Ashley:
Being a landlord sounds simple. Until you’re the one getting the 2:00 AM call about a leaking toilet or worse, you have no idea who to call to fix it. That’s when you realize this isn’t just about owning rental property, it’s about having the right systems, tools and backup in place so you don’t lose your sanity along the way.

Tony:
And here’s the thing, most rookies think managing a rental yourself just means collecting rent and maybe mowing the lawn. But there’s an entire set of essentials that separate the landlords who burnout from the ones who actually scale and succeed as real estate investors. And today we’re breaking down 10 things every DIY landlord needs in their toolbox.

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

Tony:
And I’m Tony j Robinson. And with that, let’s jump into DIY tool number one.

Ashley:
The first one is property management software. And I feel like this can go with any strategy that you’re doing as some kind of software to track your property and to communicate long-term rentals, short-term rentals, midterm rentals, house hacks, rent by the rooms, all of the rentals strategies you need, some kind of property management software. So when I started investing, well before I even started investing, I worked for an apartment complex and this was their system. It was a sheet of paper with drawn out grid lines, the month, the tenant’s name, and then a check mark if they actually made payment or not. And that was how they tracked the rent. This was for a 40 unit apartment complex, so you don’t want to have to do that because it was so aggravating and it took me a long time to actually get a system in place, but I found a property management software. I started implementing it and it saved so much time, but also created so much accuracy. Can you imagine if a tenant came in and said, I paid rent, and I say, no, you didn’t. And then I show them that grid line thing that says, see, there’s no check mark here. You didn’t pay rent.

Tony:
It’s crazy to me to think that in the day and age we live in that folks are still using pen and paper guys. I get pushback sometimes from folks who are new investors like, okay, do I really need that? And I think for this software where the cost is pretty nominal, the value that you get far exceeds the cost of that subscription. And not only do you get prebuilt tools that are purpose-built for your asset class for managing your property, but to Ashley’s point, you get records that are rock solid if you ever need to fall back on them. Some of the ways that we use property management software in the short term rental space, we use it for a lot, honestly. We use it for guest communication. So we’re on multiple different platforms and especially for the hotel. For the hotel, we’re on websites I’ve never even heard of before sometimes.

Tony:
And instead of having to log into all of these different platforms separately, we’re able to communicate with everyone through one unified inbox within our PMS. So it takes in all the metrics from these different platforms and gives us one unified inbox to communicate with. We can even send SMS email platform messages all through our PMS software. So guest communication is a big one for us. Vendor management is another reason that we leverage property management software. We can, and we have a separate piece of software now specifically for maintenance, but when we first started we were using our PMS for that and our cleaners would get notified if there was a turn that needs to be happened and they could flag issues during their turn if they noticed something was broken. So it’s our maintenance and our cleans inventory can be managed through there. Another big one for us is managing our calendars. If someone books on Airbnb, we have to block that data on VRBO and without a PMS, we would be doing that manually. I mean the list just goes on and on and on and on and on and on about the different things that a good property management software can do for short-term midterm rentals.

Ashley:
So I guess let’s maybe go over some of our favorite ones of these. The show is sponsored in no way by any of these. So these are just Tony and I telling you software that we have used or that we’ve heard other people have used that have had a great experience. And at least for the long-term rental side, I’ve used several different ones over the course of the time, but my favorite ones, if you have a large amount of properties, these only make sense at a large scale because they’re minimum to actually have the software is like $400 per month, and if you have one or two units that will kill your cashflow, it’s not worth it. But that’s AppFolio and buildium. So as you grow and scale, even if you get to maybe 50 units, just the bells and whistles that they have could be worth it for you.

Ashley:
But the basics, I like Rent Ready and I like Turbo tenant. They have the basic necessities that you need, the things you need, and then there’s extra little things that you can add on here and there. Turbo Tenant I really like because they have a lease audit, you can upload your lease agreement and they’ll tell you based on your state what things that you should change or not or what things you should include based on your state’s laws and regulations. So I really like that piece of it too. And then for midterm rentals, I’ve just used that through my short-term rental database because I know that Furnish Finder has something that they’re starting to build out. I don’t know exactly how full their capabilities are. I think maybe rent collection, but I’ve always just used short-term rental software for my midterm rentals. But I do know that some people do use long-term rental for the midterm rentals too, especially if they are sending out an actual lease agreement and not booking through Airbnb or something like that.

Tony:
Yeah, I think for us, some of the big names come up. Hospitable is one that we use virtually from the beginning of building out our portfolio. We use Guestie now, especially for the hotel and just it has some functionality. I think that works better for properties or portfolios that are scaling. Kind of like you mentioned Buildium and AppFolio versus Turbo Tin and Rent Ready. I think Guesty is really good if you’re kind of getting to scale or if you’re a short-term rental property manager, if you’re a co-host. I think Gusy has a lot of features that make it good for folks who have slightly larger portfolios. Hospitable is a little less expensive, a little less features. Gusy is a little bit more expensive with a little more features, so you can kind pick and choose where you want to land there, but both are pretty plug and play, I think easy to use at the bat.

Ashley:
And then I use hostly for mine. I’ve never even demoed or tried any other one that was just the person who was managing my properties, which she wanted to use. So we’ve just stuck with that and it’s been fine. What about the maintenance side of things, Tony? You mentioned that integrating with your property management software.

Tony:
Yeah, so when we first started we were using our property management system as a quasi maintenance kind of cleaning database. But now with just the size of the portfolio, we use a separate piece of software called Breezeway, and Breezeway is our kind of back of house operations for cleaning tasks, cleaning checklists, inventory maintenance. So breezeway is what we use and it works incredibly well.

Ashley:
I’ve just started setting up Turo, so that’s one that integrates with hostfully and came highly recommended to me. I’m not fully set up in IT and operating it, but stay tuned. I’ll let you guys know how that goes. But it seems like that’s something similar to what you’re using.

Tony:
Yeah, very similar turn. Kind of started off as a marketplace to help folks find cleaners, but they’ve I think added some software behind that service to improve what they have. Well, what about flipping Ash? Have you used any software for flipping?

Ashley:
No, just on a project management board to manage the project and manage the contractors. But I know there’s different software that you can use to actually send out the estimates. And our friend Tyler Madden who does house flipping every day at the end of the day, they send an update to the owner. So they’re using some software. I think his Instagram is at Tyler Madden, just his name, but you could message him and ask, but I am pretty sure it’s like they, it’s a software where they’re going through and for when they remodel home so that they can show their customer at the end of the day what the progress is, what was done, and each day the person’s getting an update with the photos and things like that. So if you’re flipping, you could probably use the same thing where your contractors uploading the photos to you, sending you the progress, any notes, any updates, things like that I think would be a good way to communicate and track your flip.

Tony:
I think about the more experienced flippers that we know, James Tanner, tar Yarber, both of them were using Excel spreadsheets at least for their scope of work. I think it’s interesting that we’ve got all this software that’s evolved for the rentals space, but maybe not as much for flipping. Even wholesalers, there’s so many CRMs that are out there for wholesalers or people doing a lot of direct mail marketing to find off market deals, but it seems like flippers for whatever reason, have been kind of left in the dust. There was one piece of software that I had heard of that we had tested out briefly called Flipper Force. Have you ever heard of that one?

Ashley:
No.

Tony:
Yeah, it was kind of like a scope work type thing, but we ended up just going back to an Excel sheet, so we got to find a good solution. So if you’re a flipper out there and there is a piece of software that you use for scope of work or project management, let us know because love to highlight it here for folks who are looking to flip.

Ashley:
Yeah, the only one I’ve heard of is trend, but I think that’s to build out the scope of work and then you send the estimate, but I don’t know any other capabilities outside of that besides building the scope of work and sending out the estimate and I don’t think anything to actually track the progress of it. Okay. So the next thing kind of goes in line with that is having a reliable vendor list. So we’re going to get into project management software later in this episode, but one thing that I keep in there is I track all of our vendors. So that’s vendors that we’ve used, their contact information, if we used them, what the outcome was, are we using them Again, a list of contractors referred to us who we want to use, and then a list of contractors where it’s literally their truck was driving by and we took a picture of their truck and entered their information because it said the painting shop and their information on there is to, here’s some contractors we can go to if we’re in a crunch or we want someone else to bid something out, we keep.

Ashley:
So those kind of three separate lists. And we always have our preferred vendor, so all of our plumbing issues, our HVAC issues go to this one company called BNR and BNR gets all of our stuff and they give us good pricing. They also are super efficient at scheduling with tenants and also being there making us a priority because we do send them so much business. So not only having that vendor list of who you can contact, but really establishing those relationships too with those vendors.

Tony:
Ash, our process is almost exactly the same as yours, [email protected], which we will talk about later. But Sam, we have a section inside of Monday broken out by market and within each market we have our service providers and it shows like, hey, who’s the person? What’s their service contact information? And same, we have our go-tos where it’s like if something happens, our VAs know to call this person first. If that person doesn’t answer, then it goes to the next person and we just work our way down the list of all of our approved vendors and sometimes something pops up that maybe we need to find someone new or maybe our usual crew of folks don’t have the skillset to tackle whatever issue just came up. And then we’ll go out there and we’ll source someone new and if we like them, then we add them to the board.

Tony:
So yeah, I think it takes some time to build it out initially, but searching Google Facebook groups recommendations I think is probably the best way to build that out. If you can find other investors in your market who already have trusted contacts, I think people are much more willing to share their plumber and their HVAC person than maybe they are to share their wholesaler. They might have a little bit more hesitation to share the persons giving them all their good deals, but all their trades folks, typically people are willing and open to share those because me as one person, I’m not going to keep a plumber busy at 40 hours a week, right? They got to fill that time with some other folks. So I think getting referrals is the best way to start building that list out.

Ashley:
And two, the whole point of this is so that when you need one of them, you are not panicking trying to find someone. Some other little things you can add is who is 24 7? Are some of the plumbers 24 7 are some only available nine to five during the week? The appliance vendor we use, they are very mom and pop. They are amazing, but it’s like you call their house phone to schedule, so if they’re not home, you’re leaving a message and they’re not working on weekends and things like that. So adding in those things too. So okay, this is not who I should be calling at this time, but that’s the big thing is you have the list already and you can even go as far as calling them, letting them know you have this property and you’re just get some quotes from them, get some pricing as to do you even service this area?

Ashley:
Do you come to here? I’ve had contractors literally in the next town and they’ll be like, no, we have so much business where we are. We don’t even drive that little bit extra to go there. So I think just having an initial phone call can go a long way too as to figuring out what their service capabilities are, what are they charge for? Some of the standard things you would need can go a long way too. And then just keeping those notes and tracking everything and you don’t really need a project management board to do this. You can do this in Google Sheets, Excel to track all of this. It’s just like the reason I do it is because when I actually do build out those boards, I’m actually connecting the vendor and their contact information as to like, okay, this is who I get this estimate from. And then like, okay, this is the vendor that’s actually doing that, but you can absolutely just do this on a spreadsheet.

Tony:
I think just the last thing, I know we’re talking more so about keeping a database of these folks, but just word of advice when it comes to working with them. Sometimes I think it makes sense even if you overpay a little bit just to go back to that person that’s more consistent for you because they’ll remember that. And it’s like we’ve gotten, I think about one of our crews we work with in JT and there’s been plenty of things that he’s done for us that that team has done for us where we know that they maybe didn’t even charge us for some of the things they’ve gone up there and fixed. They’re like, it was such an easy thing. I was only here for five minutes. I’m going to charge you. So when we get an invoice for something else that we feel is like, man, that kind of feels like a lot, we are okay with that because we know that net overall, it’s still a positive win-win for both sides. I think sometimes we can get so bogged down on the pennies and nickels and dimes that we maybe damage relationships that are worth far more than that. So just word of advice for rookies is value the relationship over maybe the small dollars and cents that you’re charging.

Ashley:
And that not only goes with the vendor too, but that also goes with your tenant or the guests that you have staying in your Airbnb. The more efficient, the convenience of getting that person there, even if they are more expensive or whatever, you are pleasing all sides of that triangle. So don’t ruin the relationship with your tenant or the guest or give them a bad experience with you as a landlord or the host because you are trying to nickel and dime the contractor to have them go out and fix this issue so they can stay. So it’s a ripple effect almost. Okay, so we have to take a short add break. We’ve gone over two different tools you need and when we come back, we’ll touch on communication and how this is key to your business. We’ll be right back. Okay, welcome back. The third thing that you need in your tool belt is a contact number that is not your personal cell phone number.

Ashley:
So not only for reasons of having people blow up your phone, people call you to complain whatever reason, but also for the fact that at some point in time you are not available, you don’t have to physically hand your cell phone to someone to take your calls or you don’t have to forward your cell number to somebody else where they’re getting all of your calls. So my recommendation for this is a Google Voice number and you can set them up for, unless you’re doing crazy amount of calls, it’s free to do with your Gmail account. So this is what I did from the beginning. Well, I shouldn’t say that. Not from the beginning. At first I had two cell phones, I got two phones and that was just crazy. That was too much for me. So then I went to using Google Voice. So that is the dedicated number. You get a separate number and that is the one you can give out to your tenants, you can give out to your vendors, you can give out to whoever. I just did online forums to get my insurance quoted just to see what it would be. And I gave out my Google Voice number, like I’ve had this done before where I accidentally put my phone number into some spam thing where they’re selling my phone number to $50,000, 50,000 insurance companies. So this is what I highly recommend.

Tony:
That’s actually a really good idea because even when you apply for a loan sometimes, then you get blown up by everyone on the planet who wants to give you a loan. So I like the idea of putting a Google Voice number for that too. That’s smart.

Ashley:
Or buying a website domain. Oh, I forgot the one time, time of all the domains I forgot. Or I bought to check the little mark that I want the security thing where my information isn’t sold out. Oh my God, this was over a year ago and I’m still getting phone calls. Are you the owner of blah, blah, blah? And I just say, no, I don’t even know what that is. But yeah, one time I did it. But anyways, you need to have some kind of to manage your properties, some way to reach you, like a tenant to be able to call you. Yes, the property management software has the texting communication that you have, email, there’s so many other ways. And in my lease agreement, I list the preferred ways and phone call is the very, very last way. But sometimes there is the tenant that prefers to call. There is a reason for them to actually call and not message, and they can text through the Google Voice too. But I like to keep that within the property management software. Tony, what about for short-term rentals? I’ve probably had a guest maybe call me twice the whole time I’ve been renting Airbnbs.

Tony:
I mean, we definitely get phone calls. I think with the size of the portfolio, it’s bound to happen where we get at least a couple a day. And Sam, we use Google Voice also. We try and keep the majority of our communication on platform, but Sam, we get sometimes good guests that are older that they just want to pick up the phone and call someone, especially at the hotel. I feel like the hotel is probably the biggest culprit of this right now. But we actually explored, and I might end up going back to it, but a software provider called Open Phone and similar to Google Voice, but they’ve just got, it’s purposely built specifically for online phone or voiceover internet, I dunno what it’s called, but they have a little bit more robust features around call routing. So for example, right now when I get a call on my Google Voice, it just rings everyone’s phone at the same time.

Tony:
So I get my phone ring, Sarah’s phones ring, our VA’s phones ring, but with open phone it can route to the VA’s first and then if they don’t pick up, it’ll route to us. Or if there are certain days and times, maybe our VA’s off, it won’t even ring them, it’ll just go straight to us. So we’re exploring open phone right now. I had a free trial, but I let it lapse. But I like some of what it offered, but I think especially if you’ve got other people on your team, I have VAs that work for me. Ash, I know you do as well. And I think that’s where the Google voice or open phone really comes into play because otherwise it becomes really difficult for them to be able to fully take on all of the responsibilities if they can’t text, if they can’t call, if they can’t communicate with folks who are here stateside. So definitely a tool that I think every DIY landlord have,

Ashley:
And I like the fact that you can oversee it so you’re able to log into the Google Voice. And even if you don’t, I haven’t had it come to one of the numbers we use. I haven’t had it come to my phone in a long time. It goes right to the va. But I still can log in and I can still look what are the incoming calls, which ones are being answered, which ones aren’t, how many voicemails are there? Are the voicemail numbers being called back the next morning in a timely manner? What are the text messages saying? So I really like that oversight too of it.

Tony:
And there’s one of the things here that Open phone has that I don’t think Google Voice has, but you can actually listen to the calls. So they’re like, Hey, this call has been recorded for training in security, whatever. And then you can always go back and listen to those calls and then you can give your team feedback. So that’s one thing that Google Voice doesn’t have that also I think pulls us into open phone potentially.

Ashley:
My God, we could get some good content from some of those phone calls.

Tony:
Yeah, we probably would.

Ashley:
Okay, so the next thing we’re going to talk about is I am so passionate about this because this has been one of the things that has literally changed my life for the better, and that is having a virtual mailbox. I used to be sitting in my living room with mail spread all around me, and at this time I had a million things going on, so it was okay, first I open it, then I sort it by each LLC or whatever it has to do with, then I start with one LLC, and then I’m sorting it as to, okay, is this a bill? Is this something to be filed, something to be shredded, sorting it that way. Then I’m writing out the physical checks, I’m putting it with the return piece of paper. I’m putting it into the mail, I’m sending it. This took up so much of my time.

Ashley:
So then I hired someone to actually do it for me in person, and then I was paying a bunch of money for somebody just to open the mail and sort it and then to, I would have them get the checks ready and then I would sign them and actually close the envelope and mail them out. So with a virtual mailbox, all of your mail is sent to an address and you can find locations all over the us. This doesn’t mean that it’s going to the Philippines or anything that you can put it to a location. The closest one to me was like 20 minutes away, but I live in the middle of nowhere. So I set that as my address. So all of my mail gets sent to there. And then it’s also, I think nice too for my tenants that they’re sending it to my checks to a local address too instead of there’s not some random place.

Ashley:
So all the mail goes to there when they receive the mail, they scan the envelope, the outside of the envelope, and I get a picture of it. It’s like a portal. I can go into the dashboard, see what mail came in for the day, and then I can select which things I want them to open, which things I want them to throw out to shred and which things I want forwarded to me where they’ll actually send it to my home address and I can get it. So I still have four tenants that send in physical checks. And so every month, once their checks come in, I take it from the virtual mailbox and I have it forwarded to my house. I get it at my house, I write my deposit slip, I go and deposit it. So then all the bills they’re scanned in and I can just drag them into whatever Google Drive folder they need to go in, I can handle it.

Ashley:
And eventually I built out a spreadsheet where a VA is going and looking at the mail and saying, okay, it’s a bank statement, so it gets filed here. And I just tracked it all as if this is that, then it goes here, whatever. Then any questions, they just forward it to my email and say, Hey, I’m not sure what to do with this, whatever. But this has been such a game changer for me, and it was very cost effective. I have to say it was cheaper than hiring someone to come and open the mail. But there’s a lot of different ones I use post scan mail, but there’s a whole bunch of different virtual mailboxes and they have different features that they do with it. The reason I chose this one is because they let you have a larger amount of LLCs or companies sent to the same mailbox without having to pay a ton of fees extra to have more sent in one mailbox, and instead of opening two mailboxes,

Tony:
This is one thing that I’ve not done, and I’m not sure why because I also hate mail. It’s like the bane of my existence, I feel like. And our process right now, and it sucks because we’ve had so many different processes, but we had just our home address at first, which was the worst. Sarah and I are so bad at checking our mail that it probably happens maybe four times a year where our mailbox gets so full that we have to, they just empty out the mailbox and take it back to the post office and we have to go to the post office to pick it up. So we’re like, okay, that’s not a good choice for all of our business mail. So then we got a local, it’s like a UPS store around the corner from our house. So we got a mailbox there, but then you got to drive to that mailbox to go check it.

Tony:
So it was kind of the same issue, but once we got the office, there’s a mailbox here at the office. So now we just send most of our business mail here, and the process for me is I’ll check that mailbox and Sam, I’ll try and sort it out, and then if it’s something that I need to do, I’ll set it to the side, something that my assistant can do, I’ll just take a picture and send it to her. So we’ve kind of got a process right now, but I definitely, the idea of having someone that’s just dedicated to the mail, and I wish so badly that my assistant lived here in California, but she’s in Texas because if she was here, she could just handle that for me. So right now

Ashley:
It’s just, well, that’s the thing with the virtual mail is you can be anywhere and you can do it. It’s in your mail.

Tony:
And that’s why, I don’t know why we haven’t done this yet. It’s just been on the to-do list. So I’m committing now to all the folks in the rookie podcast that Tony’s going to get a virtual mailbox set up because it’s just like ballpark ash, what should someone expect to pay for a virtual mailbox?

Ashley:
I think your standard is $300 for the year, and then it goes to, but I also have probably the premium thing or whatever, I have a bunch of LLCs, but it also varies on how much mail you’re getting. So if you request for them to scan and open 500 pieces of mail, you’re going to charge extra than if you have just, there’s limits of you get a hundred free pieces of mail scanned each month or whatever. But yeah, I think it’s like $300 per the year, whatever my plan is.

Tony:
Yeah, so like 25 bucks a month or something paid

Ashley:
Like a PO bucks is,

Tony:
Yeah, that’s how we spent probably, I don’t know if it was 300 for the year, I think it might’ve been like 200, but they weren’t scanning anything.

Ashley:
And with the post office, you can get them to scan your envelopes in, there is a app you can sign up for because I had a PO box prior to this, and I had, it’s just [email protected], their website or whatever their website is that you can sign up to have them scan your mail in. And it’s not even them, it’s just the envelope though. You’re not getting your open mail scanned. So then you get anxiety of like, oh my God, what is this envelope? Blah, blah, blah, and think it’s some horrible lawsuit or thing coming in. And it’s just like you got a $6 check from National Fuel return to you. Because

Tony:
We actually do have that for our primary residents where I can see the outside of the envelopes, but our mailbox that we had was UPS. So they didn’t offer the virtual kind of service like that. Or maybe they do. I don’t know. Maybe I never even asked. So maybe it’s something they offer,

Ashley:
But still it’s not like you’re seeing the inside of it, so you’re not seeing what you have to actually do for it. Yeah.

Tony:
Alright, well, here it is. Tony’s committing to getting a virtual mailbox. We’ll set it up.

Ashley:
And just so everyone is listening, I’ve literally been telling Tony about this for two years because I saw the picture that Sarah had posted of him covered in a pile of mail around him, and that’s what I used to look like. Okay, so the next thing is organized file storage. So this kind of goes hand in hand. Once you get a document, what do you do with it? And instead of having your shoebox full of receipts or having a stack of papers on your desk, I used to use folders. I would put everything into folders. So I had a folder. I had a section for each LLC one folder for receipts for that year, just for that year. One thing for tenant leases, one thing for capital improvements, bank statements, things like that. I used to do that. And then I went to doing a binder where I’d have a binder and I’d actually hole punch each thing and put it into the binder.

Ashley:
So it’s separated by each bank account, the bank statements and things like that. But now I just strictly use Google Drive storage. The only thing that I have that’s paper and physical that’s sitting right next to me now are my title of abstracts that I don’t know how to scan them in because they just come with this paperclip thing. And some of them are so old that I’m pretty sure if I tried to scan them, it would just shred the paper through my scanner. But, and then I have some surveys that they are scanned in, but I also have the physical copies. And then my checkbooks, I have physical checkbooks for every LLC. I don’t know if people still do that nowadays that I still do. I have them, and I do use them sometimes, but that is the only thing. Everything else is getting organized and scanned in to my Google Drive. So that’s receipts, that’s any kind of documents that come in, even if it’s something that I think I may never need again, and maybe it’s just a notice of something. I still just have a random folder inside of each LLC where I’m just throwing that in because it’s all scanned in for me anyways. It’s not an extra step for me. So it’s just literally drag and drop.

Tony:
Same for us. We set ours up. You said you had a folder for bank statements, et cetera, et cetera. We do ours by the entity and by the property. Usually we’ll have one folder for that property and then all of the things associated with that property for that.

Ashley:
That’s on mine notes too.

Tony:
Okay. Yeah, yeah, right. It’s the same thing. And then for a lot of the things too, it’ll exist inside of Google Drive, but a lot of times we’ll access it through Monday again, which we’ll talk about a little bit later. But Google Drive is just a place where we can make sure that we have our own copy of that. Because I think the downside of only keeping your files inside of your property management or your project management software, either one really? Yeah, either one, right? If you switch, well, there goes all of your data. It’s like you’ve got to figure out a way to get it all out. So we try and keep everything inside of Google Drive from a storage perspective, and then we just link to the file from Google Drive inside of our project management software.

Ashley:
Yeah, I completely agree with that. I had to have our VA transfer from one property management software to another, and she had to manually go in and download because we had put every receipt in there because there’s the one we were using. It had a bill pay option in there and manually go through and download every receipt or all of those. So now we actually do it double. So we’re putting it into the software that we pay our bills in. We’re putting lease agreements in the property management software, and we’re saving everything to Google Drive. It takes, I don’t know, like five seconds longer to do it double just because the storing of the files is so easy. We just have a spreadsheet with the quick links to here’s the most common Google Drive storage folders you’ll use. And it’s just like you hit the link, you drag drop, hit the link drag and drop for whatever it is.

Ashley:
So it doesn’t take up much time. But one thing I will say too is along with your receipts for your bookkeeping, you’re going to want to have closing statements organized on your properties if you sold them, if you bought them surveys for your properties, but also your LLC information if you have an LLC or if you have a corporation having all of that information in one place. And then think about things that your lender asks for when doing bank financing, because those, I used to be unorganized as to where it would take me forever to find what I needed for the loan officer for each property, my property taxes for each property. I was literally just throwing the receipts into a folder labeled 2025 receipts. And I would have to dig through all of ’em to find all the receipts where my property taxes that they were paid because they wanted paid receipts.

Ashley:
And a lot of times you can find them online now, but think about those things too and maybe create some kind of sheet that has the quick links to be able to access those also. Okay, our next thing here is number six and is the unit information sheet. So this is where you are going to keep all of your records, and you could do this just in a document, and we actually have one for you guys at biggerpockets.com/rookie resource. And you can get the unit information sheet there, but you could put this into your project management board like monday.com. You can just have this in Excel spreadsheet. It could be a Word document even, but it is everything that you need to know about your property. You may never use some of it, but it is some of things that if you do need to tell somebody, this information makes it so much easier than trying to figure it out, especially as you accumulate a couple properties, they kind of blend together.

Ashley:
And if you’ve rented them out, when’s the last time you’ve ever been at one of these properties? So I think Tony’s a great example of this, okay? He buys a property in the Smoky Mountains. He goes there when he first purchases it, and then it’s been guesting there for the last two years. Now there’s a vendor there that’s asking where is the water shut off for the property? And they can’t continue forward until they know where the water shutoff is, or a guest is staying there and there’s water shooting out of the wall. Where is the water shutoff? So that’s always my favorite example because I’ve also learned from experience that that’s something I want my tenants to know where that is so that it doesn’t prevent further damage. But just things like that, having all of this stuff listed out. So you have just a one pager, this little cheat sheet that you can use if needed. And you can also give out to anybody on your team if they get asked these questions about the property.

Tony:
I was looking through our property trackers, what we call it as you were given your initial response ash, and we have a lot of the information that you talked about. We have all of the documents around the purchase of the property, so our purchase price, the escrow company that we used, our settlement statement, our closing disclosure, our initial insurance. We have our short-term rental permit the day it expires, our parcel number, which Airbnb profile that’s under the bedrooms, the bathrooms, the square footage. We have all of our utilities information. We have video walkthroughs of both the interior and the exterior, the location of things like the electrical panel, the propane tanks. So just all the things that you would potentially need, especially if you’re running this property remotely. So you can quickly remember, oh man, where is the lockbox on that property? Oh, cool. Here’s a video of where we put the lockbox, right? So it sounds like a lot. We even have trash day. What do the trash cans need to get taken out that’s important for short-term rentals? So I think as you’re putting your property, as you’re kind of setting it up, spending some time there to just go through with a super fine tooth comb and think, what is all the information that I may need if I were a thousand miles away to still be able to manage this property effectively? You put all of that into one location and it makes managing it so much easier.

Ashley:
So as we’ve learned a little organization upfront, saves you hours of headaches later, and when we come back, we’ll get into lowering your risk and protecting your investment. We’ll be right back. Okay. Welcome back from our short break. Thank you for taking the time to check out our show sponsors. So we are on to number seven, your emergency fund. So these are also called your reserves, setting aside money for repairs and vacancies and other unexpected costs that can come up. So what I do is I keep money in a high yield interest savings account. I use Base Lane, and I’ve also used Wealthfront too. Those are two that have really great interest rates right now. They’re online banks or whatever, so easy to access things like that. If you need ’em, you can just easily transfer right back into whatever account you need it into to go ahead and cover that transaction.

Ashley:
But I think a big rookie mistake is treating all of the projected cashflow as profits because you should be saving that for reserves if you don’t have already a big meaty reserves account that you’re starting your purchase with. I think the best way to take this is to have three to six months of reserves in place when you purchase the property, but sometimes that’s not always feasible. Plus, if you use those reserves, you have to replenish it and there goes your cashflow for several months or whatever long it may take to actually fill that up. So Tony, what are you doing with your reserves? Are you keeping ’em in a high yield interest savings account too?

Tony:
So we use Relay as our business bank, and I don’t know if it’s a traditional high yield savings account, but they do offer, I think right now it’s like three and a half percent, whereas maybe super high yield would be like four, somewhere above four.

Ashley:
Four,

Tony:
Yeah, it’s not a huge difference. But yeah, we have a separate reserves account for each property. And the reason we do it on a per property basis, just again, we have a lot of partners on our deals, so I can’t use the reserves from partnership A to cover something that happens on partnership B. So we keep a separate reserves account for each property. One of the things though, Ash, that I think we discovered as our portfolio has matured a little bit is that in addition to reserves, one of the things that a good short-term rental portfolio needs is just like a reinvestment fund because you also want to have money set aside for continuing to improve your property’s performance. And sometimes that’s small things like, I dunno, buying a new gaming console, we went through this phase, we bought a bunch of Nintendo switches for our properties, or it could be something bigger, maybe we want to install, you want to redesign your game room, or maybe you want to add a new amenity like Asana, or maybe you want to add mini golf or you want to do something. But I think setting some money aside on a monthly basis as well is strictly for reinvestment is something that more short-term rental host should be doing as well.

Ashley:
That is a great idea. And we haven’t been touching our short-term rental income at all in the past year. I think over a year we haven’t touched it, and we’ve kind of just been saving it in there for that purpose of reinvesting. But I’ve never thought of it that way of just instead of thinking like, oh, okay, next year I want to do some improvements, let’s start saving this year is just on a continuous basis, putting that money away aside to continuously improve your property, which is going to hopefully continuously increase your nightly rate

Tony:
Or at least allow you to continue to compete. And just really the idea that initially came from, again, Sarah and I, there’s this resort in Cancun that we’d like to go to, and every time that we go, they’re just always doing something. And sometimes it’s small things like they’re replanting plants or they’re repainting the handrail and this is a place that’s generally in really good shape already, but they’re just always doing little things to keep it that way. And that was an eyeopening experience for us. It’s like, well man, we did all this work to set these things up, but we have to continue to reinvest to keep them performing.

Ashley:
Okay, let’s move on to number eight, insurance and legal protection. So Tony and I actually did a rookie reply episode on this recently about insurance cost rising and what kind of insurance you need on your property. And let’s just state the fact here that especially if you are renting out your primary residence or you’re not being upfront with your mortgage or your insurance broker that this is a rental property, a homeowner’s policy is not the same as a landlord policy, it is completely different coverage. So the first thing is to make sure that you have the correct policy in place and ask your agent or broker to spend the time going through your policy with you. Don’t just take what they send you and say, here’s the quote. Actually have them walk you through what is covered, what could happen, your deductible, what’s your deductible. So I think really understanding your policy can make a big difference in what you do need and what you don’t need, which can definitely change your premium too.

Tony:
Yeah, I think it’s just a good practice to, on a regular basis, probably annually is a good time to just go back and res shop your insurance and see is there a better rate that you can get from somewhere else, or there may be new products that you should consider that you didn’t know about before. But I think sometimes insurance can be one of those things that we just set and forget and you forget that it is something that we should actively shop to see if we can get better pricing. So if you haven’t res shopped your insurance in a while, take this as a sign to go out there and talk to a few brokers and see if you can find something better.

Ashley:
Tony, I’m following a couple insurance companies on Instagram that are short-term rental specific or they’re talking about it a lot. I don’t actually know if they offer other policies, but what their message is is that a lot of short-term hosts don’t have the proper coverage that you need as a short-term rental host because they’re not going to a short-term rental specific insurance vendor, I guess be the word. Is that true? Do you see that happening too?

Tony:
Yeah, for sure. I mean, at least from the folks in insurance that I’ve spoken with, the coverage needs are definitely different from a traditional long-term rental versus a short-term rental. I think insurance companies tend to view short-term rentals is slightly more risky just because the volume of people that are coming through. And sometimes in a traditional landlord policy, if your average stay is less than a certain figure, it could negate some of the protections that you thought you had. So if you have a traditional long-term rental policy, but all of your guests, you’ve only got people seen for two or three nights at a time, that could undo some of the protections you thought you had with your policy. So yeah, I think it definitely is important that you’re shopping policies that are specific to the exact strategy that you’re using.

Ashley:
Just a couple of things that I noticed when I went to a couple of these carriers and I got quotes from them that were stating they’re short term rental specific, and I haven’t compared them yet to my current policy. I literally just got these sent to me last night. But first of all, super easy process, I’ll say, but here’s some things I already noticed that they include, and I haven’t looked at my other policy to even see if they include this, but it’s bedbug coverage, lost rents, which I would say lost rents is pretty common in any rental, squatter and evictions, liquor liability, animal and pet liability and amenities like hot tubs and pools, and then also assault and battery. So I was surprised at that one. But the liquor liability, I did this post the other day about what’s it doing too much. I’ve won short-term rental that I bring fresh flowers and put them in upon their arrival, write a handwritten note and little drinks in the fridge and stuff.

Ashley:
And someone said they leave a bottle of wine. And I’ve heard such mixed things about this as far as like, are you supplying the alcohol? This person goes and drives, gets a DWI, and then they sue you because youer them. All of these liability things go into my head. And so I asked one person, they’re like, well, we don’t rent to people under 18. And I was like, okay, well they must have been from Canada. The drinking age is 19 in Canada. And then it’s like, well, what if it’s teenagers coming with their parents and they drink and then their parents do because the parents didn’t see the alcohol and the kids got it or whatever. All these things go through my head. So maybe that if you are supplying the wine and stuff that you do have that liquor liability in there too.

Tony:
I think it’s better just to be as open and transparent with whoever you’re talking to about insurance, about everything your property offers so they can guide you in terms of what’s the right coverage. Because what you don’t want to do is hide something or say that you don’t do something or you don’t offer something, and then God forbid something happens that wasn’t disclosed and now you don’t have the coverage that you thought you had. So transparency, sharing everything at think is the best path to get the right coverage for your property.

Ashley:
Yeah, because what’s the point of having insurance if you’re not going to have the right coverage? The point of getting insurance is so that if something happens at your property, they cover it. I looked at this campground to buy, and during my due diligence, I asked him to send me his insurance policy. His insurance policy did not cover any kind of heating that was wood fueled or you had to have wood. They had almost probably eight of the 10 cabins. There was wood burning stoves in them. So he wasn’t even honest with his insurance provider that there was and like, Hey, there’s a fire they’re not getting covered.

Tony:
Yeah, guys, insurance is one of those things. Obviously sometimes it can feel like you’re just kind of throwing money into the void, but it’s one of those things that when it’s needed, you want to make sure you’ve got all the right coverage.

Ashley:
Okay, so then number nine, this kind of goes with the Google Voice thing, but it’s communication boundaries and systems, but not only with your tenants, but with your vendors and with your partners or your team members. So really defining how when tenants can contact you, what clarifies as an emergency. The most burnout I ever felt as a property manager was when I was 24 7, I allowed unlimited access to myself no matter who called. I picked up that phone, whether it was 3:00 AM whether it was 11:00 AM or 11:00 PM I can’t even tell you how many times I get maintenance requests at 1:00 AM in the morning, just like somebody randomly thinks about, oh, this needed to be done. Not something that would be an emergency. It’s just like they randomly decided to put in that their outlet isn’t working at 1:00 AM which is fine now because it all goes through the property management software and is put into a work order, and I’m not getting an alert for it while I’m sleeping because it’s not urgent and it’s just going in there. So I think really defining for the vendors, your team members, your tenants, even your guests.

Ashley:
I stayed at a property where they had the all-in-one washer and dryer, and we have this in one of our long-term units, and we’ve had a couple issues with it, but we haven’t lately, knock on wood. But we were doing our laundry because we had been snowboarding and our clothes were kind of wet and stuff, and we wanted to use them again the next day. So I set my alarm to wake up at 3:00 AM to make sure I switch the laundry. I get up, there’s water everywhere in the laundry room, everywhere. The thing is leaking water out of it, the door is locked. I can’t even get our clothes out of it. I go to message the Airbnb host, it says, we are unavailable until 7:00 AM or something. They have an automated response thing that says from 11:00 PM to 7:00 AM we are not available, please.

Ashley:
And I can’t remember exactly what it said. It might’ve said, please call if it’s an emergency. Or I might’ve just went and found their number to call. I can’t remember. But I called and I left a voicemail and they did not get back to me until 8:00 AM and they gave me the code to their little lockbox thing, and they had me shut off the water and then reset the washer and dryer and do this thing that obviously this has happened before, and they knew what to tell me to do. But it was like, I guess on the short-term rental side, what is appropriate to limit yourself as to how much GU is messaging you and communicating you? Should there be a limit to it at all?

Tony:
It’s a good question and something that we, I think kind of go back and forth on. We also have in our messaging that, hey, we’re generally available between these hours. If there’s an emergency, feel free to contact us. But we do our best to answer as many guest questions as we can before they actually ask them. And then we do as much work as we can to get them to review those answers to those questions they haven’t asked yet before they need ’em. So for us, that means we have a really strong digital guidebook. It means we have really strong signage within the property to answer some of those common questions. So I’ll give you a recent example. At the hotel, again, we’re a self-service, self check-in hotel. So it’s very much like an Airbnb. There’s no front desk like you get there, you have your code, you punch the code, go into your unit.

Tony:
The keypads that we have, they don’t light up by default. So when you walk up to the keypad, say you’re going at nighttime, I think that’s when this usually happens. You’re going up to the keypad at nighttime, the lights on the keypad are off. A lot of people assume that you have to press something first to get the lights to come on, and then you’d enter your code. And it kept happening where people were doing that. But in reality, if you press anything on the keypad, that’s the keypad thinking that it’s your code. So people would press a button to turn on the keypad and then enter in their four digit code and it wouldn’t work. And they locked the lock, they couldn’t get in. Now they’re calling us late at night saying like, Hey, I can’t get in. You guys suck. So what we did was two things.

Tony:
We added a small light right above the door handle, so it was a little like solar light that would just take in sun throughout the day. And then at nighttime it’ll automatically kick on and just shine light down onto the keypad. So now people can see immediately. And then we printed out this small little placard right above that light that says, read these instructions on how to unlock the door. And it has written instructions. And then there’s a small QR code they can scan that takes ’em to a video in our guidebook that shows them how to unlock the door. So those two changes of putting the instructions right there in front of them, solving issue of them not being able to see by adding the light. And now we’ve significantly reduced the number of people who are calling us saying, Hey, we can’t get into our unit at nighttime. So I think for us it’s understanding what is the issue that’s happening. Is it a one-off or is it a trend? And if it’s a trend, okay, what can we do from a management perspective to reduce the likelihood of that happening? Again, sometimes it’s just communication differences. Sometimes it’s communication plus physical changes. But I think if you iterate that over and over and over and over and over again, you’ve got a lot of opportunities to improve the efficiency of your property, whether it’s short-term, long-term, midterm, or anything in between.

Ashley:
Yeah. So basically what you’re saying is it’s not a availability communication issue, it’s a being proactive to solve the reason to communicate in general. Yeah.

Tony:
If we can just eliminate the need all together, it’s a win-win because the guest never has to reach out to us, which means everything went smoothly. We don’t have to worry about getting late night phone calls, people being locked out of their units.

Ashley:
Tony, maybe I should hire you to eliminate any reason for someone to call me.

Tony:
That actually would be a good idea if we do an episode where we go through Ashley’s recent messages and see what we can do to improve it.

Ashley:
Okay. So the last thing here we’re going to go over is number 10, your plan for scaling beyond just being a DIY investor. And I started out with that. I did a lot of stuff myself. I did the property management, I did the asset management, I did the deal finding, I did the payables, I did the bookkeeping. I did some of the rehab on some of my properties. So I think to me, the most important thing to be able to scale is building systems and processes, which I know you guys hear that all the time. But I think the second biggest thing is having reserves in place and having capital. I think that plays a major role in being able to outsource things, automate things, just that sense of security that okay, you’re letting go control of these things. You’re letting somebody else do them, whether it’s a contractor doing the work or it’s a bookkeeper stepping in is having financial security that if something goes wrong, you’re able to pay to have somebody to fix it, pay for whatever the mistake was, or hire somebody else, or just like you are able to take the time from whatever else you’re focusing on because you can give up that little bit of money or whatever to be able to go and take that thing back on.

Ashley:
So I think those are really the two big things, is having that financial security to be able to grow and scale. Having capital to put into deals and to not be so worried about, I don’t have money. I need to figure out how to get creative as possible to be able to do these things. And then just building out the system and processes starting at day one. What are the things that I do every single day that somebody else could do for me? And even if you don’t want to outsource, there’s things that I scaled back on that I was like, I don’t actually need someone to do these things for me. These are things that I actually enjoy doing and I want to be the person doing, but still building out. So whatever you can do to automate it more or to make it more efficient.

Ashley:
Like having checklist, we had somebody on Shelby before, and she talked about how every time she does something, she creates a checklist. And with that checklist she saves, it, files it. If her or anybody on her team needs to do that same thing, whether it’s just sending an email to a prospective client, she has a checklist for it, here’s what you do, here’s what you say, follow through. She never wants to think about doing the same thing twice. And I think that has really helped me too. Just like the acquisition of a property, I can move so much faster during that, and it’s such a lighter lift for me than what it used to be. I didn’t have a checklist with, okay, get the utility switch, get the insurance switch, make the tenant handbook, get the property listed, all those things. And now it’s just like I can just knock out that checklist pretty quickly instead of like, oh, shoot, remembering now I have to do this.

Ashley:
And then the next day remembering, oh, I have to do this. I can just sit down and go through the checklist. So I think those two things have really helped me scale beyond DIY, because I always was afraid and I had that mindset that if I do hire people, I’m not going to be able to pay them and I’m not going to bring in the income for that. So I think having those reserves set aside that my flip did not make the profit that I was thinking it would make, I would still have the money to pay my VA going forward.

Tony:
Yeah, I think when we talk about scaling beyond DIY first, there’s two books that I think every real estate investor should read. Neither one of them are about real estate investing, but I think applies. The first one is called the Checklist Manifesto. It’s actually by a doctor, I think his name is Atul Gawande. And it just talks about how big of an impact simple checklist had on improving, really saving lives within hospitals of just making sure that we’re going through the same process every single time. The second book that you guys should read is called Clockwork by Mike Mitz, who we’ve interviewed in the podcast a couple of times, but he takes the idea of the Checklist manifesto, but applies it to small business owners, which is what all of us are. So Checklist, manifesto Clockwork gives you the framework on how to build out these super simple checklist and SOPs within your business.

Tony:
Now, from a maybe theory perspective, there are two ways to build a business. The first way is top down where let’s say that you raise a bunch of venture capital. Let’s say you go out and you raise $5 million for someone to invest in Tony and Ashley’s real estate venture. And we go out, we hire A-C-O-O-A-C-F-O, a bunch of team members, and we’ve got $5 million is our starting pot of money to work with, and we built this entire team salaries and we’ve got 12 months of runway before we run out of money. That would be like a top down approach. Most people aren’t building their real estate business that way. Most people are building it from the bottom up, which means instead of going out and building a team from the very beginning, you are the team. You are everything. You are acquisitions, you are operations, you are finance and admin, your hr, your all things marketing.

Tony:
So as you start to build your business, it’s trying to identify, well, what is the highest and best use of my time? Where am I most effective? Where can I really drive the business forward, and how can I try and do more of those things and less of the other things that I don’t like to do that I’m not good at that aren’t really driving the business forward? And over time, finding people decide into those roles. It doesn’t necessarily have to be a full-time employee property management. That’s just you hiring a property manager to take on the management side. That’s a big workload off of your shoulders if you choose not to do that. Hiring a part-time virtual assistant from overseas who only works maybe five to 10 hours a week for you, that’s a minimal cost for a lot of free time back in your own calendar. So I think just having that approach of bottom up and trying to identify what are the things I should be focusing on versus things that I shouldn’t be focusing on is how you laid the foundation for scaling.

Ashley:
Well, thank you guys so much for joining us for this episode of Real Estate Rookie. You can find us on YouTube at realestate Rookie, or you can find us on Instagram at a BiggerPockets rookie. You can also find me Ashley at Wealth Firm Rentals on Instagram, and you can find Tony there at Tony j Robinson. Make sure to leave us a review if you’re listening to this on your favorite podcast platform. We’ll see you guys next time. Thanks so much for joining us.

Dave:
We are only halfway through October and it has already been a wild one for the housing market. We’ve got a government shutdown, we’ve got signs of recession, we’ve got more sellers jumping into the market, but are buyers biting? We’ll cover this and more on today’s episode of On the Market. Hey everyone, welcome to On the Market. I’m
Dave Meyer. I am just getting my voice back after four amazing days in Vegas at BP Con 2025. Hope some of you were there because they’re all great. Every BP Con has been fun, but this one was special. There was just an amazing energy this year. I think if you were there you would know that and I was there of course, but so were the rest of our panelists. Henry did an awesome workshop on deal finding, but he also lost to me in golf just slightly, which was very fun.
Kathy participated in a pitch slam for deals and also single handedly started a 1500 person dance party at the closing party. Jane did a great session on flipping tactics and probably closed five deals while on stage and I gave a keynote about the realities of investing in 2025 and got absolutely wrecked playing craps. It was all excellent. I had the time of my life and I can’t wait for next year, which happens to be in Orlando. We announced it the last day of the conference, so if you didn’t make it this year, definitely check out next year’s conference. I promise you’ll have fun. By the way, before we get into today’s episode, I wanted to mention that we are thinking about doing more sort of small and local events for BiggerPockets in the coming year, so I would love to know in the comments if that’s something that you’re interested in and what format you’d want.
See. Do you want meetups? Do you want presentations, networking workshops? What would you value most if on the market came and visited a town or city near you? Let us know so we can plan more community events and get togethers in 2026. Alright, now let’s talk about all of this stuff that has been going on since BP Con started. There’s a lot going on of course, but today we’re going to focus on a couple things. We’ll look at new housing market data of course, and how really the market is reacting to the slightly lower mortgage rates that we’re seeing. We will also talk about how the government shutdown is actually impacting the housing market maybe more than people realize, and we’ll also talk about how there are signs that the economy in general is softening. Let’s jump in. First up, let’s talk about housing prices because we just got the case Schiller National Index for July and what it showed is that home prices nationally are up 1.7% year over year, so they’re still up, but they are showing continuous signs of softening because just in June, the month before we had them at 1.9%, and this is basically just a continuation of the trend that we’ve seen.
We’ve actually seen month over month home prices fall five consecutive months and just as a reminder, back in January, the year over year number, which is now 1.7% was at 4.2% and February is 3.9%, March 3.4, April 2.7, so it’s basically just been trending downwards closer and closer to flat throughout the year. Now, I personally have been saying this for a while now, but just as a reminder, I’ve been saying that I do think that we’re in a correction because the important thing to remember about the case Schiller index, which is the data we’re talking about today and there’s tons of different price data, they’re all kind of showing the same thing, but the thing that’s unique about the Case Schiller index is that it lags a couple of months. We’re in October, we’re talking about July data, and so if you extrapolate out this trend where we were starting the year at 4.2%, now we’re at 1.7%, we’re probably going to be very close to flat by the end of the year, and that’s not just inferring from the existing data that we already have.
Like I said, there are other data sources that you can look at that are a little bit more current and those also show just continuing signs of the housing market cooling. A new report last week came out from Redfin and showed that new listings of US homes rose 2.3% year over year, so this is just people who choose to put their property on the market. That’s up year over year and it’s not up crazy 2.3%, but it’s the biggest increase we’ve seen in over three months. Actually over the summer we saw fewer and fewer people choosing to list their home on the market. I think that’s probably because rates were still high and we’re entering this correction and sellers were just thinking, you know what? I’m not going to sell into this adverse market. I’m just going to wait it out. But now that we are in the middle of October, I’m recording this on October 10th and just a couple of weeks ago, the fed cut rates rates are about 6.35% as of today, but they did dip a little bit closer to 6.1, 6.2, and so I think what happened is a lot of sellers listed their home in September hoping that those lower rates would bring in additional buyers that weren’t really materializing over the summer, but unfortunately that’s not what’s happening.
In fact, pending sales, the number of contracts basically that have been formulated over the last couple of weeks actually fell to 1.3% from a year ago, so not crazy, but again, it’s the biggest decline in five months. We also saw that days on market, the average time it takes for a property that gets listed to sell is up to 48 days, which is a week longer than it was last year. It’s also longest it’s been since basically before the pandemic since September of 2019. And so when you look at all these things together, if you look at the case Schiller data that I started off with and you move onto this Redfin data, what you see is a market that is trending nationally towards basically a flat neutral market and it could turn into more of a buyer’s market where prices are going down on a national level.
I actually think at this point that is probably pretty likely. I haven’t yet made my predictions for 2026, but if you remember my predictions for 2025 is that we’d be pretty close to flat and it’s looking like that one’s going to be spot on. I know that can be scary for people in the industry like agents, lenders or investors, but I just want to remind everyone that this is okay. This is normal. This is part of a normal housing cycle and actually there are some benefits to this. If you are a buyer right now, it means that there’s more inventory for you to choose from and you are going to have more negotiating power when you’re talking to sellers because they’re going to be competing for a limited pool of buyers. The second thing is that things are going to be on sale. You might be able to actually get properties for cheaper than you have over the last couple of years.
And the third thing that is I think extremely important for the housing market is that affordability is actually getting better in the housing market. I know it’s not a lot better, but if you see that prices are relatively flat, they’ve been, wages are going up, they have been, and mortgage rates have come down even just a little bit, that means that we’re seeing minor improvements to affordability and we have a long way to go, do not get me wrong, but we got to stop somewhere. We got to see the tide turn and it has a little bit, and I know that’s not great for on paper when everyone’s seeing the equity value of their homes, but if you want to get back to a housing market that’s healthy, which I certainly do, I think this is actually something that’s relatively positive. Personally, I’m okay with relatively flat prices if it means that we get more affordability back into the housing market long term because that’s going to get us back to more predictable investing conditions and home buying conditions, which is really what I think we all need. So that’s the update on the housing market that we’ve had over the last couple of weeks. We got to take a quick break, but when we come back, I’m going to talk about how the government shutdown is actually impacting the housing market in ways you might not realize. We’ll be right back.
Welcome back to On the Market, Dave Meyer here talking about recent updates in the market just gave you my housing market data. Now moving on to government shut down. I know that these things happen and sometimes you’re unaffected by it and I think probably for the average American who’s not looking to make a major purchase or doesn’t work in the industry or is of course not a government employee who’s directly impacted by the shutdowns and furloughs, you might not really feel the impact of the shutdown, but there is some data that shows that the housing market is being impacted. First, I’ll just share with you a survey that Redfin just did with Ipsos, and it shows that 17% of Americans are saying that they’re delaying a major purchase like purchasing a home or a car. 7% are saying they’re straight up canceling plans to make a major purchase, and then actually 16% said that they might make a major purchase sooner than expected.
So that’s a little bit conflicting, but I just want to call out that basically 24% of Americans are saying that they’re going to cancel or they are going to delay making major purchases like buying a home, and that sort of makes sense because when you look at how the shutdown is playing out, pay has been suspended for about 2 million federal workers. There are three quarters of 1,000,700 and 50,000 who have been furloughed and the rest are expected to work without compensation. Normally, I think during previous shutdowns we’ve seen that those people will get back pay once the government reopens, but the White House has said that they’re considering not paying furloughed federal employees for the time they didn’t work during the shutdown. So all of these things have really led to a lot of uncertainty for these federal workers, and I’m sure there are other people who aren’t federal workers who are just looking at the chaos in Washington right now and are saying they don’t want to make a major purchase.
Given all this uncertainty, there’s also a ton of other Americans who work for private companies, but they don’t get paid. They don’t go to work because their work relies on government projects. So all these things are combining to impact the housing market very directly. That’s the first thing. There’s a second thing though that I’m not sure everyone has noticed, but when the government shut down on October 1st, the National Flood Insurance Program lapsed meaning that the government sponsored flood insurance is no longer issuing new policies, they are not doing renewals. If you have an existing policy that’s ongoing that is not being canceled, but no new policies, no renewals, and that is pushing people into the private market for flood insurance, which is much, much more expensive. I was just reading an article that showed a woman in Florida who had previously had a quote for $4,000 for annual flood insurance for two bedroom ranch already pretty expensive.
Now, the two quotes she got for private carriers were $9,000 and $12,000. So for one, the cheaper one more than double for the more expensive one, it was triple the government program. Because of this increased cost and uncertainty, NIR is estimating that this is going to prevent or delay 1400 closings a day across the country. Now, on a national level, of course, 1400 closing a day is probably not going to really show up in the data, but what’s interesting and unfortunate about this is that the areas of the country that are in these floodplains, and it’s actually more than you think about 8% of all properties in the US are in areas that require this kind of flood insurance from most lenders, but most of those 8% of properties are in states that are on the Gulf Coast, right? You see Florida, Alabama, Louisiana, Texas, and these are areas of the country that are already getting hit by a housing correction, and so when you combine these things together, right, when you look at the correction that’s already going on, it’s pretty bad in Florida right now in Louisiana, other places are seeing more modest corrections, but it’s definitely going to cool the market further, 1400 sales in Florida right now is actually pretty significant, and the sellers who have had their properties listed for months and are really eager to close and actually sell their homes, these delays and these cancellations are going to be particularly painful.
Hopefully, the government will reach an agreement soon and the National Flood Insurance Program will restart issuing policies and renewals, but in the meantime, it could get a little ugly there, especially if you need to get private insurance even as a stop gap for the time being while the government is shut down. Now, I was reading that in some instances it is possible for current homeowners to assign their flood insurance to a buyer. So if you’re one of these people who are in a situation where the buyer’s backing out or wanting to delay because they can’t get flood insurance, I would recommend looking into this, call your provider and see if you can assign it over because that might be a way that you can actually get through this shutdown and actually close on a property. You could do this if you’re a buyer too. If you are a buyer and you want to actually close on these properties, see if you can get the seller to assign you their insurance program.
Again, it doesn’t work in all instances, not all carriers are going to do that, but it’s worth exploring if you happen to be in this unfortunate circumstance right now. So we’ll have to just see how this plays out, but as of now, these are the two main ways the shutdown is impacting the housing market. We got to take one more quick break, but when we come back, I want to talk about just a couple of data sets I’ve been looking at recently that show more signs of economic weakness even outside of the labor data that we’re getting and what this might mean for the market. We’ll be right back.
Welcome back to On the Market. I am Dave Meyer. Now let’s just talk about a couple signs of economic weakness. Now, I fully admit the economy is totally polarized. There are signs that the economy is strong. We’re seeing the stock market near all time highs. Gold is really high, which you could argue is not a sign of economic strength, but asset prices are high. Bitcoin is near all time high too. Some people think that’s because of its hedge. Some people might say that’s economic strength, but again, there are all sorts of mixed signals in the economy right now, but a couple things came out this week, the week of October 6th that just show a couple things that I think are a little concerning in terms of the overall economy, and I just want to talk about them and how they might impact the housing market and economy in general.
The first up is car loans. Now, I’ve said on the show lots of times, and it’s still true, the average American home buyer remains in good shape. We are not seeing big upticks in foreclosures or delinquencies. They’re very minor for the most part. They’re well below pre pandemic levels. We do see some upticks in VA and FHA loans, but nothing at a concerning level right now. But when you’re looking at the strength of the economy, you often want to look at the quality of the debt that is out there because what often leads to recessions is when people can no longer service their debt, they go bankrupt, they default. That causes these ripple effects throughout the economy, so these are things that you always want to keep an eye on. The car loan data is getting just a little bit worrisome. It is not crazy or anything like now, but what we’re seeing is that the portion of auto loans that are 60 days or more overdue that are subprime hit a record of more than 6%.
That is the highest they have been in any of the data that I’ve seen going back to 2000, and that includes the financial crisis when they peaked a little bit below 5%. Now, it’s important to note that subprime auto loans are not a huge portion of the market right now, but prime loans, which is basically loans made to more qualified buyers are also going up. They’re not at all time highs, but they’re sort of back near pre pandemic levels and they’re on an upward trajectory, so both trending in that direction. We also see that an estimated 1.75 million vehicles were repossessed last year. That’s the highest total since 2009, and it looks like car dealers are actually lowering their credit standards, which is something I always worry about having come into the economy and the housing market during the great financial crisis, I never like seeing lenders lower their credit quality standards, but we’re seeing right now the percentage of new car buyers with credit scores below six 50, which is close to subprime, was nearly 14%.
That’s one in seven people. It’s the highest it’s been in nine years, and so it just shows an overall weakening of the American car owner, and I’m not super concerned about this right now because it’s still a relatively small portion of the market, but these are trends that we should watch out for when we’re evaluating the economy. But there was one stat that I had to share with you all. This is actually insane. New car prices are just, they’re wild right now. The average monthly payment in the United States, the average for all people is more than $750. That is absolutely wild. That is a crazy amount of money. That is $9,000 in post-tax money per year going towards the average car. No wonder people are struggling to make these payments that is so expensive. Maybe I’m just old and my expectations of what car payments should be is like $350, but man, that seems high and nearly 20% of loans and leases, car payments are now above a thousand dollars in monthly payments.
That just rubs me the wrong way. It just makes me a little bit concerned. Again, I’m not trying to be alarmist, but this is something I’m definitely going to keep an eye out, especially among some of the other data that we’re seeing. Student loan delinquencies are up, we’re seeing credit card delinquencies up a little bit, so this is just adding to the picture that we’re seeing across the economy right now. For the most part, American consumers, their feelings about the economy are down from a year ago, but they haven’t really changed over the last couple of months. There is this index of consumer sentiment. I talked about this a lot because it can be an indicator of where the economy is going and what it’s showing right now is that consumer sentiment was basically unchanged month over month. It actually just went down slightly from September, 2025 to October, 2025, but really big decline year over year.
So in October of 2024, the index was at 70. Now it’s at 55. That’s a 22% decrease year over year, which is down a lot. We see the index of consumer expectations of the economy dropping 31% year over year, so obviously Americans compared to a year ago feeling worse about the economy. Now, this study is actually put out by the University of Michigan, and they put out this really interesting chart that I thought was kind of fascinating and wanted to share. It shows that sentiment and expectations for people who have no stock holdings are just plummeting. Meanwhile, people who have large stock holdings are actually starting to feel better and better about the economy, so it just continues to show that in the United States right now we have sort of two different economies going on. People at the very top of the income bracket tend to be doing well.
We’ve seen data that shows that 50% of spending in the economy right now are coming from the top 20% of the market, and their expectations are fine. They’re feeling good about the economy. Meanwhile, other consumers sort of in the lower end of this socioeconomic bracket, they’re not feeling good about the economy, and that could be a sign that they are going to pull back on spending even more in the coming months. So this is another thing that we need to watch out for. Lastly, this is just quick, but I actually saw this interesting data on realtor.com that showed that 22 states, so nearly half of all states are either in a recession or in a higher risk of a recession. These are states, they’re honestly just spread out throughout the country. You see some in the northeast, like in New England, you see some in the middle of the country, Wyoming, Montana, South Dakota, Illinois, a couple in the south in Mississippi and Georgia up in the Pacific Northwest in Washington and Oregon.
They’re pretty spread throughout the country except the southwest of the country. That seems to still be a bright spot. Not all of them are growing. We see California, Nevada, Colorado, New Mexico. They’re sort of treading water. Same thing with some other states like Missouri, Tennessee, Ohio, New York, and then there are a lot of states that are continuing to grow. Texas, Florida, the Carolinas, Pennsylvania, North Dakota, Idaho, Utah, Arizona. All still continuing to grow, but it does again show that a lot of the country, when you see all this confusing economic data, it’s because it’s all really segmented. It depends on what state you’re living in. It depends on where on the income bracket you’re in. It depends on how much stock and gold and Bitcoin you own, so if you are feeling really disconnected from the headlines that you’re seeing, it makes sense because the headlines are broad generalizations and it’s really hard to make broad generalizations about the economy right now.
It is totally different depending on who you are, where you live, what your job is, what kind of things you invest in, and so just remember that you got to go a level deeper in the data. But I’m bringing this all up because some of this recession risk could be reflected in mortgage rates going forward. Again, as you may know, when there is risk of recession, that generally pushes down mortgage rates, which could bring back some more affordability to the housing market, but if that happens, and how much that happens will largely depend on inflation data, because if inflation data goes up, it will probably counteract this recession risk. Mortgage rates will stay the same, but if inflation starts to level out and we see more of this recession risk, obviously no one wants a recession, but the one silver lining of that might be slightly lower mortgage rates in the weeks or months to come.
That’s why I wanted to bring this up, and it’s something we’ll keep an eye out for here on the market. That’s my update for today, October 14th. Thank you all so much for listening to this episode of On The Market. Don’t forget, if you want to see more on the market events in your local area, make sure to leave us a comment either on YouTube or Spotify. We would love to hear what you would like to see out of on the market events. We’d love to see you in your local market. I think it’d be a lot of fun, but we just want to figure out what exactly that should look like. Thanks again for listening. I’m Dave Meyer. See you next time.

If you’re tired of evictions, repairs, and city inspectors, but love the idea of passive income, tax breaks, and appreciation, self-storage might be the investment play that’s been hiding in plain sight, while you’ve been chasing the next cash-flowing residential rental.

That could be about to change, because self-storage has been growing faster than a batch of toadstools after a rainstorm. Over the past decade, the U.S. self-storage sector has expanded from about 1.4 billion to almost 2 billion rentable square feet, increasing by over 500 million square feet. According to Yardi Matrix data, the expansion has been closely linked to the rise in Sunbelt multifamily housing development in burgeoning cities such as Houston, Dallas, Austin, and Phoenix.

Granted, self-storage is not as “sexy” as residential real estate. There’s no interior design, and no HGTV shows. Still, if you are looking for something steady and predictable without the drama of being a landlord, self-storage could be worth considering. 

It goes in tandem with multifamily real estate because as apartments have been stretching far and wide across the Sunbelt, apartment sizes have been shrinking, ushering in the need for more self-storage. “Houston apartments built from 2015 onward have shrunk by 44 square feet on average …while 5.3 million square feet of storage were added locally,” a recent analysis from national storage space marketplace StorageCafe finds. 

It’s a pattern that repeats across the Sunbelt in cities in Florida and Texas, where, along with North Carolina, RentCafé reports that self-storage inventory is expanding at the fastest pace since 2014, with some markets quadrupling capacity. 

Amid a housing boom of shrunken apartments, Americans are proving stubborn downsizers. “Self-storage has quietly become the backbone of this new reality,” a StorageCafe analyst told The Real Deal.

A Stable Investment

Like much of the real estate industry, self-storage experienced a post-pandemic surge and has now returned to a more stable, sustainable growth, according to Yardi. Owners of self-storage units in 2020 and 2021 saw occupancy rates drop below 3% vacancy, while rents shot up 40% in some areas, said commercial brokerage CBRE. This trend occurred as remote working gained in popularity and employees left their homes for other locations.

In 2023-2024, the market stabilized amid higher interest rates and slower housing turnover, and this year, signs of normalization have emerged. In Q1 2025, CRE Daily reports that self-storage transaction volume climbed 37% year over year to $855 million due to renewed investor appetite. 

However, self-storage is still vulnerable to market conditions, with cap rates currently around 5.5% to 6.5% and development pipelines thin due to tighter borrowing conditions and increased development costs, according to commercial brokerage Cushman & Wakefield, which stated that “elevated construction costs and a lack of debt liquidity have pushed down new development levels to more normalized levels,” indicating that the market is finding equilibrium again.

Why Self-Storage Still Appeals to Investors

Self-storage is not a new concept. It’s been around for decades, and despite fluctuations in the residential real estate market, it has proved to be perennially popular. Here are some of the reasons for its staying power.

Diversified use

Demand is not limited to relocation, new babies, divorce, or death. Many people with storage units choose them to alleviate clutter in their homes and garages. Indeed, 1 in 3 Americans now rent a storage unit, and a further 18% plan to do so in the future, according to StorageCafé—offsetting the lulls in short-term and mid-term rental housing. 

Flexibility

As storage leases are typically month-to-month, landlords can adjust prices quickly to accommodate demand, setting it apart from conventional commercial buildings.

Low overhead

There is little ongoing maintenance compared to residential real estate or retail buildouts. Repairs are daily and predictable and do not require delicate negotiations around tenant occupancy.

Fewer headaches

Tenant disputes are rare due to the type of asset class self-storage falls into and the straightforward lease agreements. 

Room to Grow

The Sunbelt dominates U.S. self-storage markets. Atlanta led the charge, with new deliveries, topping 1.5 million rentable units in H1 2025, according to Multi-Housing News, with Phoenix, Los Angeles, Tampa, Houston, and Chicago also making the top 10 in new inventory additions.

Investing in Self Storage

Large REITs such as CubeSmart, Public Storage, and Extra Space Storage are dominant in the self-storage space and offer the lowest barrier to entry. Investing is like buying any stock. 

However, if you want to buy and set up your own self-storage space, there are several loan options, such as a conventional commercial loan, an SBA loan, and a CMBS (commercial mortgage-backed security) loan, which is turned into a security or bond and sold to investors on the secondary market. Rental opportunities are always featured on commercial listing sites like loopnet.com or crexi.com under “industrial.”

An Ongoing Attraction for Small Investors 

Small investors have flocked to self-storage in recent years as an alternative to residential real estate. Needless to say, several gurus with courses and training programs, such as Mike Wagner’s Storage Rebellion and AJ Osborne’s SelfStorageIncome.com, are ready to accommodate the ever-growing legion of interested parties looking for an alternative to conventional landlording.

Final Thoughts

Self-storage was invented by mom-and-pop investors, who took commercial spaces and added doors to them. Now it is dominated by Wall Street titans, and opportunities tend to be thin on the ground. However, the continual demand for storage space makes it a growing asset class.

As older mom-and-pop investors age out and developers and investors construct new facilities, opportunities arise. However, as with any investment, choosing a market with high demand, obtaining municipal approval, avoiding overleveraging, and quickly filling units are the keys to success. 

This article is presented by Invest 5S.

It’s 11:47 p.m. on a Tuesday, and you’re hunched over your laptop, frantically searching for a plumber who’ll take an emergency call. Your tenant in the duplex has been texting nonstop about a burst pipe, and you’ve already spent two hours tonight coordinating repairs, reviewing invoices from last week’s HVAC issue, and updating your rent roll spreadsheet.

Sound familiar?

If you’re self-managing your real estate portfolio, this scenario probably hits close to home. You got into real estate investing for financial freedom, but somehow you’ve created a second job that demands your attention at all hours.

Here’s the brutal truth most investors won’t admit: The time you’re spending “saving money” on management fees might actually be costing you more than you think.

While you’re busy celebrating the 8% to 12% you’re not paying a property manager, you’re potentially sacrificing something far more valuable: Your time. Your energy. Your ability to scale. And, ironically, your overall return on investment.

Most investors can tell you exactly how much they spend on repairs, utilities, and mortgage payments. But ask them to calculate the hidden cost of their own time spent managing properties, and you’ll usually get a blank stare.

That hidden cost? It’s quietly eating into your profits every single month.

The Real Numbers Behind Self-Management

Let’s put some hard numbers to this time investment. According to industry data, self-managing landlords spend an average of eight to 12 hours per month per property on management tasks. For a modest five-unit portfolio, that’s potentially 60 hours monthly.

Break that down by activity:

• Tenant communication and issue resolution: 15-20 hours
• Maintenance coordination and vendor management: 12-18 hours
• Financial tracking and rent collection: 8-10 hours
• Property inspections and showings: 6-8 hours
• Legal compliance and paperwork: 4-6 hours

Now, here’s where it gets expensive: If you’re a working professional earning $75,000 annually (roughly $36 per hour), those 60 monthly hours represent $2,160 in opportunity cost. Suddenly, that 10% property management fee on $8,000 in monthly rent ($800) looks like a bargain.

But the math gets worse when you factor in the stress multiplier. Emergency calls don’t always happen during business hours. Tenant disputes escalate on weekends. That burst pipe at 11 p.m.? It’s not just costing you sleep— it’s stealing time from your family, primary career, and mental health.

Studies show that 65% of self-managing landlords report feeling overwhelmed by the time demands, and 43% admit it has negatively impacted their primary income source. Meanwhile, properties with professional management see 23% less tenant turnover and 31% faster resolution of maintenance issues.

The opportunity cost isn’t just financial. It’s strategic. Every hour spent coordinating repairs is an hour not spent analyzing new deals, networking with other investors, or scaling your portfolio.

The Specific Time Drains You Don’t See Coming

Beyond the obvious tasks, self-management involves dozens of hidden time sinks that add up fast. These are the activities that experienced property managers handle systematically, but catch DIY landlords off guard.

Tenant screening rabbit holes

What starts as a simple tenant background check turns into hours of phone tag with previous landlords, employment verification calls, and income documentation reviews. First-time landlords often spend three to five hours screening per applicant, only to discover the “perfect tenant” has three evictions they didn’t disclose.

The maintenance coordination maze

A simple repair request triggers a cascade of time-consuming tasks. You research contractors, gather multiple quotes, coordinate schedules, supervise work, inspect completion, and process payments. What should be a 30-minute fix becomes a multiday project management ordeal.

Financial tracking nightmare

Rent collection seems straightforward—until tenants start paying partial amounts, sending payments to wrong accounts, or disputing charges. Reconciling bank statements, tracking security deposits, and preparing year-end tax documents can consume entire weekends.

Legal compliance land mines

Housing laws change constantly. Fair housing regulations, security deposit rules, eviction procedures, and habitability standards vary by state and city. Compliance requires ongoing education and documentation that most investors underestimate.

Emergency response fatigue

Water heater failures, lockouts, and HVAC breakdowns don’t follow business hours. Each emergency interrupts your day, requiring immediate attention and follow-up. The average landlord handles six to eight emergency situations annually per property, each consuming two to four hours of response time.

These “invisible” tasks compound quickly, especially as your portfolio grows. What feels manageable with one property becomes overwhelming with five.

The Scalability Problem

Here’s where self-management becomes a growth ceiling rather than a cost-saving strategy. Every successful investor eventually hits the wall where time constraints throttle their ability to scale.

The portfolio bottleneck 

Most self-managing investors plateau around three to five properties because they simply run out of bandwidth. While competitors are analyzing deals and expanding portfolios, you’re stuck fielding tenant calls and chasing contractors. 

The irony? You’re saving 10% on management fees, but missing 100% of the growth opportunities that would dwarf those savings.

Career impact creep 

Property management doesn’t respect your 9-to-5 schedule. That important client presentation gets derailed by an emergency repair call. Your focus at your primary job suffers because you’re mentally juggling tenant issues. Many self-managing investors find their performance in their main career declining, often resulting in missed promotions or reduced earning potential that far exceeds any management fee savings.

Opportunity cost multiplication 

Every hour spent on property management is an hour not spent on higher-value activities. Instead of researching emerging markets, networking with wholesale dealers, or analyzing potential acquisitions, you’re arguing with contractors about invoice discrepancies. The deals you miss while managing existing properties often represent 10x the annual savings from self-management.

Decision fatigue and burnout 

Managing multiple properties creates constant micro-decisions that drain mental energy. Should you approve that $200 repair? Which contractor quote is best? Is this tenant complaint legitimate? This decision overload leads to poor choices, delayed responses, and eventually, complete burnout.

The most successful real estate investors understand a fundamental principle: Your highest value is in deal-making and strategy, not day-to-day operations. Self-management keeps you trapped in low-value tasks while opportunities slip away.

The Solution: Systems-Based Efficiency

The answer isn’t necessarily hiring a property management company. It’s implementing systems that eliminate chaos and create predictable, efficient workflows. Smart investors are discovering that the right operational framework can deliver the time savings of professional management while maintaining control and maximizing profits.

The breakthrough approach comes from an unlikely source: the 5S methodology. Originally developed in Japanese manufacturing to eliminate waste and maximize efficiency, 5S has proven remarkably effective when applied to real estate portfolio management.

Here’s how the five pillars work:

1. Sort: Remove unnecessary tasks and eliminate redundant processes that consume time without adding value.
2. Set: Organize remaining activities into logical, repeatable workflows that create consistency across your entire operation.
3. Shine: Maintain clean, up-to-date systems through regular reviews and automated updates that prevent small issues from becoming major problems.
4. Standardize: Establish uniform procedures and templates that work consistently across your entire portfolio, regardless of property type or location.
5. Sustain: Build monitoring systems and habits that maintain peak efficiency over the long term without constant manual intervention.

While the methodology is proven, most real estate investors struggle to implement systematic efficiency because they’re trapped in the very chaos they’re trying to escape.

This is where Invest 5S comes in.

Despite the similar name, Invest 5S isn’t a software platform or management system. Instead, they’re a family-owned real estate development company that offers overwhelmed investors a completely different solution: systematic passive investment opportunities that eliminate the management burden entirely.

Founded by Clay Schlinke with over 30 years of development experience, Invest 5S provides investors with turnkey duplex and fourplex investments in high-growth Texas markets. Their vertically integrated business model controls every aspect from land acquisition to ongoing management, delivering the systematic efficiency that individual investors struggle to achieve on their own.

Rather than teaching you to organize your existing chaos, Invest 5S offers pre-systematized real estate investments with defined two-to-three-year exit strategies. You get the cash flow and appreciation benefits of real estate without any tenant calls, maintenance coordination, or operational headaches. Their systematic development process—built on three decades of experience and over 4,000 lots developed—delivers consistent returns, while you focus on your primary career and family.

For busy professionals drowning in self-management tasks, Invest 5S represents the ultimate systematic solution: passive real estate investing that reclaims your time completely.

Take Action: Reclaim Your Time

Stop letting day-to-day hassles of real estate investing consume your life and limit your growth. If you’re an investor ready to escape the self-management trap, explore systematic passive investing with Invest 5S. Discover how their vertically integrated development approach delivers consistent real estate returns through turnkey Texas properties, without distractions, inefficiencies, or operational chaos.

Your time is too valuable to waste on midnight plumbing emergencies. Let systematic efficiency work for you instead.

Government shutdowns, the dollar falling 11% in the first half of 2025, its fastest decline in 50 years, record numbers of lawsuits against the executive branch, and fears and fights over tariffs, stagflation, and the Federal Reserve’s independence. 

It all speaks to political instability, which creates economic instability. 

It doesn’t matter whether you identify politically as red, blue, purple, green, or polka-dotted, the U.S.—and much of the rest of the world—feels politically and economically unstable. 

So how do you protect your money from political risk and instability? 

1. Inflation-Resilient Investments

In January 2025, the CPI inflation rate was 3%. It fell to 2.3% in April, before steadily rising again to 2.9% in August (the last month available). 

Anyone who thinks elevated inflation is beaten is deluding themselves. It remains a very real risk. The Federal Reserve acknowledged it even as they cut interest rates in September, opting to prioritize the job market over inflation. 

Oh, and the devaluation of the dollar that I mentioned earlier? Consider that another huge red flag for inflation. 

So, which investments defend your portfolio against inflation? 

In a word, real assets (I guess that’s two words, but you get the idea). 

Real estate, commodities, precious metals, and infrastructure do well during periods of high inflation:

Stocks don’t do badly either, although they don’t perform as well as real assets. Real assets have intrinsic value, so people just pay the going rate, whatever that is in today’s currency pricing.

I keep around half of my net worth in stocks and half in passive real estate investments, although I’m increasingly carving out some money for precious metals. 

2. Recession-Resilient Investments

You think Congress did the economy any favors by letting the government shut down? Workers sitting around twiddling their thumbs hardly creates a booming economy. 

Oh, and we had a shrinking job market before the shutdown. Job openings have steadily fallen for months now, and last month saw negative job growth. 

I’ve written about recession-resilient real estate investments. In the co-investing club that I invest through, we’ve vetted and gone in on many recession-resilient investments over the last year, including:

• Industrial properties with years of backlogged orders
• Rent-protected multifamily properties
• Mobile home parks with tenant-owned homes
• Self-storage facilities

In the case of multifamily properties, we’ve gone in on some properties that designate a certain percentage of their units for affordable housing. These units have a waiting list, and the properties often get a property tax abatement in exchange for the rent protection. When operators do this right, they get an immediate bump in net operating income—without having to do a single unit renovation. 

You can also invest in recession-resilient stocks, such as utilities, consumer staples, and other defensive stocks. 

3. Cash-Flowing Real Estate

The better a property’s cash flow, the better it can ride out political and economic instability. 

Besides, cash flow doesn’t require the market to improve for you to see returns. You can measure cash flow right now, in today’s market. 

If inflation and rents go up, cash flow only gets better. If a massive recession hits and occupancy rates dip, at least the property has plenty of margin for error. 

Many deals our co-investing club have vetted and invested in this year already cash flowed well from Day 1. Sure, the operator plans to renovate some of the units to add value and raise rents. But the properties don’t require it to pay high distribution—they already throw off plenty of cash. 

4. Invest Internationally

Worried about political instability here in the U.S.? Diversify to include more overseas investments. 

Admittedly, that’s much easier to do with stocks and REITs than it is with other real estate investments. You can buy shares in a sweeping index fund like Vanguard’s All-World ex-US Shares ETF (VEU) to get broad exposure to the rest of the world’s stocks. I own shares myself. 

But active or private equity real estate investments? That’s a tougher nut to crack. In the co-investing club, we’ve looked for reputable operators who own international real estate, and haven’t yet pulled the trigger with one. 

5. Get Legal Residency in Another Country

I do some financial writing for GoBankingRates, and my editor assigned me an article on the money moves that the wealthiest Americans have made in this year’s political environment. I spoke with one CFP whose answer surprised me: His wealthiest clients are securing second residency visas, but aren’t actually moving abroad. Rather, they want a hedge against political risk—an easy exit if they ever need it. 

I found that fascinating, in part because I myself spent 10 years living abroad. My daughter has dual citizenship in Brazil, and my wife and I have long-term residency visas there through 2030. 

The good news for everyday people? You don’t need to buy a golden visa or second passport. You can quickly and easily move abroad with a digital nomad visa, available in 73 countries. Some require you to show a certain amount of income each month; others require you to show a certain amount of money in the bank. But they’re designed to be pretty painless. 

The bad news: They’re also designed for short-term stays, typically one to four years. After that, you’ll probably need to apply for long-term residency. 

Fight Instability With Flexibility

I don’t know which way the winds will shift. But I want to be ready to throw up my sails to catch them, no matter which direction they blow. 

I’m not the only investor with an eye on hedging geopolitical risk right now, either. Look no further than the price of gold, which exceeded $4,000 an ounce in October for the first time ever. Gold skyrocketed a dizzying 52.6% over the last year, a sure sign that investors are worried about geopolitical risk and currency devaluation. 

Historian Neil Howe makes a troubling argument in The Fourth Turning Is Here that every civilization in history has experienced a predictable four-generation cycle, culminating in a major crisis. The last of those crises was the Great Depression and World War II, which puts us on schedule for the next major crisis within three to seven years. 

I plan to keep my wealth intact no matter what comes down the pike, and increasingly, that means hedging against political risk.

Ashley:
Real estate investing feels out of reach, like something people with money do. This episode might change that. Sebastian Rodriguez was sleeping in his car, had maxed out his credit cards and barely spoke English, yet he was able to build his own rental portfolio in just six years.

Tony:
That’s right. Sebastian started from zero, but now he owns 13 doors that bring in roughly $4,000 a month in cashflow. And today we’re uncovering exactly how he got there and how you can do the same no matter your starting.

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

Tony:
And I’m Tony j Robinson. And let’s give a big warm welcome to Sebastian. Thanks for joining us today, brother.

Sebastian:
Thank you guys for having me here. Happy to be here and happy to share my story.

Ashley:
Yes. So take us back in that moment when you were working jobs just to survive and at one point, even sleeping in your car, what was going on through your head about money and just the future in general?

Sebastian:
Yes. Wow. What was in my head going in my head, I was in survival mode. I got to do what I got to do. I feel like it was yesterday. I can still see those days and feel that no time has happened in between, but I was focused on my number one priority was only to learn the language I needed to understand where things are located. I just moved here. I didn’t have any network, any language was a big barrier for me. So I needed to understand how to move around, how to talk to people, how to get a job, how to get a house, and it’s really scary when you can communicate properly. So my biggest focus again, was understanding and learning the language. I did everything possible to just pick up the language as fast as I could. Two years down the road, I was able and I took the leap of faith to start talking to people to quit the jobs when I needed to just be in the back washing the dishes and not talking to anyone.

Sebastian:
I wanted to be in the front facing the, at least making the mistakes. I said it wrong, it doesn’t matter. I will learn how to say it. So back then again, it was so focused on how to survive, how to stand on my own feet. Also, I had a little bit of the victim mentality because this is hard. This is difficult. Why did I do this? Why did I move? I had a good life. I was comfortable in my country. But I believe that all of that took me through a better position when I could start learning and seeing that the future wasn’t just like that. It was just the stepping stone and what I needed to do in that moment. So I think that the struggle was worth it and it taught me a lot. But yeah, my focus number one was just to learn the language and understand the city where to go to get stuff.

Tony:
Sebastian, when you first moved to the States, where did you land? What part of the country were you in?

Sebastian:
Yes, I arrived to Boston, Massachusetts. Actually. I arrived to a place, a town here called Wooster. It’s about an hour from Boston, and this is exactly what I say. I arrived there. I didn’t know anyone, so I thought I was close to Boston. I got a job in Boston. I was working at night. So the transportation was extremely difficult. I didn’t consider that. So I was working in Boston, leaving so far away, I had to take the train every night. I had a situation there where again, I didn’t understand the maps and how the train works. Everything was completely new. So unfortunately I had to stay one night on the T station because I missed the train and I didn’t know how to ask for help or I didn’t know how to afford at Uber $50 because it was too far away. So things like that is what I go back and say again. I say I was just focused on how to stand on my own feet, how to understand where I’m living, where things are located. After that, I moved closer to my job. I start living in the same place, in the same area. So things got a little bit better. But yeah, that’s Boston, Massachusetts,

Tony:
And Sebastian. Crazy story that you had to sleep in the train station. But I guess what was that turning point for you that took you out of I’m just trying to survive and learn the language into actually thinking about building wealth.

Sebastian:
The goal, the priority was always to get a better life, to improve the life. When I was able to jump into the bank again and enroll into my banking career and be able to speak a little bit better, I realized and I start paying attention again to the money. So I was able to build a little bit of comfort in terms of the income and that gave me time. So it’s only wait three times to get value in life time, money or knowledge. So I built the time. So I started learning about real estate. I started understanding more how the money works, the cycle of the money, going through books and podcasts you guys every single day. And that gave me the vision of like, okay, this is not it. It’s a better path. It’s a better way to do things. So that turning point was probably when I, as Ashley mentioned, maxed out my credit cards, lost my apartment, I was sleeping in my car, I had nowhere to go and I had no family.

Sebastian:
I can’t just go and call my cousin, my aunt, Hey, can I crash into your couch? No, I can’t. So that moment I was like, okay, I need to do something. At the same time, I found my life partner and when I got engaged, things got serious and I’m like, okay, I can’t just provide, I can’t just live like this. I need something that is going to give me a better future. Whatever it takes, I’ll do it. So that’s when I, after struggling and understanding stocks and other type of investments, I used to lend money, but real estate was the best way that I found that was real. That was something tangible, something that you can play a long-term game, not just something that you’re getting and on quickly. So that’s when I understood and I decided to go all in into real estate.

Ashley:
Now that you’ve realized that and you’ve come to that point in your life, what were some of the first action steps you took when you decided real estate was going to be your wealth generator?

Sebastian:
Many. One of the first ones was to delete the victim mentality and changing the typical, I’m coming back from work, I’m tired, I just need to go to my couch and watch Netflix. No, that needed to change. I could also watch Netflix, but an hour prior that I could just analyze two deals. So one of my rule number one since long time ago was to analyze two deals every day. I will go through MLS, I go and pull two addresses, see the market and then start understanding. I didn’t know anything, but little by little I was like, oh, I kind of know what a house will go from that area. I kind of know what the taxes look like. So those type of small habits, the change in my day by day, oh, I’m tired, just going to go home and sleep. No, you need to put 110%.

Sebastian:
Now the schedule is way different. So now I can relax a little bit better, but back then it’s all in. I dunno. Another really good habit is like reading. I was never the person who used to read and take a book and it wasn’t my biggest, I dunno skill, but after reading a few books and paying attention to the podcasting and stuff, I’m like, wow, this book is like the recipe. Just follow it, follow exactly what it’s saying and it’s going to work. It’s going to happen. So I believe those two habits were big, big in my, I dunno, back in the time when I was struggling.

Ashley:
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Sebastian:
Just before going into the deal. I will say that that was the struggle. Number one, while I was analyzing deals, I realized that I couldn’t afford a house in my market. So that was my first big wall that I had to figure it out how to overcome. Because of that, I start saying, okay, this is not it. I need to find a way to invest somewhere else. And the good thing about the states is that you guys can do things over the phone. You don’t need to go there. It is really good in that sense. So I found the book, long-term, long distance investment and I just follow what the book said. I found I picked a few markets, found Philadelphia as the one that is as good in my research and then I start putting offers there. So it was another, I will say another level because you start analyzing against something out of state.

Sebastian:
So now your picture, your satellite view is even bigger because it’s not only just the house and you can fix everything because you’re right there. You need to trust the agent, you need to find the contractor. So things get more complicated. But the deal, how it looks like we bought, we land on our first property on MLS $64,000. The property was just full of trash and smell. But here’s one of my rookies, I don’t know, advice smelled like money. The house was full of trash, full of bad stuff. It smells bad I know. But once we clean it up, it was in great condition. We put only $7,000 we rented out right away. That was through the pandemic time. So we got an excellent rate, like 3%, something like that. The rent was around $950 and the mortgage back then was around $450. Today the property RV is probably around a 180. The rent is $1,200 and we still hold a note and I’m going to hold a note forever. I’ll never refine on that note. That was my first deal.

Ashley:
You’re renting this property two today for $1,200 and your mortgage payment is five 50 and I’m assuming that’s escrow too. So insurance and property taxes.

Sebastian:
Correct.

Ashley:
Wow, that’s incredible. And you only put $7,000 into the rehab of this property too?

Sebastian:
Yes.

Ashley:
Well, that’s a great first deal. Did that get you addicted then to this market?

Sebastian:
Absolutely, absolutely. But also really big learning lessons from that deal. It’s the first door that we bought and through this door we learned how to evict someone, how to help someone. One of the tenants passed away and we had to deal with all, I didn’t have any of those situations even close to my worst case scenario. So again, it’s not only, this is what I always say, perfection, speed, beat, perfection, I didn’t know. But if I wouldn’t bought it back then I probably wouldn’t have it today and I wouldn’t experience all of that and I wouldn’t learn and earn all this I knowledge. So I think that’s the most important is take action and do it right. As long the numbers look well look good, and you’re safe, just take it and learn. You’re going to learn a lot.

Tony:
On that note, Sebastian, and you’re kind of hitting it on my next question. There are a lot of rookies who are listening right now who have listened to the podcast, who’ve watched the YouTube videos. They read the same book that you read. They’ve analyzed deals, but they’re still stuck in analysis paralysis. What do you think you did that allowed you to go from not only only investing in your backyard, but investing long distance, but being able to find the deal and actually pull the trigger on something? What were you saying to yourself to say, I’ve actually got to move forward. I got to stop just listening and watching.

Sebastian:
One of the first things that I will say is everyone has to be able to measure their risk. I am a risk taker person, or at least I able to manage some type of pressure and risk. Other people can’t. That’s completely okay. But when you’re in the analysis paralysis, you probably know ready to pull the trigger because you’re scared of something. So measure the risk, run the numbers, see what’s the worst case scenario and think about that. Never be super positive, oh, this is going to run three times higher because my renovation are going to be better. Probably not be conservative, be positive, but be conservative. So if anything goes south, you still okay, you still able to learn and move on. The most important thing is make sure that this is when you say, Hey, you going to be a real estate investor? You want to buy a property?

Sebastian:
Feel that hell yes, that fire in you. Yes, I want to do it. If you do it like that, no matter what challenge you face, you’re going to be able to fix it, work around. But since the beginning you feel like, yeah, maybe no, maybe this is not my right. You clearly is something. There is some type of risk that you don’t want to take. Don’t take it. Maybe you can be, I know a silent partner in a syndication, you can always find a strategy or a way to invest, but if you feel stuck there and you can’t pull the trigger, maybe step back and see what other options you have. Where do you feel more comfortable taking some of the risk and work around. Maybe down the road you’ll be more willing to take risk

Ashley:
Going forward. Did you have to change your buy box or any of your criteria because maybe you would find that golden deal and that wasn’t working anymore? Explain those kind of next steps. Explain those next steps to explain your buy box, your strategy going forward after that first deal.

Sebastian:
Yes, that’s a great question. Something really, really important that I will, if anyone can take something out of this conversation is understand your market. You need to know where you buy, even if it’s far away you can’t see it. So you need to understand where you’re buying through these five years, six years of investing. At the beginning we were just forcing to happen. We were all in. We were like, buy any property, we don’t know, we don’t care, we just just want to do it. But I realized that that’s not the right approach. You need to understand what you’re buying. You need to run your numbers. So if you are focused on your buy box now today I only buy raw single family house under 1300 square feet, three bed, one bath with a basement in a specific zip code, 1 19, 1 44. Those that to reach that point, it took me five years because before I was just, okay, it’s a deal here, but maybe here and also here and my contractor was going all around. All of that counts. So through these years of investment investing, you will find better markets if you keep repeating the same. So stay on the same single family house for quite a while. Don’t go single family house, 20 unit building, commercial building. I probably wouldn’t recommend that. Some other people do it and it work for them. That’s amazing. But if you want to do it a little more conservative, understand first what you’re buying, building the buy box. That’s my number one priority.

Tony:
And Sebastian, I appreciate you saying that it took you five years to land on the very specific buy box that you have right now because I do think that your buy box will change and adjust and get tighter as you do more deals. And for all of the rookies that are listening, you don’t necessarily need to start with a buy box that’s as specific as what Sebastian has right now where he said, row house, single family, three bedrooms, one bath, basement, this very specific zip code. If you can, great, but just know that you can build that specificity as you start to do more. And Sebastian, I’m assuming that the reason that you have such a tight buy box is because you spent enough time looking at other deals and you found what actually works in your specific market. So I think that’s the lesson for the rookies that are listening is the more you do, the easier it becomes to identify what your buy box should be.

Ashley:
If you guys need help creating your buy box too, we actually have a worksheet for you with just a huge list of all the things you should think about. Do you want a pool or not? How many bedrooms is your range? What age of house do you want? All of these things to kind of give you an idea of what to think about when you’re building out your buy box. And you can go to biggerpockets.com/rookie resource and you can find it in there, the buy box template.

Tony:
So Sebastian buy box is one of the things that maybe was not necessarily a mistake, but something that’s evolved for you. But I guess were there any other mistakes from that first deal that have changed the way that you’ve invested since then?

Sebastian:
Yes. The other one is not be prepared for what it comes. So I was only focused on like, okay, I want to close in a property. I want to make sure that we close and once we close what didn’t have the contractors line up on time? I didn’t. So it took me a lot of time working through that property. So buying the materials, we had to hire two different general contractors and things started going south and all of that cost me money holding costs every month I have to pay for that mortgage, I have to pay for that property. So the ability to understand, to see or have a vision of what you’re going to do, but have a specific plan and a step by step is really important. Okay. Building SOPs. We closed today, we just closing a property last Wednesday. We closed on Wednesday by Thursday we need to get a new locks. It’s the SOP no, next week, no, the next day. The first time we didn’t do that. So contractor calls they like, oh, I’m sorry, someone came to the house and I stole everything. How do you know? Sure, that happens. It’s a hit on me. But again, it’s a learning experience. Oh, okay. I’m not going to do that twice. So having a specific building those SOPs or step-by-step what to do when it’s also really important for the business. No, just focus on let’s put the property and that’s it.

Tony:
So Sebastian, you touched a little bit on like hey, having the crew lined up on as soon as you’re closing on a property. What else has maybe changed about your rehab process from that first deal to how you operate today

Sebastian:
In terms of the rehab process? This is funny because the first time we used to, for example, paint being clean and do other stuff before we do the electrical. So stuff like that is where we need to understand how to do it, what goes first. So electrical, HVACs, pulling permits, all that stuff has to go first before you even start working again. I learned that through the hard way and we had to pay some fines and got fine from the city some violations. So that also, again, it’s more like thinking what’s the business after, not just focus on the property. So you need to have buy the materials in bulk that will save you a lot of money. Understand the timeline, the time that the property is going to be sitting after you list it for sale or how the refinance process works or who’s going to be your hard money lender or the person who’s going to so many, I will say everything changed. I do not operate as the first property that we bought that was far away.

Ashley:
We have to take a short break, but when we come back we’re going to find out more about private money machine that actually started to fuel your portfolio right after this. We’ll be right back. Okay. So Sebastian, you’ve proven the model works, but scaling from one deal to 13 doors requires something bigger and that’s capital and relationships. So what was the very first conversation you had when you tried to raise private money? How did you approach it?

Sebastian:
That’s a great question. It’s something really interesting. As I mentioned before, it’s only three ways that you can add value to someone. Money, knowledge or time. Back then my first door and up to today, we still are partners, but we started being friends. So back then I was just had the time. So I started getting the knowledge. I had zero credit, zero money, nothing. But my partner had everything else. So I start analyzing those properties, I start finding the opportunities and then I show it to him. He says, yes, let’s do it. I didn’t approach, and this is what I always say, you can’t approach this conversation as like I’m begging you for money. You have to understand what you’re doing, be confident on yourself, but also showing us an opportunity. This is the opportunity. Do you want to take it another big lesson here?

Sebastian:
If it’s No, it’s okay. Think as a no yet more nos that you go through closer to the yes. So 20 people will tell you no, the 21st or the 21, I’m going to tell you yes. So be real. Having those conversations is typically scary because the approach is like, oh, would you lend me some money? Do you think you can help me with this? Those were the conversations at the beginning. But again, because I was clear, transparent, honest with this friend, he was seeing what I was doing and he saw the value in me and I gave him what he didn’t have the time he was working crazy hours. So we match up and we say, okay, it’s an opportunity here for both. It’s a win-win, let’s move on. And since then today we have a great portfolio. We still do business together. We still put properties under his name, under my name now that my credit is better. But to be honest, I bought probably the first four or five properties. Everything with his money, his down payment, his credit, everything was him. So those conversations are, I don’t know, just confident that yourself, believe in yourself, you’re doing something good.

Tony:
Sebastian, you just said that this partner funded your first four or five deals, all of their capital, their credit, but you also just told us that you came to this country not speaking the language you knew absolutely no one slept in your car. How did you go from that to actually meeting someone who had the means and the willingness to fund your deals? Where did you find this person? Because if you could go from where you started to in a very few short years, having someone fund your deals, and there is literally no excuse for any other person listening to this podcast to not be able to raise money. So how did you find that person

Sebastian:
At the bank where the money is? So this is the thing of relationships. So once you know what you’re doing, you start helping talking to people and you share what your thoughts are, what your approach is. So I had the ability of, my unfair advantage was being in the bank, you could come to me, I could see how much money you have in your account, what’s your credit, what’s your, I could see everything. So if I see that you were successful, I’d be like, how do you make this money? What is your business? What did you do for work? And I was able to ask them those questions because they needed me. So it was like a unfair advantage. I start working with them asking a majority of the people, real estate, real estate, real estate. And I’m like, how do you do it? How? Let me understand your transactions. And I just focus on these people. Quick tip, where to find these people. I had so many good conversations at the gym with wealthy people because someone, a mentor of mine taught me that it’s better to pay a little bit better monthly membership if you go and have this conversation with these people. So it’s also surrender yourself with, you could find money, you understand, take your phone. It’s a really good book from you guys.

Sebastian:
How to raise private capital. That’s my number one. One by

Ashley:
Matt Faircloth, I think.

Sebastian:
Yes. And I had the opportunity to talk to him in a mastermind class that we had in. It’s just true. You go, I go through my phone, I get an opportunity, I go through my phone and I start looking number by number one by one. If I present this to Ashley, what she will say, well maybe yes, no, maybe no. Okay. And then take these people and the opportunity, someone will say yes. Like many times the big scarcity I will say is the money in my head. The scarcity is like, I want to keep this relationship and it’s fine if I pay you the money, even if I lose your money, you can sue me. You can have a real estate asset that you can get. You’re not going to lose. But my goal is to have you as relationship. We could do really good things.

Sebastian:
So it’s not just the money, it’s that what else you offer to this person. It’s many people in the bank industry, not only in the bank industry, but because I make them there that they don’t have the time. They have tons of money in their accounts, they don’t know what to do, and they prefer to put it in a CD for 18 months at 4%. And I’m like, think about all their things. FDIC, insurance, all this stuff. Why do you hold all your money there? But again, that person doesn’t know that you know what you know. So you need to always tell everyone what you’re doing, share what you’re doing and be truthful. Don’t get advantage of anyone. That’s the most important.

Tony:
Sebastian, sounds like part of what you’re saying is just getting into the right rooms with people. And you’re saying you were fortunate because in your just work that you did, you got to have a lot of conversations with wealthy individuals. You joined a more expensive gym. We’ve interviewed guests in the past, you joined country clubs and they would play tennis and golf there, and that’s how they met some of their private money lenders. But you meet these people, how do you actually go from, Hey, we’re having a conversation about, oh, you’re successful. You are a wealthy individual to can we potentially partner on something? So the very first time you reached out to that partner, what did that look like? Was it at the bank where you guys were just there in the office? Did you exchange contact information? And what did that very, very first actual solicitation for partnership look like?

Sebastian:
Yeah, we were friends at the bank level. We worked together at the bank level. He was higher in position than me. But the approach, again, the approach was never like, Hey, I need some money, or my approach was always like, my goal in life is this. I’m working to get there and this person could see it, just see it next to me. I wasn’t even asking him or telling him, would you be interested? I was just sharing who I am and be truthful. But if you want a specific example, this is something important through another bank friend, he recommended me, someone that I didn’t know this person. She didn’t know me. We had coffee once I shared all my information, all my portfolio, show her everything that I did, and this woman gave me a hundred thousand dollars. I didn’t know her again, I didn’t even go to that meeting asking for money.

Sebastian:
I was like, Hey, she might be interested in what you do. I’ve been talking about you a lot, blah, blah. I’m like, oh, thank you. Let’s have a conversation. It’s more like I was like, Hey, let me help you. What do you want? What are your questions? She’s just like, Hey, I love what you’re doing. Would you let me be part of this? And I’m like, ah, sure, why not? Right? So again, it’s probably the vision. How we see it is like, oh, I need this, I need this. No, you don’t need that. You need to become certain person. You need to have certain habits. You need to be doing certain things. Then the money money’s going to come, then the person’s going to show up. That’s pretty much what I think.

Ashley:
Now that this woman in particular, anybody, I guess when they’ve offered you the money, how do you actually make them feel secure in the deal? What are the next steps after they say, yes, I want to invest with you? What does the deal analysis look like? What information do you give them so that they actually feel secure in the investment?

Sebastian:
Yeah, no, that’s a great question. The most important is, again, transparency. Second, a deep, deep down into the what the property looks like. The numbers, comps, rental comps potentially are the potential rehab or cost on the renovations. The whole project, this person saw it. We had monthly or quarterly calls, depends on what she was looking for. In some point it was quarterly. It just letting her know how the deal goes, what are we doing, what are the next projects coming up? That’s how we handle it. But what I show is everything, to be honest, I don’t try, I even show, Hey, this is how much I’m going to make. Are you okay with it? And that also bring me a really important point through these, a few partners that we had. We understand that not everyone can be the partner, right? Maybe the person was interested at the beginning but it didn’t have the same goal.

Sebastian:
Or they have another idea on how much, again, they get upset of, oh, you’re making all the money. Okay, well you’re a silent partner. You want to be most into the investment. I can do that too. But you have to put in, so sometimes you also understand what vision and what they’re looking for. And at the same time you can say, yeah, maybe we are not the right fit for each other. Maybe we cannot work together. So I think the lessons that we learned, I learned through raising money and talking with people about, Hey, give me your funds. I’m going to do this. Are you comfortable with it? And the number one, I dunno, way that everyone feels comfortable is like these people typically understand who I am, where I live, what my career. Exactly. As you guys say, I came here no long ago, I’m doing this, this, this, this is me. If you feel that you trust me, let’s do it. If you don’t feel that you trust me, that’s okay. Again, it’s a no. Yet you’re going to call me in the future. I’m a hundred percent sure

Ashley:
For somebody who’s listening to this and has no money, no experience, and they want to take their very first step. So what should they be doing today to start building out a private money machine just like yours?

Sebastian:
I will say, changing their habits, becoming a person who, if you are able to talk to anyone, you can add value to anyone. So you need to be an expert in something. You need to understand finances well, or understand, I don’t know, rehab or construction or something. You need to be an expert in something. So that will be my number one. Learn something really well. Be an expert on something. You can share that with someone else. So go to meetups, go to join a mastermind, talk to people and share your goals. That’s also really important. Many times you see people with the same goals. So there we go. You found a partner. You guys can work together maybe if you don’t actually partner up in a deal, but you can be accountable. And that’s also really important because this is a long journey and you need friends, you need the community. You need bigger packets. You can’t do this on your own. It will be impossible. So I think that’s having a budget or understanding what you are in terms of are you bankable? Can you get a loan? Is your credit okay? Is your income good? Oh no. Okay, so find the person who can provide you that. What can you provide for this person? Oh, this person doesn’t have time. I have time. I feel that masterminds and books and changing or becoming the person that you want to become or you want to be is the right approach of anyone could do today to start changing their lives.

Tony:
Yeah, Sebastian, it’s great advice. And I think one of the biggest takeaways from your episode is that it doesn’t matter where you start. You couldn’t have started from a more challenging position. And yet even with the challenges you faced, you were still able to go out, build the network, build the portfolio, and achieve something pretty incredible in a relatively short period of time. And I think a lot of that success comes down to the fact that you focused on, Hey, what is the value that I can provide? First, understanding what your value was, and you said at the beginning it was time and your ability to acquire knowledge. Those are two things that a lot of people listening currently have. Time and the ability to acquire knowledge. And as you did those things, you simultaneously focused on expanding your network. And when you break down that way, time, knowledge, and network, those are the three things that someone needs to build the foundation to then scale their portfolio more quickly. And I don’t even know if you even realize how simple of a formula you’ve built out, but when I heard you going through your story, it’s like, man, if we could just get more people to focus on those three things, time, skills, and network. Dude, I love your story, man. Congratulations brother. It’s amazing.

Ashley:
Well, Sebastian, thank you so much for joining us today. Can you let everyone know where they can reach out to you and find out more information about your journey?

Sebastian:
Absolutely. Absolutely. You can find me on Instagram as seba Romy oh nine, I think it’s my, in my email, RS Investment Group, number [email protected]. If you got my phone number too, I don’t care. 6 0 2 3 9 4 4 9 9 9.

Ashley:
Well, there you go. You can go ahead and give him a call or shoot what text. Well, thank you guys so much for joining us today. Sebastian, thank you for bringing your knowledge to the rookie audience and sharing your story. I’m Ashley, he’s Tony. Thank you guys so much for listening.

Dave:
This investor buys houses for only a hundred thousand dollars just outside a major city. He fixes ’em up, he rents ’em out and repeats the process. It’s only taken him six years of using this simple formula to grow a portfolio that’s now cashflowing $9,000 of passive income every single month. There’s no big secret to his success, and in fact, he’s helped dozens of other investors buy almost identical properties and start their own journey towards financial freedom. Today he’s sharing exactly how he’s done it so you can follow the same path too. Hey everyone. I’m Dave Meyer. I’m the head of real estate investing at BiggerPockets, and I’ve been a rental property investor for more than 15 years. Our guest on the show today is agent and investor, Joe Hamill, who lives and invests outside of Detroit. Joe only got into real estate six years ago, but he’s managed to buy 24 properties which generate over a hundred thousand dollars in cashflow every single year. And on the show today, he’s going to explain how he scaled such a profitable portfolio with very affordable properties, why he’s converted to this slow burr strategy. Love that, and his best advice for other investors looking to do these exact same types of deals. Let’s bring on Joe. Joe, welcome to the BiggerPockets podcast. Thanks for being here.

Joe:
Thanks, Dave. Thanks.

Dave:
Great to meet you. Yeah, super excited to have you on and hear a little bit about your store. So give us your background. Where are you from and how do you find yourself getting into real estate investing?

Joe:
Well, I’m originally from Ohio. I now live and invest in the metro Detroit market, and I signed my first lease, it would’ve been about five years ago exactly to today. It would’ve been on October 1st, 2020. Since then, my wife and I, we have bought 24 properties. It’s 31 doors and where cash flowing, it’s 115,000 a year after budgeting for vacancy maintenance at CapEx.

Dave:
It sounds like an incredible portfolio to do in five years. And you’ve also done that across two really different markets starting in 2020. Fast forward to today, totally different landscape that we’re in. So I’d love to just break down how you’ve done this, but would first just want to understand sort of your goals and motivation for being an investor in the first place. I was working

Joe:
In a factory. It was in manufacturing, and I quickly realized that’s not what I wanted to do for the rest of my life. So when I was kind of searching, trying to figure out what I wanted to do, I was talking to my buddy Jake Graff, and he’s like, Hey man, you need to listen to their pockets. And so for many of us who have done that, it flips your world 180. He was house hacking at the time, so he explained that to me. And so I went down the rabbit hole of multiple podcasts a day, watched all the YouTube videos, I read all the books, I was in the forums, and so that’s when it really triggered like, this is what I’m going to do either full-time side hustle, I’m going to figure this out.

Dave:
Oh, absolutely love hearing that that BiggerPockets has helped you hone your vision and figure out how to get into real estate. What is it about real estate that’s resonated with you that previous careers in manufacturing wasn’t doing for you?

Joe:
It’s the common man’s path to wealth, right? It’s just the greatest investment when you look at how much money you can make in cashflow and then appreciation, loan pay down and your tax benefits. It’s just you can’t compete with it as an investment vehicle. So just dump all my money into it is the best place for it to be.

Dave:
I love that approach. I’ve never heard it described specifically that way, but it makes so much sense to me actually. What makes real estate so interesting that I love is you don’t have to invent anything. It’s a path to entrepreneurship where you’re not having to come up with some new genius business model. This is just a repeatable formula that pretty much anyone can follow, which is super cool. So how did you go about financing finding your first deal and what kind of deals were you looking for off the

Joe:
Bat? Yeah, so I had done two deals in Ohio where I bought land, I bought a house and I sold those when I moved to Michigan. And so that was where I initially had some capital. I made like 40 k, 20 K on each of those. And then by working, I came to Michigan, I had like 50, 60 grand. And so my first property, I was really looking for a house hack. I was doing what I was trying to do, what I was supposed to do, but coming to Michigan, that was a bit overwhelming. I didn’t know how to recognize what a good house hack was. So I ended up going with a safe bet, which was I just picked a single family home and it backed up to a nice neighborhood. It was on a busy street, but I got it for $103,000. I was going to live there for a while and I knew eventually my wife and I, we’d get married and we’d buy another house and that’d be my first rental property. And so that ended up being the first property. I bought it for 1 0 3, I put 15 K into it. It’s worth like 190 today and I thought it was going to rent for like 1300 a month, but I ended up signing a two year lease at 1600 a month. And so it’s cashflow six, $700 a month for five years

Dave:
Straight at this point. That’s incredible. Well, it sounds like you did pretty well figuring out where to buy the first one. This podcast is a long history with Detroit. I don’t know if you know this, but Josh and Brandon, when they first started, Josh loved to hate on Detroit, but I’ve heard that it’s one of those markets where if you know the market well, you can do really well, but it’s not for people who are maybe out of state or haven’t spent the time researching it. Do you think that’s true?

Joe:
I mean, I say this in good fun. There’s two types of people who dog on Detroit and it’s people who have never bought a property there and people who did it wrong.

Dave:
Yeah, okay, that’s fair.

Joe:
Because if you do it right, you can really make a lot of money and we’ve really identified what doing it right looks like. We call ’em bread and butter deals, and if you buy those, they’re just a great balance of price, rent, ROI, location, and we see a lot of success with them. That’s great. So what are those

Dave:
Bread and butter deals?

Joe:
Is it similar to what you bought on that first one? These properties? There’s your suburbs, bread and butter, and then there’s your Detroit bread and butter Suburbs are going to be a little higher price, a little lower ROI and a little easier experience, and that’s the difference between suburbs versus Detroit. And so to break it down as concisely as possible, it’s going to be an 80 K to $130,000 house. They’re going to rent for 1100 to 1500 a month. They’re one to 1.4% rule deals, cash on cash, six to 12% cashflow, $5,300 a month. They’re good appreciation. We grade properties A to F, and so these are what we call C plus B minus.

Dave:
So what is your definition of a C plus? Describe the neighborhood for us.

Joe:
Well, yeah, so my portfolio is a great example. I have 30 plus doors and in five years I’ve had two evictions and I’ve had maybe five or six tenants stop paying and I’ve had to send ’em a notice to quit and get rid of ’em. Somebody stole a trashcan once and somebody kicked in a garage door or the only two crime that I’ve dealt with in,

Dave:
Yeah, I have way more than that.

Joe:
And then vacancies another one that people will look at. I have very little vacancy. I have one unit vacant right now just because the tenant moved out a week ago. So that’s what I’m calling a C plus B minus market. What condition are the properties in? So I do a lot of light to medium sweat equity and probably favoring the medium sweat equity. So I’m doing the cosmetic plus type rehabs. Now again, you can find the turnkey at the higher price range of the bread and butter. I’m staying lower price range with more sweat equity.

Dave:
And what does that deal look like? So you said you’re buying it for what, 80 a hundred grand and putting how much into it?

Joe:
In 2023, my average single family home purchase price was $80,000 and my average rehab was probably 15, maybe touching

Dave:
20 k rehab. I’m asking these questions about the specifics because these seem very approachable kinds of deals. Even if you’re putting 25% down with traditional financing on an $80,000 property, it’s 20 grand down with a reno of 1520 K, you need closing costs, you need reserves, $50,000, obviously a lot of money, but more palatable to a lot of people who maybe don’t want to go to the house hack and put three point a half percent down or live in a super expensive market. This just seems quite achievable for people who are thinking about or comfortable with out-of-state investing presuming you don’t live in Detroit. The question I think you hear about Detroit that I just curious your opinion on Joe is like what about the appreciation? It seems like cashflow is pretty solid post. We’re going into sort of a flatter market. What do you think appreciation goes from here? I’m sure you’ve looked at the data,

Joe:
But recently we’ve done really well, especially in the post COVID era. I mean we’re in the top 2023, we were number one at least by some sources and ever since we’re still six, 7%, even just 2024 to 2025, which most markets they can’t say that. And I think it comes down to one major thing. I think it’s affordability. I think the other markets that are struggling, it’s because of affordability and the reason why Detroit isn’t is because we still are a low enough price point that we have room to grow.

Dave:
I agree. It’s kind of been my whole thesis is just that these markets that are affordable, people are going to still keep transacting, whereas other markets I invest in, it’s just unaffordable and you see the market coming down. There are obviously still people doing stuff, but the number of transactions is just really low and we’ve just reached the point where we can’t stretch affordability, people are not able to pay and maybe when things get a little bit cheaper, they’ll jump back in. But these markets, Milwaukee, obviously Detroit, Cleveland, a lot of the Midwest, this is where things are happening because it’s where people who live there and work there and have normal jobs are still able to participate in the housing market. That’s a healthy housing market I think bodes well for those types of markets in the future. So this is fascinating. Love hearing the specificity of the kinds of deals that you’re buying here. I’d love to hear a little bit about your story though, how you’ve evolved your own portfolio. Let’s get into that right after this quick break. Welcome back to the BiggerPockets podcast here with investor Joe Hamill who’s been growing his portfolio in Detroit for the last five years. We heard a little bit about your first deal where you bought a house hack. How did you grow your personal portfolio from there, Joe,

Joe:
I bought that first one rented out in 2020 and then in 2021 we bought, I think it was five deals. And the funding for that came from that original 50 60 K that I moved to Michigan with. And I also 2021, I was able to pull out my 401k penalty free using the COVID, whatever that was. So that was more funding. I did a couple of the soft burrs. You’ve been calling ’em a slow bur, we call ’em a softer whatever you want to call.

Dave:
Yeah, let’s use slow bur we got to standardize this

Joe:
Slow

Dave:
Bur is what it is. I

Joe:
Agree. It’s a better name than software. So it was be able to pull some out there. And then my wife, she had a good income and we both determined, hey, let’s live 100% off of your income. And then everything that I make through my job and as an investor, we’re going to reinvest all that cashflow. So that was the funding. Every time I hit a certain threshold of money, I would go look at the market and I’d pick out a

Dave:
Deal and execute. So you would have one going, you would do the renovation, rent it out, get rents up to market rate, and then you would refi. So you would basically take some or all of that money, combine it with your income to finance the next

Joe:
One. Exactly. And most of the time it was some of the money I did hit one. Perfect bur wow, that’s awesome.

Dave:
Wow. I am asking that because if you listen to the show, you’ve heard me talking about the slow bur and I like this because it’s more realistic and it’s just a little less pressure in today’s day and age. And just want to reiterate that doing the quote perfect bur where you can refinance a hundred percent of your cash is just pretty rare these days. I’m sure it still happens, but it is pretty rare. And I really just think in the new realities that we’re facing, having appropriate expectations is super important and not expecting to achieve returns that just don’t exist anymore. That doesn’t mean they’re not still life-changing events that are going to help you move towards your financial goals. It just means we’re not in this free money period where everything was perfect. So I just want to make sure people understand that the bur still really works, these perfect burrs. Were just there at a certain time and place and is not what we should all be expecting. So you keep doing these same deals for five or six years. How have you avoided this shiny object syndrome that I certainly get in real estate? I think a lot of people do where you want to try everything I do short-term rental, you want to flip, you want to do creative finance, you want to do everything. How have you and why have you just stuck to the same approach?

Joe:
I think you said it in terms of haven’t you had shiny object syndrome? I think I was aware of not having it. That was a very conscious decision I made early on was don’t do that. Get good at something and get bored with it whether it’s your job or investing. And I had something, I hit success on my first 1, 2, 3 deals, and so I was just clear the slate and repeat the same thing 20 times. That’s awesome.

Dave:
It seems like even though the market has been hot, finding deals hasn’t been hard.

Joe:
No, I would say in 2024 was kind of a shift in my strategy. That was an extreme seller’s market interest rates were higher then than they are today. So I really went from an average price in 2023 of 80 K to an average price of 120 5K in 2024. I’m still getting six to 9% cash on cash RO, but I really made those changes for a couple reasons. The one was the market adjustment I had to, the $80,000 house was now a hundred thousand dollars house to get the same profile of property, I had to go up in price. So that decision was kind of made for me. And then the second reason why I really went from a hundred to 1 25 was my personal strategy change. I already had 15, 16 to 17 bread and butter, really good cashflow. They were 2 1 3, 1 sided houses, maybe a little bit of character. And so now I was like, okay, let’s go up a notch. And I was looking for brick, I wanted a basement and a garage. I didn’t want any character. And so that just took me up then to the 1 25 price point. So all four of my deals in 2024 looked exactly the same with that 125 price

Dave:
Point. Okay. I mean I assume it’s gone up a little bit, but those kind of deals are still available to you.

Joe:
Yeah, I mean, like I said, shoot fish in a barrel. I could probably pick a couple out right now.

Dave:
That’s pretty incredible. So let’s talk a little bit about specifically what to look for because obviously not everyone is going to invest in Detroit, but I think this model that you’ve created is somewhat repeatable in a lot of markets. Obviously if you’re living on the coasts it’s probably pretty expensive, but if you’re investing somewhere in the southeast or in the Midwest, there’s a lot of these kinds of deals. So let’s just talk characteristics, not just price point. Are there certain bedroom counts you’re looking for and how do you try and identify that sweet spot of value add? I think that’s a big question for a lot of people. What one person calls a cosmetic renovation could be totally different from what another person calls a cosmetic renovation. So what are the kind of properties and upgrades that you’re trying to target?

Joe:
So a lot of these are two ones and three ones, which a lot of people, they really want the three two, but I think the ROI is higher on the 2 1 3 1 because less people want ’em. Your price to entry is lower.

Dave:
So you’re doing these 2 1 3 ones, which makes sense to me. Are you doing kitchens, bathrooms, floors? What’s the scope of the renovation you’re trying to do?

Joe:
The lighter ones are painting and fixtures. So you go in and you paint and you do new light fixtures, new knobs, new faucets, and the whole house looks great. That’s your light version versus your medium one is like, okay, we’re going to replace all the toilets, all the fixtures we’re painting, we’re refinishing the floors, we got to do all of our landscaping outside, maybe replace the furnace. Something like that is what I consider medium versus large is you’re doing a gut job and I think that’s when your risk goes through the roof when you take on those big ones.

Dave:
Yeah, literally it goes into your roof a lot of the time doing that. But yeah, I think that makes a lot of sense. And is that sort of what you recommend for newer investors is taking on that kind of fixtures paint kind of thing first? Yeah, definitely. It’s

Joe:
Why I am really cheering on your slow messaging right now because it’s just so much more realistic to hit the lighter sweat equity and get your feet wet on those. And if you want to go more aggressive after that, do it. But to start out, just take on the lighter stuff. But I do like taking on some sweat equity because that’s how you’re going to force ROI in a property.

Dave:
If I had my druthers, I would pay a little bit more and buy a stabilized turnkey property that had solid cash on cash return, not amazing. And those still exist sometimes in some places, but the juice is just better on a light cosmetic rehab right now, you will get better cashflow and you’re going to build equity. And I think that’s the real important thing. People look at burr and they say, oh, I can build equity. That is definitely true, but a lot of times that’s how you have to generate cashflow too because if you look at a property with the rents that it can command in its existing condition, you’re probably not hitting that six to 9% cash on cash return. I don’t see it anywhere. You could maybe get three or 4%, which is okay for some people. That’s fine if you just really want to do nothing. But if you’re trying to hold onto something for a long time, that’s why the slow burner works because you can do it sort of at a slower pace, but then you get the equity but you juice up those rents and provide a really high quality experience for your tenants that they’re going to want to stay, that they’re willing to pay for. And that just sets you up for a more successful long-term hold period in my opinion.

Joe:
Yeah, I couldn’t agree more.

Dave:
We got to take a quick break, but stick with us. We’ll be right back. Welcome back to the BiggerPockets podcast. Let’s get back into our conversation. So tell me a little bit about managing these renovations an agent as well. Are most of the people you’re working with local or out of state?

Joe:
The majority is out of state. It’s like 65% out of state versus 40, 45% local.

Dave:
And how do you coach and get people comfortable with the idea of doing renovations from out of state?

Joe:
So something started building from the very beginning was our resource list and it’s at this point it’s 200 plus names and phone numbers of CPAs, attorneys, contractors, electricians. And so that’s really been a huge ticket to, hey, you can build your core four with this resource list. And I think that’s broken down a lot of barriers, finding contractors. One of the hardest parts for me at the beginning of course. So I ended up getting my builder’s license and starting a small handyman slash general contracting company just to help myself do a lot of these rehabs and obviously clients can use them as well.

Dave:
So what do out of state investors do they find a contractor on your list and then they manage the whole thing themselves? Or how are they developing a scope of work and overseeing the project while they’re out of state?

Joe:
So we do a lot of boots on the ground for outstate clients. So we’ll take a really good walkthrough video most of the time before purchase, and that’s how they’re closing these properties. And so then after they close, they have that video and they can either hire a GC to just do the whole thing or if they want they can pick off one person at a time, hire my painter, my floor person, and just do what needs to be done.

Dave:
As an out of state investor, that is tough. It is tough to run subs yourself out of state. I think it’s easier to do it with a GC or the way I’ve done it. I don’t know what you recommend, but the way I’ve done it is my property manager has a lot of subs and sometimes I will have them run the subs through and help me work on the scope of work. Do you see people do that as well?

Joe:
Yeah, I’d agree. The GC is the more popular route. And then as well as having the property manager gc, if especially for the outstate, that’s typically what they’re going to favor.

Dave:
And then do you see most out of state investors before they purchase with you, do they come and visit?

Joe:
It’s like 50 50. We have a lot of ’em that will close without ever seeing it, and then some of ’em will want to fly in for closing.

Dave:
But do they ever even come to Detroit and get to know the market at all, even if they buy the property site unseen?

Joe:
Yeah, sometimes. Sometimes they’ll want to come in and just confirm that they want to buy here, and then we’ll usually set up some sort of tour from on that weekend. They come in, we’ll go see 10 houses and go from there.

Dave:
That’s my favorite thing to do. I love going to markets and touring around. It’s the best. I really recommend people do that. If you’re an out of state investor, I’ve closed on property site unseen, but going to the market and just getting a lay of the land generally where these properties are going to be, you like this area, you don’t like that area, it’s worth it. It really is worth a thousand dollars or whatever you’re going to spend. I know that’s seems like money you could be putting towards a property and you can, but it’s just money that you need to spend to invest into your business for the longevity of it. I just know myself, I sleep easier at night investing out of state knowing that I’ve been there and I have a general sense of I really like this neighbor. I trust this neighborhood. That’s a good place. Recommend that people take that approach as well. So Joe, tell me you’ve succeeded and had this pretty incredible portfolio that you’ve built up over the last couple of years. What comes next for you? What are your goals now?

Joe:
It’s a good question because obviously I hit some numbers that were my lifetime goals, so it’s kind of surreal at 31 that could be done. But my wife and I talk and we both believe in God’s purpose for our life and he let us know that we’re not allowed to go sit on a beach. So we’re brainstorming some philanthropic ideas. We’re going to keep investing. Oh, that’s great. Keep investing and keep growing. Work on a couple side projects with a FinTech group and hopefully have some cool things for investors at some point there. But yeah, we’re just going to keep going and try to make the world a better place.

Dave:
Oh, that’s awesome. I love to hear that. And I think that’s one of the under-discussed parts of real estate investing. That’s so cool because I’m on board with you. I am not someone who could sit on a beach and not work, but it’s so cool how real estate investing when you reach a level of financial independence just allows you to take on projects that are philanthropic or just have personal importance or meaning to you. Or people often say they want to spend more time with their family, which is a common one, which is great, but if you have other professional interests or philanthropic interests, it allows you to take that on as well, which is super cool. So highly respect that. That’s how you’re thinking about spending your time. Joe,

Joe:
Thanks.

Dave:
Well, Joe, thank you so much for being here today. It’s been great meeting you, hearing your story. Congratulations on all the success. Make sure to keep us posted on your next steps. Awesome. Thanks a lot Dave. And thank you all so much for listening to this episode of The BiggerPockets. We appreciate you listening. We’ll see you next time for another episode in just a couple of days.

Landlords are likely to choke on their morning cup of joe—Starbucks is leaving neighborhoods en masse, and the repercussions could echo around the rental real estate market.

Rental property owners usually breathe a sigh of relief at the sight of Starbucks’ familiar green-and-white awning in a neighborhood they have invested in or are considering. A popular train of thought is, “If Starbucks customers can afford to pay $5 for a cup of coffee, they can afford to pay me rent.” Landlords can also be confident that, in addition to regular rental income, their property values will increase. 

That’s not idle speculation. There’s a term for it: the “Starbucks Effect,” coined by Zillow after a 2015 report found that between 1997 and 2014, homes within a quarter-mile of a Starbucks increased in value by 96%. Of course, home values throughout the country appreciated during that period, too, but by 60%, not 96%.

Why Starbucks Is So Influential to Real Estate Values

Starbucks is considered a reputable company with upscale clientele. When one lands in a neighborhood, it’s as if the real estate gods have given the area a seal of approval, signaling for other brands, residents, and investors to follow suit. 

Hannah Jones, senior economic research analyst at Realtor.com, explained it this way:

“The presence of the café could then add to the area’s appeal, along with the other factors that convinced the company to open the location to begin with. Put differently, Starbucks doesn’t cause home values to rise on its own; instead, it tends to open stores in neighborhoods where other factors, such as economic growth, rising demand, and increasing property values, are already at play.”

Todd Drowlette, a former exclusive Starbucks real estate broker who now represents competitor Dunkin’ Donuts in New York, concurs, telling Realtor.com: 

“People consider a neighborhood’s total package. Having amenities in close distance adds to the desirability. Everyone wants convenience today. Whole Foods still brings with the brand a feeling of an upscale community because people know the type of neighborhoods they are located in.”

Why Starbucks Is Closing Stores

Money, what else, is at the root of the closures. Starbucks has decided to shutter 400 of its nonperforming retail stores, cutting around 900 corporate jobs. CEO Brian Nicol explained in an open letter that the closures target stores “where we’re unable to create the physical environment our customers expect or where we don’t see a path for financial performance.”

Worried landlords, expecting a drop in business, might find solace in the fact that Starbucks still has 18,000 physical locations operating in the U.S. and Canada, and that the closures are not spread evenly. However, landlords in dense urban areas in the Northeast, such as Philadelphia, Northern Virginia, Baltimore, and Washington, D.C., could have cause for concern, having already witnessed a flurry of closures. 

Philadelphia alone saw the closure of five Starbucks locations recently. Northern Virginia has seen a cluster of 16 stores close across the DMV (District of Columbia, Maryland, Virginia) area—including nine in Washington, D.C.— which were confirmed to be closing, according to WUSA9.

“Many of the closures listed are in city cores or densely built commercial corridors,” says Jones. “That matches reporting that Starbucks is shutting ‘some high-profile urban locations’ as foot traffic in central business districts remains depressed.”

The Starbucks Exit Effect

Just as Starbucks moving into an area signals desirability for other businesses, retailers, and landlords worry that its exit could have the opposite effect.

“One closure might not cause lasting damage…If it begins the downward spiral with two or more, it will hurt surrounding property values” Drowlette said.

Other Brands That Boost Property Values

Starbucks is not the only brand that boosts real estate values in a neighborhood, but its presence has the most dramatic effect. Zillow’s 2015 survey found that neighborhoods with Dunkin’ Donuts experienced an 80% increase in property values.

A 2022 survey by real estate data and analytics company ATTOM found that grocery stores Trader Joe’s, Whole Foods, and ALDI were likely to have a considerable positive effect on home prices, with homes near an ALDI experiencing a 58% increase over five years, Trader Joe’s 49%, and Whole Foods a 45% increase. Properties near these locations were also likely to be favorable for house flippers.  

ATTOM’s Rick Sharga said in the report: “It turns out that being located near grocery stores isn’t only a matter of convenience for homeowners, but can have a significant impact on equity and home values as well. And that impact can vary pretty widely, depending on which grocery store is in the neighborhood.” 

Your Neighborhood’s Ability to Recover From a Retail Setback Can Determine Its Fate

Losing a tenant like a Starbucks does not have to sound the death knell for a neighborhood. If a vacant storefront is filled quickly by a desirable local or national brand, the damage can be mitigated. 

Usually, national brands can pay more rent than smaller local companies. However, many high-priced municipalities have bylaws restricting national brands, enhancing their local community atmosphere and sense of exclusivity, which in turn can boost property prices. 

The trend nationally, however, has seen national brands dominating the retail scene as high rents force smaller retailers out. While most landlords and tenants want to feel they own and live in a unique location with a specific character, rather than a homogenized neighborhood that could be anywhere in America, the presence of larger retailers probably means greater stability for a neighborhood, which is far more preferable than vacant stores. 

Possible Wider Ramifications Following the Starbucks Closures

Starbucks closures could carry implications beyond commercial real estate. Analysts at Forbes have drawn a correlation between them and signs of evolving consumer and worker values, skepticism about premium pricing in a time of affordability challenges, and demand for different store experiences. Rising operating costs from labor to rent to supply chain issues have squeezed profitability from retail and dining chains, according to GlobeSt.

Should more closures of other upscale brands follow, not only will the job market be affected, but so will the affordability for workers and renters to live in once-thriving neighborhoods.

Final Thoughts: What Landlords Should Watch For Next

The upcoming months will indicate whether the Starbucks exit marked the beginning of something larger, and what impact it could have on rental markets. Here are some of the things landlords should look for when evaluating a place to invest that has recently experienced retail closures:

• Cluster effects: Are retail closures limited to specific areas, or are they happening nationally in different regions?
• Tenant replacement rates: How quickly can former Starbucks sites get repopulated with quality tenants?
• Residential price movement: As stores close, what is the effect on home and rental prices? 

The Wall Street Journal pointed out that, in the face of inflation and rising costs, Americans generally can no longer afford restaurant and coffee prices, and are generally eating out less. 

Thus, the Starbucks closures are more than a coffee story. They mark the convergence of commercial real estate, consumer behavior, and the viability of upscale retail amenities that could have a profound effect on residential landlords, tenants, and investors.

This article is presented by Steadily.

If you own rental property, you already know that landlord insurance doesn’t come cheap. In fact, premiums are typically higher than what you’d pay for a homeowner’s policy on the very same property. 

The reason why is simple: Insurers view rentals as riskier. Tenants may not maintain a home as carefully as an owner would, and claims from storms, accidents, or liability issues can be more frequent.

For landlords, that extra cost can eat directly into your bottom line. A few hundred dollars more per year might not sound like much, but across multiple units, or over many years, it adds up fast. And in today’s market, with rising property taxes and maintenance costs, keeping insurance expenses in check is a critical part of protecting your cash flow.

The good news? You have more control than you might think. While you can’t avoid carrying landlord insurance, you can make strategic choices that help bring premiums down without sacrificing the protection your investment deserves. Think of it as playing defense: You’re not cutting corners—you’re finding smart ways to lower costs while keeping your coverage strong.

We’ll cover practical strategies landlords use every day to reduce insurance premiums. From property upgrades to deductible choices and bundling opportunities, these moves can add up to meaningful savings, without exposing you to unnecessary risk.

Smart Ways to Save on Your Insurance Policy

One of the most effective ways to lower your landlord insurance premiums is by upgrading the property itself. 

Insurance companies reward landlords who invest in making their rentals safer and more resilient, because these improvements reduce the likelihood of future claims. In other words, the better shape your property is in, the less risk the insurer has to carry, and the more savings you could see.

Common upgrades that pay off

• Roof replacements: An aging or damaged roof is one of the biggest red flags for insurers. A new roof not only protects your investment from leaks and storm damage, but it can also qualify you for a lower premium.
• Stormproof windows and doors: In areas prone to hurricanes, hail, or high winds, installing impact-resistant windows or reinforced doors can reduce risk and may lead to policy discounts.
• Plumbing and electrical updates: Outdated wiring or old plumbing increases the risk of fire and water damage. Modernizing these systems not only helps prevent costly repairs but also positions you for lower insurance costs.
• Fire safety systems: Smoke detectors, sprinkler systems, and fire-resistant materials can all earn you discounts while giving everyone more peace of mind.

Double benefit: Protection + savings

The beauty of these upgrades is that they work on two levels. They make your property safer for tenants, reducing emergencies and liability, while also potentially qualifying you for premium reductions (not to mention bonus depreciation). If your property needs these improvements anyway, you might be able to offset part of the cost through insurance savings.

Confirm before you commit

Before making a major investment, check with your insurer to see what discounts are available. Every insurance company has its own criteria, and you’ll want to know upfront which improvements will actually lower your costs. This way, your capital improvements aren’t just protecting your property—they’re working to protect your bottom line too.

Rethink Your Deductible

Another lever landlords can pull to lower insurance costs is adjusting the deductible. Your deductible is the amount you agree to pay out of pocket when you file a claim, and it directly impacts your premium. In general, the higher the deductible, the lower your monthly or annual premium will be.

How it works

Think of it as sharing risk with your insurer. By committing to pay more upfront if a claim occurs, you’re signaling that you’re less likely to file small claims, and insurers reward that with lower premiums. For example, moving from a $1,000 deductible to $5,000 could trim a noticeable percentage off your annual cost.

Questions to ask yourself

• What’s in your reserve fund? If you keep healthy reserves for repairs and emergencies, you may be comfortable with a higher deductible.
• How often do you expect to file claims? If you maintain your property proactively and rarely file claims, a higher deductible makes more sense.
• What’s the break-even point? Run the math. If a higher deductible saves $600 a year, but you’d only face that extra cost once every 10 years, it may be worth the trade-off.

A word of caution

While increasing your deductible is a great way to save, it’s not for everyone. You don’t want to leave yourself exposed if a big storm hits or a tenant-caused accident requires immediate repairs. Always balance the premium savings with your ability to comfortably cover the deductible if the worst happens.

Landlord policies often offer more flexibility in deductible levels compared to standard homeowner’s insurance. Take advantage of that flexibility, but make sure your choice aligns with both your cash reserves and risk tolerance.

Bundle and Layer Coverage Wisely

Bundling isn’t just for cable bills and phone plans—it can also help landlords save on insurance premiums. Many insurers offer discounts when you buy multiple types of coverage from them, such as auto, umbrella, or multiple-property policies. For landlords with growing portfolios, bundling can make a noticeable difference in annual costs.

How bundling works

• Multiple properties: If you own several rentals, putting them under one insurer often leads to volume discounts.
• Auto + landlord policies: Insurers may reduce your rate if you carry both your personal auto and landlord insurance with them.
• Umbrella coverage: Adding an umbrella liability policy not only increases your protection but may also earn you a bundling discount.

Don’t cut the wrong corners

While bundling can save you money, it’s important not to sacrifice essential coverage just to shave a few dollars off your premium. A bare-bones policy that leaves you underinsured could cost far more in the long run. Always confirm that the bundled package still provides the protections you need, such as:

• Loss of rent coverage in case a unit becomes uninhabitable
• Liability protection for accidents or injuries
• Property coverage for damage from storms, fire, or vandalism

A long-term layering strategy

Bundling is just one part of a broader insurance strategy. Think of your coverage in layers:

• Base layer: Your landlord insurance policy
• Second layer: Umbrella liability or specialized endorsements
• Third layer: Tenant-required renter’s insurance or tenant damage protection plans

When structured thoughtfully, this layered approach helps you reduce premiums while making sure no major risks slip through the cracks.

In short, bundling can be a smart cost-saver, but only if it aligns with the real-world risks you face as a landlord.

Don’t Forget Tax Advantages

When evaluating the true cost of your landlord insurance, it’s important to remember that premiums are tax-deductible. Since rental property is considered a business activity, insurance is treated as an operating expense. That means every dollar you pay in premiums reduces your taxable rental income, lowering your overall tax bill.

Why this matters

At first glance, a $2,500 annual premium might feel steep. But if you’re in the 24% tax bracket, that deduction effectively lowers your net cost to around $1,900. Stretch that across multiple properties, and the savings can become significant.

Examples of deductible insurance

• Standard landlord insurance policies
• Liability coverage
• Flood or earthquake add-ons
• Umbrella policies that extend your protection

Keep good records

To maximize these benefits, always maintain clear documentation. Save invoices, receipts, and policy statements for each property. Not only does this simplify tax time, but it also strengthens your case in the event of an IRS audit.

You can’t eliminate premiums entirely, but when you factor in their deductibility, the effective cost of landlord insurance is lower than it looks. That perspective helps you see coverage not just as an expense, but as a strategic business investment that safeguards your income and assets.

Why the Right Insurance Partner Makes All the Difference

Cutting costs is important, but as a landlord, the real goal isn’t just saving money; it’s protecting your income stream and assets. You want premiums that are fair, yes, but you also want coverage that will respond when disaster strikes. That’s when the insurer you choose makes all the difference.

Too often, landlords chase the lowest possible premium, only to find out later that their policy excluded the exact type of loss they experienced. Or worse, they end up in claims limbo, waiting months for reimbursement while repairs and tenant issues pile up. That’s a recipe for lost cash flow, frustrated tenants, and unnecessary stress.

Why Steadily stands out

Steadily was built specifically for landlords and real estate investors. Unlike traditional insurers who treat rentals like an afterthought, Steadily’s entire platform is designed around the unique needs of property owners. That means:

• Tailored coverage: Policies structured for all rental types, from single-family homes to multifamily buildings to short-term rentals like Airbnb
• Fast, digital quotes: Get coverage options in minutes, not days of back-and-forth paperwork.
• Risk-reduction tools: From recommending upgrades to offering insights on deductible levels, Steadily helps you actively lower both your risk and your premiums.
• Nationwide availability: Whether your properties are local or spread across states, you can streamline your coverage under one provider.

Balancing affordability and protection

Steadily understands that landlords are running a business. Their goal isn’t just to write policies—it’s to help you stay profitable by minimizing risk while keeping premiums competitive. And because your insurance premiums are tax-deductible, the value of a policy that actually works when you need it far outweighs a few dollars saved on a weaker policy.

If you’ve been thinking about revisiting your coverage, now’s the time. The right insurer doesn’t just reduce your premiums; it reduces your stress, strengthens your business, and keeps your rental income flowing, no matter what challenges come your way.

Protect your investment with Steadily today. Get a fast, customized quote at Steadily.com and see how much you could save while upgrading your coverage.

This article is presented by Rent To Retirement.

If you’ve been waiting for mortgage rates to magically fall, 2025 might test your patience. The smarter move isn’t hoping for cheaper money. It’s manufacturing a lower rate on the deal you’re buying today. 

The overlooked trick? A rate buydown. 

Used correctly, it can cut your payment, improve cash flow, and even help you qualify for more financing down the road.

Here’s the gist: A buydown lets you exchange an upfront cost for a lower interest rate. That reduction can be temporary in the early years, or permanent for the life of the loan. 

The kicker: You don’t always have to fund it yourself. In the right market conditions, you can often redirect seller or builder concessions toward the buydown instead of just haggling over price.

This guide breaks down the main buydown structures, what they cost, and how to calculate your breakeven so you’re not guessing. We’ll also cover when a buydown makes sense, when it doesn’t, and the negotiation plays that actually get it paid for. By the end, you’ll know exactly how to turn a “meh” rate into a number that pencils, and how to position your next offer so your monthly payment drops without sacrificing long?term upside.

Rate Buydowns 101

A rate buydown is exactly what it sounds like. You pay money up front to “buy” a lower mortgage interest rate. That lower rate can be temporary for the first few years, or permanent for the life of the loan.

Who can fund the buydown

• You, the borrower: Straightforward. Bring cash to close to secure the lower payment.
• The seller: Instead of cutting the price, the seller gives a closing cost credit that is applied to the buydown. This can be attractive in slower markets.
• The builder: On new construction, builders often offer sizable incentives. Directing those concessions toward a buydown can be more valuable than a simple price reduction, because it lowers your monthly carrying cost.

When a buydown makes sense

• You want better cash flow in the early years while rents catch up.
• You plan to refinance if rates drop, but want immediate breathing room.
• You’re optimizing debt-to-income for future loan approvals.

Temporary Buydowns: 3-2-1, 2-1, 1-0

Temporary buydowns lower your effective rate for the first year or two (sometimes three), then the loan steps back up to the original note rate. They are popular with investors who want early cash flow relief while rents stabilize.

How each structure works

• 3-2-1 buydown: Year 1 is three percentage points below the note rate. Year 2 is 2 points below. Year 3 is 1 point below. Year 4 onward, you pay the note rate.
• 2-1 buydown: Year 1 is 2 points below. Year 2 is 1 point below. Year 3 onward, you pay the note rate.
• 1-0 buydown: Year 1 is 1 point below. Year 2 onward, you pay the note rate.

The lender funds the monthly payment “gap” from a subsidy account, typically created at closing. You, the seller, or the builder can fund that account through concessions or your own cash.

Why investors use them

• Immediate cash flow cushion: Lower payments in the early years while rents and operating efficiency improve.
• Refi runway: If rates fall, you can refinance before the step-up years hit.

Risks and red flags

• Payment shock: Your payment will rise as the buydown steps up. Underwrite deals at the full note rate. If it doesn’t cash flow at the full note rate, don’t buy it.
• Concession limits: Loan programs cap how much sellers or builders can contribute. Verify caps for your property type and LTV.
• Early payoff rules: Ask whether unused subsidy funds are applied to principal if you refinance or sell during the buydown period.

A good rule of thumb is that the temporary buydowns shine when you can secure seller concessions to fund them. If you have to pay entirely out of pocket, compare against a permanent buydown to see which wins on breakeven and long-term savings.

Permanent Buydowns

Permanent buydowns trade discount points at closing for a lower interest rate for the life of the loan. One point usually equals 1% of the loan amount as an upfront fee. In exchange, your lender reduces the note rate. The exact rate drop per point varies, so ask your lender for a point-and-price table.

Why permanent can beat temporary

• Lasting payment reduction: Your lower rate does not step up after year 1 or 2.
• Total interest saved: Because the rate stays lower for the full term, you typically save more interest if you hold the loan long enough.
• DTI help: The lower payment is permanent, which can improve debt?to?income for future loans.

The break-even math

We’ll try not to overcomplicate things, but it’s beneficial for you to understand the math behind deciding whether a permanent buydown makes sense:

1. Loan amount = L
2. Points cost = L × percent paid
3. Monthly savings = P? – P?
4. Break-even months = (Points cost ÷ monthly savings)

If you’ll hold the loan longer than the breakeven, points can make sense. If you expect to refinance earlier, they may not.

The Cost Picture

Scenario A: No buydown

• Loan amount: $300,000
• Market rate quote: 6.875%
• Principal and interest: ? $1,971/mo

Scenario B: Temporary 2?1 buydown, funded by concessions

• Year 1 effective rate: 4.875% ? $1,587/mo
• Year 2 effective rate: 5.875% ? $1,775/mo
• Year 3+: Reverts to 6.875% ? $1,971/mo
• First?year cash flow vs. no buydown: About $384/mo, or $4,608 for the year.

Scenario C: Permanent buydown with discount points

• 2 points = $6,000
• Rate: 6.375% ? $1,872/mo
• Monthly savings vs. par: ? $99
• Breakeven: ~5 years

If you can secure seller or builder credits, a 2?1 buydown gives the largest short?term relief. If you’ll hold five+ years, permanent buydowns can win on total interest saved and predictable carrying costs.

How to Pull It Off

Step 1: Price the base deal

• Collect three lender quotes for the exact same scenario.
• Ask for a rate stack that shows cost or credit for each 0.125% move.

Step 2: Model both buydown paths

• Request both temporary and permanent quotes.
• Calculate monthly savings and breakeven for each.

Step 3: Identify who will fund it

• Builders often provide credits you can direct to buydowns.
• Sellers may agree to concessions in exchange for a smooth close.
• Out?of?pocket: Weigh against reserves and returns.

Step 4: Negotiate 

• Put the credit amount and intended use in your offer.
• On new builds, insert contract language letting you choose between temporary or permanent buydowns after lender pricing.

Step 5: Underwrite conservatively

• Model cash flow at the full note rate. Treat lower payments as a bonus.
• Hold reserves for principal, interest, taxes, and repairs.

Step 6: Lock and document

• When you lock, capture the loan estimate, point table, and buydown addendum.

You can also combine strategies. Use concessions to fund a temporary buydown for immediate relief, and add a fractional point if the cost?to?savings ratio is strong.

Why New?Build Concessions Are a Shortcut

The best buydowns aren’t always funded from your pocket. They’re often baked into new construction deals, and that’s where smart investors can win in 2025.

Why builders love concessions

Builders want to keep sales prices high to protect comps, so they prefer giving closing cost credits instead of reducing sticker price. For you, those credits can be redirected into a rate buydown that lowers your monthly payment.

Where Rent To Retirement fits in

This is exactly the type of leverage Rent To Retirement helps investors capture. Their new?build inventory often comes with 5% down financing and builder concessions that make buydowns pencil. Clients are securing rates as low as 3.99% by pairing builder credits with smart buydown structures.

Even better, because these are new builds, you’re not inheriting deferred maintenance or capital expenditure surprises. You get turnkey rentals with warranties, immediate rentability, and financing terms built to maximize cash flow.

If you want to put this buydown playbook into action without guessing, start with new construction properties where the builder is already offering credits. Rent To Retirement is the shortcut to make that happen.

Don’t Wait for Rates to Drop

Waiting for mortgage rates to fall isn’t a strategy. Whether you lean on a temporary 2-1 buydown for immediate relief or pay points for a permanent cut, the math is clear: You can engineer better cash flow today and still refinance tomorrow if conditions improve.

Ready to see how low your rate can go? Schedule your free strategy session with Rent To Retirement and learn how to secure new-build rentals with the financing structure that maximizes your returns.

Disclaimer. This article is for educational purposes only and is not financial advice. Always consult your lender, CPA, or advisor to confirm which financing option is best for your situation.