BiggerPockets Real Estate Podcast - Chad Carson: How to Retire with the Fewest Rentals Possible in 2026

Episode Date: January 12, 2026

You do not need a huge rental property portfolio to retire early. Today, Chad Carson (Coach Carson) will prove it, explaining how to retire with the fewest rentals possible. Trust him, because he’s already done it with fewer rentals than you’d think. Chad ditched the “buy 100 doors” mentality in exchange for fewer rentals, fewer headaches, and way more cash flow. Now, in his 40s and years into his lifestyle of two-hour workweeks, Chad has more than enough passive income to provide for his family, go on long (often up to a year at a time) international trips with his wife and children, and grow the wealth that will sustain him through traditional retirement age. Thousands have copied his “small and mighty” approach, as Chad’s name has become synonymous with “make more doing less.” Today, Chad is showing you how to do it in 2026, even if you only have five hours a week to dedicate to investing, even with today’s home prices and mortgage rates, and even if you’re starting with zero experience. Plus, the best properties for beginners and experienced investors, the exact deals he’s purchasing in 2026, and why now may be the best buying opportunity in years. In This Episode We Cover: How to retire early with the fewest rentals possible in 2026 The best real estate investing strategy for a beginner with limited free time Why Chad believes there is more “opportunity” for investing in 2026 than in previous years Put more money down? Plus, why Chad strongly believes paid off properties beat big portfolios Why “ugly” rental properties will get you to financial independence even faster How to “harvest” your cash flow once you’ve built a big enough portfolio And So Much More!   Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1225 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

You do not need a big, expensive, or time-consuming real estate portfolio to reach financial freedom. It is completely possible to build wealth and even replace your entire income with real estate investing in a way that fits into your lifestyle. Yes, you can do this even in the 2026 housing market. Today, we're sharing the mindset and investing principles you need to make real estate investing work for you. Small and mighty real estate investors, keep listening. Hey everyone, I'm Dave Meyer, head of real estate investing here at Bigger Pockets, and I'm a rental property investor, buying rentals for more than 15 years now. Today on the show, we have one of our all-time most popular guests, someone I am happy to call

a friend, Chad Carson. You know Chad from his book, The Small and Mighty Real Estate Investor or his YouTube channel, Coach Chad Carson. And Chad's big picture real estate investing philosophy has stayed consistent for as long as I have known him. He's all about setting realistic goals and growing a portfolio that minimizes your stress levels and enables the life you want. On this episode, we're going to dive into the exact types of deals Chad recommends seeking out in 2026, even for investors who want to spend not that much time on their portfolio, maybe five hours per week or less on

their real estate investing. We'll talk about the single real estate skill with the highest potential dollar return you can learn and practice in terms. 26, and we'll reveal a couple of the levers you can pull to create more good deals, even if the numbers that you find on the MLS don't pencil out right away. Let's bring on Chad. Chad, welcome back to the Bigger Pockets podcast. Thanks for being here. Thank you, Dave. Great to be here. I love having you on. This is always a fun show. I always like to hear from other investors. I respect like you, Chad. What do you think the state of real estate investing is here in the beginning of 2026? As a real estate investor, he's

in this for 22 years, I really resonate with the idea that this is a good buying opportunity compared to the last five years. I feel more optimism in my own local market in the number of motivated sellers who are willing to play ball. I feel optimistic in that people I'm working with and I know are buying properties consistently at below market prices and locking in long-term interest rates. So if you just look at it from a fundamental standpoint, for real estate investors in particular, yes, there's a lot of choppiness. Yes, there's a lot of changes. But this This is a prime time. That's what I'm saying.

I love it. Well, I completely agree. I think, you know, I've shared some of my thoughts on the show over the last couple of weeks, but it just feels like we're getting back to more of a normal environment where the last couple of years, it's like either buyers had all the power or sellers had all the power. And it felt really difficult. And we were just like operating in the extremes of the housing market. And although people have gotten used to that and this new.

sort of normal era of the housing market might feel strange to people. I think for those of us who have done this for a while, I haven't done as long as you, Chad, but I've been doing it for 15, 16 years now, you know, this feels good to me, an era where you can have reasonable conversations, reasonable negotiations with sellers and agree on a price that is mutually beneficial. Like, that's what this is all about. And I am feeling good about this. You said, you know, you're getting more excited about acquisitions, what are some of the trends that you're seeing that are making you feel that way? Well, one of them is the one that you pointed out was delistings. You know the stat better than I do, but there's like a record number, maybe the most

you've seen in the last eight to ten years. Is that right? Yeah, yeah. I think, you know, the study was from Redfin and they haven't been around that long. So they have like 10 years of data. But in all of their data, it's the most delistings we've seen since 2017. Right. So the opportunity I see there, like I'm always thinking acquisitions, how can you buy new properties. And those are people who listed the property. They didn't get the price they wanted. And there's a lot of them who are saying, I'm just going to take it off the market now. But the question I think about is like, what are they going to do now? And for some of them, they're like in good shape. They're just going to stay in the house and not move. Some of them are just going to rent

the property out. And they're going to turn that rental and that 5% interest rate into a long-term rental. And that's good for them too. But there's some people there who have life changes where like they moved across the country or they don't want to be a landlord or. They need some cash and they're willing to sell that property at a discount and give you a good deal. It might not be a fix or upper property. It might be like a solid, nice house and a good neighborhood that fits my buy box. I think that's a huge opportunity. Absolutely.

I used to do that all the time. I used to market to expired listings. I would have a real estate agent who would give me a list of expired listings. I would mail to all those listings. And if I ever bought one of those, I would give them a finder's fee just for sending the list. There was a nice little relationship and it was just a source of leap flow. And I think that would work really well this year. Oh yeah. I think there's going to be so many of those, too. And it's not even if they have to delist. There's just stale properties all over the place. Yeah. Similar kind of thing where something that's stale, I think Redfin defines that as like a hundred days on market or more as stale. But there's way more of those. And those people are going to be willing to deal. I told the story on your podcast, Chad, but I flipped a house. I put it on the market and it sat for a while. And I wound up selling it for what I think is less than the actual.

value than what comps would support just because I wanted to get out of the deal. And it still turned out to be a solid investment for me. So I was like happy doing that. But just goes to show like even people who know what they're doing, even savvy sellers are going to be willing to move deals right now just because of cash flow management or wanting to reposition that money into something they want to acquire themselves. And I never delisted that property. But, you know, after 90 days, you kind of get to that point where you're like, I'll tell, you know, I'm willing to chat. I'm willing to negotiate and sit down.

And I'm certainly not the only one who's thinking that way. Yeah. I think the key is the psychology of you as a buyer and a investor buyer, you can't be embarrassed making lower offers. Yeah. It's just a number. I mean, it's just if they reject you and they say no, cool. Like every once in a while, realtor is going to be mad and say, that's 20% below the list

price. You're crazy. But you know what? I've had several situations in the past where I made an offer. where the real estate agent said, that's crazy, they'll never accept it, and the seller accepted it. Or the least counteroffered it. But the real estate agent doesn't always know what that seller's going to do. Sometimes the seller doesn't even know until they have an offer.

And if you make a, like, when I'm talking about it's a strong offer, this is, for me, it would be like, hey, it's a Monday. I will close. As soon as you get me a clear title, I'll have cash at the attorney's office. It could be this Friday. It could be next Friday. You tell me. And so that person who's receiving that offer has to decide, all right, this offer is, you know, 20% below the $300,000 I want to get.

There's a big haircut, and I was kind of in my mind thinking I was going to have to drop my price anyway, and I have cash sitting there two weeks from now that I could take and go do something else with. And whether that's a person who's motivated to move across the country or another investor who's like, look, I have an opportunity over here. I could buy another deal. You just have to try it. And I think that voice in our head that says, oh, don't make that offer.

I would never do that. But you're not them. The seller might have a different situation. I think that's the keys. You've got to get used to making a little bit embarrassing offers. I feel like just the quality of deals I'm seeing already are better than they've been since probably 2022, maybe even earlier than that. Maybe 2020.

Yeah, maybe 2020. 2020 was interesting because you had low interest rates. I mean, it was just a weird environment, but people are bidding them up. To me, this is going back to the old school real estate investing that when I started in 2003, four, and five, it was a little bit more, you know, you had to compete hard to get deals or you had to make offers and you had to negotiate. hard. But even if you study the history of real estate investing, which I like to do, I like to talk to like the person who's been in the business 40, 50 years and say, when you get that perspective from them, you know, there's been all sorts of weird choppy markets for the last 50 years.

And the common theme as a real estate investor is you have to go create deals. The time where you had like three or four percent interest rates and you can pay retail price and put 20 percent down and have it cash flow, like that's never been like that, except for a few years in the last last 10 years, you know? So I think that's the mindset of like, okay, as a real estate investor, we have to go create the deal, we have to negotiate, we have to make offers. My kind of approach to investing is I either have to buy it low on the price or I have to borrow low with the terms, meaning either way I'm going to buy a good location, a good property that I like, but it's either price is low and or I get really good terms from the seller, like seller financing,

creative terms. And so that if I have a really good property, it's at a great location, and I can negotiate a three or four percent interest rate from the seller. And maybe they're like a landlord who's just kind of ready to move on or something. Like I've bought some properties like that. Those are my long-term keeper properties. I'm making cash flow today. And I'm willing to pay 95, 100 percent of the price of the property because of the long run, that price is going to be much higher and the rents are going to go up.

So it's more about being a dealmaker than it is just, you know, waiting on the market to kind of tell you what to do. I love the terminology specifically that you're using. I think the idea of deal finding, which is often the term that is used in our industry, it's such a misnomer. You don't just go out and find them. It's not like you're hunting on eBay and all of a sudden you just like go and find a deal. Like Chad said, you have to make it.

You have to design it. You have to build a deal that works for you. And there are multiple levers that you can pull to design. design the deal that works for you. Chad just named several of them, right? You know, he talked about the purchase price. He talked about the interest rate that you pay. You can design a deal that has development upside. You could have asked the seller to stay in the deal with you and partner with you on a deal. I'm doing that on it's a potential development deal and it's the seller. You know, they could just take a price and take their money and run or they could be in the deal with us and

we can have a whole lot of upside and they could get a piece of the upside. Like the thing is, but that takes an attitude of being willing to sit down with a person. And this is one of my favorite negotiation strategies. Just take it slowly. Like if you can talk to the seller one-on-one, it's kind of hard through real estate agents. But if the real estate agent is willing to let you, let's just have a conversation. I wrote about this in the small and mighty investor book on my chapter on negotiation, how we're basically solving a puzzle.

And a negotiation is just taking the puzzle pieces, putting them on the table. And when you ask questions and you listen to the seller, you're basically turning puzzle pieces over so that you can then put things together. And I'll tell a seller, like, I don't know that I can solve this puzzle. Like, maybe I'm not the right fit for you. But if you're willing to talk to me for 30 minutes or an hour, like, I bet I can think about some things and give you some ideas and give you some offers. And then if they're good for you, awesome.

If they're not, like, no harm. Like, we'll just keep moving. And that approach, though, opens up so many different ideas. And the job for us as a real estate investor, those, we have, this is where bigger pockets comes in and our podcast is you've got to increase your knowledge of all these strategies and this toolboxes and you've got to increase your knowledge of how tax taxes work and the tax applications for your seller. You've got to be knowledgeable yourself. That's the value you're bringing to the negotiation is the guide helping the seller get from point A to point B and

it being a win-win for them too. Like that takes work and that it's not an easy thing to do. I really like what you just said about being win-win because that is really the key to this negotiation, right? Is when you say turning over puzzle pieces, right, you're just discovering what the seller values. You get to talk to them and figure out, oh, maybe price point is super valuable to them. That's the most important thing. So now I'm going to work with them on maybe other terms that we can negotiate that makes this mutually beneficial. Maybe they don't care about the price and what they really want is to get out quickly. Or maybe they want a lease back because they don't want to move for six months. You know, like there's all these things that are not just the top line number. And I really

appreciate what you said, Chad, about just trying to learn. And, you know, and, you know, hear people out to understand what they're looking for. And if you have the appropriate tools, as Chad said, you can offer solutions to them. Maybe they take it. Maybe they don't. But if you, know, that as an investor, that is such a valuable skill to have. And I think it's one that if you want to pick a skill to learn and work on this coming year, that's a really good one, because that's going to be super valuable, I think, for years to come in the real estate market. Yeah, that's the highest paid skill, I think, in real estate investing. If you can negotiate a deal that gets you an extra a 10,000 bucks or an extra lower interest rate, two points of lower interest rate over the next

20 years. I mean, your hour per dollar on that skill is just off the charts compared to anything else you could do. I love it. So that's a great thing for everyone to take away here because we're still at the beginning year. It's still sort of resolution season. So if there's a skill that you want to learn this year, that's a good one. I really like that. Learn how to negotiate. There's going to be way more motivated sellers. You're going to have the opportunity to just get more practice this year. You couldn't even practice this two or three years ago. No one would even talk to you. Like, how much are you offering me? Can you close tomorrow?

Are you going to waive every single contingency possible? That's what it was like. This is a new opportunity for you learn a highly valuable skill that will benefit for you for your entire investing career. So this is a really good one for everyone to think about. We've got to take a quick break, but we'll have more with Chad Carson when we come back. Stick with us. As a real estate investor, the last thing I want to do or have time for is play accountant, banker, and debt collector all at once. But that's what I was doing every weekend, flipping between a bunch of apps, bank statements,

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slash host. Welcome back to the Bigger Pockets Podcast. I'm here with Coach Chad Carson. Chad and I have been talking just a little bit about what we're seeing in the market here in 26. But, Chad, I want to talk to you a little bit more about your big picture philosophy about small and mighty investing. Maybe you could just fill our audience in sort of the high level points there. Yeah, I started the small and mighty idea because the sort of narrative that at least I heard in the real estate business when I first started was to be successful, you have to have the most units, you have to get there the fastest. And, you know, you hear different names in the industry like 10x and go big and all that kind of stuff. I like to kind of flip that

on his head. And I tried the good big thing. And it didn't really work for me. And I found that a lot of real estate investors want to have this more a deliberate business where they have lifestyle and maybe they're working two hours per week and the rentals are paying for their lifestyle and they can travel. And my wife and I lived with our kids in Ecuador one time and Spain. And we've gone on all sorts of amazing trips and have flexibility. Like to me, it's about being a time billionaire and having the most time and not having the most properties. And so that's the small and mighty philosophy is how can you have the least number of properties possible. That still might be a good number of properties, but the least number of properties possible that still accomplishes your financial goals instead

of being the biggest. And that requires a more elegant, simple solution. And for some people, that might mean like five properties or two properties. Like that's okay. That could be successful. And so it's an idea to help validate people who find that they have enough. And that's totally fine. I love this philosophy so much. If it was up to my wife, I would own one property. She's just like, Just buy one. I'm like, that doesn't, I can't.

A little bit. A little bit more than that. Yeah, I need more. I know. I need more. But I think this is my philosophy as well. I hate the idea of door count. I think it's the most misleading stat that people just do for ego.

Honestly, they just want to say how many units they own. It's not hard to acquire units if you don't have standards. You can buy a lot of bad stuff. But I'm, you know, I'm bringing this up sort of in the context of the state of real estate. investing because maybe you feel differently, but I kind of feel like the winds have shifted.

And this idea that you've always been consistent about, about being small and mighty, being consistent, being patient, is becoming the more mainstream again, where at least to me it felt like for a couple years there, everyone, you know, is about doing multifamily and going big or short-term rentals or mid-term rentals, none of which I have a problem with. I'm just saying, It was kind of like, what's the flavor of the month? Like, let's chase the biggest return. And I feel like maybe the thing that's happened because the market's been so weird for the last few years is people are kind of like, maybe just go back to the fundamentals. Just go back to the boring stuff, which to me feels validating, but I'm curious how you feel about that.

Yeah, I think a football metaphor comes to mind for me. I used to play football. And, you know, in like college football or the NFL, you'll see these like kind of fancy offenses come and go here and there. Like, oh, you know, the running shoot. I grew up as Atlanta Falcons fans. And we had this like run and shoot offense and, you know, we can make a bunch of passing yards, but you never want any games. I'm like, all right.

Like, what's the deal with this? And I think sometimes real estate strategies are like that. There's nothing wrong with the strategy itself. But I think it sort of ignores, number one, use offense and defense metaphor and sports. Like, you can play offense, but you also play defense. And like real estate investing, you can go acquire a bunch of properties, but you also have to like keep those properties. Like you actually have to like withstand the ups and downs of the market.

And so I think small. and mighty kind of acknowledges that this is a long game. You have to be conservative while also moving forward and growing. So it's not about not growing. It's just about I want to be here 20 years from now, 30 years from now, and I want to have wealth and cash flow over the long run forever, not just this fly-by-night, you know, get really big, really fast, and then crash and burn kind of thing. And that's the problem with some of the go big strategies is you hear the success stories. Like those are great. Those are amazing. But you don't see all the fallout and the people who like crashed and burn because it's a much more.

risky strategy. So I think you're right. I think it has, I've noticed a lot more people, you know, just talking about it. And I hope that it's just validating that, you know what, there's just more people who are thinking long term. They're thinking about the downside and saying, I want to, I want to have a strategy that grows and that gets me to my goals, but also it's not going to, I'm not going to lose everything and have to like start back over. Like, I want to, I want to make this thing work. And sometimes just the simplest solution is the right solution for that. Yeah, I agree with you. It's, it's sometimes sounds boring, but it's not really boring. I think people are like, oh, I've done rental properties. What should I pivot

to? I'm like, I'm just going to keep buying rental properties. Like, you know what's not boring is just having very stable, predictable income every month. Like that's just great. It's, I can tell you from experience, having done this 15 years now, like it goes by quickly. It's not like you're going to be grinding away for your whole career. Like we're saying slow and steady, but 10 years, 15 years, you're going to be in a fantastic financial position. And I also think people often overlook sort of the incremental value of real estate. People always say, like, oh, it took me 15 years to get to financial freedom. Seems like a long time.

That's fine. But I bet you in your second year, you were a little bit better off than you were in year zero. And then in year four, you were better off. And then six, and then eight and ten. And that incremental benefit matters still. Like, I don't see it as this binary where it's like, I was not financially free. And now I am financially free. It's like every step, every property you acquire is an incremental improvement.

And that's awesome. And you should be excited about that. Yeah, a lot of happens below the surface. Some of it is just your own knowledge compounding. I know for me, like the first five years, I was kind of spinning my wheels, but I was learning and I was growing. I was building a team. Another metaphor, it's kind of like farming.

Like, it's not sexy to watch an orange tree grow for the first five, six years. Yeah. But you got to plant the seed. You got to water it. You got to do all this stuff. And you can't speed up nature. Like the natural process happens. And I think sometimes we just want to force.

force it a little bit faster. And so rental properties are like a seed. You plant them, you grow them. There are ways to go faster. But I think let's separate investing from entrepreneurship and starting a business. So you can start a business, a side hustle. I used to flip houses a lot. That's how I kind of generated extra cash flow. But many people listening to this, they have a full-time job that's 50, 60 hours a week. They're doing real estate in the side for five hours a week. You need to keep it boring. Like don't try to get your excitement from real estate. Go learn to fly an airplane or go on a vacation or something. If you want excitement, like, don't do that in your real estate. Real estate does not need to be exciting. It needs to be, it needs to be like boring, boring,

boring stuff. I love that. Yeah, yeah. Get your thrill somewhere else. There's no need for adrenaline in real estate investing. So for those of our listeners who subscribe to this belief or who are at least intrigued by this idea of small and mighty. What are the kind of deals you recommend people look for in 2026? I would separate this in a couple categories. And this has been kind of something I've realized lately is that people who have five to 10 hours per week, I would put in like one category. So if you have, if you, if you, if you, if you can at least spend like 20 minutes a day during your lunch break and maybe a couple hours on the weekend, I would put you in like the five hour investor category. And I think people like that should

avoid fixer uppers and major kind of like projects. They should just look for the boring real estate. It's a little bit a little bit more turnkey. That doesn't mean you have to buy it from a turnkey provider. That just means something that needs maybe light cosmetic work. Maybe you get a 10% discount. Maybe you pay full price for it. The, the strategy there is to to to buy a really solid property in a solid location that has growth potential to it. And then you put as much money down as you need to to get a property that cash flows at today's interest rates. Over the last couple of years, that's meant like 30, 40 percent down for some properties. And so like, I think that's one category of investor. What you're looking for is good properties and good

locations that you can buy and hold for a long time. And that's just going to be super, there's just going to be a super boring structure there. There's nothing like fancy about that. If you have more than five to ten hours per week. You know, if you have a, you know, a partner or a spouse who has extra time on the side or if you have, you know, a job that allows you two or three days a week to kind of do this extra, I think you can get more into what we were talking about earlier. Maybe do some direct mail, maybe do some off-market strategies like the Henry Washington and other people talk about a lot, like actually go and try to do that negotiation with people who might be a little bit more motivated. Those are going to be your best deals, but it just requires a little bit more time

and effort. And so I think those are those are the two kind of paths I think about for different people in 2006. All right. Well, I love this. I really agree with the way that you broke it down. Like I love Henry. The way he approaches real estate is totally different than I do because I'm group one. You know, I work full time at bigger pockets. I have stuff to do. I've flipped houses and I've done burs, but that's because I have partners who have the time and who I essentially pay to do that, similar to what you were talking about earlier, Chad. Like, I would be generous giving myself a B-minus on renovations. I think you're probably better than I have.

But you're A-plus on spreadsheets, though, and data. Exactly. I'll give you that. So I do what I'm good at, like analyzing deals, analyzing neighborhoods, underwriting deals, like, that's what I'm good at. And that's how I spend my five hours a week, you know, on real estate. So I think about that. But I want to just dig into each group a little bit.

So I agree with the turnkey thing. Like, if you, the big. way to set yourself up to fill if you're in that group one is to take on more than you can chew. It's going to be stressful. And even if you wind up pulling it off, you're going to hate it, and you're not going to scale your portfolio because you're just going to be miserable the whole time. So I buy into that, buying something relatively turnkey. I've done this over the last couple of years. But tell me more about putting more down because I think that that's a hard thing for people to wrap their head around. One, if you're capital constrained, you might not be able to do that. But two,

it sort of goes against this idea of trying to scale and get to as many properties as possible. So why do you make that recommendation and what are some of the tradeoffs you have to consider? Yeah, I think the reason people don't like putting more down, if I had to guess, is that their return on investment is going to be lower. They're going to have a low, they're going to look at their cash from cash return and it's going to look like one or two percent. Or they're going to say, I'm going to be out of the game for two years now until I save up another down payment. Those are probably the reasons they say that. And what I would say is like, that's true.

But the biggest risk I've seen in real estate investing, the only way I've seen anybody go out of business is that their mortgage, they had negative cash flow, they got a bad mortgage and their mortgage led to them going out of business. Yep. And so to me, like, if you're going to get in this business, the number one thing you want to take care of is staying in the business as long as you can. And so I think when you get into a deal, you don't ever want an alligator. You don't want negative cash flow.

So priority number one is buy a deal that cash flows to. today. And with interest rates a little bit higher, there's no secret. Like the only way to get your cash flow higher on a property that has a certain rent to price ratio is you have to borrow less. That means you either put more down or you buy it at a lower price. There's no magic there. You can do both. And so I do think this is why we talk about if you have cash now to go buy a property, even if you're the five hour investor, negotiate hard. Like try to get a 10% 15% discount on a nice property. Like you can do that. Like that's very doable in today's market. you have to make a lot of offers.

Not everybody's going to do it. So let's say you buy a $300,000 property for $270,000 and it rents for $2,200 or something. So you buy it for $270,000, but you might have to put $70,000 to $100,000 down in order to get a 6% mortgage that actually cash flows with a $2,200 payment. And so the question is, is that a good deal? And I would make the argument that you have to look at all the different metrics that make a good deal, a good deal. if the property cash flows today and you have a really low cash on cash return, you're also getting principal pay down. And hopefully you also bought it in a location that has a, even if it's flat for the next two or three years, the reason you're buying that location is there's a limited supply, there's population growth, all those things that are like the most important parts of buying a good location. Over the long run, you're buying a property that hopefully is going to grow at least it at the rate of inflation.

Yeah. And so you got to run your numbers. Like if it doesn't work putting $100,000 down and you're getting an abysmal return on that money over the next. 10 years, then don't buy the property, buy another one. But don't just say I have to put less money down to make a good deal. Like putting a lot of money down, it's a safer way to invest if you're wanting to survive and stay in the business. Absolutely. And I think it gives you the optionality to invest in areas that may not be cash-hilling at 20%, which are often the best areas. I think this is a common mistake that people make is they'll invest in a Class C, Class C, Class D neighborhood,

or a Class C or Class C property because that's what they can afford and that's what will cash flow at 20 or 25% down. But you're missing out on some of the best neighborhoods. I think this makes so much sense. If I look at my own investing career, I don't think I've ever regretted

buying a good asset in a good location, ever. Even if I had to put 50% down, 70% down to make it work, I've never regretted it. And honestly, the few deals I've regretted, I don't have too many, but the ones that I feel just like meh about like not super excited about were like ones that kind of you know cash load at 20 percent but weren't in the best neighborhood or didn't have that much upside potential and just were deals that I didn't want to own long term.

I have completely shifted my focus to I don't buy a deal that I don't want to own for 10 years anymore. I think the the hey, I'll own this for a couple years. It will do something for me because it works at 20 percent. Like that's just not worth your time. I, would rather, you know, take the long view on every single deal I personally buy. Yeah. And I think it also goes back to like what kind of investor are you, like know who you are. And if you're the five-hour investor who has, you already have a full-time job. You've already got a job. Don't, don't need a second job. You need an investment. And so that's why like a little bit higher quality, maybe a little bit, you're going to be a little bit lower cap rates because of that.

That's your style. I mean, when I first started, though, I was buying the cash flow properties. And I don't regret doing those because I think it taught me a lot. I had to work harder to get that cash flow, but I had lower down payments, lower prices. So I think there's a time in place for that. So if people are listening to this, just know what role you're in and know what you lean towards. But I just think so many people avoid the higher down payment, the lower cash flow properties because they think, oh, that's just not a good deal. But they're intelligent investors, Dave, other people, myself who are buying properties that maybe other people kind of turn their nose up at, but over the long run could still be a good investment.

Great advice. So that's category one of investors. The people, people who are working full-time, maybe have up to five hours a week, but there's this whole other category of people who want to invest more time into their investing career. We're going to get into that, but we've got to take one more quick break. We'll be right back. If you own a large or complex rental property, congrats. And I'm also sorry. One day you're building a portfolio.

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Second bucket of investors, you know, what are the kind of deals? What kind of cash flows? What kind of numbers do you think they should be looking for here in 2026? Yeah, when you have more time, then you can be a little bit more ambitious with the types of deals you get. And so this is like, I mean, the classic deals people have heard about, like the Burr strategy, which more broadly means going after properties that need work. They have some kind of problem. I had a mentor early in my career.

he used to say, you know, Southern folksy kind of conversation who said, Chad, you need to look for, you know, good dogs to have fleas. That means a property that's a good potential property and a good neighborhood. But man, it's like the worst house in the street. It needs work. And there's issues with it. Very often is the remodeling that needs to be fixed. And so this is like, instead of just a cosmetic fix wrapper that we talked about with a five-hour investors, a light light cosmetic, this is, I mean, you can be a little more ambitious by a property that has, you know, it needs to, the remodel the whole kitchen or it needs to have bathroom. rooms that need to be updated. Or maybe if you're like really, if you have really good contractors and

you're more ambitious, maybe you're adding an ADU to the property and doing new construction. So I think there's a spectrum of your skill set and the amount of time you have to add to that. But that's where the best deals come in from like the deals that you can buy where the property is worth in the end, you know, 300,000 and you're in it for 70% of that. You know, maybe you're buying for 200,000 or something like. So those deals are out there, but they're going to start off really ugly, like in some way. because the remodel's ugly, the property looks ugly. Other people don't see it yet, but because you understand underneath the surface

that there's potential there, either through the value by fixing it up or by changing the zoning or something, those are the deals that have a really high equity growth potential and also better cash flow potential because as we mentioned earlier, the cash flow, there is no secret. You have to borrow less money in order to make the property cash flow. But our five-hour investors probably are going to have to put more money down to make that work. but the more entrepreneurial investors who have more time, you could buy a deal way below its value and then use cash to buy it and then refinance it and be at 70 cents on the dollar with your

loan and still make a cash flow and you might have very little cash in the deal. Like that's a great deal, but it is, it takes, there's more to it. You know, that's why I think I kind of reserve that for the second category of investors instead of the, a lot of the people who don't have that much time. This market in general, like, I just feel like it's not the time to take a lot of risk because you don't have to, but also if you're newbie. Like, there's just no reason to take a lot of risk. Like you said earlier about cash flow, the key is to stay in the game.

Don't lose. Like, just you don't even need to win. You just need to not lose, especially in your first couple of deals. And so I think that's excellent advice here. I love your framework, by the way, Chad, of starter, builder, and harvester. So you're in the harvester phase of your career now, right? So tell us a little bit about that and like what's that's been like for you. because I think this is where everyone wants to be eventually.

So I'm more of a harvester now, and I've been doing it for 22 years. But to me, the difference, like most of the invest that we talk about is either in the starter phase, get your first dealer to, or the builder phase where people are, you're trying to take $100,000 that you've saved up and turn that into a million dollars. Like, that's the builder phase. And it's all about leverage. And it's all about maximizing the amount of growth you make and your return on investment. And that's great.

Like, there's nothing wrong with that. But the harvester phase is almost like you're switching to a different, different, different laws of physics because the goal isn't just to grow and maximize your wealth, although you want to keep growing. But it is also to increase your cash flow. It's also to reduce your risk. And it's also to increase your time. The amount of time you have to actually go take those trips and enjoy your life. And like, this is the reason we did it in the first place. So Harvesting is really about transitioning your portfolio from one that has a lot of equity, but not much cash flow, which is very common in real estate, by the way. I've seen so many people who have, you know,

a million dollars or three million dollars in wealth, but they don't. they're making a much smaller cash flow than they should for that amount of wealth. And so what a harvester is all about is making these harvester moves, which could mean selling some properties. It could mean refinancing strategically. It could mean paying off debt, which for me has been all three of those, like all of the above. We've gone from instead of having like my whole portfolio, is it 70% debt to value.

Now we're more like 15 or 20% debt to value. Some of that's just been amortizing loans over time. but some of us just been deliberately paying properties off. Like we have 150,000 saved up from selling a property and cash flow from our rentals. What do we do with that money? Most people would say, we'll go buy three more rentals and put 50,000 down or buy two rentals and put 75,000 down. That's a builder move.

A harvester move is to say, no, I want to keep my portfolio as simple as possible. I'm actually going to go pay off $150,000 loan that's at 8% interest, which is a little higher than my other loans. And now I own that property free and clear and I've freed up, you know, $1,500 or $1,500 per month with zero risk. I didn't have any risk and I increased my cash flow. And that's a, that's a very good move as a harvester. I wouldn't recommend it as a starter, but as a harvester that makes a ton of sense because you shifted to a different goal than just trying to maximize your return on investment. Yeah. I love this framework. I think it's so good for everyone listening to just

keep this in mind because there's so much advice out there about real estate. All of it is good advice. But where you fall within this framework, I think, is so important. into your decision making. Like the stuff that Chad was just talking about of paying down debt, it's where a lot of us get to once you've been doing this for 10 or 15 years. You realize you just want this simple. But it makes sense, it's not what you're going to do on your first deal. You're not going to buy something for cash. You're probably not going to take out a 15 year mortgage instead of a 30 year mortgage because you want to pay, you have less debt. So just keep that in mind. And I think, especially now at the beginning of the year, it's really important to just sit down and

say to yourself, like, this is what I'm doing. I'm still a starter. So I'm going to going to make starter moves or I'm a builder and I'm going to make builder moves or I'm a harvester and I'm going to make harvester moves. I think that will really help simplify all the noise out there because it's not that it's bad advice, but there's just so many different things you can do in real estate. You can't possibly consider them all and it's better to just sort of narrow down on the things that make sense for you. It psychologically is hard sometimes because it's easy to compare ourselves to others. That's what we humans do. So I get why it's hard to do. you see your buddy over there who's flipped three houses and done two bird deals and isn't that

amazing and you're just as smart as them. Like, how come I can't do it? But I think the strongest investors know themselves and they're okay. And they accept the fact that this is where I am. I have five hours per week and I'm a builder. I'm not a harvester. This is what I'm going to do. Or, hey, I have five hours per week and I've built enough wealth. I think this is enough. Like that's a really hard thing for investors to say because we're very ambitious, myself included. But to acknowledge that, you know what, I have, I have. transition to where I have enough wealth here, it's time to take some risk off the table. That is a very difficult thing for people to do who have been building for years.

And the way, the trick that I've tried to get in my head is that this isn't a forever thing. Like, this is, this is me winning the game so that I can stay in the game for the rest of my life. Like, you know, I've won the game. Don't take, Warren Buffett always says, you know, it's ridiculous or it's insanity to risk what you already have, this wealth that you've built for something you don't even need. You got enough. You've got enough. Why would you risk the thing you already have for this extra property, this extra wealth that you don't even need? Like, take some chips off the table.

All right. Well, Chad, thank you so much for being here. It's always fun chatting with you. Any last advice to the audience for 2026? I would say it's going to be exciting year. I mean, you're going to have to channel the news and the information you get. Listen to Dave. Listen to my podcast. Listen to people who are going to be more optimistic, but realistic. We're not, we're not like saying wear rose-colored glasses and say everything's going to be rosy. We might hit a recession. We might have bad news. But I think the message that I'm trying to convey is that if you think long term, it's almost like you're going to cross the ocean, you're going to hit some storms. You're going to have some waves. It's going to go up and down. But like keep your eye on the prize.

The prize is getting to the other shore, the other side of the shore and be the more long term thinking you are, the more long term investor you are. It's just, it's a calming effect. You don't have to worry about the ups and downs as much. In fact, when you have downs, that's an opportunity. And I think that's really where we are. Who knows, I'm not good at predicting, but I think this is an opportunity year. And so keep your eye on the prize long run and then be disciplined and safe with your approach. But then go out and do it. Like go out and buy some properties, find your lane, whether you're a five-hour investor or a 20, 30-hour week investor, find the lane that you're good at.

And then let that be enough. I love it. Well, thank you so much, Chad, for being here. It's always great to have you. It's a pleasure. Thanks for having me. And thank you all so much for listening to this episode of the Bigger Pockets podcast. We'll see you next time.

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