Want to Invest in Real Estate in 2026? Listen to This First

Dave Meyer:
These had been the BiggerPockets Podcast episodes that outlined actual property investing in 2025. Hey everybody, Dave right here. I hope you’re all having fun with the vacation season together with your family and friends. It has been one other transformative 12 months in actual property. The market continues to evolve and the traders who’re thriving are those who’ve tailored their methods to match present situations reasonably than ready for issues to return to regular. On at this time’s present, we’re going to recap among the largest investing tendencies and subjects we targeted on in 2025 by replaying parts of the 12 months’s hottest BiggerPockets podcast episodes. These are the exhibits that resonated most with the BiggerPockets neighborhood after they had been first revealed. And so I hope revisiting them at this time will assist encourage you as you intend for investing in 2026. We’re going to republish a number of different fashionable episodes of the present and from throughout the whole BiggerPockets community over the subsequent week, after which we’ll return with model new podcasts beginning on January 2nd.
The primary episode I’m going to revisit at this time is again from January as a result of final 12 months I began off the 12 months by sharing my upside period framework for the primary time. The thought behind it’s that we’re in a brand new period of investing. And despite the fact that actual property will not be as apparent because it was a number of years in the past, it’s nonetheless the most effective path to securing your monetary future, and it’s higher than some other method to make investments your cash. This episode was known as The Actual Property Monetary Freeda Formulation Has Modified. It was launched in January 2025. And I feel my dialog with Henry Washington holds up simply as nicely now because it did virtually a full 12 months in the past. I feel the issue is that we deal with monetary independence as binary. It’s like both you’re financially free otherwise you’re not. When actuality, it’s a path.
And the objective, at the least for me, has all the time been to only develop into extra financially unbiased. Each deal you do, each monetary determination you make will hopefully put you in a greater monetary place so you might have extra flexibility. For some individuals like Henry, that flexibility is likely to be going to Europe and simply not working for a pair weeks. For me, I relaxation simple figuring out that if BiggerPockets determined to fireplace me tomorrow, I couldn’t work for a few years and be very snug. And to me, wouldn’t think about myself totally financially unbiased as a result of if I left my job at this time, I would wish to determine energetic revenue similar to you, Henry. However I’m extra financially unbiased than I used to be 15 years in the past earlier than I began investing.

Henry Washington:
Completely.

Dave Meyer:
And I’m extra financially unbiased this 12 months than I used to be final 12 months and the 12 months earlier than that and the 12 months earlier than that. And I really feel like that basically must be the objective is simply to maintain shifting in that route as a result of actually, your definition of what monetary independence goes to alter. The amount of cash I assumed that I might’ve wanted to really feel snug once I began 15 years in the past, I handed that quantity some time in the past. And my expectations, I attempt to not have way of life creep, however while you become older and also you simply have a extra refined life, your bills simply go up. And in order that’s why I really feel like setting this objective and saying I’m monetary unbiased or not, it’s simply not lifelike. The objective is simply to maintain making progress.

Henry Washington:
Yeah, that’s completely true. I used to be a type of individuals once I bought began that I assumed I might purchase sufficient rental properties to supply sufficient cashflow in present days
That I might have the ability to take the cashflow from the rental properties. After which when that variety of cashflow hit the variety of cash I made monthly in my day job, that I may depart my day job and stay off of my cashflow. However as I began to purchase properties, I began to comprehend that that wasn’t essentially going to be a factor. I used to be completely shopping for properties that cashflow, however your small business and your properties, they don’t operate linearly. It’s not such as you purchase it after which it money flows and nothing ever occurs or goes improper. It simply makes you simply print that cash each month and it’s excellent and the world is nice. However that’s not the case. The extra properties you purchase, issues break at completely different occasions, issues break all on the identical time, individuals transfer in, individuals transfer out. There’s this fixed circulation of cash that it’s onerous for you to have the ability to say, “Okay, nicely, I purchased 10 properties and every property money flows $500 a month.
And so now I’ve $5,000 each month that I simply will take out of this account and spend on my payments.” And the cash is flowing too fluidly for that to be a actuality. And so I noticed that if I really need these properties to pay me money circulation that I may stay off of passively, then it’s going to occur far into the long run
When these belongings are paid off. And so I needed to pivot my technique to assume, okay, nicely, how can I take advantage of actual property to nonetheless purchase leases, but additionally make money now in order that I can A, proceed to develop my portfolio, but additionally stabilize my portfolio after which begin to aggressively repay these properties so I can hit that objective sooner. That wasn’t what I assumed beginning out.

Dave Meyer:
Completely. Yeah. And I need to ask you about the way you pivoted your small business, however I’m simply curious first, was that disappointing to you realizing that?

Henry Washington:
You recognize, that’s an fascinating query. I don’t keep in mind feeling disenchanted about it simply because I used to be actively within the enterprise at that time and I had the foundational ability, which is I understand how to go purchase a great deal. All I needed to change was the best way I used to be monetizing that deal, which was flipping it and getting additional cash upfront versus holding onto it and taking a pair hundred {dollars} right here or there. So no, it wasn’t disappointing as a result of I simply love the enterprise of actual property.

Dave Meyer:
Appears like persons are avoiding moving into actual property as a result of we, people who find themselves actual property educators, BiggerPockets is a part of this, have been saying, “Hey, you may get actual property monetary freedom in a few years.” And like I mentioned, throughout the 2010s, it was all the time tough, but it surely was simpler than it was at this time. It was

Henry Washington:
Simpler.

Dave Meyer:
For positive. However I suppose I nonetheless really feel just like the prospect and the worth of actual property investing remains to be so robust that it frustrates me when persons are like, “I’m not going to get in as a result of now it’s going to take 10 years to be financially freedom or 15 years to monetary freedom.” That’s unimaginable. It’s superb. Profession in the USA is like 45 years. So that you’re saying you chop it into a 3rd. If that doesn’t get you excited, I don’t actually know what would, however I do really feel like, I don’t know in case you hear this too, however I hear individuals saying like, “Oh, I can’t discover cashflow, I’m not going to get into it. ” However the fundamentals haven’t actually modified. That is sort of all the time the way it’s labored.

Henry Washington:
The basics haven’t modified. They’re extra vital now than they’ve ever been. It’s the basics you need to keep on with now with the intention to achieve success, however yeah, that is one of the best ways to speed up that path in any method {that a} regular individual may. Are you able to do it in different pathways? Are you able to do it within the inventory market? Yeah, however you bought to get actually good at buying and selling shares. However the common individual in actual property can do that with out being knowledgeable actual property investor, and that’s unimaginable.

Dave Meyer:
Given this, given the fact, it feels like we agree that it’s going to take you 12 to fifteen years to do it. In my thoughts, that’s unbelievable. And you’ll form of be agnostic, at the least to me, about the way you pursue that energetic revenue. I feel there’s a great argument to be made that you need to simply pursue no matter energetic revenue makes you essentially the most cash. And for me, that’s persevering with in an everyday job, but it surely feels like for you, why did you make that alternative figuring out that you just wanted energetic revenue to do it by means of actual property reasonably than … You had a great job, proper? You had a great company job and also you selected to go away that.

Henry Washington:
Sure, I did have a terrific company job and I loved my job. That’s why I stored it so long as humanly potential. I used to be going to do each till I couldn’t do each anymore till somebody was going to cease me from doing each. And I did. That’s what occurred is I give up when it value me cash to have the job after they needed me to work extra hours and I simply couldn’t give them extra hours as a result of it will take away from what I used to be doing in actual property. However the reply to your query is I had to decide on the actual property as a result of I’m throwing all out right here. I used to be making $110,000 a 12 months, which isn’t a ton of cash, but it surely’s good cash, proper? It’s good cash. It’s onerous not to decide on actual property as your full-time revenue path once I’d must commerce 40 hours every week for 12 months to make $110,000.
For those who depend my bonus, I used to be most likely making nearer to $140,000 once I may flip two homes and make that, and I may flip two homes in the identical month. Yeah.

Dave Meyer:
Would you set it that manner? Proper,

Henry Washington:
Proper. We simply offered a deal and made 70K final week. And yeah, it took us 5 months to make 70K, however that wasn’t the one home I used to be flipping. I had to decide on the actual property. It made extra monetary sense. And in addition, I like it a lot greater than I beloved my day job. I preferred my day job. I really like doing this.

Dave Meyer:
In order that was me and Henry on episode quantity 1069 from January. Our subsequent episode at this time was our hottest present of the 12 months on YouTube. It’s an investor story with Deandra McDonald. This episode actually struck a chord with a lot of you as a result of it proves you can begin investing in actual property and alter your monetary trajectory from virtually any start line. DeAndra had $35,000 in debt and bought rejected by a lender the primary time she tried to purchase a property. She ultimately bought her first deal although with a down fee of lower than $4,000, and 4 years later, she was in a position to give up her job and develop into a full-time actual property investor. That is an extremely inspiring story of taking incremental steps to enhance your monetary place, one property at a time. Right here’s my dialog with Deandra McDonald from episode 1105 again in April. What did you purchase?
Since you mentioned you needed to stay in it. Have been you searching for a home hack sort of scenario?

Deandra McDonald:
Precisely, as a result of that’s all I had. With all that financial savings, that further two years, I nonetheless may give you about $5,000 as a result of I needed to pay down the bank card debt and simply stay.That was additionally a necessity. However my first buy was a two bed room townhouse, simply half a duplex the place the plan was simply to decrease my hire. However what really occurred was I moved in, I took the smaller room and I rented out the second room to a roommate, which lined my mortgage. And that began the total dependancy to this complete means of like, “Oh, I see. Okay. Yeah.

Dave Meyer:
” Yeah. I might think about that producing that revenue or saving that cash was rather a lot simpler than lifeguarding components.

Deandra McDonald:
For

Dave Meyer:
Positive. So that you didn’t get to give up your job totally, proper? I think about you had been nonetheless working full-time, however feels like at the least enhance your high quality of life simply off that first deal, proper?

Deandra McDonald:
Yeah. Even simply I bought to cease lifeguarding.

Dave Meyer:
Yeah.

Deandra McDonald:
Even simply that. I had weekends once more. I had a time off that I wasn’t interested by how can I decide up an additional shift? How can I make an additional $20 this weekend as a result of that provides to the pot? I may relaxation. So even when it was simply that, my goodness.

Dave Meyer:
I feel that is so vital as a result of I consider this trade, loads of the main target has been turned to only quitting your job, however I really like listening to tales like yours the place you present that each incremental deal can enhance your monetary scenario and may enhance, such as you’re saying, your high quality of life. You really had this tangible profit to your life simply by shopping for a single actual property deal. And I actually encourage everybody, possibly in case you haven’t gotten that first deal but, to consider that as a result of it’s rather a lot much less daunting to consider how do I substitute my full W2 job. It’s like, nicely, simply take into consideration how will you work a bit of bit much less? We’ll provide you with a bit of bit extra peace of thoughts simply to get that first deal. It sounds such as you did that, however you then bought the bug. So what did you do after you bought first home hack?

Deandra McDonald:
I stored home hacking for some time. I bought a greater job the place I used to be making more cash, however didn’t change my way of life. And so yearly on the dot, we used to have a joke that I’ve packing containers that didn’t even hassle on packing as a result of it was like, I’m going to be gone in a 12 months as a result of now I’ve this method in like, oh, I stay right here for a 12 months. I hire it whereas I’m right here. I hire it once I depart. All that extra cash goes into the subsequent property so that each property is greater, higher, extra environment friendly than the final one. I can repair stuff up as I’m going. For years is simply what I targeted on.

Dave Meyer:
What space of the nation is that this?

Deandra McDonald:
I’m in Central Virginia, particularly Charlottesville.

Dave Meyer:
Okay. And it feels like that first deal, did you simply put in 5 grand? Was that each one you needed to give you?

Deandra McDonald:
I feel we seemed on the numbers and wound up being like $3,800.

Dave Meyer:
Yeah. Oh my God, that’s superb. And so everybody listening to that is jealous. However simply as a reminder, again then it was rather a lot tougher to get a mortgage to, as Deandra talked about, there have been trade-offs to each time. So was that form of the quantity you had been taking pictures to save lots of each single 12 months? May you repeat the technique you had been utilizing simply saving up $3,800, $5,000 a 12 months and shopping for one thing new?

Deandra McDonald:
Precisely. It was like, “Hey, there may be an abundance of properties right here beneath $1150,000.” I keep in mind now occasions are completely different. Like Dave was saying, I keep in mind having a $200,000 funds and being choosy moving into and say like, “I don’t like these cupboards. Present me one thing else. I don’t just like the wall colours.” And that was okay since you had different choices. And I need to say this, in sure components of my state, that’s nonetheless very true.
My space has gotten very, very talked-about. It bought very, very talked-about after the world sort of shut down in 2020, but it surely wasn’t that fashionable six years in the past the place it was nonetheless such as you had choices. And there are surrounding counties and surrounding cities the place there are nonetheless loads of choices in case you had been to stroll in proper now with $200,000 and a need to stay there. However yeah, what occurred was I used to be paying 700 a month in hire. So I went from paying 700 month of hire to nothing. So all I did was save that cash. So now as an alternative of saving 3,000, I can save much more monthly. I took out HELOCs as I might shift from place to position. My Airbnbs would do nicely. All that cash simply stored being saved and going to the subsequent property.

Dave Meyer:
And the way lengthy had been you doing home hacking? When did you begin doing one thing else?

Deandra McDonald:
I used to be home hacking completely for about three years. On 12 months 4 is once I began experimenting with midterm and brief time period as a result of I had duplexes or I had quads that typically I might have two or three months between when this tenant ended and the subsequent tenant who needs to come back begins. So what do I do on this timeframe? Oh, I may hire to a touring nurse for 2 months or put it on short-term leases as a result of I had some further furnishings. And so they’re like, “Oh, that is nice. I can play with all of those every time I want them as an alternative of sticking to at least one factor.”

Dave Meyer:
That was my dialog with Deandra McDonald on BiggerPockets Podcast, episode 1105. We’ll be again with extra of 2025’s defining episodes after a fast break. Managing leases shouldn’t be anxious. That’s why landlords love hire prepared. Get hire in your account in simply two days, sooner cashflow and fewer ready. Have to message a tenant? Chat immediately in app so you haven’t any extra misplaced emails or texts. Plus you may schedule upkeep repairs with only a few faucets so that you’re not caught taking part in cellphone tag. Able to simplify your leases? Get six months of hire prepared for simply $1 utilizing promo code BP2025. Join on the Lincoln Bio as a result of the most effective landlords are utilizing hire prepared. Henry, it’s vacation season. What do you get an actual property investor for the vacations?

Henry Washington:
Properly, if that actual property investor is me, you may get me a 15-unit house constructing.

Dave Meyer:
Oh, does that work? Do individuals simply ship you house buildings?

Henry Washington:
They’re now.

Dave Meyer:
Properly, I bought a suggestion really. If you’re searching for a present to get an actual property investor, purchase them a ticket to the upcoming Texas Cashflow Roadshow. We’re going to be in Texas. We’re going to Austin, Houston, and Dallas from January thirteenth to sixteenth, and we’re going to be having meetups, workshops, stay podcast recording. We’d like to see you all there. So in case you’re considering you bought a good friend within the Texas space and so they’re making an attempt to get into actual property investing, they’re making an attempt to scale their portfolio, go to biggerpockets.com/texas and go purchase them a ticket.
Welcome again. Immediately, we’re revisiting among the present’s hottest episodes from the 12 months that was. Our subsequent clip has an analogous theme. Antoinette Monroe was feeling unfulfilled along with her company profession when she fell into actual property investing virtually by accident. Investing, nonetheless, not solely gave her the monetary freedom to in the end depart her job, but it surely additionally gave her a way of goal when she started working assisted dwelling amenities. Like DeAndra, Antoinette’s story exhibits that even a small portfolio could make a big impact in your monetary future and your neighborhood. That is me with Antoinette from episode quantity 1120.

Antoinette Monroe:
So I spent that total first 12 months sort of digging by means of all the BiggerPockets boards, listening to all of the podcasts to know, okay, what do you do subsequent while you’ve accomplished this? I realized about home hacking. I noticed that that’s what I used to be doing, however then additionally the start technique. And that’s how I bought my second deal. So in 2019, I bought an off-market deal from my neighbor within the neighborhood I grew up in. So I had a direct hook up with the vendor and that deal I used to be in a position to get beneath contract for beneath 200,000. It solely wanted about 30 or 40 value of labor. And thru some suggestions that I bought off the larger pockets for them, I used to be in a position to refinance that home and get all of my money again inside 45 days of closing.

Dave Meyer:
Wow. Superb. I’d like to dig into that as a result of I feel that is considered one of these offers that individuals listening are going to be like, “I need a type of.” Give me that. So inform me a bit of bit how the off-market deal comes up as a result of we all the time hear about off-market offers, they’re nice and so they sort of are simply this magical factor. And I feel how did this one come about? Did your neighbor know you had been shopping for homes or inform us about it?

Antoinette Monroe:
Properly, no, as a result of on the time I wasn’t. I simply had the one home. However my mother knew that I used to be studying to be an actual property investor and I needed to try this. So speaking to her someday, she talked about, “Hey, the neighbor throughout the road, she’s planning to maneuver to Georgia to be along with her children as a result of she’s getting older.” And I used to be like, “Ah, I do know what that is. I heard that podcast. This can be a wholesale deal.” So I used to be like, “Give me her quantity. I’m going to name her.” And so I known as her, came upon what she was all in favour of doing. I went by means of all the steps of the issues that I realized about from a wholesale deal. I used to be not a great negotiator. So I used to be similar to, what’s it that you really want for it? I’ll comply with that as a result of

Dave Meyer:
The numbers labored out. Yeah. Which is sort of a win-win scenario, proper?

Antoinette Monroe:
Yeah. And so she nonetheless talked to some completely different wholesalers and I defined to her, I used to be like, “They’re going to provide you presents. Then they’re going to come back and take a look at it, after which they’re going to whittle that provide down primarily based on the bills that they’ve. In order that they’ll do no matter to get you beneath contract.” However in the end, I feel I used to be in a position to get that deal due to the non-public relationship and he or she was getting the worth that she needed and that was sufficient for her. So it’s a type of, typically the appropriate place, proper time. You by no means know when that deal will come, however in case you’re placing out what you’re all in favour of or what you’re searching for, then individuals normally attempt to assist. So I instructed my mother, I need to be an actual property investor. I need to purchase extra properties. So anytime, now her ears are open when she hears about alternatives, she’s going to think about me and provides me a name.

Dave Meyer:
Properly, I really like that. Good for you. That’s superb story about form of this mix of serendipity and circumstance, but additionally being ready for it.

Antoinette Monroe:
Being ready. Sure. If I hadn’t been listening to the podcast, if I hadn’t been doing the analysis and understanding, that chance would’ve got here and I wouldn’t have recognized what to do with it or how you can really make it work.

Dave Meyer:
Yeah. Your mother would’ve mentioned, “Hey, our neighbor’s shifting.” You’ve been like, “Oh, cool. I hope they take pleasure in Georgia.” You wouldn’t have been interested by how may you probably create a mutually useful scenario for your self and for this individual. So it was a single household house, I assume, and your plan was to show right into a rental?

Antoinette Monroe:
Sure. So it was a single household. I put it beneath contract earlier than I noticed it. I simply had the reminiscences. I’d been in right here earlier than as a child, much like my home. That’s sort of enjoyable. However as soon as I closed on it, I got here down and noticed that they’d accomplished an addition to it that made it a a lot bigger single household than I knew. And the structure made it conducive for a cut up, which is what I did with the primary home. I purchased a single household, cut up it in half and sort of made two models out of it proper as much as the road of being in hassle with code. Simply-

Dave Meyer:
Simply towing

Antoinette Monroe:
That line.

Dave Meyer:
Yeah. Okay.

Antoinette Monroe:
Yeah. So I noticed this chance in that home as nicely, and I did the identical factor. I simply dropped a wall by means of the center of it, made a one mattress, one bathtub studio within the again with a kitchenette as a result of kitchens imply code points, after which stored the three one within the entrance. And I used to be in a position to hire each side out, one to a member of the family, as a result of anytime you’re doing one thing, there’s all the time someone watching. So instantly one half went to a member of the family, and the opposite half I used a realtor to get rented out.

Dave Meyer:
Okay, nice. You mentioned you acquire it for beneath 200 grand, you needed to put 30 or 40 grand in. How did you financial all of that?

Antoinette Monroe:
So with the primary undertaking, I had improved it after which added 700 sq. ft. So there was a great little bit of fairness in that house.
Good. I realized on the kinds that I ought to pull house fairness strains of credit score. So I had one present and able to go on that first house. So I used to be in a position to purchase this outright in money utilizing the fairness from the house fairness mortgage. After which I borrowed personal cash from my brother-in-law to finish the renovation on that second house. So it was a mixture of all of the belongings you realized. There was that house fairness line of credit score, there was borrowing cash from my brother-in-law, after which the hack that I take advantage of is my technique to make single households have twice as a lot money circulation.

Dave Meyer:
That’s nice.

Antoinette Monroe:
Which is splitting them in half.

Dave Meyer:
If you wish to hear extra of Antoinette’s superb investing journey, ensure to take a look at episode 1120. Subsequent up is a dialog I had with Henry Washington in August in regards to the BRRR methodology. Popularizing the BER is considered one of BiggerPockets’ largest contributions to actual property investing. It’s an especially highly effective technique that permits traders to recycle their money and scale rapidly. However there was a story just lately that the BRRR is debt. Some individuals say it’s outdated in an period with mortgage charges over 6%. So Henry and I needed to speak this by means of and talk about whether or not that’s true and how one can replace the BER to nonetheless make it work at this time. That is from episode 1165.

Henry Washington:
It was a complete lot simpler to search out offers to BER three years in the past. We nonetheless discover them now, however much less ceaselessly. Flip numbers are inclined to make extra sense on this market than rental numbers, however as a result of we’re searching for offers in quantity and we’re discovering offers in quantity, occasionally we get one which makes a terrific BER. After which I feel you need to put some parameters round BER, largely like a timeline as a result of you should buy, renovate, hire, after which refinance in a brief time period, or you are able to do it in a for much longer time period. I’ve refinanced a number of properties this 12 months and pulled money out of them once I purchased them three to 5 years in the past and I simply put them on adjustable charges and that adjustable price now got here due. I refinanced it right into a 30-year fastened and pulled money out.
And people long-term BERS are nonetheless BERS.

Dave Meyer:
Hernia, that’s a terrific level. I feel it’s a extremely vital caveat as a result of I’ve been calling it the delayed BER or individuals in YouTube gave me new concepts of what to name it as a result of I suck at this, however I couldn’t give you a greater identify of it. We’ll name it the delayed bur. However I feel there’s two various things that you are able to do. One factor I’ve been doing is delaying the renovation. You purchase one thing that’s really totally occupied reasonably than vacant and never making an attempt to do the BER on this flipped timeline. As a result of as you mentioned, there may be this method to doing the BRRR methodology, which is like, I’m going to do that in six months or no matter. I’m going to get in there, I’m going to renovate it rapidly, I’m going to get hire as much as market price, then I’m going to do that money out and I’m going to go purchase the subsequent deal actually quickly.
And that did work rather well for some time. I feel it’s onerous to line up two offers. Such as you’re saying, I can’t do it proper now realistically, however even you, Henry, it feels like it will be onerous to even line as much as Burr’s in that timeframe the place it will even be advantageous so that you can even try this. And so what you may do is both take form of the extra delayed method, which is getting the occupied models and opportunistically renovating when there’s time, or doing the renovation upfront, however not refinancing till you want the capital. I’m really taking a look at refinancing a deal I purchased like six years in the past as a result of it’s money flowing nicely, however I feel that there’s going to be good offers coming and I’m seeing extra offers coming and I simply may need to unencumber some capital. And so I’ll simply do the refinance, but it surely’s manner

Henry Washington:
Later. Yep. I feel when Burr was initially pitched, it was pitched as a method to scale an actual property enterprise since you may line up again to again Burr’s and you may repeat this course of and you may nonetheless repeat it. I feel the timeline for the conventional investor is simply going to be longer.

Dave Meyer:
I feel that’s proper. There may be this assumption on this query, and I get this query on a regular basis. I’m positive you do too. Do BER’s work? Is it useless? There may be this assumption that the one cause to do a BERR is you can refinance 100% of your capital out.

Henry Washington:
Full BERS. You bought a full BER.

Dave Meyer:
Proper, precisely. You want the quote unquote excellent Burr or full BER. However that’s not that widespread. Perhaps in case you’re doing Henry’s sort of offers and also you’re in the appropriate market on the proper time, that may be widespread. However I feel in case you simply sort of like reframe the dialog and don’t assume that you might want to take 100% of your capital out, then I might say Burr is completely nonetheless a method to develop your small business. You’re nonetheless in a position to refinance a few of your cash out and also you’re shopping for, ideally, in case you’re doing it proper, a money flowing rental property that you’ve constructed fairness in, you’re getting a few of your cash out of it to go scale once more. That’s nonetheless a win, even when it’s not completely tremendous 100% recycling of your capital prefer it was for that transient second in time.

Henry Washington:
Can I provide you with a sizzling take?

Dave Meyer:
Sure. That’s why you’re right here.

Henry Washington:
Even when Burrs had been simple to do, I didn’t actually like doing them.

Dave Meyer:
Actually? Why?

Henry Washington:
I didn’t like pulling my money out. I preferred the money circulation.

Dave Meyer:
That’s the opposite factor. Yeah.

Henry Washington:
Whenever you refinance a deal, what’s basically what you’re doing is you’re getting a brand new mortgage at the next quantity and that new mortgage at the next quantity comes with a mortgage fee and that mortgage fee goes to be increased than the earlier one as a result of now it’s the next mortgage. Whenever you get a brand new mortgage, they entrance load the curiosity within the first 5 to seven years,
And so most of your fee goes to curiosity. And so you set this cash in your pocket and lots of people, particularly the informal investor, could not have had the subsequent Burr lined up. They pulled the money out of their final Burr after which they blow a bit of it earlier than they get to their subsequent deal. After which it kills the aim. What I used to be doing and what I nonetheless love to do is as an alternative of refinance, I simply get entry to a line of credit score on that fairness after which that manner I don’t get a brand new mortgage at the next quantity. I preserve my decrease mortgage fee, which retains my money circulation. After which I’ve entry to the cash within the occasion I want it as an alternative of simply pulling it out and beginning to pay on a brand new mortgage after which not spending that cash correctly.

Dave Meyer:
Yeah, as a result of that’s a terrific level. For those who don’t instantly reinvest your capital that you just pull out, you’re basically simply lowering your cashflow for no cause.

Henry Washington:
Yeah, proper.

Dave Meyer:
That to me is a extremely vital factor. If you wish to hear extra in regards to the gradual bur and the way Henry and I are each utilizing it in our personal portfolios, ensure to return and take a look at episode 1165. We’ll be proper again. We’re again on the BiggerPockets Podcast going by means of a few of our greatest episodes of 2025. One of many causes I personally love having Henry on the present is as a result of he brings a lot data and expertise in relation to renovations and worth add investing. You heard it on that earlier BRRR episode earlier than the break, and also you’re going to listen to it in our subsequent clip too. Including worth to your properties is among the key abilities for nearly each investor making offers proper now, as a result of in most locations, you may’t simply go on the market and purchase properties off the MLS and get loads of money circulation.
However with just a bit little bit of effort, a bit of little bit of enchancment, you may drive up values and hire on the identical time and make offers work. That’s what episode 1088 from February was all about. Right here’s me and Henry once more.

Henry Washington:
Now, earlier than we transfer on, you may typically add direct worth for beneath 5 grand in case your property is ready up for you to take action.

Dave Meyer:
Sure.

Henry Washington:
An instance of this that we did just lately, this was in a flip, however may have been a rental, proper? And so what occurred was we had a two mattress, one bathtub home, and that one bathtub home had a laundry room, and that laundry room was very massive, sufficiently big that it may have been a small bed room. This home additionally had a sunroom. Now, this sunroom was not heated and cooled and was dilapidated. And so what we had been in a position What to do was to maneuver the laundry into the sunroom. We completed the sunroom by simply placing insulation within the partitions and drywalling the ceiling as a result of it was simply sort of like an open beam ceiling. We added insulation and drywall within the ceiling. We painted the concrete flooring. We moved the laundry in there, after which we added a mini cut up air-con unit into that sunroom.

Dave Meyer:
Good.

Henry Washington:
So by doing that, we had been in a position to spend most likely about 5 grand. And so we added sq. footage. Though it was already beneath roof, that sq. footage wasn’t counted within the heated and cooled sq. footage of the home as a result of there was no air-con. So by including a mini cut up, we added about 200 sq. ft to the home. And by shifting the laundry into that room, we had been in a position to create a 3rd bed room. And in order that $5,000 allowed us to promote this home for $220,000 as an alternative of $200,000. So I spent 5 and I offered it for an additional 20. In order that’s $15,000 value of extra worth for spending 5,000.

Dave Meyer:
And never that a lot work. And never even that. Now that’s time.

Henry Washington:
So when you’ve got a property, in case you’re listening to this and you’ve got a property and also you’re contemplating doing one thing like this, do you might have a room in that property that’s not beneath roof? Do you might have a room in that property that could possibly be a bed room as an alternative of a eating room? Folks don’t actually use formal eating rooms. I wish to convert these to bedrooms.

Dave Meyer:
I simply did that in a property the opposite day. There was a entrance little factor. I simply put a door up. It prices like $600. I’m getting most likely two, 250 extra a month in hire due to that.

Henry Washington:
Increase. Can you change a storage? Numerous the occasions, single automobile garages, individuals don’t use to park in. They use to retailer stuff. I’ve a pair models in Joplin, Missouri the place there’s single automobile garages. And once I purchased the properties, each single one of many garages was saved stuff. Nobody was parking in it. So we spend about 5 grand, convert the storage right into a bed room, and now we get an additional three to $500 a month of hire out of every a type of models.

Dave Meyer:
That is actually form of the most effective recommendation as a result of I feel it’s vital for individuals to comprehend that this isn’t luck. It’s not like Henry purchased this home and was like, “Oh, I discovered this sunroom and I can convert it. “That is the stuff you might want to be searching for while you’re really going to purchase properties as a result of anybody can theoretically add a bed room. However in case you’re popping a high and taking off a roof and rebuilding that, that’s going to be a really costly proposition. That’s going to take a very long time. Or you will discover these properties which might be arrange for it. These are good examples. I did one thing very related with my short-term rental. I needed a 4 bed room home. I wanted that to get my income. All of them had been tremendous costly, however I discovered a 3 bed room home that had a 400 sq. foot second lounge.
Nobody was utilizing it. And it’s in a walkout, but it surely already had an egress window constructed. So I didn’t even have to try this. It had a closet. It was principally all I wanted to do was put up drywall, one other bed room, particularly in case you’re new to worth add. These are the sorts of properties you can actually begin to goal. The opposite factor the place I make investments loads of locations at basements and ending them out is sort of a no brainer. You search for ones which have the appropriate ceiling peak,
Which have a great basis, which have sufficiently big home windows for egress. You don’t need to dig out the inspiration, however these forms of issues, that’s simply very easy forms of worth add that basically have a tangible, measurable, confirmed manner of including worth.

Henry Washington:
One of many first belongings you need to search for are search for houses which have bed room and toilet counts the place the sq. footage appears too massive for that bed room and toilet

Dave Meyer:
Depend. Sure. Yeah. Like a 2,400 sq. foot with two beds.

Henry Washington:
Sure,

Dave Meyer:
Precisely. That’s not proper.

Henry Washington:
For those who’ve bought over 2,000 sq. ft, two bed room home, there may be room to transform one thing to a bed room. There may be room so as to add some worth. For those who’re taking a look at a 3 mattress, two bathhouse and it’s bought 2,500 to three,500 sq. ft, there’s most likely room. Search for properties which have sunrooms. Sunrooms sometimes are usually not heated and cooled. And you’ll simply add some drywall and add some flooring and add some insulation and a mini cut up air-con unit and you may get added sq. footage.

Dave Meyer:
No, sorry. I’m simply laughing as a result of that is simply citing my childhood. My dad did this the place he transformed a sunroom to my bed room. I simply assume he skipped the insulation and including warmth half as a result of it was simply freezing my total life. And this was in New York. I used to be simply all the time chilly. There was by no means warmth. I feel he may’ve missed that important step.

Henry Washington:
Sure. Sure. Sunrooms, we’ve got made some huge cash by changing sunrooms to heated and cooled sq. footage. And so they’re simple properties to search out. It’s sometimes known as out on the MLS listings that they’ve these options. And so you may actually seek for them. Numerous them are usually not heated and cooled. And sure, you may search for properties with basement models. And Dave is completely proper. Whenever you’re taking a look at properties with basements, you need to ensure you verify that ceiling peak and verify the egress measurement of the home windows since you need to have the ability to legally get someone out and in of that window within the case of an emergency for it to be counted as an precise bed room. After which you may also take a look at properties with single automobile garages as a result of properties with single automobile garages provide the choice. You possibly can convert these single automobile garages to bedrooms.
However while you’re searching for that, you need to ensure you verify the competing properties in that neighborhood since you don’t need to be the one home with a transformed storage. You need to ensure that that’s one thing that’s occurring throughout the neighborhood as a result of in case you’re the one one, then your desirability goes down.

Dave Meyer:
My private favourite as of late that I’ve been searching for, and I’ve accomplished this previously too, is I really like a basement that’s the ceiling peak that has a separate entrance.

Henry Washington:
Oh yeah, completely.

Dave Meyer:
Particularly now with all of the upzoning that’s occurring in areas, you may flip locations into second models. Test the zoning, however the upside of including a complete nother unit
Is simply huge. And yeah, we’ve form of gone on a tangent right here. We began with 5 grand. Now we’re simply speaking about the most effective worth. That’s 30 grand, 40 grand, one thing like that. However a complete unit, I imply, that’s going to pay for itself in a 12 months or two. That’s an unimaginable return in your funding. In order that’s one thing I undoubtedly search for. All proper. These had been highlights from our high episodes of 2025. I hope you all loved revisiting these nice episodes as a lot as I did. I hope you’re all having fun with the vacation season as nicely together with your family and friends. We will likely be again within the new 12 months with model new episodes beginning on January 2nd. I’ll see you then.