3 Things We’re Doing in 2026 to (Actually) Retire with Rentals

Dave:
2026 is lastly right here. I hope you all had nice vacation and New 12 months’s. With the New 12 months upon us, this can be a nice time to begin trying ahead into 2026, discuss our targets and our New 12 months’s resolutions. I’m Dave Meyer, joined by Kathy Fettke and Henry Washington at this time. And we’re going to be laying out what we need to be extra disciplined about this 12 months, the methods we expect are going to repay greatest for us, and the targets we need to have checked off by 2027. From how we purchase and handle offers to how we take into consideration danger and alternative, we’re placing our plans on the document. That is On The Market. Let’s bounce in. Kathy, Henry, how are you? Glad New 12 months. Glad New 12 months to you.

Henry:
Glad New 12 months.

Dave:
I’m not going to lie and fake that we’re recording this within the new 12 months. It’s probably not the New 12 months, however proactively to everybody. We’re recording this in December, however comfortable New 12 months to all of you. Kathy, you might have some nice vacation plans. Inform everybody what you’re as much as. You’re all the time someplace enjoyable.

Kathy:
Effectively, sure, I’m in Paris recording this from a cave.

Dave:
You actually appear to be you’re in a medieval vast vendor proper

Kathy:
Now. I’m fairly certain I’m. I’m within the oldest a part of Paris, however I’m right here for the Christmas markets and primarily as a result of my daughter is getting married in France. So I needed to come see the venue together with her. Needed to. After which it’s also-

Dave:
Wow, you needed to.

Kathy:
I needed to, and it’s the final 12 months of the Northern Lights being actually intense. So we’re going to take somewhat journey as much as the North Pole, to the North of Norway.

Dave:
Oh, that’s so nice. Wow. What a enjoyable journey. Henry, what have been you as much as within the holidays?

Henry:
Meals.

Dave:
Sufficient set,

Henry:
Actually. Completely. I imply, I’ve little children, so I do get to benefit from the pleasure of Christmas nonetheless, in order that’s enjoyable, however principally I’m consuming my approach by way of the vacations.

Dave:
Yeah, good for you. All proper. Effectively, let’s bounce into at this time’s episode as a result of I actually need to simply begin trying ahead. Final 12 months was a fascinating … I wouldn’t name it an excellent 12 months. I used to be going to say it’s an excellent 12 months. I’d not have referred to as 2025 an excellent 12 months. That may’ve been a straight up lie. I’m feeling optimistic going into 2026 and nearly actual property on the whole. So let’s discuss this when it comes to what our New 12 months’s resolutions are. We’ll begin with actual property, however if you wish to throw a non-real property one in, I’d love to listen to them. However Kathy, what’s your actual property New 12 months’s decision?

Kathy:
Effectively, I’ve a couple of, however one is to essentially dive into AI as a result of Wealthy really purchased a extremely costly program and he’s completed it and I’ve not. I’m not even shut. However I do know it’s so highly effective. I imply, one of many issues that Wealthy did is he uploaded all the pieces, our financial institution statements, the money stream. Our system is aware of all the pieces about us. And after we add it, we may know which properties are performing effectively, which aren’t. I imply, we ought to be realizing that anyway, however I really feel like generally it’s simple to get lazy otherwise you’ve simply owned properties for some time and haven’t actually taken a glance. Is that this nonetheless an excellent performer? So utilizing AI to optimize our portfolio is my purpose for actual property.

Dave:
I like that loads. I like this as a purpose. It’s not like, oh, I’ve to purchase this property by this information. That is extra like a progress mindset sort of purpose. How do you simply evolve as an investor typically so as to make higher selections going ahead? Is that program, is that actual property particular?

Kathy:
No, no. It was only a bunch of enterprise homeowners. However I imply, it’s like he’s acquired a enterprise advisor now. All of our enterprise financials are in there and we had each worker element what they do, not in a canine sort of approach, however I suppose sort of like what do you do all day? And so AI is aware of every worker and is aware of how one can optimize for them. It’s actually been phenomenal. Wow. And we had probably the greatest months ever for our firm final month. I don’t know if it has to do with that or not, however that’s unusual, proper? At a time when actual property has been so gradual, gross sales have been gradual, we had a extremely good

Dave:
Month. That’s superior. So it sounds such as you’re utilizing AI not simply to determine properties or offers, however work on and in what you are promoting as effectively.

Kathy:
Yeah. I imply, what number of instances do you actually know what your insurance coverage covers?

Dave:
Actually by no means.

Kathy:
So with, I’ll say Claude, for instance, we are able to add our whole insurance coverage factor. There’s a phrase for it.

Henry:
Your insurance coverage binder? Yeah.

Kathy:
Yeah, that factor, the binder. To only actually know the main points of your insurance coverage coverage and even ask it, “Hey, is that this masking me for all the pieces I want for this funding property on this explicit state?” It’s actually phenomenal with what’s accessible to us and it’s solely going to get higher, so why not be on the slicing fringe of it?

Dave:
I adore it. Henry, are you utilizing AI usually?

Henry:
The quick reply is sure, however I’d be mendacity to you if I informed you I used to be utilizing it on a a lot deeper stage than simply the floor stage asking for assist with sure objects. Now, I did attempt to construct one thing just like what Kathy was speaking about about two months in the past the place I used to be importing transaction information and data from my property supervisor as a result of I wished to see if AI may give me a way of how effectively sure properties are performing. And I assumed if I may add the precise financial institution statements and marry that in opposition to the information out of your property supervisor who’s really going out to the properties, doing the precise repairs. After which I wished to marry that in opposition to what I’m spending with contractors on sure properties to get only a chook’s eye view of my portfolio. And it was very difficult in ChatGPT. And so I’m questioning if I ought to strive Claude or Gemini or a type of.

Kathy:
Claude is so good for enterprise.

Dave:
Oh, actually? I acquired to examine that out as a result of Henry and I have been simply in Seattle and other people have been raving about Gemini.

Kathy:
Yeah.

Dave:
I really feel prefer it’s a horse race proper now. One releases a brand new one and it will get somewhat bit higher after which the opposite one will get somewhat bit higher, however there’s not a transparent winner. I simply should inform you guys, I acquired somewhat little bit of a behind the scenes have a look at a giant actual property firm’s new AI instrument. It’s not BiggerPockets, however there’s one other one which’s going to launch one quickly. I acquired to do the beta. It’s so freaking cool. It’s unbelievable how good the evaluation and details about properties and markets. For an information analyst, this factor is so cool. I’m tremendous excited to begin utilizing these sorts of instruments in my very own evaluation. However I’ve to ask you guys, possibly I’m only a full management freak, however I take advantage of this for analysis, however I double examine all the pieces

Kathy:
That

Dave:
I do nonetheless, proper? Okay,

Kathy:
Good. As a result of it nonetheless makes a number of errors. It’s not there but, however will probably be. It will likely be. So studying the issues that we’re studying. And backside line, the purpose for me for doing all that is I need to see if I can … Wait, let me say that in a extra highly effective approach. I’m going to extend cashflow by 10% by optimizing our portfolio, whether or not which means taking some older properties that aren’t actually performing and 1031 exchanging them into higher ones or simply taking a look at issues like we purchased loads 10 years in the past as a result of we have been residing at a home the place somebody was going to construct this mega field property that block our view. And so we purchased the lot in order that they wouldn’t do it and now we don’t stay there anymore and we simply sort of haven’t finished something with it. We tried to promote it.
No one wished only a lot. In order that’s one factor. It’s like, how do I optimize this piece of land that’s simply been sitting there and we’re paying taxes on? And so I’ve been working with a manufactured housing firm and we’re going to place manufactured housing on that lot. And so once I’m doing an entire new factor and it’s really going to money stream in California

James:
California.

Kathy:
Yeah. And if my daughter ever decides she desires to maneuver down the road from us, there’ll be a home there for her. Intent. However yeah, it’s sort of simply stuff like that. Simply sort of taking a look at what we’ve, the theme is extra isn’t all the time higher. Have a look at what you might have and make it higher.

Dave:
That’s nice. Effectively, I believe that is an superior New 12 months’s decision. I actually like this concept of getting higher at AI as a result of I’ll admit, I’m concurrently excited by AI and really, very frightened of it and terribly aspect of it. And so generally I simply select to disregard it as a result of I’ll see these deep faux movies on-line and I’m like, “AI is evil.” However you then discuss all this stuff that AI is wonderful for. I simply want to determine the appropriate approach to make use of it for my enterprise that is smart and never be overwhelmed by the societal implications that is likely to be coming with AI on the similar time.

Kathy:
For certain. I imply, an instance is simply I’ve been working loads with Claude, that’s what I take advantage of. And asking for LA County, what do I must learn about manufactured housing? Inform me this step-by-step course of. And it’s not 100%, it’s not simple, but it surely helps it really feel not as daunting.

Dave:
All proper. Effectively, I really like this. It is a nice New 12 months’s decision. Thanks for bringing this one, Kathy. We acquired to take a fast break, however we’ll be again with Henry’s New 12 months’s decision proper after this. Welcome again to On the Market. I’m right here with Kathy and Henry sharing our targets, New 12 months’s resolutions for 2026. We heard Kathy’s, which I really like about getting higher at utilizing AI. Henry, what’s your New 12 months’s decision despite the fact that you don’t like them?

Henry:
No, I don’t like them. And I all the time really feel awkward when folks ask questions like this due to the sort of investor I’m. I simply do outdated, boring actual property, Dave. I purchase distressed properties, I repair them up after which I lease them out or I promote them. And I believe when folks ask about resolutions, they count on to listen to some tremendous formidable, inventive factor that you just’re doing. Like a giant pivot,

Dave:
Such as you’re making some change. Yeah.

Henry:
Yeah. And my targets are very comparable annually as a result of I simply need to proceed to do what works and what’s labored for generations, which is one other iteration of the identical factor. However now that I’ve positioned that caveat, basically I consider investing in three buckets the place you’re both rising, you’re stabilizing otherwise you’re defending.
And we as traders function in sometimes two of these buckets at a time, closely weighted extra so on one than the opposite. And in order I began in 2017, I’ve been much more targeted on progress. So my targets annually have been all the time round what number of extra property do I want to amass? What number of extra initiatives do I must flip to offer me the funding to amass these property? However now I’m in a spot the place I’m extra targeted on stabilization and safety. And to me, safety is paying off. And so my targets for 2026 or my decision, if you wish to name it that, is extra targeted round stabilization, optimization just like Kathy and paying off debt. So I’ve a stretch purpose of paying off two properties in 2026. And I do know two doesn’t sound like loads, however we’re speaking about fully clearing the debt on two property, which I believe is a giant deal.
So I need to repay two of my property and there’s about 4 property that I must stabilize as a result of I’m bleeding cash in them proper now.
A few of them my very own fault, a few of them, no fault of my very own. One particularly, I purchased a duplex, not in a flood zone, and we had a loopy flash flood and it tore by way of each models of the duplex. After which on high of that, a giant mistake occurred with one of many remediation firms the place they did some work unauthorized to the tune of $40,000. So I’ve a few $40,000 invoice that we’re preventing as a result of they weren’t presupposed to do the work and I’ve a few $50,000 renovation I’m going to should fund out of pocket. So these are massive ticket objects. They don’t simply come very simple. In order that property proper now’s a duplex that I pay month-to-month all of the bills on, however has no earnings. So stabilization is a giant deal for me in 2026. I even have some multifamily property I purchased in 2023.
Once more, no fault of my very own. The town has are available in and is requiring me to do some work that we didn’t plan on doing that the place you possibly can’t actually combat. So there’s loads that occurs in an actual property portfolio that I simply, I believe requires you to take a step again and consider. So 2026, stabilizing the property which can be bleeding cash and paying off two properties. And so these lead me to my different targets, which is I want cash to do these issues. In order that guides me to what number of initiatives I must tackle all year long to generate the earnings I want to resolve these issues, stay my life. Make sense?

Dave:
It does make sense. I really like the mind-set backwards. Lots of people can be like, what number of flips can I do, maximize, after which take that cash and be like, what am I going to do with it? However I actually like serious about it like, what do I must do? After which kind of backing into the minimal quantity of labor that you are able to do. That doesn’t imply you won’t tackle extra offers for those who discover alternative, however simply having an excellent sense like, okay, I must do two 1 / 4 or one a 12 months. I want to try this, be certain I’m hustling on that, after which I’ll take all the pieces else that comes from there.

Henry:
Yep. I common in all probability round like $45,000 web revenue on a flip, and I’d estimate that I must do about 15 initiatives to have the ability to repay the properties that I’m trying to repay and to have the ability to have the earnings essential to proceed to stay and be capable of stabilize the 4 property I must stabilize. In order that’s my targets.

Dave:
I adore it. I suppose I perceive possibly why you don’t love a New 12 months’s decision as a result of this sounds prefer it’s a multi-year mission too. It’s not like that is one thing you do in 2026. It is a piece of a bigger purpose that you’ve been working for and can in all probability must maintain working in direction of past 2026.

Henry:
Yeah. My bigger purpose, ideally, now they are saying your targets are presupposed to be massive and scary, proper? In company world, they name them stretch targets. The large scary stretch purpose is to have a 3rd of my portfolio paid off 10 years from now.

Dave:
I like that.

Henry:
That’s loads.
It’s some huge cash. However I really feel like for those who don’t set a giant scale … Shoot for the moon land on the celebs. If I find yourself with half of that paid off, that’s nonetheless going to place me in a particularly robust monetary place in 10 years. So the bigger purpose is that. After which what I do annually is tying into that. After which I’ve to regulate annually as a result of yeah, I’ve a purpose of two this 12 months, however what if I solely get one? So then I must take what occurs in 2026 when it comes to the financial outlook and make new targets. Perhaps 10 is likely to be too far out. Perhaps I want to alter it. So I believe I’m not afraid to reevaluate my targets based mostly on what’s taking place, however I attempt to make all of it tie collectively.

Kathy:
I really like that. It sounds such as you’re additionally trying on the safety aspect of it as a result of as you begin paying off properties, oh, there’s such reduction realizing that if there’s something goes incorrect and also you simply can’t predict, you possibly can’t predict issues like 2020 coming alongside that turned out to not be unhealthy for actual property in any respect. Ended up being a fairly good time for actual property, however may have gone the opposite path. And whenever you’ve acquired paid off properties, boy, all it’s a must to do is promote a pair and it’ll assist pay for the opposite ones that you just’ve possibly over-leveraged. And I do know that you’ve approach over-leveraged to get to the place you at the moment are and that has labored, however sooner or later you’re like, okay, it’s time to show the ship and pay a few of this off. That’s nice.

Dave:
It’s fascinating to listen to each of you’re specializing in optimization as a substitute of progress. Is {that a} reflection of the market or simply the place you’re in your private investing journey?

Kathy:
That’s an excellent query. It was simply the very first thing that got here to thoughts as a result of it’s what I’ve been doing and enthusiastic about. Simply having a look at a few of these properties that I purchased 10 or 15 years in the past and actually haven’t paid any consideration to them. For instance, one, it simply vacated and I talked to the property supervisor and he or she goes, “If you happen to replace this by about $20,000, you’ll get about 100,000 further in fairness.” I hadn’t even thought

James:
About

Kathy:
It. Simple. In order that’s thrilling. And if I try this, then we are able to promote that or maintain it, take the cash out. And so it’s nearly like an after the very fact bur,

James:
10

Kathy:
Years later down the street, bur.

Dave:
A gradual bur. It simply doesn’t matter. Simply maintain optimizing issues over the long term. That is the best way to do it. It’s completely proper. I really like that.

Henry:
For me, Dave, it’s extra a perform of the place I’m as an investor as a result of I’m a deal junkie and I really like the method of discovering offers. I really like shopping for an excellent deal and I really like working property in nice elements of the neighborhood. All of it is so enjoyable for me, however sooner or later I’ve to get to a spot the place I’m defending the property I’ve in order that I’ve paid off property to cross on to my youngsters. The overarching purpose for my actual property enterprise is for my youngsters to have the ability to be the folks they’re referred to as to be and never the folks they should be for cash. So in the event that they want or need to do one thing that isn’t going to pay them a ton of cash, not less than I’ve these property that shall be paid off that may present earnings for them.
And so to get there, I’ve to repay properties. And so I’ve to attract a line within the sand someplace and begin paying down these property. And in order that’s why I’ve the 10-year purpose attempting to get a few of these paid off in order that I’ve these to cross. Now, once I get to that time, Dave, I could begin doing extra offers once more, however I’ll all the time have- You’ll. You’ll. You’re proper. And I’ll in all probability nonetheless do offers which can be residence run offers alongside the best way. I’m not saying I’ll by no means purchase one other rental property between now and 10 years from now. I’m simply saying I’m not in aggressive progress mode. So optimization is extra vital to me proper now than progress was. And progress was extra vital to me once I first acquired began. It’s only a shift in the place I’m as an investor.

Dave:
All proper. Effectively, these are nice resolutions. Thanks. I actually suppose these are, clearly they’re not simply resolutions, however simply targets and good perspective on the place you each are in your investing journey. We’re going to take a fast break, however we’ll come again with my New 12 months’s decision proper after this. The Cashflow Roadshow is again. Me, Henry, and different BiggerPockets personalities are coming to the Texas space from January thirteenth to sixteenth. We’re going to be in Dallas, we’re going to be in Austin, we’re going to Houston, and we’ve an entire slate of occasions. We’re undoubtedly going to have meetups. We’re doing our first ever stay podcast recording of the BiggerPockets Podcast, and we’re additionally doing our first ever one-day workshop the place Henry and I and different consultants are going to be supplying you with hands-on recommendation in your customized technique. So if you wish to be a part of us, which I hope you’ll, go to biggerpockets.com/texas.
You will get all the knowledge and tickets there.
Welcome again to On the Market. I’m right here with Henry and Kathy speaking about our New 12 months’s decision. Kathy shared that she’s trying to optimize her portfolio and be taught extra about AI. Henry goes to be attempting to pay down a few of his debt and stabilize a few of his property. My New 12 months’s decision for 2026, and I’m with you on this, Henry. That is one thing I’ve been serious about for not less than six months and goes to take me 10 years. However my plan proper now and the factor that I’m specializing in is enacting what I’m calling my finish recreation.
Hopefully not going wherever, however I’ve been investing for 15 years now and I really feel like I’ve had these two totally different eras of my very own investing. My first 10 years, I purchased rental properties, I self-managed them, all of them domestically in Denver. These have been the primary 10 years. The final 5 years, then I moved overseas. I used to be residing in Europe. I bought some leases. I acquired fairly into passive investing. I acquired into lending. I do syndications. I nonetheless personal rental properties, however I’ve sort of had this second period. And now I need to transfer. I’m again in the USA. I need to transfer into my third act as an actual property investor. And I name it my finish recreation as a result of I need to spend the following 10 to fifteen years placing myself into retirement. I’m in a lucky place the place I do really feel like I’ve sufficient capital to do it, however I must rearrange my portfolio into an optimized approach in order that 10, 15 years from now, I’m going to have a portfolio that’s simply rock strong.
It’s solely property that I actually like. Ideally, they’re paid off or have very low debt on my total portfolio. And I really suppose it’s an excellent time to begin buying rental properties proper now. And so I’m seeing alternatives commerce out of a few of my extra passive choices or lending and begin buying the property that I need to personal ideally for the remainder of my life.That’s sort of what I’m beginning to consider. And I’m even contemplating … Henry and I have been simply collectively in Seattle. We have been speaking about this, serious about placing issues on 15-year notes, for instance, as a substitute of going to the 30-year repair that I’ve all the time actually used and simply begin considering, I’m 38 years outdated. At 53, I in all probability nonetheless received’t retire, however I need the portfolio that I can retire off of and that I wouldn’t want to the touch if I didn’t need to for the remainder of my life to be in place.
That’s not going to occur in 2026. That is going to take me in all probability not less than 5 years to reposition issues, do some totally different initiatives, be taught somewhat bit, however that’s my purpose. That’s the factor I’m actually engaged on.

James:
Like it.

Henry:
Yeah, no, I believe that that’s simply sensible monetary planning. It’s just like what I’m serious about as a result of I take pleasure in what I do now. I like chasing offers. I like flipping homes. It’s nonetheless enjoyable and thrilling. And is there annoying elements of it? Positive, however I take pleasure in it. However will I nonetheless take pleasure in it in 10 years? Will I simply be bored with the chase? I’ve talked to quite a lot of seasoned traders of their 50s, 60s, and 70s, and the one theme throughout all of them is sooner or later they acquired bored with chasing offers. They acquired bored with churning homes and flipping homes. And so if I can get myself to some extent the place I don’t ever should flip one other home if I don’t need to, however I can nonetheless select to, that’s superb. And it feels like that’s what you’re attempting to get to.
How do I get to the purpose the place if I simply need to sit down and do nothing, I can. I’m taken care of, my household’s taken care of, my legacy’s taken care of. But when I need to go do some cockamamie loopy deal, I also can go try this. Undoubtedly.
Getting your self to retirement doesn’t imply it’s a must to retire.

Dave:
To start with, I acquired bored with flipping homes earlier than I even acquired began. So good for you. I did one, that’s all I wanted. I’m at two proper now and I’m drained. And I didn’t even do the GC. You

Henry:
Didn’t do the arduous half.

Dave:
I didn’t even do the arduous half. I’m bored with it. No, I signed final evening although and getting this factor finished. In order that’s nice. No, that’s precisely proper. For me, it’s not even the flipping. I’m all the time tinkering. I’m identical to an optimizer. I’m all the time shifting cash from right here to there. And I acquired to cease doing that too. I’ll do a few of it. I’ll maintain a few of my cash for enjoyable as a result of for me, that’s enjoyable. Such as you have been speaking about, Henry, you want taking a look at offers. For me, I like investing in passive offers. I like underwriting offers and figuring them out and on the lookout for totally different alternatives, however I must put the rock strong factor again in place as a result of I had quite a lot of nice leases. I don’t remorse promoting any of them, however I’ve not rebuilt my lively portfolio in the best way I need to but.
And in order that’s actually what I’m going to be specializing in. And like I mentioned, there’s higher and higher offers. It’s not even that costs have gone down that a lot. It’s simply the asset high quality is so a lot better, for my part. And also you’re seeing prime quality properties come available on the market. I believe multifamily is trying an increasing number of engaging proper now. And in order that’s the plan for 2026. My different decision, simply so you recognize, as all the time, is to go on as many holidays as humanly doable.
How do I journey on a regular basis?

Henry:
Can we go on document, Dave, and set a stretch decision? You and I? Uh-oh. Can we set a decision that inside 5 years we land an Anthony Bourdain fashion TV present the place we journey round, eat meals and discuss actual property?

Dave:
That is our dream in life. Sure. We’d like a brand new imaginative and prescient board, you and I. Sure. All proper. Effectively, this was quite a lot of enjoyable. Thanks guys. I’d love to listen to your New 12 months’s resolutions, proper? We need to hear them. Share them with us within the feedback. We need to hear what your New 12 months’s resolutions are actual estate-wise, fun-wise, lifestyle-wise, as a result of on the finish of the day in actual property, we’re doing this normally not as a result of we simply need to personal or purchase property for one thing, as a result of it frees up one thing else in our lives, spending extra instances with our mates, household, touring, consuming disgusting quantities of meals. For this reason we’re really right here. So inform us what your resolutions are. Kathy, comfortable new 12 months. Thanks for being right here.

Kathy:
Thanks. You too.

Dave:
Henry, comfortable new 12 months. Excited for an additional 12 months doing available on the market with you each. And James, in fact, when he decides to grace us along with his current. Sure.

Kathy:
Completely. Thank

Dave:
You. Thanks everybody. We’ll see you subsequent time.