The 2026 Housing Market is Here: 3 New Moves We’re Making This Year

0:04Happy New Year, everyone. Welcome to the BiggerPockets podcast. I'm Dave Meyer, head of real estate investing at BiggerPockets. I hope you all had a great holiday and are excited as I am to grow your portfolios this year. Today, we're kicking off the year with New Year's resolutions. And for that, I'm joined by my on the market co-hosts, Kathy Fettke and Henry Washington. We're going to share our goals for the year, the strategies we're planning to achieve those goals, and the risks we're avoiding in a changing market. A heads up that this show will also be published on the On The Market podcast feed over this New Year's break.

0:41And make sure to tune in next week for my annual State of Real Estate Investing show and a huge announcement for the BiggerPockets podcast you're not going to want to miss. With that, let's jump in. Kathy, Henry, how are you? Happy New Year. Happy New Year to you. Happy New Year. I am not going to lie and pretend that we're recording this in the New Year. It's not really the New Year, but proactively to everyone, we're recording this in December, but Happy New Year to all of you. Kathy, you have some great holiday plans. Tell everyone what you're up to. You're always somewhere fun. Well, yes, I'm in Paris recording this from a cave.

1:19You literally look like you're in like a medieval wine cellar right now. I'm pretty sure I am. I'm in the oldest part of Paris. But I am here for the Christmas markets and mainly because my daughter is getting married in France. So I had to come see the venue with her. Had to. You had to. I had to. And it's the last year of the Northern Lights being like really intense. So we're going to take a little trip up to the North Pole, to the north of Norway. Oh, that's so great. Wow. What a fun trip. But Henry, what were you up to in the holidays? Food.

1:54Brandon Turner:Enough said, really. I mean, I have little kids, so I do get to enjoy the joy of Christmas still. So that's fun. But mostly I'm eating my way through the holidays. Yeah, good for you. All right, well, let's jump into today's episode because I really wanted to start looking forward. Last year was an interesting – I wouldn't call it a great year. I was going to say it's a great year. I would not have called 2025 a great year. That would have been a straight-up lie. I am feeling optimistic going into 2026 and just about real estate in general. So let's talk about this in terms of what our New Year's resolutions are.

2:31We'll start with real estate, but if you want to throw a non-real estate one in, I would love to hear them. But Kathy, what's your real estate New Year's resolution? Well, I have a few, but one is to really dive into AI because Rich actually bought a really expensive program. and he's finished it and I have not, I'm not even close. But it is, I know it's so powerful. I mean, one of the things that Rich did is he uploaded everything, our bank statements, the cashflow, our system knows everything about us. And when we upload it, we could know which properties are performing well, which are not. I mean, we shouldn't be knowing that anyway, but I feel like sometimes it's easy to get lazy or you've just owned properties for a while and haven't really taken a look like, how is this, is this still a good performer?

3:19So using AI to optimize our portfolio is my goal for real estate. I like that a lot. I like this as a goal. It's not like, oh, I have to buy this property by this date. It's, this is more like a growth mindset kind of goal. Like how do you just evolve as an investor generally so that you can make better decisions going forward? Is that program, is that real estate specific? No, no, it was just a bunch of business owners. But I mean, it's like he's got a business consultant now, all of our business financials are in there. And we had every employee detail what they do, not in a doge kind of way, but I guess kind of.

3:58Like, what do you do all day? And so AI knows each employee and knows how to optimize for them. It's really been phenomenal. And we've already, we had one of the best months ever for our company last month. I don't know if it has to do with that or not, but that's strange, right? At a time when real estate has been so slow, sales have been slow. We had a really good month. That's awesome. So it sounds like you're using AI not just to identify properties or deals, but work on and in your business as well. Yeah. I mean, how many times do you really know what your insurance covers? Literally never.

4:34So with, I'll say Claude, for example, we can upload our entire insurance thing. There's a word for it.

4:42Brandon Turner:Your insurance binder? Yeah, that thing, the binder, to just really know the details of your insurance policy and even ask it, hey, is this covering me for everything I need for this investment property in this particular state? It's really phenomenal what's available to us. It's only going to get better, so why not be on the cutting edge of it? I love it. Henry, are you using AI regularly? The short answer is yes, but I'd be lying to you if I told you I was using it on a much deeper level than just the surface level asking for help with certain items. Now, I did try to build something similar to what Kathy is talking about about two months ago, where I was uploading transaction data and information from my property manager because I wanted to see if AI could give me a sense of how well certain properties are performing.

5:26Brandon Turner:And I thought if I could upload the actual bank statements and marry that against the data from your property manager, who's actually going out to the properties, doing the actual repairs. And then I wanted to marry that against what I'm spending with contractors on certain properties to get just like a bird's eye view of my portfolio. And it was very challenging in chat GPT. And so I'm wondering if I should try like Claude or Gemini or one of those. Claude is so good for business. Oh, really? I got to check that out. because Henry and I were just in Seattle and people were raving about Gemini.

6:00I feel like it's a horse race right now. Like one releases a new one and it gets a little bit better and then the other one gets a little bit better, but there's not a clear winner. I just have to tell you guys, I got a little bit of a behind the scenes look at a big real estate company's new AI tool. It's not BiggerPockets, but there's another one that's gonna release one soon. I got to do the beta. It is so f***ing cool. I like, it's unbelievable how good the analysis and information about properties and markets. For a data analyst, this thing is so cool. I am super excited to start using these kinds of tools in my own analysis.

6:37But I have to ask you guys, like I am, maybe I'm just a complete control freak, but like I use this for research, but I double check everything. Oh, you have to. I does still, right? Yeah, because it still makes lots of errors. It's not there yet, but it will be. It will be so learning the things that we're learning. And, you know, bottom line, the goal for me for doing all this is I want to see if I can wait. Let me say that in a more powerful way. I'm going to increase cash flow by 10 percent by optimizing our portfolio, whether that means taking some older properties that aren't really performing and 1031 exchanging them into better ones.

7:13or just looking at things like we bought a lot 10 years ago because we were living at a house where someone was going to build this mega box property that block our view. And so we bought the lot so they wouldn't do it. And now we don't live there anymore. And we just kind of haven't done anything with it. We tried to sell it. Nobody wanted just a lot. So that's one thing. It's like, how do I optimize this piece of land that's just been sitting there and we're paying taxes on. And so I've been working with a manufactured housing company and we're going to put manufactured housing on that lot. And so when I'm doing a whole new thing and it's actually going to cashflow in California.

7:50Yeah. And if my daughter ever decides she wants to move down the street from us, there'll be a house for there for her. But yeah, it's kind of just stuff like that. Just kind of looking at what we have kind of the theme is more isn't always better. look at what you have and make it better. That's great. Well, I think this is an awesome New Year's resolution. I really like this idea of getting better at AI because I will admit, I am simultaneously excited by AI and very, very scared of it and terrified of it. And so sometimes I just like choose to ignore it because I'll see these like deep fake videos online and I'm like, AI is evil.

8:29But then you talk about all these things that like AI is amazing for. I just need to figure out the right way to use it for my business that makes sense and not be like overwhelmed by the like societal implications that might be coming with AI at the same time. I mean, an example is just, uh, I've been working a lot with Claude. That's what I use. That's, um, and asking for LA County, you know, what do I need to know about manufactured housing? Tell me the step-by-step process. And it's not a hundred percent, you know, it's not easy, but it helps it feel not as daunting. All right. Well, I love this.

9:02This is a great New Year's resolution. Thanks for bringing this one, Kathy. We got to take a quick break, but we'll be back with Henry's New Year's resolution right after this. You just realized your business needed to hire someone yesterday. How can you find amazing candidates fast, easy? Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed's sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking.

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12:06Welcome back. I'm here with Kathy and Henry sharing our goals, New Year's resolutions for 2026. We heard Kathy's, which I love, about getting better at using AI. Henry, what is your New Year's resolution, even though you don't like them?

12:20Brandon Turner:No, I don't like them. And I always feel awkward when people ask questions like this because of the kind of investor I am. Like I'm in, I just do old, boring real estate, Dave. Like I just buy distressed properties. I fix them up and then I rent them out or I sell them. And I think when people ask about resolutions, they expect to hear some like super, you know, ambitious, creative like thing that you're doing. Like a big pivot. Like you're making some change. Yeah. And I'm not, my goals are very similar each year because I just want to continue to do what works and what's worked for generations, which is another iteration of the same thing.

13:04Brandon Turner:But now that I've placed that caveat, essentially, I think of investing in three buckets where you're either growing, you're stabilizing, or you're protecting. And we as investors operate in typically two of those buckets at a time, heavily weighted more so on one than the other. And so as I started in 2017, I've been a lot more focused on growth. So my goals each year were always around how many more assets do I need to acquire, right? How many more projects do I need to flip to give me the funding to acquire those assets? But now I'm in a place where I'm more focused on stabilization and protection.

13:41Brandon Turner:And to me, protection is paying off. And so my goals for 2026, or my resolution, if you want to call it that, is more focused around stabilization, optimization, similar to Kathy, and paying off debt. So I have a stretch goal of paying off two properties in 2026. And I know two doesn't sound like a lot, but we're talking about completely clearing the debt on two assets. That's awesome. Which I think is a big deal. So I want to pay off two of my assets. And there's about four assets that I need to stabilize because I'm bleeding money in them right now. Some of them my own fault. Some of them no fault of my own.

14:19Brandon Turner:One in particular, I bought a duplex not in a flood zone. And we had a crazy flash flood. And it tore through both units of the duplex. And then on top of that, a big mistake happened with one of the remediation companies where they did some work unauthorized to the tune of$40 ,000. So I have about a$40 ,000 bill that we're fighting because they weren't supposed to do the work. And I have about a$50 ,000 renovation I'm going to have to fund out of pocket. So these are big ticket items. They don't just come very easy. So that property right now is a duplex that I pay monthly all the expenses on.

14:58Brandon Turner:but has no income, right? So stabilization is a big deal for me in 2026. I also have some multifamily assets I bought in 2023. Again, no fault of my own. The city has come in and is requiring me to do some work that we didn't plan on doing that we can't really fight. So there's a lot that happens in a real estate portfolio that I think requires you to take a step back and evaluate. So 2026, stabilizing the assets that are bleeding money and paying off two properties. And so those lead me to my other goals, which is I need money to do those things, right? So that guides me to how many projects I need to take on throughout the year to generate the income I need to solve those problems, live my life.

15:48Brandon Turner:Make sense? It does make sense. I love the way of thinking backwards. A lot of people would be like, Like how many flips can I do, maximize, and then take that money and be like, what am I going to do with it? But I really like thinking about it. Like what do I need to do? And then sort of backing into the minimum amount of work that you can do. That doesn't mean you might not take on more deals if you find opportunity, but like just having a good sense, like, okay, I need to do two a quarter or one a year. I need to do that, make sure I'm hustling on that, and then I'll take everything else that comes from there.

16:22Brandon Turner:Yep. I average probably around like$45 ,000 net profit on a flip. And I would estimate that I need to do about 15 projects to be able to pay off the properties that I'm looking to pay off and to be able to have the income necessary to continue to live and be able to stabilize the four assets I need to stabilize. So that's my goals. I love it. I guess I understand maybe why you don't love a new year's resolution because this sounds like it's a multi-year project too it's not like uh you know this is something you do in 2026 this is a piece of a larger goal that you have been working for and will probably need to keep working towards beyond 2026 yeah my larger goal like ideally like this is now they say your your goals are supposed to be like big and scary right like in in corporate world they call them stretch goals the big scary stretch goal is to have a third of my portfolio paid off 10 years from now.

17:25Brandon Turner:And I like that. That's a lot. It's a lot of money. Yeah. Yeah. But I feel like if you don't set a big scale, like, you know, shoot for the moon, land on the stars, right? If I end up with half of that paid off, that's still going to put me in an extremely strong financial position in 10 years. So the larger goal is that. And then what I do each year is tying into that. And then I have to adjust each year? Because yeah, I have a goal of two this year, but what if I only get one, right? So then I need to take what happens in 2026 in terms of the economic outlook and make new goals. Maybe 10 might be too far out.

18:04Brandon Turner:Maybe I need to change it. So I think I'm not afraid to reevaluate my goals based on what's happening, but I try to make it all tie together. I love that. It sounds like you're also looking at the protection side of it because as you start paying off properties, uh oh there's such relief knowing that if if there's any anything goes wrong and and you just can't predict you can't predict things like 2020 coming along that wasn't that turned out not to be bad for real estate at all ended up being a pretty good time for real estate but could have gone the other direction yeah and when you've got paid off properties boy you all you have to do is sell a couple and it'll help pay for the other ones that you've maybe over leveraged and i know that you have way over leveraged to get to where you are now.

18:47And that has worked. But at some point, you're like, okay, it's time to turn the ship and pay some of this off. That's great. It's interesting to hear both of you are focusing on optimization instead of growth. Is that a reflection of the market or just where you are in your personal investing journey? That's a good question. It was just the first thing that came to mind because it's what I've been doing and excited about. You know, just taking a look at some of these properties that, you know, like about 10 or 15 years ago and really haven't paid any attention to them. You know, for example, one, it just vacated.

19:30And I talked to the property manager and she goes, you know, if you update this by about $20 ,000, you'll get about a hundred thousand extra in equity. Like I hadn't even thought about it. Right? So that's exciting. And if I do that, then we can sell that or keep it, take the money out. So it's almost like an after the fact burr, you know? 10 years later down the road burr. It's a slow burr. It's a slow burr. It just doesn't matter. Just keep optimizing things over the long run. This is the way to do it. It's absolutely right. I love that.

20:03Brandon Turner:For me, Dave, it is more a function of where I am as an investor because I'm a deal junkie. And I love the process of finding deals. I love buying a great deal. And I love operating assets in, you know, great parts of the community. Like it's just it all is so fun for me. But at some point, I have to get to a place where I am protecting the assets I have so that I have paid off assets to pass on to my children. The overarching goal for my real estate business is for my children to be able to be the people they're called to be and not the people they have to be for money. Yeah. Right. So if they need or want to do something that isn't going to pay them a ton of money, at least I have these assets that will be paid off that can provide income for them.

20:51Brandon Turner:And so to get there, I have to pay off properties. And so I have to draw a line in the sand somewhere and start paying down these assets. And so that's why I have the 10-year goal, trying to get some of these paid off so that I have those to pass. Now, when I get to that point, Dave, I may just start doing more deals again, but I will always have. You will. Yeah, you're right. And I'll probably still do deals that are like home run deals along the way. I'm not saying I'll never buy another rental property between now and 10 years from now. I'm just saying I'm not in aggressive growth mode. So optimization is more important to me right now than growth was.

21:26Brandon Turner:growth was more important to me when I first got started. It's just a shift in where I am as an investor. All right. Well, these are great resolutions. Thank you. I really think these are obviously they're not just resolutions, but just goals and good perspective on where you both are in your investing journey. We are going to take a quick break, but we'll come back with my New Year's resolution right after this. The Cashflow Roadshow is back. Me, Henry, and other BiggerPockets personalities are coming to the Texas area from January 13th to 16th. We're going to be in Dallas. We're going to be in Austin.

21:56We're going to Houston and we have a whole slate of events. We're definitely going to have meetups. We're doing our first ever live podcast recording of the bigger pockets podcast. And we're also doing our first ever one day workshop where Henry and I and other experts are going to be giving you hands on advice on your personalized strategy. So if you want to join us, which I hope you will go to biggerpockets.com slash Texas, You can get all the information and tickets there. People love to call real estate passive income, which is interesting because most of the investors I know are very busy.

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