Against the backdrop of increasing discussion about the bifurcation of the U.S. economy and the concentration of economic contributions by the affluent, here’s a look at some of the quiet fractures in the U.S. real estate market over the past three years. 

Instead of one national market moving in sync (think pandemic-era boom), we now have bifurcated environments, driven by mortgage rates, regional economics, and demographics. Understanding this divide is crucial for investors, brokers, and anyone waiting for “the crash” that has yet to arrive.

Locked-In Owners vs. Active Buyers

Roughly two-thirds of American homeowners hold sub-4% mortgages. They’re staying put. Inventory remains historically thin, and that shortage keeps pricing elevated in many regions—even where demand has cooled.

On the other side, buyers entering today’s market are absorbing twice the borrowing cost for the same home, reshaping affordability and shrinking buying power. The result: a frozen top layer of the market, sitting above a strained active layer.

The Trump administration is actively exploring options to loosen lending standards, such as offering a 50-year mortgage. It’s also considering mortgage portability, essentially allowing low-rate borrowers to keep their mortgage and “port” it to a new property, similar to how U.S. cell phone plans allow customers to bring their numbers from carrier to carrier. 

Well-capitalized investors could also explore mortgage assumptions, which are occurring with increasing frequency. In fact, we were recently able to assist a multifamily investor assume a pandemic-era $3M+, sub-4% loan on a 20+ unit property that the lender worked overtime to facilitate.

Boomtowns vs. Reversion Markets

Some metros—think the Southeast, and cities like Austin, Texas, and select Sunbelt and Appalachian cities that blossomed during the pandemic—have seen sharp corrections or explosive inventory growth. In these markets, home values are sticky, competition remains, and new construction is filling the gap. 

These are the markets where prices have softened or stagnated. The gap between the two groups has widened every quarter since 2022.

The dust seems to be settling, or at least reaching an equilibrium. If these markets are on your radar, aggressive negotiations could be more well-received than anticipated. Consider incentives beyond price, such as furnishings, seller concessions to cover closing costs, and a transactional schedule and closing that is most conducive to your timelines and budget. 

In strong markets, timing is critical. Keep your proverbial foot on the investment gas, and make the effort to tour (virtually or physically) prime listings as close to coming to market as possible. Be decisive and utilize your contingency period to validate the offer and property condition. 

Single-Family Strength vs. Multifamily Stress

Another fault line is forming between single-family homes and multifamily assets:

• Single-family properties remain structurally undersupplied. 
• Multifamily faces a wave of new inventory, softening rents, and tighter lending.

Investors who assume all real estate is moving together should drill deeper into local insights and recent transactions. Multifamily investors should connect with specialized local commercial real estate brokers/agents, gather insight from reputable local property management companies, and get boots on the ground. There is no substitute for pounding the pavement and experiencing the investment opportunity firsthand.

Speaking with tenants and neighbors can provide subtle insight that can make or break the enthusiasm for a particular area or property. In our investment experience, a strong no is more valuable than an iffy yes.

The Affluent Buyer Market vs. Everyone Else

Sales growth remains concentrated at the top of the market. In October, homes priced over $1 million saw a year-over-year jump of more than 16%, and properties between $750,000 and $1 million rose 10%. In contrast, sales between $100,000 and $250,000 inched up only about 1%, while sub-$100,000 homes declined nearly 3%.

Our forecast for 2026 and 2027 is for the luxury single-family, second home, and short-term rental markets to be exceptionally strong as a result of tax incentives (like the STR loophole), diversification and profit-taking from equities, and an anticipated reduction in mortgage rates amid the end of quantitative tightening (with the potential for easing). 

What This Means for 2026 and Beyond

The U.S. market won’t “correct” uniformly. Instead, real estate investors should expect:

• Strong appreciation and demand in second home and STR hubs
• Flat or declining prices in shrinking metros
• Continued single-family demand at all levels, with price pressure on entry-level and first-time homebuyers
• Pressure on overbuilt multifamily and basic new construction areas and developments 
• More uneven, hyper-localized pricing cycles

As the old adage goes: Real estate is about location. Understanding localized market conditions and financing options will be essential to successful real estate investment in 2026 and beyond.

This article is presented by Connect Invest.

Office loan delinquencies are surging again. In September 2025, Fitch Ratings reported that U.S. office delinquencies jumped after a $180 million loan tied to Manhattan’s 261 Fifth Avenue defaulted—the latest in a string of commercial real estate stress signals. Nationwide, delinquency rates on commercial mortgage-backed securities rose by roughly 10 basis points to 3.1% in the first quarter of 2025, while the Mortgage Bankers Association logged higher delinquency rates across lodging and industrial loans in the first quarter of the year.

Office mortgages that have been securitized into commercial mortgage-backed securities (CMBS) have been the hardest hit, with a delinquency rate of 11.8% reported in October—the highest since the Financial Crisis of 2008. Delinquency on these loan types hit investors directly (secondary financing is often not permitted), making them particularly risky. 

It’s Not Just High Interest Rates

The causes for these delinquencies are familiar, including high borrowing costs, soft leasing demand, and expiring low-rate debt that can’t be refinanced on the same terms. For lenders and investors, it’s the next phase of the “delinquency wave” that began in the office sector and is now spreading outward.

The first, most obvious pathway in the current wave of office loan delinquencies is default at maturity. The financing landscape is just vastly different in 2025 compared to five or 10 years ago, when interest rates were at historic lows. It is not at all surprising that owners and investors want out.

When interest rates rise, long-term property loans—often five to seven years—become risk traps. They tie up capital in assets that may lose value or face vacancies before maturity. 

In fact, this has already happened—with pretty drastic consequences—to prominent commercial properties that went into delinquency before loan maturity. One example is the fate of CityPlace I in Hartford, Connecticut. The property had half of its value slashed in 2023 following a decision by UnitedHealthcare not to renew its lease at the tower. At the time, the exit was downplayed as “just bad timing,” but it is clear at this point that CityPlace I is indicative of a wider trend.

A very similar fate has recently befallen Bravern Office Commons in Bellevue, Washington, which was at one point fully leased to Microsoft, but has stood empty since 2023, when the company announced its exit from the premises. The property lost 56% of its value since the most recent appraisal (in 2020), and has gone underwater at 12% below its loan value.

It’s not just companies pulling out of office spaces that are creating the issue. There’s a domino effect, as less footfall at commercial properties overall means fewer office spaces and fewer amenities that would typically service workers at these buildings. 

The familiar structure of downtown commercial hubs is breaking down. A stark example is Starbucks announcing in September that it would be closing hundreds of locations nationwide—one of them at the now-delinquent 261 Fifth Avenue in NYC. 

The pattern of recent delinquencies is clear: Office spaces that relied on long-term, single-occupant leases (Microsoft, UnitedHealthcare, etc.) have suffered the most spectacular value losses. Bigger companies with large workforces have had to make the most drastic decisions in the wake of the pandemic.  

Navigating the New Landscape

It is still possible to navigate the market successfully; it just requires investors to adjust to a less predictable pattern of occupancy. What used to seem like a safe bet—a building with a long-term lease by a large, respectable company with a vast, nationwide workforce of full-time office workers—is now anything but. 

Direct commercial property ownership is also now a far riskier proposition, given the very real possibility of going into default and then having trouble with all the conventional remedial options, e.g., refinancing that is too costly, a sale that may have become impossible because the building is now worth less than the outstanding loan balance, etc.

The practice of “curing” commercial loans by negotiating an extension or being removed from the delinquency list by paying off the interest are temporary fixes that still leave investors with the same problem on their hands—just a few more years down the line. 

Investors need to think beyond traditional investment models and loan durations to survive the tectonic shifts rocking the commercial market. Short-duration real estate debt limits exposure to those long-tail risks. Six- or 12-month notes can adjust faster to market conditions, helping investors stay liquid while capturing yield from ongoing deal flow.

The Short Note Solution

This landscape of delinquency is where Connect Invest’s Short Notes stand out. Each Short Note pools investor capital into a diversified, collateral-backed portfolio of real estate loans across acquisition, development, and construction phases. Every note carries a fixed annualized rate of 7.5% to 9%; monthly interest distributions; and defined maturities of six, 12, or 24 months.

Because Connect Invest’s loan originators maintain loan-to-value ratios under 80% and perform internal portfolio diversification reviews, investors gain exposure to real estate credit without the risk concentration of a single property default.

So while office loans may be buckling under refinancing pressure, investors can still access the income potential of real estate debt—without locking up capital for years or shouldering the risk of direct property ownership. Connect Invest’s Short Notes make it possible to stay invested in real estate’s credit markets while sidestepping its most volatile corners.

Explore current Short Notes and start earning real estate-backed income today at connectinvest.com.

Worried that artificial intelligence (AI) will replace lower- and middle-income jobs, and only create wealth for business owners? 

Billionaire Ray Dalio argues that AI is making the bottom 60% of Americans more dependent on the top 1% to keep the economy afloat. He notes that 60% of Americans can’t even read at a sixth-grade level—how could they hope to compete in our increasingly knowledge-based economy? 

Early warning signs only fuel these fears. A worrying report by J.P. Morgan notes the high unemployment rate among recent college graduates and weak job growth in many white-collar careers that AI can replicate. 

What about real estate? How AI-resilient is income from real estate, both active and passive? 

AI-Resilient Real Estate Business Models

There are dozens of niches in real estate investing, most under no threat of replacement by AI. 

Flipping houses

No software can flip a house from start to finish. Think of the steps involved:

• Marketing to connect with off-market distressed sellers
• Person-to-person sales to convince the owner to sell at a bargain price
• Assessing repairs and estimating costs and profits
• Financing arrangements
• Filing permits
• Interviewing, hiring, and managing contractors, and overseeing repairs
• Working with human inspectors to sign off on repairs and approve permit completions
• Listing, staging, and marketing the property for sale
• Negotiating terms with buyers

House flippers know there’s more to it than that, like coordinating with bank inspectors to release escrowed draws, and a dozen other mini-steps. 

Flipping houses is a business, whether you do it full-time or part-time. While AI tools might help streamline individual tasks in that business, it can’t run the entire thing. 

Rental investing

Some rental investors effectively flip houses to themselves, refinancing them and keeping them as rentals (the BRRRR strategy). It takes just as many steps as outlined above.

But even investors who buy turnkey rentals have to go through plenty of steps that AI can’t do for them, from financing to inspections to use and occupancy permits. 

Again, AI tools might help here and there, but rental investing is a side hustle business. Anyone who tells you it’s completely passive is selling something. 

Wholesaling

Sure, wholesaling real estate involves fewer steps. But it still requires human-to-human sales and negotiation. 

Aside from evaluating the property and its repair costs, you need to convince the owner to sell at a discounted price. And you need to build a network of buyers who know, like, and trust you. 

It’s a fundamentally human business model, and AI tools can only take you so far. 

Flipping land

You can automate more of the marketing and sales for flipping land. Unlike flipping houses, this is more of a paper business, where you don’t actually visit most land parcels, and there’s no physical renovation or construction. 

Even so, it’s a business—and AI can’t run an entire business. Leverage AI to automate as much of the business as possible, while you simply make the final decisions and handle negotiations. 

AI-Proof Passive Investments

Not everyone wants to replace their active income by starting a real estate business. Some people (like me) just want to invest passively and earn strong returns. 

Private partnerships

Passive investors can simply partner with real estate operators. 

For example, our co-investing club partnered with a house flipper last year. We funded a series of flips in exchange for a cut of the profits. Likewise, we’ve partnered with a spec home developer to build a handful of single-family homes. 

We simply invested as silent partners in these real estate businesses’ deals. 

Real estate syndications

Our co-investing club also invests passively in syndications, where we effectively become a partial owner in a large real estate project. 

The same principle applies: They’re running a real estate investment business, buying apartment complexes, industrial properties, or mobile home parks, and we’re simply investing passively in individual properties. 

Because we invest together, we can each put in less money, $5K apiece instead of the typical $50K to $100K required. 

Real estate funds

Last month, our club invested in a land flipping fund. The operator flips about 50 land parcels each year, with an average hold time of around 4.5 months. He can’t use bank loans for these raw land flips, so he raises money privately from people like us—and pays a consistent 16% return in the form of quarterly distributions. 

Private notes

Alternatively, you can lend money privately through a secured note at a fixed interest rate. 

We’ve lent money before on secured notes paying 10% to 16%, secured with a lien against real property. Again, the borrowers run real estate investing businesses that can’t be replaced by a chatbot, and we’re simply funding the properties. 

Intrinsic Protections

Real estate is, well, real. It’s physical, existing in the real world. To build, renovate, show, sell, or lease requires flesh-and-blood people. 

Then there’s demand. Real estate has intrinsic value: People need physical places to live, eat, and produce things. To some extent, they also want places to shop and work in person, too. 

That doesn’t mean AI can’t or won’t be a useful tool for people working in the real estate industry. But AI can’t run an entire business, swing hammers, or walk prospects through a property and pitch them on it convincingly. 

Real estate will always require humans, and that will increasingly make it an AI-resilient refuge for entrepreneurs and investors. 

If you believe AI is a net threat to employees and a net gain for entrepreneurs and investors, become one of the latter. And there’s no more AI-resilient industry to do so than real estate.

Ashley:
If you’re having trouble finding deals, this is the episode for you. We’re going to break down what strategies work in today’s market.

Tony:
We’re also going to talk about when, if ever it makes sense to buy a deal at negatively cash flows, which is a hot topic for Ricky Investors. Today

Ashley:
We’re going to cover what makes a good investment versus a bad investment, and Tony and I will actually give our own personal opinion on this. Welcome to the Real Estate Rookie podcast. I’m Ashley Kehr.

Tony:
And I’m Tony j Robinson. With that, let’s get into today’s first question.

Ashley:
So this question comes from the bigger pockets forums. We just recently sold our house and finished our first deal. Congratulations. We’ve been looking for deals and haven’t had much luck, cold calling or driving for dollars. Any other strategies that have worked for you guys? So I thought this was a perfect question for right now, we’re getting to the end of 2025 going into 2026, and the market has definitely changed since a year ago even, and we’re definitely seeing it more as a buyer’s market. So Tony, what are the ways that you have found deals this year or I guess even leads even if they didn’t turn into deals?

Tony:
Yeah, I mean I think the first thing I’d say before I even answer that question is they didn’t give a whole heck of a lot of context. They just said, we’ve been looking for deals and haven’t had much luck, cold calling or driving for dollars. I think the first thing I would ask is how much activity has gone into how much effort and time have gone into cold calling and driving for dollars? Did you call 100 people or did you call 10,000 people? Did you drive for two hours or did you drive for 200 hours? I think oftentimes Ricky Investors underestimate how much time it takes to really build that pipeline of going off market for deals. We’ve interviewed multiple folks who, wholesalers or just people that do a lot of direct to seller marketing and typically if you can get your first off market deal within your first 10 to 12 months, you’re actually doing pretty darn good.
So if it’s been any shorter period than I’d say even six months, I think maybe you just need to continue to work at it to make sure that you’re doing it long enough to have that momentum start to build. So I think that’s the first piece. The second piece is the actual strategy that you’re following within cold calling and driving for dollars. If we look at cold calling, you and I could both have the same exact list, but how we approach those phone conversations can make all of the difference. Have you trained yourself up on best practices when it comes to sales or are you just kind of winging it every time you hop on the phone with someone? Do you have a script that you’re working from that’s been validated and tested and iterated? Or are you flying by the seat of your pants because someone picks up the phone, you’re calling them out of the blue one question, Hey, this is Tony, I’m looking to buy your house.
I went to the main street is very different than, Hey, is this Ashley? Hey, it’s super weird question, but this is Tony. I hate to call out of the blue, but I think you own 1, 2, 3 main street. Which one of those is going to entice that person to continue that conversation, right? So working on your script for the cold calling could have a big impact as well. And same for driving for dollars. Where are you driving? What kind of properties are you taking down as you’re driving? Are you looking at the properties that are big and beautiful and like, man, that’s just a really nice house. Lemme see if I can get that one. Or are you only taking down the ones that have the overgrown weeds in the front yard, the garage doors is broken, the windows are boarded up, what type of property are you adding? So I think before we just say, what else should I be doing? Let’s make sure that we’ve actually done everything that we can within the strategies that are in front of us to validate that we’re doing it the right way.

Ashley:
And I just think right now with the market, there’s a huge opportunity just to buy off the MLS as to there are off market deals and there’s huge opportunity there. But what about, what’s actually on the MLS too? I look to pull up Zillow list sort everything by most recent, and then I go to the very end of the list and see what’s been sitting. I would try to find out why it’s been sitting. I go and I look at, see if they have any debt on the property, how much could I offer? Do they have a ton of debt on there that there’s really not any wiggle room they need to pay that off? So I think using right now the market as an opportunity to make those low ball offers where there are more and more properties that are sitting longer on market than they were say a year, two years ago, three years ago.
So that would be the first thing I’d look at. But also what type of properties are you cold calling and are you door knocking? So is it just you’re driving by and you see a house that looks distressed? Is it you’re dropping by and you see a house that looks vacant so then you’re finding their information and calling them? So one thing that has worked very well for me in the last couple of years is older people’s homes that either passed away or they’ve gone to assisted living or gone to live with a family member. And until I just read that question, I didn’t even think about this, but in the last few years, four or five of the houses that I have bought have been from somebody that passed away or moved out to assisted living or a nursing home. And if you include my sister, that’s six houses actually.
So I think really defining what your list is as to what types of properties, is it properties in pre foreclosure, is it properties that there’s an owner out of state? So for me, what has been working, and I haven’t even realized it is actually going after homeowners who maybe are moving out, going to assisted living. And a lot of these came from just word of mouth. People know that I buy houses, people reach out to me, my dad is going to assisted living, we have this property, do you want to come and see it? And actually the property I’m sitting in right now was word of mouth. The mom had moved in with one of her kids and I was able to purchase the property off market from that too. So really define what you’re going after, what type of person, what type of seller you’re looking for, because if you just do all across the board, it’s going to be a broader net and it’s going to take more of your time and more of your money to contact all of these people. But if you can kind of narrow down the actual seller you’re looking for, that will help.

Tony:
Yeah, you made an important point, Ashley, about where we’re at in the market cycle. And I think right now the MLS still does have a lot of good opportunities. Last year that we bought was right off the MLS and we got it at a pretty steep discount. So the MLS is definitely still an option, but I think the last piece here is maybe you’re just not good at cold calling. Maybe you’re just not good at going direct to seller and not everyone is. And if that’s the case, then maybe just focus on networking with the people who are good at that. We recently interviewed Dominique Gunderson on an episode and the majority of her deals come from wholesalers that she’s networked with and she just super hard hit the local meetups in the area that she was investing in looking for wholesalers. Now she gets a lot of her deal flow from those relationships.
So you could do the same thing. You could continue to invest time, effort, and energy in trying to specialize or improve your skillset when it comes to going direct to seller. Or you could just say, my time is better spent networking with wholesalers who are doing that work for me or I know I have a friend Brian Avio, who’s based out of Vegas and he wholesales both in California and in Vegas. And the majority of his deals comes from networking with agents. So he just cold calls agents all day and he says, Hey, do you guys have any off market deals that look like this? Things maybe don’t make sense to go on the MLS. And that’s how he gets a lot of his deal flow. So you can just bypass the work of trying to find it yourself and go network with people who are already doing that and they can probably do it better than you can.

Ashley:
We’re going to take a quick break, but when we come back we’re going to talk about what happens if you have a negative cashflow. We’ll be right back.

Tony:
Alright guys, welcome back. Alright, so let’s go to our next question, which also comes to the BiggerPockets forum. And this question is from Vin. Vin says, after hearing a lot of episodes about negative cashflow, I’ve got a question. I’m currently living in my primary residence and I’m planning to purchase an investment property and it’s going to be negative cash flow. It’s in the bay area of northern California, very expensive market. But I am of the opinion that as long as the rent on the investment is at least going to be greater than my current primary residence mortgage, it can still be considered as a positive cash flow investment. The investment property is going to be in a much better location than my primary residence. I might be totally wrong in my thinking. What am I missing? So let me just make sure that all of us here are understanding what the question being asked here is.
So VIN is saying that they have a primary residence already, and for round number’s sake, let’s say that their primary mortgage is $1,000. They’re going to buy this investment property and say the mortgage is $2,000, so double their primary residence and the rent is call it $1,500. So we have their primary residence at 1000. The rent’s being collected at 1500, the mortgage on this investment property at 2000. Their question is, does it make sense to buy this investment property that is technically losing $500 per month? But it still maybe makes sense because 1500 is more than what they’re paying on their primary residence, which means that money can be used to offset the $1,000 that they’re paying and still have some money left over. It’s a good question and I get the train of thought they’re trying to follow, but I think they’re looking at it from the wrong perspective because even if they’re making money on this investment property, they’re still losing money at the end of the day, right?
There’s still worse, and I’m using air quotes here, financial position than if they just didn’t buy the investment property from a purely cashflow perspective. I do think though that there’s nuance to this and Ash, I’m curious what your thoughts are as well. I do think there’s nuance because it does depend on what your personal financial situation is and what your motivations are for investing in real estate. If you’re buying this because you believe strongly in this area that you’re buying and that is going to appreciate incredibly well, and your goal is just to have this paid off in the next 30 years. So you’ve got maybe a multimillion dollar property in the bay area of California that you can then use to fund your retirement and you’ve got maybe a lot of active income, maybe you work in tech, you get a lot of active income from your day job.
So whatever 500 bucks a month that you’re losing is negligible, then sure do the deal because it makes sense for you. But if your focus is, I’m doing this because I want income or I want to maybe subsidize my living cost, this is a bad deal because you’re losing money. It will make more sense maybe for you to go out and buy a duplex or fourplex and house hack or a house with an A DU. So that way you really are subsidizing your living cost and not trying to wrap it into an investment that’s losing money. So that’s my initial take. Ash, what are your thoughts?

Ashley:
Yeah, I think the point that I would add is that they did say this investment property is in a better location. So maybe there is more opportunity for appreciation that okay, you want to invest $500 extra every month into this property knowing that in five years you’ll be able to make that money back when you sell the property, plus make a ton more money off of the appreciation. And David Green talks about this as to breaking even and how appreciation is a play. And there’s a bunch of other investors that actually followed this where they’re okay paying into these negative cashflow properties because even though they’re paying a couple hundred dollars each month, they are banking on appreciation that in several years, five years, 10 years, they’ll be able to sell the property, recoup all of that money, they invested it into it, plus make a bigger return and cash out then.
So that could be the thing, but you really have to define what your why you’re investing if you can afford to cover that additional amount and you want to for the long term. I mean right now we’re not seeing, if you were to buy a property right now, we’re not, probably not going to see huge appreciation in that property from today to next year today just because we’re seeing it become a buyer’s market. And even properties that I saw up for sale a year ago, some of those are still sitting including one of my properties. So I think if you’re able to afford to hold the property long-term and continue to pay into it and think about it, you also have to cover any capital improvements that come up, any repairs and maintenance that come up. You have to cover any vacancies now you’re going to be paying your mortgage and the mortgage on the investment property. So just remember there’s more that goes into it than just that $500 in negative cashflow a month too.

Tony:
Ash, incredible point. And I would encourage Vin who asked this question to run this deal through the BiggerPockets calculator so that way you can make sure that you’re really accounting for all of those other ancillary expenses that maybe you hadn’t considered because maybe that delta is a lot bigger than what you initially anticipated.

Ashley:
Okay, we’re going to take our last break here, but when we come back, we’re going to get into what you should actually know before getting into real estate. We’ll be right back. Okay, so our last question here says, what should I know before getting into real estate? Is there a technical analysis part everyone should know, like cash on cash return or other metrics? What separates a good investment from a bad one? So this is definitely a loaded question here and there’s so much to look at and so much to consider and very individual as to what will matter to you and won’t matter, I guess. So Tony, I want to start backwards actually on this. For you personally, what is a good investment versus a bad one? How would you differentiate in as little words as possible? What is a good investment from a bad one?

Tony:
My motivations for investing in real estate are in priority right now. Cashflow, tax benefits, appreciation.

Ashley:
I’m going to add one more to your list. And as in time, how much time I have to actually put into the property into the deal, like the operations, things like that too.

Tony:
Absolutely. So for me, as I’m analyzing different potential opportunities, it’s against that lens of will it generate a good amount of cashflow? Will I be able to perform a decent cost segregation study on this property and will it give me some meaningful appreciation so that in 30 years when the loan is paid off, that it’s appreciated? At least to some extent. And since I have very strong clarity on what my motivations are, for me, good deals are easier to spot than maybe someone else who doesn’t have that clarity. So a killer deal for me right now, north of 20% cash on cash return is probably really good. If it’s in the single digits, it’s probably not worth my time. Bigger deals typically give better cost, segregation, tax benefits versus smaller deals. Super, super rural cities aren’t going to give me any appreciation, whereas maybe ones that are in two or three hours outside of major cities or in maybe more popular tour destinations will give me that. So that’s a good deal for me. What about you, Ash?

Ashley:
Yeah, the three that you said. Plus the fourth thing I think are the great metrics of understanding. I’m definitely, we’ll take a little bit less cashflow if I can be more hands off on the property too. So there’s that give and take of like, okay, how far do I want to take the scale to here’s my income, but also that means I’m going to be putting way more time, energy, and effort into the property too. So I try to find that happy medium, but also another metric or measurement that I use that isn’t just cash on cash return or anything like that. It is when I am looking at the property, what else could I do with that capital? So if I’m putting $50,000 into this deal, what are my other options that I could do with this? Could I invest that in any other way?
And not even could I buy another property or invest in a syndication or things like that, but are there other ways to grow my business? Could I take that 50,000 and say, you know what, this year I’m actually going to hire a project manager and I’m going to have him work for me and give it a year and see if he’s able to take my rehab projects from here to here to the ceiling, like 10 exit. And so I think that is a big thing I think about too, or what are the other opportunities I have. And then also just along with the time commitment, the stress as in, is this going to be cause me a lot of stress? Am I confident in what I’m going to be doing in this deal? Am I confident I can take it on? And a big piece of that is I don’t like to take risk financially and stress myself, stretch myself because it stresses me out. And I think that’s a big piece of it too. I could have a good deal, but in order for me and my situation to take that deal down, I would have to stretch myself financially. I’m probably going to say no and not take that risk, even though the reward could be amazing and great. I don’t like that feeling of being stressed financially. And that would be something that I would avoid in a good deal.

Tony:
Yeah, and I think part of the question too is just what else should I know? So we just talked about, hey, what’s important to you? How do you determine what’s a good deal? But I think you should also just have a good foundational knowledge of the different things that go into being a real estate investor. And at a high level, if we were to kind of split it up into different chunks, there’s the acquisition, which is choosing a market, getting approved for financing, finding deals, all of that is part of the acquisition buckets. You’ve got to have some foundational knowledge there. It’s the intermediate, what happens when you find the deal. So negotiating your purchase agreement, your due diligence phase, what does that look like from going under contract to actually closing on the deal? And then it’s what happens afterwards. It could be just the management. If it’s something that’s more turnkey, it could be the rehab. So just having some sort of working knowledge in all of those big buckets I think are important to give you the confidence to be able to step out and take that first step of actually getting that first deal done.

Ashley:
Well, thank you guys so much for joining us today. For our rookie reply, I’m Ashley. He’s Tony, and we’ll see you guys on the next episode.

Dave:
You want to invest in real estate, you’ve done the research, you’re bought in, but you live in an expensive market and no deals seem to make sense today. I’m here to tell you it is possible to invest in real estate even if you live in Denver, San Francisco, or one of these other cities where even buying one house to live in out of reach. I get it. I live in an expensive market myself, and it can be frustrating to hear about people rapidly building portfolios in places where houses only cost a hundred thousand dollars. So today I’m going to explain the strategies you can use to invest successfully even when the properties around you feel unaffordable.
Hey everyone, welcome to the BiggerPockets podcast. I’m Dave Meyer. Thank you all so much for being here. Everything is expensive right now. Coffee, steaks, cars, and yes, definitely houses and I think everyone is feeling that strain, but for my friends who live on the coasts or in expensive cities, things feel even more out of reach. 600 grand for a single family residence, a million dollars for a duplex. It can be a little bit crazy making, but fear not. There are great ways to invest even if you live in an expensive market. And in today’s episode we’re going to cover how you can build a portfolio and reach financial freedom no matter where you live. We’re going to cover different strategies that work in expensive markets, whether or not you should consider investing out of state, and I’ll even share real numbers and examples so you can decide which options are best for you.
Let’s do it. So first up, let’s just define what an expensive market is because that is completely relative, but for the purposes of this episode, I’m going to just say it’s anything above $500,000 for the median priced home that’s 15, 20% above national average right now, which is somewhere near 420, 400 $30,000 depending on who you ask. Now, I think instinctually, everyone knows that’s a lot of money that feels expensive, but just want to call out the very real measurable challenges that there are investing in real estate when you live in an expensive market. And for me, there are primarily two of these. The first is affordability, right? Like how much capital you need to actually go out and buy just a single property is hard, but even if you can do that, it does lead to problem scaling just because real estate is capital intensive in the first place.
But if you’re in a place that is very expensive, you’re going to need a lot of money upfront for down payments, for renovations, for closing costs, for cash reserves. So investing in an expensive market can lead to challenges when trying to scale up your portfolio. That’s the first one. The second challenge in expensive markets is finding cashflow because these markets tend to appreciate in terms of property price, but proportionally rents don’t really keep up with how expensive properties get. So you get in these situations where it’s more and more expensive to buy a home, but the rents don’t keep up and that makes the cashflow potential less in a lot of these markets. So all in there is nothing wrong with investing in expensive markets. People make tons of money investing in these expensive places. Think about being in, I mean pretty much any city in California or Seattle or Denver or Austin or Boston in recent decades, they have largely crushed it.
So the question is with prices high and with mortgage rates high, how do you get in? You invest in these expensive markets to take advantage of the benefits that are there to mitigate the risks that exist in the current market and to offset the challenges that come with scaling and with cashflow generally. There are two schools of thought here. One is you can find something that works locally and actually just figure out a way to make it work in an expensive market or you could invest long distance and just choose another market. I’m going to talk about both, but since we talk a lot about investing out of state in long distance on this show, I’m going to focus less on that and talk more today about the strategies that work in expensive markets. So the first category of things that work in expensive market is value add investing.
Some people call this sweat equity or forced depreciation, but they’re all the same thing. The general idea is you buy a property that’s not up to its highest and best use, it’s something that’s a little bit run down, it’s dated, it needs some work, and then you do the work to bring it up to modern standards and make it really nice. And in doing so, you can generate big chunks of equity that can really help fuel your investing portfolio. It can build a lot of capital that you can reinvest into other deals or you could just leave it in those existing deals if you want to do the bur. So there are two different strategies within value add that can work in expensive markets. The first is flipping. You’ve probably heard of this, but basically you buy a house, you fix it up and you sell it.
And although flipping does come with risk, it does also come with huge potentials for return. It is not unheard of for flippers to get 30, 40, 50% cash on cash returns, just total returns on a flip in six months. If you annualize that sometimes you could double your money in just a year, and this definitely works in expensive markets. You see this in la, you see this in Boston and New York. This is definitely a strategy that works, but it’s not for everyone because flipping is time consuming. It can be stressful and there’s definitely risk. So if you’re thinking about flipping, I think you should ask yourself a couple of questions about whether this is right for you. First, do you have any experience with renovations? It doesn’t need to be a crazy gut job renovation, although those do have higher returns. Are you good at managing projects or do you have a good network of contractors out there?
Do you have the temperament for it? Because I just literally just an hour ago listed my first flip for sale and I can tell you things are going to go wrong. You need to have the right temperament where you just can kind of go with the flow, understand that even though you need a plan, it’s probably not going to go exactly as you expect it to and you’re going to have to be willing to work with it. So you need to understand are you good at this? Do you have the temperament and are you willing to take the risk? Because even good flippers lose money sometimes. And so although you’re taking a big swing, this is just how investing works, right? The higher risk things have the higher reward, and so you can make a lot of money, but you just have to be willing to know that there are risks both in construction and in the market right now.
You do need to accept that things are taking longer to sell. You’re not going to be able to flip something, put it on the market, it’s going to sell in the first weekend. I mean maybe, but on average the time on market right now is going up 30, 45, 60 days in some places and there are significant holding costs, and so you just need to be prepared for that. But again, the opportunity to double your money is really appealing and although there are some adverse parts of the market right now that are going to impact flipping mostly like I said, days on market and longer hold periods, that’s probably number one. You also have tariffs are increasing the cost of materials in a lot of places and in some places the cost of labor as well. But you are also getting one benefit for value add investing right now, which can work particularly well in expensive markets.
There’s this thing that happens when you enter a real estate correction. I think we’re in across most of the country right now where the price of fixed up really nice stabilized assets, they might go down a little bit, but proportionally they’re not going to go down that much. Meanwhile, properties that need a lot of work are going to fall in price faster. That increases your margin potential. Now you have to balance that with increased labor costs and supply costs, time on market, all that other stuff. But there are some things that do benefit flipping in this kind of market, and I really recommend knowing your market really well because flipping is very block by block, house by house kind of thing, but it can definitely work in expensive markets. Now I know that flipping’s not for everyone, but this idea of value add investing can also work for rental property investing in the form of the, if you haven’t heard of the bur method, it stands for buy, rehab, rent, refinance, and repeat.
And basically what it is is using the benefits of a flip with a rental property, which in my opinion offsets a lot of the risk and also gives you additional benefits because think about this, what I just said was that the market is giving us cheaper properties to buy that need work. So that means that you can buy these burr properties potentially lower right now than you could in the last couple of years. And I also said that the biggest risk in flipping right now is when you go to sell it, right? It could sit on the market for a while. We could have some crazy news or mortgage rates could fluctuate and it could sit for a little bit longer than you’re hoping for, but with the Burt, you’re not necessarily selling it. So you can buy things at a pretty good discount right now, do the renovation and then refinance it and hold onto it, and maybe you sell it one day, but you have the option then to wait to sell it during a better time to sell than it might be at the time that you actually finish that renovation.
So that’s one really big benefit is that you can build equity just like flipping, but you don’t have that pressure to sell the property immediately. The second thing about a burr that can work really well in expensive markets is that burrs, sure they build equity, they get you that forced appreciation, but oftentimes they can help you increase rents, right? Because if you buy something that’s not in great shape, people aren’t going to rent that as is for a lot of money. But if you make a really great product that’s going to have demand from a lot of tenants, then you can raise rents and you can potentially generate cashflow even in expensive markets. I’ve been underwriting deals in Denver, and you can actually make the burr work for growing appreciation and generating cashflow In a market like Denver that is definitely considered an expensive market.
So this can absolutely work. I’ve talked on the show too about really liking something these days, what I’m calling the slow, which is just buying a, let’s call it a duplex with tenants, and it might not cashflow right away, but when the tenant moves out, that’s when you renovate the property. You bring up your rents then and just do that opportunistically. That takes a lot of the pressure off of you to do things quickly, which personally I like. I work full time and a lot of people do. So that takes some time pressure off, and it also means that you don’t have to invest the full amount of capital into the project right away. You can put your down payment down, you cover your closing costs, you have your cash reserves, and then maybe six months down the road you put in some money, 15 grand to renovate a unit, but you have some time to recover that capital, maybe save up some money, seek that money elsewhere, and that’s another great way to get in into an expensive market. So those are the first two strategies that I recommend. If you want to invest in expensive market, take advantage of value add opportunities that could be in the form of flipping or the bur method. When we come back from this quick break, I’m going to talk about how you can find cashflow, yes, cashflow even in expensive markets. Stay with us. This week’s bigger News is brought to you by the Fundrise Flagship Fund. Invest in private market real estate with the Fundrise flagship fund. Check out fundrise.com/pockets to learn more.
Welcome back to the BiggerPockets podcast. I’m Dave Meyer talking about how it is possible to make a profit and to invest in an expensive market. Before the break, we talked about value add investing either in flipping or a burr, but I want to turn our attention to cashflow because this is really the challenge of an affordable market. It is hard to find, but there are ways that you can do it. Like I said before, if you were to go out and just buy a regular single family home in an expensive market for 500 grand, it is very unlikely that you’re going to cashflow. In most markets, you’re going to rent that out maybe 2,500 bucks, 3000 bucks if you’re lucky, probably not going to work. But there are certain strategies, there’s two or three of them that I kind of consider as cashflow superchargers. It’s not really changing the approach.
You’re still buying a single family home or a duplex, something that you want to hold onto for a long time, but hopefully using one of the methods that I’m about to tell you, instead of generating 3000 a month in long-term rents, you can get that cashflow up to 4,000 that’s close to cashflowing or 4,500 or even more, and it can definitely work. And the three different cashflow superchargers that I consider are one, you’ve definitely heard of this, which is short-term rentals. I know everyone calls short-term rentals, a totally different strategy than long-term rentals, and in some ways it is, but to me, you’re still trying to buy something and hold onto it for a long time, and that’s really the play in the expensive market, right? Because you want to hold onto something for as long as possible to capture that appreciation when it comes.
We don’t know when that appreciation’s going to come. It could be this year, it could be next year, it could be three years from now until we see that big spike. But the real estate market works in cycles and there will be another cycle where prices go up, whether or not you rent it as a long-term rental, a short-term rental, a midterm rental or co-living, all strategies I’m about to talk about. That’s kind of up to you, right? That’s just being opportunistic about what’s going on in the market. If you can get great rents, generally I recommend long-term rentals. It’s just easier. There’s less wear and tear on the property. It’s less operational headache, but in these expensive markets, usually that doesn’t work. So you can turn to short-term rentals, which definitely has the potential for higher cashflow than long-term rentals. Now I’m saying that is potential because short-term rentals, even more than long-term rentals are very location specific.
So if you’re in LA or San Francisco where there’s a lot of tourists coming, New York, Boston, these kinds of things, people take vacations there and you can be in a great location where people are going to want to stay there and you don’t have a lot of competition from other short-term rentals. This can definitely work. I do want to caution though that short-term rentals are not magic. Over the last couple of years people have said, oh, short-term rentals generate more cashflow. Yeah, on a per night basis, that’s true. The rate you can charge for one night of a short-term rental is much higher than you can for a long-term rental, but with short-term rentals, the risk of vacancy is way, way higher. And over the last couple of years, if you look at the short-term rental market, that has definitely become true almost across the board there is just more supply of short-term rentals so you have more competition and demand for them even though it’s stagnant, it just hasn’t kept up with that more supply.
And so if you’re going to do a short-term rental, you have to really focus on competing and being the best product in your neighborhood so that you can fill that place and keep it filled. Now, a lot of people do that with a lot of success. I have a lot of investors, friends who are still able to do this, but just don’t go into short-term rentals saying, I’m doing it because I want more cashflow. You need to actually do your research and figure out if that is realistic for you in your area. That next strategy I want to talk about is pretty similar. It’s called midterm rentals. The idea here is kind of like a short-term rental, but it’s for people who stay for 30 days or more, and this has become popular with traveling nurses or corporate housing. I’ve stayed in midterm rentals myself.
When I’m moving to a new city, for example, and this is kind of a nice combination, it’s sort of a blend or a hedge between long-term and short-term rentals because getting the higher daily rate like you get for short-term rentals, but because people book them for longer periods of time, you’re mitigating your risk of a lot of vacancy. Now, if you have a vacancy with a midterm rental, it could last several months. So that is a challenge. But in markets where there is a lot of demand for midterm rentals, it can be an excellent way to generate cashflow. As an example, we were talking about buying a $500,000 home. It’s very realistic to think that you could charge four grand or 4,500 bucks for a nice furnished apartment in one of these markets and make your property cashflow. Those are two good examples of cashflow accelerators, short-term rentals and midterm rentals.
The other one I want to bring up, it’s not new, but the term for it is kind of new people call it co-living. Now, people used to call it rent by the room. It’s the same idea, which is buying that $500,000 house and instead of renting it to a single tenant where you can maybe get three grand, it’s a four bedroom house, let’s call it, you rent out each bedroom for $900, that is a reasonable amount for someone to pay, and now instead of getting $3,000 a month, you’re getting $3,600 a month. Now I’m making up those numbers. You might be able to get a thousand bucks a bedroom or 1100, I don’t know. But this co-living strategy does really work. We have a book about a guy named Miller McSwain just wrote a guide for it for BiggerPockets. You’re interested, but it can really work in these expensive markets because number one, it boosts your cashflow.
But number two, inexpensive markets. Rents are typically really expensive and there are a lot of tenants who are looking for affordable options just using the example I’ve been giving out so far, right? You can rent a bedroom. Let’s say it’s a thousand dollars for easy math, a thousand bucks a month for a bedroom in one of these homes, hopefully a nice home, whereas getting a one bedroom is probably 1800 bucks. So obviously those are different living experiences, but some people are willing to make that trade-off and live in a co-living home, and so in these expensive markets, it has demand and it can generate cash flows. So this can be a really good option for you to check out. So so far we’ve talked about two different options for value add, either flipping or burr. Next, we talked about cash flow. Again, I don’t think long-term rentals are going to work in most of these markets, but you can opt for one of these management styles, short-term rental, midterm rental or co-living, that can help you generate that cashflow.
The last option for investing in market for an expensive market is an owner-occupied strategy, and there are two of them occupied strategies give you a lot of benefits, mostly that you can put lower amounts of money down. So you can buy a house hack or do something called a live and flip, and sometimes you can put as little as 5% down, which really addresses that affordability issue that exists in these expensive markets. So for a $500,000 property, instead of putting 20% down, which is a hundred thousand dollars, then you’re going to need closing costs. Then you’re going to need cash reserves. You might need to do a renovation. You’re probably talking about 120, $140,000 of capital that you need. That’s a lot to start your investing journey. But 5% down, you are putting $25,000 down plus those other things, you’re probably in the 50 to $75,000 range.
That is nearly half. That means it’s much more achievable for people to get into these owner occupied strategies. The other thing is owner occupied loans tend to be a little bit cheaper in terms of mortgage rates, and there are all sorts of government programs that are out there that help homeowners purchase homes. So there’s down payment assistance programs, there are rate buy downs, there are closing costs credits that state and city governments often give out. They don’t give those out to investors, they give them out to homeowners who can go and buy a house hack or a live and flip. Now, which one of these owner occupied strategies you pursue is up to you if you want to generate cashflow and build a rental portfolio. House hacking is the better option. You buy a two unit, a three unit or a four unit. You live in one unit and you rent them out and it gets all the benefits that I was just talking about.
Now, if you put only 5% down, it’s going to be a little bit harder to cashflow. But the magic thing about a house hack is that it doesn’t need to cashflow. All it needs to do is lower your cost of living. That’s the benefit. So if you were paying two grand in rent, you go out and buy a house hack and all of a sudden, yeah, you’re still paying $800 for your mortgage every month, you’re still saving $1,200 in post-tax money that you can then use to buy your next deal to renovate the property or do whatever you want with. So house hacking really good option in a lot of expensive markets. I should also mention that you can combine house hacking with that co-living model. So instead of buying a two or three or four unit property, you buy a single family home with a lot of bedrooms.
Ideally you want four or five bedrooms, you live in one bedroom and then you rent out the other two roommates. This is not for everyone lifestyle wise, but it is a very effective method if you want to hustle your way into a great deal in an expensive market house hacking with the co-living model, that combo can be an amazing boost to your portfolio and a great way to start you on your journey towards financial freedom. Now, there is another owner occupied strategy. It’s called the live and Flip. It’s basically doing a flip buying something that’s not up to current standards, renovating it and building all that equity, but you actually do it as an owner occupied and it gives you three incredible benefits. The first is financing, because most people who flip use a hard money loan, you pay a couple points, 12 to 15% interest rates that could really eat into your profit.
But as an owner occupied, if you’re buying something that is in decent shape, you should be able to get that with a conventional loan, so you can get that with 5% down. You can get that with 10% down. Sometimes even if you get a conventional loan at 20%, you’re still paying six and a half percent interest rates instead of 12% interest rates, and that makes a really big difference. There’s even something called the 2 0 3 K loan, which allows you to get a conventional mortgage and to finance the renovations that you’re going to do. That’s an incredible financing option for people. I really like that approach. For people who live in an expensive market, it can really work well. So benefit one is the financing benefit two is this incredible tax benefit. The tax code says that if you live in a property for two out of the last five years, so basically you can live in it for two years, you have to live in it for two years, then the capital gains on all the profit that you make.
So if you buy something for 400 grand, you fix it up for 600 grand. I’m going to use simple math, not do the soft costs. Here you have 200 grand in equity that you have built that is tax free when you go to sell it, if you owner or occupy it, that is amazing. That means that opposed to a regular flipper who’s going to pay, let’s say 30% on that income, they’re paying $60,000 in tax on a flip that you’re not paying as a live-in flipper, you get all that money tax-free. That is an incredible benefit. The third benefit is a little bit softer, but I think it’s really important, especially for newer investors, is the time pressure is reduced. As a flipper, you need to sell your properties quickly. You’re paying 15% on that hard money loan that could be 5,000 or $10,000 a month in holding costs.
Every month you’re holding on doing your renovation is eating into your profit. But with a live and flip, remember to get that tax benefit, you need to do it for two years, and that means that you don’t have a lot of time pressure. You should be able to renovate pretty much any house in this entire country in two years, and you don’t have to do everything quickly. Not everything has to be operating perfectly. So as a flipper, especially a new flipper, that takes a lot of the pressure off. It takes a lot of the risk off to do things quickly. And so when you combine these things together, the financing, the tax benefits and the reduced time pressure, I truly think that live flips is one of the best options for investing in an expensive market. So those are all of the options you have for doing it in market.
You could do value add in the form of flipping or bur you could do cashflow accelerators like short-term rentals, midterm rentals and co-living. But remember, you got to be really careful about location and do your research to make sure there is demand for those things in your market. Or you could do the time-tested, owner-occupied strategies of house hacking or live in flips. I know it can be hard. It seems intimidating, but these do work in expensive markets. I’ve seen it in my own markets rather in Denver or in Seattle, and I know it can work in almost every market in the United States if you have the right approach and you take the right strategy. Now, of course, you can also choose to invest in a different market, and we’re going to talk about that right after this break.
Welcome back to the BiggerPockets podcast. I’m Dave Meyer talking about how you actually can invest in an expensive market even in today’s day and age. Before the break, we talked about strategies you can use if you want to invest in your own market, but of course, the question becomes whether or not you should invest out of state, and we do a lot of podcasts about how you can invest out of state. I personally invest out of state, and so I talk about that a lot. So we’re not going to talk about the tactics of actually how to go out and do it. I just kind of want to talk about if you should do it and why, because to me, this is a question I get a lot from people who live in expensive markets is should I do the strategies you talked about above that can work in expensive market, or should I just pick somewhere cheaper and go scale my portfolio?
And to me, it really just comes down to the math. Pick a strategy from above that you like that is aligned with your long-term goals. If you want to be a rental property investor, figure out if you want to do the bur method. Do you want to do a house hack? Do you want to do short-term rental rent by the room? Pick one of those and analyze the deal. Then think about how much money you would invest into that deal. So let’s call it a hundred thousand dollars, right? Take that hundred thousand dollars and analyze a deal. Just go do it on the BiggerPockets calculator. Go test out a house hack. Go test out a burr and see how much money you would make. What would your cash on cash return be? How much equity can you grow over the lifetime of that investment? Go check that out and then go compare it to a cheaper city that you pick.
I like tons in the Midwest. There’s great markets in Indiana and Wisconsin and Ohio and Pennsylvania. All these places have great markets. Pick one of them and just go compare them and then figure out which one’s right for you. If your goal is cash on cash return right away. I actually think that investing out of state makes more sense. I ran the numbers on putting 10% down on a $650,000 duplex in Denver. This is a real deal. Rents are about 5,200, and you assume that as the person buying this, you’re currently paying 2,500 bucks in rent. If you do that number, even house hacking for the first several years, your financial benefit is actually better investing out of state than it is for the house hack. Now, over time, the Denver property will probably get better because that appreciation’s going to kick in because these markets like Denver, although it’s not doing very well right now, it’s popular market, strong economic fundamentals, it will grow again, right?
And so I did the math. It actually comes out to about four years. After four years, the house hack in Denver most likely becomes the better investment. But this is why you have to make this decision for yourself because if your priority and goals are rental growth and cash on cash return, you should probably invest out of state. But if your goal is long-term wealth and building equity over the long run, the house hack is better for you. And we have all of these tools on BiggerPockets for this exact reason to make it easy for you to go out and compare these different methods. So I’d recommend people do this, go do the math. In addition to the normal calculators we have on BiggerPockets, along with Scott Trench, we made a house hack buy rent calculator. You can download it for free on biggerpockets.com/resources. You can go check that out.
And I think what you’ll see is that it’s a matter of preference, right? You can invest in your own backyard. Your returns might not be as big to start. You might not get that cashflow. You might not get that unit count that everyone loves to brag about, but over time, you are likely to build more equity. Meanwhile, if you care about count, personally, I don’t really, but if you care about door count or you really want to maximize your cash flow right now from day one, investing out of state can really work. Now, again, we’re not going to get super into how to actually do that. We have tons of different episodes on BiggerPockets, YouTube guides. There’s books about how to invest long distance. All of those are great resources. I promise you, it is not as intimidating as it sounds. If you build a great team, I do it myself and it really hasn’t had any issues.
So if you live in an expensive market, whether you choose to invest in your own market or you want to do it in long distance in a different market, don’t be discouraged. You can absolutely do this. You have a lot of options available to you, but it’s not going to be the one where you just go on Zillow and click a button and find something that is hard to find even in affordable markets right now. So you have to figure out which way you want to get creative. You could do it through value add. You could through the ways that you manage and run your rental properties. You could do it through owner occupants or you could do it through long distance investing. All of these things work, so do not get discouraged and think that you cannot invest these options work. I’ve seen them work for thousands and thousands of investors, and they can absolutely work for you.
Now, before we go, I just want to share what I personally do. I live in an expensive market. I live in the Seattle area where the median home price is $850,000 right now. I could absolutely in no way go on Zillow, find a property and have a cashflow. Just not going to happen. So what I do is I actually split the difference. I started doing some value add investing here in Seattle. I’m trying my hand at flipping right now. I’m testing it out to see if I like it and if it’s something that I’m good at because it is effective in Seattle. But at the same time, I also invest out state because while flipping in Seattle can help me build capital, it can get great equity returns. I primarily am a rental property investor. I got into real estate and the reason I’m still in real estate is because I want more passive income.
I want those tax benefits and I want them for a long time. And so when I buy rental properties right now, I’m doing them in the Midwest using long distance tactics. Now, if you’re just starting out, you’re probably going to need to pick one or another because you’re going to be capital constrained, and that’s okay. That is how everyone starts. No one starts by diversifying their portfolio. You have to go all in on one option, and especially if you’re living in an expensive market, you’re going to have to do that. But as you grow, remember that you don’t have to just pick one. You don’t have to stay with one tactic. Just get in the game and learn it, and then you can diversify later. That’s my best advice for people who are living in an expensive market. Just remember, you can do it. There are no right answers. Pick the one that works for you, your risk tolerance and your long-term goals, and you can absolutely get into the market and succeed as a real estate investor regardless of where you live. That’s our episode for today. Thank you all so much for watching this episode of the BiggerPockets Podcast. We’ll see you next time.

Dave:
The housing market is hitting its typical seasonal slowdown. Listings are tapering off. Price growth is definitely flattening and mortgage demand has stalled for the fourth straight week, but under the surface, investors are positioning what’s next and starting to look forward to 2026. I’m Dave Meyer, alongside Kathy Fettke, Henry Washington and James Dainard, and today we’re walking through the headlines and trends that are shaping the end of 2025 you’re listening to On the Market. Let’s jump in. James, Kathy Henry, thank you all so much for being here. Kathy, how are you?

Kathy:
I’m doing great. I am here in Phoenix. I’m going to stalk James later. Going to go find where he lives.

Dave:
I mean, just look for the biggest house in the city and you’ll find him. James, how are you doing?

James:
I’m doing good, man. It’s nice and sunny here. We have four more weeks of shooting. We have to complete nine houses. Three of ’em are in studs, so we’ll see what happens.

Dave:
That’s unbelievable. Wow, Henry, I hope your life is a little simpler than that.

Henry:
Yeah, I have to complete five projects, but I don’t have a timeframe. I just have to pay holding costs if I don’t go fast.

Dave:
Yeah, there’s no TV crew chasing you down right now,

Henry:
Correct?

Dave:
Well, we got a lot to talk about today. Thank you guys all for being here. We are entering sort of the last stages of 2025, but at least to me it really feels like housing has come into focus, especially housing affordability. In the last couple of weeks it’s been in the news, it was definitely a major part of the elections that went on the other couple of days. So we’ll talk a little bit about housing affordability and some ideas to improve it. We’ll talk about recent trends in the housing market, of course, how margins are being impacted by recent cost increase and how the job market is developing and actually what it means that might be positive for real estate investors. So let’s jump in Kathy Europe first, bring us your headline.

Kathy:
Okay, well, mine is from Yahoo Finance and it is Trump administration is evaluating portable mortgages and what that means for homeowners. I had to look up what in the world portable mortgages are, and I was a mortgage broker for years,

Dave:
So it sounds cool.

Kathy:
Yeah, I had never heard of it. I’m like, well, okay, it kind of makes sense. You carry it with you, and I thought, okay, this is granted. The Trump administration is no stone unturned in terms of trying to figure out how to unlock the housing market.

Speaker 5:
We

Kathy:
Know obviously home prices are defined gravity, even with high rates, even with wage growth slowing even with inflation, the prices just keep going up and not everywhere. Not everywhere, but nationally. And of course we have so many people locked into lower payments that don’t want to leave that, so it’s like how do you unlock this housing market? They floated the idea of the 50 year mortgage. Of course that was headline news for a while and there was a lot of backlash because again, having been a mortgage broker for the first years that you’re paying your loan, you’re really not paying down your loan anyway. You’re paying interest only for the most part for the first year. So most people sell I think within 10 years,
So it doesn’t matter that much. But what does matter is that 50 year mortgages tend to be higher costs, so it doesn’t really, I mean we don’t have 50 year mortgages, but 30 year fixed rate mortgages are higher than shorter term. So the idea would be a 50 year would be higher price. So then this idea came out, there was backlash. How about the portable mortgage? And apparently this is something they do in Canada and the uk it is not new. I thought it was just something they dreamed up in a boardroom, but it’s actually been done. But the difference is that in Canada, in the uk, they’re shorter term loans, so I suppose it’s different than a 30 year term where you can carry it from house to house with you. But I love the concept and it would be amazing. I have a low interest rate and I think it would be fun to carry it to another property.

Henry:
I have a 2.3% interest rate and I would carry this thing with me for the rest of my life. Are you kidding me?

Dave:
But is that the idea that you could keep your current one at a 30 year and make it portable or is it that new mortgages would be portable?

Kathy:
It sounded like they’re just talking about any possibility. Right, okay. They’re

Henry:
Trying to reverse the lock-in effect. So they’re saying, what if we could stimulate the economy by people buying houses, if they can take their low interest rates with them, and so it would be, it’s my understanding that it would be for people who currently have mortgages, not just new mortgages.

Dave:
Okay. I have thoughts about this. I mean, I actually think it’s an interesting idea. I kind of like the idea, how does that work because all of these mortgages have already been originated packaged and sold to investors. Those investors aren’t going to then agree retroactively to change the terms of the loan. Is this even that just doesn’t make sense.

Kathy:
Yeah, I mean it sounds like the state of Maine floated mortgage portability legislation in 2025, so it’s not just the Trump administration that’s been talked about because it actually does exist in other countries,

Dave:
But I get that it exists in other countries, but it exists at the point of an origination. So the fees and the interest rate and the bank already know are all factored into that. If I was the owner of those mortgage backed securities, I’d be like, I don’t know if I want that to just be portable going forward.

Kathy:
Well, it seems like they would have to underwrite the new property. They’d have to make sure it’s a similar situation because probably the people who have the mortgages that would be portable that they’d want to take with them have a ton of equity, so very low risk. So would they have that same amount of equity? Maybe just the whole thing moves like a 10 31,

Dave:
But the banks don’t want this. They want them to refi at a higher interest rate. Absolutely. They don’t want to be carrying ten’s 2.3% interest rate for the next 27 years.

James:
If someone can pull off negotiating that deal, I’m hiring them. That is the ultimate negotiator. I mean, yeah, why would they do that? So they do it in Canada, you said are their rates way higher there

Dave:
And they’re only three year terms or five year terms,

James:
So that makes sense, right? Yes, the bank shares upside or they share risk in that or they can mitigate, but on a fixed, I’m not buying Henry’s loan for

Dave:
2.25. Exactly. No one’s buying that. So it sounds like a good idea, but hard to imagine it happening.

Kathy:
The fact that we can even lock in 30 year fixed rate loans is amazing and then that we could do it at two and 3% is also amazing. What bank would ever agree to that? I don’t know. They did, but what was also interesting about this article that I forgot is consumable mortgages are a thing and they are a thing on FHA loans, on VA loans and USDA loans. So this article kind of says go look for those. That’s a great strategy.

Dave:
Those are amazing. If you can find an consumable mortgage, you should absolutely look for those. I should just note that those are only available for owner occupants and my guess is if somehow they miraculously pull off this portable mortgage idea, it would also only be available for owner occupants. I don’t think this is about to be an investor loan.

Henry:
For the record, I asked Chad GPT, what would mortgage securities holder, why would they sign up for this or what makes it good for them? And it basically said absolutely nothing.

Dave:
Yeah, nothing. Yeah, there’s no reason,
Which honestly could backfire because if you do stuff to upset the MBS market, they’re just going to demand higher rates for current mortgages to compensate for that. So it just doesn’t make sense retroactively, if they started introducing this as a new loan product moving forward, I think that would be cool. I know now I’m super stoked about that in terms of their rates, but just if a homeowner, if you were moving, it’s just easier. You get to keep your amortization schedule, it’s better for you for building equity. So I mean I would be interested in introducing it now. I just don’t think it could reasonably happen looking backwards. Alright, well interesting idea. I mean the way I feel about this, we put out an episode on the market where I was just rambling about 50 or mortgages and I just want to say I’m not opposed to short-term solutions that help the housing market, but I just don’t like ones that make the long-term solution further out. That’s kind of how I feel about the 50 year mortgage is like I get lowering the payment $200 a month for the average home could be meaningful to some people, but it’s actually just going to make affordability challenges worse instead of actually making homes more affordable, which is what actually needs to happen.
And so I think that’s not going to work. I unfortunately don’t think portable mortgages are really going to work for long-term solutions, but I hope as they’re trying to figure this out, they come up with something that might actually work because affordability is a real challenge. Some might even call it a crisis in the United States right now and it does need to be addressed. All right. Well let’s move on to our second story. Henry, what do you got for us?

Henry:
Yeah, I brought an article, it essentially says 10 things to know about the property market. So I was looking through these 10 things and or 10 statistics and a few of them caught my eye and I just wanted to chat with the group about them. The first one that caught my eye says, approximately 85% of outstanding mortgages carry interest rates below 6%. So that kind of ties into what Kathy was talking about. That number surprised me. I thought the numbers would’ve been skewed a little differently given the past two and a half years, three years rates have been well above 6% and there were still transactions happening, but 85% seems pretty staggering, which kind of plays into what we’re seeing in the market, why the lock-in effect is a real thing and why transaction volume is down and why more inventory is coming on the market with less buyers.

Dave:
This just explains so much here. There’s like two classes of homeowners right now. The people who refinanced or originated alone from 2020 to 2022 or 2023, not just housing affordability, their whole spending is in a different realm than everyone else. They just locked in this better affordability than everyone else and it’s going to be, I don’t think people are giving that up. It’s just going to be a long time to work this out. All the data I’ve seen that shows is that for the housing market to really unlock for people to start actually transacting and thinking about moving, it has to get below 5.5%.

Henry:
Yeah, this article says something similar. It says if the 30 year mortgage rate falls to 6%, about 3 million borrowers would be primed for a rate and term refinance, so that would be nearly 2 million housing units.

Dave:
I’m looking at the chart right now. 20% of people are in Henry category under 3%. Those people are never going to sell those homes. I’m sorry, who would sell a home with that? You hand it down, you rent it out, you do something else with it you did not sell. That’s an asset in itself. The 3%, then another 35% are between three and four, so that’s insane. So nearly 50%, 55% are below four. That’s crazy. I personally have a hard time imagining interest rates ever going below four. I don’t think so. Again, unless there’s an economic emergency,

Henry:
Blacks one event,

Dave:
So you have half the country with once in a lifetime, once in a generation, at least types of mortgage rates. Man, I respect that. Trump administration, state governments are trying to unlock this, but man, it’s hard to argue with money. It’s hard to argue with a really good

Kathy:
Deal. Yeah, it’s interesting. 40% of homes apparently, I think that’s what came out this last week are owned free and clear. So there’s just a lot of stability within the housing market as far as people who own them. However, even homes that are paid off might get sold if they’re inherited. The kids are like, I don’t really want to rent it, I don’t really want it. I’ll sell it. So I think there’ll be some movement over time as these homes age and as the equity gets so big that those who inherit are like, I want the cash.

Henry:
Well, that’s a great transition, Kathy, because number 10 on this list says the number of homes that are inherited has been increasing, and this summer that figure reached its highest point in over the past decade, over 300,000 homes were inherited over the last 12 months.

Dave:
It’s a hundred percent going to keep going

Henry:
And this figure is 15% greater than the number recorded three years earlier.

Dave:
I mean, I just think this is going to be the new status symbol. No, it’s not going to be trust fund babies. It’s going to be inherited a payoff house baby. That’s like if you had a paid off house, that is such a gift you could pass down. It’s incredible. But I do think Kathy’s right. I think some people will appreciate that want to live in it. It’s a good property. I think a lot of people look at that and be like, that’s just 400 grand I could have and are definitely going to sell it. Well, thank you Henry for breaking those stories. We do have to take a quick break, but when we come back we’ll talk more about investor margins and how they’re being impacted by rising costs and we’ll talk about how a bad job market might actually be a good opportunity for investors. We’ll be right back. Welcome back to On the Market. I’m here with Henry, Kathy and James, you’re up next and I think we got a very special story here. You’re bringing us, right?

James:
We do. We have, I don’t quote the Seattle Times much, but we have a story from the Seattle Times that talks about

Dave:
You.

James:
Me? Yes. About case study.

Dave:
It was on the front page of the Seattle Times top story last weekend.

James:
It is a very relevant article, not because of anything I inputted in, but just because of the topic. The article was about how flippers have been compressed and I kind of have to eat my words. In the last 12 to 24 months, we have seen investments get compressed across the board, but flipping actually was holding pretty strong as far as high yield and now it’s getting caught up with the rest of ’em. And that’s kind of what this article talks about. The main point of this article is that rising costs, cost of money, cost of construction and declining sales has totally compressed the market and we’re seeing it pretty dramatically across the board. Even in the numbers, it quotes a lot of Adam data where it talks about how in 2021 there was 3,100 homes that were flipped Last year it dropped down to 1900 and what we’re seeing is we’re seeing a very big decline in flipper activity just because the margins aren’t there.
The reason the margins aren’t there is just because of all these increasing costs, flippers can’t keep up with it, going from making very high profits have been shrunk dramatically. And there was something I wanted to point out about this because it is true in the data, right? Flipping activity has declined over 33%. They were saying on average when a flipper purchases a property, they’re selling it for around 26% higher when their costs are over 30% when they’re doing that deal. And that cost comes down to money construction and time on market. And so I grabbed just a normal performer that was for a flip property that we would often see where we’re shooting for like a 35% return, 40% return. And it really does show you just little impacts across the board we have to pay attention to as investors and start pivoting because on a flip property, let’s say in Seattle you pay 650,000, you put 150,000 in the renovation, you sell it for 9 99, that’s going to be a cash on cash return of 42%, which is kind of what we’re shooting for or net profit 64,000.
If that flip goes 90 days too long, which has been the trend for flip properties, they’re taking anywhere between 90 and 120 days longer to sell. That knocks off 21,000 or 33% of the profit. If your construction costs on that project rise by 10%, which is the average, it’s at 9.8% according to the Adam data in the article. That’s another loss of 17,500. And if we see a price decline of 2.5%, which is a little bit lower than the higher end in Seattle, that’s another 24,000. And you go from making a deal that had 64,000 in profit or 42% return to breaking even. And that’s if you can control those costs, get it sold on time and only have a two and a half percent decline, which you’ve really seen a 5% since peak. And so that’s why flippers are getting in trouble. So I think it’s just a good article about talking about rising costs and how to prep your deal going forward. You just can’t do it the same.

Dave:
Do you think any of this will get baked into housing prices? James? It seems to me like at a certain point these rising costs of renovation have to negatively impact housing prices, meaning that you could buy things for cheaper.

James:
There is a lot more deals right now out there and we’re seeing bigger discounts because investors for us, if it goes 90 days too long, that eats up 33% of the profit. So buying going forward, we are just adding 90 days to that price.

Speaker 5:
If

James:
We think construction is going to go up by 10% and we’re adding even bigger buffers, we do have some bigger tariffs coming in like cabinet costs are going to rise dramatically in the next two to three weeks. Appliances, they’re through the roof. I was just shopping like, wow, these really did go up 35%.
It is going to cause a decline in people selling as is and it is going to give a lot of, I think it’s almost a benefit for a lot of home buyers too because some of these properties are not zombie properties where they need everything, they’re just dated. But as that price drops because people have to renovate, I mean it is a good opportunity also for first time home buyers and people that want to buy a little bit cheaper where they can buy grandma’s house a little bit dated for a little bit less money. But yeah, all these costs are going to be built into the pricing. But right now investors have, they were buying all of last year’s numbers, so that’s where everyone’s getting hit.

Henry:
Yeah, I mean I would reflect those sentiments here in my market on a smaller scale, obviously our price points are different, but that is why I’ve just been so conservative in my offers because I am truly only doing deals if it’s a solid double or triple in terms of the quality of the deal. Whereas before I would hit a single, I’d take a deal where I’m going to make 30,000, 20,000 net profit in and out, easy flip, but now I shoot for a net profit of about $50,000. And in my market that’s substantial because you’re talking about a $65,000 net profit and a place where the purchase price is 400 to 500,000. I want a $50,000 net profit and a place where my purchase prices average between a hundred thousand and $200,000 and that’s all I’m doing. The last deal Id put under contract earlier, earlier this week, $80,000 purchase, $50,000 rehab, $265,000 a RV. And I’m probably going to keep it. I probably won’t even sell it. I’ll probably keep it as a rental. The numbers have to be phenomenal.

Dave:
Yeah, that’s amazing. But what does that rent for?

Henry:
That’ll rent for between 15 and 18.

Dave:
Okay, so a cashflow.

Henry:
Yeah,

Dave:
A little bit. Yeah. Yeah. Nice. That’s great.

Henry:
What if someone pays you at 300 grand? Would you sell it? No. If somebody’s going to come give me a cash offer to take it off my hands at 300. Y’all sell that thing all day long.

Dave:
Are you seeing more of those deals? Like you’re saying you’re being conservative, which I get means you may need to look at more to find the ones you’re willing to offer on or execute, but are you seeing more total good deals or is it kind of slow still?

Henry:
I’m seeing more leads, which means I’m making more offers. People need to sell, but then when they hear the conservative offer, they go, you know what? I think I’ll just keep it so I’m getting leads. People are interested, they want to hear the offer. Leads are

James:
Through the roof right

Henry:
Now.

Dave:
But that’s what I mean when my question to James before is eventually that’s going to stop. They’re waiting, holding out to see if they’re going to get better than your conservative offer Henry. But personally, I don’t think those offers are coming anytime soon. I think the reality is going to set in with the sellers that flippers can’t pay what they were paying a year ago. It’s not realistic.

Henry:
Your follow-up is so hugely important right now. That’s what happened with this deal. I made the offer and he was like, yeah, I mean just give me a few days, which means I want to go get more offers and then take the best offer. And so followed up two days in a row and he told me he wasn’t ready yet. Then I called him the next week and I was like, Hey, what do you think? And he was like, yeah, I think I’ll take it. Which means he went, he got other offers and they were all in that same ballpark or lower and then he ended up taking my offer. You’re right, if you’re not following up right now, you’re missing opportunities because the reality check is hitting the people who need to sell. You do have some tire kickers out there who would like to sell and would sell for a little bit of a discount, but once they get the reality of the market, you’re starting to see people say, okay, maybe I do need to let it go in this price range. So just be super conservative because your numbers will dwindle fast.

James:
Well, and the thing is too, the good thing about negotiating right now is there’s data that I’m not asking for a discount. We can offer them market value for the as is condition. There’s low sales on market and once you back out all the real estate commissions, they’re not low numbers. And that’s why there’s a lot more transacting off market is because you can bring people comps going, Hey, this one just got sold. It had better roof, better windows, and they paid a broker. I just have to adjust down for those costs and take it or leave it. And people are definitely taking it a lot more than they were 24 months ago. That is for sure.

Dave:
Awesome. Well, it was great press. Congratulations on that and thanks for bringing the story. I think this is super important, not just for flippers, but for people who are doing Burr renovations too. All the same principles apply here, so just be conservative. It makes a lot of sense. Still can do deals, but you have to be much, much more disciplined on what you’re buying. All right, we got one more story when we come back from this quick break, stay with us. Welcome back to On the Market. I’m here with James, Kathy and Henry sharing our thoughts on the most recent headlines, and I saw one today that made me a little sad, but also it’s a little optimistic as well. I was just reading some stories, doing my rounds on the economic news this morning, and I just saw three stories in a row that were just basically like Gen Z is over and over and over again.
There was one in the Wall Street Journal that said the companies predict 2026 will be the worst college grad job market in five years. I read another article from JP Morgan Chase that said that real income growth, which I think is maybe the most important thing for the economy, is dropping down especially for young people. And then I started looking, the fed from New York puts out these credit reports every quarter about how people are doing in student loan debt. Auto debt, credit card debt doesn’t look good for young people. It never does. They’re always the worst, but it’s not doing great.
And so I was thinking about this and feeling sorry for Gen Z. It is tough out there. Affordability is really low. Wage growth is low for them. And then I started thinking that I graduated college in 2009, which was actually at that point it was the worst job market since the Great Depression and I think 2020 took the cake. It actually got even worse than that, but I was just thinking about how frustrating that was graduating from college thinking you were going to get some high paying job and I had student debt and trying to figure that out and unfortunately it did not work for me that way at least right away. But ultimately that’s what got me into real estate. It sort of got me thinking about how unreliable corporate jobs are and how all these people had worked in these careers for a long time during the great financial crisis, all got laid off, all were not being served by the traditional ways of making money.
And a year out of college I was still waiting tables. I was cold calling for a tenant rep and I just jumped into entrepreneurship. I was like, this is the only thing that works for me. And I just thought there is a way to think about this. If you are one of those people out there who is experiencing these frustrating job markets to maybe see this as an opportunity to pursue entrepreneurship. I obviously chose real estate, but does it need to be real estate? There are other ways to do this, but I think this is a time similar to 2009 where it’s just kind of a wake up call that these traditional paths are not as reliable as people think they are. And if you want to secure your own financial future, being an entrepreneur, small business person, it’s scary, but it’s many ways a safer route.

Henry:
I agree with you. I think that it’s tougher for the younger generation to follow the same traditional path that we would normally think to go and get a job in corporate America and then make enough money to live and survive. That’s harder to do, but we also live in a time where there is so much opportunity to make money on your own with technology and online marketplaces, and so there’s just creativity. You can literally create money with your mind now, and that wasn’t something that you could do when I was a kid, the internet wasn’t a thing. You couldn’t just create a product and sell it online and people would buy it. The problem is we don’t teach people how to do that. We teach them the traditional path. So not everybody is built for that kind of business. I think now more than ever, we’ve got to be open-minded and creative to side hustles, like call it side hustle, call it entrepreneurship, call it what you want to call it, but finding a way to make money outside of your nine to five is necessary now it seems like more than just something you do on the side.

James:
Are you guys encouraging more YouTubers though? Did you just encourage Gen Z to be more YouTubers

Henry:
Maybe?

Dave:
Do you know that’s the number one job aspiration for Alpha?

James:
I do, and it’s just like, I mean, I think the American dream of going to be a doctor, a lawyer and all these things is kind of shifting, right? And I think the best thing that any kid could do, I was actually talking to my wife about this the other day, is

Henry:
Trades, baby

James:
Trades, electricians, plumbers. You don’t have to go to some $300,000 college anymore. You can go to a vo-tech school and get a trade because what we are seeing is what is getting paid more electricians, plumbers, trades.

Kathy:
I would say the number one most important thing people need to learn as a young person is ai. And yes, AI is going to take over jobs, but you know what else? It’s going to make humans super human. And what we’ve told our team at Real Wealth is we’re not firing anyone, but we’re requiring that you become an AI expert because we want you to be able to do 10 jobs. And with AI you can, but you better be an expert and you better learn. Because when we brought that on to our company, they all thought they were getting fired. It’s like, no, no, no, we don’t want to hire more when we know that AI can have us all be more superhuman. So that would be the number one thing. Go learn the future.

Henry:
AI sales and marketing, those are

Kathy:
Skills

Henry:
Everybody can use and need, especially if you’re going to start any kind of your own business. Realtors, their job is sales and marketing. Selling homes is not the main job. The main job is promoting yourself so that you have homes to sell. If you understand sales, marketing and ai, I think that you’ve positioned yourself in a way to be able to make some sort of side income.

Dave:
I’m going to throw out one other skill that I think is very important because although we’re all talking about AI and the trades, the truth is none of us have any idea how this is all going to play out. We’re just all guessing, and I really think and encourage people to just learn to be adaptable. You’re not going to have one career. I think that is probably the reality of the future. Things are going to change really rapidly, and if you can become a really good problem solver and a really good strategic thinker, that’s great. And personally, I feel like I learned so much of that through real estate investing or being an entrepreneur in some way. If you are take on an entrepreneurial pursuit, you are going to be over your head more than you want to be very early in your life, and it’s hard and it’s scary, but you’ll gain a huge amount of confidence in yourself and you’ll learn how to adjust to do market conditions, how to change as things change, how to deal with difficult people, all these things that are always going to be important. And so yeah, I don’t disagree with any of you. I think those are smart ideas, but I just think remaining nimble is super, super important these days.
Yeah, this was a fun one. Thank you guys for being here. A couple great stories here, talking about portable mortgages. Sounds like we all agree, good idea, probably not going to happen. Some interesting updates about the housing market. James big debut on the cover of the newspaper and how a bad job market, it stinks. I don’t want to gloss over it, but it can just sort of be, there is a silver lining and maybe you can find it by pursuing something entrepreneurial and finding your own path if no one else is offering a lot of jobs, which seems what’s happening today. Thank you all so much for listening to this episode of On the Market, Kathy, James Henry. Thank you guys for being here. We’ll see you all next time.

It may sound like a creation from a science fiction movie, but digital twin technology has been around for a while. It’s used in a variety of industries, from manufacturing to medical and the military. However, its latest application is particularly relevant to real estate investors, as it could dramatically reduce the cost of soaring home insurance premiums.

Insurance costs in climate-challenged areas like Florida and California have escalated dramatically in recent years. Last year, a Silicon Valley-based company composed of tech veterans launched Stand Insurance to help address the issue. The company used artificial intelligence (AI)-generated digital twin technology to create a lifelike 3D model of a home to help predict outcomes in real-life scenarios should an extreme climate event, such as a wildfire or hurricane, occur.

Other insurers partner with digital twin specialists such as the CoStar-owned Matterport and ZestyAI. 

A New Chapter for Hard-to-Insure Properties

The result of dramatic insurance losses has led to the exodus of many insurance companies from California and Florida, making these places hard to insure.

“Traditional ways to price insurance don’t work in an environment that’s so unpredictable,” Stand co-founder and CEO Dan Preston told The Wall Street Journal in 2024 when the company was launched, referring to climate-related risks. In October, the innovative insurer raised $35 billion in a Series B funding with a view to expanding operations from California to hurricane-ravaged Florida, Realtor.com reported. 

Stand is not for everyone or every home. It only covers homes in California valued between $2 million and $10 million, the Wall Street Journal reports. For a $3 million home in a high wildfire risk region, coverage could cost $12,000 to $15,000 with Stand, Preston said. Meanwhile, on its website, ZestyAI purports to offer real-time insights for over 150 million U.S.-based properties. 

“Strictly Science-Based”

Unlike conventional insurance companies, Stand and ZestyAI take a strictly science-based approach to risk assessment, rather than the traditional location and dwelling type used by most insurers—i.e., “a flood zone and a wood structure with vinyl siding,” etc. Both companies, however, go deeper, creating a 3D digital replica that factors in construction, foliage, and surrounding topography; simulates extreme weather events; and formulates a bespoke insurance policy based on that simulation.

In addition to climate-related claims, ZestyAI recently launched Z-WATER, which uses AI to predict the frequency and severity of non-weather water and freeze claims, such as burst pipes, for every property in the country.

Kumar Dhuvur, co-founder and chief product officer of ZestyAI, said in a statement:

“The landscape of non-weather water claims is shifting, with a concerning trend towards increased claim severity. The rising cost of building materials and labor has inflated claim payouts. Additionally, the interconnected nature of our homes, with open floor plans, finished basements, and high-value electronics, means water damage can have a significantly higher price tag.”  

Digital Twin Tech Is Increasingly Prevalent

You are likely already familiar with digital twin real estate technology. Matterport uses digital twins in its latest upgrade to showcase houses and buildings across its listing sites, such as Homes.com and Loop.net. Zillow has something similar with its 3D Home app.

Digital twin technology takes much of the guesswork out of insurance, speeding up claim processing, eliminating fraud, and offering insurance carriers a greater basis for underwriting, potentially leading to lower premiums, according to software developer Fingent and insurance trade publication Risk & Insurance.

A $149 Billion Industry

By 2030, the digital twin market in insurance and financial services is projected to exceed $149 billion as the industry adapts to it. 

According to Realtor.com’s 2025 Housing and Climate Risk Report, about 1 in 4 homes currently face severe or extreme climate risk. Fannie Mae CEO Priscilla Almodovar told Fortune that each year since 2021, the U.S. has averaged 22 natural disasters with damage exceeding $1 billion, indicative of the growing problem posed by extreme weather. In the 1980s, the average was three per year.

“A Tailor-Made Action Plan”

Homeowners who follow Stand’s guidance, including wildfire-proofing measures, are eligible for insurance with premium discounts. “That basically tells us what the vulnerabilities are that you need to remedy,” CEO Dan Preston said, as reported by the Los Angeles Times.

Fighting Insurers to Get Paid

Digital twin technology could prove pivotal for real estate investors in the fight against insurers to receive payouts. The end-to-end virtual documentation reduces disputes, as insurance companies and owners can conduct a virtual “walk-through” and agree on the facts together, according to a Matterport blog.

Additionally, the software company’s features, such as legal-grade metadata, help twin models in litigation, making them a valuable resource for small landlords who cannot afford expensive legal battles. 

Practical Steps for Landlords to Lower Insurance

Before using digital twin technology

1. Perform a risk audit: Walk your property with a licensed inspector or insurance expert to identify vulnerabilities.
2. Invest in prevention: Take the expert’s recommendations and perform the relevant upgrades to your home. Photograph and log all improvements.

With digital twins

1. Digitize your property: Use widely available tools like Matterport or Hover to create a 3D model of your home. A clear virtual record helps insurers verify upgrades and conditions.
2. Document every upgrade: Upload proof of mitigations—such as roof reinforcements, flood barriers, and electrical upgrades—into your twin for validation. Provide evidence of the enhancements from contractors, including certificates of work and inspection reports.
3. Contact insurers that work with digital twin tech: Insurance companies such as Stand that use digital twin technology can run simulations using your information to offer quotes. 
4. Ask for resilience credits: Ask for credits for verified safety measures. Ensure these are factored into your final quote.
5. Automate maintenance logs: Some digital twin platforms let you track maintenance events and inspections, helping you negotiate lower rates over time.

Final Thoughts

No home is entirely weather- or disaster-proof, but having some insurance is better than none, and having less expensive insurance is better than exorbitant coverage that kills cash flow. Also, touting robust safety features in disaster-prone areas is attractive to potential renters. 

As extreme weather incidents increase in the U.S., the insurance issue will no longer be restricted to states with lots of natural disasters, like Florida and California. If landlords wish to run a safe and successful business, securing their first line of defense—a thorough, effective, and affordable insurance policy—is paramount.

This is not a forecast or a prediction. It’s policy. The short-term rental (STR) markets will absolutely boom in 2026 and 2027!

Why the momentum shift? The One Big Beautiful Bill Act was passed in July. Tax code changes enable businesses to write off 100% of the purchase price of eligible assets—mainly in the form of heavy machinery or equipment, cars, jets, or yachts—used for business purposes. 

At the center for real estate investors is the STR loophole, a provision allowing short-term rental owners to treat depreciation losses as active, not passive. That means those paper losses can offset W-2 income, especially for high earners.

Why do I say “especially”? Because tax incentives are not a reason to invest in real estate, but a good one, with incentives proportional to savings. Generally, a W-2 wage earner has very limited write-offs, with STR bonus depreciation, a sufficient (qualified) investment can potentially offset all taxable income. 

Understanding the STR Loophole

The IRS allows real estate investors to depreciate property over time, but typically, those losses can only offset passive income. However, when a property qualifies as a short-term rental (average stay under seven days, with material participation), its losses can offset active income.

Combine that with bonus depreciation—the ability to write off a large portion of a property’s components in the first year through cost segregation—and investors can effectively offset the down payment and investment cost. 

Here’s an optimized example:

• A physician earning $600K per year has a tax rate of 35%, equating to $210K in taxes. 
• The investor purchases a $1M STR property with 20% down ($200K), with $600K in depreciable assets. 
• The investor still has to put the money down and still has the mortgage and associated obligations (ideally covered by rental income), but is effectively able to swap paying the tax bill for a real estate asset. 

Tax perks alone aren’t a reason to invest, but they make a good investment even better. 

How to Prepare Early

• Cost segregation plans: Don’t wait until tax season. Begin depreciation planning before you close on properties. Communicate with your CPA. 
• Invest in high-basis properties: Newer or fully renovated assets maximize depreciable value.
• Confirm loophole qualification: Even if the property is advertised as “STR eligible,” reverify directly with the municipality before contract and during the contingency period to ensure active participation thresholds can be met on time (100+ hours). For example, properties in an area with an STR wait list might not allow enough time to launch and operate. 
• Model ROI, including tax savings: Calculate your “after-tax yield,” not just cash flow.
• Work with STR-specific brokers, lenders, and CPAs: STR-specialized brokers will save time and heartache. Financing and accounting expertise can multiply your leverage.

Markets likely to outperform include:

• Coastal STRs with consistent travel demand (PNW Coast, Florida, Carolinas)
• Lifestyle luxury (mountain and resort destinations catering to affluent travelers)
• Second home destinations, such as prime active rentals, or anywhere a licensed, zoned STR can legally be operated 

What to Expect Going Forward

2026–2027 marks a shift from speculation to strategy—where tax literacy and financial engineering matter as much as design and guest experience. 

Here’s what to expect:

• Rapid offer requirements for the most successful and turnkey STR properties.
• Potential for multi-offer scenarios in strong STR markets.
• STR sellers and STR broker/agents to strategically price their listings.
• Investor momentum to consistently accelerate from spring through fall.

For high earners, the combination of depreciation, equity growth, and stable demand still makes STRs one of the most powerful real estate investment vehicles available in the next two years, and provides the opportunity for STR investors to accelerate their portfolio timeline.

Combined with anticipated lower borrowing costs, market conditions are primed for strong short-term rental investment demand in both 2026 and 2027.

Dave:
How many rental properties can one person realistically buy, and even more importantly, how many properties can one person actually manage? Is it really possible to scale a rental property portfolio without property managers eating up all your profits today? We’ll dig into that question and much more. Hey everyone, I’m Dave Meyer, head of Real Estate Investing at BiggerPockets. Thank you all so much for being here and Henry Washington, thank you for being here, helping me answer some of our community questions.

Henry:
Hey man, this is one of my favorite formats to do is finding a way to answer questions and help the BP community.

Dave:
Absolutely. Well, we got some really good questions from real investors on the BiggerPockets forums today. First up, we have an investor in California who’s wondering when it’s time to hire a property manager. Then we’ll get into tricks for analyzing deals quickly, which is a super important skill to have in my opinion and steps that you can take now even if you’re not planning to buy a property for the next couple of months. We got that and a couple of more. Let’s jump into it. Our first question comes from Austin in eda, California. I have no idea where that is, but Austin asked is anyone that manages their own properties able to acquire many properties? What systems do you use to achieve scale? So I think the heart of the question here is at what point does self-management become unreasonable or is there even a point where self-management comes unreasonable? What’s your take on this?

Henry:
Yeah, there’s a point, but it’s going to vary for every person depending on what kind of other job you have and how much time freedom it allows you, what kind of software systems you’re using, what kind of processes you have in place. You can be super efficient, self-managing with the right systems, a couple of VAs, but it does require you to know how to put those processes in place and know how to train the people you want on your team. For me, I got to about 65, 75 units

Dave:
Seriously

Henry:
Before I hired out a property manager.

Dave:
And you were doing all of that yourself?

Henry:
Yeah, not well.

Dave:
Okay. Yes,

Henry:
So the one thing I will say, I was good at picking tenants and so the tenants I picked, it was a very rare situation where we picked a tenant that we had trouble collecting rent. Same. I just feel like at the heart of being a landlord, you’ve got to get good at tenant selection. I don’t care what price point, what class neighborhood. There are people who suck at paying rent in an A class $3,000 a month rental, and there are people who suck at pay a rent in a de class, $500 a month

Dave:
Rental. Totally. If you could analyze deals and pick tenants, you’re 90% of the way there,

Henry:
Right. You just have to, if you’re going to self-manage, that’s the skill you need to figure out how to hone is your tenant selection process. If you do that right, everything else is much easier.

Dave:
Can I ask though, you were doing 60 75, but you were working on your portfolio full time?

Henry:
I had about 68 doors when I quit so somewhere.

Dave:
Oh

Henry:
Dude. Whoa.

Dave:
Okay. Your number is 10 times higher than what I was going to say.

Henry:
I started to realize between 65 and 75 units that things were taking longer than I wanted them to take. Turning a unit after somebody moved out was taking longer than I wanted it to take and finding a tenant and getting them in. The vacant units were taking longer because when you have that many units, you’re not just doing one turn at a time. You’re sometimes doing 3, 4, 5 turns at a time. Plus I was still flipping 15, 20 houses a year, so it was just a lot, but I still didn’t want to turn it over. It’s just something in me didn’t want to turn the business over.

Speaker 3:
Totally.

Henry:
My property manager basically told me, you’re probably paying more than 10%.

Speaker 3:
Oh, for sure,

Henry:
And just lost rent collection and sitting with vacant units, so you might as well just pay me and let me do a better job than you.

Dave:
Wow, that’s impressive. I think I was at 10 units or so when I decided it was time to get some help, but I didn’t go into full property manager at first. I hired a handyman who would take maintenance calls and I still did all the tenant screening myself. I did all the leases and I still did what I would call the asset management myself, and I think this is something that people get caught up on a lot and miss in rental property investing is there’s two jobs when you talk about being a manager, there’s property management, which is dealing with tenants, finding tenants, making sure that they have a good quality place to live. Then there’s asset manage, which is like just what are you doing with the property? Are you making upgrades? When do you sell it? When do you invest in it? And that part I think is always the hard part to outsource. That’s kind of your job as the investor. For me working, I found it difficult to get past 10 units and to do the property management piece

Henry:
Well,

Dave:
And I think you’re totally right. I’ve been fortunate to have really great tenants pretty much universally, never really had a problem there. The thing that kept dropping off for me is that asset management piece. I was not at the properties enough to notice when something was starting to go wrong and being able to proactively fix it before something went really wrong, and that was sort of where things started to break down. It really wasn’t on the tenant side, and so that’s sort of how I’ve thought about my portfolio structure and where I hire and get help later is focusing. I want to be able to asset manage well and I will pay people to do the property management because property management, it’s not even that time consuming. It’s just when the time comes is very variable and you need to be very flexible and that’s hard for me investing out of state and working nine to five. So that’s really how I’ve thought about it and I don’t regret it for a single second. It has been one of the best things I ever did. I wish I did it sooner. I actually think I’d own more units
Because that was what was holding me back. In retrospect, I didn’t want to manage more properties even though I had the capital to probably go buy more,

Henry:
I still felt like, man, maybe I should have kept the property management in-house until about two months in, I was on vacation in Hawaii and I got a text message that someone drove through my house. They jumped the curb. They were under the influence. They drove through the wall of the house. Luckily that wall led into the garage and they just drove through my garage but not through the door, and so as a self-manager while you’re on vacation, that’s a nightmare text to

Dave:
Get nightmare, absolute nightmare.

Henry:
But I looked at my phone, I looked at the pictures and I went, huh, that sucks. And then my property manager took care of the tenants, called the insurance company, filed the claim, got bids for the work, got the work done, got me the insurance payout, paid the contractor, and I literally didn’t think about it again after I got that text message and I was like, great decision here. Yeah. Can I give my property management a hot take? Yeah, please. Once you get past a certain point in your portfolio in terms of number of doors, it’s no longer even if you plan to continue to manage your own rentals, if your portfolio is big enough, you’re not self-managing, you’re just building a property management company.

Dave:
So true.

Henry:
You have to have people, systems and processes when you get over a certain amount of doors, so you’re going to need VAs or somebody in-house that’s helping you keep up with all this and systems that cost money in order, you’re literally building out infrastructure for a property management company. I’d say probably 30 doors plus.

Dave:
Could I tell you another reason I do it to hire a property manager?

Henry:
Absolutely, you can.

Dave:
Do you ever get that recurring dream when you show up to school and you’re not prepared for a test or something? I know that’s a really popular recurring dream. I get

Henry:
That. Yeah, 100%.

Dave:
But I was having this recurring dream where I just forgot that I owned a certain property and had it shown up there all

Henry:
The time. I have that literally all the time. I completely forget that I bought a property and I’ve just been sitting on it renovated, not making on

Dave:
That tree

Henry:
All

Dave:
The time. Oh my God, that’s so true. I’m always like, oh no, I just bought it and just left it there for what is wrong with me. Wow. I’m going to start asking that to every guest on this show. Have you ever had that dream where you forgot about a property? Wow. All right. I’m glad we could talk about these things, man. Yes,

Henry:
Real estate therapy.

Dave:
All right, well, that was a very good question and I think hopefully we helped answer your question there, Austin, because it is really personal, but absolutely you can do it yourself. I think almost anyone could do five to 10 probably by themselves. Realistically, once you get past that, it really depends. Are you working full time? Are you building a business, as Henry said?
Yeah. All right, well, we have plenty more questions from the community, but we do have to take a quick break. We’ll be right back. They say real estate is passive income, but if you’ve spent a Sunday night buried in spreadsheets, you know better. We hear it from investors all the time, spending hours every month sorting through receipts and bank transactions, trying to guess if you’re making any money, and when tax season hits, it’s like trying to solve a Rubik’s cube blindfolded. That’s where baseline comes in. BiggerPockets official banking platform. It tags every rent, payment and expense to the right property and schedule e category as you bank, so you get tax ready financial reports in real time, not at the end of the year. You can instantly see how each unit is performing, where you’re making money and losing money and make changes while it still counts. Head over to baseline.com/biggerpockets to start protecting your profits and get a special $100 bonus when you sign up. Thanks again to our sponsor base lane.
Welcome back to the BiggerPockets podcast. Henry and I are here answering community questions, and our next question comes from Shahab in Irving, Texas. He says, I’m new to real estate investing and learning how to analyze deals quickly and confidently, especially small multifamily or house hack opportunities. For those of you with more experience, what’s your step-by-step process before deciding to dig deeper or pass? Which tools, calculators or spreadsheets do you rely on? I’ve seen some online, but I’d love to know what actually works in real life and any advice for building speed without losing accuracy when running deal analysis. Can I just say shaha? I absolutely love this question. This is a great question because getting good at analyzing deals kind of means getting faster at it over time. I feel like especially the way I look at deals, which is on market deals, I need to look at a lot of them before I find good ones. You need to be able to accurate at it, but you also can’t spend 30 minutes on every one or you’ll never buy a deal, so love this question, but Henry, let’s start at the top here. What’s your step-by-step process before deciding to dig deeper? You just told us you’re not detail oriented, so let me guess. It doesn’t start a spreadsheet.

Henry:
Oh, absolutely not. It’s literally on the back of a napkin
And so let me put a caveat here, right? You need to be able to analyze deals quickly in order to make offers, and you need to be able to do it quickly so you don’t get stuck in analysis paralysis because if you’ve got to go through some complex calculation every time you see a deal, you’re going to second guess yourself. You’re going to be playing with the numbers over and over again and you’re not going to submit enough offers to get you where you want to go. I would suggest to people, if you are a super detail oriented person, that’s cool. Get yourself all the calculators and spreadsheets that you need, but only use those when you get to what I would call level two of analyzing a deal.
Level one should be something that you can do quickly that just lets you know what offer will get you in the ballpark. Then you can make your offer or dive deeper into the deals that have a fighting chance of you getting them, so maybe you are analyzing a bunch of on market deals, you do it super quick back in the napkin and then you submit 10 offers and then you get a counter or two. Well, then on that counter or two, you can plug those suckers into your super fancy smancy crazy calculator spreadsheet thing and you can get the numbers and spend the time on the appropriate deals and not spending that amount of time on every deal.

Dave:
Now, I think the thing that people get mixed up about that is that they think it’s some math problem that you’re running in your head. For me, there is a little bit of math. You look at maybe rent to price ratio, something like that, but actually what it is, it’s a function of just knowing your market really well. That’s the most important thing you’re looking at. Is this in a good neighborhood that I’m interested in buying in that will disqualify probably half of them. I don’t know. I’m making this up. It’ll probably disqualify a lot. Is it on a busy road? I don’t want it. Is it in some neighborhood that’s super expensive and there’s no juice? I don’t want it. Is it in a neighborhood that’s probably not going to have a lot of t demand? I don’t want it. Those are the things that are going through my head.
The second thing is knowing your buy box and comparing this property to the buy box, so that’s honestly the first round of filtering is I’m not coming up with some cash on cash return. In my head I’m like, does this just kind of fit the kind of thing I’m trying to do? And it’s less about math. It’s mostly about knowing what you want, which is why we talk so much about figuring out your goals in buy box and knowing your market enough to see if this particular property matches that. So for me, that’s phase one. Step two is putting into a calculator, and again, by this time in my career it takes me 10 minutes or less, 15 minutes at a certain point. You can use the BiggerPockets calculators. There’s plenty of guides on there, but that’s where you really figure out is this going to offer me the kind of return I’m looking for, and then I actually even go one step further and do sort of a third round.
Sometimes this is after I’ve put an offer right before I’m about to put an offer. That’s where I would talk to my property manager or my agent and get just double checks on the assumptions that I’m putting into this deal because a calculator is only as good as the numbers you put into it. If you’re just wrong on rent, yeah, it’s going to show you an awesome ROI, but you’re just wrong. So that’s where I sort of have someone else double check it. That’s kind of the process I have. Getting good at step three. I don’t think you need to be fast at that. You shouldn’t be doing that that often unless you’re like Henry and you’re making offers all the time, but for someone like me, I don’t need to do that all the time. One and two are really what I would focus on to be able to really look at the volume of deals that you need to be able to look at in order to find good deals with relative consistency.

Henry:
My gut check is still, where would I need to be for this to hit a 1% rule or better? 1% rule is about break even. Maybe you’re losing just a little money, so if I’m better than 1% rule at the price point I’m looking at, I’m probably going to be making money, and so I will then dig a little deeper if I feel like the property passes that, that vibe check.

Dave:
I literally, while you were talking, I just pulled up a property I was looking at before someone sent it to me. I asked what the year of construction was, what the rents are, if those are sustainable, and the asking price, it hit 1% roll, it’s in a good neighborhood, so now I’m going to move on to step number two and start checking this out. That’s all it is. It took 30 seconds, 45 seconds to just be like, is this good enough? And you’re going to look at a lot of them and honestly they shouldn’t be good. Most of them, I’d say if more than like 30% of the things you look at past step one, your criteria are probably not strict enough.

Henry:
Yeah, your analysis is off. There’s no way

Dave:
People get very frustrated by this, but that’s the whole point is you have to be selective. Not every deal is meant for real estate investors. Alright, great question. We have more including questions about doing burrs and what kind of neighborhoods you should target for those. That’s a great question. We’ll get to that when we come back. Stick with us. Welcome back to the BiggerPockets podcast. Henry and I are answering questions. Question number three is from Salvato in Rochester, New York where my alma mater is Salvatore S, I’m searching for my first deal and I want to do a burr, but the only homes I can buy with cash and rehab are C or D neighborhoods. I’m concerned the value of the home won’t go up over the years as it would in a better neighborhood. Can anyone with experience doing burrs in CRD neighborhoods give me some advice?
Good question. Lots in there, so I guess my first question would be why do you have to buy cash? Absolutely. Do you have to buy cash was kind of what stood out to me because I think he’s right generally speaking, especially in the sort of weird housing market correction that we’re in. The assumption that the value of the home won’t go up as much in a B or a neighborhood is absolutely true. You should count on that. Maybe it will change, but generally speaking, you should probably count on the best appreciation in a markets a little bit less in B markets, a little bit less in C markets, a little bit less in D markets. Maybe you’re on the path to progress, maybe you can nail that, but generally speaking that is true and so it really comes down to are you trying to hold this forever as an appreciation play or as the brr? Are you just trying to get it an equity kick upfront and then hold it for cashflow? Both are okay, but I kind of think it just comes down to a personal question unless for some reason you are set on having to buy this property for cash and then you kind of just have to do the c and d neighborhood, but you can still make a great profit on that even if it doesn’t appreciate as much as other neighborhoods. You could still get a huge equity kick and have a cashflow.

Henry:
I do have several follow up questions. One was why do you have to pay cash? I agree with you. The other one is, I don’t know, you just have to know your market, so just because it’s a C or D neighborhood doesn’t mean it’s not going to be an appreciating market. There are C and d neighborhoods in appreciating markets all over the country, and so I think this is more a function of understanding where you’re trying to do a burr and if properties go up in value in that market, look at the 10 year adjusted appreciation rate and that’ll let you know on average what you can expect properties to do when you zoom out over the long term. The other thing is I just sometimes think C and D neighborhoods get a bad rap.

Dave:
Same

Henry:
People hear C and D neighborhoods and they think crime and no appreciation and nobody wants to live there and that’s just not true. Again, you need to understand your market. Sure, there are some neighborhoods in almost every market that are going to be a problem, but there are a lot of c and d neighborhoods where you can get great numbers.

Dave:
Absolutely.

Henry:
My other caveat is it’s the concern of the value of the home won’t go up. Is that concern related to you needing the home to go up in value in order for you to refinance and pull your money out, or is that concern related to you just wanting a property that appreciates over time? Because my real concern with this is are you paying cash for a property at retail value and then renovating it and then hoping that the market appreciates enough over time for you to pull your cash out in a short period of time because that’s not going to work?

Dave:
Yeah, don’t do

Henry:
That. That’s not going to work, but if you are, even if you buy a bird deal in a not appreciating area or a very slowly appreciating area, as long as you buy that deal at a low enough price point, you can absolutely refinance it and pull your money out. It’s just did you get the property at a low enough discount to enable you to pull your cash out?

Dave:
Yeah, I totally agree with Henry. I think that this idea that you can find something that’s distressed enough that you could buy it low enough to do a successful bur and it’s going to be in a great neighborhood that appreciates more than the average in your market. It’s just a little bit. I think the big change that we’re going through right now is a change in expectations, and this is just normal investing, right? The reason you do the brr is because you don’t need market appreciation. You’re forcing that appreciation. You’re doing the value add and so expecting to be able to do that and get market appreciation, hopefully you do, but to me, the burr in today’s day and age, the value of it is you get the value add, you get a pop of equity right upfront, quickly, super valuable. That is amazing and hopefully when you refinance it, you have a cash filling property that is now renovated is going to have high tenant demand, is going to command good rents for the neighborhood.
That’s probably going to cashflow for you. That’s more than enough for me. If you get that, that’s great. If that market appreciates, that’s also good, but if you go into a neighborhood for example, let’s just play this out. You go into an neighbor neighborhood, it’s going to be much harder to buy at the right price as Henry alluded to, and it is very unlikely in a neighborhoods, no matter what market you’re in, that you’re going to be able to cashflow a property after you refinance it. It’s going to be much harder to do that, so I think it’s really a question of priority For me, I’d take the B or C class neighborhood, do the Brr get a cash flowing property rather than being a BNA neighborhood, but that’s just me.

Henry:
Yep. I’m 100% with you and I would also say in this market, I wouldn’t expect you to be able to execute a full 100% burr in six months like you could before, but if you’re able to get into a property in a B or C class neighborhood that’s got some slow appreciation, but you’re getting the equity bump on the buy, you’re forcing the appreciation, it’s cash flowing and you can pull 50% of your cash out. It’s a pretty solid win in my book.

Dave:
A hundred percent. I think that’s a great deal. Alright, but good question. I think that makes a lot of sense. Salvato, let us know in the comments we’re on YouTube, what you wind up doing with this project. We love to hear from you. We do have to get out here, but we have one more time. A quick question here. Fourth question comes from Erica in Washington who’s also kind of just getting started in real estate. She asked, is it ever too early to start taking actionable steps? I plan to move to the market. I choose to invest in and house hack a multifamily home, but I know I won’t purchase a property for at least another year. I’m not sure if I’m at the stage of speaking to lenders, is this thought process holding me back? Should I reach out to local banks even if I don’t have the savings I want yet? Any other advice on realistic well action steps to start taking early

Henry:
This question, has you written all over it?

Dave:
Me?

Henry:
Yeah.

Dave:
Okay. All right. You’re just ready to go. You just want to leave.

Henry:
I mean, my answer is good job. Keep

Dave:
Doing that. Yes, absolutely. Yeah. The reason I put this at the end with question is because it’s easy to answer. Absolutely. The fact that you’re on the BiggerPockets forums asking questions is excellent. I think most people usually take, I don’t know, 3, 6, 9, 12 months to get comfortable enough with the idea of real estate investing to want to pull the trigger on a deal, so I think you’re absolutely talking about it. Go talk to lenders. I think that is totally acceptable as well. They are not as much going to look at in the first conversation how much savings you have. They’re going to look at your debt to income ratios and they’re going to help you understand what payments, monthly payments you’re going to be able to afford and just be honest with the lender and they will have an honest conversation with you. In the meantime, I think you said you haven’t moved to the local market. The other thing I would do is the second I move to that market, go to real estate investing meetups, start meeting people even before you are ready to go out and execute on a deal that’s going to be super helpful and comforting and getting you to know the right people and just keep doing this. Listen to the podcast, read a couple of books, but I think it is very normal to spend a half a year or a year getting comfortable with the idea of investing before actually doing

Henry:
It. Yeah. I think the difference between her and what we hear a lot of investors say is a lot of new investors, they think they want to invest, but they’re not truly bought in yet and they’re still scared, and the vibe I’m getting from her post is not that she’s scared, she is
Trying to be as prepared as she possibly can, and that may mean she needs to take some more time and save some more money, and she can learn that by talking to a lender. It may mean that she needs to focus on learning a little more about a particular strategy. When you have made the decision that you’re going to do this and now the time you’re spending is helping you become a better investor before you even start, that’s positive. If you have a plan and you’re trying to execute that plan and you can talk to lenders and learn how much money you need to do the thing you’re trying to do when you’re going to need it by how much payment you can afford, and then you’re taking steps along the course of a year to help you be prepared to do that, that’s great.

Dave:
Absolutely. I love that advice. I think that’s a very important distinction is preparedness and fear are different questions. If you know you want to do this and you’re committed and you’re just getting all your ducks in a row, do that. That’s just smart if you’re just stalling because you can’t decide if you want to be in. I understand that that’s a real issue. It’s hard, but that’s a different question. So I think for Erica, she seems to know what she wants to do and taking time to save up money and do that in a responsible way. I think you’re doing exactly what you should be doing. Erica, so good for you. All right. That’s what we got. We talked all about self-managing. Henry and I talked about our dreams.

Henry:
We did talk about our dreams.

Dave:
Yes, we talked about our dreams. We talked about analyzing deals quickly, how to do a burr in the right type of neighborhood and whether it’s ever too early to start making moves into real estate investing. If you have questions you want Henry and I to talk about, you can always send them to us on Instagram, comment them in the comments on YouTube or participate in the BiggerPockets forums. We have thousands of forum posts every single day where people are helping each other with their real estate journeys for free on biggerpockets.com. You can go do that, and we might just pluck your question right out of those forms if you are an active member of the community, so go check that out as well. Henry, thanks so much as always for your support and answering these questions. It’s great having you here.

Henry:
Glad to be here, buddy,

Dave:
And thank you all so much for listening. We’ll see you next time for another episode of the BiggerPockets podcast.

Ashley:
If you’ve been learning about real estate investing for months or maybe even years, but you still haven’t bought your first property, this one’s for you.

Tony:
Most rookies think they need more money or more experience, but sometimes you’re already ready. You just don’t realize it. Yet today we’re breaking down the four clear signs that’ll tell you that it’s time to buy your first rental property and what to fix if you’re not quite there yet.

Ashley:
So if you’re stuck in analysis paralysis, this episode is for you. This is the Real Estate Rookie podcast, and I’m Ashley Kehr.

Tony:
And I’m Tony g Robinson. And with that, let’s get into sign number one that you are finally ready to buy your first real estate investment. So sign number one is that you have a strong personal finance foundation. I guess let’s just define what we mean when we say financially ready. And we just interviewed Liz Carroll on a recent podcast episode, and it was a lot of that conversation was about the personal finance story behind your first real estate investment. So you guys can go back and list that episode if you want to a deeper dive into this. But really what it means is that it’s not necessarily about being debt free, right? I invested with student loan debt, I had my own primary mortgage. I had car debt. I had just the debt that’s kind of associated with living your life. But I was still financially ready to pull the trigger on my first investment because I had really good active income.
I had money saved in the bank to cover my down payment and my closing costs and reserves and all those things. So the first piece is are you financially ready? If you are living paycheck to paycheck and there’s too much month at the end of your money, and that happens every 30 days, then maybe it’s a sign that, Hey, let me get that fixed first before I jump into it. But again, if you can on a very consistent basis, take care of all of your short-term consumption, like all the things, you just keep your household running, you are saving for your long-term, right? You’re saving for retirement. You’ve got investments that are in stock market, whatever it may be, and you’ve got money set aside for maybe the medium term, think emergency fund safety net. If you’re checking all those boxes, there’s a good chance that you are actually ready to get started.

Ashley:
Yeah, financial foundation, a big thing that I always like to hit home is it’s not about how much money you have. We’re talking about the surplus savings, things like that. It’s about how you manage the money you do have. So living within your means, making sure all your debt payments are made on time. I think those are some of the mindset shift you need to have is that you don’t need to have a ton of money to get started In real estate, yes, you want reserves and things like that, but what’s more important is that you know how to manage your money, what’s coming in, and you know exactly what’s going out and where it’s actually going. What are those categories? And a favorite app that I love to use is Monarch money. This is what I use. I link all of my accounts, my credit cards, my mortgage, my retirement accounts, my bank accounts all linked in there.
So I have one dashboard where I can go in and see, okay, where am I at every single day. And then it also categorizes my transaction. So I know how much I spent at the grocery store for the month, how much I spent going out and having an idea. If you’re sitting there thinking, I don’t know the exact amount and I don’t want to go and look because it’s probably going to terrify you and you’re afraid to actually look at what the balance is in your bank account or how much you spent going out last month, then you definitely need to look.

Tony:
That reminds me of me in my early twenties. It’s like you go out and you have a night out and you wake up the next morning, you’re like, oh my God, how much should I spend? So we don’t want you guys living that life. But guys, there’s really kind of three key things that you want to check to know if you’re ready. So one, I already talked about it, it’s your personal financial situation, right? So do you have money in the bank saved up to cover your own personal emergencies? You’re saving maybe 401k in the stock market, whatever it may be. Does that box get checked? The second is, do you have money to cover your down payment, your closing costs for whatever property unit buying? And I guess maybe another piece to that second part is not only your down payment, but do you know how much you can get approved for?
Are you in a position to actually get approved for a loan? And the third number is your reserves. Do you have enough in case things don’t go according to plan? You buy the property on day one, your HVAC goes out, or Ashley was always afraid of the roof blowing off if you buy the property and then the next day the roof blows off, can you fix that? So if you can check all three of those boxes, then financially it feels like you’re pretty darn ready. And I just want to also cover maybe some of the myths that Ricks have when it comes to being financially ready. A lot of people say, I’ll buy when I make more money. And again, I think that’s true to an extent, but once you’ve crossed a certain threshold, waiting is actually just working against you. There were a lot of people, actually, I’ll give you guys a real life example.
We bought our primary home back in 2018, and since that time, the value of that home and we’re in California heavy appreciating market, the value of that home has gone up roughly $300,000 in seven years. So a good amount of equity gain in that timeframe. As we were shopping for our home, I was telling everyone that I knew cousins in-laws who were also in that phase of buying their homes. It was like, guys, look, we’re buying in this new construction subdivision. Prices are pretty reasonable for what we’re buying. You guys should come by with us. And none of them listened to me, and they all ended up buying homes a few years after me, and now their mortgages are double what mine are for less home. And that’s what happens when you wait too long that the market can shift on you. So never try and time the market, just look at where you’re at right now and make do with what you have. And then the second thing that I think is a big rookie myth is the amount you need to put down. Traditionally, yes, 20% is the number that gets thrown around a lot, but you don’t necessarily need 20%. If you’re house hacking, you can get in for 0% if you’ve got a VA loan. NACA is a loan product that I’ve talked about a lot where you can get in for zero down FHA very low down option. The US VA

Ashley:
Loan too is zero down.

Tony:
Ashley’s favorite USDA, which I didn’t know existed until she became my co-host.

Ashley:
Actually real quick is right now when this is being recorded, we’re going through the government shutdown and they are actually going to stop funding USDA loans.

Tony:
Interesting

Ashley:
Right now until the government starts back up. But I thought that was so interesting because I didn’t think of that as being a repercussion. And it said for now, VA loans, FHA, loans are still going to go through, but they’re stopping USDA loans.

Tony:
Interesting, right? So yeah, I mean, all the more reason guys, if you were had the ability to get one six months ago, maybe you should have pulled the trigger, right? I think the point is though, is that there are a lot of options out there to help you buy your first property with low money down options, even from an investment perspective, the 10% second home loan still exists, and you have to use it personally for a percentage of the year to qualify for this. But it still exists. There are investor loans at 15% down, and I know people who have used those loan products. So don’t think you have to wait to get to 20% down to get that first deal.

Ashley:
Now, if you feel like you are financially ready, or maybe you need to do a couple more things, here’s a little action item list that you can do to get yourself ready. So first, building that financial foundation. Make sure you’re living within your means and you know where your money is going, where it’s coming in and out. Get an app to track it, use a spreadsheet, whatever works for you. Also, I want you to know what your credit score is. You can use Credit Karma. You can actually each year pull your own credit report for free without having it ding your credit. Then you go to, it’s not even a government website, so be very careful as you’re Googling. It’s like free credit report.com or something, but make sure it’s actually the legit website. And don’t put your social security number into the wrong website, please.
So you can pull your credit for free. You can see what’s showing up on your credit report. Make sure there’s not some utility bill from eight years ago that’s in collections that’s sitting on there that happened to a partner of mine when we tried to get a loan before. So know what your credit score is so you know can actually get approved for a loan or if you need to do some work to actually rebuild your credit. And then where is your down payment coming from or how are you funding the deal? Get a pre-approval. You can go ahead and start building your savings. What’s the amount that you actually need for reserves and a down payment too on the property, but even perfect finances won’t help you if you’re still stuck in the research mode and analysis paralysis. Next, we’re going to talk about the moment you’ve officially learned enough to take action.
And that’s most of you guys listening right now. We’ll be right back. Okay? The dreaded analysis paralysis. So we actually met someone at BP Con who came up to us and said they had been stuck in analysis paralysis. And each time we had a guest on a rookie investor that talks about how they overcame it, it motivated them, gave them that oomph like, you know what? I do know enough? And one thing Tony and I always talk about is if you are listening to these episodes and you are already starting to know what some of this information is, it’s like, oh yeah, I already knew that. I already knew that. I already knew that. Then you are ready to take action. So sign number two, you’ve learned enough to take imperfect action. If you’ve heard the majority of the lessons in this podcast, you’re probably ready.

Tony:
And we say this often, but it’s like to Ashley’s point, if you’re listening to the guest interviews or when Ash and I do the Ricky replies, and you’re like, I actually knew that already. Oh, I knew that too, I remember that. And if you’re saying that as you’re listening to the podcast, that is a sign that you are ready. You can never get to the point where everything Ash and I, to this day, we are still rookies compared to people who have been doing this for 20 years, and they’re still rookies compared to people who’ve been doing it for 40, right? We’re all rookies in some sense. So it’s never about knowing everything, but it’s about knowing enough to make an informed decision about the best use of the resources you have available to you. So if you can’t get off of that ledge, then you’ll never be able to get started.
One of the things that I like to say, guys, is that what stops us often from taking action is this feeling of discomfort, right? The fear really boils down to, I don’t feel comfortable with this decision, but the truth is, when you’re doing something new, something that’s outside of your normal skills scope, right? When you’re doing something new, by default, it’s going to be uncomfortable. So if you are always seeking the actions that make you feel comfortable, then you’ll always be seeking things that are currently within your skillset, which means you will not grow. Put another way. It is impossible to be growing and to be comfortable at the same time. Growth requires discomfort, right? Growth requires discomfort. So if you’re listening and any of this resonated, shut up, hit pause and go analyze some deals and get some offers out.

Ashley:
I don’t let my kids say that word, Tony. And now when they’re listening to this episode and the car, they’re going to

Tony:
Tell him, uncle Tony said, it’s alright, just in this one specific use case.

Ashley:
Along those lines, if you can analyze a deal, if you can estimate rent, if you’re looking at comparables, if you’re spending every night scrolling through Zillow and saying, you know what? I can tell this would make a good deal. This wouldn’t make a good deal, and you have some sense as to the properties you actually should be underwriting, then you need to build your buy box. You need to start putting properties together to make an offer. Even if you’re not formally submitting an offer, run the analysis and understand, okay, this is the type of property that I actually want. This is my buy box. And kind of building it out from there. And that leans us into sign number three, that you’re leaning towards a clear niche or strategy, and you really want to focus when you’re building that buy box on what you actually want to undertake because there are shiny objects all over the place, and you’ll get distracted. There have been times in my life where I have a tab open looking at self-storage, I have a tab open looking at campgrounds, and then I have a tab looking at a cabin in the middle of the woods. So you don’t want to be like that. You want to niche down, especially to build that foundation.

Tony:
Yeah, I think it’s natural in the early part of your real estate investing journey to want to explore all of these different options because I mean, that’s part of trying to identify what resonates with you most. But at a certain point you’ll start to say like, man, I love the idea of flipping the idea. Sounds great, but man, I hate the idea of all of this active income that I’ll have to chase, and it’s just one deal after the next, and I’m not making any money if I’m not doing any deals. You might say, man, I love the idea of short-term rentals, but man, the thought of talking to 15 different groups of people every single month for as long as I own this property, that’s not super exciting for me. And as you start to have these different conversations with yourself, you’ll naturally start to lean toward the idea of what makes the most sense for you.
And you’re like, Hey, I really like the renovation part of flipping where I get to take it from an old beat up house to something that’s beautiful. I like the idea of short-term rentals where I get to give a really good experience. So maybe I’ll do midterm rentals, or I can still buy old homes and I’ll burn midterm rentals and I’ll buy old homes. I’ll fix them up, and then I’ll place some midterm rental there. So I still kind of get the short-term rental pizazz, but I get the increased cashflow and I kind of get to meet, right? So you’ll start to have those kind of conversations with yourself, and as you find that focus, it’ll give you more confidence on what you need to do. And I think the goal here is that you’re able to match the strategy to who you are and what your resources are, right?
So for example, if you have very limited capital, then maybe house hacking makes the most sense for you because house hacking oftentimes allows you to get into a deal with the least amount of cash out of pocket. If you have maybe a lot of cash on hand, or you can get access to a lot of cash and you want to be super hands-on and you like the idea of projects that may flipping makes a lot of sense. If you like creativity and you’re an artist in your heart and you want to build beautiful things that maybe short-term rentals makes a lot of sense for you. If you’re super risk averse and you don’t have a lot of time and you just want something steady, that maybe turnkey long-term rentals makes a lot of sense. But the goal is that you want to match the strategy to where you are in your life and what your resources are, your time, abilities, and desires to make sure that you’re leaning into the right niche, into the right strategy.

Ashley:
One mistake that I made along my journey was not sitting down and doing this. I started thinking, okay, I’ve got my long-term rental set. I’m bored. I want to go and chase something else, and it’s okay to pivot. It’s okay to change your strategy and things like that. But I didn’t have a clear goal or understanding of the lifestyle or what I wanted out of real estate. I was just looking at, oh, this looks fun, this looks exciting, this looks like it can make money. And I actually pursued a campground where I’d be doing a syndication. And along the way, I realized I do not want to do a syndication. I do not want to have investors reaching out to me to find out how is the property going and deal like that. And I understand that you can set up communication restrictions and stuff like that, but I didn’t want to deal with a huge, huge property.
It would’ve had to take a million dollars in renovations, and I realized I’m lazy. I don’t have the work ethic or the time commitment to put in what it would’ve taken to take down this property and to get it fully operational and get it running. So I think I needed to be clear with myself and understand, you know what? I just want to build the slow and simple. I’m not looking to become a billionaire. I just want to build wealth for myself that I can enjoy and also have some leftover for my kids someday. So I think once I came to that realization that I didn’t have to grow and scale and become this huge investor and build this huge empire, that actually what I was building was working for me in the lifestyle that I wanted today and for in the future too. So that was definitely one mistake that I had made was not fitting that strategy I pivoted to within my lifestyle.

Tony:
And some of it is experimentation, right? We’re going to try certain things, we’re going to go down certain paths, and you might be far down that path before you make that realization that actually this doesn’t really align with what I want. And that’s okay because it is almost a process of elimination to clearly identify what niche and strategy makes the most sense for you. So even if you’re not fully committed, if you’re leaning towards one, that’s why we said leaning right? If you’re leaning towards a strategy, then it’s time to start taking action to really validate whether or not it makes sense for you. So even when the numbers make sense and your niche feels right, one final sign separates the dreamers from the doers and it has nothing to do with money. And we’ll cover what that is right after word from today’s show sponsors.
Alright? So at this point, you have the money, you’ve got the knowledge and the focus. The last question is, why are you doing this? And that takes us to sign number four, that you have clarity on what your why is. Okay? So you know what your why is, guys, we almost should have started with this, but I really, as I’ve matured as an investor, I think I’ve found the importance or I better understand the importance of understanding your motivations and your why as a real estate investor. Because based on what your why is, based on what your motivation is, we could look at the same exact opportunity and come to completely different conclusions on whether or not it is a good deal. Because good is a very subjective word, and it’s based on what are your goals. And if my goal is to, like Ashley just said when we were talking about the last sign that she doesn’t want to be a billionaire, and if you took Ashley and you sat her down with a young Jeff Bezos and you gave them the same opportunity, they would look at it differently because of their motivations for why they’re doing the work that they’re doing.
Same could be said, I know a real estate investor who he invest in real estate, but his real passion is he does these trips to Africa and really all around the globe, but it’s all about environmental advocacy. That’s what his passion is. So he really just wants real estate to be able to support that passion of his. So his reasons and motivations for investing are very different than even what Ashley’s are. So every person has a different why. So getting back to the sign here, if you know what why is, if you have clarity on why am I actually investing in real estate? Do you want true financial freedom or do you just want extra income? Are you looking for long-term wealth where 30 years down the line you can have a fully paid for real estate portfolio and not worry about anything else? Or do you want quick cashflow today so you can quit your job as fast as possible, but just having clarity on, Hey, why am I doing this is one of the most important things to say. I’m actually ready.

Ashley:
The last piece I’ll add to this before we go to break is that all of that is very important, but also for your very first deal for building that foundation, I want you to think about what you would be good at, even if you don’t enjoy it. So if you really want to build wealth faster, you should be picking a strategy where you will excel at it. So for example, I love the idea of designing Airbnbs and picking out tile and all of those things. I love that idea. I am not good at it. I have stood in Home Depot in the tile aisle for an hour with my children trying to pick out a tile for a bathroom shower. So that is not an efficient time that is slowing me down in my wealth building process, and I’m just not good at it. Yes, sometimes I will still do it because it’s fun and I want to enjoy it.
But if I would’ve started out picking a strategy like short-term rentals where I had no mentor, I did for long-term rentals, I knew nothing about it and I wasn’t good at hospitality. I was used to a property manager that’s responding with tenants who are constantly complaining all the day, and I was already becoming a grouchy person because of that, that I probably wouldn’t have been this nice, sweet, friendly person responding to the Airbnb guests. So I would’ve failed. I would’ve failed. I knew it. So I did the long-term rentals, and I think that really helped me set up for success was that even though it’s the boring method and it wasn’t exciting, I knew more about that and I had the opportunity there and I took advantage. So also think about that piece too, even though you may want to do the thing that will be fun for you and fulfill a passion that can come later. And I think it was five years, six years after investing, I bought my A-frame and I went $40,000 over budget and failed at first. And now it is great and wonderful, but that $40,000, if that was my first deal at that time, that would’ve bankrupt me for sure.

Tony:
We’re pretty much done with the four signs. Ash. I’m just going to finish off with a, hey, do these things in the next 90 days help you get your first deal. So we can just riff on that to finish this one out really quick. So guys, those are the four signs, right? And as you put all of those pieces together, if you can say yes to all four of those, then you are ready, no if, ands or buts about it, you are ready if you can say yes to those. So I want to give you guys a bit of a roadmap or a challenge to help you actually make some progress here. What I’ve seen as one of the biggest obstacles to aspiring investors actually getting their first deal is a lack of activity. It’s not a lack of skill, it’s not a lack of knowledge, it’s a lack of activity.
So what I want to focus on is squeezing and cramming an incredible amount of activity in a very short period of time. So what I want all of you guys to do is to, for the next seven days, I want you to analyze and submit on a different property every day for the next seven days. Notice I said analyze and submit on. I don’t care what the purchase price is, I don’t want you to care what the purchase price is. You do your analysis. It doesn’t matter what your strategy is. Flipping wholesaling, long-term, short-term, midterm apartments, single family, mobile, home parks, whatever. Find seven different properties one per day, analyze it, identify where your necessary purchase price is, and submit the offer 10 or 15% below what your max offer is. And the absolute worst thing that’s going to happen is that you break through this fear of submitting offers and they say no.
That’s the absolute worst case scenario. The best case scenario is that one of those people says yes. They’re like, yes, I will take your offer. And the more likely scenario is that there’ll be some sort of negotiation in the middle. But the simple act of breaking through that glass ceiling of I’m afraid to submit a lot of offers, I’m afraid to low ball people, if you can break through that, it then makes offer number 8, 9, 10, 20, 30 significantly easier. So that’s my challenge. Ash, what do you think have to add for people to break through the analysis paralysis?

Ashley:
Yeah, I think everything along the lines that you said, and one thing I want to add in is partner alignment. Is this your spouse, your significant other? Maybe you have a partner in the deal is to, as you’re going through this analysis paralysis of trying to get started and things like that, even if it’s not your spouse, significant other or somebody you’re partnering on the deal, an accountability person to add into the mix. Find somebody who maybe is also stuck in analysis paralysis and hold each other accountable. Like go get on a zoom call, go through each deal you’re looking at and have the other person call you out and say, I don’t see anything wrong with this deal. I think you should do it. Or maybe they will say, you know what? I think you missed this, or you look at this more and maybe this isn’t a good deal.
And it kind of gives you that reassurance. This could be another rookie, it’s another set of eyes. Somebody who’s going through the same exact thing you are. But also that alignment of, as you’re listening to this episode, maybe there was a couple aha moments of, you know what, I have been thinking of this strategy, but Ashley’s right per usual, and I don’t think I’d actually be good at that. So go ahead and align with your spouse, your significant other, and make sure that you are on the right track for what fits both of you. Because if you go down this rabbit hole and you’re got all these ideas and stuff like that, and you go ahead and implement them, maybe you love the idea of working nights and going and doing the rehab to build wealth from your family. You’re going to do it, but maybe your spouse does not like the idea of you not being at your kids’ soccer games or you not being home for dinner or things like that. So having alignment and then also an accountability person to help you through this analysis paralysis. Okay. Well, thank you guys so much for listening to this episode. I’m Ashley. He’s Tony, and we’ll see you guys on the next one.