30 Rentals in 5 Years with Small, Affordable Multifamily Properties

0:00In 2021, Jesse Walters bought his first rental property, a 20 % down, turnkey, single-family home. But shortly after that, when interest rates went up, Jesse did what nobody expected. He bought even more. In 2022, he bought another rental. This time, it was a value-add property. And then in 23, when rates were 8%, Jesse bought a fourplex that still brought in$3 ,000 a month in rent. If it worked at 8 % rates, why stop there? In 24, he went bigger, flipping four houses and buying two rentals. And now, his biggest deal to date, 11 rental units that he bought in 2025 for, get this, zero dollars down.

0:40All small multifamily, all affordable housing for his community. And he's going to make a great profit. Jesse has slowly scaled his portfolio now to around 30 rental units, when just five years ago, he had zero. Everyone is telling you real estate is impossible to buy in 2026. Prices are too high. Rates are too unpredictable. Today, Jesse's laying out exactly how he scaled, even with high rates and even when the market was going sideways.

1:13What's going on, everybody? I am Henry Washington, host of the BiggerPockets podcast, and I've got my co-host Dave Meyer here today. What's going on, Dave? Not much, man. Excited for this episode, though. We got a repeat guest who's doing some cool things in real estate and eager to catch up with him because he's really showing a lot of people what is possible to still do in real estate here in 2026, even though everything's confusing and annoying and sometimes frustrating. Yes, we do. It's always fun to have repeat guests back. It's cool to hear people's stories, but it's oftentimes even cooler to see how they continue to grow and evolve because that is also a part of real estate investments.

1:51And so let's get to it. let's bring Jesse Walters onto the show. Jesse, how are you? Hey, thanks for having me. I'm doing great. Yeah, it's been a pretty crazy last year and a half. And yeah, excited to talk about it. Yeah. So it's been about a year since you were on the show. And for those who may have missed your episode back then, why don't you give us just a little bit about your background and how you first got into real estate? Yeah. So it really started in 2017. My wife got licensed as an agent. And she started growing that career. And I was in the background kind of watching that by curiously.

2:25We had a coffee business going at that time too. In 2021, we bought our first rental. It was a single family home in Columbia. We bought for 165, I believe, but we're 20 % down, 30 year fixed loan, nothing fancy. Didn't know what we were doing. I hung up a mirror in the bathroom and that's all I did in that thing. And I did that one myself. I didn't even hire it out, But yeah, we got that thing rented out for$1 ,500 a month. In 22, that's when I really dove into bigger pockets and started learning a lot more. I'm like, all right, I need to do something else here. So we bought another single family.

3:00It was on the MLS. Need a little bit of work. Wasn't too bad. We put about$15 ,000 into it. It was a construction loan. And we bought that for like$130 ,000. And yeah, we got$145 ,000 in it. Rented that out for$1 ,500 a month. and in 23 that's when things really started taking off we bought a fourplex that was on the market it's actually my hometown about 30 minutes away and uh we bought it for 190 000 one of the units was vacant when we bought it i put it up for rent it was like a two bed one bath small town we put up for 700 bucks a month and i got close to 100 phone calls or emails whatever on this thing i was like, I definitely undershot this.

3:43What are we doing here? That's good market feedback, learning something. You underpriced it. I guess two things. One, I was under market. And then two, there's a very big need in this town for rentals. I just didn't realize there was that much demand and less of little supply there. So I rented out at the price I hadn't marketed because I didn't want to go back on my word at that point. The other tenants there, we raised up the rents a little bit. One decided to move out. I kicked that one up to 800 a month. I just kept going up 100 bucks every time until we figured it out. About 18 months into that one, we had all four units turned at that point.

4:19And we were bringing in about three grand a month on it. And we bought it for 190. That's awesome. After we got that one done, I really started focusing in that town and buying rentals there and really pushed it. It sounds like you learned a lot about about demand in your area at the time? Because it seems like you were able to buy things, add value, and then your rents seemed to be, sometimes it sounded like even more than you were expecting, which shows you that there was demand in the area. But I think one of the things that you do well, because I've known you for a little bit of time, is you have a lot of relationships in the area.

5:02One, I think because your wife is an agent, but two, because you're from there. Did you leverage relationships to find these off-market opportunities? Or how are you bringing in these opportunities? I guess starting, what really helped us was we knew a lender and he was very blunt with us, you know, just telling them like, yes, no, or like, this is a good one or not. And like, he was really vital with that first rental we bought. How we find most of our deals now, one is mailers. So last year we bought five properties on postcards and the rest is like agent referrals or online like investor lift or you know Facebook things like that and but like I have one agent specifically he sent me like four or five deals last couple years another one sent me two or three typically what's happening is these agents they get a listing these houses need a bunch of work they don't want to put them on the market because they're going to be a hassle they're going to sit there a while things like that and they know I do what I do and they're very transparent with with me like this is what it is this is the amount of money they need to get out of this thing.

6:03And I usually know the price going in and we just try to meet in the middle and create a win-win for everybody. And they don't have to go to the market. The agent wins. I still, I pay the agent's commission when we buy it as well. So they still get paid on it. And I think that's what really helps snowball it too. It's like, well, the agents know like they're still going to get paid if they call me. Yeah. I was literally going to ask, well, how do you get these agents to call you over everybody else? But it sounds like you're making sure that they get the thing that's most important to them. If they know they're going to get paid and they get the deal done faster, call Jesse.

6:35I don't negotiate their commission or anything. I'm going to work in the 3 % commission for you right off the top and we'll get it done that way. I think this is just a philosophy people should be embracing everywhere in their investing career. It's just figure out a way to create mutual benefit. This is exactly what we talk about on the show, but agents deserve to make money, right? Like they, they, they were working hard. They're bringing you a deal. They should make money for bringing you that deal. So going to them and acting like you're going to get their best deals, but you're going to pay them the least just does not make sense.

7:09Like, it's just not going to work and maybe it'll work once, but they're not going to call you again next time. I think this is, you know, we talk about real estate being a relationship business all the time. And this is the opportunity for you to stand out, figure out a way to build good relationships by creating mutual benefit for your tenants, your vendors, your lenders, everyone. Jesse's figured out a great way to do it. It's why he's getting great deals. And it's a model that pretty much everyone can replicate as well. I call it speaking to the people in the what's in it for them. When you talk to people, if you can speak to them in the words or the phrases or highlight the things that you can do that help them get to the thing that they want to get to, they're going to want to talk to you more.

7:54They're going to remember what you have to say. They're going to remember that they want to work with you because you're speaking to them in the language that makes the most sense to them. Agents want to be able to get paid for the hard work that they put in. They want to be able to close quickly and they want their sellers to end up essentially being happy so they can create repeat business. And I think oftentimes when we ask people like, how do you find deals? And they say networking. And that doesn't really sound like a strategy, but Jesse's telling you exactly how he networks for deals. This is what networking looks like for Jesse.

8:25You have to figure out what networking for deals looks like for you. So if we round that out, you're networking, you're using direct mail. So you're sourcing leads. You've got a lender. So, you know, you've got the funds. So really it's just a matter of analyzing the leads and making the offers so that you can close on the deals. Yeah, correct. And we don't get most of them. Like I'm, we make 10 times. Yeah, I most offers I put out there. They say no like it is not like I'm just oh this house showed up I buy that when this house showed up. I buy that one like no, it's I'm going to look at houses any kind of property You know multiple times a week sometimes and just like and it's just no no no no I'm like, okay, where's the yeses, you know about how many offers would you say that you make before somebody says yes?

9:11Typically, I would say it's like one in ten probably. Yeah, that's pretty good. That's pretty darn good It's very interesting and cool to hear kind of how you've grown your business. It sounds like you really picked up steam in 2023 and 2024. 2025 was a pretty challenging year for almost every real estate investor I've ever talked to. So talk to us about how your business evolved from 2024 into 2025. life. So in 2025, just to go down quickly here, single family is a three, two slab built in 2015. We bought it on a postcard. I bought it for 200 grand. It was a 10 year old property. It didn't need much.

9:50It was all cosmetic, but like 15 in it, just paint like light fixtures, things like that. And then it appraised at 287 and we have it currently rented out for 2300 a month now. No, that's great. And that's a very low maintenance property after that. You know, it's being being a three to slab as well. There's no basement. I don't worry about, you know, basements leaking, nothing like that. So I'll take that one for sure. Another one we did. This was one of my favorite ones I bought. It was a duplex built like in the 90s. So pretty straightforward as far as like construction wise, things like that.

10:26So we bought that for 210. I didn't even negotiate that one. He came in. He's like, I want 210 for it. I'm like, yep here you go and uh we put like 30 grand into it on both sides it it was just cosmetic and it appraised for 330 wow so i walked in almost 90 grand of equity on that one and it's currently ran out for 2800 a month on both sides gross rents and i've got 240 in it and i dscr that one so i pulled all my money back out and then some and it's on like a 5.8 interest rate with a 30 year wow that's awesome so that one was perfect like that was the best way it could have gone i got no money in that one you did a full burr in 2025 yeah wow i could not believe it he's just showing off i know i got very lucky with that one like i don't i that's the only one i found for sure or something yeah the rest of them kept telling me no so so jesse uh you know when you're doing these deals you're you're finding them in cool ways is your preference to do buy and hold or flipping or like, how are you thinking through applying a strategy to the leads that you're getting?

11:32I actually learned this formula from Henry. Uh, so gross rents minus 30%. And then that pays the taxes, mortgage insurance. If that's like break even or a little bit above, I typically hold it. Okay. Cause it's at that point it's fully renovated. And then I don't have much to do for the next few years anyway. So, and then after a few years, I'll reevaluate if I want to keep it or not, if it's making me money or something like that. Cause I took it, I have equity in all these, you know, in some capacity. So I can always sell them later. And if they don't work out, I just sell them. If they don't cash flow, they don't do that, which is most of them.

12:05Really, I'm flipping them. Okay. Generally speaking, I'm flipping singles and keeping the multis, but it doesn't always number out that way. Just to be clear, I know I taught you the number, but I want to make sure everybody understands. So it sounds like you're looking at your property and you're taking rents and you're subtracting debt service, taxes, and insurance. and then you're subtracting 30 % for expenses. And if you're positively cash flowing after that, then it's a solid deal because that's fairly conservative underwriting. Then you do the thing that Dave and I have been talking about for like multiple episodes, which is evaluate your deal after you have got it to where it is actually performing to see if it is actually performing like you underwrite it to.

12:47And then you can make a decision whether you sell that or keep that down the road. Is that what I'm hearing? That's exactly it. Yeah. Because at the end of the day, there's equity in it. All of these have equity. So it's easy to sell later and pocket some money at the end of the day, worst case scenario. Yeah. I mean, I think that's just real estate strategy one-on-one. A, you're walking into equity day one, which is what's most important for me and my portfolio as well. Yes, I want it to cash flow. I do. But there are some properties I am willing to break even on depending on location and there's all these other factors that you consider.

13:20But I never buy at retail value. I always walk into equity because the goal is if you have more than one exit, you have a way out, right? And that's what people who are in trouble in tougher financial times find themselves in a difficult position because they don't have a second way out. Their first monetization strategy maybe isn't planning out like they thought. So maybe that long-term rental isn't long-term renting like they want it to, and they bought it at the top of the market, now you find yourself in a place where if you want to sell it, you've got to throw money on the table to sell your property.

13:54That's where you get in trouble. So walking into equity and being able to have cash flow as an option is a way to stay, you know, air quotes safe. Is it foolproof? No, but it is much safer if you can walk into some equity. Better to have some options. All right. This is cool. I think there's a lot of great information in here for people who are either beginning investing or starting to grow and scale their portfolio, getting an inside look at how Jesse was growing and scaling his portfolio. But I do want to dive into this flip turned flop and we'll do that right after the break. As a host, the last thing I want to do or have time for is play accountant and banker.

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15:16It's packed with advanced automations and features to save you even more time. When I bought my first rental, I thought collecting rent would be the hard part. Nope, the admin crushed me. Every night was receipts, tax forms, and checking who was late on rent. I kept thinking, if this is one unit, how do people run 10? Baselane changed that. It's BiggerPockets' official banking platform that handles expense tracking, financial reporting, rent collection, and even tenant screening all in one place. It's the system I wish I had from day one. Sign up today at Baseline.com slash bigger pockets and get a$100 bonus.

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18:08All right, we're back with investor Jesse Walters. Now, Jesse was growing and scaling his real estate business in 2025, which is pretty cool because a lot of people were not growing and scaling in 2025. But it does sound like you ran into a bit of a hiccup. welcome to the club of people who did a deal in 2025 that didn't work out like they thought so i'm interested to hear how was your flip and did it turn out to be a flop or did you get out by the hair of your chinny chin chin the hair of the chinny chin chin is is pretty accurate statement i think but yeah so yeah this was a a ranch walkout like a it was a three-bed two-bath with a full unfinished basement on it.

18:51We bought it for$265 ,000. That seems like a higher price point than you normally buy at. It was, yeah. Uh-oh, Henry's red flags are going off. For sure. We bought this thing for$265 ,000 and I budgeted about$40 ,000 going into it. Really, it was mostly to finish out that basement and add some square footage. Upstairs was just paint, countertops, flooring, light fixtures, nothing major. I undershot that. it ended up being like 65 grand renovation and also we went over intentionally in some ways because the market was turning and there was another house on the street that wasn't selling it was literally right next door same exact house and it was just sitting there and i was watching this thing i'm like well my house needs to be nicer than that one to sell it yeah so i'm like i'm gonna put some nicer finishes in this one so we went 25 over in that it sat on the market for four months yeah so all through winter we sold it in late january early february i think this year so i budgeted to sell it for 375 we got it under contract for 373 so i was like okay we're okay we're gonna get out of it i'm still gonna make a little bit of money we're okay we get two inspections and i did not catch it that deck the back it was a double decker deck there's a platform in the basement platform on the main level and that thing was leaning oh no and that was a ten thousand dollar fix to get that thing the other thing too i was gonna do it but because we already went over budget i just didn't and uh it needed a roof i knew that going into it but i was like i'm gonna try and negotiate this into the deal like after you know we'll get it done that way and uh it came back and like we by the time we negotiated the roof and in that deck i was like I came out, I think I made 600 bucks.

20:37Woo, there you go. That's two tanks of gas these days. Oh, yeah. That's not that bad. Honestly, I feel like you learn a lesson and you come out even, which is basically what you did. That's a win in my book. But let's break it down. So where'd this thing go around for you, Jesse? You've probably had some time to think about this. What was the issue here? They gave me a number that they needed. And this was like on the brink of foreclosure. When you were buying, right? Yeah, I'm sorry, when we were purchasing it. Yeah, so the sellers were, they're like, we're gonna lose this in two weeks if we don't sell it.

21:13And I was like, one, I need to close in two weeks. And then two, they have to have this number or is the bank just taking it. So I gave them their number and I fibbed on my own underwriting just to get to their number. So I get that. How bad? What did you want to pay for it? It was maybe 10 grand above what I wanted to. It wasn't horrible, but it was like, that's a deck.

21:37And so it was close enough where I took the deal. You know, it was like 10 grand, like 10 grand. I can flex it. I can be okay here and still do it. So, and it got them out of foreclosure too, because they were in a tight pinch. And I was like, I can actually help them here. For sure. That's hard to not do. Yeah. So like, let's do it. And then the underwriting on the renovation, I wasn't paying attention to the market. It was right when it was turning and I didn't pay attention to like, OK, I can't just like make this a standard thing. It's a little higher price point. Like I need to be putting a really nice bathroom in this thing.

22:12And like this isn't just a basic reno. It's like I got to have glass shower doors, you know, tile floor to ceiling, you know, things like that to make this thing pop. Every investor who flips a house is going to find themselves in this position at some point where you have to either bite the bullet and put more money into it. And sometimes putting more money into it doesn't mean that you get to take it out. It might just mean that you get yourself back to break even. Yeah. Right. And so it's actually it is a math problem. And that's where either you having your real estate license or you having a good investor friendly agent is so important.

22:49People think it's only important when it comes to just like, you know, negotiating your sale or it comes to somebody buying. But like these situations are where your agent really makes their money because they're the ones that are selling the properties and seeing what people are buying or what people aren't buying, especially when the market starts to turn. There are still transactions happening when a market's turning, but the transactions are happening on certain properties offered at certain price points with certain amenities. and like you really have to know what those are so you can try to put your property in that best position to sell when the market is not working in your favor.

23:28And sometimes it does mean you have to bite the bullet. It may mean that you have to bite the bullet to spend 20 grand to make the ARV you were expecting to make, not even to make a new higher ARV. And that is a hard pill to swallow as an investor to throw good money at what seems like a bad problem. I've got a house like that right now. I've got to spend$15 ,000 on a fence and fixing a driveway that I didn't think I was going to have to do in order to sell this house for the exact same price point that I planned on selling it beforehand. That sucks, but it's better than holding onto something that's bleeding you dry.

24:03Right. Because you're basically making the analysis here, Henry, that you're going to spend 15 grand. But if you don't, it could sit on the market for another three months or four months. I don't know if that would cost you 15 grand, but it will sit and you still might need to put 15 grand into it four months from now. Once you learn the lesson the hard way, right? Yes. This is true with Burr investing too. It's true with every kind of value add investing where like eventually you need to be able to make a call if your plan is working or not. And it's not a fun place to be. And you got to take your pride out of it.

24:38Exactly. And that's why I was asking about the calculation, because I really think it's hard, but you got to just do it by the numbers. You have to say, here's what the ARV is going to be. Or if you're a rental property investor, most of the time when I'm doing this for rental property, I'm trying to get my rents to X, right? And sometimes the market changes and you see the property next door not renting and you thought you were going to be able to get that for rent, right? And you need to start making these decisions for yourself. how much more am I going to have to put in and how much is that going to change my outcome?

25:11And is that better or worse than my initial plan? It's super easy to go on gut where if you're flipping a house and you go walk a comp that has an open house and you're like, oh man, they have nicer landscaping. I got to go landscape. Yeah, maybe. But like, how much is that going to cost? How much is that going to change the ARV? Like it has to come down to the numbers and it can't just be a panic or a gut reaction. Well, thank you so much, Jesse, for a, just being extremely transparent with everybody. It's hard to share about deals that didn't go well, but those lessons are some of the most valuable lessons for people to learn.

25:46Look, if you're listening to this, nobody's batting a thousand out here. Everybody's done a bad deal or is doing a bad deal currently, or will do a bad deal at some point in the future. What's important is what do you learn from those deals that don't go well? How do you not repeat the mistakes from those deals that don't go well and make sure that bad deals don't take you out of the game. That's really the only way to truly fail is letting a bad deal completely wipe you out. So it sounds like you were able to get out by the hair of your chinny chin chin. So we appreciate you sharing that lesson.