Dave:
For the first time in years, the price of a newly constructed home is now lower than the price of an existing home, and builders are even sweetening the deals with rate buy downs and seller credits. And this makes new construction an interesting option for investors for the first time in a very long time. But it’s not for everyone. There are important regional differences. Not all construction is the same, and you really need to know how to find these deals, how to negotiate the best deals. And so today we’re digging in on this new opportunity in new construction.
Hey everyone. Welcome to On the Market. I’m Dave Meyer. Thank you all so much for joining me for today’s episode. This is actually a topic I have been thinking about making an episode on for a while. I’ve been dabbling in it a little bit here and there looking at deals myself in new construction, but I haven’t made this episode because honestly, for a really long time I would’ve never recommended new construction to investors or people in the BiggerPockets community because there’s just too much of a premium. Ordinarily it just costs way too much to buy a newly constructed home. The rents aren’t that much higher and so the math just doesn’t really work out. But in the last couple of years we’ve seen this interesting phenomenon develop, but it’s only gotten more pronounced the opportunity over the last couple of years I find myself looking more and more and new construction listings.
I’ve toured a couple of new construction homes recently, haven’t pulled the trigger but have gotten pretty seriously interested in them. So I wanted to share with you why I think this is such an interesting asset class and help explain what types of investors this might make sense for and if you are one of those investors, how to actually go out and buy one of these deals. So that’s what we’re doing today. We’re going to start first with the opportunity, just share with you some information and data here. As of Q2 2025, the median price on a newly built home was about $411,000. Meanwhile, the median price on an existing home, a lived in home, a used home if you will, was nearly $430,000, meaning that buying a newly constructed home in the United States is now about 18 and half thousand dollars cheaper than buying a existing home.
Now of course there are regional differences, but this is a crazy stat. This is not something that normally happens. In fact, there was one time back in 2021 where these sort of touch together, but I was looking at data from the National Association of Home Builders who tracks this kind of stuff and it goes all the way back to before the crash in 2007, and there has never really been a time where this has happened. There has been times where it gets close, but these lines have never really crossed until the last couple of years. So we need to ask ourselves if we’re interested in this. Yeah, that’s great on paper, but we need to talk about why this is happening too, to figure out if this is actually as good of an opportunity. As it sounds like the main reason why prices are going down has to do with inventory and just varying inventory dynamics with the existing home market and the new home market.
Basically, builders have a very different calculation about inventory than homeowners do. Think about how their business model works. These are big national builders and of course there are smaller builders, but when we talk about this trend that’s developing, it really comes down to these publicly traded companies that are building thousands, tens of thousands of homes every single year. The way their business model works is almost similar to a flipper in that they have to permit build and dispo these properties as quickly as they possibly can. They do not want a lot of inventory sitting on their balance sheet because this business is super capital intensive. They can’t just go out, maybe even if they have a sub development, right, they’re going to build a thousand homes. They can’t go and build all 1000 of them at a time. Yes, for logistical reasons, because there’d be a lot of construction work, but also for capital reasons, it would be extremely expensive to go out and build 1000 homes, buy all the materials, pay for all that labor all at once.
And so instead what they do is they often build in phases. You see this all the time in sub developments. They’ll build phase one, it’s 200 homes, phase two is another 200 homes and so on, and they need to sell the homes from phase one to get to phase two. They need the money back that they’ve invested into those new construction builds to get it back and to move on and keep their business growing. And this means that they’re incentivized and willing to work with price or seller credits or rate buy downs or whatever the incentives is to move those properties and get them off their books. Now of course, this is very different from homeowners we talk about on this show all the time. The reason the market is in more of a correction right now and not in a free fall is because there’s no forced selling in this market.
People, whether they’re small investors or homeowners right now have the choice of whether or not they want to sell. And right now it’s not the best time to sell. It’s definitely one of the weaker times it has been to sell in the last three or four years for sure. And so a lot of people are just choosing not to. They say it’s too expensive to move or I’m not going to get top dollar for my property, and so I’m just not going to sell my home. And that has limited the spike in inventory in the existing home market. So think about these two things happening at the same time. Existing homes, you don’t have people who are desperate to sell. Some of people are sure, but in a broad big picture sense, they’re not just fire sailing their homes or offering big discounts, they’re still trying to get top dollar.
Meanwhile, builders, they just got to move this inventory so they can move on to the next thing and they are willing to give concessions, whether that’s in terms of price or rate, buy downs or whatever. And you see this reflected in the inventory data. One way that we measure inventory is months of supply. The higher it is, the more inventory there is. And for existing homes you used homes, it’s 4.6 months, whereas for new construction it’s about 7.6 months as of September. But before that, it was actually closer to nine. So the average over the last couple months is eight and a half, so significantly higher than existing home sales. And this is exactly why we’re seeing this flip in the trend. Now, if you’re wondering, does this spell trouble for builders, are they in trouble and they’re going to be losing money? That is hard to say.
But so far the data I could dig up points to, no, I couldn’t actually find data for 2025, but when you look at data from 2020 through 2024, there is some studies from the National Association of Home Builders again, that shows the gross and net profit margin for builders. And it went up a lot in 20 22, 20 23, 20 24. That suggests they have the ability to lower prices or to offer concessions and still turn a profit. They means their margins may go back to 2020 levels or 2017 levels, but they were still making 18, 19% gross profit margins during that time. Their net profit margins were at 8.7% as of 2023, but normally they’re in the seven, seven and a half range. So they might go back to those periods, but they’re probably willing to do that as long as they’re still selling homes and moving inventory. And the good thing for the home builder industry is that’s exactly what’s happening.
They are seeing inventory move, especially in the last month. The average over the last couple of years has been an annualized rate of about 700,000 homes, give or take. It fluctuates a little bit, but it’s been relatively flat around 700,000 homes per year. As of August, 2025, that annualized rate spiked to 800,000. So this suggests that there still is demand. Demand just went up. We saw like a 10% spike in new home sales in August, 2025. It’s only one month of data. Always want to caution that those aren’t trends and we need to see if this is an anomaly. But it is interesting to see this big spike in home sales because they’re offering incentives and there still appears to be buyer demand. And so that suggests that this trend may continue into the future, which is what makes it a potentially interesting opportunity for real estate investors.
We do have to take a break, but when we come back, I’m going to talk about why this is such a good opportunity for real estate investors and how you can potentially jump in. We’ll be right back. Welcome back to On the Market. I am Dave Meyer. Thanks for joining us today to hear about the potential opportunity that exists in new construction these days. Again, this isn’t something that is normally that appealing to real estate investors, but I want to talk a little bit about why small, regular mom and pop real estate investors, people with modest portfolios like you and me should consider this. Not saying everyone should do it, but it is at least worth thinking about because the numbers kind of make sense. So here are a couple things for you to think about. First of all, the lower all in monthly costs, your just expenses on paper and into the future are likely going to be lower.
So the first thing is one, the prices are lower. That’s just going to make your cost lower because it costs less to buy these homes. Now of course, that’s going to vary market to market, but we’re just talking on a national level and I dug into a couple of markets in Florida, I looked in Oklahoma a little bit in the Carolinas, and this is true in a lot of places. You can buy new homes, comparable specs, comparable size at a cheaper price, so that’s going to be cheaper. The second thing really comes from these concessions builders right now, in order to move this inventory, because we are in a slow market, generally speaking, they’re often buying down rates. Sometimes they’re buying points, so you have a permanent buydown. Other times they’re temporary buy downs, one, two buy downs, 1, 2, 3 buy downs, which lower your costs for one, two, or three years.
They’re also closing cost credits that you can save money on. So all in all, your monthly payment on a new home could actually be lower than an existing home that is incredibly attractive. The reason it’s so attractive is because they’re not necessarily apples to apples comparisons. When you buy an existing home, you are buying something used. Essentially it’s like the difference between buying a new car and buying a used car. When you buy the used car, there’s stuff that’s probably going to go wrong that’s been a little bit worn down, even if it’s taken well taken care of. There’s just wear and tear on things that happen, and that means your CapEx and repair costs are going to go up. Meanwhile, when you buy new construction, a lot of them have warranties. I know people have differing opinions on the value of warranties, but a lot of them do have warranties.
Most of them should have very modern systems that should reduce any near term costs. You’re going to have a brand new roof, right? You’re going to have a brand new hot water heater, you’re going to have a brand new HVAC system, you’re going to have new appliances. Some people might say that those will break sooner. I am one of those people that tend to agree new appliances suck and they all break faster than the old ones, but overall, you are very likely to have lower CapEx and repair costs at least for the next couple of years when you combine that with the lower cost of your mortgage payment. So you’re going to have lower expenses, then you have to consider the rental side because if you are a renter, all things being equal, if you’re looking for a three, two and you have an existing home that’s worn in or you have a three two that’s new construction or recently built, you’re probably going to want to live in the new construction.
And so that means you can potentially command higher rent. Now, that’s really going to come down to location. Some of these giant massive subdivisions in the middle of nowhere aren’t going to command higher rent, but there are areas if you buy, right? And we’ll talk about that in a little bit where you can actually command higher rent on new construction. And so when you combine these things, you look at potentially higher rents, definitely lower costs, you are going to make better cashflow potential. And as a real estate investor, that’s what you’re looking for. That’s why it’s such an interesting opportunity. You’re getting this newer product, you’re getting new systems, you’re getting energy efficient, smart home features, all these things that people want that you probably want in a home that you can’t get with existing homes and you’re getting it at a cheaper price. Just to hammer this home, I want to give you an example using real numbers right now, existing home average price is $423,000.
If we assume we’re putting 20% down, getting a 30 year fixed right now, probably get, if you’re an owner occupied, I’m just going to use the rate 6.5%. That’s nice and round your principal and interest on your mortgage payment’s going to be $2,140. If you bought a new home with the median price of 410,000 with, let’s just say you get incentives, let’s say you negotiated down 5%. I don’t know if that’s possible. Let’s say you get it for three 90, just as an example, you had to rate down of one point that we get your p and i down to $1,770. That’s a difference of $370 per month. That in most markets is the difference between a strong cash flowing deal and one that you just wouldn’t buy, right? Just imagine that you could get, I don’t know, 2,500 bucks a month in rent, 2,700 bucks a month in rent on that.
You could definitely cashflow potentially really well depending on taxes, insurance, other stuff in your area. Again, also with those lower repair and CapEx cost. And of course, this is just an example. In some markets you are seeing discounts of 5%. In other markets, you are seeing them really loaded up on concessions. It depends on the location, it depends on the builder and the incentives they’re offering. I’m just trying to give you an example that you can legitimately lower your expenses by meaningful amounts if you buy these properties right Now, buying, right, of course depends on locations, and when you look at new construction opportunities, they’re not really spread throughout the country equally, you see them in high demand. I think you could probably guess. We see them in Texas, we see them in Florida, the Carolinas, you see them in the Sunbelt parts, Vegas, Nevada.
You also see ’em in Oklahoma. There are areas of Ohio that they’re building a lot, and that is a really interesting dynamic because you’re going to have a trade off here. This is where more inventory exists and where they’re willing to offer concessions. But that’s probably because demand isn’t that high right now, right? They’re not giving concessions out of the kindness of their heart. They’re giving concessions. They need to incentivize people to buy these homes. And so what happens is in a lot of these markets, you are going to see some of the biggest corrections markets like Austin, San Antonio, parts of Houston and Dallas. Not all of those metro areas, but parts of Houston and Dallas, they’re seeing corrections, but they have tons of inventory on the market. Same thing with Phoenix, Tampa, Orlando, areas of North Carolina. We’re seeing the exact same thing. And so you’re having this dynamic like a lot of the rest of the country where there’s more inventory, more opportunity, but these markets are seeing some of the biggest corrections in the country.
So as a buyer, you really need to be discerning. You can’t just buy anywhere. You need to focus on really good locations even within these markets. And think about competitiveness. You need to identify areas where you can buy a new build, where you’re going to have strong renter demand or resale value demand in the future. And that’s going to depend on the same things that always matter when you’re buying a property, access to amenities, desir abilities, school districts, that sort of thing. So I think it’s really just up to you. Some people, if you’re really bullish on Orlando, you should go and just find the best property in that area and really negotiate hard for the best incentives you can find, but there’s a correction in that area. Or you could also target markets, like I said on some in North Carolina or in Oklahoma for example, where the markets are somewhat flat, but there’s still inventory that might be a little lower risk but a little lower upside.
So that’s really up for you to decide. But just as a reminder, these deals aren’t available everywhere, but you can Google this and find out where this kind of inventory exists in terms of strategies and ways that you can use these properties. I think they’re pretty standard. This isn’t really all that different than buying a traditional rental property. So I definitely think that long-term rentals work, generally speaking, this is not true everywhere, but generally speaking, you want to target friendly family subdivisions. These is single family rentals. They’re usually bigger homes. They appeal to families. So you want to, which to me is great. It’s a great strategy. You can find tenants who will hopefully stay a long time. So long-term rentals definitely work. These definitely work for house hacking for sure. You can buy as an owner occupied with a builder that’s going to probably get you even a better rates.
Then you can convert it to a rental later. And actually when we were on the Cashflow Road Show in Indianapolis, I went to it sort of like this. It wasn’t a build to rent community, but they were buying a lot of infill in this one area in Indianapolis, which is good market, and they had a lot of duplexes, and I just thought that was an awesome opportunity for house hacking this kind of deal. It would do a little better than break even probably if you did it as a traditional rental. But this kind of deal, if you bought it as an owner occupied living in a brand new side-by-side duplex, that’s a really intriguing option. I’ve actually even seen some build to rent fourplexes that work well at current rates, but with incentives and owner occupied, they can be amazing. So I should mention that for both of these, they don’t just have to be single family.
A lot of these build to rent communities have duplexes and have fourplexes that you can buy as well. I would just, when you’re looking at those things, again, think about renter demand because one thing that always worries me about these big subdivisions is if there are a hundred rental units that look exactly the same, how do you compete? And if there are going to, if there’s a decline in rent or there’s adverse economic conditions, how do you compete with your neighbors? If they start lowering their rents, you might be forced to lowering your rent. So that’s something to think about in these build to rent communities. All things being equal. If it were me, I would choose new construction in infill, not in massive subdivision for that very reason. But there are pros and cons to both other things you could do, you could definitely do short-term rentals or midterm rentals with these kinds of things.
I basically think it works for any type of long-term buy and hold sort of strategy. As long as you are really testing demand, you need to know who wants to live there, who wants to rent there, and if it works in your neighborhood, new construction can work as well or better than existing homes in a lot of these markets. We got to take one more quick break, but if this opportunity sounds intriguing to you, I’m going to walk you through a little bit of a playbook on how to identify, negotiate, and execute on these kinds of deals. We’ll be right back. Welcome back to On the Market. I’m Dave Meyer walking you through the new opportunity in new construction. Before the break, we talked about what’s going on, why this is an interesting opportunity, and if it’s for you, I’ll just share with you a couple of thoughts about how you can actually go about pulling this off.
First up, where to source these deals. A lot of builders right now are putting up marketplaces because this did not exist in the last couple of years, but similar to Zillow, they’ll have their own listing platform that you can go and check out properties. There’s one from Lennar or Lennar. People always tell me I’m pronouncing it right, I have no idea how to pronounce it, I’m sorry, but Lennar, let’s call it Lennar. They just put out one that actually calculates expected cashflow for you, which is pretty cool. It’s pretty fun to poke around with, but other builders are doing the exact same thing, so you can check that out. So that’s a good place to source. The second thing is if you live in a market where there is a lot of new construction, go drive around. I was driving around through Colorado recently where there is a lot of new construction and I went on a 50 minute drive through the Denver metro area, sort of the outskirts behind it, and I was just seeing billboard after billboard after billboard for new construction, and all I kept thinking was, man, I should walk in there and go negotiate a deal because not only there were two things about it that struck me.
It wasn’t just one subdivision, there was multiple subdivisions and there is multiple subdivisions for the same builder, which means they’re going to be more incentivized to offer discounts because they have a lot of inventory to move. And there was multiple builders. So that means when you’re negotiating, you can probably play these people off each other by shopping around and looking at different product. And so just keep your eyes open. I think that’s another good way to look at these playbooks. The other thing is talk to agents. Agents should know what new construction deals are on the market and which ones are attractive to you. And of course you can always look at Zillow as well, but personally this is just a suspicion, I believe going directly to the builder is going to give you the best opportunity to negotiate. So I would say look on their own websites or drive around, call the numbers, walk into the sales office at the new place and go face-to-face.
Go direct on the phone. That’s probably the best way you’re going to get to a decision maker and have that leverage in your negotiation. Now, when you’re approaching these deals, you want to look for signs of leverage and power essentially in the negotiation because not every community is going to be desperate to sell. Not every builder is going to offer incentives. So you have to understand where you’re going to have the most leverage. And again, the most leverage often means the most inventory, which means prices could be going down. So this is a decision you have to make for yourself, but if you want max leverage, look for places where the same builder, like I just said, has multiple properties in the same area. Just go see how many things they have on the market and how quickly they’re selling because that will tell you where you are in a negotiating position.
And this is something that’s so much better than existing homes, right? Because existing homes, the seller has one property, you don’t know their motivation level, you don’t know what they’re willing to take. But if you dig in a little bit and see how quickly things are selling compared to how much inventory they have on the market, you can sort of get a sense for how desperate they are or how, let’s call it, how willing they are to cut a deal. Not desperate, but you can get a sense of that. You can also look at this in aggregate. So there are publicly available data sources where you can see months of supply for new homes in your market. I would definitely check that out. And then the last thing, just a little tip I have heard some from friends in this industry is a lot of these builders, they’re publicly traded companies and they’ve quarter end incentives for their salespeople.
And so if you go at the end of a quarter, then you might be able to get a little bit sweeter of a deal as well. So think about timing that a little bit. Obviously just get the best deal you can, but if you happen to be at the end of the quarter, that might help you as well. Now, once you find your deals, you do need to underwrite these properties pretty similarly to existing homes. And I think this is one area that there is a potential pitfall is you don’t want to account for no maintenance or no repairs. You still need to set some money aside for CapEx because if you’re going to hold onto this for a long time, the water heater’s going to break. You’re going to need a roof in 20 years maybe if you plan to hold onto it that long.
So you need to still underwrite it assuming that there are some repairs and maintenance. But I think it’s okay to assume relatively low repairs for the first year or the second year. The second thing to make sure that you look for is HOAs. A lot of new construction subdivisions have HOAs, and we talk about this on the show, that’s not always a bad thing, but it’s something you definitely want to understand how much the fees are, how much they can potentially go up, what they cover, who’s governing these HOAs. I know it sounds like a lot of homework to do and it can be, but it’s crucially important. An HOA is a governing body with legal rights to make decisions about your investment. So if you are going to go buy in one of these communities, you best understand what is going on in that HOA or what is intended to go on in that HOA before you buy.
Again, it is not all a bad thing, but it’s something you definitely need to understand during your underwriting process. Third, you need to understand taxes because sometimes you’re buying new construction before there has been a recent assessment. So you really need to dig in on what your taxes are going to be. Fourth, understand warranties, how good this warranty is. Review the warranty company, see what they cover, how long is it, and use that to guide your underwriting because if you have a rock solid warranty, then you can underwrite for lower repairs for the first year or two. If you don’t, you might as well budget a little bit of repairs to make sure even if the warranty doesn’t cover something, you’re going to be doing well. And then the last thing to make sure that you cover is the rental feasibility, right? You need to understand the demand.
That I think is probably the hardest and most important part of underwriting. New construction, especially in a subdivision. You got to know what you can lease it for. If there’s an HOA, you better understand what the leasing rules are. Can you do short-term rentals? Can you do midterm rentals? A lot of them, but look at what they allow. If there’s any rules on pets or anything that’s going to restrict your ability to maximize your rent, definitely understand that during your underwriting. So overall, it’s pretty similar to underwriting a regular rental property just with a couple of stipulations that I want you all to look out for. So those are things to look for in your underwriting. And again, I think the biggest risks here are one HOAs, which can be a risk, not necessarily, but something to look in. Just the fee creep, the governance of them.
It just adds an additional variable that you need to look into. And the second thing again is location risk. Sometimes builders build in really random areas. We saw this during the great recession. We saw these subdivisions just absolutely tank. They’re not good locations. You still have to buy in a good location, even if it’s in a subdivision, it can’t be out in the middle of nowhere. If there is a market correction, buyers, renters are going to be more discerning. They’re probably going to do what they always do, which is want to live in good locations. And so don’t just buy something because it’s cheap, buy it because it is a good asset with low maintenance costs and it has to still be in a good location. And one more thing, sorry, I almost forgot this. One more thing to remember and underwrite for is the rate buy downs.
A lot of times with these builders, they’re offering rate buy downs that only last one or two or three years. That’s okay if you underwrite for that, but make sure that the deal still pencils at the rate that it’s going to reset to. So if you get quoted at 6.5 and they give you a rate, buy down to 5.5 for two years, underwrite the deal at 6.5 and then just treat the first two years as gravy where you save a little bit of money, but do not underwrite it at the lower rate unless that is fixed rate debt that you lock in for the next 30 years. That is super important. If I were negotiating, would prefer to get a permanent, even if it’s less, if I could even get 0.5% buydown for 30 years, I’d take that over a 1% buydown for two years.
I take that all day long. I would much prefer the permanent. I just know what I’m getting. And to me, that’s more important than saving a couple bucks for just two years. So that’s underwriting. And then just a couple last thoughts before we get out of here just about negotiating what you can. A couple tips about negotiating. First thing is to lead with monthly payment target, not the price. And this is actually very different from how I personally approach buying cars where I only care about the price, I don’t care about the financing, but because of the way builders work, they’re going to be more willing to negotiate with you on concessions, credits and rate buy downs than they are on price. And this makes sense. If you think about their business model, right? They’re trying to sell a couple dozen, a couple hundred, a couple thousand properties in the same subdivision, and they will do anything to protect their comps.
They do not want to go from four 10 to three 90 because that will signal to every other buyer that comes down the road that they can get it for three 90 instead. They would rather negotiate on things. They’ll be much more willing to negotiate on things that don’t show up publicly. These are things like seller concessions. They are rate buy downs. They’re seller credits, although everyone wants to buy lower as a rental property investor. If you’re looking for cashflow, just see how much you can reduce your expenses. Of course, you do not want to overpay, don’t pay more than market price for these properties. But where you’re going to have the most leverage, I believe, is in that monthly payment. And that’s where I would push hardest in my negotiations. The second thing is you don’t have to just accept a single concession. You can try and bundle these concessions like a permanent rate buydown or closing cost credits.
Sometimes these properties don’t come with appliances, for example, so you can ask for a washer dryer that can be a couple thousand dollars. So try and bundle as many of these things as possible. Again, they might not be willing to work on price that much. If you get a rate buydown some free appliances, that’s pretty good. That’s definitely lowering your costs. And then the third is make them compete against each other. If you are looking in a market where there are multiple builders, go negotiate with both of them and say, a builder is offering me a permanent buydown of one percentage. Point B builder, you’re only offering 0.5 for two years. I’m not interested. And C, if they will match or beat prices. Again, you don’t want just the best deal. You want to get the best asset, but you want to get the best asset at the best price.
And so use this newfound negotiating leverage that you might have in this market. And that’s it. It really isn’t all that different from buying existing homes, but there are just this few nuances that you should pay attention to when you’re researching, underwriting and negotiating these deals. I would love to hear from all of you if this is something you’re interested in or if you’ve done this in the past, let me know in the comments on YouTube or on Spotify because I’m very curious what your experience has been. I have a few friends that have delved into this. I’ve been looking at a couple of these over the last couple of months and I’m going to continue underwriting them. Haven’t found one in one of the markets I already invest in, and I haven’t decided yet if I want to sort open up an entire new operation in a new market just to pursue new construction. But it’s something I’m definitely going to be keeping an eye on, and I would love to hear from all of you what your experiences have been. Thank you all for listening to this episode of On The Market. I’m Dave Meyer. See you next time.

This article is presented by Baselane.

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The Bottom Line

Beyond the features themselves, what stands out about Baselane Smart is that it doesn’t feel like “tech for tech’s sake.” 

Too many platforms roll out AI tools that sound good in theory, but fail to solve real-world problems. Here, every automation addresses a pain point that investors actually face. Whether that’s reconciling dozens of small Home Depot charges, keeping property accounts organized for multiple rentals, or ensuring that cash flow never dips below what’s needed to cover a mortgage, it’s AI with a purpose. The purpose is to make life easier for landlords and investors.

If you’ve ever thought, “I didn’t get into real estate to do bookkeeping,” Baselane Smart feels like the answer to that frustration. The most important thing it really gives investors is time. Time to focus on the deals that actually grow your portfolio. Time to spend with family and friends instead of chasing receipts. Time to finally step away from the spreadsheets and enjoy the life you are building through real estate.

And in this business, time saved is opportunity gained.

In September, the Federal Reserve cut interest rates by a quarter point, the first in 2025. They also signalled that they expect two more rate cuts this year. 

Does that make now a good time to invest in real estate? 

I don’t believe in timing the market, and I continually invest $5,000 a month in new real estate investments. 

Market timing aside, there are both risks and opportunities for real estate investors during rate-cutting cycles. Keep your eye on both as you explore investing in real estate over the next year, whether as an active buyer or passive investor (like me). 

Opportunity: Cheaper Debt

The Federal Reserve doesn’t control mortgage rates. It controls the federal funds rate, the short-term interest rate that banks use to lend each other money. 

Mortgage and commercial loan rates are based on Treasury bond yields, which the Fed doesn’t control. In fact, mortgage rates ticked up when the Fed raised the federal funds rate. 

Even so, loan rates have historically shared a strong correlation with the federal funds rate. Most analysts expect lower mortgage rates over the next year, making refinances and purchase debt more affordable each month. 

Opportunity: Better Cash Flow

All else being equal, cheaper debt means investment properties will cash flow better. They’ll generate a higher cash-on-cash return or yield. 

Of course, lower loan rates typically drive up property prices as well.

Opportunity: Potentially Higher Property Values

When mortgage rates fall, buyers can afford to make higher bids for homes, because most homebuyers calculate their maximum purchase price based on the monthly payment. 

So they do make higher offers, which of course drives up home prices. Read more from the Federal Reserve about that trend if you’re curious. 

The same holds true for commercial real estate such as multifamily properties. Loan rates and cap rates tend to move in lockstep. Lower interest rates drive down cap rates, which means higher property values. 

That’s great for current owners, who can get some relief by refinancing or selling at a profit instead of a loss. 

Opportunity: Distressed Sellers

The Federal Reserve doesn’t cut rates without a good reason. They do it to help juice the economy when it starts sagging. 

A weaker economy often means more loan defaults from distressed sellers. That creates buying opportunities for both residential and commercial investors. 

In our co-investing club, we just invested in a passive real estate deal, buying a distressed property. The seller was in foreclosure, so the operator was able to buy the property at a deep discount. 

Risk: Higher Unemployment Means Higher Vacancies

Specifically, the Fed cuts rates to spur a lagging labor market, meaning higher unemployment.  

Higher unemployment means more rent defaults, both among residential and commercial tenants. More rent defaults mean more evictions and higher vacancy rates, which in turn mean weaker cash flow. 

In many cases, “weaker” becomes negative cash flow. Investors can find themselves losing money each month on investments and become distressed sellers themselves. 

Risk: Lower Cap Rates for Buyers

That potential for higher property values that I mentioned earlier? That’s great for sellers, but not so great for buyers. 

Buyers might find themselves paying more for the same cash flow, otherwise known as compressing cap rates. 

Risk: Price Volatility

Again, the Fed cuts interest rates when they’re worried about a weakening economy and recession risk. And in deep recessions, buyers pull back, which depresses prices. 

However, property prices don’t always go up in rate-cutting cycles. Home prices fell 25% to 30% on average in the Great Recession. 

Even so, recessions don’t always drive down prices. In four of the last six recessions, home prices actually rose—not least because lower interest rates stimulate price growth. It’s not always clear which direction property prices will move, however, hence the risk of volatility. 

Risk: Overheating and Bubbles

Some Americans have openly questioned why the Federal Reserve should remain independent of political interference. Why? To them, I would say, “So that politicians can’t overheat the economy while they’re in office and leave a ticking time bomb for the next administration.” 

Every president wants a glowing economy under their watch. But recessions are part of market economics, and the longer you artificially delay one, the worse it will be when it eventually hits. 

One form that overheating takes is too much debt accumulating in the economy. Businesses and consumers alike become overleveraged, and the longer these debts are allowed to build up, the more pressure builds in the system that eventually bursts, often in the form of an asset bubble or recession. 

Low interest rates incentivize debt. That can help when the economy is slow, but it can overheat the economy if left unchecked. 

I don’t trust politicians worried about the next election to make these decisions, and you shouldn’t either. 

Risk: Inflation

Cheap loans are why the Fed raises interest rates to fight inflation. 

Inflation isn’t all bad for real estate investors, of course. Buyers simply pay the going rate for properties; however, the currency fluctuates. Inflation can push prices up faster than expected. 

But inflation also causes the Fed to raise interest rates, which can wreak havoc for real estate investors. It’s why multifamily properties fell 20% to 30% in value after the rate hikes of 2022, which has created an opportunity for buyers, but a nightmare for sellers. 

Investing Through Rate Changes

How far will the Fed cut the federal funds rate? Will Treasury yields and loan rates follow suit? 

Investors can only speculate. And I don’t invest based on speculation. Instead, I practice dollar-cost averaging with both my real estate and stock investments. Investing $5,000 each month alongside other passive investors in a co-investing club, rain or shine. 

That keeps me investing even when other investors panic from the “blood in the streets.” It also limits my exposure to any one investment. 

On balance, I see more opportunity than risk right now for real estate investors. I see hands-off real estate investments as undervalued at the moment, especially compared to an overpriced stock market that seems to notch a new record every week. 

Only you know how to best invest for your own financial goals. Just know that the riskiest thing you can do is not to invest at all, because you’re guaranteed losses from inflation.

This article is presented by Steadily.

Did you know the cost to insure the exact same rental property can vary by more than 40%, just by crossing state lines? While you’re crunching cap rates and analyzing rent rolls, insurance can be a hidden expense quietly eating into your returns, and most investors don’t realize it until it’s too late.

Landlord insurance isn’t just another line item on your P&L. It’s a fixed cost that directly impacts your cash flow month after month, year after year. 

Yet when evaluating potential markets, most real estate investors focus on purchase prices, rental income, and maybe property taxes. Insurance gets treated as an afterthought.

That’s an expensive mistake. The difference between a high-insurance state and a low-insurance state can mean thousands of dollars annually. Over a 10-year hold period, you could be looking at $20,000 or more in additional costs—money that could have gone toward your next down payment.

So we dug into the data. We analyzed median landlord insurance premiums and rates per $1,000 of insured value across the United States. 

And what we found might change how you think about market selection. These five states offer the perfect combination of affordable insurance and strong rental demand, giving savvy investors a hidden edge in building profitable portfolios.

Why Insurance Costs Matter More Than You Think

Let’s start with some context. The national median for landlord insurance sits at approximately $1,300 per year, with an average rate of $3.32 per $1,000 of total insured value (TIV). But these numbers swing wildly depending on your ZIP code.

Think about what this means for your investment strategy. You’ve found two identical duplexes, both generating $2,500 per month in rental income. One’s in a high-insurance state, where you’ll pay $2,000 annually. The others are in Nevada, where you’ll pay $800. That’s a $1,200 difference every single year, or $100 per month straight off your cash flow.

Now multiply that across a portfolio. If you own 10 properties, that seemingly small difference becomes $12,000 annually. Small differences get amplified over time as your portfolio grows. 

But raw premium costs only tell half the story. The rate per $1,000 TIV reveals the actual value you’re getting for your insurance dollar. A lower rate means you’re paying less to insure each thousand dollars of property value, which becomes especially important as you scale into higher-value properties or markets.

Understanding these metrics isn’t just about saving money. It’s about making smarter investment decisions from day one. When you factor insurance costs into your initial market analysis, you can identify opportunities other investors miss and avoid markets where hidden costs will erode your returns.

The Five Most Affordable States for Landlord Insurance

1. Nevada 

• State median premium: ~$800
• Rate per $1,000 TIV: $1.89

Nevada absolutely dominates when it comes to affordable landlord insurance. With premiums running nearly 40% below the national average, this state offers investors an immediate competitive advantage. 

But it’s not just about cheap insurance. Nevada combines low costs with strong rental demand, no state income tax, and landlord-friendly regulations.

Las Vegas leads the charge with a median premium of just $805 and a rate of $1.93 per $1,000 TIV. The city’s tourism-driven economy creates consistent demand for both long-term and short-term rentals. 

Even with its current legal challenges, Las Vegas sees over 40 million visitors annually, allowing the short-term rental market to thrive, while steady population growth fuels traditional rental demand. The relatively stable weather patterns and lower natural disaster risk contribute to these attractive insurance rates.

Reno follows closely, at a $893 median premium and $2.10 per $1,000 TIV. Often called “the biggest little city,” Reno has transformed from a gaming destination to a legitimate tech hub. Major companies like Tesla, Apple, and Google have established operations here, driving population growth and rental demand. The slightly higher insurance costs compared to Las Vegas are offset by strong appreciation potential and growing tenant pools from Bay Area relocations.

2. Utah 

• State median premium: ~$875
• Rate per $1,000 TIV: $1.89

Utah ties with Nevada for the lowest rate per $1,000 TIV in our analysis, making it incredibly efficient from an insurance perspective. The state’s diverse economy, ranging from tech in Salt Lake City to tourism in the southern regions, creates multiple investment strategies for savvy landlords.

St. George emerges as a hidden gem with the lowest city premium in our entire analysis at just $700 and an impressive $1.60 per $1,000 TIV. This southwestern Utah city benefits from year-round mild weather, proximity to multiple national parks, and an influx of retirees. The combination of low insurance costs and steady demand from both tourists and permanent residents makes it particularly attractive for buy-and-hold investors.

Moab takes it even further with a median premium of $650 and the lowest rate at $1.50 per $1,000 TIV. Yes, you read that correctly. Despite being a world-renowned outdoor recreation destination, Moab’s insurance costs remain remarkably low.

The city’s unique position as a gateway to Arches and Canyonlands national parks creates exceptional short-term rental opportunities. With proper management, investors can capitalize on peak tourist seasons while maintaining some of the lowest insurance overhead in the nation.

3. Idaho

• State median premium: ~$880
• Rate per $1,000 TIV: $2.02

Idaho has quietly become one of the hottest real estate markets in the country, and the insurance costs haven’t caught up to the growth. This creates a unique window of opportunity for investors who move quickly. The state’s combination of quality of life, business-friendly environment, and relative affordability continues to attract both residents and companies.

Boise shows a median premium of $915 with a $2.02 per $1,000 TIV rate. While these numbers have crept up slightly with the city’s rapid growth, they remain well below national averages. 

Boise’s economy has diversified beyond its agricultural roots, with companies like Micron Technology, Simplot, and numerous tech startups calling it home. The city consistently ranks among the fastest-growing metros in the nation, with population growth averaging 2.5% annually since 2020.

Idaho Falls presents an interesting alternative at a $915 median premium, but with a better rate of $1.87 per $1,000 TIV. This suggests you’re getting more bang for your insurance buck in Idaho Falls compared to Boise. 

The city serves as a regional hub for eastern Idaho and benefits from stable employment through the Idaho National Laboratory and a growing healthcare sector. For investors seeking strong cash flow without the competition of Boise’s hot market, Idaho Falls offers compelling economics.

4. Wisconsin

• State median premium: ~$1,025
• Rate per $1,000 TIV: $2.51

Wisconsin might surprise some investors, but the state offers unique advantages that offset slightly higher insurance rates compared to our top three. The key is knowing where to look and understanding the state’s distinct market dynamics between stable urban rentals and lucrative vacation properties.

Green Bay leads Wisconsin with an $850 median premium and $2.07 per $1,000 TIV. The city offers textbook Midwest stability: steady employment, consistent rental demand, and lower property prices that boost cash-on-cash returns. 

The Packers aren’t just a football team here—they’re an economic engine that drives tourism and creates unique short-term rental opportunities during the NFL season. Eight home games can generate premium nightly rates that savvy investors leverage to boost annual returns.

Door County tells a different story at a $1,100 median premium and $2.27 per $1,000 TIV. While insurance costs run higher, this peninsula surrounded by Lake Michigan has become the “Cape Cod of the Midwest.” The summer vacation rental market here is incredibly strong, with properties often booked solid from Memorial Day through Labor Day. 

Investors who understand seasonal rental strategies can generate impressive returns despite the higher insurance costs, especially with waterfront properties commanding premium rates.

5. Arizona

• State median premium: ~$1,025
• Rate per $1,000 TIV: $2.26

Arizona rounds out our top five, offering a compelling mix of population growth, landlord-friendly laws, and insurance costs that still beat the national average by over 20%. The state’s diverse geography creates distinct micro-markets, each with unique investment profiles.

Flagstaff presents better value than expected at a $1,200 median premium and $2.36 per $1,000 TIV. Sitting at 7,000 feet of elevation, Flagstaff offers something rare in Arizona: four seasons. This creates year-round rental demand from Northern Arizona University students, families escaping Phoenix heat, and winter sports enthusiasts. The city’s proximity to the Grand Canyon adds short-term rental potential that many investors overlook.

Sedona shows the highest premiums in our Arizona analysis, at a $1,450 median premium and $2.51 per $1,000 TIV, but don’t let that scare you off. Sedona’s short-term rental market commands some of the highest nightly rates in the Southwest. The city’s stunning red rock landscapes, spiritual tourism, and luxury traveler demographics create a unique investment opportunity. While insurance costs more, the revenue potential often more than compensates for investors who understand the luxury vacation rental market.

Making Smart Insurance Decisions with Steadily

After analyzing all this data, you might be wondering how to actually capitalize on these insurance savings. That’s where having the right insurance partner becomes crucial.

Steadily has emerged as the go-to insurance provider for smart real estate investors. Built specifically for landlords, they understand that every dollar saved on insurance is a dollar added to your cash flow. Unlike traditional insurers who treat rental properties as an afterthought, Steadily specializes exclusively in landlord insurance.

What makes Steadily different? Instant online quotes let you compare coverage options and bind policies in minutes, not days. No phone calls, no waiting for agents. 

Their coverage targets the risks landlords actually face: lost rental income, tenant damage, and liability issues that standard policies often exclude. 

And they cover both long-term, medium-term, and short-term vacation rentals. 

If you’re building a portfolio across state lines, Steadily operates in all 50 states, with consistent underwriting standards—meaning you get to work with one provider instead of juggling multiple agents and policies. 

Ready to see how much you could save on landlord insurance? Get your free quote from Steadily today!

Legendary investor Warren Buffett once said that the key to investing was to “be fearful when others are greedy, and to be greedy only when others are fearful.” 

Real estate investors have taken Buffett’s advice to heart. While homebuyers have sat on the sidelines, waiting for interest rates to fall, landlords have been buying rentals at a clip.

A Surge in Investor Purchases

Over the first quarter of 2025, investors were responsible for nearly 27% of all homes sold in the U.S., around 265,000, a staggering percentage not seen in years, according to analytics provider BatchData. The number marked a meaningful increase of 8.3% from the 2020-2023 average.

The buying bonanza is not a blip. Data and analytics firm Cotality shows that investor purchases averaged 85,000 homes per month in the first half of 2025, virtually unchanged from the previous year, despite uncertain market conditions. 

Thom Malone, principal economist at Cotality, said:

“Investors expanded their market presence significantly in 2025, building on historically high levels. This demonstrates their resilience in a high-price, high-rate environment. As these adverse conditions are expected to persist, investors are well positioned to meet rental demand. Their tendency to buy with all cash means high interest rates are less of a deterrent. Plus, current high prices can be offset by strong rental returns.”

One-Third of All Home Purchases Were by Investors

Investor purchases even teetered around 32% or one-third of all home purchases earlier in the year, before dipping slightly in June, traditionally a slow time for home sales. However, investor buying remains well above the pre-pandemic norms of 15% to 20%.

“Without this investor participation, many markets would face severe illiquidity and potentially destabilizing price volatility,” according to a report from mortgage trade publication Scotsman Guide. “With traditional buyers sidelined by financing constraints that doubled monthly payments compared to recent norms, investors provide critical liquidity in an otherwise constrained market.”

Why High Rates Have Not Been a Deterrent

The well-worn narrative of high interest rates as a deterrent to buying hasn’t been the case with investors. According to Scotsman Guide and Cotality, there are several reasons for this:

1. Many investors are buying with cash after years of increased equity and sound investing. They can afford to cherry-pick deals amid decreased competition.
2. Debt service coverage ratio (DSCR) loans enable investors to purchase homes at more favorable rates than homeowners, basing their purchases on rental income.  
3. High purchase prices have translated into high rents, allowing investors to offset an increased sticker price with rental income. 

Why Investors Should Buy Now

The market is looking more favorable for investors to enter. Here are three reasons to get your feet wet now.

1. Traditional buyers may soon return to the market

Prevaricating about buying an investment is only likely to allow the competition to catch up once rates fall. Currently, traditional homebuyers and sellers are experiencing a standoff due to higher rates and the lock-in effect that prevents existing homeowners from listing their residences. With rates expected to fall, buying in anticipation of further rate cuts could be a prescient move.

2. Rental demand remains strong

In recent years, potential buyers have become long-term renters, and as a result, their households have expanded. According to the Scotsman Guide, between Q1 and Q2 2025, renters experienced a 2.6% growth in their households, while homeowner households declined by a marginal 0.1%. Increased rental demand means a need for more supply, favoring investors. 

3. Big investors are betting heavily on rental real estate

Wall Street generally doesn’t make a move without commissioning a slew of surveys and reports, and they have decided that rental real estate is a surefire bet.

In August, the Carlyle Group, a private equity behemoth, raised $9 billion for real estate investments. They are not the only ones. 

National apartment REIT AvalonBay Communities has bought 126 townhomes in Texas for $49 million, and plans to invest an additional $1 billion in build-to-rent (BTR) properties. Blackstone, Invitation Homes, and Pretium Partners are all aggressively expanding their footprint. JPMorgan has also entered the in-demand BTR space, launching a new firm with Paran Homes and Georgia Capital, according to CRE Daily. 

However, there has been a backlash against Wall Street’s practice of buying residential homes for rental purposes, which leaves fewer homes available for would-be homebuyers and contributes to the housing crisis. New York Governor Kathy Hochul has proposed legislation that restricts hedge funds from buying large volumes of single-family homes, leaving the field open to smaller investors. In a January statement, she said, “Shadowy private equity giants are buying up the housing supply in communities across New York, leaving everyday homebuyers with fewer and fewer affordable options.”

Final Thoughts

Despite headlines regarding Wall Street’s mass purchasing of residential rentals, mom-and-pop investors remain the largest demographic of residential investment property owners, contributing roughly 20% of the nation’s 86 million single-family homes and townhouses, according to BatchData, whereas institutional investors account for 2.2%.

Smaller investors need to be opportunists to stack their portfolios without incurring too much risk. The rental market is presenting them with increased buying opportunities due to the lack of competition from traditional buyers. However, the winds of change are in the air, and the Federal Reserve’s first rate cut in almost a year could signal the start of more to come.

Mortgage rates are currently at their lowest level in nearly a year. As a result, some buyers have started to return, contributing to August’s three-year high for home sales. The advantage of buying at the top of a rate-cutting cycle is that a refinance opportunity awaits once the cycle ends. 

Dave:
Do you think you can’t invest in real estate because you have a lower income wrong? It is not only possible to invest in real estate, but I think it’s the best way to improve your financial situation if you’re at the lower end of the income ladder, even if you only make $50,000 per year as an example, there are financing options, government programs and investing strategies specifically designed to help you get into your first real estate deal and progress towards financial freedom. From there. Today I’ll break down why investing in real estate makes sense even if it seems unachievable. At first glance, I’ll share which strategies to focus on if income is your main barrier to entry and I’ll share a few programs to check out that could be a total game changer.

Dave:
What’s up BiggerPockets community? I’m Dave Meyer and welcome back to the BiggerPockets Real Estate podcast. Today we are tackling one of the most common questions I hear from our community. Basically, I want to start investing in real estate, but I’m only making $50,000 or less per year. Is it even possible? And lemme just tell you right off the bat, the answer is absolutely yes. In fact, some of the most successful investors I know started with modest incomes and limited capital, and today we’re going to break down exactly how you can get started even on a tight budget. First, I’m going to share seven different funding options to consider if you have a low income. Then I’ll talk about my favorite investing strategies for people who are capital constrained and I’ll finish up the episode by going sort of step-by-step through how to take action on your first investment.

Dave:
So if you’re making $50,000 or even a little more than that, this episode is designed specifically for you. Let’s dive in. We’re going to start with talking through different funding options because we need to get this big question out of the way, right? I’m sure there are a lot of folks who are on the lower end of the income spectrum thinking that they want to get into real estate investing but just don’t know how to get the capital and how to finance these deals because real estate is amazing, but it is a very capital intensive business. You do need money to get into this business, but the good thing is that real estate investing is not necessarily like buying a traditional home. You don’t actually have to put down 20% of the full purchase price to acquire the asset, and there are actually seven different options to consider if you want to invest with a lower income and not everyone is going to work for every investor.

Dave:
That’s why I’m giving you a couple of different options here. I’m not going to go super into depth into each of them. I just want to show you that there are possibilities out there if you’re willing to search and figure out which one of these actually works for you. Option number one is an absolute classic. It is an FHA loan and this is absolutely perfect for folks on the lower end of the income spectrum because they were designed specifically for low income Americans to get them into the housing market. So if you are doing a house hack or potentially even a live and flip, I’ll explain that in a minute. This is a really powerful strategy. Now, it is important to know that FHA loans are only available for people who are owner occupied. You have to live in the property that you buy with an FHA loan.

Dave:
So house hacking or live in flips really are the only options here. You can’t just go out and buy a duplex, rent it out to two people and use an FHA loan. But for people who are just getting into the game and have a lower income owner occupied strategies like house hacking and live in flips are two of if not the two absolute best strategies to get started. So these sort of work really well together. The reason FHA loans are so great for people who are getting started with a lower income is that you can actually put as little as 3.5% down on a property. So I know the traditional amount that most people hear is putting 20% down, but this is a government sponsored program where you can put as little as 3.5% down. So if you’re talking about buying a $300,000 property, for example, your down payment will be close to $10,000, which is a lot easier to stomach and get together than $60,000 like you would be putting down if you put 20% down.

Dave:
Or as a real estate investor, often you put 25% down and then in that case you’ll need $75,000 to put down. So it’s a lot better. The other really incredible thing about this is when you put 3.5% down, you don’t have to just buy a single family home, you can actually buy a two, three or up to a four unit property, and that’s sort of why it works so well for house hacking because you can live in one of those units and rent out the other one, two or three units that you get. It’s also great for people who have relatively lower credit scores because credit scores for an FHA loan can be as low as five 80. You definitely still want a higher credit score because the higher you go in your credit score, the better rate you’re going to get. But if you have low credit, these options are still available.

Dave:
The debt to income requirements can be up to 57%, which is much more lenient than a conventional loan. You’re allowed to get gifts for a down payment if that’s something available to you and you can actually count some of your expected income up to 75% of it towards your qualifying income. So all of these things together make it an incredibly powerful way for lower income folks to get into the real estate investing game because it addresses head on the hardest part of getting in the game, which is figuring out that money for your down payment instead of putting 20 or 25% down, put as little as 3.5% down with an FHA loan. So that was option number one. Option two is a different but somewhat similar approach to getting into the game. This is using a conventional loan with low down payment options. There are some more traditional banks now that allow you to put three or five or 10% down, specifically usually for first time home buyers.

Dave:
So again, this is going to work for people who are going to embrace the many, many benefits of owner occupied strategies like house hacking or the live and flip. With a lot of these options, you don’t necessarily have PMI private mortgage insurance, FHA loans. One of the downsides I should mention of that is yeah, you can get in with a lower down payment, but there are some additional fees. It’s called PMI on top of your normal principal and interest payments that make your monthly mortgage payments a bit higher and obviously that’s not ideal. It can hurt your cashflow or how much money you’re saving. And so with these conventional loans with low down payment options, you can potentially avoid them. Now there are trade-offs because they probably have higher interest rates. The underwriting might be a little bit more strict than some of the things I mentioned in the FHA loan, but don’t overlook these because more and more lenders are offering these kinds of financing and it can be a really good way for low income folks to get in the housing market.

Dave:
Our third approach for low income people to get into the real estate gain is a little bit different tactic, which is partnership strategies. If you can’t get together enough capital to put a down payment on your property either putting 20 or 25% down or for some folks, it’s not going to even be possible for three or 5% down and that’s totally okay. This is a similar situation for how I got started. I really had no capital to put into my first deal, and so I used a partnership strategy and this is a very, very common way for real estate investors to get into the game. I know a lot of people put on social media that they’re buying all these properties. A lot of those people are using partnerships. This is very common. Not many people have all of this money that they can invest into real estate right away, so they go out and find someone to partner with.

Dave:
Now, there’s tons of different formats for partnerships, but I’d say there’s basically two different approaches that you can consider to get off the bat. One is a down payment partner or partners if you don’t have the capital to go out and make this down payment, see if you can find someone in your network who does have an interest in real estate investing who wants to partner and support you and can contribute some or all of that down payment. Now you should mention it doesn’t just need to be down payment. You’re also going to need closing costs. You should also have cash in there, but basically find someone who can bring the capital that you need and then your job in that deal is to go find a deal, operate that deal successfully and create a successful partnership. Another way to do it is maybe you don’t have great credit or you don’t work a W2 job, so you can actually go find a partner who maybe does have a credit and who can qualify for finance or has a higher debt to income ratio.

Dave:
That’s another form of partnership that you can go out and seek. So whether you want to call this private money or partnering, whatever it is, the idea here is go out into your network and to be honest with you’re first getting started, it’s probably going to be friends and family. Go see if you can raise some money from friends and family to get into your first deal. Now if you don’t have friends or family that can provide that capital, totally understand a lot of people are in that situation. You can go and look for partnerships or money outside of that circle, but I just want to be realistic that that is a challenge if you’re going to partner, looking first to friends and family is going to be the easiest way to do that. If you need to get pulled together 2, 3, 4 different partners to get that first deal, that’s okay.

Dave:
For me, I think the most important thing is to get into that first game. I had three partners on my first deal, and again, this is a very normal way to get into real estate investing. Number four, our creative and seller financing. When you don’t have enough capital to put down to buy a property, you can look into things like seller financing if you haven’t heard of this before. Basically when the owner of a property doesn’t have a mortgage on their property, and that’s actually about 40% of people right now, you can go to these people and see if they would be willing essentially to be the bank for you. So instead of buying your property with a mortgage and making mortgage payments every month to Chase or Wells Fargo or whatever, you actually just pay those monthly payments to the seller. And although you’re still going to have to pay something every month, the terms of that loan are very flexible.

Dave:
Basically, whatever you can agree to with the seller is possible. The interest rate is entirely negotiable. The down payment is entirely negotiable. The amount you pay for the property is entirely negotiable. So if you’re one of these people who doesn’t have capital, you don’t want to do a partnership looking for seller financing can be a great option. Now it’s worth mentioning not every seller wants to do this and you do need to make it worth the while for the seller. I had someone approach me about seller financing a deal I own outright right now, and they wanted to put 10% down. They wanted to pay market rate and they wanted a 5% interest rate. I said, why would I do that? I’m going to make the same amount of money and basically lend you money at a lower interest rate than I can make elsewhere.

Dave:
So you have to remember that the seller is not going to be doing this out of the kindness of their heart, and so sometimes you need to pay a little bit higher of an interest rate. Sometimes you might need to pay a little bit over market comps for that property in order for the seller to agree to something like this. So don’t expect the world on these kinds of deals. You have to find a mutually beneficial structure so that you and the seller both benefit from this kind of deal financing option number five, don’t overlook these down payment assistance programs. There are so many different state and local municipalities that offer down payment assistance programs specifically to help low to moderate income buyers get into the housing market. Oftentimes these are grants that don’t need to be repaid. They’re just money that you essentially get for free.

Dave:
Sometimes they’re structured in the form of zero interest loans for down payments and closing costs. Sometimes you get a credit at closing and you don’t have to come out of pocket for any of these things. There is a huge variance in what is offered, but absolutely look into what is available to you if you live in a city, Google the name of that city and down payment assistance programs or first time home buyer assistance programs and see what they have. Do that for your state as well. Also, ask your lender and ask your agent about them because they absolutely should be familiar with what programs are available in your area and help you figure out how to navigate those things. Option number six is only available to certain segments of the population, but it is an amazing tool for anyone who has served in the military.

Dave:
There is something known as a VA loan. This is for military veterans or active military, and it offers zero down payment options. That’s right, you can put $0 down if you’re active military or a veteran. There is no PMI like there is with an FHA loan that saves you hundreds of dollars per month. You still get competitive interest rates. They’re often better than FHA loans and just like an FHA loan, you can buy up to a four unit property as long as you’re going to do the owner occupied thing. So this is an awesome option for anyone who qualifies for it. And similarly, our seventh and last financing option is USDA Loans for Rural Investment Properties. This is another government program that allows you to put sometimes zero down. You get below market interest rates. These properties do need to be in rural areas. They need to be designated by the USDA to be in certain areas, but if you are looking to buy a property in those areas and you meet the other qualifications, USDA loans can offer you a 0% down way to buy your first property.

Dave:
So those are our seven options for low income folks to look for if they’re trying to get their first real estate investment. And like I said, not everything is going to work for everyone, but the key takeaway here is that there are multiple different financing paths available to you that honestly higher income investors can’t even access. So your job is to look at the seven different options that I just outlined here and figure out which of these works for you. You got to do more research. We have tons of resources on BiggerPockets. You can go learn more about each of these in more detail, but figure out which one is going to work for you because it’s not going to work for every single person. But I bet for 80 90% of people listening to this podcast, one of these options could actually work for you. So go check these out. Now I need to turn our attention to which strategies, which types of deals work for lower income investors. We’re going to get to that right after this quick break. Stay with us.

Dave:
Welcome back to the BiggerPockets podcast. I’m Dave Meyer, sharing strategies and tactics that lower income investors can use to get into the real estate investing game. We talked about seven different financing strategies before the break, and next I want to touch on two investing strategies that can be really effective even if you’re only making $50,000 give or take. And again, we have tons of episodes, resources on BiggerPockets that you can use to go dig into these in more detail because I’m just going to provide an overview so that you can select which ones you want to do more research on. The biggest bucket of strategies that work for low income investors are the ones that I mentioned before the break, which are owner-occupied strategies. These give you access to the best financing options like FHA loans, like VA loans, low down payment, conventional mortgage. These are all available if you are willing to do the owner-occupied strategy.

Dave:
Now, there are two different ways that you can use occupied and we often talk about one of ’em, but the second one I think is one of the least appreciated overlooked strategies in real estate investing. The first one though is house hacking. You’ve probably heard of this, but basically it’s where you buy a two to four unit property using an FHA loan. You could use a conventional mortgage, but for purposes here, it’s about using a low down payment loan live in one unit and rent out the others, and the rental income from your tenants should cover at least some of your mortgage payments so that you’re saving money every single month. You don’t need to be cashflow positive in these situations. The goal of a house hack is actually to reduce your living expenses as much as possible so you can save up as much money as you can to go out and buy your next deal.

Dave:
And this is just an absolutely proven no-brainer model. I have seen people effectively live for free while building equity and learning the landlord business. It’s awesome. And again, the beauty is that you’re using owner occupied financing. If you’re low income, you can put as low as 3.5% down. You’re getting great rates, you’re getting more lenient qualification requirements than a normal investor loan. And plus you get to learn property management, sort of the training wheels for being a landlord while you’re doing all of this. But that is not the only owner occupied strategy that you should consider. There is also the live in flip strategy. Live in flip is basically when you flip a house, but it’s the house that you are actually living in. And there’s a really key difference here because when you go out and flip a home in a traditional way, you are using hard money most of the time, which is super high interest rate debt.

Dave:
Usually it’s 10, 12 up to 15%. Sometimes you can put 10 or 20% down, but you’re still making a large down payment. You have to pay for materials somehow to actually go and flip a house, whether you’re taking out a loan or paying for that out of pocket. And the whole game of doing a flip is doing it quickly to reduce all of your holding costs, like your loan payments and your taxes and your insurance payments. So you want to do it quickly. The live and flip though takes a lot of that pressure off because if you buy correctly, you can use one of these owner occupied types of loans, maybe a VA loan or a low down payment, conventional mortgage option, and you can take as long as you really want to do the flip. But basically you should give yourself about two years because there’s this really awesome part about the live and flip, which is that if you live in that property for two years or more, you have to basically live in it for two out of the last five years that all of the money that you make on that live and flip all the profit is actually exempt from taxes.

Dave:
You do not pay capital gains tax on that, and that is incredibly powerful. So basically you could do the live in flip and then hopefully generate enough equity, go and sell it, and then when you do that, you can either go buy a house hack or you can buy a rental property or you could just go and do another live in flip. And I love this option again because it has a lower down payment option for lower income investors. Now, the types of properties that you’re going to need to do this for will change because for an FHA loan, there are specific requirements for the house that you need to hit, and oftentimes it can’t be in really bad shape to get an FHA loan. But on the flip side, there are other government programs that allow you to borrow the money that you need to renovate a home like a 2 0 3 K loan.

Dave:
Awesome option for people here to consider if they want to do a live-in flip strategy. Or you could just go out and look for a conventional mortgage with a low down payment option, use that to purchase the house and then either come out of pocket to buy the flip or potentially partner with someone to buy the materials and pay for the labor that you need to do a flip. But I would highly recommend considering this if you’re handy, if you’re willing to get your hands dirty a little bit, this could be an incredible wealth building strategy, especially early in your investing career when you need to build up equity that you can use to go out and buy subsequent investments. This is a really good way to supercharge your equity growth early in your career. So those are two great strategies for low income investors to get started.

Dave:
The third is the Burr strategy. If you haven’t heard of Burr, it stands for buy, rehab, rent, refinance, and repeat. And it is basically a strategy that allows you to recycle at least some of your capital into multiple deals. The idea is you go out and buy a property, you have to put some money into that deal as a down payment. You need to put some money into that deal to renovate the property. But once you’ve built up equity and improved the value of your property, you can refinance it, take some money out of the deal and use it for your next property. This is why Burr is so popular, especially for people who have limited capital, but it’s honestly just popular for everyone because it allows you to be very efficient with the capital you want, and that’s valuable to everyone, whether you’re a low income investor or a super successful investor.

Dave:
Now you can sort of do a burr with an owner occupied hybrid, but if you were going to do a burr without owner occupied, you are going to need some capital. This isn’t a no money down strategy. You still need to find money somewhere to go purchase this property and pay for the renovation. You can do that through some of the financing options I mentioned above. A common way to do this would be through partnerships, but you are going to need some capital. But the reason I like this is because Burr, if you can get that first injection of capital, you might not just be able to buy your first property. That might help you get your first and second property or your first, second, and third property because it’s a very efficient use of the capital you have. So I really recommend lower income investors learn about the Burr strategy and see if it’s something that you can realistically pull off.

Dave:
So those are my three favorite strategies for low income investors. Of course, you can do other things. You can go out and buy a traditional rental. You can go out and buy a short-term rental or a midterm rental, but you’re going to need a partner, right? And if you don’t have the money, you’re going to need to go out and find someone who does to buy those kinds of deals because either you’re going to owner occupied and maximize all the programs out there for owner occupied people or you’re going to have to partner. It’s just one or two of those things. I know people overcomplicate this and come up with all these different strategies, but you’re going to have to do one of those two things if you don’t have the capital to just go out and buy rental properties on your own, and that’s okay. This is what everyone does, so don’t think this is some unusual way to get into real estate investing. This is probably the most common way to get into real estate investing. That’s why I know that people listening to this can make this work for them because it’s worked for so many other investors in the past. Now that we’ve talked about financing options and strategies, let’s just talk step by step, what do you do to go out and land that first deal? We’ll get into that right after this quick break.

Dave:
Welcome back to the BiggerPockets podcast. I’m Dave Meyer talking about how to invest in real estate on a lower income salary. So $50,000 give or take. Before the break, we talked about seven different financing options you can use to get into the game and some of my favorite approaches for low income investors to start their career with. Now that we’ve done those, let’s just talk step-by-step, action plan. What do you do? Because I get it, if you don’t have a ton of capital get started, it could be really daunting to look at the price of homes and think, how can I actually go out there and do it? So we’re going to go step by step. What do you do? Step number one, and this isn’t what I recommend for everyone, but for lower income investors, step number one is go talk to a lender and understand your financing options.

Dave:
This is something so many people just skip over. There are tons of people who reach out to me almost every day saying, I don’t know if I can afford a home. I don’t know if I can get a house hack. I don’t know if I could do a live and flip. Well, you know how you figure that out. Go and talk to a lender. These are people whose entire job it is to tell you whether you can afford these types of homes, and best of all, it’s entirely free. So if funding is your number one concern, you do not need to go and guess about what you can afford. Go talk to lenders and see what they have for you. I recommend you meet with two or three different lenders and compare programs, and that’s not just necessarily go talk to different brokers. If I were you, I’d talk to maybe two different brokers.

Dave:
Just go see someone who will shop around on your behalf and then maybe go talk to two local banks as well. Because local banks or credit unions sometimes have their own programs or will have incentivized to lend in their own communities, and they might have programs to help you out that you’ve never heard of or a broker may have never heard of. So go talk to three or four of these people. If you qualify for things like a VA loan or A-U-S-D-A loan, you definitely want to talk to lenders who have experience with that and talk to these lenders about DOW assistance programs in their area. In my experience, good lenders who specialize in your market should know about this. Now, you might talk to some lenders who are on a national basis, and that’s okay. I’ve used national lenders too, but just talk to a couple local ones and see if they know some things that you can learn about down payment assistance, and as you’re talking to these lenders, do that research about city municipality, regional state level programs that you may qualify for.

Dave:
At the end of the day, the goal of this whole step of talking to lenders is to get a preapproval to understand the maximum amount that you can get a loan for because that will set your buy box later in our step-by-step guide so you understand exactly what your budget is for going out and getting a property. This I think is the most important thing that low income investors can do because it takes all the guesswork out of it for I think the majority of people out there listening to this podcast right now, you’re going to find out that you can afford something that actually makes sense, and that’s incredibly empowering and motivating for you to go out and get their deals. When a lender tells you, yeah, I’ll lend you a couple hundred thousand dollars to go get you into real estate, that is awesome.

Dave:
So go have those conversations and see what you qualify for. There will be some section of people, it’s small that won’t qualify, and the lender will tell you, actually, your credit’s too low or your DTI is not good enough, and honestly, that’s okay too. You want to know that because at least you are taking away the guesswork of Can I buy this? Can I get into real estate? And you’ll get a very specific answer from the lenders about what you need to go out and do to be able to qualify. Maybe you need to work on credit repair, maybe you need to pay off some credit card debt. I don’t know. But it is better to know the barriers to you getting a mortgage than to just stay out there guessing. So step one, go out there and talk to some lenders. Understand your financing options.

Dave:
Step number two is define your long-term strategy and goals. You need to figure out what you’re aiming for because I know especially for people who just really want to get their first deal, you could just say, I’ll buy anything that makes sense, and I totally understand that sentiment. That is how I started in real estate, but 15 years into this, I have recognized that starting with a plan and a strategy actually really helps you go a lot faster than just diving into any old deal. So figure out where you’re trying to go and over what timeline. If you are a long-term buy andhold investor, which is what I think 80, 90% of real estate investors are out there trying to build wealth for the long-term, then I think looking into house hacking or a traditional renter property, if you want to partner with someone, are really good options and you want to focus on getting a defensive deal.

Dave:
Now, I know a lot of people out there are saying that cashflow isn’t that important, and that is a worthwhile debate. Personally, I believe that cashflow waxes and wanes in importance depending on where you are in your investing career. But if you are lower income and getting into your first deal, cashflow is absolutely essential, not because it is going to make you rich, not because it is going to change your life instantly and you’re all of a sudden going to retire, but because it reduces your overall risk when you are a low income investor, your goal of your first deal is to get in, hold on, learn, and get a little bit more financially free. If you do not have cashflow, it calls all of that into question because unlike someone who’s say, starting with a ton of money, if they buy a deal that doesn’t cashflow and a water heater breaks and they need to come out of pocket two grand to pay for that, that’s okay.

Dave:
But for folks who are low income and trying to get into that, you can’t have that situation that brings in too much risk into your first deal, and so you need to really understand how to analyze deals well, to understand the real metric of cashflow, which incorporates the potential for expenses on things like water heaters and roofs and HVACs and all the other stuff that inevitably breaks. You need to take all that into account and still make sure that you are getting cashflow. That is the strategy I recommend for anyone who wants to be a buy and hold investor and getting in with a low income. Now, if your goal is to just try and make some money as quickly as possible, which might be okay because you want to buy rental properties later without a partner, then I think a live and flip is awesome.

Dave:
I actually think anyone who’s willing to take on the inconvenience of a live and flip because it is inconvenient you’re living in a house that you’re flipping anyone who’s willing to do that though, it’s one of the best ways to start, even if your goal is long-term buy and hold because it allows you to build up that equity and buy properties in the future. So you just need to figure out what your goals are, like a one year goal, a three year goal and a five year goal are usually what I recommend to people. If your one-year goal is just get a cash flowing rental, then go out and do a house hack. If your one-year goal is to build up as much equity as possible to buy deals in the future, go do a live and flip. The whole point though of this step is figure out where you’re trying to go over the next five years and back into a plan that works for you.

Dave:
Step number three, go educate yourself and do some market research. Once you figured out, Hey, I want to do a live and flip, or I want to buy a house hack and I have X money to spend, which is where you should be entering step three, then you got to go make sure that you can really pull this off by learning as much as you can about these topics. So if you want to be a house hacker, go read the book on house hacking or listen to all of the millions of episodes we have on BiggerPockets about house hacking and how to be successful at it. If you want to be a live-in flipper, go read a book about live and flip or listen to the many podcasts Mindy Jensen has put out about being a successful live and flipper. This is where you just have to be good at being a real estate investor.

Dave:
This is true whether you’re low income or high income, you got to learn the skills to make sure that your first investment goes well As part of this education, it’s not just learning the tactics and things you need to do, you also need to do some market research. This is where you have to pick where you want to buy a house because although it is really an oversimplification to say real estate’s location, location, location, there is truth to that old saying that location matters a lot and where you live and flip might be different than where you want to buy a house. Hack might be different than where you want to do a burr, and so you need to find the right market for the strategy that you have selected. Now, all things being equal, you want to invest in your own backyard if you’re first getting started.

Dave:
That’s usually my recommendation because that allows you to take advantage of the owner occupied strategies and it allows you to just keep an eye on your deals and get good at managing those deals over time. Now, if you want to partner with someone you can do out of state investing in a low price market, that is absolutely possible too. If you live in an expensive market on a lower income, maybe you need to go invest in the Midwest, you can afford something there, you can absolutely do that, but that’s probably going to take a partnership option because you’re not doing owner occupied, and that’s okay. Just at this stage of the process of buying that first deal, you need to go out and figure out where you’re physically going to buy those properties, tons of resources again that are free on BiggerPockets that you can go do that.

Dave:
Step four is starting to get deal flow and analyzing those deals. Deal flow is basically you need to look at a lot of different properties before you go out and select them, and you need to figure out where you’re going to get that deal flow from. For the vast majority of people getting your first deal, especially if you have a lower income, is going to come from a real estate agent. You don’t really have to overthink it that much. Go on biggerpockets.com/agent, find an investor friendly agent and ask them to send deals that fit your buy box. At this point, you should have a buy box decently well developed. You should know what your maximum budget is based on what your lender has told you. You should know what type of property you’re looking for based on the strategy and goal work that you’ve done, and you should know where you want to buy based on your own education and research about different markets.

Dave:
So go find that agent, tell them what you’re looking for. Hopefully they can refine your strategy with you and give you some input on what to look for, but figure out what your buy box is and start getting those deals sent to you. Now, a lot has been made in recent years about off market deals, and if you have access to off market deals, great, you should pursue them. That’s a great thing to do, but it is hard to get off market deals if you’re income because a lot of the strategies you use, like sending out mail, putting up flyers or direct marketing, any of these things, they cost money and they cost time and just given where the real estate market is today, more and more good deals are going to be available on the MLS are going to be in front of agents.

Dave:
And so for most people, I would recommend that strategy. Start looking at a lot of deals and start analyzing those deals. Analyze as many as you can. Analyze five a day, analyze 50 a week if you have to really get confident in how well you can run the numbers. Tons of resource on BiggerPockets how to do that. I wrote a whole book called Real Estate by the Numbers on how to do that, but we have tons of different webinars. We have all sorts of free stuff that you can check out as well if you want to get good at analyzing deals. But the main thing I want you to remember, any deal that you look at as a new investor, if you’re not doing a living flip, if any sort of buy and hold, whether it’s a burr, it’s a house hack, it’s a traditional owner occupied, it has to cashflow.

Dave:
Just don’t look for a deal that doesn’t cashflow. If you are low income, that is too risky. You do not want to have to come out of pocket to float your deals. You want to make sure that after maintenance costs are factored in after vacancy costs are factored in after capital expenditures are factored in. Those are things like those big ticket items like replacing your water heater or your roof every decade or so. Those things have to be factored in and after you factored them all in, it has to cashflow within the first year or do not buy it. That is the best advice I can give you for a low income investor because you’re in a situation where you’re not going to be able to afford to pay for a $5,000 water heater if it breaks in the first month. So you really need to factor all that in to make sure you are not going to be putting yourself in a bad personal financial situation by buying these deals.

Dave:
And I promise you, these deals absolutely do exist. You just need to be disciplined to go out and find them. It might not be on the first deal you analyze. It might not be on the 20th deal you analyze. It might be the hundredth deal you analyze, but this is the job of an investor. If you are expecting that you can come into this with low income and just find a deal in the first day or two, I’m sorry, that is not what’s going to happen. If you are coming into this with a lower income, you’re going to have to hustle a bit to figure out where these deals come from, and this is how you hustle. Look at a ton of deals, get very good at analyzing deals. These are skills that anyone can learn. You get very good at it, and that’s how you protect yourself and get into the game.

Dave:
That’s step five, step six. Once you’ve done that, you just start making offers. Make offers. Talk to your agent, figure out what you are willing to pay for different properties. Be willing for people to say no to you. That’s okay. Figure out what you’re willing to pay for properties. Negotiate hard because we are in a buyer’ss market right now. This is a big change from where we’ve been over the last couple of years, and buyers actually have leveraged negotiating power right now. So the way you should approach these offers is you don’t want to be greedy, don’t insult people or make stupid offers, but go out there and make offers that are mutually beneficial and you think actually reflect the value of the property to you as an investor and stick to it. Stick to it. Be willing to walk away from deals that don’t make sense.

Dave:
Just keep going until you find the one that works for you. And then step seven is just scale and repeat. Once you’ve done this, once, everything gets a lot easier. If you do a live and flip, you’ll have equity to go buy your next deal. If you do a house hack, you can save up enough money to go do a second house hack a year later. If you do a partnership in a bur, you should be able to efficiently recycle some of that capital to go get your next deal. Or if you want to partner, once you’ve done one deal, the amount of people who are going to be willing to work with you and partner with you and lend to you is going to go up exponentially. The difference for me as someone who does private money lending difference between someone who’s done no deals and one deal is pretty considerable, and the more experience you get, the more options are going to be available to you.

Dave:
So once you get that first deal, everything will get proportionally easier for every deal you do from there. So those are our seven steps. Just as a reminder, step one, talk to lenders and understand your financing. Step two, define your strategy and goals. Step three, do the education and market research. Step four, talk to an agent and start analyzing deals. Step five, make offers and get your first deal. Step six, scale and repeat. That’s it. And before we get out of here, I hope what you are taking away from this episode is that your income doesn’t define your potential as a real estate investors. Some of the most successful investors I know started with less than $50,000 per year and built incredible wealth through real estate. The key is to accept and to start where you are. Use the tools available to you like FHA loans and house hacking, and focus on cashflow over appreciation. Do not try to get rich. Quick focus on building wealth steadily and systematically. Your first property is always the hardest, but once you prove to yourself that you can find finance and manage a rental property, the second one becomes easier, and the third one is easier still. That’s what we got for today’s episode. If you found this helpful, make sure to leave us a review and share with anyone who would benefit from it. For BiggerPockets, I’m Dave Meyer. See you next time.

Ashley:
Today we have a guest on who’s made some incredible moves in her investing journey. She started as a DIY, hands-on landlord, and then made the leap to a more passive approach.

Tony:
And not only that, she scaled from single family rentals into self storage, which is a huge jump. And we’re going to break down how she made that pivot, the system she put in place, and the lessons she learned along the way.

Ashley:
So if you’re sitting there rehabbing and managing your own rentals, maybe juggling tenants, toilets and turnovers, this is the episode that will show you what it’s like to step back, build smarter, and start thinking bigger. Welcome to the Real Estate Rookie podcast. I’m Ashley Kehr.

Tony:
And I’m Tony j Robinson. So let’s jump right in and hear from today’s guest, Brit ar and Brit, thanks for joining us today.

Ashley:
Thank you so

Britt:
Much for having me, you guys.

Ashley:
Yeah, so we are so excited, and most people probably know a lot about your background from your large social media following and all of the BiggerPockets episodes. You’ve been on the past, but can you start off by sharing a little bit about your early days as a DIY investor and maybe what kind of drew you into real estate and what those first couple of deals looked like?

Britt:
Yeah, so real estate to me was building this path of freedom. I didn’t want to have a boss. I wanted to be able to work when I wanted to travel when I wanted to. And in the early days, my first properties, I was buying for under $50,000 in these small towns, but they’d make great cashflow. And the first one I ever bought was $25,000, but it made $850 in rent and I didn’t have a lot of money. So I’d go out with my tool belt, learn how to do all the renovations myself, the demo, the painting, the flooring, the what you name it. I was doing all of it and I was living in my van working on these places and just burying those properties by rehab, rent, refinance, repeat, doing that over and over again.

Tony:
And Britt, you built, as you mentioned earlier, a big following on Instagram because you shared and documented that journey. But at a certain point you realized that you couldn’t continue to DIY all by yourself. So what was that point when you realized you couldn’t be a one woman show anymore?

Britt:
Well, the point I got to was when I realized the whole reason I got into real estate was for freedom and not a job. That’s what I did. I just built myself this huge job. So in the early days, if I stopped working, my entire business stopped moving forward. And just more recently, I was on a month long trip to Europe and I had so much progress in my business. We got two hotels under contract raising capital. I sold an apartment building. So much happened and this was all with me being in Europe, just doing a few check-ins with a team. Whereas in the early days, there would’ve been zero progress, nothing would’ve been happening.

Ashley:
So you made a big difference from doing your work in Europe to spending every day in your rehabs, living in a van, sometimes living in the rehabs. For somebody listening, what’s maybe that pivotal moment and what’s the first action item, the first step they should take if they decide, you know what, I’m not liking this path I’m on anymore is feeling more like a job. What’s the first thing they should do or start thinking about to change that?

Britt:
I always say start thinking bigger sooner because real estate takes time. We’re in this for the long run. So the sooner you could start thinking bigger, surrounding yourself with people who are doing bigger things, that was a huge pivotal moment for me when I actually got into rooms instead of just being alone in my DIY renovations. I didn’t believe really in myself that this would be possible for me. But once I surrounded myself with the right people, I think that’s so key because you start to create this belief in yourself that you can do it too.

Ashley:
So do you think building your community, attending events, masterminds, how do you get yourself into those right rooms with those right people?

Britt:
Yeah, there’s so many out there and there’s so many communities, there’s so many things that you could join and you’re not always going to go into the right one, right too, because there’s a lot of people that I am extremely inspired by, but then there’s a lot of interesting investors and influencers out there that maybe don’t have the same core values that I have. So I think you have a feeling of alignment with certain people, certain mentors. When I was listening to BiggerPockets way back in the day when I’m living in my van, driving to these properties, I’m listening to Brandon Turner, everything they were talking about the podcast and their guests, and there’s certain things that I was just drawn to. So my first mastermind was through Brandon Turner and I met some incredible people, incredible groups of friends, and I had it in my mind like, wow, everybody’s like this.

Britt:
Everyone’s cool and down to earth and growing and doing great things. But then I got into the real world. Not everybody’s like that, and you do have to be a little bit careful, but I think just putting yourself out there, I was so extremely nervous to go to these masterminds. I didn’t feel good enough. I didn’t feel that I’ve done enough. I was scared that I didn’t have the right things to say, but it’s just all in our heads where there’s always limiting beliefs and insecurities. We just have to push past that and know that the good people will be there for you, the good mentors, the good communities, and you can find that support.

Ashley:
One of the first masterminds I went to and you were there at that one is we had to do a TED talk on a topic. And I was terrified leading up to that everybody here is more successful than me. Everybody here already knows anything I could talk about. But that was such the wrong mindset to have. It was everybody else is successful at what they’re doing and I’m successful at what I’m doing. And I found a super, super niche topic talking about having life insurance on your business partners, something very, very random and it worked. So I think a lot of it is that mindset piece. Even going to BP Con and joining even Facebook groups like having that courage and knowing that you do have something to bring to the table. If you’ve read a book on real estate, if you’ve listened to a podcast, you have something that you can contribute to the community.

Ashley:
And if you really, really feel like you don’t, then listen. Listen, just be in those rooms and listen to what other people are saying, and you don’t have to contribute. You can just soak up all the knowledge in those moments. Tony, I wanted to ask you, you started off pretty much not ever doing DIY working in your properties, but you and Sarah did a ton of self-managing and you did a ton of the admin, all of that stuff. So what was that pivotal moment for you where you decided, okay, I want this to be more passive for me,

Tony:
Really, when my wife told me I can’t do this anymore, so you got to figure something out. She was the one who was really managing the day-to-day, and I think at that point we were up to 12 properties or something to that effect, and she’s like, Hey, I feel like I’m kind of burning out here. And that’s when we started to put more people in place and teams and systems. So I think a lot of times it is just when you get to that breaking point of like, man, I’ve been grinding for a while. It’s got to be something better than what I’m doing right now.

Ashley:
We have to take a short break, but when we come back, we’re going to talk about some of the biggest pain points of actually being a hands-on investor. We’ll be right back. Okay. Welcome back. We are here with Brit. So Brit, what were some of the kind of strategy or mindset shifts you had to start making when you decided to become more passive?

Britt:
Well, a big one I would say is I had to learn to put a dollar value on my time. And I started as a waitress making $10 an hour. So I did that for so many years, and that was my starting point. And so doing every job, doing everything myself kind of made sense. But until I started to build up that skillset and I was listening to, I mean BiggerPockets podcasts had a huge impact on me. So I was doing my DIY renovations, I was learning, I was growing my skillset. And then I got to a point where, okay, I was learning from the podcast. I was kind of starting to realize that hiring out is an expense, it’s leverage. So I had to get out of those small tasks. I had to free up my time so I could focus on the $10,000 an hour task or a hundred thousand dollars an hour task.

Britt:
It’s like, okay, there’s way bigger things that we could do here. And for example, I bought an apartment building in 2023 for a million dollars and I’m now selling it for 2.5 and congratulations. Thank you. And honestly, I put less time and effort into that project than I did a few years before on a single family home, or maybe I made a hundred thousand dollars or less. So it’s just getting out of those tasks and start focusing on the bigger dollar per hour task, that was a huge turning point for me, and it was the most difficult one to get to. And it was just a lot of practicing, a lot of delegation, a lot of being intentional about switching that mindset because I grew up with the thought of partnerships are bad. You should do everything yourself. Why hire if you could do it yourself for free? That’s kind of the lessons that I was taught. So it took a lot to really break out of that. But now my first thought is, who can do this for me? Not how can I do it myself so I could focus on the bigger dollar per hour task.

Tony:
Brit, I appreciate that insight, but I want to put my rookie cap on for a moment because I remember hearing successful entrepreneurs say that when I was first getting started, like Dan Martell says, buy back your time, hire the right people to put in the right seats to do the work so you can focus on bigger picture things. But do you think that you would be as successful as you are today? Had you started that way, would you have had the resources from really just a money perspective to hire all those people? Or do you feel like going through that initial DIY phase was necessary to get you to the point where you could start hiring the right folks?

Britt:
I think it really depends on maybe your background, where you come from, what your skill sets are. It was necessary for me. I had to go through the figuring it out on my own, doing everything for you. I’m so glad I did that. And also big tip is to remember to document everything. The best thing I ever did was document all of those early DIY projects. I filmed everything. And this is because I had a mentor tell me start document and sharing your progress. You never know when you’re going to need deal flow, when you’re going to need investors on your projects. And so I didn’t really expect any of that to come true. But now 10 years after doing social media, I’ve raised over 25 million for my progress for my projects. I’ve seen so much come from that. So I’m glad I started there and worked my way up into hiring.

Britt:
I don’t think I could have just automatically went from the mindset of I’m going to hire everything out immediately. But it depends too. Maybe you really are at the point where you have to crunch down your timeline and maybe you have a management position at your W2, whatever it is, where you have a little bit more of that skillset to start hiring out right away. And I do know investors who get right into sell storage or right into commercial, but it’s usually because they have capital of their own. They could invest, they could start hiring earlier. If you don’t have any of that, it might take some more time or you might have to partner, you might have to leverage in other ways.

Tony:
And I appreciate that insight, Bri, because I think there’s two ways to build a business. You can do it top down or you can do it bottom up and top down is, Hey, I’m just going to hire some key people to help me build this business out, and I’m just going to lead those people and let them execute on the actual doing. And bottom up is kind of what you described where you were doing everything and as you built up your business, you started pulling people in to take off some of those responsibilities. Both of those approaches work. But to Britt’s point, I think a lot of it does come down to what are your resources at the beginning? Can you afford to put people on some sort of payroll to help you build out this vision and dream of yours? And some people can’t, other people. I know for me, when I first started, I was working a day job out of family of mortgage, different things we were working to take care of. So just know that there’s two different ways to attack that. But Brett, you mentioned partnerships and systems. I guess what role did partnerships, property management, or really just systems and processes play in allowing you to scale

Britt:
Everything and all of those things are leverage. So you’re leveraging other people’s money, other people’s time, other people’s experience using technology as a leverage. And all of these things can help with growing in a significant way. And the more you learn how to use leverage, the more you are able to scale and grow. But again, these things do take a lot of time and I mean, I love partnerships now. Can be good, can be bad. You have to really, like I say, be aligned with your partner in a long-term vision way. And even your core values, there’s so many things that you want to be careful about when partnering and I was brought up that partnerships were bad and that was because my mom is an entrepreneur. She had a really bad partnership in her early days, so she always told me, never partner, never partner.

Britt:
You’re going to get burned. You’re going to get screwed over. Same with hiring, there’s no good workers, all of these things. So that was all in my head until my first partnership with my self storage partner, a GA Osborne, and everything aligned. We have the same vision, we have the same goals, we had the same values, and it’s been an incredible partnership. And I know, and that really changed my life. I learned so much. I was able to leverage his experience, his skill sets, his systems, and then I brought my skills to the table as well. We all have strengths and weaknesses, so we all bring something to the table. I’m really bad at a lot of things, but I’m really amazing at a lot of things. So I’d rather focus on those amazing things, focus on my best skills, and then partner with people who have the opposite skillset.

Ashley:
Now that you’ve kind of grown your team built out these partnerships, what is some of that technology that you’re actually using? Like Tony and I use monday.com for a lot of our project management. Is there technology out there that we should be using and just software in general that has really helped you manage and kind of scale and grow your business?

Britt:
So I would say for me, I am pretty terrible with systems. I’m terrible with SOPs, I’m terrible with technology, all this stuff. However, my team is the best at it. So now I have six people on my team. They’re all pretty much opposite to me, very organized, very good with technology, with systems. I have a COO that runs my meetings. So we have weekly meetings where we use the EOS entrepreneur operating system from the book Traction, I highly suggested it keeps things, even if you’re on your own. I was actually using EOS way back when I was just starting to figure this all out. But using a system is important because you have to be able to track your goals, track your progress, and if you’re not tracking, it usually just falls away because life gets busy. But you have to keep some sort of structure.

Britt:
And we use clickup for task management. Again, I’m barely in there. I’m out there. I’d rather be out there creating the relationships, raising capital, finding deals, networking, doing all those things. And then my team is in there getting the task done. So there’s a way to do it. And if you’re not good at something, there’s always a way to expand when you do have a team. Now I’m so thankful for my team that can use the best systems and keep up with it. I’m not be the one to do it, so I need the people in my corner that are going to move those things forward.

Ashley:
Now Brit, a really hot topic for us has been just strategy in 2025. What new opportunities are you seeing in 2025 and how are you evaluating them?

Britt:
Yeah, so it’s an interesting time, and one thing to note is this great wealth transfer with all these baby boomers starting to retire. And that’s why I’ve been really focused on self storage and hotels because a lot of these owners, and I think it was like 80% maybe, of these owners are in that generation who maybe don’t have someone to pass these properties down to. So there’s so much opportunity in that, and it’s going to be a small window of time because we’re seeing it even in the cell storage industry, it was very much fragmented to mom and pop owners, individual owners who had maybe one storage facility or maybe two. And then the number goes down and down and down because institutions are buying these places up quickly. So our window is getting smaller and smaller. So we have to get out there and start looking and learning.

Britt:
And if that’s something, maybe it’s hotel investing or self storage. Those are the two asset classes that I’m focused on, and I could get into those reasons why as well. But they’re businesses, so you own the business and you have a high cash flow business, but the real estate is attached to it. So I love how these properties are valued. I love how you can add income streams. I love the creative financing that you could do. They’re usually a little, it could be a big project, but you also could find storage facilities and even small boutique hotels for less than a duplex in some markets. So there are lots of opportunities out there. And I think getting creative 2025, it’s been a little bit of a crazy year, interest rates skyrocket, but I just see so much opportunity coming up.

Tony:
But I love, you’re talking about self storage and I’ve heard it called the silver tsunami, right? Where there’s a lot of folks in that generation who are retiring, and that’s part of the reason that we got into hotels as well. And I want to get more into how Ricky’s can think about this transition, and we’ll cover that right after A quick word from today’s show sponsors. We’re back here with Britt. So Britt, you talked before the break about why you like self storage, and I think there’s a big opportunity in commercial real estate right now as well. But with this transition, did you keep scaling your single family residential portfolio or did you just really start to focus on these bigger commercial assets?

Britt:
I completely stopped in the single families because kind of like I was saying before, I just wanted to focus on the higher value tasks. Like I was saying with my single family home when I was doing that and I maybe made a hundred thousand or I could focus on commercial assets and make a million, I’d rather focus on that. And so recently I sold my last single family home and actually gave a few to family members as well because I just got to a point where it did make sense for me to stay focused. And I think with real estate, it’s hard because shiny objects, it’s just everywhere. Oh man, I want to do storage. I want to do hotels, I want to do single. I want to do flips I want to do, and then the problem is you just get a little distracted. So I think putting the blinders on is quite important. And then you get to a point, okay, now I’m doing well. Now I could start to diversify

Ashley:
With the self-storage. What was the reason that you decided to choose self-storage as your path?

Britt:
I was always interested in self-storage. I love, like I said, that is a cash flowing business as well as the real estate. And I love that you didn’t have tenants at the property. I thought that was pretty cool. I love that you can add all these income streams. And I actually heard, of course on the BiggerPockets podcast, my now business partner, I didn’t know him at the time, but it was AJ Osborne, and he was talking about how he made $13 million on one deal, and that just blew, I didn’t even know you could make that much money in real estate. I was at the time still DIY, buying houses for $25,000 working on them. And I’m listening to this podcast like, the heck, you can do that. That’s crazy. So that really sparked the interest. And then I met him later on at a mastermind that Ashley was talking about earlier as well, and there was just so much certainty that that was the path I wanted to choose.

Britt:
And I love the asset class. I love it’s way different from single family and I’m creative. I think that’s why I’m drawn to the hotel and hospitality side as well, because my personality, I love the creativity of that. But then in storage, there’s still a lot of creativity. You can take a mom and pop facility that maybe doesn’t even have a website, they don’t have any advertising, they’re not even checking if people are paying every month. So there’s a lot of money on the table that you could come in and it’s pretty simple business operations. As long as you understand those basics, you can really turn the place around. And then in commercial real estate, the property is valued off of the net operating income. So if you’re increasing that income, you are increasing the value of the property itself. Whereas in single family homes, you can do this incredible property, bring in all this income, and it doesn’t matter. It’s based on the comparable properties in the area. So if you are bringing in tons of income in your property and you did this incredible job, this renovation, it doesn’t matter. It just matters. If houses are selling in the area for $300,000, that’s what it’s going to sell for. It doesn’t make a difference on the value and the income you created. So I like that that’s in your control. And there’s a lot of simple strategies and ways you could do that within self storage investing. And then your property value goes up in that way.

Ashley:
When I went through my year of having really bad shiny object syndrome, self-storage campgrounds, mobile home parks, anything you can think of, I looked into and I found a self-storage deal. And the guy, he would go whatever the first Sunday of the month ended up being, he would go and sit at the self-storage unit and that’s when people would come and pay there. He’d sit there for four to six hours until everybody came and he would collect rent that way. So the first Sunday of the month, the person renting had to go and deliver their rent. And so obviously that seemed like a really good opportunity there. Imagine how many people refused to rent there because they’d have to drive to pay rent every time and just not having to waste time and sit there as operator. But I think there’s lots of potential in self-storage. And you actually are doing a workshop at B Pecon with aj, your partner. Tell us a little bit about that workshop and why someone may want to attend it.

Britt:
It’s going to be awesome. All my self-storage nerds, we’ll convince you if you’re not a self-storage nerd yet, but it’s going to be a three hour workshop. We’re going to go through how to find these deals. We’re going to go through how to analyze deals. We’re going to have worksheets where we’re going to have a lot of interaction as well. We’re going to go through the self storage industry, the history of it, but then where the huge opportunity is now and how you can take advantage of it. The time is now, we’re talking about this silver tsunami. You don’t want to be on the sidelines. This happens all the time. People go, oh man, I wish I invested in 2008. Well, the time is now. It really is. And the more you just sit on the sidelines and you’re waiting for perfect scenario opportunity, now, this is the time to get out there, learn as much as possible, take advantage of the opportunities, and go all in. And me and AJ are going to be there with you, answering questions, doing worksheets, really getting you in that space where you can take advantage of the opportunity. And we have a really exciting announcement because if you buy a ticket to the BiggerPockets Conference, you could use the code storage workshop and that will get you a free pass to our storage workshop, which is going to be incredible. So we can’t wait to see you there.

Ashley:
That’s awesome. That’s such a great value to get that for free with your BP ticket. So yeah. Awesome. Well, Brit, besides seeing you at BP Con, where can people reach out to you and find out more information?

Britt:
Mostly on Instagram. I’m the most active there at Investor Girl Britt, but I’m all over social media, so if you prefer LinkedIn, whatever your social platform is, I will be there.

Ashley:
Well, Britt, thank you so much. We really appreciate you taking the time today to share with rookies your transformation and pivot from DIY to passive investors. So thank you so much. I’m Ashley. He’s Tony, and we’ll see you on the next episode of Real Estate Rookie.

This article is presented by Connect Invest.

Missed the last housing cycle? You’re not alone. Pending home sales fell by 0.4% in July, continuing a three-year trend of slugging along. And it’s not likely to change anytime soon—there are 36% more sellers than buyers, the largest gap since records began in 2013. 

With a buyer’s market looming and uncertainty that it will get better anytime soon, plenty of investors are parking capital, but that doesn’t mean it has to sit idle. There are investment vehicles offering predictable returns, asset-backed security, and low minimums without the friction of traditional ownership. Some of those, like real estate-backed notes, make it easy for your cash to get a higher return than if you put it in a savings account. 

What Are Real Estate Notes? 

A real estate note is simply a document indicating a debt, like an IOU for financing real estate. When a borrower takes out a loan and agrees to the payment and interest terms, these notes are created. The lender then sells these debt instruments to investors, who can collect the payment until it is paid off.

There are different types of real estate notes, including first-position and second-position liens, which indicate how secure the note is and who gets paid out first. 

Why Invest in Real Estate Notes? 

Investing in real estate notes might make sense for several reasons. For one, it allows you to earn a passive income stream. All you have to do is buy the note, and you are entitled to the payments.

It’s also hassle-free, as you don’t need to manage a property. But you get the advantage of diversifying your investments with exposure to real estate. And in many cases, the interest you receive is higher than that of a savings account. 

Real estate notes also come with higher liquidity, which can be advantageous for investors who don’t want to get locked into owning a property for years. And with housing staying on the market longer these days, that’s advantageous for investors who want the ease of selling quickly.

Of course, there are risks involved. If the borrower defaults and doesn’t pay back the loan, you won’t receive payments, or you could even lose your initial payment for the notes.  

Where to Buy Real Estate Notes 

Any individual or fund can buy a real estate note. There are several ways to invest in real estate notes, including through banks, funds, and online platforms. 

Just like any real estate investment deal, you should do your due diligence. Find out the loan-to-value ratio of the property so you know how risky it is, and research the history and condition of the property to discover its marketability and value.

You can also buy notes for a pooled portfolio of real estate, which can help diversify your investment even further. This means instead of buying notes for one property, you would buy notes that cover a range of collateral-backed real estate loans that are vetted by platforms. 

One platform that makes it easy to invest in a diversified portfolio of real estate properties is Connect Invest, with which you can invest in private residential and commercial real estate projects with a starting investment as low as $500 and time commitments as short as six months. 

Final Thoughts 

Real estate notes are one way to get exposure to the housing market without having the overhead of owning a property. With the market still in flux, it could be a way to wait out the housing crunch while earning passive income.

See how Connect Invest helps you stay active in real estate, even if you’re waiting for better buying conditions.