3 Types of Rentals That STILL Make You Rich

0:00Hey, everyone. This is it. The last BiggerPockets podcast episode of 2025. We released 153 episodes this year, and I hope you found them inspiring, educational, and entertaining. I know I had a great time making each and every one of them. We will have a new episode Friday to kick off 2026. And then the following week, we're going to do my state of real estate investing, which you're going to want to listen to. And we have a very fun, very exciting announcement coming next week as well. To close out the year, we are republishing one of your favorite episodes of 2025. This is a conversation I had with Henry Washington, Kathy Feke, and James Daynard back in April about properties that we had each recently purchased.

0:46It was a lot of fun. and I think it showed that you can make real estate investing work for you in almost any market at almost any price point. So enjoy it, have a happy new year, and thank you all for listening. Here's my conversation with Henry, Kathy, and James.

1:05Hey everyone, I'm Dave Meyer, head of real estate investing at BiggerPockets, where we teach you how to achieve financial freedom through real estate. And today on the podcast. I am joined by three expert investors who are my co-hosts on the On the Market podcast, James Daynard, Kathy Fecky, and Henry Washington. James, Kathy, and Henry are each going to tell us about an investment property that they've bought within the last few months with purchase prices ranging from$55 ,000, so sort of at the low end of the spectrum, all the way up to$600 ,000 at the high end of the spectrum. Well, thank you guys for being here.

1:41Kathy, great to see you. Great to see you. Can't wait to hear what these guys are up to now. Are you nervous? I mean, not that this is a competition, but we always make it. It's going to be a competition. It always is, even if it's unsaid. Okay, well, you usually hang pretty well in these competitions, so we'll see. James, how are you doing? I'm good, and it doesn't need to be said. It's always a competition.

2:05Henry, good to see you, man. Hey, glad to be here. This is always a competition, and I want to win this time, so. All right. Well, I'll give you guys a little bit of a spoiler because I've read a little bit about the deals. We know so far that Henry's house that he's bringing to trying to win, apparently, with a house full of spiders when he closed, but it will be a part time vacation home for his family. Kathy found an incredible upside opportunity in one of the U.S. largest and fastest growing cities. And James is getting super creative with a multi-part strategy to create profit other investors may have overlooked.

2:39So whether you're a new investor, you've been in real estate for a long time, today's show will have some great ideas to get the wheels turning on your own next property. Let's get into it. All right, Henry, I'm going to pick on you. You have to go first and share the deal that you're doing. Yeah, we've got a single family home that we purchased. It is coincidentally across the street from a lake. And it's arguably the second nastiest house I've ever bought. It was so riddled with brown recluse spiders and webs. you got me there when so first of all when you walked in you walk into a sunroom the sunroom literally three inches thick on the ground of just cigarette butts like this guy would just smoke his cigarettes and then throw his butts out in the sunroom and then when you get into the house like i took one step in and i was like no i'm good so i you had to get like a stick of some kind and then you just had to like wave it around in front of you from all the cobwebs oh it's like When they make cotton candy, you know, they take that little thing and roll it around.

3:46It was literally just like a thick stick of cotton candy except spider webs. And then the subfloors were so rotted away that like we just had to put two by fours down so that we have something sturdy to walk on because I thought I was just going to fall through the floor. You know what, though? I like that Henry said that this is the most realistic deal. Who wants to buy a house where you're going to fall down and get killed by spiders within the first 30 seconds? It's realistic, though, Henry. It is realistic because our listeners can afford it. We haven't talked to yours yet. What did you like about it?

4:16I've heard some things that would turn me off, but what was attractive about this? I liked that it was across the street from the lake. I liked that I could buy it for$55 ,000. I think we paid for it. Oh, yeah. That's something to like. I mean, it needed more put into it than I paid for it. So we're putting 90 grand into it. But the ARV on the house is$265 ,000 conservatively, probably closer to$275,$285. And if we want to long-term rent it, we could easily get$1 ,800 a month, mostly because as we bought it, it was a three-bed, one-and-a-half bath, but we were able to steal some room from a couple of closets, and we made it a full three-bed, two-bath.

4:58So$1 ,800 a month long-term rent, but we're going to actually short-term rent it because it's across the street from the lake, and I just want to be able to take my family there and do like lake stuff. I don't really know what lake stuff means because I'm not an outdoorsy person, but we're going to figure it out. You will find out soon. I got to ask you about this lake though, because there's different, there's bougie lakes, there's redneck lakes, and there's lakes you don't want to go near. What are we talking? I'm going to say one word and then you tell me what kind of lake it is. Arkansas. No, no.

5:29It is a pretty lake. There's actually a deck and pier that you can walk up to and like fish off of. They even have like a fishing house. So when it's cold outside, you can go inside the little house and fish down into the lake from the little house. And there's a boat dock and all kinds of stuff. So it's actually, there's really nice lakes in this community. Oh, nice. And so I like the price point. I like that I have multiple exit strategies. I can sell this one if I wanted to and make a pretty decent profit because, like I said, ARV is pretty high. I could long-term rent it for$1 ,800 a month and cash flow the property.

5:58Or I can short-term rent it, which is what we're going to do. And we're estimating to make about$3 ,000 a month on the short-term rent. But the real reason I want to short-term rent it is because I haven't been able to get my wife to agree to let me put a golf simulator in my personal home. But if it's for a short-term rental and it's going to bring us more income, I have gotten her agree to let me put it in the short-term rental, which is only like a 20-minute drive from my house. So it's basically like my own personal talk. Is Henry working on that house again? What could possibly be wrong with it now?

6:33Wait, I have to ask you about this because I was going to put one in my short-term rental because I have this detached garage that I don't use for anything right now. But I was worried that people were going to break it because it's like, you need a computer and a software. Are you worried about that at all? There's cases that you can get for your launch monitor that can secure your launch monitor to the ground so that no one can take it. And then you can also lock your computer up in a case so that no one can take that. Just a key to entry case. So yeah. Maybe I have to come visit you in person and see how you created this just so I can replicate it.

7:05If you want to come and do some market research or I can come out there and consult and tell you exactly how to set all this up. It's all right. Yeah, easy, easy peasy. But Henry, so you bought this house. It's got no floors. It's got lots of spiders. Like what does the permitting take? Because for us, if we have to wait nine months for a permit, it can be all the profit in the deal. Yeah, no, that's a great question. Actually, the permitting process was really easy. actually. I just went to the permit office and told them what I was going to do. And then they made me draw it out for them. And I did.

7:35And then you pay for the permit and they issue it to you pretty much on the spot. As long as you're not asking to do something that doesn't conform to their normal standards. So I'm wanting to build a deck over the driveway of this property because the elevation is so steep that I don't want anybody to park at the top of the driveway. and so I actually want to build a deck over the steepest part, but the rules in this community say that every house has to have either a carport or a garage. And so when I asked them to do that, they said I'd have to come to the meeting and present and get approval and then they'd give me a permit.

8:11So as long as what you're asking for is within their normal standards, you can get a permit pretty quick. If it's not, then you've got to go present. And how did you finance this, Henry, because I imagine this deal you could not get a conventional loan on. So how'd you make this one work? No, this was similar to a hard money loan. I financed almost 100%. I think I had to put about$5 ,000 down out of my own money, but they financed the majority of the purchase and all of the renovation. And then once we finish the renovation, we will refinance it out into a 30-year fixed on a DSCR. So you financed your own golf simulator, just to be clear.

8:46Yeah, for business purposes, yes. Yes, of course. Purely business. I will get no personal joy out of this. And how long are you expecting this renovation to take? Sounds pretty serious. By the time we're done, it'll be about five months. Yeah, seems pretty reasonable. So as you said, this is the most relatable deal. Is this a deal you think an average real estate investor could find and pull off? Absolutely. I think there are markets like this all over the country where you can buy houses for a reasonable price point and you can figure out a way to monetize them. I'm not saying it's easy. I am saying it's repeatable.

9:22Well, what's hard about it? Tell me. It looks easy because I just get to get on here and talk about the deal that I have. But what we don't hear me talking about is how long or how much marketing I had to do in order to find an opportunity like this. There's a level of consistently looking for opportunities. And then when we find one, we're able to capitalize on it. So it's not like I just found this one property sitting out there. Nobody wanted and bought it. It took a lot of legwork on the front end to find this opportunity. I mean, I love this deal. When the rehab's bigger than the purchase price, it typically means - You're making money.

9:56Yeah, you're making some money on this thing. You better be making some money. But you still have to control those costs, right? And I think you have to be careful about buying the cheapest thing because the cost can't explode. I mean, What do you think for somebody that was like brand new? What's their rehab number going to be? You could easily run this about 125 to 150. It's not just controlling your costs. It's also not over renovating. But I have this contractor doing like four jobs for me right now. And so he's able to source materials all at the same time. And I'm able to get a discounted rate because we're doing so many jobs with this one contractor.

10:28But even you said 125, right? So Henry, just as a reminder, he said his renovation cost him 90. So even if you went up to 125, which is like a 30, 35 % increase over what Henry's paying, you're still into this deal for 180 and the ARV is 265. It's still a good deal. It's a stupid deal. Yeah, right. You could mess it up left and right. Exactly. So like, yes, there are inevitably efficiencies that come with doing the volume of deals. Henry's Doe, having a business for several years, being great at building these relationships, that definitely helps. But even if you're starting, there's so much cushion in a deal like this that it gives you a lot of flexibility and allows for some of those inefficiencies that just exist for anyone when they're first getting started.

11:13Absolutely. All right. Well, that is Henry's deal. We are going to take a quick break, but when we come back, we're going to hear about Kathy's new property, and we'll see if it's as relatable as Henry's deal that's filled with spiders and has no floors. We'll be right back. Running your real estate business doesn't have to feel like juggling five different tools. With ReSimply, you can pull motivated seller lists. You can skip trace them instantly for free and reach out with calls or texts all from one streamlined platform. And the real magic? AI agents that answer inbound calls. They follow up with prospects and even grade your conversations so you know where you stand.

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16:10Welcome back to the BiggerPockets podcast. I'm here with Kathy Fecky, James Daterd, and Henry Washington talking about deals that we are all working on right now. We heard about Henry's frightening deal with a lot of upside. Kathy, tell us about something you're working on. Well, this is a classic Kathy deal, and it is quite opposite from Henry's and probably James as well. Shouldn't be any spiders in this one. But actually, it is me helping my daughter get her first investment property. Because first of all, I don't know about my youngest yet, but my oldest, Karina, listens to me. And she bought a house instead of a car right out of college.

16:47Because she didn't get a car, her debt to income ratios were better. She was driving an old car. She didn't need a new one. And that house helped her buy a house in Southern California. And just recently, the bank contacted her and said, we can give you an equity line. All you have to do is just sign. And she called me. She's like, mom, what do I do? And I said, honey, you buy an investment property. That's what you do. And it's a pretty substantial equity line that they're giving her. So it's scary. She's very busy, busy professional. She's got her own business. And she lives in Southern California.

17:18So to find what Henry just described in her neighborhood would be about a million dollars for that. So I wanted to show her how I've been investing and how we've been teaching people invest who don't live in areas where it makes more sense to do the types of things that Henry's doing and James is doing. So how do you have a full-time job, two young kids, try to take care of your life, your home, all the things, and try to buy an old house and fix it up? It's really hard. So an alternative is to buy a new house that doesn't need any work and that still cash flows and is in a growth area where you today can negotiate to have the rate bought down.

17:58So, you know, Dallas has been hitting the news a lot as an area where prices are going down or there's just a lot of inventory, but they're not really talking about the outskirts. And if you go to North Dallas, it's a very different story, very low inventory versus higher inventory. Places like the McKinney area and even further North where you can still get tremendous deals and they still cash flow and it's still in the path of progress. all the things I love for buy and hold investing for busy professionals who just aren't in a situation to buy a spider house. It's just not going to work for them.

18:30So this deal is in an area in North Dallas, kind of near McKinney. There's so much development coming in in this area. The purchase price is$214 ,000 for brand new. That's really good. Wow. Crazy. The median price in that area is almost double that,$395 ,000. So getting it well under median price, I love that. It's a three bedroom, two and a half bath. We're negotiating the interest rate down. We're trying to get it under 6 % by negotiating with the builder. And the rent looks to be around$1 ,825. So again, not the numbers you're going to see with Henry, but also that's really hard to do when you live in Southern California.

19:11You're not going to find a$50 ,000 house and be able to put$100 ,000 into it, make it work. So again, this particular area has days on market is 65, months of inventory 3.9. So kind of normalizing, not what you hear in the news, which is a flood of inventory in Dallas. You have to know that for the Case-Shiller Index and a lot of these areas where they mentioned cities, they're not always talking about the metro area. And the metro area is very different than the city itself. Cities operate very differently than suburbs. So you just got to know your suburb really well and know where the growth is headed.

19:46Because if we want something that cash flows, if we want something more affordable, so do businesses. Businesses want to get out of expensive areas and into more affordable areas where they can get the land for cheaper, where they can pay their employees a little bit less than they might have to in a city. So you've got to always be looking at where our business is moving and where is housing needed as a result of that. So I'm super proud of her. She's going to be able to pull this deal off. It's her first investment and I like it so much, I'm going to get one too. Oh, wow. Just double dipping.

20:18I love that. Yeah, you know it. You know what I love about this deal right now though? You're catching the builders in the middle. Yeah. You know, right now it's a little bit harder to sell inventory. So they're now selling to you at a discount. You're able to negotiate the rate buy down, which is a benefit to you. You know, I mean, essentially you're getting the property for cheaper by getting that rate buy down. And also we have tariffs coming that supposedly is going to raise construction costs 10 to 15 % and you're locking in on today's bill costs where the builder is also working with you to get the inventory off.

20:48And that's what we're always chasing as investors is what's in the middle of no man's land. And that's how you can kind of crush that deal when you can get that rate negotiated down and you're buying below replacement costs. Because if construction costs is up 10, 15 % in 12 months, you're buying below replacement costs. And that's what I really do love about that deal. It's the right price, it's the right affordability, and it should naturally go up in value just by the bill cost alone. There's a couple of things I love about this deal. First of all, brand new construction home in an area of the country that is going to continue to grow.

21:22There's a lot of land mass in Texas. They're not just going to stop growing, right? So $214 ,000 for a purchase price for a brand new home? Yeah, it's crazy. The home's not going to go down in value. Even in the short term, if it does, over the long term, this property is going to appreciate. And I know there's people looking at listening to this and looking at the numbers and going, oh, 214 ,000, only 1825 in rent. But you have to consider that this property is brand new construction, which means you are not going to have the maintenance expenses and the capital expenses, maybe that like I am going to have with my property, that's a much older property, right?

22:01And so that is going to help you with the cashflow in the short term. And in the long term, you're going to have equity and appreciation plus the tax benefits on a property like this. Like this is almost a no brainer. If you get$214 ,000,$1825 ,000 rent in a market that's going to appreciate. Sometimes where you find new construction at these price points, you're probably not going to get the growth or the appreciation over time. So I think being able to buy something like this at that price point near a metro area like Dallas is pretty amazing. And then, like you said, just not to get nickel and dimed.

22:38It's like buying a new car versus an old car. You're going to get a better deal on the old car, but you might have to more fix it costs than a new car, hopefully. Yeah. And lower vacancy, right? Like, I think when you go into these communities where it's more family oriented, you might have longer term tenants, too. I mean, this makes a lot of sense to me. You know, Kathy, this might be a more relatable deal. It was. I think, you know, for an average investor who, especially who lives in a high price market, like this is a good option. Henry, your deal has a lot of juice in it to borrow James's term.

23:09But, you know, it's it's a little bit more work and it's going to be a little bit harder to do. So I think you might be competing here on relatability, Kathy. All right. All right. Well, thank you for sharing with us, Kathy. Sounds like a really good deal. Good example of something that you can buy anywhere in the country if you have the capital to afford something like that. All right. We're going to take a quick break, but we'll be right back. Here's the truth about passive investing. If the strategy isn't right on day one, the returns won't save it. Multifamily real estate offers structural advantages.