This Could Be the Best Real Estate “Buy” of 2026

Dave:
Each time we begin to assume that the market is getting rather less complicated or somewhat extra predictable, some wrench will get thrown into it and the whole lot simply feels completely up within the air once more. And that may make it troublesome to determine what is definitely working in actual property proper now. What methods and what ways do you have to be utilizing amongst the always altering surroundings that we’re in. However we will help you reply this query. As we speak, we’re bringing on our pricey buddy, common panelist, James Dayner, to stroll us via what’s truly working. When you’re an everyday right here, you already know James. He’s on the present on a regular basis. He’s the host of the A&E present, Million Greenback Zombie Flip, and he is likely one of the solely buyers I do know who does each form of investing. He flips, he does purchase and maintain, he does improvement, he’s a lender, he does somewhat little bit of the whole lot.
And that provides him a singular capacity to assist us perceive what is definitely working on this bizarre and complicated market. As a result of although issues appear much less sure than standard, which is true, issues are completely nonetheless working as James is about to share with us. And by listening to James and understanding what he’s doing together with his enterprise, you can also work out develop your portfolio and obtain your monetary targets even throughout this complicated market. Let’s convey on James. James, man, thanks for being right here. I’m excited to select your mind as a result of as everybody is aware of proper now, it’s been a bizarre, complicated 12 months in actual property, however you do the whole lot, proper? You flip, you do purchase and maintain, you do burs, you do improvement, you do non-public lending, you do the whole lot. And so I simply form of wish to perceive from you and have a dialog about what’s working, what’s not, and what our viewers ought to be fascinated with proper now.
So possibly let’s simply begin with like, what are you feeling in regards to the market in the present day, a minimum of the place you use in Washington?

James:
I really feel like ever because the pandemic cooled … As soon as charges went up, the market’s form of gone into this bizarre hills and valleys the place it simply form of goes like this. And so- It’s moody.

Dave:
It’s only a moody teenager. I simply really feel prefer it goes up and down, however not that a lot, but it surely’s similar to you by no means get consistency.

James:
No. Yeah. A moody teenager’s proper. You don’t know what you’re going to get. And I’ll say yearly by the tip of the 12 months, I’m fully stunned out of all of our companies, what you’re doing one of the best and what you’re doing the worst.

Dave:
What stunned you final 12 months? What did you assume was going to work one of the best in 25 and what truly labored one of the best?

James:
I assumed flipping was going to be probably the greatest years to flip in as a result of we form of got here off this type of little down in compression and stock was actually low 12 months in the past. And going within the spring, I keep in mind even speaking to you, I used to be like, “There’s nothing on the market. Issues are pulling up even with charges. And you probably have the suitable product, it simply goes out the door.” And impulsively, as soon as these tariffs bought introduced, it slowed down dramatically. And the debt actually strangled the offers, market timing. And so flipping ended the flattest by the tip of the 12 months. That has been some of the surprising ones. And I believe all of the short-term funding and improvement heavy worth add was a whole lot of transitioning, however I assumed this was going to be somewhat little bit of a slower spring and we’ve bought the whole lot.

Dave:
This spring already.

James:
Oh, the whole lot is bought. It’s all gone.

Dave:
That’s so bizarre. I believe

James:
The most important factor it’s important to issue into underwriting now could be whenever you’re taking a look at issues. It’s not that the precise info of the economic system, it’s how do folks really feel in regards to the economic system? However then how do you make emotions on underwriting? It’s just like the checkbox. Are folks pleased, unhappy, or assured? Does that go into your underwriting adjusted returns? However I’d say that’s been the toughest half is we’ve this type of ever-changing market and essentially the most random issues come out of nowhere like tariffs. I wasn’t anticipating that. And it simply form of shocks the market and it’s important to pivot and alter your plan. The factor is, the whole lot’s fixable, however you at all times have to write down out no matter stock you have got.

Dave:
So what was that like for you, James? You stated final 12 months wasn’t nice. Did it’s important to promote some stock at a loss, simply decrease revenue margin? And the way have your margins now shifted into 2026 when it seems like issues are promoting a minimum of sooner?

James:
Issues are undoubtedly sooner. And the great factor is whenever you undergo a transitioning market, like we form of simply went via, you alter your underwriting. So when issues do promote sooner, the offers get quite a bit higher since you’re form of factoring worst case situation. However what had occurred when the market slowed down, I’d say one of many greatest errors I made was I used to be being very reactionary due to what we had seen over the past 12 months as a result of the earlier 12 months, when something would occur, it will form of decelerate, however then at all times form of roll again up. And what we noticed after the tariffs is it form of got here down after which flattened and simply stayed regular. There was no form of rollback up till this early spring. And that was in all probability one of many greatest issues just isn’t be so reactionary and add extra debt price into these offers going ahead.

Dave:
Only for holding.

James:
Only for holding as a result of it’s what eats up the deal. Even the deal that we did, fairly flat. And in case you have a look at the performa, our funds was not very a lot over and we upgraded it and we hit our ARV

Dave:
As a result of

James:
Our performa ARV was one, 4, 5.

Dave:
That’s precisely what we hit, proper?

James:
It’s what we hit, however the center half, the debt price killed us on that deal.

Dave:
Yeah. Took too lengthy to promote. Precisely.

James:
However we undoubtedly took some losses on some homes as a result of that’s simply a part of the sport. I’d say essentially the most random, the offers I assumed we might be the worst offers had been one of the best offers and the offers I assumed had been one of the best offers had been the worst offers. However you simply need to form of make your pivots. And I’d say flipping wasn’t nice. Improvement was even worse in 2025.

Dave:
Oh, actually?

James:
When consumers develop into extra selective, density just isn’t wished. Individuals need area. And when there’s a restricted purchaser pool, a whole lot of websites which have too many models on one website, they’re laborious to promote as a result of they’re simply not that enticing for consumers.

Dave:
Yeah. Only for everybody to know, in Seattle the place James operates and the place I reside, a whole lot of the event is constructing ADUs or taking tons and placing city houses on them. So what he means is you’re not doing single household improvement, proper? You’re doing way more density. And that’s why you see that in each market when issues begin to decelerate, these are the form of issues that get hit somewhat bit. So that you’re not doing single household improvement, are you?

James:
Oh, we do some. So those- Oh, actually? The very best, truly.

Dave:
Actually? So it’s the density factor.

James:
The density was no good. Whenever you’re underwriting improvement usually, you’re at all times going, “Okay, nicely, what number of models can I get on right here? What’s your common value per sq. foot?” And it form of begins to provide the worth of the positioning. So the extra models you have got, extra sq. footage, the higher the deal seems, but it surely doesn’t inform you how livable and the way a lot folks need it. And so going ahead, if we’re doing improvement, we’re specializing in taking a unit off the positioning. We don’t must construct the whole lot. We have to construct what’s livable, and that’s how we’ve to underwrite it.

Dave:
So whenever you say improvement was even worse, had been you shedding cash on these offers and have you ever been capable of eliminate them?

James:
Sure, we’ve gotten rid of just about all of them. We have now some websites developing, but it surely undoubtedly made us form of pivot. Now we had some house run offers too. We had one the place we did a city house website in Bellevue and our unique proforma was at ARV and a promote value of 1.9 million, and we promote them for two.5.

Dave:
Ooh, that’ll cowl up for a pair losses.

James:
It’s an ideal deal. It took a very long time as a result of it was a full allow, heavy density, Bellevue, but it surely was the suitable product and bought the suitable value. And so I suppose my message to at all times buyers is there’s at all times going to be the unhealthy deal, however it’s important to have a look at the entire image. When you’re doing a certain quantity of offers in improvement, is it working as an entire or is it not? And so what we’ve narrowed in is we’ve simply crossed a whole lot of stuff off our purchase field. No extra tremendous dense websites. It’s bought to be livable and so they need to be in the suitable places. However I’d say improvement, yeah, we took an enormous hit on a city house website as a result of too many models, not livable, no parking, lack of facilities. And that is a few 400 grand clip on that deal.

Dave:
So what would you say then to people who find themselves possibly simply doing much less quantity than you? Is it a nasty time to be a form of one that does one flip a 12 months since you may not be capable of steadiness out a nasty cope with a house run such as you did?

James:
Yeah. When you have got all of your chips on one deal, you both look actually good in case you hit the suitable market or it could possibly actually damage in case you hit the flawed market. And lots of people purchase that method, they’re doing one to 2 initiatives at a time. And there’s nothing flawed with that. You simply bought to verify whenever you’re going via extra of a transitioning market or a market that’s somewhat moody, little teenage like, you bought to cut back the chance, which is purchase what you’re good at and what your contractors are good at. And that’s one factor we actually did for 2026 is we’ve this many contractors, they’re good at these initiatives. That’s what dictates my purchase field, not the efficiency.

Dave:
So simply in abstract, you’ve talked about tariffs, we’ve talked in regards to the Moody market, but it surely sounds to me what you’re saying is it’s not truly the fee will increase from tariffs which might be impacting the enterprise. It’s extra similar to the psychological impact that’s impacting demand greater than your enter prices. Is that proper?

James:
It’s a mix. I imply, we undoubtedly felt some will increase in costs, however the factor about growing costs is you simply change your subsequent funds on your subsequent deal. So that you simply make it somewhat bit larger. And so these are all fixable issues. What you don’t know is you don’t know if a conflict goes to pop off and other people get freaked out or there’s provide chain points. And people are the issues that actually will make this market moody. And that’s the place you simply need to go for larger return. However it’s laborious on this market to get a really constant return out of sure asset courses, that are the event and the flipping.

Dave:
Yeah, it’s tremendous laborious. I imply, I don’t do a whole lot of that, however I simply see different folks. Disposition is tough proper now. It adjustments week to week. It adjustments month to month. You don’t know what surroundings you’re going to be promoting into. When you requested me 4 weeks in the past, is an effective time to promote, I’d’ve stated sure. Finish of February, proper? We had been touching 5.9 in mortgage charges, 4 weeks later at six six once more. And yeah, for some folks that’s a monetary burden, particularly costly stuff right here in Seattle. That’s an enormous change in your month-to-month fee, but it surely’s simply the psychology of it. That’s going to decelerate the market. Individuals, they simply had one thing with a 5 in entrance of it. Now seeing a six six, it doesn’t really feel nice. I imply, I really feel the identical method. So I don’t blame it.
I truly personally assume we’re going to be in for a really gradual spring season, however I’m glad to listen to issues are promoting for

James:
You. That’s the factor that’s so laborious about this and why it’s so laborious to get constant returns as a result of in all actuality, consumers ought to have been shopping for much more in August as a result of the charges had been decrease and pricing was decrease. Now pricing’s up somewhat bit within the springtime and the charges are larger and we’re nonetheless promoting. That’s what the logic has gone.

Dave:
Effectively, this has been tremendous useful on kind of the event flipping facet. Let’s flip and discuss some purchase and maintain stuff since you do this as nicely, however we bought to take a fast break. We’ll be proper again. Welcome again to On the Market. James and I are right here speaking about how issues are going, what to do on this complicated market, what methods are up, what are down. We talked somewhat bit earlier than the break about flipping and improvement, how they’ve been laborious. It sounds such as you’ve navigated your method via them, James, however what’s your learn on the purchase and maintain market proper now?

James:
The purchase and maintain market, I truly assume there’s a whole lot of potential there, but it surely all is dependent upon your technique. And the factor that I’ve seen just lately is just like the Burr single households are again so far as a method goes, you simply need to put one other step in. And so for 2026, I’m truly making an attempt to select up 10 BRRR properties.

Dave:
What’s the additional step?

James:
The additional step is you don’t money movement for the primary 10. You simply need to be ready to issue a small adverse in to create the fairness. And so what I’m doing is I wish to decide up some extra models, however I wish to hold my capital. So I’m going via and making an attempt to select up BERS and so long as they’re inside $100 to $200 adverse per property, I’m okay as a result of the objective is to create the 20% fairness and there’s alternative proper now on particularly little small, low cost, heavy fixers. After which I’m actually simply home banking them and I’m going to construct up 10 after which do an enormous 1031 change as a result of it could possibly get me into that subsequent asset class, which we’re seeing one of the best buys on. And that’s your small multifamily, like 15 to 25 models heavy worth add. These have been one of the best buys of 2025.

Dave:
Oh, attention-grabbing. Okay. So let me simply recap this technique. So that you’re saying you’re going to go and purchase 10 purchase and maintain properties, and also you assume you get a 20% fairness return on every of these?

James:
If it doesn’t hit the 20% fairness return, I’m not shopping for it.

Dave:
Okay. In order that’s your objective. And so mainly in case you do 10 of these, although you’ll be shedding throughout these a thousand bucks, 2,000 bucks a month, in case you do 10 of them, so that you’re going to be shedding 15, 25 grand, no matter it’s, one thing like that per 12 months, doing 20% fairness bumps on these initiatives, which I assume, I imply, what are you shopping for them for?

James:
Sometimes, it’s about 350. That’s in regards to the buy value. What we’re making an attempt, I’d say the common exit once we’re performed fixing them, they’re 450 to 550 is the vary I’m making an attempt to remain in as a result of that’s form of the magical quantity to be in that couple hundred greenback a month adverse.

Dave:
Okay. After which what would you stroll with? You promote all 10 of those and do a 1031, how a lot fairness you bought?

James:
So after promoting prices, so the objective is that if I can get 10 houses at a mean worth of 500 grand with 20% fairness place. And the objective is to attempt to get 25%. That’s actually the quantity I’m chasing as a result of that’s a flip return. But when I can get to twenty even, which is 5% lower than I wish to be, that may create one million {dollars} in fairness. And that million {dollars} in fairness after promote price is basically extra like 600 grand. However what that does is it provides me 600 grand to go purchase a $2 million condo deal.

Dave:
Tax free.

James:
Tax free and on the deepest low cost that can money movement as a result of that’s the place we see isn’t any man’s land in Seattle.

Dave:
So only for our viewers, as a result of I believe for normal, you’re not an everyday individual. For normal individuals who purchase 10 properties in a 12 months, in all probability not going to try this. Can somebody, such as you simply stated, the candy spots, 12, 20 models, ought to folks be taking a look at simply going straight into that if they’ve the capital or possibly doing a 1031 from one thing of their current portfolio? Asking for a buddy, as a result of I’ve two 1031s coming

James:
Up. Yeah, that’s the place we’ve seen the least quantity of competitors. And so I believe the important thing to entering into any transitioning market is chase what nobody else is chasing. Proper now, folks wish to construct daddoes, they wish to do density on homes. Everybody’s chasing the one household lot, particularly with their new upzoning, whereas I’m going, nicely, who desires to purchase not nice cashflow? As a result of whenever you have a look at these, they’re not nice cashflow as a result of it’s important to put a lot money down, but when I can defer and transfer the cash over, the cashflow turns into actual. And most significantly, I can create a really huge fairness place as a result of when you begin creating 20% on a $3 million constructing, I imply, that’s 600 grand you’ll be able to create simply by renovating a constructing.

Dave:
That’s the candy spot you’re saying you’re going to try to make 600 grand by shopping for a 12 to twenty unit.

James:
Yeah. So the objective can be to get BERS, create the 20% fairness, create 600 grand in down fee cash, then 1031 into one other constructing that I can then create one other 20% fairness. So these Burrs can double its cash over a 24-month interval.

Dave:
I imply, that’s excellent. I’d like to see that. However for individuals who aren’t going to do all these BERS, do you assume this small multifamily is an effective transfer no matter the way you fund it?

James:
Oh, for certain. I imply, that’s one other no man’s land. Two to 4 models proper now. Mathematically, they don’t actually pencil that nicely.

Dave:
No, they’re horrible. It’s BiggerPocket’s fault. We ruined it.

James:
It’s not good. Whenever you go searching, even whenever you see it and also you’re like, “That’s an ideal value.” You run the numbers, you’re like, “Ooh, that is horrible.”

Dave:
Dude, I used to be doing it yesterday with a bundle of 5 of them or one thing, and it’s a good value. The cap charge’s good, however whenever you do the numbers, it’s simply not thrilling sufficient. It’s not definitely worth the effort or the chance. So I’m seeing the identical factor. I see higher offers. They’re getting higher, however they’re nonetheless not good, I’d say. It’s form of the way in which I’ve been why I’m making an attempt to be affected person, however you’re not the one one that stated this. We’ve had Brian Burke on fairly a couple of occasions who’s famously timed the market very nicely with multifamily. And he says proper now he thinks the eight to 25 unit is the candy spot. So it sounds such as you guys agree on that. Do you have got any recommendation on exit and discover these? As a result of what you have a look at on CoStar isn’t nice.
Are you discovering these offers off market?

James:
The easiest way you could find these form of offers is to community with business brokers

Dave:
As a result of

James:
They’re at all times on the market pounding the telephone. I don’t even fear about wholesalers at that time as a result of it’s actually … Industrial brokers understand how to take a look at issues and so they actually do comply with up with the identical neighborhoods. And so one of the best factor you do is get teed up with 10 to fifteen business brokers that promote multifamily and so they’ll float you stuff on a regular basis. I imply, I in all probability get 10 to 12 offers despatched to me a month out of market a minimum of that I’d say is the easiest way to do it or actually expired listings.

Dave:
Yeah, even on business.

James:
I’d say expired and canceled listings was I can’t even consider is popping out of my mouth as a result of everybody talks about that off market and it’s sometimes a waste of time for my part, however that has been probably the greatest locations to look as a result of folks wish to promote. They simply didn’t get the supply.

Dave:
It’s loopy. The one we labored on collectively that was flat, we mainly broke even on it. It’s loopy to me that nobody made us a proposal. Nobody even made us an insulting supply for six months. Isn’t that uncommon? Are folks simply scared to try this now?

James:
Yeah, I don’t know. It’s like they don’t actually know if they need it or not. Both they’re gung-ho and so they’ll throw you essentially the most offensive supply.

Dave:
Yeah. Effectively,

James:
You understand what? It’s not even offensive. I’m at all times like, “Oh, this supply’s actually low.” I’m like, “I can’t blame them for asking.”

Dave:
Yeah, proper.

James:
However yeah, that was what was so bizarre and that’s the place you get frozen as a result of I’m like, I don’t wish to discount simply to get low provides as a result of we’re simply making an attempt to go away the place we’re at so we are able to drag the supply in. And in order that’s the place you’ll be able to form of get stalled out.

Dave:
Okay. In order that’s James’s ideas about purchase and maintain proper now. It sounds such as you agree with Brian Burke. It’s business actual property, so it’s above 4 models, but it surely’s not sufficiently big that you just’re getting the institutional folks in. That’s form of the candy spot that I believe we’ve been speaking about quite a bit and that’s tremendous attention-grabbing. However I wish to get some recommendation from you for newer buyers as a result of this type of stuff, taking down an enormous venture like that, doing 10 Burrs at a time, in all probability not for a brand new investor. So let’s hear your recommendation on that proper after this fast break. Welcome again to On The Market. James and I are simply speaking store. Wish to perceive what’s happening, what’s working, what’s not. We’ve gotten his recommendation on flipping improvement, purchase and maintain, however let’s discuss newer buyers. When you saved up some cash, you bought one deal to do in 2026, give me two examples.
One in an costly market like Seattle or one in case you reside in a less expensive market someplace within the Southeast or the Midwest.

James:
Essentially the most juice that you just’re going to get, I imply, it goes again to flipping. It’s simply that it will get the best doable return within the shortest period of time in case you purchase the suitable deal. You’ll be able to leverage it to the place even you probably have 50 grand, you may make that stretch. And in case you hit that deal proper, you may make a 30, 40% return in your cash in a six-month interval.

Dave:
Even on this market although?

James:
Oh, even on this market, as a result of it’s all about the way you arrange the leverage too. You’ll be able to hit these returns. What I’d say is for a brand new flipper, you don’t have to purchase a heavy fixer. When you’re placing in 50 grand in a home and also you’re making 20, that’s a very good return. That’s

Dave:
An awesome return. That’s incredible. I take that each one day.

James:
And people offers are doable within the Midwest in every single place. And the benefit of in the present day’s market is leverage and laborious cash lenders much more aggressive, so you place much less money in and you may make 15 to twenty grand and that’s going to provide the highest kick in your funding or flip it with one other operator as a result of in case you don’t know what you’re doing, companion with somebody. And in case you’re making half of that and also you’re making 30 to 40%, you’re nonetheless making 15 to twenty% return and also you’re doing it passively. Effectively,

Dave:
That’s excellent recommendation. I can’t disagree. I’m kind of a gradual and regular form of investor, however if you wish to get into the enterprise and make some strikes, I agree with you. I believe additionally studying, I’ve talked about it quite a bit. It’s why we’re doing this worth add convention in Seattle this week is as a result of I remorse not getting good at this type of stuff earlier in my investing profession. And whether or not you flip or do purchase and maintain or do improvement, it’s only a ability that you just wish to study as an actual property investor too. So clearly do that conservatively and in a approach to shield your self, however it may be a good way to start out your investing profession.

James:
Yeah. And one other factor that individuals can do, they will work their method into it’s simply develop into a lender. When you’re going to do a passive flip and you may make a 40% return and also you get half of that, you’re making 20% of your cash. Nonetheless comes all the way down to market timing, proper? Are you hitting the market proper? You may get somewhat bit extra, you hit it flawed, you may get somewhat bit much less. When you’ll be able to lend out cash at 12% and two factors or extra and get a assure out of it to the place it’s quite a bit much less dangerous and you’ll nonetheless make a very good return.

Dave:
Completely. I like lending. It’s been nice. I do it in funds, but it surely nonetheless makes a whole lot of sense and a good way to … It’s the easiest way to get money movement proper now. I don’t know a greater approach to get cashflow, do

James:
You? I’d say out of each funding engine I had in 2025, being a non-public lender was by far my most worthwhile as a result of it’s constant. You’re not going to hit these spikes, however you simply don’t have the lows. And what I’ve discovered, just like the inventory market, consistency wins, and it undoubtedly gave me a a lot larger return on my money than some other factor. All

Dave:
Proper, man. Effectively, thanks a lot for being right here. This was a whole lot of enjoyable. At all times respect your insights. You’re considered one of few folks I do know who does each form of actual property investing. So you have got actually the background and the expertise to assist folks perceive what’s working and navigate this Moody teenage market that we’re in. So thanks, man.

James:
Yeah, no, for certain. Greatest tip for everybody although, in a Moody market, persist with what you understand or companion with folks if you wish to broaden out, as a result of that’s the place you’ll be able to actually get clipped.

Dave:
Completely. Makes a whole lot of sense. Not the time to take pointless threat to attempt new issues, persist with what you understand is great recommendation. I needed to discuss myself into that the opposite day. I used to be going to kind of stretch for one thing and I used to be like, “Nah, not the time.” Not the time. Whenever you bought market tailwinds, that’s whenever you do it. That’s whenever you take a flyer.

James:
Dave, I bought to know. What’s it? What was it?

Dave:
Oh, it was an enormous out- of-state, large intestine renovation job. I simply was like, “You understand what? You’d’ve beloved it. I ought to

James:
Have referred to as you.

Dave:
We should always have performed it collectively.” Yeah.

James:
If I’m going out of state, I’m following your blueprint on that the place … Are you able to think about you rent the flawed contractor in a special state and it simply goes

Dave:
Sideways? Oh, that’s horrible. Yeah. You want somebody there daily. I appreciated the deal and it was going … The extra I did due diligence, it was like each layer of the onion you peeled again, you’re like, okay, now it want … The rental funds simply stored going up and up and up and up, however the upside was big. You get at a very good value, however I made a decision to not. It’s simply not the time to do it.

James:
You understand what? I believe that’s in all probability the suitable name.

Dave:
I do know, however I used to be making an attempt to channel you and get the juice.

James:
Let’s do it in our yard.

Dave:
Yeah, precisely. All proper. Effectively, thanks all a lot for listening to this episode of On The Market. By the point this comes out, you’ll have missed our superior Seattle worth advert convention that James is internet hosting. However in case you like the thought of that, hit us up within the feedback as a result of we’re going to do extra of this stuff. We wish to know what you wish to study and the place you need it to be. Put that within the feedback for us and possibly we’ll make it occur. James, thanks once more.

James:
Yep, thanks.

Dave:
Thanks once more everybody for being right here and for listening to this episode of On The Market. I’m Dave Meyer. See you subsequent time.