BiggerPockets Daily

Mortgage rates recently rose above 7% for the first time this year, bringing an already glacial housing market to a standstill. The news has hit investors like a horror movie jump scare after we’d thought the worst was behind us. A robust economy is partly to blame. During the pandemic, when U.S. citizens feared rationing and mass unemployment, predicting our current economy would have been almost unthinkable. Learn more about your ad choices. Visit megaphone.fm/adchoices

In our first sotry today, California ADU laws have been softening for several years in an effort to increase housing space and availability. ADUs are often used as rentals, which can help alleviate some of the pressure on rental supply. However, what it doesn’t do, is increase general housing supply, as ADUs are considered a part of the primary residence, where only one person can own it. However, Assembly Bill 1033 was passed in California last October that changes everything, and presents investors a huge opportunity. Our 2nd story highlights that rents were on the rise during the peak pandemic years, only to come back to normal growth trajectories over these last couple of years, with a few pockets of decreases and increases depending on the market. Spoiler alert: The same is going to continue, but at least we are confident enough to say it’s guaranteed. At least according to Barry Sternlicht, CEO of Starwood Capital, who said that with widening supply gaps and a lack of construction, we’re guaranteed to see rents continue to grow for the next two years Learn more about your ad choices. Visit megaphone.fm/adchoices

As a rental property owner, there’s no better feeling than a tenant signing a lease. This puts you on track to generate a positive return on investment (ROI). Unfortunately, things don’t always work out as planned. For example, a tenant not paying rent can turn your profit upside down. Should you find yourself in this situation, there are several key steps you must take. Learn more about your ad choices. Visit megaphone.fm/adchoices

Pittsburgh has the hottest housing market in the country. Who knew? According to Redfin, Pittsburgh housing prices were up a mighty 22% from February 2023 to February 2024, making it the city with the fastest-growing house prices in the country. Formerly the heart of the Rust Belt, the city has recently reinvented itself as a tech town, welcoming major players like Google, Facebook, Amazon, Uber, Apple, and Microsoft. It’s not by luck. The city’s Carnegie Mellon University boasts one of the country’s most coveted computer science degrees, which turn out some of Silicon Valley’s top tech talent. Learn more about your ad choices. Visit megaphone.fm/adchoices

When discussing rental properties, it’s common for people to refer to multifamily residences. How many times have you heard someone say something like, “I have 20 units under management,” most of which are probably spread across just a few buildings? This investment approach is logical from an economic standpoint. Having four units under one roof versus just one, four rents instead of one—you get the point. Learn more about your ad choices. Visit megaphone.fm/adchoices

During much of the year, this short-term, two-bedroom rental in Indio, California, a lovely, quiet, desert town about 35 minutes past Palm Springs, hovers around $172 a night. That is, until mid-April every year when thousands of revelers descend on the world-famous Coachella music festival, the listing says it is a 17-minute walk away. During those weeks, this very same rental commands $808 a night. That’s more than a 369% increase, and it’s the same for every rental in the area, in every price range—for example, $410 goes to $756; $2,300 goes to $6,386, etc. Learn more about your ad choices. Visit megaphone.fm/adchoices

Simply investing in any metro Sunbelt market is not a recipe for success. To catch a cresting wave of appreciation and cash flow, you’ll need to dive deep into the metrics to examine where people are moving to, how property and rental prices are increasing, and what the unemployment rate is like. The good news is that we’ve done it all for you! So stop throwing darts at the map, examine our findings, and pick markets like the savvy, switched-on investor you are. Learn more about your ad choices. Visit megaphone.fm/adchoices

With home prices and interest rates still at record highs and inventory squeezed, homebuyers and real estate investors may be better off purchasing a fixer-upper in some cities. At least that’s according to a report from StorageCafe, which found that fixer-uppers cost an average of 29% less than homes that are ready to move in. And in 20 of the largest 50 cities, they can cost 50% less than a regular home. Learn more about your ad choices. Visit megaphone.fm/adchoices

You can’t eliminate all risk from investments. After all, the zombie apocalypse could strike tomorrow and probably wipe out your entire portfolio. But you can reduce risk, even among high-return investments. In fact, these are precisely the investments you want to minimize risk for—your Treasury bonds don’t need it. I love real estate syndications as high-return investments. They’re completely passive: You don’t have to worry about financing or contractors, permits or inspectors, tenants or property managers. You don’t have to become a landlord, yet you still get all the benefits of real estate ownership, including cash flow, appreciation, and tax advantages. Learn more about your ad choices. Visit megaphone.fm/adchoices

The pandemic swept through the U.S. housing market like a tsunami. Radical price hikes and all-time low inventory accompanied massive migration away from pricey big cities. Four years later, the housing market still hasn’t fully recovered. If you plan to invest in real estate or scale your existing portfolio in 2024, it’s worth keeping these six things in mind for a clearer perspective on today’s market movement. Learn more about your ad choices. Visit megaphone.fm/adchoices

Effective rental property management is essential to your long-term success. Without a defined strategy, there’s a greater chance of making mistakes that cost you time and money. Here’s a property management checklist that tells you two things: 1. What needs to be done 2. When it needs to be done Learn more about your ad choices. Visit megaphone.fm/adchoices

Depending on the college, students nationwide looking to live at school have recently found themselves staying in luxury hotels, trailers, on friends’ couches, or Zooming in to class from their parents’ homes. That’s because available student housing is becoming as rare as a full-ride acceptance letter from an Ivy League university. The shortage has created a massive opportunity for private developers and landlords, who know that housing doesn’t have to be paid for out of pocket but can be borrowed, along with student loans that cover tuition and food. Learn more about your ad choices. Visit megaphone.fm/adchoices

I don’t invest in Bitcoin because I am betting on the continuation of Western civilization, not its collapse or decline. If I did believe my government would collapse, I’d invest in guns, ammo, and canned corn. And if I believed that Bitcoin could peacefully replace my country’s currency, I’d still rather own real estate, businesses, stocks, or other alternative assets than a currency like Bitcoin. At $1.3 trillion in market capitalization as of April 2024 and a price of $65,000 per Bitcoin, enthusiasts of the cryptocurrency, who I will refer to going forward as “Bitcoin Maximalists,” may think that they have another conclusive proof point validating their thesis. Learn more about your ad choices. Visit megaphone.fm/adchoices

I don’t invest in Bitcoin because I am betting on the continuation of Western civilization, not its collapse or decline. If I did believe my government would collapse, I’d invest in guns, ammo, and canned corn. And if I believed that Bitcoin could peacefully replace my country’s currency, I’d still rather own real estate, businesses, stocks, or other alternative assets than a currency like Bitcoin. At $1.3 trillion in market capitalization as of April 2024 and a price of $65,000 per Bitcoin, enthusiasts of the cryptocurrency, who I will refer to going forward as “Bitcoin Maximalists,” may think that they have another conclusive proof point validating their thesis. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you haven’t heard, Henry Washington and I are doing something special in honor of the 200th episode of On the Market. We are competing in a Flip/Off, battling against each other to see who can score the highest return. We described our deals on the podcast and what we hoped to achieve, but I want to keep everyone up to speed on how my flip is progressing. So, every week, I’ll update this diary so you can see how my property transforms into the high-cash-flow deal I know it will become. Learn more about your ad choices. Visit megaphone.fm/adchoices

This year’s hurricane season is expected to be one of the busiest on record, with a potential for 25 named storms. How much risk is your property at? Meanwhile, home prices fell in 7% of markets, but some stand out as cities that, on paper, shouldn’t be showing declines. Is this indicative of a larger trend? Or is it just an outlier? https://www.biggerpockets.com/blog/14-cities-facing-highest-property-damage-risk-during-hurricane-season https://www.biggerpockets.com/blog/crash-or-correction-home-prices-are-falling-in-these-cities Learn more about your ad choices. Visit megaphone.fm/adchoices

With median house prices in the U.S. inching towards half a million dollars and mortgage rates back over 7%, homebuyers and investors alike are getting choked out of the market. Although there are several cities in the Midwest and South where you can still buy homes for $100,000, they tend to be the exception rather than the norm. Despite the shortage of houses, according to Realtor.com, there are several markets where you can buy a quality home in a good neighborhood for under $300,000. Learn more about your ad choices. Visit megaphone.fm/adchoices

A record 300,000 migrants entered the U.S. through the southern border in December. Rather than trying to sneak past border agents, many surrendered to apply for asylum. Overwhelmed immigration courts take years to process these claims, and migrants are protected from deportation in the meantime. They hope to stay, work, and build a life here. But achieving legal status in the U.S. is a complicated process. Meanwhile, some Americans are fearful of the impact of increased immigration rates on U.S. citizens and communities, which has led politicians to consider immigration policy reforms. Learn more about your ad choices. Visit megaphone.fm/adchoices

Taxes and regulations impact your bottom line as an investor—and not always in direct or obvious ways. Unfortunately, as soon as you start talking about either one, the average person closes their mind, circling the wagons around their existing worldview and only hearing data points that support it. Look no further than this Yale study, which shows that people perform worse on math problems if the correct answers conflict with their political ideology. I’ll get it out of the way now: I find both major political parties reprehensible and hypocritical. I’ve voted for each roughly equally over my life. Learn more about your ad choices. Visit megaphone.fm/adchoices

Before you find and hire a property manager, there’s something you need to know: Not all property management companies structure their costs the same way. Knowing how much property managers generally charge—including their fee structure—allows you to determine if it’s the right fit for you. Learn more about your ad choices. Visit megaphone.fm/adchoices

A Wave of Zoning Law Changes Could Have Huge Impacts for Investors and Housing—Here’s What You Need to Know The U.S. is facing a housing deficit of about 3.2 million units, and the situation is especially dire in urban areas like New York. It’s one of the reasons prospective homebuyers are finding it increasingly difficult to find affordable homes. That’s led many cities and communities to consider changes to strict single-family zoning restrictions, which are correlated with high home prices, surging rents, and fewer housing starts. Many see the reversal of pervasive restrictions on multifamily construction across cities as a solution to the affordable housing crisis. Learn more about your ad choices. Visit megaphone.fm/adchoices

Are you sitting on the sidelines in this market? Many investors are. There’s a lot of fear and caution. But we’re not. And you don’t need to be, either. Of course, I recommend staying in cash if you can’t find the right investment opportunity. But we are finding them on behalf of our investors, and they’re the beneficiaries. I’ll tell you about one here. Learn more about your ad choices. Visit megaphone.fm/adchoices

For real estate investors, the question of cash flow versus appreciation is as old as time. However, in an era of high interest rates, buying properties for cash flow isn’t easy. That doesn’t mean investing should be off the table, as there are many advantages of owning rentals other than immediate cash flow—appreciation and tax advantages being the most obvious. Whether to keep buying or stay on the sidelines comes down to some specific decisions. Let’s dig deeper. Learn more about your ad choices. Visit megaphone.fm/adchoices

In a recent episode of the BiggerPockets Real Estate Podcast, I had the privilege of chatting with Mindy Jensen about my journey to financial independence. One burning question arose: How did I manage to lower my expenses without sacrificing quality of life? Well, fellow FIRE enthusiasts, let me share six of my key insights into how I transformed my financial landscape by embracing strategic hacks that allowed me to live life to the fullest (no cutting out lattes here!) without breaking the bank. Learn more about your ad choices. Visit megaphone.fm/adchoices

We are less than a month away from listing our Brooklyn, New York condo, which we bought for $375,000 back in 2004, the same week we got married. 20 years, two kids, and one chocolate lab later, we are selling the condo for something close to $1 million and then flipping the profits into a new investment via a 1031 exchange. (New here? Catch up on the last few monthly missives!) As a reminder, we haven’t made much cash on this property over the past 20 years. The growth has been all equity—and now’s the time to cash in! Learn more about your ad choices. Visit megaphone.fm/adchoices

Why does mindset matter most? The answer is quite simple, yet surprisingly hard to believe: Mindset matters most because having the right one allows you to have the proper focus, work ethic, and decision-making skills to grow your company and your business. What Is Mindset, and How Does It Allow Me to Do All That? Mindset = mind + set. Mind = The element of a person that enables them to be aware of the world and their experiences, to think, and to feel; the faculty of consciousness and thought. Learn more about your ad choices. Visit megaphone.fm/adchoices

Commercial real estate is in for a terrible 2025 as high interest rates and high vacancies force big-time landlords to cut their losses at 50-80% discounts. Meanwhile, South Carolina passed a new law that effectively puts an end to wholesaling as a practice in the state. https://www.biggerpockets.com/blog/high-interest-rates-are-forcing-big-time-investors-to-sell https://www.biggerpockets.com/blog/new-south-carolina-law-would-severely-crack-down-on-wholesaling Learn more about your ad choices. Visit megaphone.fm/adchoices

There’s a critical lack of affordable housing. This housing shortage began following the 2008 financial crisis and worsened during the pandemic, and now, not enough homes have been built to meet current demand. Inventory is slowly rising in Q2, which is helpful, but more inventory alone doesn’t solve the problem. The government has plans to help create more affordable housing inventory and keep large-scale investors from taking homes away from middle-income Americans. The White House released a budget in March that included plans to support Biden’s Housing Supply Action Plan. Items like significant tax credits for first-time homebuyers and for homeowners who sell their starter homes were created to directly reward and incentivize consumers to move. Learn more about your ad choices. Visit megaphone.fm/adchoices

. What were you doing on the morning of Jan. 17, 2020? While the world was learning about a strange new virus approaching our shores, my business partner, Ben, and I were visiting Louisville, Kentucky. We were meeting our largest operating partner, Mike (not his real name), to walk through a mobile home park his firm was acquiring. Our fund would be the largest investor. This park looked like many we had invested in, but larger. There were 315 lots, but about 50 were vacant. We saw a typical range of cars—from junkers to Jaguars. People walked their dogs, kids boarded buses, and a maintenance man shuffled around with his coffe Learn more about your ad choices. Visit megaphone.fm/adchoices

A mayor in handcuffs, a bankrupt city mired in poverty, unemployment, and soaring crime: 10 years ago that was Detroit’s legacy. Today, it is a real estate success story. Early investors—to quote one of Motown’s most famous songs—are dancing in the street. Developers are pouring billions of dollars into its business district, luring the likes of Ford, Quicken Loans, Blue Cross Blue Shield, and more to take up office space. There’s even a Gucci store—the city’s first. The spillover has resulted in booming residential home prices—up 40% since 2020—and revitalized neighborhoo Learn more about your ad choices. Visit megaphone.fm/adchoices

Gearing up for your first rehab? Whether it’s a flip or BRRRR, I’ve got earth-shattering news for you that will change everything you thought you knew about value-adds in real estate: If you’re trying to build equity for leverage or to cash out and want to get the best bang for your buck, forget the roof, new furnace, kitchens, or bathrooms. You need to take it outside and spend some real money on landscaping. But everyone knows kitchens and bathrooms are where the big money is made, right? Don’t get me wrong—you should update kitchens and bathrooms, but we are talking return on investment (ROI) here. Kitchens and bathrooms are high-expense, high-return areas. Landscaping is a low-expense, high-return prospect. You’ll get a better return on landscaping than you will any other rehab expense. Learn more about your ad choices. Visit megaphone.fm/adchoices

The real estate market is ever-evolving, and there has been a growing trend toward ground-up construction. With existing home inventory remaining at historic lows and no improvement in sight, new construction will be one of the solutions to the current housing crisis—and savvy investors will reap the rewards, with an average of 10% to 20% gross profit on projects done right. For builders, a successful project is one completed on time and within budget. But that is no easy feat these days. According to the Construction Management Association of America, 98% of construction projects go over budget. To put it another way, that’s 9 out of 10 projects, according to the International Journal of Innovation, Management and Technology. Learn more about your ad choices. Visit megaphone.fm/adchoices

Juggling 0% interest business credit cards is like juggling torches in a hay-covered barn. Drop one, and the whole place goes up in flames. However, if you are disciplined and know what you’re doing, they could be a great asset in helping you kick-start your real estate investing career. Getting a 0% Business Credit Card There’s lots of information online regarding 0% APR business credit cards. Most offer 0% interest for 12-18 months. This makes them well-suited for real estate projects that can be refinanced or sold, allowing you to pay back the cards before interest starts to kick in. These cards are relatively easy to get, provided you have good credit and a business entity. Learn more about your ad choices. Visit megaphone.fm/adchoices

What’s easier to find, a unicorn or a rock star contractor? If you asked most value-add real estate investors, the answer would be obvious: “Unicorns, of course.” We all know the inherent value contractors bring to any real estate investment. A great contractor can help you reduce costs on renovations, save money on holding costs with quick turnarounds, and manage the project with limited guidance. The end result, of course, is a beautifully renovated property that gets finished on time and brings in a big payday. Learn more about your ad choices. Visit megaphone.fm/adchoices

As real estate investors, your emergency funds are a critical line of defense against unexpected costs. It prevents you from dipping into your budget to handle them. But what should you really use an emergency fund for? And how much money should you keep in your safety net? Here’s everything you need to know. Learn more about your ad choices. Visit megaphone.fm/adchoices

From the moment we take our first steps, we’re handed a blueprint for the American dream. Grow up. Get educated. Land a job. Buy a car. Tie the knot. Purchase a house. Raise a family. Clock in for 40 years while diligently stashing away funds in a 401(k). It’s the classic tale of success, promising a life of stability, security, and financial freedom. But what if I told you that beneath this facade of prosperity lies a lurking threat to your wealth journey? Learn more about your ad choices. Visit megaphone.fm/adchoices

If you read traditional financial independence/retire early (FIRE) bloggers, many of them reached their goals by simply pairing a high savings rate with a standard portfolio of stocks and bonds. There’s nothing wrong with that. It works, and anyone can replicate it. But my wife and I follow a different path to FIRE. You do need a stable financial floor—but that’s just the beginning. Learn more about your ad choices. Visit megaphone.fm/adchoices

If you dream of becoming a real estate investor but work at Walmart, you could well be on your way to realizing your dream much sooner than you think. This comes with one important caveat: You’d need to manage a Walmart store to enjoy the financial benefits that could set you up with the cash needed to invest. Walmart U.S. announced last week that it would be giving its store managers stock grants in the company. The announcement comes after Walmart also made the decision to raise managers’ salaries and introduce a new bonus structure that will allow store managers to earn up to 200% of their salary in annual bonuses. Learn more about your ad choices. Visit megaphone.fm/adchoices

When evaluating deals in the competitive world of house flipping, as showcased in my current project, featured in my Flip/Off battle with James Dainard (you can also read about his weekly progress), I consider several key factors to ensure both a strategic purchase and a profitable sale. These components are crucial to the success of the flip and are designed to resonate with a broad range of potential buyers, especially those entering the market for the first time. But before I share my recipe for success, let me give you some background on my project. Learn more about your ad choices. Visit megaphone.fm/adchoices

Breaking news: Direct mail is still a key factor in real estate marketing, and it has the potential to be bigger and better than ever before. That’s because the analog marketing technique is being supercharged by digital tools. The days of the one-size-fits-all approach are gone. We all remember those days: stacks and stacks of the same advertising leaflets delivered to hundreds of local mailboxes, only to be discarded by uninterested (and often annoyed) residents. The cost of printing was, in many cases, unjustifiable, given the lackluster performance of this marketing method. Learn more about your ad choices. Visit megaphone.fm/adchoices

The notion that investing in multifamily is always better than investing in single-family is false. The goal of real estate investing isn’t to own a particular type of property but to secure a reliable income. The reliability of this income doesn’t depend on the property type but on the tenant who occupies the property. To show you what I mean, I will compare the financial performance of a typical fourplex in Las Vegas to the kinds of properties we’ve targeted over 16 years. Learn more about your ad choices. Visit megaphone.fm/adchoices

In his recent article, BiggerPockets CEO Scott Trench did a great job enumerating all the reasons why multifamily is in the difficult position it’s in. If he had written these same things a year ago, I wouldn’t be writing this rebuttal—I would have simply said, “Ditto.” But I don’t believe that the picture he has painted is an accurate reflection of where things are headed. Here’s why. Learn more about your ad choices. Visit megaphone.fm/adchoices

Most investment strategies touted by gurus involve first buying a course to learn their strategy to get rich in real estate. While subject-to deals, wholesaling, syndicating, BRRRRing, Airbnb arbitrage, and fix and flipping, when done correctly, have undoubtedly been ways to make money, they all involve an element of risk or hard work to find deals. There’s another way. This blueprint is for the risk-averse, those working full-time, interested in the tried-and-true investing methods, and satisfied with growing their portfolio and wealth over time. Learn more about your ad choices. Visit megaphone.fm/adchoices

If, like me, you check mortgage interest rates like an expectant parent checks their wife’s contractions, you doubtless will have analyzed every type of loan product in an attempt to inch the currently high rates down. Famed financial guru Suze Orman recently appeared on CNN extolling the virtues of an adjustable rate mortgage (ARM). But to many American homebuyers, mentioning an ARM is like the Ghost of Christmas Past returning to haunt us once more: Weren’t ARMs partly to blame for the 2008 financial crash? ARMs were derided in 2008 because many Americans got into financial trouble. Once their interest rates adjusted upward after three, five, or seven years, borrowers could not refinance down to a lower rate and fell into foreclosure. So why is Orman—whose monetary advice tends to be conservative—suggesting we go ice skating on a financial frozen lake? Learn more about your ad choices. Visit megaphone.fm/adchoices

There is no right or wrong way to invest in real estate. All that matters is that you’re comfortable with your strategy and positioned to generate a positive return on investment (ROI). However, it never hurts to compare all your options—and that means taking a closer look at short-term vs. long-term real estate investing. Learn more about your ad choices. Visit megaphone.fm/adchoices

When you’re talking to real estate investors, they’ll often tell you how many doors they own, meaning how many rental units they have in their portfolio. Stating door numbers, however, can often be misleading. Generally, the real metric to keep track of is cash flow because, after all, profitability is what counts in any business, right? Sometimes, though, the two can get conflated, and on occasion, owning just a few doors, irrespective of cash flow, can be a good strategy for building long-term wealth. Learn more about your ad choices. Visit megaphone.fm/adchoices

Get ready for the ultimate real estate adventure as the BiggerPockets Conference (BPCON) 2024 heads to the tropical paradise of Cancun, Mexico, Oct. 6-8. International travel is always exciting, but knowing it can also be tax-deductible really takes things up a notch. Traveling outside the United States for business can be a little tricky when it comes to taxes, but don’t worry—we’re here to guide you through everything you need to know. Learn more about your ad choices. Visit megaphone.fm/adchoices

The biggest hindrance to building a real estate portfolio that allows you to leave your job and become financially free is getting past the hurdle of covering your living expenses. Decreasing your costs by living overseas could be the most logical way to build a real estate portfolio in the U.S. quickly. Why the Cost of Living in the U.S. Makes Saving So Difficult According to the Bureau of Labor Statistics’ Consumer Expenditure Survey, the average household earned $94,003 in 2022 before taxes and spent $72,967 (just over $6,000/month) on total expenses. Of that number, $24,298 accounted for accommodation, which amounted to around $2,000/month on rent or a mortgage. Learn more about your ad choices. Visit megaphone.fm/adchoices

My first investment property was a C/D-class multifamily in Houston. I selected it primarily based on perceived cash flow. According to my calculations, the return on investment (ROI) was between 12% and 14%. And with a multifamily, even if one unit is vacant, I still have cash coming in. How could I lose? And then I got hit in the face (wallet) with reality: It was an older building, and maintenance was continual and expensive. Plus, the tenants and others almost continuously vandalized the property. Rent delinquencies and evictions were frequent, and the process was lengthy and expensive. And I was left with a damaged property that needed hundreds or thousands in repairs before it could be rented again. I ended up losing thousands of dollars each year despite doing almost all repairs and maintenance myself. This was completely different from the calculated 12% to 14% ROI. Learn more about your ad choices. Visit megaphone.fm/adchoices

Owner financing offers buyers and sellers more opportunities with real estate transactions. Before entering this type of transaction, it’s important to know what owner financing is, how it works, who benefits, and who pays property taxes on owner financing. Learn more about your ad choices. Visit megaphone.fm/adchoices