3 Things We’re Doing in 2026 to (Actually) Retire with Rentals

0:002026 is finally here. I hope you all had a great holiday and New Year's. With the new year upon us, this is a great time to start looking forward into 2026, talk about our goals and our New Year's resolutions. I'm Dave Meyer, joined by Kathy Fecky and Henry Washington today, and we're gonna be laying out what we want to be more disciplined about this year, the strategies we think are gonna pay off best for us, and the goals we wanna have checked off by 2027. From how we buy and manage deals to how we think about risk and opportunity, we're putting our plans on the record. This is On The Market.

0:39Let's jump in.

0:45Kathy, 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. You 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.

1:25So 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. Henry, what were you up to in the holidays? Food. Enough said, really. Absolutely. 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 want to just start looking forward.

2:02Last 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. We'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.

2:44I'm not even close. But I know it's so powerful. I mean, one of the things that Rich did is he uploaded everything, our bank statements, the cash flow, 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 should 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? So using AI to optimize our portfolio is my goal for real estate. I like that a lot. I like this as a goal.

3:20It's not like, oh, I have to buy this property by this date. This is more like a growth mindset kind of goal. 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. Like, what do you do all day? And so AI knows each employee and knows how to optimize for them. It's really been phenomenal.

4:00Wow. 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. So with, I'll say, Claude, for example, we can upload our entire insurance thing. There's a word for it. Your insurance binder?

4:36Yeah, 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.

5:19And 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 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. Henry and I were just in Seattle and people were raving about Gemini. I feel like it's a horse race right now.

5:54One 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 going to release one soon. I got to do the beta. It is so cool. 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. But I have to ask you guys, maybe I'm just a complete control freak, but I use this for research, but I double check everything.

6:37Oh, you have to. 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 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 cashflow by 10 % by optimizing our portfolio, whether that means taking some older properties that aren't really performing and 1031 exchanging them into better ones, or 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.

7:17And 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 of housing on that lot. And so when I'm doing a whole new thing and it's actually going to cash flow in California. Yeah. And if my daughter ever decides she wants to move down the street from us, there'll be a house for there for her.

7:52But 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. But 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.

8:37I 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. This 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. Thinking about wholesaling or flipping your first property, but not sure where to start?

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11:41Welcome back to On The Market. 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? 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. I just do old, boring real estate, Dave. I 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.

12:26Like 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. 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?

13:10How 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. 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, which I think is a big deal. So I want to pay off two of my assets.

13:47And 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. 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 uh to the tune of forty thousand dollars so i have about a forty thousand dollar bill that we're fighting because they weren't supposed to do the work and i have about a fifty thousand dollar renovation i'm gonna have to fund out of pocket right 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, but has no income, right?

14:38So 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.

15:26Make 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. Like I need to do that. Make sure I'm hustling on that. And then I'll take everything else that comes from there.

16:00Yep. 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.

17:03And 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.

17:42Maybe I need to change it. So, you know, I think I'm not afraid to re-evaluate 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 if you, as you start paying off properties, there's such relief knowing that if anything goes wrong and you just can't predict, you can't predict things like 2020 coming along. That turned out not to be bad for real estate at all. It ended up being a pretty good time for real estate, but it could have gone the other direction. And when you've got paid off properties, boy, all you have to do is sell a couple and it'll help pay for the other ones that you've maybe over leveraged.

18:21And I know that you have way over leverage to get to where you are now. And 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, I really haven't paid any attention to them.

19:04You know, for example, one, it just vacated. And 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, yeah, 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. Slow burr. Slow burr. Slow burr. It just doesn't matter. Just keep optimizing things over the long run. This is the way to do it. Yeah. It's absolutely right. I love that.

19:41For 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 great parts of the community. 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 that 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.

20:28And 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 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.

21:03growth 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.

21:34We'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 BiggerPockets 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. Thinking about wholesaling or flipping your first property but not sure where to start? The truth is, deals don't just fall into your lap anymore.

22:07You need to go out and create opportunities. That's where PropStream comes in. With PropStream, you get instant access to over 160 million properties nationwide. Use 20 pre-built lead lists such as pre-foreclosures, tax delinquencies, and vacant homes to find motivated sellers fast. And now, PropStream has integrated batch leads and batch dialer to provide you with a complete all-in-one solution. That means you can not only find motivated sellers, but you can also reach out right away. Skip trace phone numbers free on select plans, then send postcards, emails, or call sellers directly. Don't worry if you're new.

22:40PropStream also gives you AI-powered insights and comps that are over 99 % accurate, so you know you're making smart offers. Plus, you'll have access to PropStream Academy to guide you step-by-step. Start your seven-day free trial and get 50 free leads at propstream.com. That's P-R-O-P-S-T-R-E-A-M.com. slash BP. Don't just dream about real estate, make it happen with PropStream. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy.

23:16All the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise flagship fund. Now you can invest in a$1.1 billion portfolio of real estate, starting with as little as$10. The portfolio features 4 ,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought-after industrial facilities thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well-diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash bpmarket to explore the fund's full portfolio, check out historical returns, and start investing in just minutes.

23:56Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at Fundrise.com slash flagship. This is a paid advertisement. Inspecting your rentals again? Here's a pro tip. A simple checklist makes sure nothing gets overlooked. It saves you time and costly repairs down the road. And when it comes to managing your rentals, RentReady makes everything easier. Rent gets paid on time, leases get signed online, and maintenance requests don't get lost in your inbox. And if you're a BiggerPockets Pro member, I've got great news for you.

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