to turn it in. The house was built three years ago. So it’s about looking for situations, right? Correct. Chauncey, can we play a game?

Chauncey Pham:
Yeah. I’m

Henry Washington:
Going to put your skills to the test.

Chauncey Pham:
Okay.

Henry Washington:
We’re going to role play. I’m going to be a seller. I like that. So I filled out your website. I have a house on 123 Main Street. You get the lead and you’re calling me and I answer the phone and what do we say? What do we do?

Chauncey Pham:
Hey there, Henley. How are you?

Henry Washington:
Oh, I’m doing great. How about you?

Chauncey Pham:
I’m doing pretty good. Hey, you’re the owner, right? Over at 123 Main Street?

Henry Washington:
Yes, I am. Absolutely.

Chauncey Pham:
All right, cool. Well, I got your information from my website. It looks like you are looking to sell this thing really quickly. So tell me this, before we even get into the conversation, if I could wave a magic wand for you, get this thing sold exactly the way that you want to, how does this situation play out in your head?

Henry Washington:
I would love to get it sold and get it sold quickly because I really need to unload this property so that I can get the money I need to move on to my next property.

Chauncey Pham:
Okay. So number one, how much money do you need to move on to your next property? And number two, why do you need to sell so urgently?

Henry Washington:
Yeah, I need to sell urgently because I found a house that I really want to buy and this one has too much work that it needs for me to get done. So I just need out.

Chauncey Pham:
Okay. So you need out. And how quickly are you looking to close?

Henry Washington:
At least 30 days or less. If you can go faster, that’d be great.

Chauncey Pham:
Okay, awesome. And so then at that point, I would typically do some sort of analysis with them and start pulling up the comps on the property. And at that point, I would start really poking the bear at the pain. So I would ask them to send me any pictures or possibly FaceTime me. Let’s do a quick video walkthrough of the property so then I can compare it to what’s on the market. And this way, this can expedite me getting them an offer. I don’t even need to come out to the house. FaceTime me real quick, get me on Zoom. Let’s walk through it right now. I can get you an offer right now on the phone. And I’m going to also, at that same time, pull up some other properties and have him pull it up and acknowledge the fact that his property is nowhere close to those so that when I come with my low ass number, he’s not offended.
So Henry, you understand your house doesn’t look like 124 Main Street that’s right up the street. This one, look, this one has granite countertops. We just walk through, yours has for Micah, and I’m going to have to replace all of that, right? You understand that? And so I typically walk them through all of that and then I’ll even normally ask them a question. So Henry, based on these houses that I just showed you, how much money would you personally think needs to be put into your house to get it up to that level?

Henry Washington:
I love this question because I do it all the time. I would say somewhere between 25 and $30,000, which in seller talk means what to an investor.

Chauncey Pham:
Yeah. Now Henry, how are we going to get 25, $35,000 done on the … You think I’m doing the work or I’m going to hire someone? I have to hire someone. There we go. So that’s not going to work. Realistically, this is looking like about $100,000 that I’m going to have to put into it. So let’s back these numbers out. So you want to walk away with X, Y, Z, and in order to do that, I would have to give you this number. But if I attack $100,000 on top of it, when I turn around to sell it, I don’t have any money. So let’s work out something that’s fair. Does that work? If I can solve your problem and the timeframe that you need it solved, but I’m also solving a problem for myself, let’s make some shake. And that’s typically how it level with them.

Henry Washington:
And that’s the investor standpoint. Now, when you make those offers, are you also offering them a solution where you’re the agent?

Chauncey Pham:
Correct.

Henry Washington:
At the same time?

Chauncey Pham:
So typically if they are offended by the investor offer, look, you don’t get both at the same time. You can’t be out of time and want more money. So if you want to tell me right now that you’re not out of time, then I have another solution for you. And that solution is we can come in. We can maybe do a little bit of work on the property for you. I own my own construction company, so I can come in, I can do the work for you. We can get paid on the back end, so we can work out a deal that way. I’ll list it for you. I’ll control that part of the transaction for you, make sure that your fees and all of that are really good on that end. We’ll take care of the construction for you and then we get it sold and get you that higher number, but it’s going to take a little bit more time.
So which one do you want? You want time, you want money?

Henry Washington:
I love it. I love it. I do a version of the same thing, but what you were essentially doing when you asked me what I wanted was you were trying to figure out which solution makes the most sense,

Chauncey Pham:
Right? Correct.

Henry Washington:
If you’re saying you need to move quickly, then you’re thinking as an investor. And if you’re saying, “I have all the time in the world and my house is in great shape,” then you have an option as an agent to list that property. And I think that that’s what investors need to learn is your job isn’t to sign your contract on your next deal. Correct. Your job is to figure out what does that seller need, what do they really need because they’re obviously going to hold something back because they think that we’re here to swindle them and get this best deal possible, right? And so they’re holding these cards close to the chest. But as you ask questions, you can start to figure that out and you can start to present a solution that actually works for them. And I think what you’re saying is as a licensed agent, I now have more options to help somebody than somebody who is not a licensed agent because all they can do is make a cash offer or maybe do something from a creative financing aspect,

Chauncey Pham:
But they

Henry Washington:
Can’t list a property and they can’t do some of these other things. And so I do think that licensed agents have a superpower, but I don’t know that they all know how to use it. So you did your first flip. About how many flips did you do in a given year and for how long did that last?

Chauncey Pham:
So our first year, 2019, we did exactly 10 flips. Wow. Yeah. So we did 10 our very first year. So that $60,000 kind of gave us a little confidence and we built the little process out and then we bought our second property. And then after the second one, we had the opportunity to pick up three more. So we were running four at a time right after our first one. And so by June of that year, because we picked up our first in January, by June, we’d completed like five or six. And then it kind of kept snowballing from there until our highest year, we did 21. Oh

Dave Meyer:
My God, that just gives me so much anxiety. I can’t even think about that. But it’s awesome. I mean, it’s incredible. But can you tell us a little bit about them, Chauncey? How much were these deals? What were you paying for them? How were you financing them? And how big of the renovation were you doing because you were doing so much volume?

Chauncey Pham:
When we first started, we were buying in the high ones, low twos, and then we were doing around $60,000 renovations and selling in the mid threes to high threes. We continued to progress. And obviously here in the Dallas-Fort Worth area-

Henry Washington:
So did the prices.

Chauncey Pham:
I mean, that doesn’t exist anymore. And so now we’re acquiring pretty much all across the board, but I would say that our sweet spot is acquiring somewhere in the threes, doing around $150,000 renovation and selling in sevens, high sixes or sevens. Wow. One deal that I just completed, we’re able to pick it up at 405. We did $190,000 or so renovation and it sold at 860.

Dave Meyer:
Wow, amazing.

Henry Washington:
So those numbers, the original numbers, the purchasing the ones, renovate for about 50 to 60, selling the threes, that’s about what my market is now. And it seems like you’re focused more on a higher price point purchase. Is that the same home that you were buying when prices were different or are you specifically looking for a higher end type of deal?

Chauncey Pham:
So our goal is not necessarily to buy a house at a particular price point. We always like to look for houses that are standouts, that when on the market they have something cool or quirky about them. So whether it’s the layout, it’s something architectural about them, it’s the lot, and it just always tends to be around that price point. But realistically, the specs of the homes that we’re buying right now are about the same as they were when we first started back in 2019, the prices are just so much more expensive.

Dave Meyer:
I like this approach. I just have to say, I think I like the idea of looking for something different. In my opinion though, there is a part where it goes too far, right? How quirky are we talking?

Chauncey Pham:
Nothing crazy, but I just refuse to do just standard gray or white walls with … I need something interesting. We go for large skylights, cool entrances, funny layouts. We do a lot of sunken living rooms, a lot of-

Dave Meyer:
Very 70s,

Chauncey Pham:
Yeah. Yes, yes. And we keep those elements where most flippers would go in and probably try to make everything look like everything else on the market. We find the houses with old character and we try to preserve it.

Dave Meyer:
I assume it limits a little bit who you sell to, but are those people more interested then? Like you get people who are really passionate about the homes because there’s something that they get attached to.

Chauncey Pham:
Yes, correct. So essentially my marketing background, even just doing marketing online will tell you that your job as a marketer is to create an offer that’s so irresistible that the consumer can’t not buy. They feel stupid for not buying it and to almost create raving fans to your product. And that’s kind of the approach that we take. And so yeah, we are normally getting multiple offers, but we’re not getting 15. We may get three or four, but those three or four people that want the house and the one that ultimately ends up going under contract will do anything to make sure that they stay under contract because they know they can’t find another product like ours.

Dave Meyer:
So much good stuff here from Chauncey, but we’ve got to take a quick break. We’ll be right back. Welcome back to the BiggerPockets podcast. Let’s jump back in with Chauncey Fan. So you’ve talked a lot about flipping, but have you ever thought about doing rental properties or any other strategies alongside flipping?

Chauncey Pham:
Yeah. Yeah. We have some rentals out in East Texas. So we have a portfolio of 17 rentals in East Texas. But what I found here in Texas is that it’s very difficult to cash flow anything in the Dallas-Fort Worth market, simply because taxes and insurance is so expensive on top of the acquisition costs. So the market that we’re in is like Texarkana, Tyler, Longview. I’m actually from Texarkana. So you’re able to buy properties there for really cheap. A lot of people rent forever there and you’ll get good cash flow, 500, $700 a month. But the problem is the value of those houses, they don’t increase. So you’re cash flowing, but if you go to sell it 10 years later, you’re lucky if the value has gone up $20,000 or so. So I’m not really hardcore interested in the building of rentals. We really like to leverage doing things that get us a lot of capital in hand and then taking that and kind of investing in other outlets.

Henry Washington:
So it sounds like you used your market expertise as an agent to understand where I can buy for cash flow and where I can buy to increase my return so that you can strategically buy rental properties, but it sounds like the flipping business is what’s really generating the income, but the market changed, the price points shifted and that means risk shifted. Is there anything else that you did do or have done to help you mitigate the risk and the change of the market that has happened over the 2025, 2026 market? Because a lot of people fell on their face in 2025. So how are you staying profitable?

Chauncey Pham:
Absolutely. So really excited about this new kind of model that we built out and it’s our turnkey model where we essentially are operators. So instead of going in and actually owning the properties, we have clients that are liquid, typically at least $150,000 or so, and they are interested in getting a return on their money through flipping, but they don’t have anything except for the money. And instead of doing what a typical flipper would do, which is take their money and then go and buy a flip and then give them a fixed return on it, instead we’ve built out all of the verticals around flipping houses. So you’ve got to find it, you got to fund it, you got to fix it, you got to furnish it, and then you got to flip it, right? So I own all of those parts of the transaction. So we’re sourcing the deals, we are the lender, we broker out money and then we have our own commercial line of credit that we loan out.
We own the construction company. I have the staging inventory because of the real estate brokerage that I went to, I have hundreds of agents underneath me, so we’re listing the property. So essentially we’re able to go to our clients and say, “Hey, I’ve got this house, I’ve got it for, you can pick it up for $200,000. Here’s the scope of work. It’s going to cost approximately X, Y, Z.” It’s accurate because I own that part of the process. Here’s the design, here’s everything that has to do with it. Here’s the average days on market, here’s the ARV, and so your potential profit when it sells will be X, Y, Z. Do you want to take it down or not? And if so, then we start that process and I’m making money in every single one of the steps of that process that that person would’ve otherwise had to gone out, find a house, get a lender, find a GC, hire a designer, hire a staging company, find a realtor.
I’m all of those things for them. And I’m able to make six figures on each deal with zero money out of my pocket. And so I’m leveraging my skillset in house flipping to have now become an operator and built out a highly profitable business without me having to technically own the asset.

Dave Meyer:
I mean, that sounds incredible. Both from your perspective, but also from a flipper, if you’re not a professional at this, it sounds like you’re offering a lot. But if you’re making six figures, what are the margins for the flipper?

Chauncey Pham:
It depends, but I mean, they’re typically making 20%, 25%, somewhere in there.

Dave Meyer:
Okay. But are they running the project? Are they doing-

Chauncey Pham:
No, they do nothing. They’re completely hands off. They

Dave Meyer:
Do nothing.

Chauncey Pham:
They do nothing.

Dave Meyer:
Okay.

Chauncey Pham:
They do absolutely nothing except for sign on the dotted line and acquire the property and sign when it closes.

Henry Washington:
So you’re not worried about making money as the investor, you’re worried about your companies making money all along the way? Is that …

Chauncey Pham:
Correct. Correct.

Henry Washington:
Okay. So walk me through what that looks like from an investor’s standpoint. So what’s a typical deal look like for you as the business owners and the investor?

Chauncey Pham:
They all look different because I own the different pieces of the process. There’s no set fee for each part, if that makes sense. Okay. So some houses, if I’m able to acquire it really low, then I can front load it and I can make more money on the acquisition. So if I’m able to acquire a property that’s worth 350,000 for 85,000, then obviously I can offload that to my client at maybe a 150. So now I’ve made a big chunk on the front end, right? Versus a house that I’m not necessarily acquiring really, really low, but I know it has extensive construction, then I can ultimately structure the deal where I’m making more money on the construction side or in the design. So there’s no set numbers. We underwrite them differently. Every single house is completely different, but our goal is to make sure that our turnkey clients are coming back.
So our goal is to make sure that they’re making money. And so I’m going to structure the deal in a way that every time they’re getting more money than they would in any other way in putting their money in the market in any way. And so as long as I can do that and they’re not doing anything and they can call themselves a house flipper, they get the ego of being able to say, I’m an investor with being hands off, but then getting a 20, 25, sometimes up to 35% return on it, then they’re happy as clams.

Dave Meyer:
I’m just trying to understand the risk reward profile here

Chauncey Pham:
Because

Dave Meyer:
It’s like other turnkey properties, right? Normally, if you go and buy a turnkey rental property, you’re giving up some of your upside to lower your overall risk.

Chauncey Pham:
And

Dave Meyer:
That’s kind of what this seems like. You’re giving up some of your upside in a flip to lower your overall risk. So I’m just trying to understand what the risks are for the flipper. They’re owning the property, they’re still liable for cost overruns. So those are important considerations for people who would consider this model.

Chauncey Pham:
Yeah, absolutely. But the cost overruns aren’t the … We went over and you just have to pay it. It’s, this is a decision that as a real estate investor, you need to make. And ultimately, when we are underwriting these properties, we are extremely conservative with our numbers. So we are calculating everything as if everything has to get fixed. We’re talking all of the MEPs, everything cosmetic. So if there happens to be an overrun, then that’s typically because we’ve seen some sort of upside. So the house across the street just went on the market and it has an extra bedroom and we have the opportunity to convert a space here to a bedroom if you want to achieve that number. So then at that point you get to make that decision. It’s not just an arbitrary, “Sorry, we went over. You got to pay this extra money in construction.” It’s not that type of thing.
So they get what the full scope of work is before they even make the decision to acquire the property and they know what all of that looks like.

Henry Washington:
And it sounds funny, but like you said, I’m making more than them, but you’re making more than them across several different Different businesses. Correct. And this is all money that an investor pays to other companies anyway. Yeah, we’ll be being paid anyway. This is what I do anyway. Everybody always makes more money than me. It’s just what I get to walk away at the end of the day. I pay my contractors, I pay the title companies, I pay the real estate agents, I pay the project managers, and then I get to keep what’s left. The process doesn’t change. It’s just that in this particular niche, in this particular market, you own all these businesses. So you’re mitigating your risk by taking your profit margins through your companies and not having to own the real estate asset, and you’re still making money flipping houses. You’re just not the one owning the asset and you get to offer essentially a turnkey product to your seller.
That’s a pretty cool perspective. Vertical integration is, I think, important to most businesses, but it’s an intimidating thing to take on. How did you take that bite of the elephant to where you started to own different parts of the process that weren’t the typical buy the house, renovate the house?

Chauncey Pham:
Yeah. So it actually started with this mastermind that I’d gone to for real estate, and they had us do this exercise where we wrote the word realtor in the middle, circled it, and then we had to come up with who all in a transaction made money. And at the end of the day, I think we came up with 45 different people in a real estate transaction, make money from something out of realtor rinks. So then when we found ourselves on a television show, flipping houses and getting more and more demand for needing to get more houses, we were like, “Man, I don’t really want to buy more houses. How can we leverage what we know? How can we … ” And I just had this thought and I told my husband, I’m like, “We did this exercise when I was a realtor. Let’s see all of the different parts of flipping a house, how many people are making money off of that?
” And instead of us going out and always buying more houses, why can’t we just leverage our skillset in this and leverage our expertise and make money off of all of the different parts? Because ultimately that’s what people have the most problems with is implementation. So if I can implement things for people that I’ve already become an expert at and I can just make money, then that’s how I’ll do it. So it really was kind of born from, again, this idea that I learned being a realtor and then out of necessity of just continuing to need to buy more houses on the television show. And right at the tail end of that, and I’m like, I’m tired of having to buy more houses. We finished and wrapped production with the show and we were like, let’s try this turnkey thing. Enough people now know us.
We have the credibility. We have the processes built out. And so then we just started doing what we were already doing. So then it was pretty simple. We were already sourcing deals. So we just made that a legit process. We already understood hard money lending. So then we looked at what it would take to get a line of credit that we could loan out and broker for other hard money lenders. We already had our own construction company, so that was already set in stone. But then we got our tax resale certificate and then we set up accounts with all of the wholesale suppliers for the materials. We then bought the staging inventory and set that business up. So it was things that we were already doing. I think you start to get into the weeds with vertical integration when you’re trying to reinvent the wheel instead of looking at what you’re already doing, who you’re paying money to, and then seeing how you can kind of bring that in- house, which is ultimately what we did.

Dave Meyer:
It makes total sense. I mean, this money is going out. You might as well get some of it if you have the capacity to do it. It’s impressive, super impressive that you’re able to run all these businesses. Did you start all of them? Did you acquire them or is all this from scratch?

Chauncey Pham:
No, we started.

Dave Meyer:
Wow, that’s

Chauncey Pham:
Awesome. We started them all from scratch.

Dave Meyer:
Very cool.

Chauncey Pham:
Just one by one. And they’re not running independently. I’m not marketing all of them. So it doesn’t seem daunting.

Dave Meyer:
Yeah. It’s not like you’re doing staging for someone else. You do it for yourself. Yeah. Right. Yeah. Okay. Yeah. That makes total sense. So you’re marketing turnkey and then everything else flows from there.

Chauncey Pham:
Correct.

Dave Meyer:
That makes sense.

Chauncey Pham:
And occasionally we get the one-offs where someone just wants a retail construction job, we’ll take it. I do design jobs for other people, but that’s not my focus and that’s not what I market, but I do have the ability to do that. So as the market changes, I’m in the position to make money in a ton of different ways when other people aren’t.

Henry Washington:
Well, I commend you, you’re braver than me because the amount of times I’ve thought, man, I should just start my own construction company because I’m running all these crews anyway and just haven’t pulled the trigger to do it. You are my inspiration that this is absolutely possible, Harry. Especially with the level of experience- Totally

Chauncey Pham:
Doable, dude. It’s so doable. It really is.

Henry Washington:
All right, Chauncey, thank you so much for coming on the BiggerPockets Podcast and sharing a literal wealth of experience. I wish we had more time to be able to dive into all of the things that you have experienced and have experience in in the real estate world. Thank you so much.

Chauncey Pham:
Thank you for having me guys.

Dave Meyer:
Thanks, Chauncey.

Henry Washington:
Also, guys, if you learned something from this episode, then I recommend you checking out BiggerPockets Podcast, episode 1160 that’s back from August 2025, where Dave and I both shared some of our favorite cheap and easy methods for sourcing great deals. Thank you so much everybody for listening to this episode of the BiggerPockets Podcast. We’ll see you on the next episode.

 

In This Article

This article is presented by BAM Capital.

You bought your first rental, or maybe your second and third. You learned how to screen tenants, handle maintenance calls at 11 p.m., and navigate the slow grind of building equity one unit at a time. That took discipline and real courage, and most people never do it.

But the skills that make you a great single-family landlord aren’t the same ones that build lasting, scalable wealth. At some point, the model starts working against you.

More properties mean more tenants, calls, and systems to manage—and more of your personal time tied up in something that was supposed to give you freedom. The returns can plateau. The complexity increases. And you start wondering if there’s a smarter way to grow.

There is. And thousands of experienced landlords are already making the shift.

The Ceiling Every Single-Family Investor Eventually Hits

Single-family real estate is a genuinely great starting point. It’s tangible, relatively straightforward, and easy to finance. But it has structural limitations that become more painful as you scale.

Vacancy hits harder

When a tenant leaves a single-family home, your income from that property drops to zero. No other unit absorbs the blow. Every empty month is a full month of paying carrying costs, such as mortgage, insurance, and taxes, out of your own pocket.

Your time doesn’t scale

Ten single-family homes mean 10 roofs, HVAC systems, sets of appliances, and potentially 10 different property managers spread across different neighborhoods. The coordination alone becomes a part-time job.

Appreciation is hyperlocal and unpredictable

A single-family home’s value is heavily tied to what comparable homes in that specific neighborhood are doing. You’re exposed to local market swings with limited ability to diversify within a single asset.

Financing gets harder

Conventional lenders typically cap the number of financed properties you can hold. Once you hit that wall, your options narrow and get more expensive.

All this means there’s a natural evolution point from single-family housing, and multifamily is often where sophisticated investors land next.

Why Multifamily Performs Differently

The economics of multifamily work in fundamentally different ways than just “more units”—and most of those differences favor the investor.

Built-in diversification within a single asset

A 100-unit apartment complex doesn’t go to zero vacancy when one tenant leaves. Occupancy fluctuates, but cash flow continues. This natural smoothing effect is one of the most powerful risk-reduction tools in real estate—and it’s baked into the asset class.

Income drives value

Single-family homes are valued primarily by comparable sales. Multifamily properties are valued on net operating income (NOI). This is a critical distinction: If you increase rents, reduce vacancies, or cut operating costs, you directly increase the property’s value. You’re not waiting for the market to do it for you.

Operational efficiency at scale

One property manager, maintenance team, and insurance policy—managing 80 units in one building is not 80 times harder than managing one. The infrastructure consolidates. Costs per unit drop. Systems actually work.

Institutional-grade demand drivers

Multifamily benefits from some of the most durable demand dynamics in real estate. Housing costs remain elevated. Homeownership rates have stagnated among younger demographics. Demand for quality rental housing isn’t a trend—it’s a structural reality.

The Old Barrier to Entry, and Why It No Longer Exists

For most of real estate history, institutional-quality multifamily was simply out of reach for individual investors. A 200-unit Class A apartment complex in a growing metro might carry a $30 million–$50 million price tag. You needed institutional capital, relationships, and infrastructure to compete. 

That changed with the rise of real estate syndication, which allows a group of accredited investors to pool capital and invest alongside experienced operators who source, acquire, manage, and ultimately exit the asset. You participate in the economics—cash flow distributions, appreciation, and tax benefits—without taking on the operational burden.

The sponsor (the general partner, or GP) does the heavy lifting: finding the deal, securing financing, overseeing the business plan, managing the property management team, and executing the exit strategy. You, as a limited partner (LP), contribute capital and receive returns proportional to your investment.

What you give up—and what you get

As a passive LP investor, you give up direct control. You’re not choosing the paint colors or approving the lease renewals. For operators accustomed to having their hands on every decision, this can feel uncomfortable at first.

What you get in return is professional management, deal flow you couldn’t access alone, diversification across markets and asset sizes, and—critically—your time back.

How to Evaluate a Multifamily Syndication

Not all syndications are created equal. Before committing capital, here’s what experienced passive investors pay close attention to:

• Track record of the sponsor: How many deals have they completed? Examine the sponsor’s track record: Have they historically met their targets on a net-of-fee basis, and how have they navigated varying market cycles? How did they perform through adversity?
• Market selection: Is the property in a market with strong employment growth, population inflow, and limited new supply?
• Business plan clarity: Is the value-add strategy specific and credible? You want a clear thesis: renovate X units, achieve Y rent premium, and exit at Z cap rate.
• Preferred return and waterfall structure: A preferred return (typically 6%–8%) means limited partners receive distributions before the sponsor takes their profit. Understand the full waterfall before you invest.
• Alignment of interests: Does the sponsor have their own capital in the deal? Skin in the game changes behavior.
• Transparency and communication: How often does the syndicator report to investors? How do they handle bad news?

The Tax Angle (It’s Better Than You Think)

One of the most compelling, underappreciated aspects of multifamily investing is the tax treatment.

Depreciation on commercial real estate can offset significant portions of the income generated by a property. With cost segregation studies, sponsors can accelerate that depreciation, front-loading the tax benefits in the earlier years of the hold.

For passive investors, this often means receiving distributions that come with paper losses that offset taxable income. Through strategies like cost segregation,  investors often receive distributions that are offset by depreciation, potentially reducing the immediate tax impact. However, tax benefits vary by individual and should be verified with a professional. 

This is a meaningful advantage over other income-generating investments—and one that single-family investors often underestimate when they first evaluate multifamily syndications.

As always, consult your CPA or tax advisor for guidance specific to your situation.

Is This the Right Move for You?

Multifamily syndication is available to accredited investors, who are generally defined as individuals with a net worth over $1  million (excluding primary residence), income over $200,000 ($300,000 with a spouse),  individuals holding certain professional certifications (e.g., Series 7, 65, or 82), or entities with assets exceeding $5 million. 

Beyond qualification, it suits a specific type of investor: someone who has already proven they can build wealth through real estate, understands the fundamentals, and is ready to grow without growing their personal workload.

If you’ve spent years building a single-family portfolio and you’re starting to feel the ceiling—the management complexity, the financing constraints, the time trade-offs—multifamily syndication is worth a serious look.

A Note on Finding the Right Operator

The quality of your returns in passive investing comes down to one thing above all else: the operator you choose. The asset class and market can be right, and the deal can still underperform with the wrong team at the helm.

For investors exploring multifamily syndication for the first time, doing due diligence on the sponsor is the single most important step in the process.

BAM Capital is an operator that has gained attention among accredited investors seeking institutional-quality multifamily exposure. The firm focuses on Class A and B multifamily assets in the Midwest, with an emphasis on markets with strong employment fundamentals and long-term demand drivers. For investors who want to participate in multifamily without building an in-house team or sourcing deals themselves, firms like BAM Capital represent the kind of investment vehicle worth putting on your research list.

Whatever operator you ultimately choose, make sure they’ve been tested—not just in good markets but in difficult ones too.

Final Thoughts

Single-family real estate built your foundation. Multifamily can be what takes you to the next level without the operational complexity that comes with continuing to scale the old model.

The economics, scale, and tax treatment are all different. And crucially, the demand for your time is also different.

If you’ve been wondering whether there’s a smarter way to keep growing, there is. The investors who figure that out earliest tend to look back and wonder why they waited so long.

Disclaimer: This content is for informational purposes only and is not financial, tax, legal, or investment advice, nor an offer or solicitation to buy or sell securities. Investment opportunities offered by BAM Capital and its affiliates are made pursuant to Rule 506(c) of Regulation D, available exclusively to accredited investors, as defined by the Securities and Exchange Commission (SEC) and, if applicable, qualified purchasers, as defined by Section 2(a)(51) of the Investment Company Act of 1940. Verification of accredited investor status is required before participation in any investment.

Contact BAM Capital for details on current offerings. BAM Capital and its representatives are not fiduciaries or investment advisors. The information provided is general and may not reflect individual financial goals. Financial terms, projections, or forward-looking statements contained herein are hypothetical and should not be interpreted as guarantees of future performance or safety. Such statements reflect BAM Capital’s opinion and are subject to market fluctuations, economic conditions, and investment risks. Investing in private real estate securities involves significant risks, including, without limitation, illiquidity, economic downturns, and potential loss of invested funds or capital. Past performance does not predict or guarantee future results. Historical transaction figures represent past performance across multiple deals as of the date this information was published, not a single investment transaction. BAM Capital and its affiliates do not guarantee the accuracy or completeness of this information. Prospective investors are strongly encouraged to conduct independent due diligence and consult with legal, tax, and financial advisors before making any investment decisions.

© 2026 BAM Capital. All rights reserved.

In This Article

A recent Wells Fargo survey shows that nearly all Americans want to save in 2026, but doing so is proving harder than ever.

Being able to save is one of the core pillars of real estate investing. Amid a cost-of-living crisis, more people are finding it harder to accomplish.

“The findings tell us that when people feel in control of their money, it has a positive association with self-care, happiness, and freedom for most people, even though about half are at odds with spending versus saving,” said Chris Starr, Wells Fargo’s head of deposits. “But life happens, and many adults can’t cover a financial surprise. A clear plan to manage spending and save where you can lowers stress and puts you in control of your money.”

Unrealistic Expectations

The problem many real estate investors face is that we are bombarded with hard-to-duplicate success stories—people who were working low-paying jobs who found a seller willing to hold the note and then found others, and before you know it, they were amassing doors and cash flow.

While that might be possible, many of these stories, in my opinion, set a dangerous precedent because they involve high risk and leverage, and for every such story, there are many more that end in financial disaster. What many of these stories fail to explain is that attaining the doors is one thing, but holding on to them when you are highly leveraged is another.

Far more common and realistic are stories of real estate investors who kept their steady, decent-paying full-time jobs, amassed some savings, and invested cautiously, with a buffer of cash on the side to help them overcome inevitable obstacles as they built their portfolios. Now that saving money is harder than ever, investing safely in real estate is becoming more difficult. However, that doesn’t mean it cannot be accomplished with discipline and sensible investing strategies.

A Reality Check

Before launching into saving strategies in today’s market, these are the realities that savers are currently facing.

The cost of living has increased in all areas

Bloomberg: Overall inflation has cooled, but Americans still pay about $126 today for what cost $100 before the pandemic, with the biggest jumps in costs of groceries, housing, utilities, and car insurance.

Renters are cost-burdened

Harvard University’s Joint Center for Housing Studies: For current renters looking to save for a down payment on a small multifamily dwelling, it often feels as if you are facing an endless uphill battle. In 2024, nearly 23 million renter households spent more than 30% of their income on rent and utilities—nearly half of all renters. Cost burdens have risen in 44 states and 88 of the 100 largest metro areas over the past five years.

Monthly mortgage payments have doubled

Yahoo! Finance: Citing analysis from Strategas, Yahoo! Finance reports that the average monthly mortgage obligation has “more than doubled” in just over five years as higher interest rates, with increased house prices (not to mention taxes and insurance), pushed typical payments over $2,600 by April 2025.

Greater amounts of money are needed for a down payment

Bloomberg: Goldman Sachs economist Elsie Peng estimated that a couple now needs about 70% of their annual household income to afford a standard (20%) down payment on a median-priced home, up from 58% in 2019.

Practical Ways to Save

As real estate investors, we have always prided ourselves on thinking creatively about financing, using techniques such as subject-to, seller financing, rent-to-own, private money, DSCR loans, etc. It’s easy to get caught up in the hype of these work-around solutions instead of having to dip into your pocket for a big down payment.

What is often overlooked is the fact that, as an investor, you still owe the monthly mortgage payment, and chances are it is a lot higher than if you financed conventionally (unless you inherited a low rate). In an age when everything else is going up, leaving yourself with small margins and little cash on the sidelines is not wise.

It’s fine when using OPM for the down payment, as it allows you to keep hold of your savings for emergencies. The problems arise when you are using OPM because you don’t have any savings to start with.

One way to save more money is to take a holistic view of your expenses. Here are some ways to do it.

Cancel subscriptions and memberships

Rather than waiting for costs to drop, a more practical solution is to carve out investable cash from your existing budget, which, admittedly, is easier said than done.

MarketWatch experts suggest taking a holistic look at all your expenses, including recurring costs such as streaming services, app fees, subscriptions, and unused memberships. If you have a specific target, look to eliminate or at least downgrade it. 

Individually, it might not sound like much in your quest for mortgage money, but collectively it can add up, especially if you have your eye on an FHA loan with a 3.5% down payment.

Save on healthcare

CNN reports that millions of Americans are facing higher premiums and out-of-pocket costs as the Affordable Care Act costs expire. Shopping around for plans, using employer benefits, and effectively avoiding medical expenses where possible can free cash for a down payment and reserves.

Pay down debt

Unless you have a firm handle on your debts, they have an annoying habit of increasing. Before investing, put your savings toward eradicating bad debt, such as credit card, student loan, and store card debts. By doing this, you have effectively kick-started your cash flow by boosting the amount of money left in your pocket at the end of the month.

Increase income

Here’s another heading that falls into the “easier said than done” category. However, there are practical ways to do this that don’t involve driving an Uber through the night or working side jobs at Starbucks and Home Depot—although these are excellent ways to get healthcare coverage plus extra income if you have the time.

Live somewhere cheaper

You don’t have to emigrate to Cambodia to accomplish this, though living and working remotely can certainly turbo-boost your ability to save. Other, less drastic measures include taking in roommates or short-term rental guests, or moving in with your parents or family members to help you save money. Alternatively, you could choose to become a short-term tenant in a room in someone’s house rather than renting an entire apartment.

Look for practical side hustles

Rarely does a day go by that I don’t see an influencer telling me how they made millions of dollars online by working five hours a week in their shorts and flip-flops by a beach.

As tempting as it is to try to go down that rabbit hole of easy cash, the safer bet is to do something where the money is more guaranteed. It might not be glamorous or very well paid, but it’s not forever, and when done alongside everything else, the goal is to get you to that first down payment faster. 

Nerdwallet breaks down some no-nonsense ways to get your money right.

Final Thoughts

The strategy of lowering expenses and increasing income is from the school they knocked down to build the new school. However, as vintage as it is, it still works. If you plan to invest in real estate in the current high-expense era, having sufficient cash is a must.

Put the blinkers on and don’t get sidetracked by the “I was delivering pizzas a year ago, and now I’m making $100K in cash flow a year” stories because you are setting yourself up for a big fall, even if you have lenders or private money willing to back you. You still owe the money, tenants are still liable to skip paying rent, and repairs will inevitably need to be done. 

So focus on the hard work of saving cash and explore the joys of eating beans and rice a few times a week. It’ll be worth it in the long run.

Dave:
15 years ago, Matt McCurdy had everything most people want, a fresh MBA, a stable corporate job, and a clear path to retirement in 30 years. There was just one problem. He didn’t want to wait 30 years. So he sat down, wrote a business plan for real estate investing and bought his first rental property. Then he bought a few more. When his stable job became not so stable and he had to leave his W-2 job a few years later, he didn’t panic. He already had a backup plan generating income for him. So he decided to go all in on real estate and continue to build an impressive rental property portfolio. Today, Matt owns more than 50 properties and has a cheap financial freedom decades earlier than he would have if he had stayed in that cubicle. Matt took his financial future into his own hands instead of relying on a corporation and you can do the same thing.
Keep watching to find out how.
Hey everyone. I’m Dave Meyer, Chief Investment Officer of BiggerPockets. Today’s show is an investor story with Matt McCurdy from Cedar Rapids, Iowa. Matt’s going to share his story of how he escaped the corporate treadmill by buying great cashflowing properties in Cedar Rapids, Iowa. In this show, we’ll talk about why he waited almost 18 months to buy his first property, how he navigated a crossroads of whether to stay small or keep scaling, and how he bought 20 homes in a single deal with only $30,000 in cash. That actually happened. It’s a great story and there are a lot of lessons that all of you can apply to your own investing careers. So let’s bring on Matt. Matt, welcome to the BiggerPockets Podcast. Thanks so much for being here.

Matt:
Yeah, thanks for having me.

Dave:
I’m excited for our conversation to learn a little bit about your real estate investing journey. Let’s start from the beginning. Tell us a little bit about where you were in life when you decided you wanted to get into real estate investing and what brought that on?

Matt:
Well, I was in the typical role that a lot of people are in. In corporate America, grinding away, in a desk job, didn’t really see a way out of that. I saw a corporate ladder that I was trying to climb, but didn’t see it happening as fast as I wanted it to. So read the book that everyone typically has read. Robert Kiyosaki’s book, Rich Dad, Poor Dad, and then it kind of took off from there.

Dave:
That is a common angle, people reading Rich

Matt:
Dad

Dave:
Poor Dad. How old were you at the time when you were thinking about this?

Matt:
I think I was 27 when I read that book.

Dave:
And what was your career like? You said it was a desk job. Were you making decent money, just not fulfilling?

Matt:
Yeah, decent job. Call myself middle class. Did a four-year degree from the University of Iowa and moved through two different corporate positions in the supplier management role. So got to manage a lot of suppliers through project schedules, budgets. And from there, just didn’t see a way to transition to executive level to make the money I wanted to without going through the mundane manager roles that just grind people out.

Dave:
So where’d you go from there, Matt?

Matt:
Well, I started with a simple business plan. Speaking of my educational experience, they harped on creating a business plan. And I also saw that through my corporate America experience. So I said, “Well, if it’s working for Fortune 500 companies, it probably would work for me. ” So that’s what I first started with was a simple business plan. I knew I was going to be wrong from the get- go. It took me a year and a half to actually buying my first rental property, but after that it was plug and play and rent and repeat and try to go as fast as I could.

Dave:
I love that. So tell me a little bit why you wrote a business plan. It’s not something we hear a lot about in real estate investing. What was in it and what was the point? If you knew you wanted to do real estate, why go through the exercise?

Matt:
It helped me clear up everything that was in my brain and what I was hearing, what I was reading, what I was learning to put it onto paper. And once you put that onto paper, there’s something that happens between your brain, your nervous system, everything where you are actually committing to this and you’re really thinking through it. You can have ideas all day long, but it’s one thing to be very strategic with what you’re trying to do in your business. And now you’re trying to articulate it on the computer or writing it down on paper. Nowadays, it’s through AI. Why not? It’s very simple now. So there’s really no reason not to do it.

Dave:
It’s a differentiator, right? Absolutely. So few people do it. Whatever format you want to put that in, that doesn’t really matter. I think it’s the exercise of thinking through all the variables and what you’re good at. I love that. I think it’s really good advice that people should be following. So once you did that, Matt, what was your first deal? How’d you go about actually getting in the game?

Matt:
Yeah. So the first one was a prototypical single family house that was three bedrooms, one and a half bath house in Cedar Rapids, Iowa, not too far from a local elementary and high school. Just location-wise, it made a ton of sense. I wanted to position myself to rent to as many people as I possibly could.

Dave:
No, I mean, I think especially for your first deal, just trying to get that mass appeal kind of rental where you’re not going to have a lot of vacancies, you’re going to find a high quality tenant. It just makes a lot of sense. What was it like though? How mu did you buy it for? How’d you finance that?

Matt:
Yeah, I bought it for $92,000, which sounds ridiculous nowadays. It does. It does. Which still, this kind of shows you where I was at in Cedar Rapids in particular. We’re right around probably 225 to 250 for that house nowadays. I was always looking to force appreciation and really through that was just buying a house that needed some work. So this house needed about $15,000 worth of work. Some of it was sweat equity. My fiance and I did at the time, but that was a three bed, one and a half bath that we made a four bed, two bath.

Dave:
Okay. So you were doing real value add. This wasn’t just cosmetic. You was doing some structural stuff. And you did all the work yourself?

Matt:
No. So I would say half and half. I had a contractor. My actual father-in-law helped me on some stuff too. Nice. Because my wife and I, or my fiance at the time, both of us had W2 jobs. So we were very busy, but we were burning the candle at both ends, going over there after work, working on weekends, just doing anything and everything, kind of clawing to scratch and claw to get that put together.

Dave:
How long did that take? Well,

Matt:
We closed December 13th and we had a tenant in there January 1st. Oh,

Dave:
Okay. Oh

Matt:
My gosh. We were messing around and that’s-

Dave:
Yeah, we’re in celebrating the holidays that year.

Matt:
No, we did. We bought this house in December of 13th of 2013. We got married January 11th of 2014. So roughly a month later, we went from renovating this house to getting married. I can remember many, many nights. It’d be midnight, one o’clock, and we were just going after it. But we’re young and stupid.

Dave:
Yeah. I mean, it helps sometimes to be young and stupid, at least in my case. Yeah. Well, good for you. I mean, that’s kind of the hustle that it takes, man. This is a lot of times when you’re just getting started. You just got to do what it takes. It’s going to be different for everyone, but recruiting your father-in-law, doing the work yourself, figuring out a way to get it funded, that’s usually what a first deal looks like. I know a lot of people want to raise private capital or do something advanced to start, but I think the hustle approach is not only the most common way, but often the best way you learn a lot, you learn what you like, what you don’t like, what to avoid in the future. And whether or not, honestly, if you’re going to like this business, but I assume since we’re talking here today, Matt, that you liked it, even though it sounds like a stressful couple of weeks and a very big push to get this thing open, sounds like it worked out well for you.

Matt:
I had my idea and I went with it. I’m too stubborn to stop. I learned, speaking of learning some things, I did not scope the sewer line. And that house unfortunately had Orangeburg sewer lines, which people don’t know what Orangeburg was. It was this magnificent revolutionary product back in the ’60s that they put in a lot of houses for sewer lines. And it was wrapped with some kind of cardboard paper type exterior, which go figure in the ground. It’s eventually going to rot and fall apart. So on our honeymoon, I was getting phone calls and I was actually dealing with a collapsed sewer line and tenants that were fortunately patient with me and were able to get some people to help while I was out of state.

Dave:
Yeah. These are the things you learned, right? Now, I’m sure you get a sewer scope on every deal you do. So sounds like a great first deal, Matt. I want to hear about what you did next, but we got to take a quick break. We’ll be right back. As a host, the last thing I want to do or have time for is to play accountant and banker, but that’s what I was doing every weekend, flipping between a bunch of apps, bank statements, and receipts, trying to sort it all by property and figure out if I was actually making any money. Then I found Baselane and it takes all of that off my plate. It’s BiggerPockets official banking platform that automatically sorts my transactions, matches receipts, and shows me my cashflow for every property. My tax prep is done and my weekends are mine again. Plus, I’m saving a ton of money on banking fees and apps that I just don’t need anymore.
Get a $100 bonus when you sign up today at baselane.com/bp. BiggerPockets Pro members also get a free upgrade to Baselane Smart that’s packed with advanced automations and features to save you even more time.
Welcome back to the BiggerPockets Podcast. I’m here with investor Matt McCurdy, talking about his first deal, how he hustled into a single family home in Cedar Rapids, Iowa. Matt, after that first deal, you had a couple hiccups, but it sounds like overall it went well for you. What’d you go on and do after that?

Matt:
Unfortunately, I didn’t have a bank role. I didn’t have the idea of syndications back then. So I really just used my W2. I did the old fashioned way, saved a lot more than I spent. We were living pretty broke just to try to save every dollar because every dollar and cent got me closer to my end goal, which was ultimately to leave corporate America. So the faster I did that, the quicker I could get to it. So short-term sacrifice equals long-term gain, and that’s the way I look at it. So 2014, we just bought a couple properties, two single family houses, and then in 2015, we really scaled up a lot quicker with four duplexes and then I want to say three additional single family houses.

Dave:
And you were doing that just still with your W2?

Matt:
So that is part of it. The other part is, unfortunately, my wife, her mom passed away in November of 2013. I’m sorry. We had that on the front end, bought that first house and then got married. So we had a- Wow. Like I said, a busy couple months.
But we used some of that life insurance money to help pay for the down payment on those four duplexes. We still have those four duplexes. We still talk about how those are Karen’s duplexes. It’s just a great way to remember through that. But what we also did was find a different financing, basically a local credit union, and that loan officer was a lot more aggressive than what I was used to dealing with with the first few properties. And that’s something I’ll always advocate to do. I’m doing it right now. I’m actually trying to shop around different insurance companies, always trying to shop around, not necessarily rub it in the current people’s face that you’re doing it, just do it kind of behind the scenes and see if there’s other better options out there. And luckily we’re able to find a different loan officer that took a little bigger of a chance with it, did some bridge loan stuff with us and made it work so we could tackle those four.
It was a bigger bite than I was used to taking buying four duplexes all at the same time, but they’re all on the same block. Tons of synergies there. And then really once you hit five or more, it starts snowballing where it becomes- I agree. Instead of hundreds of dollars, it becomes thousands of dollars. And now thousands of dollars just sounds better.

Dave:
Yeah. It also buys more.

Matt:
Yeah, it does. It really does. And then every dollar that you’re taking from that, especially if you have a W2 job like I did, it was just compounding so much faster for me.

Dave:
It really does. Between the equity you’re building, the cashflow you’re getting, you’re saving more money, it really does have a exponential effect. People call everything exponential growth, but it actually can be exponential growth if you’re reinvesting your profits in the way that you should. So it sounds like you grew fast, Matt, but you were working at the same time. Your goal though was to quit your job. So did you have a number in mind, like, if I can get to X cashflow a month, I can quit my job and I need Y number of properties to get that cash flow. Is that what you were working towards?

Matt:
Yeah. And I was just trying to keep it simplistic. I ended up leaving corporate America in 2017, or corporate America left me is how that went.

Dave:
Oh, you lost your job?

Matt:
Yeah. So they moved my job to corporate headquarters and I didn’t really want to move there. Oh, fair. It didn’t really make sense for me to move, number one. And number two, I was planning on leaving in April of 2017, but they actually gave me severance until about April of 2017.

Dave:
Is it funny how some things work out like that?

Matt:
Yeah.

Dave:
It’s like meant to be.

Matt:
It is. So what I was doing around that was like $500 a month per property.

Dave:
Wow. Okay.

Matt:
So that’s what I wanted. I think I had about 20 properties at that point. Oh,

Dave:
So you’re making like 10 grand a month in cashflow, which I mean, tax advantage cashflow too. It’s probably more like making 12 grand or 13 grand in W2 income.

Matt:
Yeah. And looking back on it, I was naive like, “Oh, is this enough?” Because as real estate investors, we know how much our P&I, principal and interest are, the insurance, the taxes, all those things weren’t as crazy as they are now.

Dave:
No, it

Matt:
Was much easier. They were more stable. Nowadays, it’s a little different, but the big variable was your maintenance and repairs. “What’s that going to cost? What if five furnaces go out this year? Oh, man. “But it still felt weird because I went through the American educational system. We are not taught to become entrepreneurs. We’re not taught to be out on our own. We’re taught to get good paying jobs and then go retire and then die. It still felt raw and weird, but- I

Dave:
Bet. It’s all

Matt:
Right.

Dave:
It’s also kind of addicting when you have the cash flow and the W2 income, it takes a little pressure off the real estate side, at least speaking from experience. You have all this income that I think for most people covers your living expenses and then everything else you could just keep reinvesting and reinvesting, but I’m sure you have to change your strategy a little bit because now you’re living off that cashflow and it’s not just pure reinvestment into your

Matt:
Portfolio. Absolutely. At first, I said I was retired and then I was like, ” Wait a minute, my friends are making fun of me. Call me the retired guy.

Dave:
“And

Matt:
I was like, ” No, I graduated from corporate America. “There you go. I graduated
Because flash forward to 2018, I was never busier. I couldn’t believe how I went from fishing and golfing and trying to fill my time in 2017, see where I would go to just putting on the full throttle in 2018 and acquiring as much as I did. But it was a good reset because I didn’t know where I was going to go. I wanted to make sure my numbers were right. I still couldn’t believe that I wasn’t going to get hammered with taxes. I was just used to that mindset of the W2 where you get hammered with taxes, you’re meant to kind of be average and work through whatever they tell you to do. Whatever HR tells you you can have for a raise, whatever they tell you, you can have for a bonus, you accept and you move on. And now I’ve entered a new space where it’s up to me what I make.
It truly is. And it’s-

Dave:
Yeah, it’s

Matt:
So

Dave:
Liberating.

Matt:
It really is. It’s very liberating, but also scary. Where are you going to come up with the money to grow at this point? Where are you going to come up with the money if some of these risks actually come to fruition?

Dave:
I think it’s cool, the idea of just taking a little bit of time off. It helps reinforce that you really want to do real estate because if you have enough money to go play golf and go fishing, and then you’re like, ” Actually, I like doing this. I want to keep growing. I enjoy this. “And I think that’s where it goes from exciting and motivating because there’s this financial element to being fun and fulfilling where it’s like, this is a business and it’s something that matters to me more than just the dollars and cents. So in 2018, when you dove back in, where did you apply your time and your energy?

Matt:
It was the first time I acquired a package of single family houses. And that’s a really good niche if you have the capital or you have the leverage to be able to do something like that. And this package was sitting on the MLS. Oh, wow. Really? It was just sitting there underrented and that’s what turned a lot of people off. They didn’t understand what the market rent was for this portfolio. To give you an idea, those were $114,000 houses times 10, so 1.14 million. And I was able to cross collateralize some stuff. And I was a real estate agent, used my commission for some of the down payment, representing myself as a buyer. So I only brought, I think, maybe $100,000 to the 20% down.

Dave:
Oh my God, that’s amazing.

Matt:
So fast forward roughly eight years. Some of those properties are pushing 200, some of them are 250, $250,000.

Dave:
On average, double basically.

Matt:
In 2018, some people were talking about, well, maybe we’re overpriced at that point. But going back to my business plan, I would’ve shied away from that because I wasn’t making $500 a month in cashflow before repairs and maintenance. I was only going to make about 350 to 400 there. But the way I justified it is, do I want to grow? Number one, the answer was yes. Number two is, okay, what have I been doing in the past to make that 500? And it was to renovate a lot of these houses. And there were only about one or two of them that truly needed renovated. The rest of them were just plug and play and we were able to keep a lot of those tenants in place even after major rental increases.

Dave:
I mean, I think this is part of the trade-off that you have to make. It’s like you make more if you dive deep into one property, if you’re going to do value add. But sometimes when you want to scale, like Matt’s talking about, you have to give up some of the immediate upside. It’s not giving up the long-term upside, but you can’t renovate 10 properties all at once. I would imagine in your position, you’re buying 10 and you say, “This is more of a turnkey kind of thing. I might make a little bit less per unit on this, but I’m getting 10 all good deals at once, even if they’re not all home runs.” That’s just part of the trade-off as you scale, is just figuring it out. You want to do one great deal at a time or a couple pretty good deals at a time.
I think when you’re at the point Matt was at a couple pretty good deals makes a lot of sense. So Matt, I want to hear more about how you took this over because I do think people are sleeping on this idea of acquiring portfolios as they scale. You were able to not put that much down. It might be more accessible than people think. We’re going to dig into that, but we got to take one more quick break. We’ll be right back.
Welcome back to the BiggerPockets podcast. Matt McCurdy and I are here talking about his journey from buying a single, single family home in Cedar Rapids, Iowa to buying a package of 10 properties in 2018. Let’s talk a little bit about these 10 properties because it sounds great. You only put a hundred grand to buy $1.1 million of properties, but I would imagine taking over these properties all at once is kind of like an operational challenge. What was that like?

Matt:
It is. And then the part I didn’t tell you, we actually were expecting our son, he’s now seven, but he was born in mid-November of 2018. We closed on those right around Halloween of 2018. Oh my

Dave:
Gosh. So everything all at once.

Matt:
Yep, of course. That’s the way I roll. But at that point, my wife had a little bit of feedback for me. The question was, how are you going to manage all these? Because at that point I was self-managing everything and I started my path of hiring a property manager. And what I did was I still self-managed most of my portfolio, but everything I was acquiring moving forward, I was giving to a property manager because I was still being cheap and scarcity mindset of just not wanting to give over everything because I didn’t value my time as much as I probably should have.

Dave:
Did you hire a firm or were you trying to hire a person who actually worked for you and just managed your rentals?

Matt:
He was more of a mom and pop property manager versus ABC property management company kind of thing.

Dave:
Personally, I find those people to be more effective.

Matt:
This one wasn’t.

Dave:
Oh, no. Uh-oh.

Matt:
Yeah. I went through two, one every year and then finally ended up hiring someone in- house and to this day he’s still my property manager.

Dave:
Yeah. I mean, that’s kind of the dream, right? The

Matt:
In- house property

Dave:
Manager.

Matt:
That’s the ideal world.

Dave:
Did it at least give you confidence that you could keep scaling from that point? Having hired a property manager, did that mean you could go out and buy more units? Did you want to go buy more packages? What did that open up for you, if anything?

Matt:
It helped me to really develop that team that Robert Kiyosaki talks about, develop that team. You got to have a team and maintenance and repair contractor type workers are just, they’re tough. They’re really tough to find because all those property management firms have those contractors and you pay for them sometimes dearly, but getting some of that control back was definitely a blessing for the portfolio.

Dave:
So Matt, after you did this, 2018 still, you started to systemize this business, you’re now not working in corporate. Catch us up to what you’ve done between 2018 and today. I

Matt:
Started looking at mobile home parks and I acquired a couple of those, one in 2020 and one in 2021, but I still didn’t take my eyes off of the single family duplex area that really has been my bread and butter. And I ended up acquiring another package in 2023 back again, prices are white hot, shouldn’t be able to get anything. And I ended up buying a package of 22 houses.

Dave:
Oh, whoa. In Cedar Rapids still? All the same?

Matt:
Yeah. Yeah. Yeah. And again, that was another thing where I lowered my cashflow expectations, but I ended up buying in for the equity.

Dave:
Because you got such a good price?

Matt:
Yeah, it really made a ton of sense. I’ve combed through those numbers so many times I couldn’t believe what I was actually buying. I’m pretty sure from purchase price to appraisal value, it was roughly a million dollars difference. And that was me not turning a wrench on anything.

Dave:
How would you not do that, right?

Matt:
Yeah.

Dave:
How did that come about? Were you looking for a package or did it just kind of fall into your

Matt:
Lap? That’s a funny story. I’m a real estate broker in Cedar Rapids, and I actually helped this client for the first property he ended up selling, but he just kind of started going with another agent and I guess she convinced him to put him into a package or maybe he got tired of dealing with the onesie-twosie sales that I told him to do and he just wanted to be done and out and just the timing was right. There was a little bit of a lull in Iowa in the fall of 2022 and early 2023 where things were just kind of sitting a little bit longer than they had in the past. And everybody was thinking, “Oh, I’m going to have my house listed, have 10 offers in the first 10 hours kind of situation.” And then when that didn’t happen, people kind of panicked. So I actually told the agent, I said, “I don’t know how he’s going to react to me even offering on these.
He has my phone number. He could have totally just reached out to me and saved himself all his commission.” But again, I was representing myself as the buyer and got commission to buy my own properties. And that one, I didn’t bring much to the closing table either because I was able to cross collateralize one of my mobile home parks and use my commission. I think I brought like $35,000 in cash to closing for- Wow.

Dave:
That’s unbelievable.

Matt:
$2.2 million purchase.

Dave:
Unbelievable. Yeah.

Matt:
It’s all about getting creative.

Dave:
So Matt, we got to get out of here, but maybe just tell us before, what does your portfolio look like today and what are your plans for the future?

Matt:
Yeah, so my portfolio, I have roughly 50 buildings. So between single families, duplexes, 60 front doors, and then I have about 90 mobile home lots that are filled with about a hundred additional lots that I need to infill for mobile home park stuff. And then just recently wrote a book, got it published right before Thanksgiving.

Dave:
Congrats. What’s it on real estate?

Matt:
Yeah. Yeah. Awesome. I call it the guide to buying one to four unit real estate. And just kind of really the idea was to write something. I never wanted to be an author, but I have a son that’s seven and I’m not sure if he wants to be in real estate or not. But if I got hit by a bus, I have all this knowledge that I haven’t shared with him, nor could he comprehend right now just at his age. So I just wrote 15 chapters in this book of things that I really think are critical for investors to understand. And it’s certainly only, I think, 160 pages long. So it’s not terribly in depth to the point where you have all these strategies, but at least it gives you an idea of understanding things. And I try to put in stories and humor to make it fun and real life concepts kind of like what I’ve shared today in that.
So yeah, the book’s called Corn Fed Millionaire Playing upon all these farmers in Iowa.

Dave:
That’s awesome.

Matt:
I’m not a farmer if you’re wondering. Is it

Dave:
Out yet?

Matt:
Yeah. Yeah. We published it right before Thanksgiving of 2025.

Dave:
Awesome. Well, check it out. Corn Fed Millionaire. I love the title.

Matt:
Yeah. Yeah. And you can check me out. I have a real estate brokerage firm and anybody that’s looking at Cedar Rapids market, you can go to investoredgere.com/biggerpockets and you can get a free Cedar Rapids market report, kind of tell you what’s been going on. We’re like every other metro in the country. We have a couple data centers that are They’re coming online and just a ton of rental demand that we’re seeing from that.

Dave:
Well, Matt, thank you so much. Congrats on your success and thanks for sharing your insights with us. I know probably buying packages of houses sounds difficult, but if you look at the way Matt sort of methodically went from hustling his first deal to getting a little bigger to getting a little bigger, that’s how you scale. You have to put in that effort upfront and then these opportunities, it does start to snowball, whether from your financing or your deal flow. This is how you build a successful real estate investing career. It takes 10 years. It takes 15 years, but you can absolutely do it. And Matt, congrats on all your success. It sounds like you’ve really done it all the right way and happy to hear that this has worked out for you in the way you were hoping.

Matt:
Yeah. Thanks a lot. Thanks for having me.

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.

 

In This Article

Indianapolis and the state in which it sits, Indiana, couldn’t be further apart when it comes to their real estate fortunes. For mom-and-pop landlords eyeing Indiana for future investments, the sharp divide between parts of the city and state is indicative of the modern-day market realities that need to be considered when underwriting deals.

Indianapolis: Zillow’s Top Buyer-Friendly Market

Indianapolis has been on investors’ radars for some time, culminating in Zillow ranking it as the most buyer-friendly market among the 50 largest U.S. metros for 2026. The listings giant cited a perfect storm of buyer favorability.

Orphe Divounguy, senior economist at Zillow, said of the list, which featured mainly Midwestern and Southern cities:

“Home shoppers have room to breathe in these buyer-friendly markets. Lower competition gives buyers more time to decide and wiggle room to negotiate, adding up to a less stressful shopping experience. Cooling prices today, paired with expected growth ahead, make for a good entry point for those who have been waiting for the right moment. For sellers, pricing strategically from the start becomes that much more important when buyers hold the power.”

Affordability Is a Key Driver

“People are gravitating toward this area due to the market affordability,” Laura Turner, a broker and owner of F.C. Tucker Laura Turner Realty Group, told local news outlet WRTV. ”Nationally, they may be spending 50% to 60% of their income [on their mortgage]; here, it’s 30% or less of their income.”

“Companies are going to be looking at this area to say we want to locate headquarters to Indianapolis,” Turner continued. “Because of the affordable housing, because this is a destination that people are wanting to raise their families in.”

For smaller investors looking to augment their incomes with additional cash flow, Indianapolis works because entry-level prices and cap rates make turning a profit or at least breaking even a real possibility, even as interest rates flutter around 6%. However, Indianapolis also serves as a cautionary tale for what investors need to watch for when scouting markets.

Regional Indianapolis: A Tale of Two—or More—Cities

Metro Indianapolis, like Pittsburgh and Detroit and other older Midwestern cities, functions as a regional system rather than a single city. Commuting patterns and housing patterns mean that neighboring regions are often influenced by one another.

Stats show that growth across all regional areas does not happen at the same pace, and generally, regional growth, where residents can live and work, has grown much faster than city growth in the downtown areas. 

The same is true of Indiana as a whole. Recent metro growth in suburban neighborhoods in central Indiana has not been matched by growth in the denser city centers, which have suffered. 

According to Indianahub.org, the state’s growth has spread out into:

• Logistics corridors
• Suburban office nodes
• Life sciences clusters
• Industrial parks

However, in the city center, signs of urban decline are evident. According to Axios, the Indianapolis metro area grew by 2.2% between 2020 and 2023, making up half of the gains in Indiana’s population.

Indiana’s Foreclosure Problem Uncovered

According to real estate analytics and data platform ATTOM, Indianapolis ranked near the top of national foreclosure rates with roughly one filing for every 1,249 housing units in February. Another Indiana city, Evansville, recorded one for every 1,316 units, giving it a top-five foreclosure berth alongside the state’s capital.

Indiana’s dive into foreclosure despair hasn’t been sudden. Last year’s ATTOM foreclosure reports showed one filing for every 302 housing units, signaling a multiyear blip, comprising homeowners who, amid job losses, inflation, and rising interest rates, simply don’t have the money to pay their mortgages.

How Exactly Can Indianapolis Be the “Best” and “Worst” at the Same Time?

If Indianapolis were a comic book character, it would be the Joker, wearing two expressions at the same time. But how does a mild-mannered Midwestern city manage to have such an extreme split personality? 

It’s because we are not comparing apples with apples. The Zillow report focuses on conditions facing would-be buyers today—mortgage affordability, competition levels from other buyers, and expected appreciation. ATTOM, on the other hand, focuses on borrower distress among existing owners. Also, ATTOM’s figures account for households that fell behind on payments months or even years earlier, reflecting economic conditions over a long period, some stemming from the forbearance conditions put in place after the pandemic.

The Idiosyncrasies of the Indianapolis Market

Indianapolis is a unique market in many ways because it is many things at once. Regarding its foreclosure ranking, the city had a high number of “zombie foreclosures,” according to ATTOM data: 6.5% of foreclosures stemming from financial mishaps years earlier, often in the form of vacant or distressed houses.

“ATTOM’s data doesn’t pinpoint the local nuances behind why certain metros stand out, but in parts of the Midwest, it likely reflects a mix of older housing stock, slower demand in some neighborhoods, and ownership or equity situations that make distressed owners more likely to walk away early,” Rob Barber, CEO of ATTOM, told Realtor.com. “Those conditions can increase the chances that a foreclosure becomes a zombie, even though overall zombie rates remain low nationally.”

Investors Are Flipping Foreclosures Into Rentals

Additionally, because of Indianapolis’s unique regional layout, many disparate areas—some thriving, others struggling—are included in its overall reported numbers, creating a somewhat confusing picture.

While the investor heat has been turned up on Indianapolis for a while, with out-of-towners rushing in to rehab and rent, many locals feel this has only contributed to the real instability, taking homes away from local owner-occupants.

“Far too often, when these homes end up going into foreclosure, they end up being purchased by out-of-state investors, who then flip them into expensive rentals,” Amy Nelson, executive director of the Fair Housing Center of Central Indiana, told Indiana Public Media (IPM).

Final Thoughts: How Out-of-Town Investors Should View Indiana

Overall, Indiana’s foreclosure numbers are not off the scale and reflect normalization after years of housing instability rather than a crash. In ATTOM’s national release, CEO Barber emphasized that even with year-over-year increases, “overall foreclosure levels remain well below historic norms.”

Realtor.com noted that foreclosures in Indianapolis and other Midwestern towns actually represent an opportunity for new investors. However, as with any investment, due diligence is required, especially with an out-of-state investment where you cannot just jump in your car to check on your rental. That means meticulous tenant screening, hiring the right property manager, and doing your homework on which neighborhood you are investing in.

In Rust Belt Midwestern cities like Indianapolis and Pittsburgh, neighborhoods can change not only from region to region but also from block to block. FHCCI’s review of Marion County pinpointed specific neighborhoods such as Crown Hill, Near Northwest-Riverside, Maywood, Near Southside, and Martindale Brightwood as having the highest foreclosure rates, with the far Eastside also flagged for heavy out-of-state investor activity. Homes in these neighborhoods will need to be examined block by block. It’s also probably best to examine alternative neighborhoods to stave off competition.

It’s important not to believe all the investor hype about Indianapolis, which would have you think that, amid the deluge of new residents, jobs, and affordable housing, you can throw a dart anywhere on the city map and make money. Mortgage rates, employment, and tenants’ profiles are only part of the picture.

“It is rising escrow costs, for instance,” FHCCI’s Amy Nelson told WBOI News. “Although your mortgage payment very often hasn’t changed much, it’s the other costs that have, and that can be home insurance rates, which have been escalating, and utility costs and property taxes, all of which can have a significant impact.” 

In This Article

Talk of lower interest rates has sparked hope that house flipping could make a comeback. Guess what? It never left. 

According to a new report from New Western, a marketplace for off-market properties for investors, local flippers supplied 217% more starter homes to the market in 2025 than homebuilders did, reshaping the narrative of how first-time buyers find affordable houses.

Why It No Longer Makes Sense for Builders to Construct Smaller Homes

Like the dinosaur, starter homes once roamed across the length and breadth of America until a cataclysmic event—the COVID-19 pandemic and rising interest rates—made them an endangered species. In particular, the new construction of starter homes dwindled. 

The New York Times, citing data from the Federal Reserve Bank of St. Louis, recently reported that builders broke ground on 1.36 million homes in 2025, slightly down from 2024. Given the 4 million-home supply gap reported by Realtor.com, there is still a significant void to fill.

“It has become more expensive, almost financially not viable, to build what we thought was a starter home: a 1,000-square-foot home,” Christian Kosko, a D.C. mortgage lender who often works with younger buyers, told the Washington Post. “They’re now incentivized to build million, million-and-a-half, $2 million homes. That’s where the profit is for those builders. The ramp-up in interest rates has made numbers for building smaller homes no longer work, even when they are mass-produced.”

Zillow senior economist Orphe Divounguy told the Post:

“In 2022, when mortgage rates more than doubled, the builders started to build smaller. They tried to make the math work for potential homebuyers. But prices have increased so much, it’s still very difficult to afford a home, especially in markets that don’t allow for building on small lots.… When a builder goes in there and tries to actually build something that would sell in today’s market, they just can’t.”

Flippers Have Flooded In to Fill The Void

The potential for a starter home comeback was always there. Entry-level homes have been the hardest-hit segment of the building drop-off, falling from 40% in the 1980s to just 7% today, according to the Home Buying Institute. 

The supply of older homes, ripe for renovation, remained, waiting for investors with cash and contractors to turn things around. New Western’s Flip Side Report, based on dozens of major U.S. markets, found that local independent investors delivered 120,193 entry-level homes to the market in 2025, compared to 37,923 starter homes delivered by builders, marking the previously mentioned 216.9% edge for flippers.

In a recent press statement about the report, New Western cofounder and president Kurt Carlton said: “What if the real housing crisis isn’t that we haven’t built enough homes, but that we’re letting millions of starter homes disappear? Fixing today’s housing challenge isn’t just about building more homes. It’s about whether attainable housing actually exists at the entry point.”

Carlton added that in 2025, “small, local independent investors quietly became the largest supplier of starter homes in America,” not by building subdivisions but by “revitalizing existing homes that would otherwise remain underutilized and returning them to productive use.”

Amid Rising Construction and Labor Costs, Fully Finished Homes Carry Increased Appeal

In a 2026 prediction article, Forbes outlined the appeal of renovated and furnished homes to prospective homeowners over fixer-uppers. Shaun Pappas, partner at Starr Associates, said in the article:

“We also anticipate continued bidding wars for properties that are ready to move into. The continued rise in construction costs, including labor and materials, has made it more difficult for home purchasers to buy and perform renovations. Therefore, we see a potential decrease in the housing prices for homes that need renovation work, and an increase in housing prices for homes that are ready to be occupied.”

Starter Homes: A Close Relationship With Cash Flow Investors

Whether you’re a flipper or small landlord, starter homes are likely at the center of your investing equation. For flippers, the relationship is obvious: demand. Given the affordability crisis, smaller homes are not only an entry point for many but also a longer-term option, doubling as empty-nest residences for older homeowners.

New Western’s analysis shows that renovated homes are usually priced well below new construction and often below the median price of homes on the market, making them an attractive proposition for small investors looking for long-term holds and cash flow. A previous report from New Western showed that revitalized homes are 35% to 80% more affordable than new construction in most markets, and 17% more affordable than the market median existing-home sales.

The vast pool of older housing means there is also a large potential for BRRRR flippers once interest rates drop, or for those who have the cash on hand to undertake a rehab project for rent and refinance at a later date.

Small Multifamily Homes are the New Starter Home

According to Realtor.com, based on data from the National Association of Home Builders, small multifamily homes of two to four units are filling the new-construction starter home gap. Financing is easier for these builders as they are larger and make financial sense for homeowners because the rental income offsets the mortgage payment.

Investors could look into buying these too, especially newer investors looking to kick-start their landlording journey, because they qualify for FHA loans that require a 3.5% down payment. By rinsing and repeating, while refinancing the former personal residence into a conventional mortgage, investors can accrue a sizable portfolio in a short period of time.

In many cases, the urban infill lots accommodating small multifamily properties have replaced older single-family housing stock as zoning laws have changed to allow more housing. In newer developments, outside city centers and established suburbs, two-to-four-unit homes sit alongside townhouses and single-family homes.

“In both cases, the appeal is affordability and access to a neighborhood that can’t always be attained through the traditional single-family home path,” Realtor.com senior economist Joel Berner said in a press release. “These townhomes or duplexes offer entry-level buyers the opportunity to own a home in a neighborhood they like without spending more than they can afford.”

Final Thoughts: Best Cities for Investing in Starter Homes

The scope for generating cash flow from starter homes is only going to increase as a slate of zoning reforms moves through the legal system to increase housing across the country. Often, that means building small multifamily units in place of older single-family homes. In others, it means constructing ADUs where lot size allows, while also renovating the existing single-family structure. In all instances, opportunities for flippers and landlord investors in the starter-home space are considerable.  

Some cities are more favorable to investors seeking starter homes than others. Most tend to be smaller metro areas in the Northeast, Midwest, and South, as this Realtor.com report shows. Cross-referencing that report with this comprehensive analysis from Construction Coverage using data from the U.S. Census Bureau, Zillow, Redfin, and Freddie Mac will give you an accurate reading as to where to begin your starter home investing career.