Is the 2026 Housing Market Finally Becoming “Unstuck”? (Rookie Reply)

0:00What if the scariest part of your first real estate deal isn't the numbers, but the moment you actually have to wire the money and commit. Today, we're answering three questions from the BiggerPockets forums that hit exactly where rookies are feeling the most pressure. Closing on your very first deal, investing in a market where sales are slowing down, and figuring out your after repair values when you're investing from a distance.

0:27This is the Real Estate Rookie Podcast. I'm Ashley Kerr. And I'm Tony J. Robinson. And with that, let's get into today's first question. So our first question today says, I'm closing on my first investment property tomorrow afternoon. Congratulations. That's what every single person listening to this podcast wants to get to. So he says, I'm closing on my first investment property tomorrow afternoon. Sweaty palms? You bet. It's a small property, only a duplex and not a large dollar value. But when I looked at the closing statement and saw the out of pocket I need to wire tomorrow morning, reality started to hit.

0:59On paper, the numbers work. I walked through it with many people that I would consider advisors, but deal analysis to reality is tomorrow. I'm pretty excited and nervous at the same time. So here's the question. It says, think back to your first deal. What were some of the challenges you didn't expect out of the gate as a real estate investor? I'd love to hear some stories. So first, this is major, right? It is a little scary when you've got to wire in those funds for that first deal, but it's a big moment and it's a culmination of a lot of hard work. and regardless of where this first deal goes, you got to give yourself some credit for being a member of the BiggerPockets community who doesn't just consume content, but actually turns that content into action and into a first deal.

1:44So when I think back to my first deal, some of the challenges, I got to say, all in all, my first deal was actually a pretty smooth first deal. I found a property that needs to be renovated and I was doing this all remotely. I live in California. The property was in Louisiana. And the renovations went relatively smoothly. There were no big gotchas or we were actually pretty spot on with the budget as well. So I got pretty lucky on my first renovation. I had a great property manager and they found me a pretty solid tenant who was there for the entire, I think I owned that deal for two years and had someone in there for the entire two years that we owned that property.

2:21It was a pretty uneventful first deal. I didn't make a ton of money off of it. I think I was cash on like 150 bucks a month after all my vacancy and expenses and property management fees, but it taught me the ropes. So I really can't think of anything from my first deal, Ash, that was like a big gotcha. What about for you? The really big gotcha, I guess, was we had done our homework. We had gotten quotes. And we were going to put a split unit in the upstairs for the heat and the AC. And when it actually came time to install it, the HVAC company said, you actually don't have enough amperage for your electric and you need to upgrade your electrical panel.

3:06And that was about an$800 expense, which that was a lot of money for me to like not be prepared for. And so that was like something really unexpected that happened but we actually did everything right and it was really the company that we worked with that they should have told us that when they came out to quote the the job and not wait until it was installed for somebody to realize that it wouldn't work out that way um so that was like a big thing that was frustrating as we did the right process but there still was a hiccup and that's why i preach reserves reserves reserves are so important to have um the next thing is um i would have uh put in like a lot more uh maybe like software and tools uh right away instead of like a lot of pen and paper and quickbooks i would have used a property management software right away with my my first tenant instead of just having them mail a check, entering it into QuickBooks and, you know, having them text me or call me for maintenance requests and things like that.

4:17So that was a challenging when I accumulated several properties as to making the switch where it would have been so much easier to just implement that from day one. And then here you go, here's my process for paying rent through, you know, Now I use TurboTenant paying through there. And this is how you do it instead of having tenants just switch after they were already used to a certain method of paying run and submitting maintenance requests. Yeah. I'm thinking not just my first deal, but just like other mistakes that I've made as a real estate investor. And I grew up in an area where everything is like city sewer, right?

4:59It's like I've never dealt with a septic tank before. and the first property that I bought, the first short-term rental that I bought in California was on septic. And I did not do a septic inspection. And a few months into owning this property, and this is a short-term rental, I get a call from a guest who's very pleasant and polite, but says, hey, there's some brown liquid coming up from the bathroom and the shower. And it's because the septic was backing up. And it turns out the septic was in massive need of a pump, right? It hadn't been pumped out for a while. So now every time that we buy a property that's on septic, one of the things that we do early on is check the septic, right?

5:36We do a septic inspection. And we've actually had deals where like there was a property that I purchased where there was no septic. And this is like a big renovation job, but there was no septic. It was like all of the plumbing was just like going out into the dirt, right? And had I not had that experience beforehand, I probably wouldn't have caught that. So I think one of the big things that I would ask, and obviously you're pretty close here, but just this is for all the rookies that are listening is for whatever area you're in, ask your agent, like, hey, what are some of the inspections that are maybe not common nationally, but that are common to this specific area that I should know about to make sure that I'm not stepping into a bigger problem down the road or for this age of home or for this part of town or for this structure, whatever it may be.

6:18And a good agent should be able to kind of point in the right direction there as well. And then just doing a home inspection and, you know, walking through with the inspector, are going through each item on the list. And I always ask their recommendation or if they have anybody that they recommend to do the repair work, if they have an estimated cost that they see, but that would take for that. And then I also have them prioritize like, okay, what are things that need to be fixed right away? What are things that need to be fixed within the next year? Or like, do you think is going to die within the next year?

6:53Like the HVAC system, the hot water tank. And so it's kind of like immediate within the next year, then five years, and then like maybe like a 10 year thing, like the roof, you know, you probably got another 10 years on the roof or something like that. And I've always found that really helpful in kind of like helping me estimate my repairs, but also my CapEx and then also what I want to negotiate with the seller too. So for a property right now that I have under contract, we negotiated there was mold in the attic. So having them remove all of the mold. The vents for the bathroom were actually venting into the attic and that was part of the reason for all the mold.

7:30So having the vents redirect to the outside. And then there was just a couple other like little miscellaneous things that we had them just take care of that things that we didn't want to have to deal with. That's actually a really good point, Ash, about like thinking about your repairs and renovation during that window as well. I think we've heard from a lot of rookie investors that they close and then they start to try and plan out what their renovation schedule looks like, but then you've lost a week or two weeks or sometimes more by waiting until you close. Ideally, if you've got a renovation project going on, which you didn't say in this question, but if that is the case, you want your demo to start on the day that you get your keys, right?

8:11That dumpster dropped right off. Right off, right? Because otherwise you're eating up a lot of holding costs by just trying to plan things out. So even for us, even if it was a short-term rental, we would sometimes start purchasing the furniture before we even close in the deal. Because sometimes a couch, there could be a three-week lead time on the couch alone. So we would even pre-order some of the furnishings for our short-term rentals or flooring if it's a renovation. We might purchase some of that beforehand if there's a long lead time on this specific tile that we want for the bathroom showers.

8:42Knowing that obviously there's a chance that maybe we don't close and then we'll have to go through the hassle of trying to get that stuff returned, but better to have all of that material sitting in the driveway on day of closing. So renovations and demo can start all on day one. And not even just to like have it furnished, but also you can't even list it until it's furnished either. So like, you're not going to take a picture of your empty living room with no couch and list it on Airbnb. Like you need to have the house complete to give your accurate photos to the listing, you know, to put up.

9:11So that's like an even bigger thing with short-term rentals is like you can't even start accepting bookings until you have your pictures to, you know, with all of your furnishings in it. OK, well, coming up, we'll break down what actually surprises investors after their first closing, the stuff no spreadsheet prepares you for and how to avoid the most common early mistakes. That's right after a quick word from our sponsors. You ever head out on a trip, lock your door and think, cool, my most valuable asset is now doing absolutely nothing. Because while you're off traveling, your home is just sitting there.

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11:41They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no brainer. So visit costsegregationguys.com slash BP for your free proposal and find out how much you could save this tax season. Let's zoom out from that first deal because once you're in the game, the bigger question becomes how to adjust when the entire market feels off. So this second question says reports indicate 2025 is on track to be the worst year for home sales in U.S. history. Based on a news article I saw recently with buyer activity way down.

12:20For active investors, how are you adjusting your strategy? Finding better deals because of less competition, pivoting from flips to rentals, holding longer than planned, offering seller financing to make deals work. Would love to hear how seasoned investors are navigating this unusual market. Okay, so the first thing I'm thinking of here is my own market. And there's nothing for sale. There's literally nothing. I actually am listing a duplex for sale right now. And I think that it's actually going to sell just because there is literally nothing you could buy in that market. I literally think that it's a smaller town, but there's one other property for sale.

13:03And I also have an apartment for rent in that same town. And within 48 hours, I received 37 leads of people interested. I had to open up more showing time because it was so booked. So I think just because there's not a lot of transactions going on in the market doesn't mean that there aren't pockets of areas where deals can happen. I saw a Facebook post where somebody asked, I'm looking for a home. My family's moving to the area. Does anyone have anything for sale? We can't really find anything right now. So many people commented, listing in the spring, listing in the spring, listing in the spring, DME for details, DME for details.

13:47And it was like, okay, we're going to get that spring surge again. And I think that will kind of give us more of a feel of like what's actually going on the market. Because then if you get flooded with these listings again, and they're still just sitting there, even if they're decently priced, then yeah, that's more opportunity for you as a buyer to go in and make these low ball offers for people that have to sell their house, that need to sell their house. So I think it's hard to gauge. I think looking at the news and what they say is going on nationwide, I think is very different. You need to look at your market specifically as to what is happening with properties sitting days on market, looking at how they are priced.

14:31Are the properties that are sitting on market, Are they the ones that people are still listing them for 2021 prices that people could get when the market was crazy? And then also make sure you're looking at pending. Click that little checkbox in Zillow so you're not just seeing sold houses, but you're seeing the pending. And you can go and you can look at the history of that property to see when it was listed and when it went pending. Like there could be a bunch of decent houses that are actually selling pretty quickly. And I've seen that also in my market where if a property is decently priced and a lot of grandma houses are selling where they're great bones, but they're not, you know, renovated at all.

15:17They've got the old shade carpet, but like great condition and great shape. Those sell like that in my market. or if they're like somewhat renovated and like, you know, three beds, two baths, those are also selling very quickly. It's more of the properties that need rehab that are sitting, more of the small multifamily that's sitting and also like larger properties that aren't renovated or updated at all. Yeah. I think there are a few things that happened in 2025 that were somewhat unique. First is that we had this combination of prices continuing to increase while mortgage rates remained elevated.

16:02And because of that, we had affordability challenges and that somewhat limited the potential buyer pool because homes were just more expensive. So affordability, I think, continues to be a challenge for a lot of folks looking to buy homes. And obviously for us as investors, increased prices and increased rates can also squeeze our ability to produce cash flow on traditional single family homes. And I'm talking nationally, right? Like every market kind of sees a different breakdown locally, but just nationally is what we saw. There's also what's been called like this lock-in effect where there are a lot of homeowners with really low interest rates, you know, think 4%, 3%, some even below 3%, who have no intention of ever moving or selling their homes because they don't want to trade their 3 % interest rate for a 6 % interest rate, right?

16:55Even if they bought the same house, that's a significantly more expensive payment for them. So if they want to move up to a bigger home, it's even more of a challenge for them. So there are still a lot of sellers who are sitting on the sideline because they don't yet feel that they can afford to move up because of where rates have gone. So it's this weird thing where there's this affordability challenge. There are sellers who don't want to sell. There's a lot of buyer demand, but they're kind of stuck on the sidelines. And all these things are kind of coming together at the same time. I think all of that has changed what it means to be a real estate investor in 2025 and now going into 2026 and beyond.

17:37And like for me, I know Ash and I both had properties that have sat for a lot longer than what we wanted. And we've interviewed other investors in the podcast, Henry Washington, Dominique Gunderson, both of them talked about their flipping business and what that looked like this year. And they saw volumes decrease because they just simply weren't getting as many yeses because they were underwriting more conservatively. So maybe that's what it looks like. The volume took a bit of a step back in 2025. So you've got to be more disciplined in your underwriting. you've got to have the courage to say no to a deal and not just get so deal happy that you start saying yes to things or kind of fudging your numbers to try and make them seem more reasonable.

18:17But I don't think that you stop being a real estate investor. We also interviewed Thatch and James Dayner in that episode just recently aired. And these are folks with multiple decades of experience in real estate investing. And their biggest point of that episode was, it doesn't matter if the market is up, it doesn't matter if the market's down, you still keep doing deals. How those deals look and what those deals look like and your criteria might shift and change, but we don't stop being real estate investors simply because the market is a little bit stickier than it was before. Because a lot of times it's in these moments where the big wealth is really made.

18:50So 2026, we'll see what the year looks like. I think there's a lot of anticipation that rates might continue to come down. I think it was maybe last week or so, we're recording this in late January. And I think it was like last week that rates had hit a recent low. So maybe we'll see that again as we get into 2026. But I think the goal for you is how do you still find deals that meet your investment criteria? And it doesn't matter what the market's doing. If the deal matches what it is you're looking for, then move forward with the deal. I actually just emailed my lender last night and I had gone through the loan process.

19:25I think it was in December, early December. And then the closing has been delayed on the property because of the mold remediation and everything that the sellers are doing. And so I emailed them and I said, you know, I'm just wondering, like, has my interest rate gone down? Can I get a better rate now? Because the rates have changed since I started the loan application process. So he hasn't emailed me back yet, but I'm going to keep harping on it. And the rate lock actually expired on it because of the timeframe anyway. So I'm really hoping that I can even get a better rate on this deal. I was talking to an investor recently and they were able to get like a couple of point reduction on their rate because they opened up like a credit card with this local credit union or something.

20:17But either way, they told me that their rate was like 5.75. On an investment property or their primary? On an investment property. Wow. And I was like, I haven't heard anything below a six in a while. So the fact that there were some banks out there, different incentives, whatever it may be, that are getting people below sixes, I think that's going to start to open up a lot more demand as well. Yeah. And I think I've seen just for primary residents, the rate around 5.8, I think is the lowest that I saw, even just for your primary, which is usually lower even than an investment. But I think it was Dave Meyer who had talked on the podcast one time about he opened like an account with Wells Fargo or something.

20:57And because he had like a brokerage account with them, I can't remember specifically. They actually gave a discount on the interest rate, too, if you did a loan with them, too. Yeah. And that's just like a good thing to ask, guys. And this is more so like especially a lot of like the bigger banks can probably offer this as well. But just ask, hey, are there any incentives? like, is there anything that I can do to maybe earn an additional point or two off my mortgage? And you'd be surprised what options are out there. All right, guys, before we go into our final question, if you are not yet subscribed to the Real Estate Rookie YouTube channel, make sure you do that.

21:32You can find us at Real Estate Rookie. If you want to do more than just hear mine and Ashley's lovely voices and see our lovely faces, you can hang out with us on YouTube and join the conversation there because you can leave comments. But we'll be right back after a quick word from today's show sponsors with our final question. Hey, rookies, if you're watching this, we want you to apply to be a guest on the Real Estate Rookie Podcast. That's right. Ashley and I are looking for amazing stories just like yours to be a part of our Real Estate Rookie Podcast. Now look, you don't need to be an expert.

21:59You don't need to have done thousands of deals. Even if you've done one deal, your story could help inspire the next listener. As a rookie investor, especially if you just got your first deal, it is all fresh in your minds and you are the best person to tell your story, give your experience on how you got it done to help someone else get their first deal. So head over to biggerpockets.com slash guest if you want to be a part of our show. Again, that's biggerpockets.com slash guest, and we'd love to have you on. All right, guys, welcome back. We're here with our final question for the day. It says, I'm looking to flip in the Tampa, Florida area, and I'm in touch with a few wholesalers and realtors in that market.

22:39I've received multiple properties from them. However, I'm always concerned that their ARVs are inflated, which will leave me in the red. How do you determine correct ARVs when you are not physically present and can't pull your own comps from the MLS? Great question. I think first, let me just define a few terms here. Number one, ARV stands for after repair value. This is the value of the home after you've made any renovations or improvements to it. So you buy an old beat up house for a hundred thousand bucks and after you're done renovating it, now it's worth 200 ,000, right? The 200 ,000 would be your after repair value.

23:22Wholesalers, we talk about wholesalers a lot, but just to quickly define that, a wholesaler is basically someone who's a professional deal finder. They do all the work of knocking on doors, sending mailers, sending text messages, cold calling people to try and find motivated sellers who are willing to sell their properties below market value for various reasons. And they sell those contracts to real estate investors like me and you. So I define those two things because a wholesaler makes their money by locking a property up at one price and then selling that contract to an investor for a different price.

23:57And the price that the investor pays is always based on the proposed after repair value. The higher the after repair value, the more the investor is willing to pay. The lower the after repair value, the less the investor is willing to pay. So if a wholesaler wants to maximize the amount of money they can make on a contract, it's in their best interest to provide the highest potential after repair value to the seller. Now, why do I share that? It's because the wholesalers are motivated to paint the rosiest picture possible for you as the investor about what that property might sell for. My strong recommendation is to use whatever they propose as a single data point, but do not make any definitive decisions on whatever ARV a wholesaler provides to you.

24:45When I get properties from wholesalers, and sometimes I'll read the comps I send over, they might pick comps that are like 12 months old or that are six miles away. And those aren't the best comps that we want to use when we're going through our process of predicting or projecting our own ARV. So I think that's the first thing I'll say is that do your own homework, find your own comps. Not to say that you can't trust the wholesaler, but you guys have slightly different motivations and your best interests aren't always aligned in terms of what they project and what you project. Yeah, definitely like doing your own research and not going off of what anybody else is telling you, especially if they have skin in the game and making a fee on the back end of the wholesale deal.

25:33But one thing that I think has really helped me is just making a spreadsheet with and looking at properties that have gone pending and then properties that have sold in the area on my own. And you can like a recent agent that I just worked with, she printed it off, you know, for me of different comps. But sometimes I've noticed that they're they're not the comps that I would use. So like I'm looking at every single listing to actually look what's comparable because sometimes listings aren't accurate. They don't have the right bedroom count. They, you know, are stated that they're in one zip code, but it's actually in a different town, even though it has the one zip code.

26:16and like there's different things like that. Like in my area, a lot of like their villages are called and they have their own water and sewer supply and you don't have a well on your property. Well, you could still be in one village's water and sewer hookup, but you're actually, you know, a different town zip code. So like different things like that, when you're pulling just from like a generic, you know, list like off the MLS and not like actually looking in detail at the comps, those are little things that could be missed. So I really like just pulling my own comps off of Zillow. And in one thing to take into consideration too is like in New York State, it can take like 45 to 60, sometimes 90 days to close on a property.