4 Trends That Are Making Real Estate Investors Rich in 2025

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14:51Henry Washington:Welcome back to On the Market. I'm here with Kathy, James, and Henry talking about market trends we're seeing in our own investing portfolios. Kathy, you're up. What are you seeing? Oh, Dave, I'm seeing so many things. Where do I start? Good things, bad things. What do you got? We are seeing most investors wanting to buy property in Texas. and maybe that's because it's still strong. It's still a strong market. Prices are pretty low and builders are having a tough time selling. So we're able to negotiate those prices down. We also just refied our rental fund in Texas and same thing, we're able to take that money and buy a lot of brand new homes at incredible deals.

15:35So that's one trend. We also have subdivisions. we syndicate from Oregon all the way to Florida. So I have kind of an inside view on the sales side, not so much the buy side on that. And in our Florida property, again, very surprising. We have that Murata property just north of Tampa was 4 ,000 lots. This year we sold like 400 homes. It is the top sixth fastest growing subdivision in the US. And just in June, there were 69 sales. So that one is doing great. And then we've got one in Bozeman that has been great and it's slowed down. I can't tell you why. It's still pretty affordable compared to other homes in the Bozeman area.

16:20So I can't say that it's because they're too expensive. But then in the Oregon subdivision that we just launched last year, people, we have a lot of buyers who want to buy, but they can't sell their home. So that's kind of an interesting thing that I hadn't seen for a while. Interesting. They want to buy and they, you know, they want to put that offer in, but it would be contingent and they're just not able to sell. So again, like lots of trends going on here in Malibu. It's man, if you ever wanted to live here, it is on sale. Nothing is selling. Really? I imagine it has to do with the fires. And of course, the fact that you probably can't get insurance, but details.

17:03sales. But it's crazy. A house, like I said this before, just with sweeping views, three bedrooms overlooking the ocean just went for 1.4 or something. What? Cheap. Yes. Seriously? Yes.

17:19Henry Washington:You got to let me know about these things. I'm not moving there, but I'd like to dream about it. Yeah. Wow. Interesting. So it's like a mixed bag, really, what you're saying, it seems like. Definitely a mixed bag. And so I think the bottom line here is to know your market. But these are two different, you know, our subdivisions are selling to homebuyers, you know, just people who want to own a home. They're not rentals. But on the rental side, again, the majority of investors, and I consider our investors pretty educated and experienced. And they're just, again, flocking to Dallas, but also Cleveland, because the numbers really work there.

17:53Indianapolis, you can still get cash flow. So yeah, that's what we're seeing there. Kathy, in Texas, have you seen the insurance rise kind of like level out there as far as Costco? Or do you think people are also going towards new construction because the insurance costs a little lower? Yeah, we haven't had issues. And even in Florida, we really haven't seen issues with insurance as much as people talk about it. Because a lot of the, at least the ones that Rich and I bought and that a lot of people have bought through us are new. And so insurance is kind of not bad and neither are property taxes.

18:22But it's terrible in California. It's really bad. Rich was just saying to me this morning, a rental property we have here went from$3 ,000 a year to$17 ,000 in insurance. Oh my God. And the cost that they're making in some of those states are going up pretty dramatically too, because I'm doing that renovation in Newport Beach and I'm below the minimum threshold for construction on my permit, but they're still trying to make me sprinkler the house. And I'm like, wait, what are we talking about here? And it's just because of the fires and the things that are causing the insurance to spike, it's hitting you on your construction budgets too.

18:58Yeah, but on our Florida one, I think our insurance went up 5%. So like nothing unusual.

19:03Henry Washington:But that's had it gone up more in previous years? I'm not sure. I'm not the data one.

19:11I think it goes up.

19:13Henry Washington:I was just curious because like maybe it's just maybe it is slowing down, but like it had gone up a lot in the previous years. So Kathy, on these bigger plats that you buy, because you guys buy some bigger stuff. Yeah. Because I know a trend I'm trying to watch for right now is like builders selling in the middle of building or fully permitted sites. They just, they want to dump their product off. Are you seeing that? Because that's what makes it a lot easier to build. Like what Henry was talking about, the beginning work is the hard work. Yes. If the site's ready to build, those are some very good opportunities because they're quick, they're easy.

19:45You can get financing immediately on that deal. Are you seeing a lot more of that floating around? Because I've been tracking that. I'm not seeing it in Seattle. I've been looking for it. Like, are you seeing a lot of opportunities there? Because I think that's a huge opportunity nationwide. Yeah, I mean, that's the opportunity we've got with the Oregon land that we acquired. The builder just gave up after 10 years of trying to get it going. It's very hard, and certainly on the West Coast, as you said, to get projects off the ground. And we got it for an amazing price, like half what's lots worth.

20:14And it's still been hard to sell those homes. Like I said, the buyers want the homes. They want the new home. They just can't sell the home that they have in order to free up the cash. But I haven't been looking, so it may be out there. We've been more interested in projects that are already almost finished or finished and don't have to do any work.

20:36James Dainard:Are you in a state where they'll disclose who's pulled permits for new construction, James? Because that's probably where I'd start, is to start calling or mailing those people who've pulled permits and see if they want to dump the land before they build. Yeah, we track all that. It's a matter of actually permits are at all-time lows being issued on townhome sites because land price has been so high. Dirt has been so high. Bill costs are high. There's not a lot of people applying for permits for townhomes. There's going to be a serious gap in that in the next 12 to 24 months where we are. And so there's just not a lot of it.

21:09James Dainard:I'd also check the agenda on the city planning meetings because a lot of these people are sometimes having to go and get approvals for the things that they're doing, especially the newer people. And so just seeing who's going to be on the agenda, you can make some calls, man, that blew my mind. Someone did that to me with the project that I was working on. They just pulled the agenda to the city planning meetings. It was a bank. And then they called me and they were like, Hey, I see you're looking at X, Y, and Z. Do you need funding? You can probably do the same thing with people looking to build and maybe want to offload land.

21:35Yeah. Hard money lenders, you guys are great ways to find deals too. Because we have been reaching out to other competitive lenders locally to find out, do they have any investors that want to dump off their properties midstream because they're out of control costs or ground up and they got permits rolling out, they're leveraged high. Their lender might say, you know what, you have too many projects going on. We want more money down and the builder can't do it. And so they're great deal sources for investors. Call your hard money lenders, whoever's financing you. Hey, do you know anybody wants to get rid of their stuff?

22:06you will be surprised.

22:07James Dainard:Title companies have the same thing. They're closing transactions. They know who the investors that are in there that are looking to sell off their portfolios because of problems they may be having. So call your title company and ask them if they know any builders that are selling and put you in contact.

22:20Henry Washington:That's great advice, Henry. Thank you, Kathy, for bringing us the story and for all the input. We do have one more trend to share with you. I think you're going to be surprised by it. We'll be right back with it after this. Tax season reminder for all the real estate investors listening. If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS-compliant strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal.

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25:34Henry Washington:Welcome back to On the Market. I am here with Henry, Kathy, and James talking about trends we're seeing in our own portfolio. I'm going last, and I think this is probably going to surprise people, but the trend I am actually seeing right now is cash flow. I am starting to see deals on the market that are cash flowing better than I have in probably three or four years, at least in the Midwest where I've been looking at deals. I have a buy box set up with agents in a couple of different places. And I'd say in a normal week, I probably get like three that I would realistically take the time to analyze numbers on just because things aren't good right now.

26:12Henry Washington:But the last couple of weeks, I've been getting like 10 or 12, like literally like three to four times more interesting deals. I haven't pulled the trigger on any of them, but like things are starting to get a lot more interesting in the little niche I like to operate in, like small multifamilies in inexpensive markets. And that is super encouraging to me. I think part of that is because prices are going down modestly. The other reason is there's just more inventory. So there's a better ability to negotiate. Third, rents are still growing, not gangbusters, but they're going up a little bit and mortgage rates are coming down a little bit.

26:48Henry Washington:And if you look at the combination of these things, it's not like amazing cash flow. This isn't like five years ago, but it's a trend. And I think like if we continue on this trajectory, at least to me, this gets a little bit exciting. I don't know if you guys are seeing this in any of your markets, but in the Midwest, that is definitely starting to emerge. What kind of cash flow are you seeing in the Midwest, like return-wise? Like if you buy it on market and just put minimalized effort into stabilize it, you could still get like 3%, 4 % cash on cash returns doing almost no work. If you actually go and stabilize it, like you can get 8%, 12 % cash on cash returns.

27:26Yeah, that's good. Yeah. Yeah, the deal flow is definitely kicking up. Yeah. The margins get better when there's more stuff for sale, that's for sure.

27:33Henry Washington:My hypothesis about this is that for the last five years, we've seen two to four units has been so crowded, partially because on BiggerPockets, all we talked about is house hacking because it's legit a good idea. And so we've had a lot of people who want to owner-occupy, and they're willing to pay more than investors. But I think the people who are trying to house hack and owner-occupy, that amount of people is going down. And so we're starting to see the two to four unit inventory. the sellers have to cater to people who are putting 25 % down. They can't cater to the people who are putting 5 % down and just need to redo their cashflow.

28:11Henry Washington:So the pricing is having to adjust for where the demand is for this asset class. And that is beneficial for people who are not trying to own or occupy these things. Like I am the rental market is definitely picking up because actually I put a house up for rent that I had up 12 months ago and it took me 60 days to fill this thing. It was like dead. And we put it up tennis moving out in 60 days. and I've had like 30 inquiries on this property. Really? Wow. Like you put it up for rent last time. I'm like, I don't understand. I barely bumped my rents. I renovated it, made it nicer and I'm not even getting any interest.

28:41It doesn't make any sense. But now I do feel like rents are going to pop because people are not buying. So where are they going? And then the people that do own have high rates or high basises, they got to cover. And so it's just naturally forcing it up.

28:55Henry Washington:That is encouraging. I think this is one of the things we've talked about on this show, on the other BiggerPockets shows. is it's like one of the impacts of market conditions is I think maybe not this year, but as we head into 2026, rent growth is going to pick up and vacancies are going to start trending down. I think that's probably true in multifamily, single family, small multifamily. And that is an encouraging sign. It gives me personally more motivation to buy. Even if you buy one of these stabilized deals at, you know, three, 4%, or you can do a renovation to a 10%, then you, you know, rents are going to grow.

29:30Henry Washington:you know, that turns a deal that looks pretty good today into like a really solid deal in a year or two from now. Yeah. And then also, if you just look at trends, I personally think the Fed has a lot to do with those trends. Of course, they're following trends. But when we know that they're going most likely into a rate cutting cycle, it may not happen right away. But eventually, that works as a stimulus because money becomes cheaper to borrow, more people can borrow. And And like you said, Dave, every inch we move closer to affordability, more people can come off the sidelines. If prices are stabilizing, if they're not going up as quickly, or even in some areas going down, and then you see interest rates come down a little bit, mortgage rates come down a little bit, you've just got a few thousand people, maybe a few million off the sidelines.

30:16So it's important to pay attention. And we're going into that cycle of, it looks like, lowering rates.

30:23Henry Washington:I hope you're right. I'm not convinced. We shall see. I got to know, what is your buy box? A 3 % cash on cash can't be it. No, no. I was just saying you could buy a stabilized asset for that, just as an example. Yeah. I'm still trying to do renovations for them. I'm trying to buy them at that rate, renovate them, and then get them to that 8%, 12 % cash on cash return is what I'm looking for. But the renovations are pretty much cosmetic. I'm not trying to do anything super serious on these. And you're able to find those deals. The way I've been doing it, though, is I'm not looking for vacant two to four units.

30:59Henry Washington:I'm trying to find these deals that are going to cash flow. When people move out, I renovate them, I boost rent. So it might take me a year and a half or so to get it to that 8 % to 10 % cash on cash return. But for me, I'm fine with that. Okay, so performance 8 % to 12%. Yeah. So as you get, I know as I'm getting more and more calls on deals, too, I'm like, my, my return slowly going up too. Cause I'm like, if there's this much inventory floating around, I want a better deal. Uh, like, does it rate? Like I've been, I feel like I've raised my return every like two weeks. I'm like, it's freaking me out.

31:34Henry Washington:Yeah. Yeah. Because you're worried about downside risks. So you have to have the bigger upside. Yeah. Just, you know, heads against and you know, again, if there's more inventory, you get a better deal. Yeah, I do. I think in these markets, they're still pretty solid. Like prices are still going up and inventory is not as crazy. But yeah, I do think that makes a lot of sense. I haven't pulled the trigger on any of them, but I don't think I'd take a perform of 8 % right now, probably 10 to 12 or maybe a little bit higher. That's probably right. Maybe I should listen to James right now. I think I need to listen to you and go buy some houses out in the Midwest.

32:06Henry Washington:Buy some cheap stuff, man. Just get a lot of cashflow. It's great. I will go half on one with you. All right, let's do it. I'll go find one. I want to be passive this time. I'm going to throw half up and you can handle my Midwest. Okay, great. Well, this was a lot of fun, as usual. Thank you guys so much for talking about these trends. Let us know what you're seeing in your market. If you're watching this on YouTube or listening on Spotify, where you can comment about it, let us know what you're seeing. We'd love to hear what's happening in your market. Clearly, as we're seeing from this conversation, you know, Kathy in her multiple markets, James in an expensive market, Henry in a fast-growing but a little bit more open-to-building kind of market, me in the Midwest.

32:43Henry Washington:We're seeing a lot of different stuff going on right now, and that's why we're bringing you this information because how you adjust your strategy is really going to depend on who you are and where you're operating. So let us know what you're seeing. Thank you, James, Kathy, and Henry for being here. We appreciate it. And thank you all so much for listening to this episode of On the Market. We'll see you next time. Athletic Brewing Company crafts award-winning non-alcoholic beers for those who want to be part of every round. With over 185 flavor awards, they're exceptional NA beers that fit your lifestyle and any social occasion.

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