BiggerPockets Real Estate Podcast - The 2026 State of Real Estate Investing: An “Easier” Road Ahead

Episode Date: January 5, 2026

Real estate investing is about to get easier…much easier. And this could be the average American’s first opportunity in years to get in the game. Small investors are more optimistic, planning to buy—not pause—in 2026 as home prices stall, rents get ready to rise again, and affordability slowly trickles back. This is the State of Real Estate Investing in 2026, and the opportunities are growing. We’ve turned a corner in the housing market. Buyers have control, prices can be negotiated, and mortgage rates are coming down—this is what we’ve been asking for. Cash flow is even making a comeback after many investors thought it was gone for good. So, what strategies will work especially well in 2026, what are the pitfalls investors should look out for, and what is Dave buying in the next 12 months? Today, we’re sharing it all. Strategies. Tactics. Risks. Rewards. We’re cracking open the expert investor playbook, and even sharing brand-new insights from investors that contradict what major media networks have been telling you about the housing market.  In This Episode We Cover Cash flow returns—the 2026 perfect storm for cash flow potential to increase  The biggest buying opportunity in years—and why average Americans must take advantage  Real estate investing strategies Dave is betting on (with his own money!) in 2026  Riskier strategies new investors should stay away from (and experts can win with) Four crucial considerations before you buy an investment property  Housing crash in 2026? Here’s the real likelihood of it happening  And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1222 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 is about to get easier. Much easier in 2026. Deals are getting easier to find. Homes are sitting on the market longer. Rates are actually starting to come down, and buyers finally have more choices. But the average American may miss this. Many people are looking at the housing market and they don't like what they see. Meanwhile, small investors, they're buying.

They're building wealth. and they're more optimistic about 2026 than ever. So what do they know that the average American doesn't? What opportunities are appearing in the market that you don't want to miss? We're breaking it all down today in the 2026 state of real estate investing. I'm going to give you the exact strategies that are primed to work in 2026. I'll share my vision of the housing market and where we're heading, and I'll explain why waiting for a crash may be this single most expensive mistake that you can make.

The 2026 state of real estate investing starts now. Hey, everyone, welcome to the Bigger Pockets podcast and happy new year. I'm Dave Meyer, investor, analyst, and head of real estate investing at Bigger Pockets. It is so great to start a new year here on the Bigger Pockets podcast with all of you. This is an exciting time of year. It's time to set ambitious goals to map out your plans for the year and to put yourself on track towards the life you want for yourself and for your family. But I want to just start by saying, I think there are good opportunities coming for real estate

investors in 2026. These are better opportunities that I have seen, honestly, in years. And it just gets me excited in general to be in this industry at this time. So in our show today, that's what we're going to be covering. I'm going to run through my state of real estate investing report as I do every year. It's basically my outlook for the housing market and investing conditions for the year. I'll share my personal strategy that I am working on for 2026. We're going to talk about better inventory that's on the market, better deal flow, better cash flow possibilities out there.

Yes, that is absolutely happening. We'll talk about improving affordability, the outlook for housing prices and mortgage rates, whether you should wait for a crash and more. We do have a packed episode today, and I want to get right. into it. But first, I just have a little bit of a teaser for you because on Wednesday's show, the next show that comes out, we have a fun announcement to make. I personally could not be more excited about this announcement. It is a huge win for this show and the Bigger Pockets community, but I will say no more. You got to tune in on Wednesday. So with that, let's get into our

26 state of real estate investing. So what is the state of real estate investing in 2026? If I had to pick just one word for it, I always try and just narrow it down to one word. And my word for 2026 is improving. Things are getting better for real estate investors after several tough years. I doubt I need to tell any of you this, but deals over the last couple of years, they've been pretty hard to find. Cash flow has been tough. Financing is hard. Uncertainty has been super high.

And nothing is perfect. we still have a long way to go in the housing market to get back to normal, to get back to healthy, but it does in many ways feel like we've turned a corner, at least from my perspective. I am personally not super bothered by a modest correction in the housing market, like the one I think we're in. I actually think this is a step in the right direction to a more affordable, a more predictable, a more productive housing market. And at the same time, those changes make it. investing easier for real estate investors. Because every single market has its tradeoffs.

When things are going up like crazy, like it was during the pandemic, yeah, it can boost returns. That is the benefit of that kind of market. But there's also a downside to those kinds of market where deal flow was hard. Cash flow was harder to find. Now we're transitioning and we're sort of getting the opposite, right? Maybe appreciation is not going to be great over the next couple years, and we'll talk about that. But that means at the same time, there's better inventory. Great assets are on sale right now. There's less competition. So let's look a little bit at some of these specific things that are improving for real estate investors. The first one, like I said, is deal flow. I think this is the thing that gets me really excited right now because it has been

a slog looking for deals since at least 2022, maybe even earlier. Even during 2020 and 2021, it was hard to find good deals. But right now, inventory is getting better. That means there are more homes for sale on the market. It's not crazy. It's not like we're seeing some flood of inventory that's going to lead to a crash, but it's getting better. That means there are more options for us as real estate investors to choose from. Affordability is going up. This one just It honestly, it warms my heart. We have had years and years of declining affordability. I've probably heard me say this on the show.

But housing affordability, the last couple years, have been near 40-year lows. And although we still have a long way to go, don't get me wrong, housing is not affordable yet. Just this last data that we have from October of 2025, it is the best affordability we've seen in three years. As investors, this really helps. we're also seeing days on market go up. This leads to better negotiating leverage. When sellers are seeing their properties sit on the market longer and longer, it makes

them more likely, more willing to cut a deal that also benefits us as real estate investors. The next one might surprise you, but cash flow is actually getting better. If you think about a correcting market like the one that we're in, even if home prices in your local market are staying stagnant, but really, rents are continuing to grow, which on a national level they are. Most of the forecasts I've seen for rent expect modest rent growth in the next year. That means that cash flow prospects are getting better. Now, I'm not saying it's back to 2019 levels.

It's slow, but they're starting to get better. And competition is going down because there's just more homes on the market. Demand actually hasn't come down that much, but since there is more supply on the market, that means relatively there is less competition. all these things combined. These are things that we can and should be celebrating. It is a reason, in my opinion, for optimism. And I am not the only one here.

I look at these things and I don't see, oh, man, the housing market might be flat. Maybe it will decline a couple of years and think, oh, this is risky. I don't see this so much as risk as I see it as opportunity, reason for optimism. Now, again, not everything's great. Like with any market, there are tradeoffs. and this market is no exception. Prices are pretty stagnant. Prices might fall in some places.

So appreciation is going to be lower. I personally think the risk of a crash is relatively low. Affordability, even though it's getting a little bit better, it's still pretty rough out there. And rent growth, although I think, you know, most forecasters are saying it will go up a little bit, probably not going to be a banner year for rent growth in 2026. So given these tradeoffs, right,

the fact that deal flow is getting better, but there are some downsides to the market. How do we invest? How do we move forward in a market where there is both opportunity and there is risk? What do we do? Should we wait to get more clarity? Some people might advocate for that, but personally, I don't think that's the right strategy. First of all, and this is kind of always true, no market is without risk. That's just not how it works.

That's not how investing works. there is always risk. So just remember that. You can't wait for a perfect market because it's never going to happen. And the second thing is that financial freedom isn't going to find you. It's not going to present itself all wrapped up in a perfect package. You have to go out and get it. And in my opinion, now is as good a time as any. So waiting, especially because I don't personally think there's going to be a crash, is not really going to help you. Instead, what you got to do is focus on what tactics and what strategies are going to work well in 2026. So we're going to pivot our conversation to that, what works well in 2026, but we do need to take a quick break. We'll be

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visit BiggerPockets.com slash retirement to learn more. Welcome back to the Bigger Pockets podcast. I'm Dave Meyer, delivering the state of real estate investing for 2026. Before the break, I talked about why I feel like real estate investing is getting a bit easier. Deal flow is better. There are opportunities out there for investors who are willing to study the market, to learn from what has worked historically, and to apply that to their own investing decisions and portfolios here in 2026. So let's do that. Let's talk about what's going to work. Now, you've probably heard me say this before, but I think the housing market is in what I call the great stall. Affordability, although it's getting a little bit better, is still pretty low. And to me, this is the major

thing that drives the housing market. I talk about this all the time, but affordability is the big thing driving what happens in the housing market. Now, some people point to low affordability and say, oh, this is the reason the market is going to crash. That hasn't happened yet. Affordability been low for three years now, and that hasn't happened yet because there is an alternate way that affordability gets back to the market, and that's what I call the great stall. Rather than seeing something dramatic or crazy like a crash in housing prices, you actually see a slower restoration of affordability through a combination of things happen. Number one, prices remain kind of flat for the next couple of years. Now, they could be up 1%, that could be down 1% in the next

year, but that's, I call all of that relatively flat. I think the main thing that we need to look at here is whether on paper they go up 1% or down 1%, they are going up slower than wage growth. And that is happening in the market right now. Wages are growing faster than the prices of homes. And that brings back affordability, right? Because if prices stay flat, but people are making more money, that slowly brings back affordability. That's not something that's going to happen super quickly because wage growth is something that happens relatively slowly.

But that is going on right now. And hopefully that's what's going to continue into next year. On top of that, we've seen mortgage rates come down. I know not everyone's super excited about it, but one year ago in January of 2025, rates were at seven and a quarter. They're 1% lower now at 6 in a quarter. And that's obviously way higher than they were during the pandemic. But that is a significant improvement.

That brings millions of people back into the housing market. And this dynamic of slowly improving affordability in the housing market is what I think we are in for in the next year or two. This is why I call it the great stall because I don't think it's quick and I don't think it's going to be dramatic. I think prices are kind of just going to stall out for another year or two. Might be even three. I'm not I can't predict that far out. But I wouldn't be surprised.

Let's just put it that way. I wouldn't be surprised if we saw real home prices. Inflation adjusted home prices kind of be slow, kind of be flat for the next couple of years. Now, what is happening? This great stall could be called a correction. I have often called it that because when real home prices are down and have been for a few years, I think that's a correction. But before we get into what strategies work in the great stall, because there are tons of strategies

that work in the great stall, I think we have more options now as investors that we have. This market actually works for a lot of different strategies, and we'll talk about that in a minute. But I do want to address the crash fear because this narrative is just constantly out there. So I understand this narrative because the last time we had a correction, in the housing market, it was a crash. Like, that's what happened in 2008. But that is not normal, right? And since the Great Depression, we have had one time where the market is really crashed,

that's in 2008. But corrections where real home prices go flat for long periods of time, that is not just something that's possible. It's actually quite normal. If you, you can Google this, but you can go look at real home prices over time. Seeing periods of flat home prices is the normal way where affordability is restored to the market. So I just want to say that there is precedence for this. The other thing I want to say is that there is just no evidence right now that a crash is going

to happen. If you look at inventory levels, they were rising last year, they've kind of leveled out for right now. New listings, those have leveled out. They're about even year over year. Delinquencies, a crucial predictor of a crash remain below pre-pandemic levels. Foreclosures remain below pre-candemic levels. Credit quality for the average American homeowner is high right now. People are paying their mortgage. And demand is actually resilient. The last reading we have for it's back into 2025 showed that demand for housing is actually

up year over year. I know people say, oh, there's a crash. No one's buying. That's not true. We actually had an increase in home sales in 2025 over 2024. The reason I'm telling you this is that the fundamentals of the market. market are holding up. They're not supporting rapid appreciation. I'm not saying that. But the idea that the bottom is going to fall out of the market is not supported by any data. It's not supported by any

information. It is fear that is driving those ideas. And as investors, we can't make our decisions based on fear. We have to base it on data and information and experience. And that's what we're going to do. So we are in a correction. And yeah, some people might see that as negative. But I don't. I think it means we're getting assets at better prices, right? And although the risk of a crash is not zero, it's pretty low and prices will eventually recover. And that's why I see this as a buying opportunity. I think we're in a good time to start acquiring assets if you are a long-term buy-and-hold investor. If you're a flipper, there's going to be some risks, right? Because selling right now is a little bit hard. But if you are a buy-and-hold investor, I see this as a good time. And I am not the

only one here. So if you're sitting there thinking about 2026, feeling optimistic, feeling like it's the time to buy, that it's a great time to get into real estate, you're not alone. The aggregate Bigger Pockets community is feeling the same way. I am feeling the same way. I get to talk to professional real estate investors all the time and they are feeling the same way. But we got to talk about how do you do this right? How do you grow in 2026 in a way that moves you towards those goals that takes advantage of these opportunities, but while still respecting and recognizing some of the risks that are out there. Because you've got to respect the current market,

and you've got to take what it's giving you. And here's what I think that looks like. I've been using a framework or playbook that I've been talking about for a little while now, and I want to share it with you. It basically combines four basic principles. It's what I've been doing since 2025, and it worked for me in 2025, and I think it's going to work for me in 2026, so I'm going to keep doing the same thing.

No need to change it up if it's already working. Number one is, yes, the market is uncertain. There is chance that it will decline a little bit. There's chance that we'll have a melt-up. But I think the most prudent decision right now is to plan for the great stall. You've got to plan for slow or no appreciation and rank growth in the next few years. Now, I know that doesn't sound exciting, but if you plan for it, it's totally fine, right? the worst thing you can do is go out and invest, assuming that we're going to have amazing

appreciation and rank growth and basing your underwriting and investing decisions on that. Maybe I'm wrong. Like, maybe that will happen, but basing your decisions on that optimism is not what I would do. I'm optimistic about the market because I think there's better deal flow, but I am not particularly optimistic about appreciation or rent growth in the next couple of years. And that's totally okay. We have to mitigate that risk. We do it up front. We do it as we're looking for deals. We do it in our underwriting. If you address it right up here and say, hey, appreciation is probably going to be slow. Then it's okay. You just don't want to be caught flat-footed in a year or two and say, oh, my God, I bought this deal assuming there was going to be appreciation and there isn't. And now I'm in a bad spot. You can avoid that. You don't need to take on that risk by planning for the great stall and assuming that appreciation and rent growth are going to be slow.

We can absolutely invest around that. That's what we're talking about right now. So that's pillar number one, plan for the great stall. The next pillar of investing in 2026, the framework I'm using, is to have modest short-term expectations. I personally think that even in the last couple of years before things started to get better, the biggest challenge in real estate has not been the market or deal flow or high mortgage rates.

It has been expectations. people have been chasing returns that are not coming back. Sorry to say it, but the deal you can do in 2018 or 2021, it's probably not coming back, and that's fine, right? That was a magical time. I call it the Goldilocks era because everything was perfect during that time. And just because we've moved from perfect to normal does not mean that you can't invest. So what I want people to remember is that having modest cash flow in the first year of your

portfolio, that's normal. Having modest appreciation on an average year, that's normal. The average appreciation rate in the United States is 3.5%. Whereas inflation is 2, 2.5%. So when you look at the average of appreciation compared to inflation of long term, it's like 1%. That is normal. And these are the expectations that we need to have. And if you're thinking that's not good enough, well, real estate investing has worked for decades, for centuries with exactly these kinds of conditions. And even with these modest short-term expectations for returns, they're still going to beat the stock market. They're probably still going to beat what else you can do with your money. It's still the best way to pursue financial freedom. So I encourage people to adjust their

expectations in the short-term, but keep your long-term expectations high. So those are the first two parts of the framework, probably for the great stall, and have modest short-term expectations, but keep your long-term expectations high because that's the game. That's what we're actually going for. The third pillar here is to underwrite conservatively. I've been saying this a lot recently, but I know a lot of people say you shouldn't play scared. I think you should right now. I think that it makes a lot of sense to be very, very picky.

This is part of planning for the great stall. But I am underwriting with no appreciation next year. I'm going to underwrite for probably no rent growth, no market rent growth. If I do a renovation and, you know, bring markets up to market rent, that's a different story. But I am not assuming that there are going to be macroeconomic conditions that are going to, you know, give me this tailwind to boost my rent. And that's okay. There are deals that work with these conservatively underwritten ideas.

And those are the ones you want to buy. For me, that's what gives me confidence in this kind of market because we're in a market that's correcting. Prices could go down next year. They could go down one or two percent. Vacancies could go up this. year. Rents might not grow. And again, all of those things are okay if you bake them into your assumptions. If you go into that and say, my business plan is to buy a great asset. And even if

rents don't grow for a year or two, I'm okay because I'm still getting cash flow and it's going to be a great asset in five to 10 years, that's the right mindset. This is not the market to go in and have rose tinted glasses. You don't want to go into this and say, oh, my God, you know, there was this one comp that's getting $2,600 a month. I think I can get $2,600 a month, too. No, don't do that. If everyone else is renting a 23 or 24, put your expenses, underwrite a 23 and 24, be conservative in your underwriting. This is the way that you protect yourself against downside risk that is in the market, but still take advantage of the inventory, the deal flow, the negotiating leverage that's going to give you good deals this year. That to me is absolutely

crucial. The last pillar of my strategy is to focus on upsides, right? I'm not just doing this to get average deals with conservative numbers, right? I am comfortable with those deals because they still make me money. If I underwrite conservatively and I'm doing this right, even in a bad year, quote unquote, bad year in the housing market, I'm still earning a positive return with those conservative deals. That's awesome. But I want to give myself a chance to take this from a single or a double to a home run. And that's where the upsides come in. Those I've talked about on the show,

I've put out multiple shows about what I consider the upside era. These are things like looking for areas where you can build in the path of progress. This is things like areas where you can bring up rents to market rents. That's a really good upside.

These are things like zoning upsides or my personal favorite right now, which is really buying below market comes. I think this is a real key, a real hack for buying in this kind of market. Because if you're concerned that prices are going to go down two or three percent year over year, reasonable concern, then buy two to three percent, at least by five percent, by six percent below market comps right now. This might sound pie in the sky like, sure,

everyone wants to buy under market comps, but it's possible right now. This is the benefit of the great stall. Things are sitting on the market longer. You get to negotiate. Not every seller is going to do it, but some of them are. And I want to call out. I'm not saying that you should focus on buying below list price because people can list their property for anything they want. You need to do your own analysis, figure out what a property is worth, and buy 5% below. Like, that's a great hack. And if prices don't come down 5%, you're walking into equity. That's an upside. This is a way both of mitigating risk and gathering upside. But there are plenty of different upsides that you can look at, adding capacity, like I said, path of progress, rent growth, zoning upside, owner-occupied

strategies to save on living costs. These are all ways to take your deals that you underwrite conservatively, that have modest short-term expectations and give you that opportunity to hit a home run in the long run, right? Our long-term expectations stay high. And the way you get a deal that works now in this era, low risk, but you hit those long-term expectations is by focusing on the upsides. So this is the framework that I've been using. It's been working for me for a while, and I'm sticking with it. But within this framework, there's a lot of different things that you can do. Notice that I didn't say, you got to do burr, or you can't flip, or you can't do short-term rentals. Many of these strategies are possible. Many of these strategies can work, but some of them

may not. So let's talk about which tactics and which strategies actually fit within this framework, because there might be more than you actually think. But we do have to take one more quick break. We'll be right back. The Cashflow Road Show is back. Me, Henry, and other Bigger Pockets personalities are coming to the Texas area from January 13th to 16th. We're going to be in Dallas. We're going to be in Austin. We're going to Houston, and we have a whole slate of events.

We're definitely going to have meetups. We're doing our first ever live podcast recording of the Bigger Pockets podcast. And we're also doing our first ever one-day workshop where Henry and I and other experts are going to be giving you hands-on advice on your personalized strategy. So if you want to join us, which I hope you will, go to biggerpockets.com slash Texas. You can get all the information and tickets there. There are two kinds of real estate investors,

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That's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal.

Cost segregation guys is the go-to-firm. having done over 12,000 of these studies with 500 million in total depreciation identified. Head to Costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Welcome back to the Bigger Pockets podcast. I'm Dave Meyer talking about the state of real estate investing here in 26. And as you know, since you've been listening, I am optimistic about it. I've shared with you my outlook for the market, which is the great stall, and my framework for investing in the Great Stall, which is to plan for it, to have modest short-term expectations,

but high long-term expectations, to underwrite conservatively and to focus on upsides. Now, within that framework, there are a lot of tactics that could work, and I want to talk about which ones I think are going to work the best. These are in no particular order, but I'm just going to give you some tactics that I think you should consider in 2026. Number one is value add investing is going to continue to be important. Value add, which some people call sweat equity, some people called it forced appreciation, but it's basically just the idea of buying something that is below its highest and best use.

It's not optimized and optimizing it yourself. And usually, if you're doing it right, you can optimize it in a way that you are building more equity than it costs you to make that optimization, right? This is the entire idea of flipping. You buy a house that needs work, you renovate it, and you drive up the equity by more than what it costs. And I just think generally speaking, value ad investing is going to be important during this year. Now, this can take different forms. This can be in the form of burr.

This could be for flipping. We'll talk about that a little bit because there are risks in flipping. But I think the burr is going to be really good strategy here in 2026. But it's also true for existing portfolios, too. Like if you have properties that you own and you want to optimize them, value add is still a great way to drive up equity and increase your rents for rental property investors. Value add works, I think, in almost any market conditions. But one thing that happens in a correction in a great stall is that properties that aren't up to their higher and best use, those prices tend to fall. But the properties that are really good, that are really nice, tend to maintain their value better.

And that creates a bigger spread, right? Bigger spread between what you can buy properties for and what you can sell them for or rent them out for. That's a great tactic for 2026. I think it fits well into my framework. A second strategy that works is some of these cash flow accelerants. Now, cash flow has been hard to come by. I think it's going to get better for long-term rentals, but that's going to come slowly. There are some ways that you can sort of supercharge that from co-living and midterm rentals.

I think these are interesting ideas right now. The midterm rental market is a little saturated in some places, but there are definitely still markets where this can work. And if you want to be a little bit more active in managing your portfolio, midterm rentals can work. The other one is either co-living or rent by the room. They're the same kind of thing. But basically, you take a single family home, for example, has four or five bedrooms.

And rather than leasing it to one tenant, you lease it to four tenants. They each rent their own bedroom. and this is a way that you can generate more cash, more rental income for your properties and boost your cash flow. This just definitely works. It doesn't work in every market. You have to find markets where there is demand for this kind of housing, usually big, more expensive markets. You have to be willing to take on a little bit of a management premium. It's going to be a little bit harder to manage these kinds of properties.

But if you want to boost your cash flow, this could definitely work in 2026. Another tactic I really like is looking for zoning upside. You've heard me talk about this before, but I think DADUs, adding ADUs are a great way to go. Here in Seattle, there's a lot of split-level homes. You can take split-levels and section them off into two different units. That's a great way to add value to boost your cash flow. Or a lot of cities are completely rewriting their zoning code to allow for more density in their cities. And these are great upsides.

If you can buy a property that is cash flowing in day one but has the potential next year, even five years, 10 years down the road to add another building, to add more units onto it, that's a great way to take a good deal today and turn it into a home run in the long run. I love that. I mentioned this earlier, but I personally still think burs are great. I think this is just 101 real estate investing. Buy a rental property, fix it up, rent it out, and then refinance it. You know this. If you listen, I love the idea of a slowber. I do not have the expectation that I'm

going to be able to refinance 100% of my capital out of these deals. I'm not even in a hurry to do it. I buy deals where there are tenants in place. And I let them live there as long as they want. And when they leave, I will renovate it and bring market rents up to market rate. I might do some structural rehab to make it a better quality property for tenants who want to stay a long time. but it might take me a year or two years to fully stabilize this property, but it takes so much risk off the table. I can buy these properties using conventional financing. That is such a big advantage. If you do a burr, there's no tenants in place. It's really structurally unsound. It needs a lot of work. You might need to get hard money for that. That's a 12% 13% interest rate.

You're going to need to pay two points up front. You're paying a lot of money in holding costs. When I buy one of these burrs, I'm getting a conventional mortgage on it. I'm paying six and a half percent. That saves me so much money. It allows me to get cash flow and allows me to take my time because I'm making cash flow. I'm amortizing. I'm getting tax benefits. I'm getting all of that in the meantime while I'm opportunistic about when I do my burr.

So if I had to pick one strategy for 2026, that would be it, the slow burr. So just as a mindset, value add, burs, midterm rental. co-living, I like all of these tactics. Other tactics can still work, but I do want to be honest that there is a little bit more risk here. Short-term rentals, people still do it. People are still successful with them. But the short-term rental industry is struggling right now. I think we've all seen this. There is a lot of supply on the market right now. It is pushing down occupancy, it is pushing down average daily rents. I have a short-term rental. I'll tell you that in 2025, it did not perform as well as it did in 2024. And I,

expect that to continue. You also see markets that are saturated in short-term rentals seeing the steepest corrections. Now, if you are a long-term investor, that could mean an opportunity. But you have to be careful. So I just, I think short-term rentals can work, but I would really stick to those principles that I said before about underwriting very conservatively. If I were buying a short-term rental right now, I wouldn't even count on my occupancy rate being the same from 2025 to 2026, I would assume a decrease in occupancy rate. I would assume a decrease in average daily rents just to be safe. This is an industry that has risk in it. Doesn't mean there's not opportunity. Those things go together. Risk and reward go together. But I would be very careful about short-term

rentals. The second thing is commercial real estate. We've seen crashes here. Prices are good in commercial real estate, right? But there is still risk. We don't know where the bottom is coming in commercial. And unlike the housing market, which I think has a solid floor, like I don't, I'd be surprised if we saw national home prices go down more than three or four percent next year. I'd be surprised. But commercial just has more to fall. There's more upside here too, because it could rebound. So I'm actually personally kind of excited about commercial real estate. I'm going to be looking at bigger multifamilies in the next year. But I am going to be very careful about it. And I recommend people do that as well because there are some really bad deals

out there. There are really overpriced commercial real estate properties right now, but I think there will be more and more good deals. So this is something you can consider, but with caution, right? Same thing for the last strategy here, which is flipping. I flipped two houses last year. I actually knew it was going to be a rough market and I did it anyway because I wanted to learn how to do it. Managed to make some money off of those. So I'm happy about that. But the market is weird right now. People's buying demand is up and down every single week. And it's hard in flipping because you need to be able to sell into a correcting market. And even though I've been optimistic this year, the reason I like 2026 and say it's getting easier is because

it's getting easier to buy. It is not getting easier to sell. It is getting harder to sell. And so that is a consideration that you need to think about if you're flipping a home. You need to be able to take advantage of what the market's giving you and buy lower than you have in the last couple of years because when you go to sell it, it could take longer. You might not get the ARV that you were expecting. And so flipping still works, but do it cautiously. And again, be really picky about those things. So those are the tactics that I think will work. Some that I think are going to be a little bit riskier. But I also wanted to add just a couple other things here too that don't fall under the traditional buckets of strategy that we talk about.

And that's just kind of mindset. I really encourage people. What's going to work right now is a long-term mindset. Thinking about buying assets that you want to hold on to for a long time is great. I've sold some assets in the last year that they weren't performing badly, but I'm thinking, hey, how do I stock up on the stuff that I want to own in 2040, right? Like, that's kind of the mindset I'm thinking about right now. When I do a burr, when I buy a rental property, when I consider commercial properties,

that's the mindset that I'm taking, and I've said before, I only buy cash-flowing properties. I'm not going to buy something that doesn't cash flow after stabilization, not saying that you should go out and speculate, but I am saying look at deals and look at their long-term potential more than thinking about whether they're going to maximize your cash-on-cash return in the next year. Another mindset thing, like I said, buying under-market comps. I think that's a tactic that's going to be super important right now. and then fixed rate debt. I love fixed rate debt.

I know some people will be tempted right now to get adjustable rate mortgages because it comes with a slightly lower mortgage rate. But I'll just be honest, I think it's a toss up. If you look five to 10 years from now, it's a toss up if mortgage rates are going to be higher or lower. I know people think it's going to be lower because that's, but that's a recency bias. I just want to call that out. Mortgage rates have been much higher in the past.

And if you look at our national debt and some trends that are going on, I think there's a very good chance that mortgage rates are higher. in a couple of years. And that's okay if you plan for it now. Like I said, just a minute ago, my whole approach is long term. What do I want to own 10 years from now, 15 years from now? And the last thing I want is to own a great asset that I want to hold on to. And then when I get my arm comes up and my rate adjust in seven years, all of a sudden I can't afford to hold on to that. I don't like it. I want to buy with fixed rate debt because that way I know I can hold on to it for 10 years. I have no concerns that I'm going to be able to hold on to this 10, 15, 20

years from now. That's what I want to be focused on. So that's just another thing I want to caution because people talk a lot about what assets they're buying. The financing is really important. And I have done interest-only loans. I have done adjustable rate mortgages in certain circumstances. But I think for most people, if you're buying a rental property that you want to hold on to, heavily consider fixed rate debt. 30-year fixed rate is a great loan product, and it is what I recommend to most people most of the time. So those are generally the tactics that I think are going to work.

I've kind of tell you, but I'll just reiterate what my plan is. I don't really have any big reveals year. I'm going to do what I've been doing in the upside era so far. I'm planning for the great stall. I have low short-term expectations, but I am still buying only things that cash flow after stabilization. I don't have to have day one cash flow.

But after I renovate them, they need to have solid cash flow. And I'm going to be very picky about looking for those deals. And I target three to four upsides in every single deal. That's the playbook. That's what's been working for me. And I think it's going to keep working. I'm not a super high volume buyer at this stage of my career. I have a solid portfolio.

It's been working for me. But I look to keep buying. I'm probably going to buy maybe two to four new properties this year, ideally small multifamily properties. That's kind of my goal. I might buy a bigger property. You know, I've been looking at some eight units, some 16 unit kind of things. I would consider those as well.

And I'm mostly going to look at slow bursts. Might not be sexy to everyone, but to me, that's what works. I like sticking with what works. I don't need to take on any additional risk. I just think that's a low risk, high upside way to invest. And that's what I'm going to be pursuing. I may also flip another property or two. I did too in Seattle last year.

That went pretty well. I allocate some of my portfolio money each year into what I would call risk capital. And I may choose to put that into flips this year. But I don't need to do them. If I don't find any deals, I'm not going to be thirsty. I'm not going to stretch for these deals. I'm going to keep playing my long game for sure. But if a screaming deal comes my way, I'm going to take it.

So that's the state of real estate investing in 2026. Things are going to get a little bit easy. The market won't be sexy. Mainstream people might not see these opportunities, but there will be opportunities. Deals are going to be easier to find. Cash flow prospects are slowly improving. Negotiating leverage is back.

You can afford to be patient and it is vital that you are because there is some short-term risk. There are things that you have to mitigate, but you absolutely can if you follow the framework I've put forth in today's episode and just keep remembering, the long-term outlook remains strong.

There is no such thing as a perfect market. Every market has trade us. It is your job to figure out what the market is offering you. And I hope this episode gets you off to a great start to 2026, but rest assured, we are going to keep you updated on what tactics are working, how to mitigate risk, and how to pursue financial freedom in a solid, predictable, but exciting way each and every week here on Bigger Pockets for the rest of 2026. Thank you guys so much for being here for our first show of 2026.

Remember to tune in on Wednesday. We have a fun and exciting announcement for the Bigger Pockets podcast community. I'm Dave Meyer. We'll see you next time. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand new construction homes,

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