This article is presented by Lennar Investor Marketplace.

Once upon a spreadsheet, new construction homes were the fancy properties: shiny, flawless, and out of reach for the budget-conscious investor. But what most investors don’t know is that these new homes aren’t always more expensive today.

In many markets right now, brand-new homes are going head-to-head with older resale properties on price. When you factor in the benefits of a new home (minimal maintenance, energy efficiency, loyal tenants, and builder perks), new builds come out ahead.

For beginner and intermediate investors focusing on long-term rentals, investing in new builds could be a strategic move. Let’s break down the numbers and reveal why buying new could mean spending less, stressing less, and earning more—especially when you use the right tools like Lennar’s Investor Marketplace. 

Lower Maintenance Costs, Fewer Surprises

One of the biggest perks of new construction is dramatically lower maintenance and repair costs in the early years. Everything is new—the roof, HVAC, plumbing, appliances—so major fixes are typically not needed for a long time. 

Statistics support this claim: According to NAHB analysis of the American Housing Survey, only 11% of owners of newly built homes (under four years old) spent over $100 per month on upkeep, compared to 26% of all homeowners. In fact, 73% of new homeowners spend less than $25 per month on routine maintenance. 

Lower maintenance properties save money, absolutely, but also time and stress. New homes usually come with builder warranties on major systems and structural elements for 5 to 10 years, meaning that if something breaks, it’s often covered. In a new build, your maintenance “responsibilities” might be as simple as changing HVAC filters or touching up caulk. 

Investors who purchase an older home have to factor in many line items in their budget, including potential water heater replacements, reroofing, leak repairs, electrical wiring updates, and so on. Those costs can add up fast. In 2024, common home repair projects ranged from thousands for system replacements to tens of thousands for big-ticket items like roofs.

Energy Efficiency and Lower Operating Costs

New construction homes are built to the latest energy-efficiency, insulation, and building-material standards. This translates into lower utility bills and operating costs, benefiting both the landlord and tenants and making the property more attractive to renters. 

Modern windows, better insulation, Energy Star appliances, LED lighting, and high-efficiency HVAC systems all contribute to reduced energy usage. In practical terms, a tenant in a well-insulated new home will enjoy lower electric and gas bills than they would in an older, drafty house of the same size.

Other operating costs are lower as well. Homeowner’s insurance premiums are often less for new homes. Insurance companies know that new structures carry less risk of issues like old wiring causing fires or an older roof being blown off in a storm (because new homes are built to modern code and with new materials). Likewise, water and sewer bills are often lower, since new plumbing is less leaky and new fixtures conserve water.

Attracting Quality Tenants and Longer Tenancies

Beyond the dollars saved on maintenance and utilities, new construction rentals offer a less tangible but very real benefit: They attract high-quality tenants and encourage more extended stays. Renters love new homes. Everything is clean and modern, there’s no wear and tear from previous occupants, and the style is up to date. 

Modern open layouts, fresh paint, new floors, and contemporary kitchens and bathrooms make a strong first impression on prospective renters. In contrast, if a house feels dated (shag carpet, old cabinets, or an AC that can’t keep up in the summer), tenants notice and may be less enthusiastic about signing a new lease.

Incentives and Financing Advantages of New Builds

New construction is very popular right now, and it’s surprisingly affordable.

As of mid-2025, the median new home price was $401,800, while existing homes averaged $441,500. That’s a 9% price difference in favor of new builds. Think paid closing costs, free upgrades, and mortgage rate buydowns that can slash your monthly payment.

In some markets, these incentives make new homes more economical month-to-month than older ones, especially since resale sellers rarely lower prices. In places like Florida, builders’ rate buydowns and credits can make the payments on a brand-new home lower than those on an older property with a smaller sticker price.

The Long-Term Value Proposition

When you add it all up, new construction homes give investors something older properties rarely do: peace of mind that actually pays.

Even if the upfront price looks similar, you’re getting a home that’s easier to manage, less expensive to maintain, and more attractive to tenants. No leaky roofs, surprise plumbing issues, or middle-of-the-night repair calls. That means your cash flow stays consistent, and your tenants stay longer.

More investors are building portfolios around new construction. One of the biggest names leading that charge is Lennar. Through Lennar Investor Marketplace, you can browse curated, turnkey homes across 90+ markets. An industry-leading warranty, rental comps, and end-to-end support back each one. They’ve streamlined the entire process so you can focus on scaling.

Whether you’re looking for your first rental or building a nationwide portfolio, Lennar Investor Marketplace makes it as simple as choosing your market, picking your home, and watching your investment perform. No remodels. No contractors. Just modern homes designed for modern investors.

Dave:
The end of 2025 is here, which means it’s time to look back and reflect a little bit on what worked this year and what tactics that we enjoy that we’re going to carry into our strategies for 2026, and today we’re going to do something a little different. We are sharing our favorite things of 2025. It might be a trend that you’re obsessed with, a headline that changed how you invest, a portfolio pivot that really paid off or just a big lesson that we think every listener should carry with them into next year. To do this, of course, I am joined by Henry Washington, James Dainard and Kathy Fettke for our ideas, strategies, and moments from 2025 that we’re going to bring with us into next year. You’re listening to On the Market. Let’s jump in. James, Henry, Kathy, welcome to the show. Thank you all so much for being here. Every year, my wife’s family does this big Christmas Eve party and they do this thing called favorite things, and rather than just doing a white elephant or like a secret Santa, you bring three of the same thing. It’s something that you really like and then everyone trades them and every year for the dudes, it’s just either you get a three pack of golf balls or a six pack of beer. Everyone. Men are just, all we have is two things that we like.

Kathy:
It’s so simple.

Dave:
Yes, but it’s a fun game, so we thought that we would do something like that. We won’t obviously do any trading, but I’m curious about your favorite things of 2025 so that we can share them with the audience and hopefully they can learn something about what they might bring into next year. Does that sound good?

Henry:
Yeah.

Dave:
Yeah. Alright. Well, Henry, I’m going to pick on you. What is your favorite thing about 2025 that you’re bringing with you?

Henry:
Well, look, Dave, as someone who enjoys finding real estate deals and someone who wrote a book on helping other people learn how to find real estate deals, my favorite thing of 2025 by far has been the return of being able to find a good deal without having to be this professional investor. There have been great deals on the market.

Dave:
Yes,

Henry:
There have been great deals if you’re just willing to do a little bit of work and reach out to some sellers. I’ve bought more deals from wholesalers this year. Typically that’s been a harder thing to do. It’s just the availability of a quality deal seems to be back and it was gone for a few years. You had to work really hard

Dave:
After four years of this show. The name of our podcast finally makes sense on the market. You can now actually buy deals on the market in 2025 going into 2026.

Henry:
Absolutely. Do you have to still negotiate? Yes. Do you have to put in some level of work? Yes. If you want to find a deal on the market, you still have to be willing to make an offer at substantially less than what somebody may have it listed for, but what we’re finding is there are more people willing to say yes to those than there was before. It used to be this needle in the haystack drill and now it’s not as challenging. Like last week I probably made 10 to 12 on market offers and these were just verbals. We weren’t even submitting the actual written offer. We just had my agent verbally and we say verbal, but they basically sent a text message to the listing agent saying, Hey, my investor client is interested in this property. We’re willing to make an offer of x. I know it’s not what you’re looking for, but we can assure you that we’ll close fast, it’ll be all cash. We won’t ask for any repairs, and just sending 10 to 12 of those text messages. I got two responses where I was able to go look at the properties and then adjust my offer and one of those were about to put under contract. That’s an amazing number to make 10 verbal offers and to have two responses and get one under contract, that’s easy.

Dave:
Join me on the lazy side of investing, Henry,

Henry:
So

Dave:
The water is warm. It’s so nice over here

Henry:
And the deal we’re going to put under contract, no work. It is completely renovated. It’ll just be a turnkey rental. I’ll get it. With 60 grand of equity,

Dave:
I mean this is the best favorite thing. Now I switch my head. It’s so true. This is the best one. This is the best thing that’s going on in the market right now is that you can find good deals. It just feels so much easier than it has. It’s funny, I do the state of real estate investing thing every year on BiggerPockets and I’ve been writing it over the last couple of weeks and I was like, I think investing is just getting easier. I think that’s what’s happening right now. It’s not easy, but it is trending in that direction and that feels good after years of it just feeling harder and harder and harder. I just think on market’s always been available, they’re just less hairy right now. It’s just a little bit simpler on market distressed homes people, not everyone sells those to an investor or goes through a wholesaler. Those still hit the MLS, but there are decent condition properties, properties that you could buy with a conventional mortgage on the MLS that actually makes sense these days. That is different. That’s a good favorite thing

Henry:
And it’s really excitement about what comes after the deal. Yes, it’s amazing that now it is air quotes, easier to be able to find deals, but what that truly means is we’re starting to see the return of year one cashflow. Again, that’s kind of gone away over the past two to three years where you were having to wait until year two, three year five before you’re really seeing the cashflow numbers and you were really just breaking even if you wanted to a buy and hold investor over the last couple of years, but because of this opportunity of being able to find deals easier, if you’re willing to do just a little bit of work year one cashflow is returning in a lot of markets now, maybe not in California where Kathy is. That’s still a challenge, but in a lot more markets, you’re able to now buy properties without having to do a ton of work and get cashflow in year one. We’re back, baby, we’re coming

Dave:
Back. It’s slow, but it’s good. Yeah. All right. Well, Henry, I think you stole the show already going first with this one, but let’s move on to someone else’s favorite thing. James, what’s your favorite thing?

James:
A couple of things I do like about this upcoming year that was a great experience for me this year was one, because there’s more deals, like you’re saying on market. You can buy a little bit easier flips right now. You don’t have to go as deep to make the return, but my favorite thing for the year, I feel like this is what everyone’s talking about, is the expenses have been increasing all the way across the board, and I love being a private money lender right now because no matter what, even if you’re not taking, you can do it in so many different ways and they’ve been great because they’ve freed up time for me where I’ve done some passive equity deals, but also just the steady interest rate, the consistency of it. It’s the only thing that hit a hundred percent of what I thought it was going to do for the year.

Dave:
I mean, I love it too as a concept. Are you worried though, with flip sitting on the market? Are you worried at all about the operators being able to execute deals right now?

James:
No. You have to vet your people, right? I do seconds. I do a hundred percent first, but it has to be for the right operator in any kind of deal. If you’re investing with the right operator, you might actually charge them a little bit less for that kind of leverage, but they’re bankable and they have assets and they will pay the bill, and to this day, I’ve never lost money on a hard money loan and we’ve been lending since 2009. You have to do it correctly. I saw people get smoked in 2008 doing the bad kind of loans, second thirds, gre, gre, greed, chase the rate, but it’s steady. You don’t have to worry about rising taxes, rising insurance, eating up your cashflow. You don’t have to worry about sitting on the market too long, paying too much in an interest expense. You are the interest, and at the end of the day, being the bank last year was the most profitable thing.

Dave:
Wow. Some people like James operates his own hard money lending fund. I do hard money investing just in other people’s funds and even that’s great, you don’t earn as much, but I’m in a couple of funds and they just pay every month. That’s real mailbox money if you want it. The minimums are typically expensive, but I know a lot of good operators who have debt funds right now and they do really well. It’s a great way to make cashflow and it’s way for me personally, I think about trying to balance my long-term investing approach, which is what I do with most things. Buy properties I want to own for 5, 10, 20 years, but I’ll take some cash right now and the hard money renting works pretty well for that, so I think it’s great as well, and I’m glad you have such an optimistic outlook for it going forward as well, James.

James:
Well, the cool thing about it is you can balance, it’s hard to make cashflow on a single family right now, but you can park some money there, or even if you’re losing a little bit on that, you can offset it by putting it in a hard money fund, kicking out the cashflow to cover, so you can do a blend to get a really good rental property, but you have to vet your funds, vet your operators, who are you putting in the fund? What assets do they have? What are they lending on? What’s their average duration? Don’t just take someone’s word for it. Dig into their portfolio and what they’re lending on and who they’re lending to.

Dave:
That’s a great point, and thank you, James. I think this is something we don’t talk about a lot, but I think lending and being on the lending side has been a great thing and probably will continue to be for the foreseeable future. A great favorite thing. Alright, let’s take a quick break, but when we come back, we have mine and Kathy’s favorite things. Stick with us. Welcome back to On the Market. I’m Dave Meyer here with Kathy Fettke, Henry Washington, James Dainard, talking about our favorite things in 2025 things we’re going to carry over into 2026. Kathy, what was your favorite thing of 2025?

Kathy:
Oh my gosh, I have like three, but okay,

Dave:
Me too. There’s so many good things that happened this year, but so many start with

Kathy:
One. I’ll throw the first one out that I’m not going to go elaborate on, but AI has been extremely helpful in underwriting in so many things, but I’m just going to say, I’m just going to put that out there. We’ll do a whole nother show on that, but that was one of my favorite things and I really look forward to learning it more in 2026, but I would say for 2025 specifically bringing back that a hundred percent bonus depreciation, baby, that’s a big one.

Dave:
Not surprised to hear that. That being your favorite thing, that is a big one for real estate investors. Maybe explain to anyone who’s not familiar with what changed this year and how beneficial that could

Kathy:
Be. Bonus depreciation is the first year depreciation that you can take, and it was sort of winding down under the Tax Cuts and Jobs Act is when we first got it and it was a hundred percent and then it went down to 80 and then the next year it went to 60 and then this year it would’ve been 40% bonus depreciation that you could take in your first year of owning a property. Again, I am not a CPA, do not hold me to this. Talk to your CPA, make sure you get the right information. Don’t trust me. I have to always say that when you talk taxes, but it was really dwindling and so you couldn’t take massive write-offs in one year. You used to be able to, until the O-B-B-B-A, that one big beautiful Bill act brought it back up to 100% and it’s permanent.
However, I have personally talked to several CPAs, interviewed them, tried to really get the nuts and bolts of this, and they disagree, and I’ve hounded them on this one thing, and I just want to say this is something that’s really important to look for is that the way I understand it is that the a hundred percent bonus depreciation is only good on properties that are purchased after January 19th, 2025. So a lot of people think, oh, I’m just going to get this a hundred percent bonus depreciation on an older property, and I’ve had CPAs go, yeah, yeah, that’s what it is, but the way I understand it is it has to be a property bought this year after January 19th, so look that up because it sounds like you can still get the bonus depreciation on older properties, but it’s at the 40% level that it was. So the a hundred percent is on newer properties. Again, don’t take my word for it, but go out and buy a good property that you can bonus depreciate.

Dave:
And from what I understand too about the one big beautiful bill act is it is not set to expire, right? It is indefinite,

Kathy:
Right? It’s permanent.

Dave:
So even if anytime you buy a property now you can consider doing this. So bonus depreciation is an amazing thing for real estate investors, but all of you are considered real estate professionals, right? Tax status.

Kathy:
Yeah, absolutely.

Dave:
Yeah. As someone who’s not that, it doesn’t really help me unfortunately, which stinks, which I just want to call out for people because it can help a little bit, but depreciation usually, at least for me as a real estate investor, if I buy a rental property, the normal depreciation without bonus depreciation usually offsets my rental income, and I don’t wind up paying tax on the income from a rental property, but I still have to pay all of my income tax for my job at BiggerPockets. I can’t take the depreciation from my passive investments and apply it to my active income. That is only reserved for people who have this real estate professional status. And so bonus depreciation is amazing. If you’re an agent, you’re a professional investor, if you’re a property manager, if you have that status, you can offset almost all, sometimes more than your active income. But if you are not doing that, and you should look up what it means to be a real estate professional status, I just want to call out to people that you might not get the full benefits of bonus depreciation because I painfully am aware that you don’t get them unless you’re a real estate professional.

Kathy:
Unless you have a short-term rental.

Dave:
Short-term rental loophole.

Kathy:
That’s the only way

Dave:
Around that.

Kathy:
Yes. That’s why there’s all this talk about the short-term rental loophole because yeah, James Henry and I can get this bonus depreciation on anything because we’re real estate professionals, but if you have a full-time job and you do that more than you do real estate, then you’re not, and unless you have a short-term rental, it’s a loophole for now, and that’s why people kind of go about those

Henry:
Unless you have a short-term rental that you manage,

Kathy:
That you manage, manage that you have to

Henry:
Manage.

James:
Yes. But isn’t it also too, if someone’s significant other is a licensed real estate broker that then you can run it through that way?

Kathy:
Yes. If your spouses,

Dave:
Yes.

Kathy:
It’s not just if they’re a broker, they have to also manage your portfolio. There’s more to it than just being a licensed real estate agent.

Dave:
You have to be actively involved. There’s something called active participation in each deal that you bonus depreciate.

James:
Oh, it’s not just sitting in open houses. Yeah,

Dave:
No, you have to actually, I’ve looked into it. Believe me, you can’t do it that way. But this is great for anyone who does have it. I do think it breeds a little bit of life into the market too because it just adds a bit of incentive for people to transact on real estate, which we need right now because there’s just not a lot of transaction volume. So I think this is definitely a good favorite thing. Did you have another one, by the way? Ai? You said this one.

Kathy:
Yeah, I do. And we could talk about it on a future show, but seller financing I think is a really incredible opportunity because there’s a lot of people out there who can’t qualify, and if you can help them qualify by being the bank, being the bank and doing seller financing, then there’s a huge opportunity there. I think

Dave:
Another good one. Yeah, we will have to talk about that on another show. We do have to take a quick break, but I will tell you my favorite thing when we come back, stick with us. Welcome back to On the Market. I’m Dave Meyer here with James Dainard, Henry Washington, Kathy Fettke, talking about our favorite things of 2025. Henry started with on-market deal availability. Then we talked about James’s love of being the bank right now and hard money lending. Kathy shared with us her love of bonus depreciation. I’m going to bring, I struggled with this. There’s a lot of things I like. I got to be honest, James, I thought about saying flipping because James has brought me over to the dark side. We’ve done two deals, but they haven’t closed yet. They’re pending, and I’m not going to call them my favorite thing until they actually close, but it was close.
But my favorite strategy is actually something I’ve been doing for a long time, but I named it this year and it seems to have sparked some interest from people. I love the slow. This is just something where I think it’s basic boring real estate investing, but it has been working for me and I’m going to keep doing it in 2026, I think during the pandemic and the years leading up to it, people got the idea that the burr, it had to be perfect. You had to be able to take a hundred percent of your money out of your deal that you had to do it in six months and extract all this value out of it immediately. I honestly never bought that. I don’t think that way. I think the way that I’ve been buying deals for the last two or three years makes a lot of sense.
I’m buying small multifamily properties with tenants in them often, and I just wait. I left the tenants stay there as long as they want, and these deals typically cashflow right off the bat, but not crazy, like two 3% cashflow. So I’m at least making money, holding costs are covered. Then when the tenants move out, I renovate it, I bring the rents up, and then the next time tenant moves out, I renovate it. I bring the rents up, and once I’ve done that, I’ll refinance, take some money out and still have a great cash flowing property, usually in the eight to 10, maybe even higher percent cash on cash return. I’m not pulling a hundred percent of my equity out on these deals, but I’m at least pulling out all of my renovation costs. And then you have a great property that’s now in great condition.
You could go on and do it again. And I just love it because it takes all the time pressure off of it. I feel like so many people have these expectations that a burr is like a flip, but when I’m buying these properties, I don’t have a 12% hard money loan. I have a conventional mortgage on these properties. I’m making cashflow on it. There’s no rush. I am making money every month holding onto this. So it really, as someone who works full time, I think is a really good strategy because it allows you to get the benefits of value at it gives you cashflow, but it’s not this super time consuming stressful thing. So the slow burr is what I love and it’s something that I am planning to do more of heading into 2026,

Kathy:
I love me a slow burr,

Dave:
Which

Kathy:
Is basically real estate investing.

Henry:
I was going to say it’s called real estate.

Kathy:
Buy a property, it goes up in value, you refi it, you get your money out. I mean, yeah, that that’s traditional.

Dave:
I know. I guess I felt the need to name it because everyone says the bur is dead. You’ve heard this, right?

James:
It’s such bs. Bur

Dave:
Is dead, right? It’s such bs. I guess I’ve said this in a lot of context recently, but I just don’t think the market sucks. I think people’s expectations suck. What’s holding back real estate right now is people are expecting these crazy returns. It’s magic. The fact that you could ever do a perfect bur is a little bit of magic. You could, and that’s great if you were able to pull that off, good for you. But don’t count on that happening. Lightning can’t strike every single time. This is a great way to make money. It is a boring way to make money, but it is predictable. It is very safe in an uncertain environment and there’s very low risk to this. And so I just think this is the tried and true way of being a real estate investor.

James:
Have you ever noticed that the people that say the burrs are dead are usually trying to sell something and then they’re trying to sell something else and then they’re trying to sell something else? It’s just because it’s not the trending topic anymore.

Kathy:
Yes,

James:
But there’s so much opportunity. I’m with you, Dave. Actually, I might go slow. I think it works really well. There is no excuse to do a burr sometimes. I don’t want to do that heavy of a rental, and that’s the only way I can get that deal done. But what you’re saying is the strategy works, right? You just got to park your money, wait for ’em to move out, and your repairs are not that heavy. They’re more cosmetic.

Dave:
Yeah, exactly.

James:
Which is great. You can control those costs and then just those minor little cosmetics increase it enough to get your cash back out or a chunk of it. But it’s a great way. I’m trying to buy 10 of ’em this year. That is my goal is to buy 10 burrs and I’m going to go a little bit heavier. I want a 10 31 ’em later into a little bit bigger property in California. That’s the only way I can afford this rental property in California is if I buy 10 burrs somewhere else and then create the equity and trade it out. And so it’s just money in the bank burr is by far the most impactful strategy you can do.

Dave:
I totally agree. And I’ll say some of them are cosmetic, some of them are a little bit more, I’ll change a layout, you’ll do some structural stuff if it makes sense, because some of the deals I’m seeing, and I think, again, this goes back to what Henry said about more deals on the market. Some of these deals right now, the rents are like 50% of market rate. It’s crazy how low some of these rents are. No one’s renovated them, and maybe you need to change the bathroom, change the layout to be a little bit more modern, but you could double your rent some of these times if you’re willing to do this, and it’s not. You’re going to have three months, four months of vacancy in these things. But the other part of this that I love, James taught me this, but it’s like you could permit these things while people are living there.
So you’re not losing all this time or having all these holding costs, just get it permitted. You’re ready to go. They’re moving out usually 60 days ahead of time. You could really reduce your holding costs and your expenses by doing it this way. So depending on your skill level and your appetite for risk, you can do a heavier reno too and still use this method to control your costs. Alright, well those are our favorite things. I have to add my one bonus one, I read a stat the other day that said that affordability in the housing market is the best it’s been in three years, and that just warms my heart. I just want to tell you, I think it’s awful how unaffordable housing is in the United States, both our investors and homeowners. That’s why it’s felt so hard. This is so hard, and don’t get me wrong, we’ve gone from 40 year lows of unaffordability to like 38. It’s not great, but it is moving in the right direction. You got to bottom out. Things need to start moving in the direction. And so that is my number one trend that I hope goes into next year because all of these strategies, whether it’s on market, deal fighting, slow burrs, doing hard money loans, bonus depreciation, everything gets better if affordability improves. And so I am hopeful that this trend that we’re starting to see develop in the second half of 2025 extends into 2026.

Kathy:
Yeah. It’s just that all that appreciation happened all in a couple of years instead of over five or six years. So we’re getting closer to that five or six year point where we would be, had rates not been so low. And in that time period, there have been some jobs where there’s wage growth, there’s some areas where there’s wage growth and we’re seeing housing prices flatten and even in some areas go down and now mortgage rates getting back to closer to 6%, which is very normal. Very good rate. So yeah, I think that this lack of affordability has been a temporary thing, a result of the pandemic and just like the pandemic through a lot of things out of whack, a lot of prices went crazy. It’s all kind of coming back to where it would’ve been had there been no pandemic. So hopefully things are going to come back to normal normalize, and then Henry and James are going to be like, why is it taking a normal amount of time to sell a property? I don’t like this. I

Henry:
Don’t. We just want the best of both worlds. I want to be able to find a deal without working for it, and I want to be able to sell it in three days.

Dave:
Yeah, exact opposite. Investing market conditions. You want both of them at the same time. Yeah, that’s a reasonable request. Absolutely. Well, guys, I have to say my real favorite thing is doing this podcast with all of you. So I’m going to end on a corny note at the end of the year, but I really do love doing this show. It’s very fun having you all here. And thank you all so much for listening to this show. It has been a great year for on the market, and we have some more fun, exciting stuff planned for next year. So thank you all for being a part of On the Market Community.

Kathy:
Oh, thank you. And I think we’re coming up on another anniversary.

Dave:
It’s going to be our four year anniversary.

James:
No way.

Dave:
Yeah. Isn’t that crazy?

James:
Love it. Yeah,

Dave:
It has been a delight and the show continues to grow and do great, and it’s really because of three of you. So thank you. Thank

Kathy:
You. Well, thank you.

Dave:
Alright, that’s it. That’s what we got for you for On the Market Today. Thank you all so much for listening. We’ll see you next time.

The hype on tiny homes has been anything but small. But how practical is it for investors to scale a portfolio of cash-flowing micro-dwellings into an oversized income? 

Loudoun County, Virginia, could give landlords a chance to find out. The affluent northern Virginia county is studying whether one-bedroom homes under 800 square feet can serve as a realistic path to increased homeownership and, in doing so, more affordable rentals. According to a recent feasibility study reported by Homes.com, the Board of Supervisors asked for an evaluation of how county-owned land could reduce the sale prices of units in the 400-to-600 square foot range.

WTOP News reported that in 2025, the average price of a one-bedroom unit in Loudoun County was $348,650. The Loudoun County Board of Supervisors report suggests that the units could be priced between $125,000 and $155,000 per unit. Taking the latter number, a tiny home here could generate a 10% to 11% cash-on-cash return (see later calculation).

Scaling to Multiple Units

Loudoun’s feasibility work models about 45 tiny homes on the Ashburn park?and?ride site at around $155,000 each. If an investor acquired three similar units:

• Total equity (approximate): $93,000–$105,000
• Aggregate pretax cash flow (three units × $3,550): About $10,500/year

The Tiny Home Movement Is Nationwide

The awareness around tiny homes has increased significantly amid the housing crisis in other counties and cities such as Hamilton County in Ohio, as well as Tillage Farms master-planned community in Princeton, Texas, which, according to the Houston Chronicle, is building tiny homes through national developer Lennar in its fastest-growing city. Homes start around the mid-$100,000s for just over 600 square feet.

“With exceptionally affordable pricing, this new collection brings a unique opportunity in today’s market—especially for first-time homebuyers,” Greg Mayberry, Dallas-Fort Worth Division president for Lennar, said in a press release. “Tillage Farms delivers the thoughtful design, quality, and value buyers expect from Lennar, located within an amenity-rich community in a highly sought-after Dallas suburb.”

According to Zillow, the average listing price for all homes (new and old) in the Dallas-Fort Worth area is $359,523.

Why Tiny Homes Could Present a Practical Key to Scaling for Small Investors

Tiny homes present a unique investment opportunity due to:

• Lower per-door capital: It is possible to buy or build multiple units for roughly the price of a single conventional starter home in more expensive markets
• Improved rent-to-price economics: Tiny home rents often track one-bedroom apartment rates. With tiny homes, acquisition costs are lower, which can, in some instances, boost the cash-on-cash return. However, the square footage can also play a role in determining the rent price.
• Multiple rollout models: Investing in small homes is a test in creativity, utilizing various scenarios such as ADUs/infill development, clustered land-lease communities, modular build-to-rent clusters, or public-private partnerships for discounted parcels.

Case Study: Ashburn Park-and-Ride Site, Loudon, VA

Using the Loudoun County sales and approximate rental numbers as an example, this is how a 10%-11% cash-on-cash return could be achieved:

• Purchase price per tiny home (416 sq. ft. one?bedroom): $155,000 based on the Loudoun feasibility estimate for Ashburn’s park?and?ride site
• Down payment (20%): $31,000
• Loan amount: $124,000
• Assumed loan terms: 30?year fixed, 6.5% interest (typical recent investor rate range)
• Monthly principal and interest: About $785, or roughly $9,420 per year

Rent and income assumptions

• Typical Ashburn one?bedroom rents: Roughly $1,800–$2,200/month; several data providers put the average near $2,060/month.
• Assumed market rent for a new 416?sq.?ft. tiny home (priced below Class A apartments): $1,750/month

From that:

• Gross scheduled rent: $1,750 × 12 = $21,000/year
• Vacancy and credit loss (5%): $21,000 × 0.05 = $1,050/year
• Effective gross income (EGI): $21,000 ? 1,050 = $19,950/year
• Operating expenses and NOI: In higher?cost, suburban single?family rentals, a 30% to 40% expense ratio is a common underwriting range for taxes, insurance, maintenance, management, and shared?area costs. Using 35%:
  • Operating expenses (35% of EGI): $19,950 × 0.35 ? $6,980 /year
  • Net operating income (NOI): $19,950 ? $6,980 ? $12,970/year

Cash flow and returns

• Annual debt service (principal + interest): $9,420.
• Cash flow before taxes: $12,970 ? $9,420 ? $3,550 per year (about $295/month).
• If the total cash invested (down payment plus closing/initial costs) is roughly $35,000, Cash?on?cash return: ? $3,550 ÷ $35,000 ? 10%–11%/year.

These numbers are based on current interest rates and assume yearly leases, not short- or mid-term rentals.

Glamping, Ecotourism, and Tiny Homes

Tiny homes have been a particularly enticing proposition in the short-term rental space because high per-night rents, coupled with low purchase prices, equal high cash flow. Tiny home resorts such as Cabinscape, The Fields of Michigan, and many others are great examples of how profitable a cluster of tiny homes can be when location meets opportunity.

Earlier this year, BiggerPockets featured Manny Reyna, who started a tiny house business with just a $12,000 down payment and later scaled it into a glamping tiny home business.

Final Thoughts

Investing in tiny homes is great for one main reason: cash flow. However, traditionally, they appreciate at a lower rate than conventional single-family or small multifamily homes. Also, if you plan to start an STR business, you’ll have to deal with the hassle of intense management, overseeing bookings, seasonal fluctuations, and maintenance. While this can be outsourced, it is by no means a hands-off investment if you want to oversee it properly.

Also, tiny homes might not be built to the same exacting standards as a conventional home, so wear and tear, particularly in a short-term rental, could be an issue.

For investors skittish about the proposition of a tiny home as an investment, one solution for singles or couples is to build an ADU next to their personal residence, rent out their single-family home, and live in the ADU—thus maximizing cash flow, while being near their investment, and minimizing wear and tear on their ADU. and live in the ADU—thus maximizing cash flow, while being near their investment, and minimizing wear and tear on their ADU.

When I bought my first property, hosting felt simple. Guests booked far in advance, competition was manageable, regulatory scrutiny hadn’t hit full stride yet, and if you furnished your place decently, you could almost count on it performing. 

But after six years of hosting, analyzing hundreds of properties across multiple states, and running a portfolio that now grosses more than $1 million annually, one truth stands above the rest: The game has changed, and it’s simply not as easy as it used to be.

As BiggerPockets’ resident short-term rental expert and a full-time investor based in Houston, Texas, I own and manage more than 20 unique rentals, from cabins to glamping sites to A-frames, and everything in between. 

Long before Airbnb, I studied hotel management at the Hilton College at the University of Houston, where I learned how guests think, how revenue management works, and what drives exceptional hospitality. Today, those lessons are more relevant than ever.

Here are six insights shaped by years of data, hundreds of conversations with hosts, and thousands of guest stays. These are the realities modern hosts need to understand.

1. Booking Lead Times Are Shrinking Fast

Back in 2019, a fully booked calendar two months out was standard. Guests planned ahead, hosts could predict revenue, and dynamic pricing followed smooth patterns. 

That world is gone. Today, many markets are seeing average booking windows of around 20 days, and for smaller, more experiential stays, bookings often happen within a week of arrival.

I once had a couple book one of my Mirror Houses for 2 p.m., with check-in two hours later. They said they saw it on TikTok and decided to go immediately. 

This level of spontaneity is becoming standard. It is not a sign of declining demand. It’s simply a shift in traveler behavior.

This shift means hosts need to adjust their systems. A quiet calendar a month out does not mean your listing is struggling. It means travelers are booking differently. It also means your pricing needs to be highly responsive to market trends rather than set weeks in advance.

What helps in this environment?

• Daily dynamic pricing that reacts to local demand
• Cleaners prepared for shorter turnover notice
• Refresh checks for units that sit empty for several days
• Systems that support last-minute communication and preparation

2. Guests Aren’t Buying Bedrooms. They’re Buying Experiences.

One of the most apparent shifts in the STR industry is that guests choose stays based on how the experience makes them feel rather than the number of rooms. A perfectly furnished two-bedroom will often lose out to a smaller but more unique cabin with great lighting, a fire pit, or a forest deck. The emotional impact is what matters.

This clicked for me after reading a guest review that said, “The fire pit under the trees made us feel like we were in our own little world.” They never mentioned the mattress, linens, kitchen, or decor I spent weeks perfecting. Their memory centered on one intentional experience.

To lean into this shift, hosts should think like experience designers rather than landlords. Ask: What detail in your listing creates a moment guests will remember for years? That moment could be:

• A romantic outdoor soaking tub.
• The first morning coffee on a deck above the treetops.
• A curated playlist plays softly when they arrive.
• A stunning interior design aesthetic.
• A stargazing hammock with soft lighting.

People are not buying a place to sleep. They are buying a story they want to live inside.

3. Every Great STR Needs a Moat

A moat is a competitive advantage that other hosts cannot easily copy. It could be a view, a unique architectural style, a location near a major attraction, or a premium amenity other hosts are unwilling to invest in. Without a moat, you will always be competing on price.

One of my lakefront properties had a small private cove. It wasn’t grand or luxurious, but guests fell in love with it. They drank wine by it, took anniversary photos, and wrote emotional reviews. That cove became the listing’s moat because no other host could re-create it.

Examples of strong moats include:

• A breathtaking view.
• A rooftop deck with a fire table.
• A sauna or outdoor shower experience.
• A property directly beside a hiking trail or waterfall.
• A private forest clearing.
• A design theme executed at a high level.

If a competitor can copy your advantage with a weekend shopping trip, it is not a moat.

4. Views Are Always Worth Paying For

Views are among the most consistent drivers of STR performance across every data set I have analyzed. Whether it is mountains, lakes, rivers, or oceans, a property with a view typically earns higher nightly rates and occupancy and stronger guest sentiment.

I once toured two cabins in the same neighborhood that were practically identical. One overlooked the tree canopy. The other opened to a sweeping mountain panorama. 

The cabin with the view generated more than $40,000 in additional annual revenue. Same layout, size, and furniture quality. The only difference was the emotional impact when a guest stepped onto the deck.

A genuine view also improves long-term resale value. If you gasp when you first see a view, your guests will too.

5. Direct Bookings Are the Future of STR Profitability

Every experienced host eventually learns that Airbnb is not their business. It is one marketing channel. Direct bookings create higher margins, better guest relationships, and more consistent income. They also reduce dependency on platform policies or algorithm changes.

Building a strong direct booking ecosystem takes time. I started with a simple Lodgify site and eventually upgraded to a custom Boostly site as my brand grew. 

Social media became a major accelerant. Guests discovered my properties through Instagram Reels or TikTok videos, and then booked directly via the website link in my profile.

Direct booking guests tend to:

• Stay longer.
• Spend more on add-ons.
• Complain less.
• Treat the property with more care.
• Return more frequently.

A diversified booking strategy creates stability and long-term resilience.

6. Dominate One Market Before Expanding Everywhere

Many investors spread themselves too thin by buying one property in several different markets. It sounds attractive, but it creates operational chaos. Multiple vendors, other regulations, unfamiliar tax rules, different time zones, regulatory hurdles, and inconsistent guest expectations can quickly turn a fun project into a stressful business.

When you dominate a single market, you build density, which creates efficiency. Vendors know you. Cleaners prioritize you. Guests follow your brand. Systems are easier to scale. You intuitively understand the seasonality, pricing patterns, legal landscape, and visitor behavior.

Benefits of going deep before wide include:

• Lower operational costs.
• Better vendor relationships.
• Higher-quality cleans.
• Better guest communication.
• Improved brand recognition.
• A scalable, sellable business model.

Once your systems are built and tested in one place, expanding elsewhere becomes far easier and far less risky.

Final Thoughts

Short-term rentals are not dying. They are maturing. Travelers are more experience-driven, booking patterns are tighter, and the operational bar is higher than ever. Hosts who adapt to these shifts are seeing stronger performance now than at any point in the last decade.

This article is presented by Express Capital Financing.

If you spend enough time around real estate investors, you start to notice there are two types of people entering 2026.

The first group is still whispering to itself that rates are “definitely” going back to 3%. They’re convinced the economic stars will align, Jerome Powell will have a spiritual breakthrough, and mortgages will magically become cheaper again. These are the same people who think Blockbuster might return if we all “manifest” hard enough.

The second group? They’re building wealth regardless of what interest rates are doing. They’re refinancing, pulling equity, and rolling cash from deal to deal, using momentum as their strategy rather than waiting for the perfect economic weather report.

This guide is for them.

And before we jump in, thank you to Express Capital Financing for helping shape this updated 2026 BRRRR playbook. Their team has seen every version of the refinance universe—and still picks up the phone when investors call (which says a lot these days).

The 2026 Reality: Refinancing Still Works

Let’s kick off with a real story. Back in 2020, an investor named Sarah bought a duplex in Ohio. She did what many rookies do: She over-renovated the kitchen, underestimated her contractor’s ability to disappear without warning, and spent six months in a stress dream.

But she did one thing absolutely right: She refinanced. When the dust settled, she pulled out $52,000 and immediately bought a fourplex. 

Fast-forward to today, and she’s sitting on 22 units. And this is not because the market was easy, but because she didn’t wait for perfect conditions.

That’s the whole lesson for 2026: You don’t need to be perfect. You need to make progress.

Here are the steps to take.

Step 1: Stabilize Like You Mean It

Every lender wants proof that your property is functioning like a stable adult, not a chaotic group chat. That means no lingering repairs, mysterious leaks, or tenants who pay rent based on vibes and lunar cycles.

A BiggerPockets member recently shared that their lender required them to show a full month of on-time rent payments before the file was touched. They tightened operations, stabilized the property in 45 days, and the refinance sailed through.

A smart tactic is keeping a stabilization folder with:

• Before-and-after photos
• Repair receipts
• Contractor invoices
• A list of upgrades

Hand this to your lender, and they’ll trust you immediately.

Step 2: Raise Rent (Thoughtfully) and Lock In Leases

Value comes from income. That part is simple. What’s more complicated is navigating a 2026 rental market where half the country feels soft, half feels hot, and the rest feels like a confused middle schooler trying to pick a personality.

This is not the year to wing it. Make small improvements, run clean turnovers, and lock tenants into 12-month leases. Predictability equals a higher value on paper.

Step 3: Build Your Digital Paperwork HQ

Refinances often die because of messy paperwork, not bad deals. Lenders now expect everything to be clean, digital, and accessible. That means:

• E-leases
• A rent roll
• Income and expense statements
• Insurance documents
• Utility bills
• Property tax history
• Rehab receipts
• Bank statements
• Before/after photos 

Put everything in one shared folder titled “Refi 2026—[Your Property Address].” Send it early. It makes the entire process faster.

A fun pro move is to record a two-minute walkthrough on your phone explaining every upgrade. Appraisers appreciate the context more than you’d think.

Step 4: Call Your Lender Before You Need Them

If you’re waiting until the very end of your renovation to call your lender, you’re already behind.

One investor working with Express Capital Financing called during demolition. The lender walked him through expected LTV, required documents, appraisal timing, and how soon he could close after stabilization. That single early phone call saved six weeks and unlocked an additional $18,000 in cash-out.

Step 5: Date Around (Lenders, Not People)

Relying on one lender is the refinance equivalent of only eating at one restaurant, and then complaining that the food “lacks variety.”

You want at least three lenders in your corner. Each will give you different LTVs, fees, underwriting styles, and flexibility.

One Phoenix investor recently got two quotes: 6.5% and 7.3%. The 7.3% lender offered an 80% LTV and a 30-year fixed. The 6.5% lender capped his LTV at 70%. He took the higher rate because it got him the capital he needed to buy another property. Cash matters more in these situations.

Step 6: Negotiate the Whole Package

Most beginners only negotiate the rate. Veteran investors negotiate the entire loan. Ask your lender about:

• Fees
• Amortization
• DSCR minimums
• Interest-only options
• Reserve requirements
• Fixed-rate periods

Many lenders have quietly increased “admin” fees this year. Ask for a full breakdown so nothing surprises you at closing.

Step Seven: Tell a Value Story to the Appraiser

In 2026, conservative appraisals are more common, which means you need to help appraisers understand what your property was, what you transformed it into, and why it deserves your target valuation. Create a packet with:

• Before-and-after photos
• Full upgrade list
• Nearby rental comps
• Rent roll
• Neighborhood developments

A BiggerPockets investor once submitted a nine-page binder. The appraiser increased the value because the packet demonstrated the actual improvement. That binder was worth $14,000, and only cost the time it took to put it together.

Step 8: Pull the Right Comps

Some comps are garbage, while others are gold. In 2026, the difference matters more than ever.

One investor in Charlotte had an appraisal come in way too low. They challenged it using comps from the correct micro-neighborhood—literally the next block over. The difference in valuation? $62,000.

Your comp homework can make or break your refinance.

Step 9: Treat Your Refi Like a Project

Refinances stall for three predictable reasons: slow paperwork, appraisals, and underwriting. Avoid that mess by creating a timeline of important dates, set milestones for completion, and follow up proactively.

Express Capital Financing is designed for this pace. Their team does fast underwriting, specifically for BRRRR investors.

Step 10: When the Appraisal Comes in Sad

If your appraisal comes in low enough to ruin your afternoon, breathe. You still have options. You can:

• Challenge the report.
• Send better comps.
• Highlight missed upgrades.
• Request a second appraiser.
• Wait for rents to trend up.
• Switch lenders entirely.

A Colorado investor challenged a $47,000 low appraisal and recovered $39,000 after showing the appraiser what they had missed. That’s the power of pushing back with facts and evidence.

Step 11: Leverage Your Track Record

After your second or third BRRRR, lenders stop seeing you as a risk and start seeing you as a pipeline. Show them:

• Rent growth
• Payment history
• Low vacancy
• Successful past refinances

Lenders love predictability. Use that to negotiate better terms for yourself.

The Fast Track System

Express Capital Financing specializes in investor-focused refinances. This means fast underwriting, high-LTV cash-out options, bridge-to-rent structures, and complete transparency on fees and terms.

One investor in Michigan needed a refinance to close fast so he could lock up another property. Express Capital Financing closed in 21 days, freeing up enough cash to buy his fifth property without raising private money.

Final Thoughts

Every BRRRR investor eventually reaches the part of the journey where the work turns into leverage. You found the deal, took on the renovation, and got the property performing. Now you’re standing at the moment that separates stalled portfolios from growing ones: the refinance. It’s the inflection point where sweat equity becomes opportunity, and where momentum finally kicks in. 

Treat this step like the engine that powers everything that comes next. Use the insights in this blog (and this downloadable guide) to keep the energy moving forward.

And when you want a lending partner designed for speed and investor needs, start the conversation with Express Capital Financing. The leap to your next property is closer than it looks.

Dave Meyer:
This investor has acquired eight units in only three years. Now he’s cash flowing 1600 bucks per month and is on a path to financial freedom that would’ve been impossible with only his middle class day job. He didn’t start with a huge pile of cash or any other built in advantages. Some of his Midwest properties cost less than a hundred grand, and he is buying and managing them all from his home in California, thousands of miles away. This is a simple, repeatable investing formula, but it yields life-changing results. Hey everyone, I’m Dave Meyer. Been investing in rental properties for more than 15 years, and I’m the head of real estate investing at BiggerPockets. Today’s show is an investor story with Ben Vidovich from Santa Clara, California. Ben is a high school teacher and he’s passionate about that job, but he knew it didn’t provide the financial upside that he was looking for.
So in 2022, he bought his first rental property in Indiana. Since then, he’s scaled a portfolio by repeating the same investing formula, buy affordable homes, fix ’em up a little bit, then rent ’em out. There’s no tricks here, there’s no gimmicks, just a proven path to a better financial future for Ben and his family. During today’s episode, we’re going to discuss how Ben found the confidence to buy his first investment property in an out-of-state market he’d never visited. Why he’s comfortable buying properties with existing tenants in place, and how he decided putting more money down could actually accelerate his timeline for purchasing additional units. Let’s bring on Ben. Ben, thanks for being here. Welcome to the BiggerPockets podcast.

Ben Vidovich:
Great to be here. Dave. Thanks for having me on.

Dave Meyer:
I’d love to start by just learning a little bit about you. Where are you from? What brought you into this world of real estate investing that we’re in?

Ben Vidovich:
Well, I’m from the Bay Area. I was born and raised here in California and still here to this day. I’ve always kind of seen real estate at play. My dad worked as a property manager for some apartment buildings that are kind of in the family, so been watching him do that. Never really learned the business per se, but I’d get in there and paint the walls and rake the leaves and that sort of stuff. So I think it was just something I grew up around. And then when I got older and I was about to have my first child, I was like, man, I really got to do something to change my trajectory. I work as a teacher, I love that job, but I needed to do something to change the course we were on if I wanted to provide a better future for my family because as all the old people say out here in the Bay Area, the valley has changed quite a bit.

Dave Meyer:
Did you go into teaching at a young age? How long were you teaching before you realized you needed something else in addition to teaching to secure the financial future that you’re looking for?

Ben Vidovich:
Yeah, I joined a school and started teaching and I loved it. So I was doing that for a long time and was able to save a good amount of money. I always kind of lived frugally. Somewhere along the lines. I think I read Rich Dad, poor Dad, like many people. And during COVID times I read that and started really thinking about investing out of state just because there weren’t a lot of options here. And so I spent the next maybe couple of years in analysis paralysis, scouring the forums of BiggerPockets listening and reading everything I possibly could. And then like I mentioned earlier, as soon as I knew I was going to be a dad, I was like, okay, I got to take action. We got to stop. You can only learn so much at some point you have to take a first step, you have to dive in and you’ll get better from the practice and the implementation rather than just thinking about it all the time.

Dave Meyer:
And what about real estate in particular appealed to you when you sort of realized, Hey, I need something to augment my teaching. What about real estate made you think that’s it for me instead of going into another job or there are other entrepreneurial pursuits you could consider?

Ben Vidovich:
I think it was the best avenue for the amount of time that I had and the amount of money that I had. So prior to investing in real estate, my wife and I invested a lot just into low cost index funds and we put most of our savings in that for a long time, and that was great. But then once you sell the index funds, which we did to buy a mobile home that we lived in for a while, that’s it. You’ve done what you can with it. Whereas with real estate, you can keep saving the money and you can benefit from the cashflow, the appreciation, and there’s just more ways that I think it generates wealth than what the traditional path is for a lot of other Americans, which is just putting it in the market in some form or another.

Dave Meyer:
It’s just that level of control is so nice too. Again, it’s kind of the idea behind flexibility too. If you put in an index funder or 401k, it’s kind of locked in there, but real estate, yeah, you can buy something, hold onto it for 30 years. You can also optimize, you can refi, you can just get more creative and have a much more hands-on tangible thing that you control and can really contribute to that financial freedom, which is such a nice part of real estate investing. Now, I don’t want to be presumptuous Ben, but I’m guessing on a teacher’s salary in California, the options for investing locally were not abundant When you were getting started.

Ben Vidovich:
No, you assumed correctly. I mean, it’s tough out here to buy a home with a down payment and then rent it out. That’s just the reality of it. In the Bay Area, it’s really high cost of everything that you would have to put into the home to maintain it. And then you have property taxes which are higher out here, interest rates went up. So yeah, it’s not really tenable. So you run one or two deals analyzing it here and you’re like, okay, it’s not going to work. So I turned just to other parts of the country in the analysis paralysis phase and eventually wound up in a southern Indiana, made some calls that as I finally took action and just hit it off with some different people that I felt good about working with and eventually was able to muster up the courage to buy the first deal.

Dave Meyer:
That is a bold first step. It takes a lot of people’s understandable time to get comfortable with the idea of investing out of state. So how did you go through that process of thinking about buying something that is cash intensive so far away without really being able to see it and feel it and have your hands on it?

Ben Vidovich:
Yeah, it was weird explaining it to my dad, you’re not flying out there. You’re not what? So it does take that, but I would say a lot of people have done it before me. So that gave me some confidence. I would scour the forums of BiggerPockets to just read about what other people did and things I could avoid and just telltale signs. The long distance investing book by David Green was really useful. Just tried to apply all the steps from that. Literally read a chapter, okay, look up the property taxes on this website and make sure it lines up. So I was just really trying to apply everything when I was finally taking action. And it led to phone calls and then as you start making phone calls, you can kind of see who you enjoy speaking with, get a sense of who’s going to call you back or not on the property manager side of things or agents, whatever.
So that was all really critical. And then just leaning into referrals. So if I talk to you Dave, I’m going to ask for some referrals and then I’ll call those people and what do you guys think about working with Dave? And so there’s a lot of that and you can get pretty far with it. So eventually after having someone tell me no to a couple of deals who I was looking to work with who was a property manager, which by the way, that’s a good thing if they tell you just don’t buy the first thing. I was able to find one that looking back on it probably overpaid a little bit, but it got me in the game. It gave me proof of concept, which is what I think all the newbie investors need really. And it’s been rolling since then. So it really is true that first one opens a lot of doors and confidence.

Dave Meyer:
I want to hear about this first deal, but before we do, you could have picked anywhere in the us. You’re investing from California. What about this area of Indiana appealed to you?

Ben Vidovich:
It felt affordable. It was not too big, not too small, about a hundred thousand people or so diversified job industries. They got a good hospital system, good school system. There’s a steel industry across the river right on the border of Kentucky, so there’s a good amount of people living out there. So that was good. And then just the affordability was huge because on the first deal I did do a 25% down payment and I had a 30 year fixed loan, and that came with a certain loan payment every month. And I just didn’t want to feel like, gosh, if there’s no tenants, what am I going to do? So the price point needed to be one that I felt comfortable with if there was a vacancy for a little bit. And just the people I ended up talking to there, because I spoke with agents in other markets and stuff, just felt like I hit it off the best with them and really connected with some people that had worked with other out-of-state investors before so I didn’t have to reinvent the wheel and took the leap of faith.

Dave Meyer:
I really like that approach of not stretching yourself too thin. Everything else you said about figuring out where there’s demand, something you can afford is so important, but whether you’re investing in your own backyard or you’re going to invest somewhere further afield, making sure that you are super comfortable that you’re going to sleep at night if things don’t go well, that is so important on your first deal, especially while you’re still learning, you may have a little bit more vacancy than an experienced investor before you learn how to market things and how to turn things over efficiently, just not using every single dollar to maximize what you can buy and instead making sure that you find something that you can comfortably hold, even if things go a little off track in the first couple months of your business plan is such a good approach. And it sounds like you found a really good area of the country, Ben. So let’s hear a little bit about this first deal. Did you have a very specific buy box you were looking for?

Ben Vidovich:
Not entirely. I was just looking for something that was in a good area. I didn’t want to get too risky with the location, so it had to be in a better part of town and it had to be, I think I had about 45,000 I wanted to spend on the down payment, so it couldn’t have been any more than that. So I was looking like 200,000 as a price point and below. And after looking at some things here and there that just didn’t make sense, I found a duplex, or I should say my agent found a duplex that I probably wouldn’t have found on my own, and she sent it to me and they wanted, I think two 10. We put in an offer much lower. It had been sitting a while and I think we ended up getting it under contract for one 70.

Dave Meyer:
Oh wow. And this is in 22?

Ben Vidovich:
Yeah, it was in October. It needed a new roof, so that’s part of the reason why there was a discount. So that was a bit concerning and it was like, all right, we’ll see if this property manager knows his stuff or not. And I closed on it. And what I really liked about it, Dave, is that it came, this is not everybody likes this, but it came with tenants who were paying rent. And so not everybody likes inheriting tenants, but those tenants were paying rent that I knew would cover the mortgage taxes and insurance from day one. And those rents had a lot of room to go up. So I was like, if I can just get this thing, fix the roof and kind of hold on for a while, eventually I’ll do a turnover, I’ll get the rents up. And then I think the first rent, everything’s paid after there was no roof cost, I think I got 200 bucks and I was like, alright, and this is only going to go up. So that was in 2022 and I was pulling in just short of 1500 on the rents for both combined. Both combined.
And then now in 2025, they’re pulling in over 1700. And honestly I think it could pull in more than 2000, but I don’t really want to force a turnover if I don’t have to and everybody’s paying on time. So we’ll just kind of let that thing keep riding.

Dave Meyer:
So let’s dig into this a little bit. You paid one 70, you’re getting 1500, that’s close to a 1% rule deal, so you’re probably getting a pretty good amount of cashflow right off the bat. What’d you put down? 20%, 25%?

Ben Vidovich:
I’d put 25% down.

Dave Meyer:
Okay. And then how much did that roof cost?

Ben Vidovich:
Only about $7,000, which out here and where I’m from for context on the listeners put a

Dave Meyer:
Zero on it,

Ben Vidovich:
More like three exit.

Dave Meyer:
Okay, so you were probably all into this thing for what, 50 50 grand, something like that,

Ben Vidovich:
Including the roof I think around there.

Dave Meyer:
Okay. And then talk a little bit more about inheriting tenants. This is a debate and I’m curious, how did it play out for you? How long had those tenants been tenants in that place and how did it work out for you now that you’ve owned the property for three years now? Three.

Ben Vidovich:
One is still there. We’ve increased her a little bit over time, nothing crazy. She pays on time, she keeps it clean. So we got no issues there. And I just know that at some point when there’s a vacancy, we’ll get the higher rent. So I’m not worried about it. I think the people that perhaps don’t love inherited tenants, they’re trying to maybe force appreciation and a get in, get out maybe a bird. I’ve been there on some projects where I’m like, ah, it’s going to make this a lot harder if there’s a tenant in place, but if you’re just buying and holding, it’s already kind of livable and the numbers kind of work and they’re going to get better in time. I mean as long as there’s proof that they’re paying rent. That’s something I would ask for before you close on it is just proof of the rent roll. I don’t really have a big issue with it. And if my property managers don’t have an issue working with those tenants, I’m all for it.

Dave Meyer:
I personally really like the approach that you’re using. I do the same thing where it’s like I could buy this property and having these tenants who I know are going to pay rent reduces so much risk to me, the risk of having one of those tenants not be great is less than buying something with vacancy, especially in a market that you don’t know because you don’t know how long it might take to fill. And so to me, the idea of just, Hey, I know I’m going to be able to make my mortgage payments for the first couple of months, I could build up a little bit of a cash reserve, I could get this thing rolling. Well, that often outstrips the downsides unless you want to do that forced depreciation. If you’re just eagerly trying to do a bur, that’s a different situation. But for those of you who listen to the show a lot, I like this thing called the slow burr, which is kind of the same thing.
It’s like I just wait until people move out to do the renovation. I’m not going to force anyone to leave. I want people to stay in an apartment if they like it and they’re living there. To me, that’s great. And it just allows me to be more opportunistic about the upgrades that I make instead of putting this time pressure on myself to get things done really quickly. All right. Well, this sounds like an awesome first deal. Congratulations on pulling the trigger on this from long distance, but I want to hear more about how you scaled From there. We’ll be right back. Running your real estate business doesn’t have to feel like juggling five different tools. With three simply, you can pull motivated seller lists, skip trace them instantly for free and reach out with calls or texts all from one streamlined platform. And the real magic is AI agents that answer inbound calls, they follow up with prospects and they even grade your conversations so you know where you stand. That means you spend less time on busy work and more time closing deals. Start your free trial and lock in 50% off your first month at reim.com/biggerpockets. That’s R-E-S-I-M-P-L i.com/biggerpockets.
Welcome back to the BiggerPockets podcast. I’m here with investor Ben Vidovich talking about how he bought his first property while living in California as a teacher in southern Indiana. It sounded like the first deal was solid, right? You’re making good cashflow, it seemed like you bought in a good part of town. Once you did that, what was your next thought? Where’d you go from there?

Ben Vidovich:
Well, I have to credit my lenders for really helping me here. And a key piece of information I gave them when I was kind of researching what lender to use on that first deal was I made sure I let them all know I was looking to scale. I didn’t want to just buy one and be done. And the lender I used kind of picked up on that thread and they transferred me to their commercial side of the lending business that they run, and commercial lending, man, there’s just so much fun stuff you can do. So the second deal actually came from those lenders who are pretty connected. They invest themselves in the area and they said, all right, Ben, we have this special loan that’s called a subject to appraisal loan where you can buy a property and then also get money for the renovations, and the funds you get are based on what it’s going to be worth when those renovations are done.
So what they described it as is kind of like a reverse bur where you get the money upfront, it’s all kind of rolled into this loan. You don’t have to do a refinance at the end. You get it up front. And all of those loans that I have are less than a hundred thousand. They’re 20 year adjustable rate every five years, which I know is not, maybe not every investor loves that, but my kind of thought pattern is 20 year loan, less than a hundred thousand dollars. Even when that rate adjustment happens, it’s not going to be a crazy difference because the loan amount is very small to begin with. And in those five years, you’re probably going to get some rent increases over time too. And it’s adjusting on the new principle, not the original principle that you pulled out.

Dave Meyer:
Okay, that makes sense. Yeah, I never really considered something like this, and I’m a big fan of fixed rate debt, but I do think there are applicable times to do it. I’ve used arms, I’ve used interest only loans for certain times, and I think that’s a really good point that I never really thought about that with an arm, if it adjusts after five years and it goes from five to 7%, that stinks. But the amount when you’re borrowing 80 grand, I don’t know what that comes out to, but I imagine it’s maybe less than a hundred bucks a month in deference.

Ben Vidovich:
I think so. And I mean, just looking at the way interest rates have been, I mean hopefully it doesn’t swing big in the up direction, but it really hasn’t been swinging all that much. It’s been a slow trickle to come down to where it is now. So on some of these subject to appraisal loans, because you’re baking the equity into the deal by saying it’s going to be worth this, and the LTVs kind of already baked in at that 80%, I didn’t have to really bring any money to the closing table because I just had to float the costs of the loan while I had it before a tenant in there. So my thought pattern is if an adjustment comes, I can always put a down payment and kind of recast the loan if I need to, if the payment gets too high. So it’s just been a cool tool that I’ve been able to use to help scale a portfolio without having to come out of pocket on a lot of the deals I’ve done.

Dave Meyer:
What did that do for you without that? Would you have been capped out or sort of delayed in buying your second deal?

Ben Vidovich:
Oh, most definitely. That second deal, like I said, I didn’t have to really bring anything to closing because the margins were good enough that the bank was willing to lend the money. They knew all the guys that were going to do the work, they knew the property managers, and I kind of just got brought into the fold, I think because I was a strong borrower and followed through on that first one with them and just kind of showed credibility and got the roof done. And banks know your information once you do a conventional loan with them. So they’re like, all right, we can do one with him and see where it goes from there. And so the second deal was not really anything out of pocket except for, like I said, those monthly holding costs.

Dave Meyer:
And what did you buy?

Ben Vidovich:
It was a single family, three bedroom, two bath, but it had a tenant that had been living in there for a long time. So the upstairs was pretty much unlivable, kind of a destroyed home by the end of it, sadly. And it took about six months to renovate. It was pretty big to turn it back into the three two. But again, another thing that I should point out here is I wasn’t using a general contractor. I was working through my lender and they have their guys that do in-house property management, so it’s more of a property management company that’s doing this turnover. So they probably are moving a little slower than a gc, but I was just making the loan payments on this subject to appraisal loan and it was like 500 bucks, so 500 bucks a month for six months, and then after that, the tenant got in there and that tenant’s been there ever since, and it pulls in about 200 bucks every month now. So I think it’s a win if you can scale and just kind of hold on to assets. That’s kind of my philosophy right now is I’m just kind of trying to grow slow and smart, and then as those principles get paid down and properties appreciate a little bit, you can have some options in the future.

Dave Meyer:
I love slow and smart. Slow and smart is the way to go. You’ve got plenty of time to figure this out, do it in a way that makes sense to you, is not stressful to you where you’re learning and growing a little bit and not taking on more than you can chew. But a three day roof job to a six month renovation is a pretty big swing. Is kind of a unique situation where your lender is a property management company, is doing the renovation. Were you just letting them figure out the scope of work? Were they picking out materials or how involved were you?

Ben Vidovich:
I got the scope of work and I asked the questions that I wanted to know the answers to. Like, Hey, what are you guys doing here? But in terms of making decisions, they kind of have a product. They have their own items that they always do in their rentals. So they showed me photos of different projects they had done in the past. I said, yeah, it looks pretty good to me. I live in that. So I kind of entrusted them to do the work. It was a little more nerve wracking than I thought it would be, but I was just patient and I would get photos periodically, so I knew it was happening, and it was pretty awesome when they finally got a tenant in there and I didn’t really look at deals or analyze and do anything. I was like, let’s just get this one done. I think that’s really important to just go one at a time, especially in the beginning.

Dave Meyer:
What was nerve wracking about it for you?

Ben Vidovich:
Well, I didn’t know how long it was going to take per se. And so a month goes by, two months go by, and I don’t think people understand how slow real estate is until you experience it because it looks fast online, but it really is a slow game. How

Dave Meyer:
Did you plan for this to make sure that you had realistic expectations? I don’t know how much of a burden for you at that point, $500 a month was? How did you sort of offset some of the understandable nerves that you have at the outset of the deal?

Ben Vidovich:
Well, I underwrote it with the broker who has done these before, and we used a really conservative rent estimate. I think we used like eight 50 for this three bedroom, two bath home. And then by the time we got a renter, it was a thousand. So we wrote it very conservatively, and then I think it was a 30 5K purchase, and then our rehab budget was another 30 5K, so all in around 70. And that’s pretty much what the balance of the loan was. They rolled in the closing costs. And I’d say in the meanwhile, since then I’ve just been trying to learn more about what it means to make good offers and get a little bit better on the investing side of things so I don’t have to quite rely on other people as much and can be responsible for the decisions I’m making too.

Dave Meyer:
I love this approach, Ben. I got to say, this is a deal. If you’re listening to this and you’re thinking, I need to get into real estate, I just don’t know how to do it. Correct me if I’m wrong, Ben, but this just feels like a very replicable model that almost anyone could do. Do you think this is something our audience should be considering if they maybe live in an expensive market, California, wherever on the coast, somewhere like you?

Ben Vidovich:
Yeah, I think you need to get interested, but once you’re interested and you do some basic education and you put a little work in to understand some of the elements of what it means to have a good deal and whatnot, I mean, yeah, anyone can do this.

Dave Meyer:
Thank you for sharing that story with us. I do think I’ve done this too. Investing long distance buying something that’s turnkey is not that hard, especially if you have tenants in place. But doing the renovation is kind of another level of nerves, and my recommendation is to just ask as many questions. Even if you feel like you’re being annoying, ask what the layout’s going to be. Ask them for photos frequently. Ask them if they comparison shopped for a couple of different things, even if they’re trustworthy. Just learning the process will make it feel less nerve wracking and scary. I think if you can ask questions and you see, hey, they’re actually doing their due diligence, they’re smart about this, they’re thinking about it, that will calm a lot of the nerves. And if you do that and then realize they’re not doing your due, maybe you need to fire them and find someone else. But I think just staying really involved, even though it’s far. And even if you don’t know a ton about construction, just learn. It’s your money, it’s your deal. Use it as an opportunity to learn so that the next time you go do this, you’re going to be feeling better about it and be more efficient about it. So those were two deals, Ben. How far apart were those two?

Ben Vidovich:
I think that second one came about a month after the first one, so pretty quickly.

Dave Meyer:
That is awesome. Congratulations. I’ve not heard many people being able to pull off two of their first deals in just the first two months. I want to hear how you’ve scaled from there to today, but we got to take one more quick break. We’ll be right back. Welcome back to the BiggerPockets podcast. I’m here with investor Ben Vidovich talking about how he bought two properties in two months basically in southern Indiana while living in California. A really cool replicable model that almost anyone listening to this was an interest in real estate and has saved up some capital to get started, could replicate, but obviously you probably wanted to scale from there. Ben having two wins in just a couple of months. So where have you gone since then?

Ben Vidovich:
Well, after that second deal, I did a third one, pretty much the same idea with the subject to appraisal loan. And then somewhere along the way, I read the small and Mighty Real Estate Investor by Chad Carson and I was like, great book. Yeah, maybe I should do a really big boring down payment. And so I saved up some money for a while, kind of took a break. I was like, it’s great to scale and kind of do it without putting a ton down, but you’re also pretty leveraged. And maybe there’s a little bit of margin because the bank wouldn’t loan if there wasn’t. But still I wanted to try to see if I could do something a little different on the next one. And so then I kind of went full in on that. My wife and I were in a mobile home. We had some money that we had used to buy that out here, and we were like, you know what? We can’t really do anything with it. And this thing might depreciate it one day. I mean, probably not in the Bay area, but still didn’t love it. So we sold and we went back to renting and we kind of redeployed that capital into buying one rental that is just free and clear, which has been really kind of a nice breathing room for our portfolio.

Dave Meyer:
Nice.

Ben Vidovich:
And then we’ve been kind of going in between, now let’s do some that are not really leveraged and trying to scale when leverage makes sense.

Dave Meyer:
Okay, so let’s talk about that because Chad’s friend of the show, I love Chad and his approach is that it’s often better to just buy fewer rentals. And the less leverage you use, the less debt you take out on them, the fewer you need to buy because you can replace your income sooner. It’s less operational headache, you have less risk in your portfolio. And so sometimes making bigger down payments makes sense. So that’s a very different approach to the one you were just doing where you’re putting almost nothing down. And so what about Chad’s philosophy resonated with you, and was it hard to shift from doing a high leverage deal to a no leverage deal?

Ben Vidovich:
The resonating was the cashflow aspect and just having a little bit less risk after doing two where I didn’t really have a down payment, I was like, yeah, that’s awesome, but there’s not a lot of cashflow. Something goes wrong, then you’re kind of on the hook for it. So the next one, we did the big boring down payment and the money’s sitting in it now. And I thought, yeah, that could be a problem. What if I’m not using that to recycle the money more? But then this is where the commercial loans came back into play. This is pretty cool. So what I’d learned out there is the commercial lenders will let you buy another rental property using that same commercial product of 20 year loan, and you just have to bring your 20% in the form of cash or equity. And I was like, wait, equity, I just made this big boring down payment.
Can I borrow against that? Nice. And I said, yes, you can. So I basically deployed the money to have more cashflow, but then I was also able to still use it to buy what became another duplex deal where it was like we talked about earlier inherited tenants kind of thing. And the seller wanted to get out and he sold it to me out of good price, and we’re just kind of waiting to do turnovers there. But I didn’t really have to come out of pocket for that one because I already came out of pocket on the one prior with the big cash down payment.

Dave Meyer:
So you kind of blended, you’re kind of putting, I mean, you’re not really doing this, but you’re able to buy one property using no debt and then one putting 20% down. And so you basically got two properties basically putting 50% down total.

Ben Vidovich:
Yeah, it’s kind of like one big down payment that buys you two houses, but not in the same transaction. It’s just kind of over time. So now that’s given me confidence to pursue Chad’s strategy a little more intentionally. It’s all right to pay down some of this debt because I know I can borrow against it in a safe way, and I can be very selective when I do that.

Dave Meyer:
So Ben, now we’re sitting here end of 2025. We’re recording this. Where does your portfolio sit today? What does it look like?

Ben Vidovich:
Got about eight units that are within my portfolio, and then I have a couple more that I have acquired with partners and it’s all in the same market, so that’s been fun to work with some other people there too. And right now we’re just kind of wrapping up two end of the year projects that are going well, and then we have yet to sit down and kind of do some goal setting for next year. But again, just trying to be intentional and don’t grow for the sake of growth grow so that you can have security and stability in it

Dave Meyer:
Just in an average month. Ben, what does your portfolio bring in these days in terms of cashflow?

Ben Vidovich:
Well, the number that hits my bank account is a bit above 2000 every month. But remember, you always have to set aside a little bit for reserves and whatnot, so I put about 20% away for that, and then the rest I just reinvest. I’m not really pulling anything from that at the moment because I’m still doing projects and investing dollars into renovations at the moment.

Dave Meyer:
I love it. That’s awesome. Before we get out of here, Ben, I’m just curious, you said you got started because you wanted to change your trajectory. You were starting a family and felt that teaching wasn’t sufficient for your financial goals. Is it fair to say that just three years into this, you have put yourself on the financial trajectory that you were looking for?

Ben Vidovich:
Oh, 100%. I mean, I don’t want to mislead people to say I’m retiring tomorrow or anything like that, but there was no trajectory like that. I mean, we were putting money in the market, and we all know the market’s been pretty up and down, and that gives people a lot of panic. But real estate is pretty steady, very slow, and you can control so much of it. If you want to add value, you can do that. If you want to just buy and hold and let tenants pay down your debt and that increases your net worth, you can do that. There’s just so many ways that you can make money in real estate. It generates your wealth in a variety of ways, and it’s just super accessible. It’s a tangible thing. You can underwrite it and have a fair degree of certainty that the numbers are going to be pretty close. And I don’t think that’s something you can do in other asset classes aside from maybe owning a business, but that’s kind of what owning a rental portfolio is.

Dave Meyer:
Well, Ben, thank you so much for joining us today. We really appreciate it.

Ben Vidovich:
Oh, likewise. Super glad to be on. Thank you so much, and thanks for all the great work you guys do here at BiggerPockets.

Dave Meyer:
Oh, we love it. Love hearing these stories of people who are taking what we’re learning here, applying it, and getting on a better financial trajectory in just three years. Ben, congratulations on all your success. Thank you all so much for listening to this episode of the BiggerPockets Podcast. I’m Dave Meyer. We’ll see you all next time.

Ashley:
This is one of the easiest ways to become a real estate investor using an asset you already have.

Tony:
Today’s guest is Alex Boing. He just became a landlord. Everything is fresh in his mind to share all of his experiences with you rookie, so you guys can hopefully get your first or your next deal as well.

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

Tony:
And I’m Tony j Robinson. And with that, let’s give it a big warm welcome to Alex. Alex, thanks so much for joining us in the show today.

Alex:
Hey Ashley and Tony, thanks for having me on. It’s great to be here.

Ashley:
So Alex, let’s start at the beginning. When you bought your first primary home, did you already have plans to turn it into a rental someday or did that kind of happen about later on?

Alex:
Yeah, when we, obviously our first goal was just buying a house, but I think my dad was a landlord, my mom was a landlord. They both owned rental properties. So it was always in my mind that I would do that one day if the opportunity came up. And I think after we were able to buy our first home, that obviously became a reality that if we moved into another house we can rent this out. So the prospect of passive income was always in my mind and I was always interested in that being a part of my future.

Ashley:
And how long did you live in this primary residence before you decided to rent it out?

Alex:
So we moved in 2019. It was my wife and two kids and they were pretty young at the time and we lived there for about six years.

Tony:
And Alex, as you came to the decision of moving from that residence, how did you decide between keeping it as a rental and selling it? Because sometimes you can sell that, maybe use those funds to get a nice, bigger, better primary for the next one. So what was your thought process on keeping it as a rental versus selling it?

Alex:
Yeah, it’s always been in the back of my mind that we could make some passive income from our home. And I think that was always something we discussed and that was something that was at the forefront of our minds. Obviously the Denver market was pretty pricey, so we thought about selling as well. But I think the main thing that came up was that we had locked in that refinance post COVID and had a 2.6%

Ashley:
Interest rate. Definitely a motivating factor to keep that.

Alex:
Absolutely. And I think because you hear for a lot of people, they’re the golden handcuffs or it’s the golden goose depending on what you’re trying to do. And for us, we were like, okay, we’re not going to sell this when we’ve locked in historic late rates. Let’s figure out how we can rent this.

Ashley:
So when was that decision made as to, okay, we’ve lived here for six years, we’re going to go and buy another property? What was involved in the timing of that decision that okay, it’s now is the time to turn it into a rental?

Alex:
We had been casually looking at getting a new place and it just wasn’t the right time just for us to make a down payment. Just financially didn’t make sense yet. And I think really the biggest precipitator of us moving into our new place was we had our third child and our original starter home. We were just outgrowing it and we had lived there for a long time, so we wanted a little more space. And it was just a matter of what are we going to do with our starter? Are we going to sell it? Are we going to rent it? And like I said, I’ve always had it in the back of my mind. We’re always daydreaming about ways to make that extra cash, whether it’s through stocks or through rental investing. And obviously rental investing and renting out your property is a stable way to go about growing equity and making money passively. So that was always the reality that we would do. And I think we realized once we found the house that that was what the route we were going to take, especially because we locked in that post COVID interest rate.

Tony:
We recently interviewed Matt Krueger on the Ricky Podcast and he followed a very similar process to what you just described where I believe Ash check if I’m wrong here, but it was like every year for a decade, his wife and their growing family would every 12 months go move into another primary residence and turn the previous property into a rental. And that he was able to reach financial independence by doing that. But part of the reason that he liked that strategy was because of the financing options that came along with living in that property as a primary residence. So when you guys bought that first starter home, what kind of financing did you guys use to take it down?

Alex:
We just did a conventional down payment. We had saved up for a few years. We were very fortunate to just have stable jobs and to be making decent money. And like I said, that first hurdle is always the biggest of buying that first home. But we didn’t do any unorthodox financing. I mean for the second home we did kind of look into home equity loans and HELOCs, but once again, those are additional payments you got to make. And once again, I said we’re fortunate enough to have just been saving and to use that for conventional down payment.

Ashley:
And Alex, you say fortunate enough, but also there’s discipline involved there because you have to give yourself some credit as to not just being lucky because there’s a lot of other people that aren’t taking the time to build that personal foundation first to actually take the leap into real estate investing by just going the boring simple path of saving up money and living below your means and budgeting and things like that so that you are able to afford that down payment. Now did you do 20% down or how much did you do down on that first one

Alex:
For the property? We just bought our new primary. We did 15% about that.

Ashley:
And then for your first primary,

Alex:
I think that was less, that was probably five to seven, I want to say thereabouts,

Tony:
But I think that’s an important point, right? A lot of people hear conventional and they automatically think 20% down, but you said 15% on this one and five to 7% on the first one. There are options out there at 5% down on a conventional. So Ricky’s need to understand that there’s more than this 20% when we say conventional.

Alex:
Yeah, I think there’s a lot of options out there depending on your financial situation and even to just bring up the fortunate, but we’ve just had stable jobs and we’ve been able to have jobs that have given us the luxury to be able to save. But yeah, definitely taken and put in a little way each paycheck. It takes a little discipline not to spend that going out to eat that week, but it’s worth it because you want to live in a nice home, especially if you’re raising a family.

Ashley:
Now, when you went to go get the second property, did you have any trouble with the financing as to keeping the first property, the loan in your name, or was there no problem at all with that?

Alex:
No, there was no problem with that. Yeah, that was very straightforward.

Ashley:
And I think a big thing too is that you went conventional for both loans where we often see it as someone gets an FHA loan, they’ve gotten the low interest rate, they don’t want to refinance out, but then they can’t use the FHA loan again to purchase the second property because they already have it in their name once. So their option would be to use conventional for the second, or they have to refinance out of the FHA loan and go ahead and go into the conventional. So just another reason, we like the conventional loan less hoops to jump through and you still can sometimes get down to 5% for your down payment where FHA is three and a half percent. Oh, we have to take a short break, but before we do, what are the things and the steps that you had to take to prepare your home for your tenants before you actually moved out of the property? Did you have any repairs or changes that you needed to make to the property to actually get it rent ready?

Alex:
Absolutely, and like I said, I had three children at that point living in that home for six years. So it was lived in. And when you’re living somewhere when working hard and you’re busy and raising kids repairs and a lot of those things aren’t always at the forefront, oh, this light doesn’t work. I didn’t replace it right away. There’s just things, I have a pretty low tolerance for repairs and that kind

Ashley:
You learn to live with things.

Alex:
Yes, exactly. But when you’re about to prepare that home for someone to come live there and you want ’em to be happy, you start noticing how many things you might have left or swept under the rug, so to speak. So we had a fair share. We obviously had plenty of cleaning, lots of repairs, painted the walls. We had some plumbing things we needed to fix. Of course there was some last minute maintenance issues that cropped up just as bad luck I would have it, but we were able to get it ready. But yeah, no, there was lots of prep that we had to do to get ready for the tenant.

Ashley:
Now did you do this before you moved out of the property or did you wait until after you moved out and would you do it differently if you did it again?

Alex:
I think we would’ve just, you can always say this, we probably procrastinated a little longer than we should have. We did have a week gap where we were able to move into the new house and also before the tenant came, I think it was actually, it was more like two weeks the tenant came and the house was just empty and vacant and we were able to go back and just really walk through the house and make sure everything was up to par for her to live there. And yeah, no, it was like I said, I think if I could go back, just giving ourselves more time, it always just feels like a rush during move week because you’re not only preparing the house for the new tenant, but you’re trying to get your new house ready to go for you

Ashley:
Coming up, we’ll go through the steps that Alex took to go from homeowner to landlord and the operations he put together from listing the unit to getting the first tenant moved in. We’ll be right back. Okay. Welcome back from our short break. So Alex, part of the listing process is actually listing the property for rent and how much is going to cost. How did you decide on a rental amount to charge for your property?

Alex:
Yeah, it was a combination. Obviously we looked at what other properties were going for in the area and what they were renting for. Also, I used Turbo Tenant. I was fortunate enough to have been working for a property management software all in one landlord software for the past year and a half. And I had said that really contributed to me being motivated to do this in the first place. I think it just reinforced everything I had always wanted to do by renting out the property. But I’m just blessed to have had this. I think the biggest thing going into this and renting out your property is you want to have systems in place to be able to do that and processes. And I think Turbo Tenant for me kind of streamlined that and made it all there in one place and I didn’t have to think too much. It kind of holds my hand during the whole process. So in that initial step to list it, I was able to list it through Turbo Tenant. I was able to use a rent estimate calculator to kind of determine what we could rent that for. Also, in addition to just looking at what other properties were renting out for in the area,

Ashley:
I actually just did this yesterday on Turbo Tenant. I listed a property for rent and it is so easy just following the process, going step by step. But yeah, and I also use the comparables and looked up the rent estimator. I’d never used it before on Turbo Tenant, but there’s a ton of other ones. BiggerPockets has a rent estimator, but you can do that to pull comms. And then also just looking on Facebook marketplace, I always look there to see what’s listed. I also look on Zillow apartments.com to see what’s listed. And even though those aren’t rented, you can usually tell if it was just listed, it could be a good comparable comp. But if it’s been sitting listed for 60 days and no one’s renting it, it’s probably not a good comp then because that rental price point is probably not accurate. Then another way you can get comparables is calling property management in the area and asking what does a two bedroom in this market go for? What do you have available? Are there even any units available? So you can get also what’s the vacancy rate in that area too, based off of calling the property managers and then posting in local groups, Facebook groups for real estate investors and asking what are other people charging for? Two bed, one bath, X amount of square footage, decent shape in this area, and you’ll get people that respond to. And even in the BiggerPockets forum also,

Tony:
Alex, one of the decisions you made was to self-manage. And I think for a lot of folks, even when they’re following your process of buying a property, moving out into a new primary, turning the old one into a rental, they still don’t necessarily want to become landlords. So what was your thought process or how did you come to the decision to self-manage versus hiring a property manager?

Alex:
We didn’t have the budget for a property manager. Also, we’re starting out with one property. We’re really attached to that property too. I can imagine hiring someone to watch it. Like I said, we raised our kids in this house, so it’s got that sentimental value that I’m willing to take the extra steps to go there and do upkeep and have a relationship with the tenant to see how they’re treating it. So yeah, I think that played a big part in it.

Tony:
I got one follow up for you, so it makes sense why you chose to self-manage. What was your first step in educating yourself on how to do this correctly? Because every state, every city, every county has tenant landlord laws. There’s a certain way you’re supposed to do the listing and the tenant screening. What was your first step in educating yourself on how to be a good landlord?

Alex:
It’s one thing to learn about something and read so many books about it, but then it’s a completely another thing to actually do it right. I think that goes for anything, and it was no different in this case.

Ashley:
Now, Alex, you’ve had a good support system to help you get started on this track. What about the actual showings of the property? How was your turnout? Did you get a lot of interest? Did you get a lot of applications and were you the one that actually went and showed the property to people?

Alex:
Yeah, no, that’s probably the most exciting part of the process for me is because you just get to meet people who might live in your home.

Ashley:
This is the one process I avoid doing. I do everything on the computer, but I no to do the showing.

Alex:
I’m a pretty social guy and just interested in what people are looking for. So for me, it was really exciting to just meet these people that are going to live in the house that we spend so much time in. But yeah, we had a pretty good turnout. I think we had a good turnout. However, we did have a pretty short turnaround time to avoid vacancies, so that was always the big concern for us. So we wanted to get in as many applicants to pick the perfect one as possible. So we went through, I think ended up 10 to 12 people ended up coming to look at the house.

Ashley:
Did you do an open house where it was a window of time for people to, or did you set individual showings?

Alex:
Individual showings. So yeah, they would come by and we’d show ’em the place and a lot of just different people in different stages of their life. We had a group of college girls fresh out of college that wanted to stay there. We had a couple families that wanted to stay there. We had people with extended family. It was all walks of life. So once again, which I found interesting, I got to meet these people and eventually we settled on someone who didn’t even come in person to do the walkthrough. I did a virtual walkthrough and that was enough for her to want to rent the place out and she ended up being the tenant that’s there. Now,

Tony:
Alex, since you did all of these showings yourself, to me, that kind of sounds like a lot. You said 12, 15 different showings. Would you have done it the same way moving forward, or would you have done the open house that Ashley mentioned?

Alex:
I didn’t even think about it. We’re just trying to accommodate people, get them in as quickly as possible. Yeah, I think that probably would’ve made more sense is to do something where they all come at once. However, the tenant who ended up staying there, for example, she didn’t even live in Colorado, so I had to do a virtual walkthrough with her. So that might not have been something that would’ve worked out for her, but I think there’s plenty of scenarios where that would’ve been something that would’ve been more pragmatic to do

Ashley:
Wherever you moved to. Was it convenient for you to do the showings?

Alex:
I should have said this, the house we moved into is two blocks away. We did not even leave the neighborhood. We’re really happy with the school there. It’s a great little neighborhood. We’ve got a big beautiful lake and we’re pretty much just settled there. And like I said, our kids are both well into elementary school. My son’s about to go into middle school next year, so we didn’t move far. This wasn’t really inconvenient for me. I had to drive less than a minute away to go show the house.

Tony:
Ash, what about for you? What’s your preferred way of showing units today? Are you doing virtual remote showings where you’re not even meeting them, they’re doing it themselves? Are you doing open houses? What’s your preferred method?

Ashley:
First of all, I’m doing none of them. That’s the preferred method that I don’t do. The last time, the last time I did a showing, we did an open house and Daryl and I did it together, but usually for properties that are 20 minutes or more away, I’ll set it for open houses and we’ll usually do one in the evening and then maybe one a Saturday morning or something. But for other, or we’ll do turbo tenant has the scheduling. And when we use AppFolio, they had that too, where you can set your availability. So we would just do 15 minute windows for an hour and then we would set it so multiple people could schedule the same 15 minute window. So I do think people like to schedule their own window, so I do think that is better for the tenant and you’re more likely to get people than just saying, oh, we’ll be here from five to six if you want to come.
I’ve seen better results with more people attending from doing the actual window blocks and them setting their showings. But we only do that with having software that shows and not going back and forth like, oh, are you available at one? Oh no, one 30. Okay, let’s do that. They have to pick from a calendar, just like if you’re scheduling a meeting from someone and they have their availability, that’s the only way that we’ll do individuals showings is setting it that way. But we still kind of block that time where it’s not like you can pick any 15 minutes within an eight hour window. It’s like literally pick a 15 minute window from five to six 30 or something like that. So we know someone has to be at the property from five to six 30, and then nobody books at five, but somebody books at five 30, they don’t have to come until five 30 or whatever. So we’ve definitely done both. I prefer the open house model just to get it all done with, but I think for the tenant perspective, they seem to prefer and you get a better outcome with doing the individual ones for sure.

Tony:
And there’s a lot of nuance that goes into that. Asher, I appreciate you walking through that. I think the other piece that I’m curious about Alex though is the actual screening of the tenants, right? Like you said, there is an emotional element to you in renting this house out. So what did your screening process look like to find the right tenant?

Alex:
Once again, we used a turbo tenant to screen and it was really useful. We did have a lot of people that, I don’t want to say a lot of people, but several people that didn’t qualify after we screened them, and we did have to deny them. So it was good to be able to check for all that and have a tool where we could jump in and see those things and have it be accurate because obviously we wanted good tenants, we wanted people that would take care of the house and where there wasn’t a lot of risk involved, so that mitigated that.

Ashley:
Yeah, and I think when going through the screening process, one thing that’s really valuable for rookie investor to know is what you state laws are, and just fair housing laws are in general as far as when you can deny someone and when you can approve them, there’s a lot of local housing authorities that will give you free classes, virtual or in-person, or they cost $10, or you can go to your city hall and they have pamphlets that’s like a landlord guide to the state laws and know what you can and cannot deny. And then I think setting some kind of metrics like Alex, you said some didn’t meet your metrics or your criteria and having that set and clear as, so mine is, depending on the area, it could be two and a half times the rent or three times the rent. They need to make an income to be able to be approved.
Their credit score needs to be sometimes at 600 or above. Sometimes we do in some markets we had gone down to five 50 and above. But just setting those metrics for that area, for that property as to what is going to be approved and what’s going to be denied. And you can even put those right into the listing too, so it’s very clear. And that also can cut out the people who already know they don’t qualify, don’t waste your time for showing they don’t spend the money paying for the application to be completed for the screening. So before you’re even starting to list the property, you should know what your screening criteria is going to be and that it really fits the criteria, the requirements by state and local laws and fair housing laws too.

Alex:
Yeah, I think ours were, luckily they weren’t super nuanced. It was like people with an extensive criminal history or even that kind of thing. So it wasn’t anything super nuanced in that way, but it was good to have that and for us to be able to see that this tenant is going to be someone who’s going to take care of the place.

Tony:
Alright, up next we’re going to get into Alex’s decision on his next property, which is his new primary. And we’ll cover that right after. Quick word from today’s show sponsors. Alright, Alex, I’m curious, so the new property that you bought that’s two blocks down from your current rental, as you were shopping for that home, were you also thinking about the possibility of that becoming a rental in the future?

Alex:
Oh, absolutely. I think, and especially when you’re renting out one and you moved the tenant in and it’s working out, you kind of get excited at the prospect, oh, I can do that with this one. And like I said, I’m excited at the prospect of being able to rent this one out potentially in the future. So it’s absolutely in the cards to do that.

Tony:
Just one follow to that, Alex. I’m curious, since you had that in mind already, were there certain things that you had maybe learned from your first primary to rental experience that you’re like, okay, we need to make sure that we have this in the next property that we do this primary to rental in?

Alex:
Yeah, in a general way. I will say luckily the house was just an overall upgrade as it should be if you’re moving into the next place. So it was a newer house and it was way better kept up. There was so many less repairs and maintenance that needed to be done on move-in or that we even had the inspection process was so much cleaner and just overall a better experience than our first house. I think our first house loved it at the time and we were super excited about it, but there were a lot more things that came up during inspection in the new house. It was the best inspection experience I’ve ever had. We hardly had to ask for anything, which was awesome to have happened for us.

Ashley:
Do you have a plan in place for how long you want to stay there?

Alex:
No, and I think that’s where kind of the personal aspect comes in, because I would love to be able to rent out this place when the time comes, but we’re even closer to my children’s school, so they’ve started walking to school. So that kind of comes into place and we’ll definitely be all the way, or at least in this location for the next several years till they’re through middle school because that’s where school goes all the way up through eighth grade. I think maybe once we’re choosing a high school forum, then the possibility of moving again and renting this one out would come up.

Ashley:
Do you foresee yourself buying other rentals outside of them being your primary residence?

Alex:
Yeah, that’s definitely something I want to look into more. Once again, I think you grow up and you think of ways to make money outside of your passion. My passion has always been producing videos or music and that kind of thing. I’m in that creative sphere, but in addition to your nine to five, you’re just thinking, oh, how can I make more money? And real estate is always doubted as the most stable way to do that. So I’ve always thought about it and I think just working here and hearing influencers such as yourself, talk about how they did it has piqued my interest in just buying a property as a rental.

Tony:
So I think my last question for you, Alex, is do you have any maybe last minute advice for Rick’s who are thinking about turning their current primary into a rental from your experience going through this for the first time?

Alex:
Yeah, I mean, I would say it’s funny because I think it brings me all the way back to my first jobs that I had in customer service. It feels like a very customer service oriented business when you rent it out. Specifically for me, like I said, everything from the showings to hearing your tenant ask for requests and accommodating that to make sure they’re happy. I’m still in customer service to a degree, or at least that’s how it felt to me during the process. So treating it that way and having respect for the tenant as a customer, I think that that would be the biggest advice I have for someone. It’s not something where we say you’re making passive income, which is true to a degree, but I still think you’re actively having to participate and make their experience better if you want to have a successful business.

Ashley:
Now, Alex, the question that everybody’s wondering is what is the cashflow on this property?

Alex:
Okay, yeah. So our mortgage for the original property was 1800 and we charged rent for 3000. So it’s at $1,200 cashflow.

Ashley:
That’s great. That’s awesome. We shoulda have started the episode with that. And I’m assuming your mortgage payment, does that include escrow, your insurance, and your property taxes?

Alex:
Yep. Yeah, yeah, yeah.

Ashley:
Wow. That’s great. Congratulations. Well, Alex, thank you so much for joining us today to share your experience getting your first rental property. We really appreciate it. We love when rookie investors come on right after they got their first deal and it’s fresh in their memory. So if this is, please go to biggerpockets.com/guest and fill out a form to come on just like Alex did to share his journey. Alex, where can people reach out to you and find out more information?

Alex:
If anybody has any questions or can take any value from my experience, you can shoot me an email at [email protected]. Would love to help anybody on their journey if I’ve got something, a value to offer.

Ashley:
Well, Alex, thank you so much. We really appreciate it and you provided a ton of value today for our rookie investors. I’m Ashley. He’s Tony, and we’ll see you guys on the next episode of Real Estate Rookie.

A dog is not just man’s best friend; it’s turning out to be a landlord’s, too. Pet-friendly rentals garner considerably more cash flow than no-pet rentals, according to a study from RentCafe. 

According to proprietary stats, the website states that U.S. landlords can charge an average nonrefundable pet fee of $315 on top of the average pet rent of $36/month. With rental margins tightening due to higher expenses and rising mortgage rates, saying yes to pets could not only yield higher rents but also lead to renewed leases and happier residents.

In a High-Stress World, Pets Are an Anxiety Buster

As of 2024, about 66% of U.S. households owned a pet, a sharp rise over the last 40 years, according to Forbes Advisor. It’s likely no coincidence that nearly 6 in 10 renters now have a pet, according to Zillow, up from 46% before the pandemic. The website says that almost half of renters said they passed on a rental because pets were not allowed.

“Allowing pets can be a strategic edge for landlords competing to fill units,” said Emily McDonald, a rental trends expert at Zillow, explaining that pet-friendly listings attract more interest in today’s market.

Zillow Trends found that listings that allow pets tend to lease up to eight days faster than those that do not. In New York City, generally one of the least pet-friendly cities, apartments that welcome furry friends attract pet parents about 26 days faster than those that don’t.

A 2025 report from the Michelson Found Animals Foundation, a philanthropic organization, found that pet-inclusive policies reduce tenant turnover. The report’s authors note that communities that embrace pet-inclusive strategies generally see residents staying up to 21% longer, lowering leasing and make-ready costs for landlords. 

“Property owners who respond to this trend can expect stronger tenant loyalty, reduced vacancies, and a significant edge in the competitive rental market,” Ross Barker, director of the Pet Inclusive Housing Initiative at Michelson Found Animals Foundation, said in a statement.

The cost of pet ownership is nothing to bark at. Americans spent roughly $147 billion on pets in 2023, according to Reuters, including food and treats, veterinary care, insurance, and supplies. 

For owners who cannot keep up with costs, pet care can be a significant source of financial stress. However, it also illustrates the demand for pet-friendly residences with modest pet fees.

What a Pet Package Looks Like

According to RentCafe data, a standard pet package includes:

• Approximately $35 in monthly pet rent.
• Refundable deposits over $300.
• Nonrefundable fees that average $315.

Dog Breeds, Insurance, and Liability

The RentCafe report shows that dog breeds, insurance, and liability are among the concerns of many landlords. To address this, most rentals have targeted restrictions that limit the types of dogs allowed based on size and “aggressive” characteristics.

Although dogs are predominantly the main pets tenants have, they are not the only ones. However, bans on domestic cats are rare. Rather, restrictions focus on litter-box training and vaccination requirements.

The New York Times reported that of America’s renter population, 59% of whom own pets, the majority are likely to be lower income, and for them, the additional cost of owning a pet can present financial difficulties in the housing crisis. As such, state and federal bills targeting pet fees have become an issue for housing advocates. Colorado became the first state to enact a law capping pet rent and deposits and prohibiting home insurers from imposing breed-based restrictions.

“Unless you can afford to rent in a luxury building, or absorb potentially hundreds of dollars in monthly or one-time fees, you may be forced to choose between housing and your pet,” Barker of Michelson Found Animals told the New York Times. “It’s not just an animal issue; it’s equally a human issue.”

A Contentious Issue

This, along with other similar proposals across the country, has evoked a strong response from landlord groups, concerned about the damage pets can cause to their properties and the inadequate compensation pet caps could engender.

“There are bad people, and there are bad dogs, and our job is to screen that and make sure that we’re providing a safe environment for everyone,” Russell Lowery, executive director of the California Rental Housing Association, told Fox News in response to his state’s proposed legislation advocating for eased pet rental restrictions, which was withdrawn after considerable opposition.

Under the California proposal, landlords would have had to provide “reasonable justifications” for denying a pet.

“Chasing mom-and-pop landlords like myself—small investors like myself—out of California is not going to solve the high price of rent; it actually is going to make it worse,” landlord Ivan Blackshear told Fox News last year, before the bill was withdrawn.

It’s important for landlords to remember that, under the Fair Housing Act, landlords generally cannot charge pet fees for support animals.

Final Thoughts: Welcoming Fido Without Killing Your FICO

Landlords who want to make their rentals pet-friendly without incurring the financial setbacks that a cat-trashed or dog-demolished residency can cause should adhere to a structured, repeatable playbook. Here are some steps to take.

Create a formal written pet policy 

Such a policy standardizes the following:

• Permitted type of animal
• Size or weight limits
• Number of pets
• Required vaccinations and local registrations

RentCafe finds that landlords with such policies experience fewer disputes and insurance issues than owners with a more informal approach to tenants.

Set transparent pricing

Create a predictable set of costs that lets renters know what to expect. These should include:

• A refundable pet damage deposit.
• Modest monthly pet rent.
• One-time nonrefundable cleaning fee.

Demand documentation

Treat pet documentation in the same way as you would pay stubs: as a requirement, not an option. It will serve both as liability protection and as behavioral screening. Standard pet documentation should include:

• Proof of vaccination
• Local licenses
• Flea/tick treatment records
• Emergency vet information

Make low-cost, high-impact property upgrades

Making your property pet-friendly can be relatively budget-friendly. Common-sense, durable design choices will help limit wear and tear and are a good idea to incorporate, whether your tenant has a pet or not. These include:

• Semigloss or scrubbable paint in high-traffic areas
• Vinyl plank or tile flooring
• Door kickplates
• Corner guards
• Easy-to-clean baseboards

This article is presented by Range.

If you’re a high earner juggling rentals, RSUs, a W-2, maybe some freelance income, and a growing investment portfolio, your financial life might be costing you more in taxes than it should. All these different streams of income can end up being too complicated for any one professional to track properly. Companies like Range see this firsthand across thousands of clients.

As your income rises and your wealth grows, the tax code actually gives you more opportunities to optimize. This means more deductions, timing strategies, and ways to offset gains. The more moving parts you add—equity comp, rental losses, stock sales, pass-through income—the easier it becomes to accidentally trigger a tax landmine that wipes out thousands of dollars you didn’t need to lose.

Most people assume overpaying taxes happens because of one big mistake. In reality, it’s usually the result of dozens of small, seemingly harmless decisions made throughout the year. This could mean an RSU vesting at the wrong time, a bonus hitting the same year you sell a property, a renovation completed in January instead of December, or an entity structure set up years ago that no longer fits your portfolio.

Individually, these moments feel insignificant. Collectively, they quietly inflate your tax bill—sometimes by five or even six figures.

We’ll break down why financial complexity is the silent tax you’re probably paying, and how smart investors simplify before they optimize. 

The Hidden Cost of Financial Complexity

When your income comes from multiple sources, your tax picture becomes less predictable. A bonus paid the same year as a property sale can bump you into a higher tax bracket. Capital gains can trigger the 3.8% net investment income tax. Short-term rental income may be treated differently than long-term rentals.

The issue isn’t that these events are inherently bad. It’s that most people discover the tax consequences months after the decisions were made, when it’s far too late to optimize.

High earners often assume they’re getting every deduction the IRS allows. But without proactive planning, it’s easy to miss:

• Real estate professional status opportunities.
• Cost segregation timing.
• Loss harvesting opportunities in equity accounts.
• Timing income to avoid bracket creep.
• Aligning deductions to offset large gains.

The tax code has plenty of doors you could walk through, but complexity makes them hard to see.

Gains, losses, and timing mistakes

Many investors don’t realize how much timing matters. Sell stock with a gain in the wrong year, and you lose the opportunity to pair it with a property loss. If you exercise incentive stock options too late in the year, you accidentally trigger AMT. And if you sell a rental in a year when you also have high W-2 income, depreciation recapture hits harder than it needed to.

Each individual decision, such as vesting stock, renovating a property, or selling an asset, might be perfectly reasonable. But without coordination, the tax effects stack, compound, and can eventually blindside you.

This is why high earners often feel like their tax bill “doesn’t make sense.” It’s not that anything went wrong; it’s that everything happened in the wrong order.

In a complex financial life, nothing exists in isolation. Every decision has a tax consequence, and every tax consequence affects decisions you haven’t made yet.

Most Common Places High Earners Leave Money on the Table

When your financial life gets busy, it’s easy to assume your CPA will catch everything, or that tax software will flag opportunities automatically. The truth is, most tax-saving moves must be planned in advance.

High earners consistently miss them for the same few predictable reasons. Here are the biggest areas where complexity quietly costs people thousands each year.

1. Depreciation mistakes and poor timing

Real estate investors often:

• Forget to add capital improvements to their depreciation schedule.
• Miss the chance to group properties for tax purposes.
• Delay or skip cost segregation studies that could accelerate massive deductions.

The mistake isn’t technical, it’s timing. These moves only work if you plan them shortly after acquisition, or before major renovations. Wait too long, and the benefit shrinks or disappears.

2. Equity compensation without a tax plan

RSUs, ISOs, and NSOs can be incredible wealth builders, but they also create enormous, unexpected tax events. Common pitfalls include:

• Exercising options late in the year and triggering AMT.
• Vesting RSUs in a year you already have high income.
• Selling shares too quickly and losing long-term capital gains treatment.

Without proactive planning, equity compensation can easily push you into higher brackets, reduce key deductions, and limit your ability to use real estate losses.

3. Entity structures that no longer fit your portfolio

Many investors set up LLCs when they buy their first property. By the time they own multiple rentals, short-term rentals, or active businesses, that structure may no longer be optimal. Common issues include:

• Using a simple LLC when an S-corp election could reduce self-employment tax.
• Having each property in a separate LLC when a holding structure would simplify taxes.
• Not considering a series LLC or the need for a different filing status.

Entity decisions affect tax brackets, QBI deductions, liability, and even financing options.

4. Stock gains and losses that aren’t coordinated with real estate

High earners often have assets spread across multiple brokerage accounts, sometimes with different advisors; sometimes forgotten entirely. This can lead to:

• Missed opportunities to harvest losses.
• Unplanned short-term gains hitting in high-income years.
• Selling appreciated stock without pairing it with passive losses.

One untimed trade can offset the benefits of an entire year’s tax strategy.

5. Waiting until tax season to look at your tax situation

By the time your CPA sees your documents in March or April, every meaningful tax decision has already passed. You can’t change your entity structure after the year ends, retime stock exercises or RSU vesting, or reclassify income or expenses. And you can’t retroactively harvest losses or plan property sales.

Most of the tax code’s best opportunities exist during the year, not after it.

Why DIY Coordination Doesn’t Work Anymore

By the time most high earners realize their financial life has become unmanageably complex, they’ve already tried the two default solutions: more spreadsheets or professionals. Unfortunately, neither solves the real problem.

Spreadsheets work when your financial life is simple: one job, bank account, a couple of investment accounts, and maybe one rental. Your spreadsheet can become a liability rather than a tool once you layer in your financial reality:

• RSUs and stock options
• Multiple rental properties
• A short-term rental or partnership
• A side business or 1099 income
• Several brokerage accounts
• Different advisors and systems

Manual tracking falls behind almost immediately. You can forget to update vesting schedules, lose track of taxable events, overlook how one decision changes your projected tax position, or discover half your income sources weren’t modeled correctly. Complexity increases faster than you can organize it.

So, you’ve outgrown your spreadsheet era. Most high earners will move on to hiring an expert to help with their tax tracking. This means adding: 

• A CPA for taxes.
• A financial advisor for investments.
• An attorney for entity structure.
• A planner for insurance or estate decisions.
• A bookkeeper for rentals.

Expanding your team of professionals might sound like a good idea, but none of these professionals see the full picture:

• Your CPA never sees your vesting calendar.
• Your FA doesn’t know when you’re selling a property. 
• Your attorney doesn’t know how equity comp affects your tax bracket. 
• And your bookkeeper doesn’t know your long-term investment plan.

You become the quarterback: translating advice, reconciling contradictions, and trying to make everything line up. This is where most tax inefficiencies are born.

When coordination depends on you, you can:

• Get tax advice that contradicts your investment plan.
• Make investment decisions without understanding tax consequences.
• Choose entities that don’t match your long-term goals.
• Time income and expenses in ways that clash across assets.
• Lose deductions because something changed and no one updated the strategy.

You’re not unqualified—your financial life is just too big to run solo.

Without one place where everything comes together—your rentals, stock compensation, business income, long-term investments, tax planning, and estate plan—your strategy can’t keep up.

This is exactly why many high earners, even extremely successful ones, unintentionally overpay taxes year after year.

The Case for Integrated Tax Strategy

By now, one thing should be clear: You might be overpaying taxes, not because you’re careless, but because your financial life has become complex, and you can’t be reactive during tax season. When your income, investments, equity compensation, and rental portfolio all move in different directions, the tax code rewards people who coordinate those moving parts—and penalizes those who don’t.

If your CPA, financial advisor, and attorney all operate in separate silos, you’re guaranteed to miss opportunities. This is exactly the problem Range set out to solve.

Range brings all this under one roof: your tax strategy, investment picture, equity compensation, real estate, and long-term planning. Instead of guessing how one decision will affect everything else, you finally get a forward-looking strategy that adapts as your life changes.

With an integrated team working year-round, you can:

• Time RSU exercises and vesting for maximum tax efficiency.
• Coordinate property sales with gains and losses across your portfolio.
• Optimize depreciation and cost segregation timing.
• Align your investment strategy with tax brackets and phaseouts.
• Reposition entities as your rental or business portfolio grows.

You stop leaving money on the table simply because no one was looking at the full picture.

Your Next Step: See How Much You Could Be Saving

If you suspect your financial complexity is costing you more than it should, or you simply want a clearer, more proactive plan, now is the moment to take action.

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This article is presented by Baselane.

If you own or plan to own a short-term rental, there is one phrase you will eventually hear: the short-term rental tax loophole. It sounds like something accountants whisper about at conferences, but it is actually one of the most powerful legal tax strategies real estate investors can use. This rule allows many Airbnb and vacation rental owners to use their property’s paper losses to offset W-2 or business income, potentially saving thousands of dollars in taxes.

Let’s look at what it means, how it works, what qualifies, and how Baselane makes it easy to stay organized and compliant.

Why Short-Term Rentals Get Special Treatment

The IRS usually treats rental income as passive income. That means losses from your properties can only offset other passive income. For example, if your long-term rental loses $10,000 on paper, that loss cannot reduce your salary from your day job. It just carries forward to future years.

Short-term rentals are different. Because they operate more like businesses or hotels than traditional long-term rentals, they can be classified as active trades or businesses under certain conditions.

Once your short-term rental is treated as an active business, any paper losses from depreciation, repairs, or startup costs can offset your active income. That is the loophole. Instead of paying taxes on all your W-2 income, you can legally reduce your taxable income using losses from your Airbnb or vacation rental.

The Two Big Requirements

The IRS does not hand this breakout freely. To qualify, you have to meet two key requirements.

1. Average stay must be short

Your average guest stay must be seven days or less. If it is between eight and 30 days, you may still qualify if you provide substantial services, such as daily cleaning, linen changes, or concierge assistance. The property should feel more like a short-stay accommodation than a long-term lease.

2. You must materially participate

This is the rule that separates real investors from set-it-and-forget-it landlords. To qualify for active status, you must demonstrate that you personally participate in managing and operating the rental. The IRS offers several ways to prove this, but the most common are spending more than 500 hours per year on the property, or spending over 100 hours and ensuring no one else spends more time than you.

Material participation includes things like communicating with guests, organizing maintenance, updating listings, and scheduling cleanings. The IRS expects you to track your time, down to the hour, so you can prove it if ever questioned during an audit.

The Tax Savings

Investors love this loophole because of the bonus depreciation. Every rental property owner can deduct depreciation, but short-term rental owners who meet the participation test can use those deductions to offset regular income.

Imagine you buy a vacation rental for $500,000 and run a cost segregation study on the property. Between depreciation, furniture, appliances, and startup costs, your accountant calculates a paper loss of $40,000 for the year. You did not actually lose that money in cash, but on paper, the IRS counts it as a business loss.

If your property is considered passive, you cannot use that loss to reduce your job income. But if your short-term rental qualifies as an active business because you manage it yourself and guests stay for a week or less, you can.

Now picture this: You earn $150,000 at your job. That $40,000 paper loss lowers your taxable income to $110,000. Depending on your tax bracket, that could save you $10,000 or more in taxes in a single year.

The Catch

The IRS knows this rule is powerful, so they expect proof. To qualify, keep detailed records of your average guest stay, the hours you spend managing the property, and all income and expenses. You also need accurate depreciation schedules and receipts.

It is a lot to track, and most hosts quickly realize that DIY accounting does not cut it. That is where Baselane comes in.

Simplifying the STR Tax Game

Baselane is an all-in-one banking and bookkeeping system built for landlords and short-term rental operators. It helps you stay organized, compliant, and ready for tax season without drowning in spreadsheets.

Automatic bookkeeping

Once you connect your bank or use Baselane’s integrated account, all your transactions are automatically imported and categorized into Schedule E categories. This takes the guesswork out of whether a Home Depot purchase should be labeled repairs or improvements. Baselane learns your patterns over time, helping you capture deductions that most hosts forget.

Separate accounts for each property

If you have multiple properties, Baselane lets you open separate virtual accounts. This makes it easy to see income and expenses for every property without mixing transactions. It is also a lifesaver if you need to show records of material participation for one property but not another.

Tax-ready reports

At year-end, Baselane automatically generates a tax package that includes your Schedule E report, cash flow summaries, and year-end statements. You can hand it straight to your CPA; they will have everything they need without your shoebox full of receipts (we’ve all been there).

Real-time cash flow and documentation

Baselane gives you live dashboards so you can see exactly how each property performs. It also lets you attach receipts directly to transactions, keeping everything in one place. If the IRS ever asks for proof, you will have it ready in seconds. This kind of recordkeeping not only supports your deductions but also helps prove your material participation, a key element of the rule.

Common Mistakes

Even well-meaning investors can slip up. Here are a few common errors to avoid:

• Not tracking time: The IRS expects detailed logs. Saying you worked a lot is not enough.
• Too much personal use: If you stay in your property for more than 14 days a year or more than 10% of the total rental days, it becomes a personal residence, not a rental business.
• Relying entirely on property managers: If someone else spends more time on your property than you do, you do not qualify as materially participating.
• Sloppy bookkeeping: Mixing personal and rental expenses makes it almost impossible to prove what is deductible.

Baselane helps prevent these by separating transactions, tracking expenses, and creating organized records.

The Bottom Line

The short-term rental tax loophole is a legitimate IRS rule designed for people who actively manage their rental business. Used correctly, it can save you thousands each year and accelerate your path to financial freedom.

The loophole only works if you qualify, track everything carefully, and file correctly. Baselane takes the stress out of that process. It tracks every expense, organizes your income, creates tax-ready reports, and helps you stay compliant without becoming your own accountant.

So while other hosts are sorting receipts at midnight, you can relax knowing your books, reports, and CPA package are done with ease. Your short-term rental is working just as hard for you as you are for it.