BiggerPockets Real Estate Podcast - 2024's Biggest Opportunities (and Risks!) in Real Estate Investing

Episode Date: August 7, 2024

Want to make money in real estate investing, EVEN during 2024’s harsh housing market? It’s easier than you might think—and we’ve got the proof. We brought expert investors Ashley Kehr and Henry Washington on to the show to share exactly what they’re doing to make more money, even as most investors sit on the sidelines, worrying about interest rates and high home prices.  From $50,000 profits on fast flips to a sneaky tactic to boost rents by fifty percent in just weeks, we’re showing investors can make more money than ever before, no matter the market. First, Ashley and Henry tell us about the deals they’ve been doing this year. Both are tackling more projects than most investors, so how are they finding undervalued properties, and what are they doing with them? Next, we’ll walk through the quick house flips making these investors more than $50,000 in profit in LOW-COST markets! You could replace your yearly salary with just one of these flips! Finally, Dave spills his secret on how he’s increased the rents on his properties by up to fifty percent, all while buying his rentals at market value. If you have his level of patience, you’ll be able to create cash flow when most investors are struggling to break even on properties they buy. These tactics are working across the country, in many markets, in 2024. And if these investors can do MULTIPLE deals like this, you can too!  In This Episode We Cover: The sneaky tactic you can use to raise rents by fifty percent and boost your cash flow Quick house flips and how to make five-figure profits even if you’re a hands-off investor How to find off-market listings THROUGH your real estate agent Henry’s foolproof buy box for house flips with the biggest buyer pool  Why you should NOT overlook Section 8 rentals (huge jumps in rents)  And So Much More! Links from the Show Find Your Next Investing Market with BiggerPockets Market Finder Let Us Know What You Thought of the Show! Find an Investor-Friendly Agent in Your Area See Ashley, Dave, and Henry at BPCON2024 in Cancun! Flipping Houses: How to Get Started and Everything You Should Know Ashley's BiggerPockets Profile Henry's BiggerPockets Profile Dave's BiggerPockets Profile Real Estate Rookie Podcast On the Market Podcast (00:00) Introduction (02:04) Deals We're Running This Year (09:32) Hands-Free Home Buying and Selling (22:44) $55,000 Profit on a Quick Buy and Sell (29:35) How to Increase Rent by 50% (39:15) The Dish  Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1001 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

Real estate investing trends and successful strategies can be sort of hard to predict due to big economic market cycles. For example, short-term rentals burned very high in 2021, but then started to calm down. Commercial real estate was the darling of every investor until 2023 when things started to change. So the million dollar question most investors are asking is, what is working in real estate today? And what is it? Hey, investors, this is Dave. Welcome to the Bigger Pockets Real Estate podcast. If you're brand new here, welcome to the show. If you've listened before, welcome back. Today, we are premiering our very first

deep dish episode. It's a brand new format where we will get into the nitty-gritty of real estate investing tactics and dive deep into the tips, the tricks, the strategies that make successful investors and hopefully provide me some lessons and things that you can go and apply to your portfolio today. On today's episode, we're talking to two Bigger Pockets personalities, giants in the real estate investing space. We have Ashley Care, who co-hosts the Bigger Pockets Rookie Podcast, and Henry Washington, who is a co-host of the On the Market podcast. He also is on this show quite a lot. And we're doing this, bringing on these two great investors today, because although Ashley and Henry are investing on a scale that's bigger than most of us, my

self-included, there's a lot we can learn from their insights and experience. And I know that there's going to be a lot of lessons that they share in this conversation that you can apply to your own decision-making today. And stick around to the end because we have a new segment of the show called The Dish, which I think you're really going to like. We're going to ask Ashley and Henry to answer some really rapid fire, but sometimes personal and definitely revealing questions that are going to help you understand how these great investors think. With that, let's bring on Ashley and Ashley, welcome to the show. Thanks for joining us today. Thank you so much for having me. I'm so excited to be here on the Deep Dish.

Yeah, this is like one of those old school like Flintstones, Jetson's crossover episodes. We're excited that you're here all the way from the Rookie Show. Henry, you're here all the time, but that doesn't make us any less excited to see you. Thanks for being here. Thank you. Thank you for having me. This is super fun, man. Yeah. So we're going to get into what's working today. what isn't working. But I want to help set the stage for everyone listening and provide a little bit of context. So Henry, roughly, how many deals have you done this year? And like what are the

buckets, like short-term rentals, long-term rentals flips? Yeah. So I've purchased about 20 some odd rental properties. And I just count doors because several of them were multis. And I was was just counting the flips here. One, two, three, four, five, six, seven, eight, nine, ten flips so far this year. Ooh, all right. Very nice numbers. 20 and 10, very nice round numbers. All right.

That's big time in it. Ashley, where are you so far this year? So I am at two flips, one long-term rental and one short-term rental and one flip under contract. Oh, nice. congrats. Is flipping new for you? I feel like you were not originally a flipper. Yeah, I have gone through flipping a house with James Dainer twice. And the first time we did a whole series of, here's exactly how you flip a house. And he showed me the whole rope. So this is the year that I went off on my own. But after his guidance, I feel pretty

comfortable. So did you start moving into flips because of market conditions? Part of it was because of that because even though interest rates have gone up, the properties that people are purchasing for primary residents in my market are selling faster and still selling for above asking. And the numbers are making more sense. And if you were to go and buy a multifamily property right now, which that is my bread and butter is small multifamily. So one of the properties I did purchase was a five-unit property, but there was very specific things as to why I purchased that. But yeah, the flips are new to me, building capital from it. And it's just there's great room in my market right now to do a flip. Henry, is your allocation of 20 doors long-term rental and 10 flips sort of where you want to be?

Is that like your ideal mix? Yeah, I would say on average we do anywhere between 10 and 15 flips a year. So we're probably going to be on the right about that this year. And doors, you know, I used to say I wanted to add 20 to 30 a year, which we are obviously have hit. But we're slowing that down, I think. You know, there's some, when you're buying value ad, it's fun to buy great deals. And it is not as fun to stabilize those deals. and you don't start making money until you get them stabilized. So we're doing some just slowing down on the buy-in so that we can optimize what we have in our portfolio. And actually, sort of the same question. You said, you know, your bread and butter is more rental properties, but you're starting to flip now. Like, do you, what analysis did you do to figure that out, that flipping was going to be a better tactic for you in this market? Because it'll take low capital for me to get started in it. So I'm using

a private money lender and then for the purchase of the flips. And then I'm using my line of credit for all the rehab. And a big piece of this is that I have a great contractor where I don't have to micromanage. And the flip is actually becoming more passive for me than actually getting a rental property where a rental property, if I'm buying one, I'm adding value, so I'm going through the rehab process, which the rental properties are usually too small of scale for my contractor to want to take on. So that's me finding different subs or that's me having my maintenance person do that and it takes longer because he's trying to do maintenance requests in between doing the apartment turnover, things like that. Also, the fact that I've done a ton of comping.

Comping, comping, comping. And I just consistently watch what exactly is happening in the market that I want to do a flip-in. I look every single day. I have spreadsheets galore for like the property that I'm doing right now. I'm looking at every property that sold. But then I go back and I look at what was the list price? How long was it on market? When did it go under contract?

When did it actually sell? and then I'm looking at, you know, all the comparables does have a garage, does not the square footage. But the big thing is in New York State, you have to have an attorney to close. And that's where I'm investing. And so your close time could be 30 to 60 to 90 days, depending on if you're using a loan or if there's contingencies, it can take a very long time. So if you're looking at what a property sold at, if it was 45, 60 days it went under contract, That's a big, the market can change. It can shift in that time period. So that's why I like to go back and look at when did it go under contract because that's when it was worth that amount to someone, not when it actually closed. So comparing a lot of that data too.

Man, you know what's super interesting, Ashley, is like the reason that you are doing flips is because your kind of superpower is you've got this contractor that kind of allows you to be hands off. And so you can essentially buy properties, get them renovated, and you're not having to put a bunch of time into it. So it's like you can go now maximize that part of your business. We're the same way in the rental space. That's why we bought about 20 rentals this year is we brought on a property manager who has been phenomenal with my properties. And not only are they a property manager, but they're also a project manager. And so I can literally go buy a value ad rental property and just hand them the keys. And they'll go run the renovation. They'll renovate it.

They'll market it. They'll get a tenant in it. And they'll start. Yeah, I literally do nothing but close on it. And then we get a, we get a rental property up and going. So that is why we bought several more this year. And some of the ones that are taking our time and that we're having to stabilize are the ones where we didn't turn over the renovation to and we're doing it ourselves. So more of a lesson that we need to give them more of the work so I can focus on the flips. We do have to take a quick break, but we're going to hear about some specific deals from Ashley and Henry when we return. What if I told you you could forget everything you know about investment property loans?

Because host financial is rewriting the rulebook, tossing out those pesky DTI restrictions. They focus on your property's income potential, no tax returns, or personal income statements needed. Simple, efficient, and tailored for investors like you. Imagine a lender that sees the gold mine in your property, not just the numbers on your paycheck. That's the host financial difference. And they're approved in 47 different states,

so your next big deal could be just around the corner. Ready to unlock your property's true potential? Visit hostfinancial.com. Don't let old school lending hold you back another day. That's hostfinancial.com. Real estate investors, the April 15th tax deadline is coming fast. If you own rental property and,

and haven't done a cost segregation study yet, you could be handing thousands of dollars to the IRS that you don't have to. These studies let you write off as much as 25% of your building and generate huge tax deductions. Costsegregation.com is an online, self-guided software that makes cost segregation fast and affordable. So it finally makes sense for smaller rental properties purchased for as low as $100,000.

With pricing under $500 and an average savings of over $25,000, in, it's just a no-brainer. What's more, audit support is included by the number one cost segregation company in the U.S., but you must complete it before the tax deadline. Go to Costsegregation.com and use code tax deadline to get 10% off your first report. Don't overpay the IRS. Head to Costsegregation.com before April 15th. Thinking about wholesaling or flipping your first property, but not sure where to start? The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where props comes in. With PropStream, you get instant access to over 160 million properties nationwide.

Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new. Also gives you AI-powered insights and coms that are over 99% accurate. So you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step by step.

Start your seven-day free trial and get 50 free leads at Propstream.com slash BP. That's P-R-O-P-S-T-R-E-A-M. Don't just dream about real estate. Make it happen with PropStream. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of these smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can

increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily. They focus exclusively on landlords, whether it's a single-family rental, a burr-builder's risk policy, or midterm holiday guests. You get fast quotes, flexible coverage, and protection for property damage, liability, and even loss of rental income. Now is the perfect time to review your rates and coverage.

Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Welcome back to the Bigger Pockets podcast. Let's jump back in. So, Ashley, I maybe just anecdotally hear a lot of investors, people in the Bigger Pockets community who are moving from traditional buy and hold into flipping because it does seem like there's good margins still right now. So I'm wondering if you can help walk us through one of the flips that you've done this year. So I think definitely having some sort of advantage can make there be a good

margin for you. So first of all, you know, like I have a very reliable contractor. So that right there is an advantage for me. Someone else may be doing the work themselves. That's an advantage for them. They're not paying labor. Someone may get a military discount at loads and be saying 10% on all their material. So I think there's different things you need to account for. If you are going to decide you're going to flip as to like, do you have an advantage against other investors that you can make the deal work because of that? This is why I don't flip because I have no skills or advantages. There are skills in spreadsheets. Do not worry. Thank you. For, making me feel better even if it's not true.

But with, so there's one property we bought, it's a ranch house, and it's in a market I never invested before. So I had to do a lot of market research. But my contractor is actually doing a flip right around the road on his own. So I had somebody that I could consult with and rely on as far as the market. So that was another advantage for me to take this property. Second thing was this property was a pocket listing. It was the person that owned it, passed away. It was two daughters selling the property. They hired my real estate agent to list the property. She had called me and said, before I list it, do you want to come look at it? And I went and looked at it. I put in my offer, which was a little bit less than what they wanted. I mean, negotiated a little bit and they ended up accepting it. And so we got it for $161,000. And they had, I think, wanted. 170 maybe for it. So we got it for 161,000. The fact that it was a pocket listing was a huge advantage because we weren't competing against anyone. It wasn't actually on the MLS yet. So that's one great way to find deals now is get in with real estate agents and get those pocket listings. So we got the

property under contract. If we would have just sold the property as is and maybe cleaned it up a little, we probably could have sold it for $200,000. So we were already getting it below market value. Can you just tell me, actually, like, when you negotiated and put in that offer at 161, I don't know if that was your first offer, but is this what you were doing comps? And like, what were the comps telling you at that point was the value of the property? So at the time of getting it under contract, the comps were saying about 175 to 185. But I never went and actually looked at the property.

My partner did who's completely passive. And this was like the first property he ever stepped into because I was out of town. And he went and took pictures for me. So this is me. I knew I had to go a little bit lower because I hadn't set foot into the property. But it was actually like a bigger yard than was originally like told to me. There was a bunch of different things that actually increased the value more. And it had a second bathroom in the basement.

in the basement, which added more value to it. But looking at the comparables, I thought at first it was maybe worth 185 around there, but then actually after when we closed on the property, which was probably 60 days later, then it went up to about 200,000 plus the differences that I had noticed from the photos and what the property actually was. And just to be clear, pocket listings are essentially off-market deals, but they're off market deals that come from agents.

So they're off market deals that either that could be on market deals if the agent talks that seller into listing it. But agents are typically the gatekeepers to these off market deals. So they're like a hybrid of off and on market. So the best way to find them is through relationships with real estate agents and just ask them if they know of anybody looking to sell and it isn't listed yet. And this one, we use dual agent. So she was rep, my agent was also representing the seller.

because this was going to be her listing. But I had bought one previously from her last August where it was just another agent in her office had that listing. And he, I guess sometimes in their office, an agent will go in and say, hey, I got this property. Any other agent want to walk through and see if you already have a buyer. And so my agent took me through before they actually listed it. So there's a couple different ways that can be done.

That's exactly how I bought one of my best performing properties, which is an eight-unit apartment building. The sale fell through. And when the agent got noticed that the sale was going to fall through, he literally turned around in his chair in the office and was like, I'm losing a buyer here. Does anybody have anybody that might be interested in this property? And like my agent called me within an hour. We analyzed it and put in an offer.

It's basically an off market deal with none of the work, which is basically just the best of both world. But I think it's important to remember that these things don't just happen overnight. Like you don't call an agent and you're like, hey, what are your pocket listing? Especially if you use that tone of voice, that sounds a little creepy. That's the tone of voice I use in all of my conversations. When I call random people, no wonder I'm not getting any good deals.

Hey, what's in your pockets? But no, I think realistically, it's like these things just take time. And so for anyone listening, if you're trying to find pocket listings, you want to identify tactics that are going to work this year. It's about building that relationship with an agent over a long period of time and becoming a reputable buyer. And that doesn't mean you have to have the most money or like you're going to buy every deal. At least in my experience, it just means that you're like straight up and you're honest

and you're not going to waste the agent's time. Like sometimes I get pocket listening. I don't have time to look at it this week. You know, even if I'm interested in buying, like I can't act on this fast enough. or, you know, this one's not in my buy box. Send me another one. If you can become someone that they know that they can go to quickly and get a quick response for, they're going to send it to you because that's what's valuable to them,

not that you have to be the most sophisticated investor in the world. And that's why it's so important to tell everyone and anyone what you're looking for. Because like if you're talking to your agent doing a showing and you're saying, this is not exactly what I want, but this is. then it'll be in the back of their mind. But even not even agents, just anybody in general. I bought in so many word of mouth deals too from people. So like my sister's cousin or I guess that would be her cousin too if it's your sister's

cousin. My sister's husband's cousin is wanting to sell a property. You know, I thought of you because you talked about how you want a duplex or whatever it may be. And there's always, you know, that should. to be your only lead source you rely on is waiting for someone to bring you a deal, but putting it out there what your buyboxes and what you're looking for. All right. So it sounds like you got a great deal. What, you know, and then you had a contractor that you trust. So did you just turn it over to the contractor?

So what my process is is, and this is for doing rehabs on apartments too, is I go in first and I build my scope of work what I want done. And then I say, send the scope of work to the contractor and then, or whoever's doing it. So on this flip, he went in after me with my scope of work. He facetimes me and he's like, okay, let's go through. And how I do a scope of work is I go room by room. I walk in the front door and I start there, like hallway closet painted, new door knob, new hinges. I just go everything and I move room to room. And then once I plug it, and I'm literally using a piece of paper. And then once I get back home, I go on to nice Excel spreadsheet, plug it all in, highlight it by category. Like, these art rooms have

the electrical stuff. And then I send it to my contractor. Then he'll face-time me, walk through or whatever. And on this one, this is where I rely on him for recommendations as to what's going to be more cost-effective or, like, what's a good idea I didn't think of? So in this situation, the bathroom is so tiny. So he recommended we're ripping out the tub anyways. So let's take that dry well down. We're going to tile it because we need to put Hardyback report up there. let's put a pocket door in because you're ripping that all out anyway. So right there, we make those changes together. Then I go in after we walk it together, update the changes, and then he builds me his estimate based off of that.

And then another thing, too, is I give him my credit card so that he pays for materials because I want all the points. And then I'm also having some control over the cost of it too where, you know, there's no up charges on the actual materials. That's super smart. And I was I was chuckling when you were talking because I literally do the same thing. I do a scope of work when I first get to the project room by room. You're nicer than me though because you go back to your computer and you make it all look nice. I literally do it in my notes app on my phone. So I have like one category that's in it's called entire house. And I'll go, I want this color paint. I want this color flooring in all the major rooms. And then all the individual stuff that's based on just the rooms. Then I'll add that to a room. And so I'll just have it broken. out by room and my notepad on my phone. And then I just add my project manager to a shared, to that shared note. And I'm like, here you go. And then we send that to contractors. Like, I don't even, I don't take that extra step. Which is more effective to do that. Wait, I have a very newbie question here because I've never flipped a house. What is the alternative to go room by room? That seems like the logical thing to do. So when my contractor sends me back

the quote, it's by category. Yeah. Oh, so it'll just be like Windows 7. By trade, yeah. Yeah, or electrical, HVAC, plumbing, cabinetry, millwork, yeah. Oh, I would never be able to understand that. That would make no sense. Yeah. Okay.

Well, knowing nothing else about it, I like your approach, Ashley. And people get hung up on that, too, and that's what I tell people. I'm like, do, let them do their job. Like, their job is to buy trade level of detail. So I let you do your job. I'm going to give you this room by room. If you have questions, come back to me. And then we'll sign off on it once they have, once we compare what I did to what they did.

Yeah, like, you can go into a room and just be like, that doesn't look right and just write fix baseboard heater. And then when you walk it, he could say, you know, it wasn't plugged in or something. That's why it wasn't working. You're, you know. Baseboard heater. How northeast of you. So, Ashley, would you say that these tactics that you've been using work well in this market?

in really sounds like it would work in any market, but do you plan to sort of scale up what you're doing here? No, I'm going to do maybe, I got that one flip under contract, and then I have, I'll probably do one more flip this year, and that's it. Just very slow, casual.

I'm very low risk at things. Like, I don't want to be overwhelmed. And I think Henry does the same thing, too, where he makes sure that he has enough money to pay his lender, even though like he has the cash he doesn't use it and that I'm the same way like if for some reason a flip didn't finish I want to make sure I can either tap into the cash I have or use one of my line of credits to pay them back. I never want to have more hard money or private money out than what I actually can I have myself to pay everything back. So I'd love to sleep at night and I don't want to

like ever get stressed out or worried about money. So I move pretty. slow because of that. I don't scale as fast because of that. And it makes me feel way more comfortable in the deals that I'm doing because I do have some wiggle room. So great, Ashley, thank you. It sounds like, you know, just for everyone listening, we're brought on Ashley and Henry to talk about what's working in today's environment. And this has been a super interesting case study here, Ashley. You have pivoted strategies pretty significantly. Not like you've stopped buying buy and hold, but you've picked up a whole new approach in flipping. And it does seem like this is something that can work for a lot of other investors as well. As I said, a little bit

while ago, I've heard a lot of people who are starting to move into flipping or at the very least, more value add type of investing because it really has good margins in today's market. So with that said, Henry, let's switch over to you. Do you have a, can we talk through one of your deals? Oh, I'd love to, man. Let's do it. All right. What do you got in mind? because I'm sure it's value added because that's what you do, right? Yes, yes. So we, like I said, we've done about 10 flips this year and we've got more coming. So flipping is working in our market.

And a deal I want to talk about is a property that we purchased, single family home flip, three bed, two bath, just under 1,500, maybe probably just at about 1,500 square feet. And we were able to buy this one for $184,000. This lead came through direct mail. So we went direct to seller and it was a landlord. So this property was a rental property. The tenants had moved out and the house was just kind of in shambles.

They didn't grade the property correctly and rain had started to push up against the house and kind of eroded some of the walls. And so they were getting kind of wetness and dampness and grossness. And the seller had the tenants move out, walked in there and said, you know, what, I'm done. I don't want to deal with any of this. And so we were able to come in, purchased it for $184,000. We've spent about $55,000 on the renovation so far. And when we underwrote this deal at an ARV, so a future sale price of $315,000 based on comps, and we were super conservative with that. So if you compare it to other properties that sold in the same neighborhood, this wouldn't have been like selling it.

at 315 wouldn't have been the top of the market in terms of selling this property. So we're pretty conservative in that underwriting. And we bought it, I think the renovation is taken about 60 days. And just in that 60 day period, the property is now, we listed at $330,000. So we've had a several, we had a few recent sales that have driven that price up. And so we're able to list it still conservatively at $3,000. 130,000. And so we're estimating to make about a $55,000 net profit after commissions and subtracting our holding costs and all of the other ancillary fees. So, I mean, that's,

I mean, that's pretty typical single family flip in my market. And I think that's why. So that's what's working right now. Yeah, absolutely. What we're seeing is properties are still selling. Typically, I think average days on market is just at or above. 30 days here. And what we're seeing sell is properties that are done well that are in desirable locations and that are priced reasonably. And so if you take that information and you use it in your underwriting, you're able to make offers that allow you to buy properties and fix them up and land in that price zone where you don't have to sell it at the tippy top of the tier in order for your property to make you some money. And so that means we're missing out on some deals because

we're offering less than maybe what sellers want at the property. But I'd much rather be conservative on that end so that the deals that I am getting, I don't have to be so concerned about when it comes time to sell them because we underwrote them so conservatively. I have a question for you regarding kind of like your buy box of what you're finding. Are you finding that anyone looking to flip, they should be looking at like a certain affordability as in like if you even if you get a great deal on a high end home would you do the high end home or even maybe one that's in a lower income neighborhood. Is there like a specific range of house that you're looking for like bedroom count or anything that you're

finding is like kind of the sweet spot in your market? Yes, absolutely. So in my market, we're still targeting the biggest buyers pool, which is the first-time home buyers. And that first-time home-buyers pool typically wants three to four bedrooms between 1,200 and 2,200,200 square feet in that range. And if you can list anything under 300,000, it's typically going to go pretty quick. And so that's kind of like the super sweet spot. If I can come in and get something for like a hunt, like I have another deal where I purchased it at 120. We're going to put 40 in it. We're going to sell it at 265.

Like those are going super quick because you're under that $300,000 price point, which opens you up to more affordability and more buyers. And there's just not a ton of that product on the market. So more buyers, less competition. That's the sweet spot that you want to be in. So I like that first time home buyer pool. Now, you're right. A great deal on a luxury flip. That sounds awesome.

It's just when I'm going to do a luxury flip, here's how I position myself. I have to be buying that property for such a good deal that I could turn around and sell it with only minor cosmetic updates and make money. And so when I'm underwriting those, I don't go to my agent and say, hey, Mr. Agent, give me the highest and best ARV you can give me on this. on this property. What I go to my agent and say, hey, what is the I guarantee this property sales for this price super fast, no hassle. Like you stick it on the market for this price. Somebody's coming to buy it. Now, that's typically not going to be your highest number that somebody may be willing to pay, but that's not the number I want to underwrite a luxury flip at. I only want to underwrite them at the, what's the, I know it's going to sell for this price, no matter what, and then I'll underwrite it

based on that. And so if I get a deal in that price range in its luxury, I'll consider doing it because it's really challenging to lose to lose with those. I've done a couple of luxury flips like that. But I don't make luxury flips my main business model for the risk factor. And I think too, part of the risk factor, like the couple flips I've chosen could all be rentals. So for some reason they couldn't sell, I have a second exit strategy where I can go ahead and put financing on them and turn them into rentals. And that I feel like helps me feel like it's not as huge of a risk because I have that exit strategy where if I was doing a high-end luxury flip, it probably would be higher to rent

out what I needed it to rent out for to actually refinance it. Awesome. Well, it sounds like you both are finding pretty solid tactics to use right now. Because you both did flips, can I share a deal that's working for me? because I feel like I need to give some voice to the buying old renters out there. All right. Well, actually, Henry, we were talking about this strategy the other day. I needed to come up with a name for it.

But here's the basic idea. You buy a rental property that's break-even. And I basically buy deals on market in the Midwest that can break-even cash flow. And then I opportunistically upgrade it over like a reasonable amount of time, like a year or two years. And I still need an acronym for this, Henry. We came up with something really clunky and ugly the other day when we were talking about this. But it's like basically, buy, what is this, B, E, C, T, O'R, buy even cash flow, then opportunistically renovate.

It's the Bertor, right? Burtur. Yeah. No, it's not. It doesn't right. Will this be a session at BPCon? Yeah, it's just going to be me talking to myself in a room where no one shows up. But the idea actually works.

So I feel like because of the cash flow situation, it's tough out there. But I invest in some places in Southern Michigan where you can find deals that are under, you know, that cash flow, one or two percent on the market. But they're under rented. And they need maybe a cosmetic rehab and maybe like a little bit. better, you know, a little bit more, you know, some structural work or just some more in-depth upgrades. But within a year or two, what I found for within a year, I think, actually, I can get that cash on cash return up to seven, eight, or nine percent just by upgrading them over time. And to me, that is a good deal because I, you know, if I can find something even above a six percent

cash on cash return, I'm pretty happy. I can't find it very easily. on market right away, but it takes time to stabilize deals. And just because it's basically what you would do with a burr, but I'm just not necessarily refinancing it. I'm just like holding back some cash, you know, with these properties, they're 200, 250 grand. So I'm holding back 25 grand, which, you know, I'm in a fortune position. I have that 25 grand.

I could just wait on. And when the unit becomes vacant, I put the 25 grand in. I fix it up. And then I get the deal that I wanted in the first place. I just happened to have waited. nine months for it. So the upgrades are mostly cosmetic. So in this one that I bought back in January, we just finished a renovation on one of the two units. We put luxury vinyl plank into all the floors because it was kind of this old, like really nasty tile. The bathroom needed new vanities,

new tile. There was some safety stuff in there, too. I needed to upgrade a lot of the electric. We did actually new ceilings because there was some plaster problems in a lot of it and then upgraded some of the cabotry in the kitchen. There's some other small stuff, but, you know, this wasn't a massive renovation that took months and months and months. It was like two or three weeks. And it got the rent in this unit from what was about, I think it was at 10.50. And we should get 1450 to 1,500 now just making those upgrades. So you get rent up 40, 50%, just by doing that. It's kind of a no-brainer.

Yeah, I do the most of the rentals I bought this year, very similar. Like the way I've been underwriting these deals is I want them to be cash flowing even just a little bit or breaking even as they sit when I buy them. And you're able to then go in, make some minor updates. And sometimes like there's one of the deals that I bought this year, I was about, I think it was about 12 units. And we literally just raised rents, right, to market rents. Like, it's just part of your due diligence and looking for deals is also looking for landlords who aren't managing or keeping up with normal rent raises and managing their properties correctly.

I bought another property, Henry, that the rents, I was, I think this is, it was a new tactic that I had never done. It was a different one. but the rent that they were charging was below Section 8 numbers. And so I was like, I could just go in and get a quality Section 8 tenant and get guaranteed rents from the government immediately. Like, that's just a great, you know, like, it's just makes so much sense. I think looking for other ways to charge, like add other revenue streams to your property, too. Such as like in some of our duplexes, we put in like, we call them cages, but they're storage units.

So like if they both have access to the basement, we build out the cages and charge them extra if they want one of the cages for storage. What I've seen done too is like having a utility closet that has the washer and dryer in it. And if you want to use the washer and dryer, it's an extra $50 a month and the door will be unlocked for you. And then if you decide you don't want to pay the extra 50, then that door stays locked and you can't access it. So trying to look of ways to get creative. Like the buy and hold that we bought this year is a five unit. It has four residential apartments and then a commercial space downstairs. The commercial space is gutted.

And it was for sale for probably a year and a half before I put in my offer. And it sat because nobody wanted to deal with this huge commercial space. It was an old restaurant. And so what we did was just ran the numbers with the four residential units and said, this is what we can offer you. And we'll cash flow without doing anything to the downstairs. So when kind of like Dave, saving up for that big renovation, you know, not putting all, you know, doing it right away, we have seller financing on that deal for four years.

So we have the next four years to renovate that downstairs commercial space, get a tenant in there, and then go ahead and refinance out from our seller financing. But you got to get creative with finding other ways to add revenue, even if that's just raising the rent. And if you want to talk to your tenants too to see, would you be interested in us replacing that old gross linoleum, maybe not say it that way, with LVP, we would increase your rent by $50 a month or whatever it is.

Sometimes just doing a small little renovation, you know, can help you raise the rent. Yes, I do a lot of the same things that you do in terms of property. So we bought a six unit. And this six unit is it was two standalone, two units, and then a two units above above four single car garages. And when I was underwriting this deal, I saw that the current owner when we walked the property was literally just using the four under units for his own personal storage. And so we saw that the deal, cash flowed as it set, not a ton, but just cash flowed a little bit as it said. So it's paying for itself. And I immediately knew, okay, I can take one of these units and we're going to add washers and dryers in them. And there are third. So people adding laundry to your facility can be a pain in the butt if you don't want to manage a laundromat. But there's also third party companies that will come. They will place washers and dryers into your facility. And then,

then they will come service them, maintenance them, collect the money, and just do a revenue split with you. Sometimes it's 50-50, sometimes it's 60-40. You get the higher end. And so that increases your revenue. And then you don't have to worry about buying and managing the actual equipment. So we're going to do that in one of the garages. And then we're going to use the other three garages as storage and offer it as additional to increase the cash flow. Another thing we like to do to increase cash flow, Dave, you talked about Section 8. I like going in and finding apartments that are maybe two bedroom apartments with a single car garage like townhouse style. And we can convert those single car garages very inexpensively to a bedroom. And when we do that

conversion to a bedroom, we're now able to get Section 8 to pay for a three bedroom property, which they pay more rent for three bedrooms than two bedrooms. And so we might go in and spend between three and $5,000 to convert a bedroom, but then we're getting an extra $2 to $300, maybe $400. a month rent through guaranteed Section 8 rent. So these are just some of the ways that you can be creative to add value to your property inexpensively. Yeah, that's so true. It's just all about getting creative and not trying to scale as quickly as possible

necessarily as Ashley was saying. Like, if you're using every single dollar that you have for acquisition, it slows you down on a lot of these ideas, like renovating a garage or doing a cosmetic rehab or, or doing flips opportunistically when you find these great deals. Sometimes, especially in my opinion, in these types of environments, it's just better to hang on to a little cash and use it as opportunities arise. They're not as obvious. They still exist, and you just need to have some dry powder to attack them when they come along.

We've got to take one final break, but stick with us because when we return, Ashley and Henry are going to give us the dish on their personal real estate investing. Thinking about wholesaling or flipping your first property, but not sure where to start. The truth is, deals don't just fall into your lap anymore. You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you cannot only

only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new. PropStream also gives you AI-powered insights and comps that are over 99% accurate. So you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step by step. Start your seven-day free trial and get 50 free leads at Propstream.com slash BP.

That's P-R-O-P-S-T-R-E-A-M dot com slash B-P. Don't just dream about real estate. Make it happen with PropStream. If you own a short-term rental, here's something worth knowing. Not all landlord policies are built for your type of property. And with holiday bookings, chilly weather, and higher guest turnover, having the right coverage is more important than ever. Steadily offers insurance designed specifically for short-term rentals, covering property damage, liability, lost rental income, and even unexpected issues like bedbugs. Steadily works exclusively with real estate investors. so they understand the details that make short-term rentals unique,

and they build coverage to match it. A quick review of your rates and coverage every year can help you protect your property and your cash flow. Get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, rental property insurance for the modern investor. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties,

and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean-up, no progress. That's why hundreds of property managers rely on bill to streamline their finances. Bill for property management lets you add all your properties, assign permissions, pay bills,

and receive payments quickly and efficiently, without the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties, and HOAs. Choose flexible payment methods like same-day ACH, international wires, card, or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each

property to keep everything organized. Ready to simplify your workflow, book your free demo at bill.com slash bigger pockets, and get a $100 Amazon gift card. That's bill.com slash bigger pockets. 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 Mind. 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. Welcome back to the show. I'm here with Ashley Kerr and Henry Washington. I now want to move on to our newest segment on the show. We're calling it The Dish. This whole episode is called The Deep Dish.

We're talking about getting deep into today's real estate market. And now I want the Dish, which is, for me, you guys, I have some questions for you. It's going to be lightning round style. I'm going to alternate back and forth between you. Really quick answers. Some of them are going to be real estate. Some of them are very stupid. Some of them are going to be personal. I want to know from you guys. So, Ashley, I'm going to start with you. First question, what is a real estate strategy you wish you could do in today's market, but won't because it's just not working for you? I would say I've actually looked into this, run the numbers on it, but to own like a luxury,

ski resort. So there's actually a ski resort that's for sale by me that has been vacant for a very long time. And it's like a thousand acres. And I would love to open that ski resort up again, develop like town homes and retail and all this stuff on it. But it does not make sense to do that right now in today's market. Well, that just sounds awesome. All right. Henry, I hope you figure that out, Ashley. Andrew, what's yours? There's several things I wish I could try or I want to try, but one of the things being new construction, build to rent, like I love to build like a street, maybe five to six single family homes, sell off four of them, keep a couple, and maybe you're basically get them for free because your proceeds from the sales, pay for the two. There's just a lot of time,

effort and involvement that goes into that, and it's not my bread and butter. And so I, always have to weigh the opportunity cost of me spending that time in this new area. What does it cost me in terms of what I'm really good at? So I've just never really found the time to focus on that. But it sounds super interesting to me. Yeah, I'm with you on that one. That one sounds appealing to me as well. All right, Henry, we'll go with you again.

What's your biggest weakness as an investor? My biggest weakness as an investor is organization and our lack thereof, lack of organization. So one thing I wish I was a whole lot better at is. is having better defined KPIs and tracking them consistently. I run a fairly small operation, and so I have to wear a lot of hats. And what I've learned is that I need to hire people to do the things that I'm not good at instead of trying to make myself good at something I'm not naturally good at.

And so those are some of the things we're looking at in order to get better at tracking. All right. Actually, biggest weakness as an investor. Mine would be leadership is my weakness, as in I don't like confrontation. I don't like training and I don't like small talk. So for me to engage with people on my team, that is a big weakness. I would avoid meetings as much as possible. So I've really had to do a lot of self-development as to how to be a better leader in my business for sure. Good for you for doing it. and thank you for sharing that. Ashley, third question.

Do you have a live, laugh, love sign in any of your properties? I am, this is probably worse because I don't have any in any of my rental properties, but my first ever farmhouse that I moved into before I got married, that was the whole theme of the kitchen back in 2011. No. Yes. I did not know that when I wrote this question. That's so good.

All right. Henry, I don't think you could top that. But do you have a live laugh line? A live laugh love in any of your properties? Oh, bro. I do not have a live laugh love sign. But in my personal home, in my guest bathroom, we have a live laugh poop sign. Okay.

I like that. That's way better. Have you guys? There was a reel going. around. I don't know if it was real or fake, but on Instagram where some people in a short-term rental were counting how many live-lap love signs that they saw. And it was something like like 25 in one short-term rental. And now this is what I'm picturing Ashley's house as. It was just like everything at the entire house just had live-lap-love all over it. And you know, it's just like

that old farmhouse style with a huge kitchen and then tons of other small rooms. So the kitchen was the biggest room. And it just had sides throughout the whole. thing. I think there was even over, like the one wall had the vinyl that you sticker you put up there, too, you know, that every landlord hates to have to rip off after the tenant leaves. I think I had one of those two. Did your kitchen have a sign that says kitchen? I think it probably said like eat or farmhouse or something. Yes, yeah. Eat. It definitely said eat. All right. Well, since they were calling this segment the deep dish, I need to ask one pizza related one. Henry, favorite pizza topping? Oh, I'm so basic when it comes to pizza. I am sausage and pepperoni pizza all day long. That's all I want. Can't go wrong, Ashley.

Extra pepperoni, just as much pepperoni as you can put on there. Where as boring as possible. Is it the little pepper? See, I love those little pepperonies that like... That curl up. Yeah. They make the little cup of orange grease. They hold the grease.

Yes, exactly. It's like a thimble of just pure, delicious oil. That's my favorite pizza topic. I don't even eat the pizza. I just want to eat chips of pepperoni like that. It's so good. So here's what you do. You take that oil and then you mix it with a little other cooking oil and then you pop popcorn in it.

And then you got pepperoni flavored popcorn. What? Oh, my good. Henry, next time I see you, we're making that. Done. All right. Last question for the deep dish here. Henry, this is actually going back, sort of the old school Bigger Pockets questions here.

What is the best real estate book you've ever read other than your own? I see what you did there. The best real estate book I ever read, I'm going to give to one being Jay Scott's book, the book on flipping houses, I can you should call flip. But that book was so detailed in terms of like what it takes to flip a house. There's so many costs associated with flipping a house. And like people really only talk high level numbers. Like you get a loan and you pay for the house and then you get a loan and you do the rehab.

And then you flip it and then you make money. But there's a ton that goes into it in between there and that money has to come from somewhere. So it was really like eye opening to understand what it really takes to flip a house. And then Gary Keller's book, Millionaire Real Estate Investor. Like for me, that one just, it was like when I was researching real estate, investing, everything I would learn was like this puzzle piece. So I felt like I had all these puzzle pieces, but I had no idea where they all went in this big puzzle. And that book kind of created this frame for me, for me to start like, oh, that's what they meant by this. And I would kind of,

and so it kind of helped me piece together all these other pieces and make sense of what real estate investing was. All right, Ashley, same question. I think for me, it would be Chad Carson's retire early with real estate. It was when I was grinding so high. hard and I was like in the nitty gritty of building my portfolio and that book really had a great impact for me and I think is just really simple to understand you know just it doesn't it's not that complicated to actually build some kind of wealth or retirement for yourself and you can use simple strategies you don't have to go after the you know the shiny object that's happening right now is like you can just do the slow, boring buy and hold or whatever the strategy is you're doing.

Totally. I love it. And I love Chad's philosophy too. And I think it's next week, Chad is coming on the on the show. So he's going to be coming here and talking about his philosophy as well. Yeah. Makes you tell him you had a fan girl on. Oh, yeah. I definitely will. And I'll be talking about myself. All right, Henry, Ashley, thank you so much for sharing the deals and for this little lightning round. This is fun. You guys gave some real personal honest. answers. I really appreciate it. Thank you all for listening to our first deep dish episode. We'd love to hear what you think about it. So if you thought this was a good episode, please make sure to leave us a five-star review. If you didn't listen to last episode, I also announced to everyone that we have a new

feedback form for people. You just go to biggerpockets.com slash pod feedback. And I will get that directly if you want to tell me what you thought of the show, how we could do better, what you liked about it, all that. And if you want to learn more about the strategies and tactics that we've talked about here today, always you can find more information on biggerpockets.com. So thanks again for listening. We'll see you on Friday for a new episode of the Bigger Pockets Real Estate podcast. 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.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. BiggerPockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.