How to Find Profitable Rentals in 2025 (Lazy + Expert Methods)

0:00This is how you find an investment property in 2025, even if Zillow and Redfin aren't working. The usual listing sites are not your only options, and some of the alternatives that experienced investors use might actually be easier and cheaper than you think. So today, we're sharing where else you can find deals right now.

0:24Hey everyone, I'm Dave Meyer, head of real estate investing at BiggerPockets, and today on the show, I'm joined by my friend, Henry Washington. What's up, man? How you doing? What's up, Dave? How are you, buddy? Good to be here. Today, we're doing one of my favorite formats. We're going to be answering a few questions from real investors on the BiggerPockets forums. And first up, we have a question that is just tailor-made for you. We have a new investor who wants to find off-market deals. Then we'll also cover how to raise rents for inherited tenants, when it's time to offload a property, and a couple other great questions you definitely want to stick around for.

1:00Henry, you ready? Let's do it. All right. Our first question comes from Bobby from Philadelphia. He asks, I've been attempting to find a small multifamily to house hack as my first investment property since the beginning of the year. I've been using public listings like Zillow, Crexian, Realtor.com without much luck. So I'm looking for sources for off-market properties. I know patience is a big factor, but any guidance here would be greatly appreciated. Henry, this one has your name all over it. I'm just going to sit back and let you cook. So go for it. Yes, I love this question because, A, we all know we love talking about house hacking here, and it's such a phenomenal strategy.

1:39But I've got the perfect solution for people who are in this boat. If you would like to find a small multifamily, especially to house hack, I would use direct mail as an approach. You could try cold calling, but I would use direct mail. But I would use a very targeted list. Really what we're building a list of is property owners to market to. So what you want to do is go to a list building website. There's PropStream, there's ListSource, there's DealMachine, all of these sites, you can build a list of property owners. There should be a filter where you can select the types of properties you're looking for.

2:15You want to make sure that you have selected multifamilies and all of the small multifamily selections. Sometimes you have to dive deep into that list because they're buried in there, but you want to make sure you select all of the appropriate property types. And I would specifically look for senior owners. And what you're trying to take advantage of with this list is your retiring baby boomers. A lot of people right now are talking about the silver tsunami as it comes to baby boomers selling their businesses. But you've also got baby boomers that are retiring who are looking to get rid of their real estate portfolios.

2:47And a lot of these property owners own small multifamily properties, And I would filter for equity of at least 80 % or more because a lot of these are going to be paid off or pretty close to paid off. 80%, wow. Yes. Why that high? I mean, is it just they're going to get a big check so they'll probably be motivated? Why that high? Because the one thing that people don't like right now are interest rates. And if you filter for a list and you get properties that are majority paid off, you're able to negotiate seller financing. because a lot of these are retiring landlords and they're getting rid of the property because they don't want to deal with the headache of the property.

3:28But they obviously like the idea of cashflow because they've been investing in real estate for ages. And so it's a great list of people where you can pitch owner financing to say, hey, I would love to buy this property. And if you want to keep getting rents, you can continue to do that. I'll just make my payments to you and then you'll get money every month regardless. So you're doing like a double strategy. You're doing an off-market deal and you want to negotiate seller financing. Absolutely. Why not get the best terms you can get when you're looking at this list? For me, I like the ones who are almost paid off because they like to continue to get cashflow.

4:04And you want to also make sure that they've owned the property for at least 10 years. So what you're banking on is that these people have owned the property for a long time and they're looking to get out of it, looking to get out of the business, and it can help you snag some of these deals. But don't just send a letter that says, hey, I'm Henry. I'd like to buy your house on 123 Main Street. What's one thing that boomers love to do, Dave? Well, if it's my parents tell really boring stories. Absolutely. Boomers love to talk. They will tell you all the things about life. They genuinely want to tell you stories and help you.

4:42And so don't just send a letter that says, I want to buy your house at 123 Main Street. send a more personalized letter. I send a letter that says, hey, I'm Henry. I invest in real estate here in Northwest Arkansas as well. I see you on the house on 123 Main Street. I would love to sit down and have coffee with you and learn from your experience as a landlord over the years. I'm trying to become a better landlord. And I think that you might be able to help me. And you will get a much higher response rate from that letter than you would saying, hey, I want to buy your house. Here's a cash offer.

5:14This is a house hack too. So like you are living there like as an investment. I don't know what this person's long-term strategy is, but you know, some people do want to sell to an owner occupant. Yeah, absolutely. And you can say, Hey, I want to live there, but I will also want to invest there. You can include that in your letter. The more personal you can make it, the better. And you'll get a much higher response rate. And then you can go sit down and talk to these people and build a relationship. And let's say that person isn't really interested in selling their property, that's fine. Mom and pop owners know all the other mom and pop owners in town.

5:47And so if they're not ready to sell, I bet you they know who is. And you can really start to build relationships with people and potentially get yourself a really good deal. So I love the senior owners who have lots of equity in their property. And then I reach out to them and try to build a relationship. And sometimes that means I'm going to offer on a property and sometimes it doesn't, but I usually improve my network. And worst case scenarios, you get somebody that wants to help you out and share some experience with you. I love it. Your response here is such a perfect example of the just dramatically different approach you and I take to real estate.

6:25And I'm going to share with all of you my lazy approach to the answer to this question in just a minute. But I want to ask, because you're right, this approach will get you a better deal than what I'm going to recommend. So keep that all in mind. But I want to know, like, realistically, how long is this going to take someone? How many letters do you need to send out? Like, what time frame can be expected if you're going to take this more hands-on approach, which again, I agree, will get you a better deal? I would say you probably need to send mail for at least 90 days to this list. So sending it to the same list and somebody getting a piece of mail every month.

7:01I would actually accelerate it. I'd probably do every two to three weeks to send a piece of mail just to accelerate the touches. And I would say you probably want to send to somewhere between a thousand and 3000 people. If your list has less than that, your likelihood of getting a response where you're going to get a deal goes down pretty dramatically. But I think if you're sending it to between two and 4000 people and they get between three and five to seven pieces of mail from you, it might take you three to four months before you probably have a decent lead on the hook and then however long it takes for you to close after that.

7:37I think, again, what's helpful here is you don't need them to have a ton of equity. So you can increase the equity to give you more people to reach out to. So you've got more gun powder. But I do know that that list will give you a pretty good response rate compared to a typical letter that says, hey, I'm an investor. I want to buy your house for cash. The response does really well with that demographic. Okay. How much will this cost? Yeah. Just try to calculate somewhere between 50 and 75 cents per piece of mail. So you can do the math based on how many pieces of mail you want to send. And that number goes up or down depending on what kind of mail you send.

8:15If you just send a postcard, it's less. If you send an actual letter, it's more. All right. This is a great advice. Super specific too. I love it. Whether you are Bobby asking this question or thinking about similar things, this is a very specific thing. It will take a little bit of time. It will take a little bit of money, but this is a proven method for actually walking into a lot of equity when you buy a property. We have more questions like how to get rents up to market rate with existing tenants and how to get organized so that you can set yourself up for success while you're scaling. But first, we got to take a quick break.

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12:41Welcome back to the BiggerPockets Podcast. I'm Dave Meyer here with Henry Washington answering your questions from the BiggerPockets forums. I should mention, if you have questions, go to the BiggerPockets forums and ask them. You might get a great answer from our community there, or we might pick one of your questions for our next Q &A session here on the podcast. For our second question here today, it comes from LA, an investor named Joshua, who asked, I'm looking to buy my first property. I found a duplex where the back unit is vacant, but the main house is occupied and the current residents are paying half of market rent.

13:16They've been there 10 years and are on a month-to-month lease. My question is, how can I make this a win-win scenario for both me and current tenants? This property has potential, but with what the current rents are, It just doesn't make sense. This is a great question. First of all, Joshua, love that you're trying to create a win-win situation for both you and your tenants. I think that is a great way to approach this question. So Henry, what are your thoughts? I love this question because we've had to do this several times. And the fact that you're even asking it means that your head and your heart are in the right place because a lot of people think we're just evil landlords.

13:51We raise the rents immediately. And if you can't pay, you can't pay. But that's not the case a lot of the time. So, A, I commend you for doing this the right way. B, first thing you want to make sure for people who aren't Joshua is you want to make sure that those tenants are really good tenants. Because if they're not great tenants, then this may not be the way to keep them in there. You know, if they're going to end up costing you money because they're late on rent or these other things. So, you just want to make sure that these tenants are truly good tenants. Just because they've been there for 10 years doesn't mean they've been good tenants.

14:22And then be transparent and upfront with the tenant. A lot of the times tenants, when a place changes hands, they're going to be scared and apprehensive because they probably have some negative thoughts towards landlords themselves. And so I always just like to go and meet the tenants myself in person, introduce myself, you know, let them know that we now on the property. So an example is I had a house where the lady was paying about$400 a month rent because her rent hadn't been raised in years. And I bought the property and we needed to get her closer to 900 was market rent at the time for this property.

14:57So, you know, it's more than double her rent, which is really substantial. And so what we did was I told her, hey, I bought the house. We have a mortgage payment of and I told her I showed her what our mortgage payment is. I said, so this is a mortgage payment. I've got to be able to afford to make the mortgage payment. Plus, because I now bought the property, taxes are higher and insurance has gone up over the years. And so this is where we are. And then I pull rent comps and I show them, I'm like, within a one mile radius, properties of the same level are renting four and I'll show them the comps so that they see, because if I raise their rent, they're going to have to go looking anyway.

15:35So I show them the comps in the area. I say, so market rent is about$900. And so I want to find a happy medium with that tenant. And so what I'll say is I do need to try to get you closer to that number, but I'm okay if we don't get you all the way to that number. If you're willing to stay and continue to take care of the place as you've taken care of the place, I'd love for you to stay. And so I'll ask them, based on that information, what price do you think is fair and that you could afford to get to? right because I want to hear their opinion and I want them to feel like they had some say in it so it doesn't feel like I'm just the evil landlord who came in and raised their rent and typically once you show them all that information they'll give you a reasonable number and if they can't give you a reasonable number or they don't give you a reasonable number there's probably a reason maybe they're on a fixed income maybe they truly can't afford to get to where they need to be and I'm trying to establish that that understanding with them because if it's the point where she says look, I can only pay 500.

16:32I can't afford anything more than 500. Then we don't need to be having a conversation about how we get you closer to market rents. We need to be having a conversation about how can I help you transition to something that's more affordable in a way that's not going to kill you financially. And so that's a different conversation. And I knew what I would be willing to take if she was going to be able to get to somewhere around between 775 and 825, I could live with that. I didn't need to get her all the way up to 900 because also if she moved out, then I have to spend more capital making improvements to the property because she's been there for so long.

17:05So that delays me having to spend that capital and gets me more money right now. So I was willing to get her to pay less. So she said what she could pay. We ended up right around 775. And then once we established that, I said, great. Now, what if we can over the next six months get you up to that point on a tiered basis. So it's not just like punching you right in the stomach right away. You've got this big rent increase. And so we worked out a plan to where every month we raised her rent a little bit until we got to the point to where we needed to be. That made it a much easier pill to swallow for her and helped her get accustomed to that rent over time versus just having her have to change her entire lifestyle in 30 days.

17:45I absolutely love that approach. I think that's sort of the human way to do it. You have expenses, you need to meet. You, as a landlord and a business owner, have to earn a profit in order for taking the risk that you have by owning an operating property. That's part of the business, but you want to do it in a way that respects your tenants and values them appropriately because they are your customers. I love that approach. Can I ask if you do this in person or over the phone? I'd do it in person. Yeah, I think that's sort of a key thing. It's like going and sitting down with someone shows that you actually care.

18:18And if you do actually care, which you should, if you're getting into this business, like, go spend the time, go do it. Or if you're, you know, managing from afar, find a property manager who is willing to go do this and spend the time with the residents as well. Because, you know, if you just call someone on the phone, or you send them an email, just like, here are the comps, it's a little passive aggressive. You know, going and actually sitting with someone, I think shows that like you want to build a relationship with them. That's going to stand the test of time. This is not like some hard nosed corporate negotiation where you're just like, you know, just like sending them facts and figures.

18:53You're going to work with them. And that's, that's sort of the important thing. For me, I never want to use a tone or words that make it sound like this is mine and you have to do what I want to do. It's always like, this is your home. I would love for you to stay in your home. Yeah. Right. This conversation isn't about me figuring out where you need to go. This conversation is about us trying to figure out how we can help you stay here in your home. Right. I want to put myself at their level, not above them. We're just two people trying to work out a solution. You know, I want them to take their walls down because I truly do care about them and want them to be okay and be able to stay if they can and want to.

19:38Absolutely. And yeah, I, again, respect and appreciate the question here from Joshua asking about how to make it a win-win situation because that's really the main thing. Like if you approach it with that mindset, you will figure it out. You know, I've personally never really even had a problem with these kinds of things because you go into it with that mindset. Now, on a tactical level, when I underwrite a deal like this and I know there's someone in there, I usually ramp up rents to market rent over like three years and just assume that it's going to take me a little time to get there. But as a buy and hold investor, I'm OK with that.

20:11For me, what matters is when I need this money 5, 10, 15 years from now because I'm retire off it, whatever, is it going to make sense then? As long as I'm able to generate positive cash flow, if$50 a month. in taking three years to get that extra 100, 150 bucks to be true, quote unquote, market rent. I'm fine with that. That's okay with me. And I recommend people do that because if you don't, as Henry said, then you're going to have turnover costs. You might have a vacancy while you renovate, like you're going to pay for it one way or another. Yeah. So you might as well just like do the thing where you have a great tenant, keep them in there and everyone's happy.

20:47Yep. Well, you're solving every question for us here, Henry. So I'm going to keep going and see what you got for question number three, which comes from a BiggerPockets community member named Renee. She said, I've been noticing that some local investors are starting to reassess their portfolios, especially with the current market conditions. For those of you who have been holding multiple properties, how do you decide which ones to keep or sell? Is it cash flow, tenant turnover, maintenance issues, or just gut feeling? I got a lot to say about this one, but Henry, how do you approach this? I love this question.

21:20A, because I don't think enough people do it or they at least don't talk about the fact that they're doing it. I know. The whole like buy real estate and never sell crowd is very loud. And I disagree with all of them so much. Absolutely. And this is the topic I'm hosting a breakout session for at BPCon. So I'll give you a little bit of the answer here, but if you want to come see and hear the in-depth talk about this exact topic, then head over to biggerpockets.com slash conference and grab your ticket to BPCon, where I will be there speaking, talking about exactly this. Oh, nice. Getting a little sneak preview here.

21:57Let's hear it. Absolutely. Absolutely. So I think every investor should be analyzing their portfolio, preferably on a quarterly basis, if not at least twice a year. But quarterly allows you to be more tactical and pivot faster if you need to. So just set a reminder on your phone for once every four months to sit down and just look at your P &Ls for your properties and see if the properties that you purchased are actually performing to how you underwrote them too. And then as you're looking at that, you can make a determination. And typically you're going to do one of three things. Either it's going to be performing well, and that's great, or it's going to be underperforming.

22:44And then you have to decide, okay, well, if it's underperforming, what can I do to make it perform? Typically, it's going to be that you have to spend some sort of capital. Do you need to update the kitchen? Do you need to add a bedroom? Do you need to put laundry in it? Right? There's tons of things that you can evaluate to get there. But what you're trying to figure out is how do I get this thing to perform to how I underwrote it to perform? And as you're doing that, you take note of how much cash that is so that you have an understanding of, okay, I have property A, property A is not performing how we underwrote it.

23:19And my estimate, it's going to cost me$15 ,000 to do A, B, and C to get that property to perform at that level. And then you have another choice. And that other choice is, does it make the most sense for me to spend that 15 grand to get the property to the performance level you want? Or based on what your investment style is, does it make more sense for you to take that 15 grand and go purchase another asset or to pour that 15 grand into another asset where you're getting a better return? You can't make any of these decisions unless you understand what each one of your assets is doing. So you have to be evaluating your portfolio to know.

24:02And so I can't just tell you, should you keep an asset or sell an asset? What I can tell you is you have to make sure that your accounting is set up properly so that you can look at each property's performance, look at each property's P &L, and then you can make a determination. One example of what I did in this very similar situation was we had a duplex and I thought we weren't getting the rent I expected in one of the units. I underwrote it for us to be able to get about$13 to$1 ,500 a month rent per side. And we were only getting 12. Every time we would rent it, we'd get somewhere between 11 and 12.