BiggerPockets Real Estate Podcast - $100K/Year Passive Income with Cheap, Small, Repeatable Rentals

Episode Date: June 9, 2025

This investor is making $100,000 per year with small, affordable, repeatable rental properties. He started investing years ago but recently bought another home-run rental for just $87,000, which will continue to boost his passive income. His slow, steady “tortoise” approach is one that anyone (especially beginners) can use in 2025 to build wealth and massive passive income through rental property investing. How do you do it? He’s sharing his blueprint. Nathan Nicholson woke up one day in his 30s to realize that his bank account had only $32,000 in it. While by no means is $32,000 a small sum, as a top producer in the mortgage business, he expected to have much more—something needed to change. After watching clients close (and make it rich) on rentals, he decided to give it a shot. But instead of going for the biggest house his money could buy, he opted for a small, affordable property where less could go wrong. It was a good move and one worth repeating. Fast forward over a decade later, Nathan has 22 properties, 10 of which are paid off, with six-figure cash flow coming in every year. He scaled smart (and safely) using his “tortoise approach” to investing—an approach you can use, too! In This Episode We Cover Why buying small (less than 1,000 square feet!) rentals is a smart move for beginners  Taking the “tortoise approach” to wealth so you safely get to early retirement  Cashing out your 401(k) for rentals? Why Nathan says it’s worth it  One quick calculation (that beats the 1% rule) every investor should use  Why Nathan is buying even more as price cuts hit many major housing markets  And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1132 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[e-mail]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

This investor buys the same $80,000 house over and over again. He had only $30,000 in the bank in his early 30s despite a successful career. And at that point, retirement looked like a pipe dream. Then he discovered real estate investing and started slowly building a better financial future, one affordable property at a time. Now he owns 22 properties, cash flows almost $100,000 per year, and will have the option for a stable retirement well ahead of schedule. Let's find out exactly how he did. Hey, everyone, I'm Dave Meyer, head of real estate investing at Bigger Pockets. Today's guest on the

podcast is investor Nathan Nicholson from Louisville, Kentucky. Nathan didn't buy his first investment property until he had a realization about needing to take control of his financial future in his early 30s. But he's since then built an incredibly impressive portfolio all at very affordable price points. Today, we're going to hear how he was able to embark on a path to financial freedom with only a handful of properties in his first few years of investing. Why he recommends being very careful with leverage, even as a loan officer, and why, unlike a lot of investors, he always wants to buy the smallest possible house for his money. There is a ton of actionable advice in this conversation, especially for investors looking for houses at a price point around

$100,000. So let's get into it. Nathan, welcome to the show. Thanks for being here. Yeah, thank you for having me. It's a pleasure. Tell us a little bit about yourself. How do you find yourself on this podcast? What do you do in the real estate industry? Well, in the real estate industry, currently I'm a growth leader at Success Mortgage Partners. I've had a long career there from Supreme Lending, Lower.com, and Sierra Pacific. I saw a lot of my friends in the mortgage industry buying real estate, and I just was wondering, how are they doing this? And, And that's kind of what projected me into buying real estate and looking into it a little bit more. What year were you starting? What was the time frame for all this?

Yeah. So, I mean, basically, I've been buying real estate for right around 15 years, give or take, 14 years, roughly. And so at that point, I was in origination. Of course, the market was, you know, very, very interesting to say the least, just like it kind of is now to this day. I mean, ironically. But anyway, with that being the case, obviously, I was looking at different ways to try to afford retirement, try to find ways to make more money down the road. And in all honesty with you, when I looked at my savings account, I think I had $32,000 in it. And when I looked at it and I'm going,

I got to be 60 years old to have 60. Yeah, right. At the rate this is going. And looking at my friends telling me over and over again to buy real estate, at that point it kind of signaled that I need to do something a little bit different. A lot of people would tell you never to cash out your 401k. But the reality is I was like, well, I have no money to work with. and I was kind of scared to take hard money, which a lot of people are in the very beginning.

And so I looked at my 401k as an option and I kind of went that route with cashing it out. And I had about 85 to 100 grand in there. And just immediately was like, what can I do? How can I buy properties? So tell us about your first deal. You cashed out your 401K. Did you have like a very specific buy box or something you wanted to pursue first? I got with a property manager.

My mother knew. And he basically was trying to show me the ropes a little bit. And he said, just go out and buy a deal. It doesn't matter what it is. We'll figure it out. Well, of course, I found a foreclosure. And obviously, this was in a state kind of a situation where they were losing it, but it was in a estate. It's kind of weird scenario. I bought that house for $32,000 in Louisville, Kentucky at the time. And, you know, I thought it was very expensive and I thought it was really risky. And my property manager, that is still my property manager today after 14, 15 years. He said this will be the best deal you ever buy in your entire existence. He's not wrong. Well, it's pretty great. You had $32,000 in your bank account, like you said, and you were able to buy this property for $32,000. So this is around 2013, you know, like somewhere around there.

So, but basically, yeah, it was $32,000 and I bought a cash. And so it was more for me looking at it from a mentality of playing with it, right? Like being a cat and a bowl of yarn is let me buy it cash. Let me make sure that I don't have any debts. Let me be safe. And so as I went into the house, I realized that $32,000 in my rent of like $750 a month or whatever, it was cash flowing really good. And I'm like, man, I really don't want to refinance out of this.

So at that point, I decided just to keep that 32K in there. That was my first house was a free and Claire house. And that's really what set the tone. But then after that, I dominoed into three other ones. So I bought four back to back to back to back to back out of my 401K. I mean, literally I bought within a period of eight months of each other just to domino. So that way the cash flow would carry it forward. So that way if someone didn't pay, I would be able to afford that.

Wow. Well, I'm sure everyone listening is just salivating at the idea of buying a property. A cash flow 750 for 32 grand. Yeah. So then did you buy similar deals? I assume just trying to do the math of how much cash you had on hand, buying for these deals. Yes.

You bought some of them with leverage after that. That's correct. Yeah, I had about $50,000 to $60,000 left out of my 401K. I fully pulled that out, all 100% of it. Wow. I was looking around semi-project area, stuff like that, just the outskirts that were getting better. And I really focused on small footprints. I really like, you know, 1-1, 2-1, 3-1s, 900 square feet, one-story, on crawl.

And so I really focused there. But my second deal was a 203K renovation loan on Wheeler. And that was a house that was $60,000. Brick, very nice and needed full rehab. So I used a 203K loan for that. and from there refinanced out of that, obviously, at the end, and then just kept moving into the same similar footprint houses. All right. So you said you like a small footprint. That's kind of unusual. Yes. You know, the traditional wisdom is, you know, get yourself a big house, get a four two, get a five two, get a five, three. When I say that, I mean four bedroom two bath, five bedroom three bath. Why do you like a small footprint?

Smaller footprints to me just costs less, right? You could buy them cheaper. Now, they may not rent for as much, but in all honesty with the price of goods right now, as far as cost. contract work, you know, painting, repairs. So if you do the math on a small footprint house, say it's a 700 square foot house. Say the average, you know, renovation cost is going to be $30 to $40 to square foot. You know, you fully do that. I mean, you're what, $20,000 in on that house? Now think of it this way. If you buy a very large house and it's 1,500 square feet, it's got a second story into basement instead of a crawl. I like crawls or slabs. But if you got three parts of this house that are all 1,200 square feet apiece, if you, if you're a second store, it's you do the math on your square footage there, if a tenant destroys your house, and it's $30 to $40 a

square foot and you've got two levels that you've got to do minus the basement, right? You're looking at a major rehab cost there. So even if the rent is $300 more a month, I'm looking at this from a cycle of how cheap can I make it over a long period of time. My cash flow may not be as big, but my costs to repair are going to be much lower. So in the long run, I actually make more money how I do it. So there's two different ways to look at it, but that's why I do it. That makes a lot of sense. And, you know, if you have a more complex build structure, like you said, if there's a basement or something like that, it might go up from 30, 40, 40, 40 or 50 bucks a square foot. So you're paying a higher rate and more per square foot as well. So that's an

interesting approach. We do have to take a quick break, but we'll have more with Nathan right after this. This segment is brought to you by Resimply, the all-in-one CRM built for real estate investors. automate your marketing, skip trace for free, send direct mail, and connect with your leads all in one place. Head over to reassembly.com slash bigger pockets now to start your free trial and get 50% off your first month. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. The lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a program to help prevent that. With their new express rental loan, you can can close in 10 days or less. And they still offer their price beat guarantee so you can get

great pricing and a timeline you can count on. Fast, simple, reliable. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time consuming, and expensive. But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10. The portfolio features $4,700, a single-family rental home spread across the booming sunbelt. They also have 3.3 million square feet of highly

sought after industrial facilities thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio, check out historical returns, and start investing in just minutes. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the funds prospectus at fundrise.com slash flagship. This is a paid advertisement. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property,

or commercial building you own and depreciate most of the cost against your income legally, 100% IRS compliant. That's instant cash flow improvement. Cost segregation guys is the number one firm nationwide, specializing and identifying these faster depreciating assets in your property.

They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no-brainer. So visit cost segregation guys.com. for your free proposal and find out how much you could save this tax season. There are two kinds of real estate investors, those who have reviewed their insurance,

and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, Don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BPPod. That's NR EIG.com slash BPPod. Welcome back to the Bigger Pockets podcast. I'm here with investor Nathan Nicholson talking about how he's scaled up his successful rental property portfolio. So you bought those first couple of houses because you cashed out your 401K. How were you able to sort of keep on scaling after that?

So, I mean, really just looking at my first house, I bought it frame clear. So I was saving that $700 plus a month. In a year, that's $7,000 to $9,000, right? And so as I bought the second, the third, and the fourth one, and that was all within the same year. I put all my 401k in it, went all in. I was netting about $350 a door at that point. So I was saving probably about $14,000 to $16,000 a year off of those houses. And so anyway, what I did is I would just snowball it.

So work my W2 jobs. and take that $16,000 in income. And if I found a property that I could afford at that point, I might put 10 or 12 grand into it, buy it, keep the four back for reserve, and then buy again. But really, my progress was really based on Rules of 72, which in all reality is just the compounding approach here, is that I've never used my real estate income for myself. I've always put it back into the business. And so, you know, one year, I've got $15,000 while I could buy one property, right?

when three years I'm buying a property every eight months, and six years I'm buying a property every six months, right? And so now I'm at year 15-ish, and I'm buying three to four properties a year, on average. And if I had the opportunity to have better rates in this marketplace, I would actually be able to burr probably four or five, like right before the market kind of got worse, I burr'd bird five houses in the same year.

It's brilliant. I love it. I absolutely support, when possible, to reinvest as much as you absolutely can, at least early in your career. And you don't have to. That's like one of the cool parts about real estate investing. It's like, for a little while,

I actually stopped because I decided to go back to grad school. And I use some of my, you know, some of my cash flow to just pay down my tuition. So I didn't have to take out loans, you know, that kind of thing. But I do think when possible,

the more you can reinvest early in your career makes a lot of sense. Because as Nathan just really articulately explained, that means, yeah, first, you're taking a couple years. It took me four years between my first deal and my second. deal. Then two years after that, now I'm buying multiple deals a year. You know, it just really

escalates if you could be patient and sort of have the discipline to keep constantly reinvesting. I just closed on our property this morning, funny enough. I was just at Borders, Louisville, Kentucky, closing on one on Longfield Avenue, which is a little 2-1, back to my point. You know, 21, 7-H0 square foot, crawl space. I mean, I speak it as it is. It's true. Practice what you preach. I like it. Yeah, so I bought it for, you know, $87,000. and, you know, I paid a little bit over. I mean, again, I would have loved to have had it at 82, but once I updated, I'm going to put about 15 into it.

It'll be a 1.3 DSCR after the fact. So a lot of people use the 1% rule. I really look at a DSCR number as my 1% rule. If it's not 1.2 or higher, I will not buy it. So this property with the increase in rents once I move the tenant out, we'll be at a rough 1.3. And if I raise it an extra $60, it'll be at a $1.4. 1.42, which is very, very good.

Tell me a little bit about the deal. So you're buying another 2-1. What are the prices now? You bought it for 32K, but what are they today? Yeah, so, I mean, you know, 32K and great moving condition back then compared to 87,000 and needing easily 13 to 15,000 minimum to get it rent ready. That's really the reality of the situation. You're buying 21 houses specifically for my market, Louisville, Kentucky is right around.

You see them listed at 120, but they're all dropping to 105. You're getting 2-1s in semi-decent condition for $90,000 to $110,000 around here. That's still pretty good. I mean, obviously triple what you paid. So it's a different era. But, man, I think in most parts of the country, that would be a screaming deal right now. So what does that rent for? So, yeah, that house at this moment, so a lot of houses are in the 1-200 range at a 2-1 for a small footprint like that.

And usually those are a little bit more updated. But, you know, if you have it semi-updated, you could probably pull. 1,050 to 1125, give or taking that range. And if it's actually not really updated at all, you could probably rent it for 9.95 and get away with it pretty quickly. And I mean, these properties go very quickly because there's a rental shortage in Louisville, Kentucky right now. It's very hard to find properties to rent.

And tell me a little bit just mentally how you've had to adjust to this new era. Because I do think we hear a lot of people who maybe started before the pandemic. And they're like, oh, my God, it used to be so easy to get these deals or price. are crazy. And all of it's true. It is true. But I guess my point has always been that you shouldn't let historical performance change your opinion on what the best investment is today. It's like about what you spend with your money now. It kind of doesn't matter what deals we're doing in 2017. If real estate's still the best use of your money, then you should be buying real estate. And if it's not, then you should buy some other asset classes. So you should be evaluating things that way. But at least for

me, it took, it does take some adjustment. So I'm just curious, like, how that's gone for you, starting in an era of super cheap housing, moving to an era of very expensive housing that we're in right now. How have you had to adjust your strategy, but also just your mentality about investing? So what I've done is I've really focused on over the last 10 years and how things have been changing is how do I get my debt service paid off, right? How do I become more free and clear? how do I get rid of my leverage? And how do I use that cash flow in order for me to create instead of a debt snowball, more of an income snowball, which is what everyone talks about with their cash flow. And so really my focus now is actually buying properties, finding a way to pay them off as quickly as

possible through refinancing them and leveraging a little bit. But the other thing is, is that what I found recently for the marketplace is it's very hard to buy, even today, like that deal I just told you, the $87,000 deal. That $87,000 deal, if you were using hard money trying to burr it, it would be very hard to cash flow. You'd probably be in a negative cash flow in all honesty with you or losing money. And so what I found and what I've been doing is I've been looking at properties that don't need as much all the time, but I've been having to put more money down, 10% down, 20% down on a purchase. If I'm buying a cash, I may leave 10. If I'm financing it right out the gate, I generally will go in at 20% with lower terms like a 20-year-am, stuff like that

to pay it off quicker. And so that's kind of what I've been doing to get around it, is putting more money into it. I think a lot of people would agree with me. It's getting a little bit harder now to do that. But what I will say is that if your dollar cost averaging, especially now, I'm still buying. A lot of people are still buying. And there's a reason for that because the prices only keep going up. And it's going to keep going up. And if you're not dollar cost averaging and you're finding ways to put money into the deals or you're finding ways to burr out of them properly, you're going to be stuck because three years from now, that $87,000 house is going to be $15,000 for the same house. You know, so you got to buy now. Yeah, absolutely. Well, I want to talk to you a little bit more

about that because you've said a couple things that I think are really important. One is you said that you're able to get some good deals right now, but long term things absolutely go up. So I want to turn our attention to like how to sort of navigate the situation right now to make sure you're not taking on too much risk, but you are enjoying the upside potential that could be coming over the next couple of years. We do, though, have to take one more quick break, so we'll be right back. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without

the complexity and expense. That's the power of the fun rise flag. Now, you can invest in a $1.1 billion portfolio of real estate, starting with as little as $10.10. The portfolio features 4,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash BP Market to explore the fund's full portfolio. Check out as historical returns and start investing in just minutes.

Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at fundrise.com slash flagship. This is a paid advertisement. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest.

Vacancy periods, rehabs, short-term rentals, or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors. understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NREG.com slash BP pod.

That's N-R-E-I-G.com slash B-P pod. If you think property management is expensive, try mismanaging a vacancy or an eviction or a maintenance issue that turns into a five-figure problem because no one caught it early. that's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy.

That's why I like Mined. Unlike other property managers, Mind manages your property like an investment. They obsessively measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score. And they have the results to prove it.

Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. Tired of traditional lenders holding you back, host financial is here to change the game. They've ditched the DTI restrictions and they zero in on what really matters, your property's income potential. So no more chasing papers for tax returns or personal income statements. Think about it. A lender that values your property's worth over your paycheck, that's the host financial difference.

Approved in 47 states, they are ready to help you make your next big move. Curious if you qualify, just head over to host financial. Financial.com and find out. Stop letting outdated lending practices hold you back. That's hostfinancial.com where your property's potential meets unlimited financing. Welcome back to the Bigger Pockets Podcast. I'm here with investor Nathan Nicholson. Before the break, we were talking about how buying now makes a lot of sense because prices

keep going up over time. Nathan, you also said, you know, these two ones are, you know, being posted for 115, but you're getting them for 105. Is that because market dynamics are changing or prices falling in a little bit? like what's going on there? The market is stagnating a little bit to a point where you're starting to see a little bit of pullback, which funny enough, there was an article today about it talking about how the seller market is ending and the buyer market is here and it will be here for the next six

to eight months. And so I do see that happening in Louisville. And how do you sort of square that with the idea that you said, you know, prices go up. We're seeing prices stagnate. You said six to eight months is you're just feeling confident because you're believing prices will just get back on the normal appreciation train later this year, or, you know, sometime in the near future. That's exactly right. I feel like right now it's just maxed out.

When rates start dropping, as we both know, I mean, the question mark is the economics and the market currently with tariffs and everything else. The minute the market changes, I think the rates will actually start coming down. And you're going to see a lot more opportunity. You're going to see a lot of investors jump back into the market very quickly. I would say that will probably occur within the next six to eight months, obviously, once they get all the world economic issues worked out. But rates drop, it will be a by-party for a lot of investors. And I think that dollar cost averaging is really the best way to kind of get through this at this point, especially for the Louisville market anyway. I'm kind of with you. And listen,

you know, there's a lot of uncertainty in the economy right now. A rate's going to drop in three months, I don't know, six months, I don't know, a year. The trend is probably down over time. And so, even if there is a longer period of price declines and softness, I don't necessarily think that's a bad thing. If you just sort of buy deals that still work today, then all you're going to do is get upside if and when the market does turn around. As you said, the buyer markets now, and that's kind of what that article said. And Louisville, that's exactly right. If you go from a 120 house and I basically come in and say, I'll give you 100 for it, and they go 105. I mean, they just drop it a huge percentage, almost a mean, one shot to an investor, right?

Right? So you know what's happening. I mean, it's turning and all these houses that are sitting there, to your point, you could get deals like that. That's where this $87,000 deal came from. I mean, they had it listed originally for sell by owner, a wholesaler that I knew scooped it up before I did. I mean, it's okay, Kevin. But it's all good. He got it. And I bought it from him this morning. So it all worked out. I know him. He knows me. It all worked out. And the thing is, is that I got it at a good price that works, you know? Even a year ago. It was hard to negotiate. Properties were still flying off the board. And, no one knows how long this will last. And so it's hard to time the market precisely. But if you find good deals, that makes sense. And if you're buying for, you know, under what you think you could have bought for six months ago and you see the intrinsic value, you think it was going to go back up. Like, it's pretty good time. I agree fully. So catch us up to today, Nathan. How many properties do you have? Yeah. I mean, currently as of today with my closing, I'm at 22 properties. I've got 10 paid off for Inclear at this point. And the cash flow,

I think my rents are about $280,000 a year. And I'm netting with vacancy and repair about $126,000. And TrudeNet is about $98,000 to $100,000 a year, which, by the way, I write it all off. So that's straight in my pocket. Awesome. Amazing. That's why they call this podcast bigger pockets, right? That's right.

Yeah, exactly. So all that being said, Nathan, like, what's next for you? It sounds like you kind of just do the same thing, bread and butter over and over. Is that the plan going forward? So I'm in that process of, do I buy a three to four more house? houses this year? Or do I take the cash that I have and I leverage out that line of credit and I go buy a three or four million dollar property, right? So that's kind of what I'm looking at now. Or building duplexes, I'm in a mindset of maybe buying land and building spec homes just for

cash because the margin on that's really, really good. And or building at a duplex or quad. And the margin on that's really good too. So I mean, I'm looking at a lot of these things, but it really depends on the land that I could buy at the time, right? Because it all matters with the deal. Either you get the deal or you don't. And so whatever comes to me first, I'm kind of looking at those avenues. It's interesting. So you were saying doing development but paying for it in cash and not paying a construction loan?

Correct. That's exactly why I'm leveraging my lines right now. I'm actually, it's something that I've always wanted to do. I've done a lot of burrs. Yeah. So I'm pretty versed there. I've got some really good contractors and I know some that are builders. And so in my mind, I know a lot of business.

builders too because I've been in the real estate and a mortgage game for a long time. I know their margin sets. And so, yeah, the line of credit is a lot better there because obviously not taking out hard money at 13 to 15% right now and paying a point or two on that. I can maybe leverage a line at eight, eight and a quarter. That's really helpful over the long term, especially if you're building something out over six months, you know, buying the land, owning it cash, building out all the sewer and so forth and then building the spec on top of that.

Having a line of credit to do that of your own money or having a line of. cash to do that is definitely very helpful, especially now. Yeah, and I want to sort of clarify for people, when Nathan is saying cash, it doesn't mean he has that money in the bank because you have a line of credit. So he's borrowing against assets that he has. For example, if you had a $200,000 paid off property and say you can rent, you know, 75 LTV, you know, you could take out $150,000 and use that to finance development. of a new property.

And obviously not everyone could do that, but it's great because if you were to just go get a construction loan, that might be 12% and paying two points or it could be higher. I don't even know. But so just that level of, you know, doing a little bit of arbitrage here and figuring out that you can develop at a lower cost than someone else might be able to because you have these paid off properties can be really beneficial. Yeah. And I think it's interesting, Nathan, because you're a mortgage professional, but it seems like

a lot of your strategy has been around low debt, you know, trying to not over leverage yourself and trying to pay off properties quickly. You know, it seems a little counterintuitive because you hear a lot of people wanting to max leverage. So like, how did you arrive at that strategy? I've seen a lot of people lose everything they have is the best way to put it. And I honestly with you, I know four people personally that have done strategies where they over leverage and they've been burned on it. And so my strategy really came from their experience and them telling me not to do it is the best way to put it. And so I started my career path out exactly on that as far as my investing page as to not over leverage too much. But to your point, now I am looking to over leverage,

but that's also because in the tortoise concept, right? I mean, the tortoise is slow. But again, a lot of people don't realize the shell is what is there to protect you, right? And so in bad times, if you got good cash flow, that's your shell. And if you pay off your properties, that's your retirement and that's your cash flow. And the bigger your cash flow is, the bigger your shell is. And so you could leverage out. And so being safe is very smart. So I try to buy these cheaper properties because if you put 20% down on an $87,000 house, you only owe $65 grand on it. That's half my net in a year. I could pay that house off in one single year. And it gets me to that point a lot quicker. And so anyway, that's definitely a format that I still will continue to use.

I think paying off debt is very smart because it creates that shell. It allows you to have a larger income snowball to be able to leverage if you need it and good or bad times to buy or to try to play defense. And so it's a really good strategy, I think. Awesome. Well, I think that's really wise advice. You know, people listen to the show. I'm all for the tortoise approach. I think this is what real estate is all about. It is a get rich slowly kind of. scheme. And it's not really that slow when people say that. It's like 10 or 15 years you're going to be doing great. And just trying to make wise, low risk, high upside decisions is just the name of the game. And there are times where you want to leverage. Like, to be honest, in 2015, 2016, or even

2020 when rates were so low, it was a good time to leverage. Now, to my opinion, not as good time to leverage. So you need to just adapt. There's no one size fits all thing where it's like you should always be putting the least amount down so you can buy more properties. I don't know if that makes that much sense these days. So Nathan, thank you for sharing some of those insights with us. Any last thoughts or advice for our audience here before we get out of here? It's really smart to be secure. You know, it's not a quick game. People think it is. It's not. First thing we will tell you as an investor that is experience, and I'm at about 15 just like you, is that it is not easy. It takes a long time. Yep. But if you're methodical

with it and you're smart with it and you listen to bigger pockets, you listen to these stories, You listen to other people's pros and cons that they've had their experiences. Take all of that information and try to figure out where you are economically as far as your family, your income, your savings, where you want to be, your wants, needs and aspirations, and leverage an approach that works for you. And if you can do that and do it methodically, you will always win. Just don't over leverage. Don't over leverage. I can always say it over and over and over again. Be smart.

You can leverage just don't over leverage. Well, that's a great way to get out of here, Nathan. Thank you so much for joining us today. It was a good time. Yes, definitely a pleasure. Thank you again for having me. It's always a privilege and a pleasure to be on the top real estate podcast in the world, in my opinion. So thank you so much for this. I appreciate it. Yeah, thank you. And thank you all so much for listening. Before we get out of here, I just want to remind everyone to make sure to follow the Bigger Pockets Real Estate podcast, wherever you get your podcast or make sure to subscribe on YouTube as well.

We have a lot of great content going up there. And if you think other investors could learn from your story and you want a chance to appear on the Bigger Pockets podcast like Nathan, make sure to go to biggerpockets.com slash guest and apply to be on the show. Thanks again so much for listening. We'll see you next time. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer.

The show is produced by Ian K, copywriting is by Calicoe content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose.

And remember, past performance is not indicative of future results. Bigger Pockets LLC disclaims. all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.