3 Types of Rentals That Make You Rich in 2025 (Actual Deals)

Summary

BiggerPockets Real Estate Podcast: Episode Summary

Title: 3 Types of Rentals That Make You Rich in 2025 (Actual Deals)
Host: Dave Meyer
Release Date: April 23, 2025

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Introduction

In this engaging episode of the BiggerPockets Real Estate Podcast, host Dave Meyer welcomes three seasoned investors—James Dainard, Kathy Fecky, and Henry Washington—to share their recent real estate deals. The focus is on showcasing diverse investment strategies that cater to different budgets and market conditions, illustrating how varied approaches can lead to substantial wealth creation through real estate.

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Henry Washington's Spider-Filled Gem

Timestamp: [02:25] - [10:44]

Henry Washington kicks off the discussion with a compelling story about purchasing a challenging property:

• Property Details:
  • Location: Across the street from a lake in Arkansas
  • Purchase Price: $55,000
  • Condition: Riddled with brown recluse spiders, thick cobwebs, and severely rotted subfloors.

Key Insights:

• Renovation Investment:

  • Total Investment: $90,000
  • After Repair Value (ARV): $265,000 to $285,000
  • Rental Income Potential:
    • Long-Term Rent: $1,800/month
    • Short-Term Rent: $3,000/month

• Unique Features for Short-Term Rental:

  • Proximity to a picturesque lake with amenities like a deck, pier, fishing house, and boat dock, enhancing its appeal for vacation rentals.

Notable Quotes:

• Henry Washington: “I like that it was across the street from the lake. I liked that I could buy it for $55,000.” (04:00)
• James Dainard: “It's realistic because our listeners can afford it. We haven't talked to ears yet.” (04:43)
• Henry Washington: “It's almost a no brainer if you're strat like at 214,000, 1825 rent in a market that's going to appreciate.” (19:10)

Challenges Addressed:

• Property Maintenance: Implementing practical solutions like using sticks to navigate spider-infested areas and reinforcing subfloors with two-by-fours to ensure safety.
• Financing Strategy: Secured through a hard money loan, financing nearly 100% of the purchase and renovation costs with plans to refinance into a 30-year fixed mortgage post-renovation.

Conclusion:

Henry emphasizes the deal's relatability and repeatability for average investors, highlighting the importance of consistent effort in sourcing and capitalizing on undervalued properties. He underscores that while the deal presents initial challenges, the substantial ARV and flexible exit strategies make it a lucrative investment opportunity.

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Kathy Fecky's New Construction Investment

Timestamp: [14:04] - [20:26]

Kathy Fecky presents a contrasting approach by focusing on new construction in a burgeoning market:

• Property Details:
  • Location: North Dallas, near McKinney
  • Purchase Price: $214,000
  • Median Price in Area: $395,000
  • Property Type: Brand new, three-bedroom, two and a half bath home

Key Insights:

• Target Audience: Designed for busy professionals seeking low-maintenance, cash-flowing properties without the hassle of extensive renovations.

• Investment Strategy:

  • Negotiated Interest Rates: Successfully negotiating the mortgage rate below 6%
  • Rental Income Potential: Approximately $1,825/month
  • Growth Prospects: Positioned in a high-growth area with ongoing development, ensuring appreciation and rent increases over time.

Notable Quotes:

• Kathy Fecky: “This deal is in an area in north Dallas, kind of near McKinney. There's so much development coming in this area.” (14:04)
• James Dainard: “You're catching the builders in the middle. You're able to negotiate the rate buy down.” (18:05)
• Kathy Fecky: “If you want to buy an investment property, this is a great option for busy professionals.” (19:11)

Challenges Addressed:

• Market Differentiation: Kathy explains the importance of understanding the suburban markets versus city centers, noting that suburbs often present more affordable and stable investment opportunities.

• Financing Advantages: By negotiating lower interest rates and capitalizing on builder incentives, she secures a favorable financial position that enhances cash flow and property value.

Conclusion:

Kathy's strategy exemplifies a passive investment approach tailored for investors who prefer minimal hands-on management. By investing in new construction within a thriving suburb, she ensures steady rental income and capital appreciation, making it an attractive option for professionals who balance full-time careers with real estate ventures.

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James Dainard's Creative Seattle Investment

Timestamp: [27:22] - [34:42]

James Dainard shares an intricate deal that leverages creative financing and land redevelopment in Seattle's competitive market:

• Property Details:
  • Location: Central Seattle
  • Purchase Price: $600,000
  • Property Size: 4,000 square foot lot
  • Zoning: LR3 (Low Rise Residential)
  • Potential Development:
    • Front House: Renovation to sell for approximately $900,000
    • Backyard Lot: Construction of a new 2,100-2,200 square foot house to sell for $1.2 million

Key Insights:

• Investment Phases:

  1. Renovate Front House:
     • Investment: $125,000
     • Sale Price: $899,000
     • Profit: ~$35,000
  2. Develop Backyard Property:
     • Construction Cost: $700,000 to $720,000
     • Sale Price: $1.2 million
     • Equity Creation: $350,000 to $400,000

• Long-Term Strategy:

  • Utilizing a 1031 exchange to defer taxes and reinvest profits into additional properties, such as a four-plex, without immediate capital outlay.

Notable Quotes:

• James Dainard: “This is how you do it in a high-price market.” (31:21)
• Kathy Fecky: “You can have income coming in while you're working through the permitting process.” (31:21)
• James Dainard: “We have to look at creative ways in expensive markets.” (33:58)

Challenges Addressed:

• Permitting and Zoning: Navigating Seattle's zoning laws to maximize property value and potential developments.

• Financial Management: Balancing renovation costs with projected sale prices to ensure profitability, even amid rising construction costs due to tariffs.

Conclusion:

James's deal highlights the importance of creativity and adaptability in high-cost markets. By meticulously planning renovations and leveraging zoning allowances for additional constructions, he not only maximizes property value but also creates significant equity. This strategy underscores the potential for substantial returns in competitive real estate environments through innovative investment practices.

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Investor Competition and Final Verdict

Timestamp: [35:12] - [37:11]

The episode culminates in a friendly competition where each investor votes for the deal they find most compelling:

• Votes Cast:
  • James Dainard votes for Henry Washington's deal, admiring its high equity potential and affordability.
  • Kathy Fecky votes for James Dainard's Seattle project, valuing its multiple income streams and creative financing.
  • Henry Washington votes for Kathy Fecky's North Dallas investment, appreciating its solid numbers and growth prospects.

Host's Decision:

• Dave Meyer: Acts as the tiebreaker and selects Henry Washington's deal, citing the added appeal of a golf simulator as a unique benefit.
  • Dave Meyer: “If you throw a golf simulator on any deal, I'm taking it.” (35:55)

Final Insights:

• Henry Washington's deal is lauded for its relatability and substantial returns, making it a standout example of effectively managing and profiting from distressed properties.
• Kathy Fecky's investment is recognized for its strategic positioning in a growth market, offering stability and appreciation.
• James Dainard's Seattle venture is celebrated for its complexity and high equity creation, demonstrating the potential of creative investments in expensive markets.

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Conclusion

This episode of the BiggerPockets Real Estate Podcast offers invaluable insights into diverse real estate investment strategies. From renovating distressed properties and investing in new construction to executing complex development projects, the featured investors illustrate how adaptable and creative approaches can lead to significant wealth creation in 2025's dynamic market. Whether you're a novice investor or a seasoned professional, the lessons shared by Henry, Kathy, and James provide actionable strategies to enhance your real estate portfolio and achieve financial freedom.

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Note: Timestamps (e.g., [02:25]) refer to the position in the transcript where the quoted or referenced content occurs.

Transcript

[Dave Meyer]

You can buy a quality rental property today at almost any price point, whether that's 50 grand, 200 grand, or 600 grand. Whatever the price point, you need to know how to find the value in your particular market. And you need to think through how to operate your property to maximize your returns. But starting or growing your real estate portfolio is completely doable, even with current prices and interest rates. Today, three professional investors will teach you how they're investing for long term wealth creation right now. Hey everyone, I'm Dave Meyer, head of real estate investing at BiggerPockets where we teach you how to achieve financial freedom through real estate. And today on the podcast, I am joined by three expert investors who are my co hosts on the on the Market podcast. James Dainard Can, Kathy Fecky and Henry Washington. James, Kathy and Henry are each going to tell us about an investment property that they've bought within the last few months with purchase prices ranging from 55 grand. So sort of at the low end of the spectrum, all the way up to 600 grand at the high end of the spectrum. Well, thank you guys for being here. Kathy, great to see you.

[Kathy Fecky]

Great to see you. Can't wait to hear what these guys are up to. Now.

[Dave Meyer]

Are you nervous? I mean, not that this is a competition, but we always make it.

[Kathy Fecky]

It's going to be a competition. It always is, even if it's unsaid.

[Dave Meyer]

Okay, well, you usually hang pretty well in these competitions, so we'll see. James, how you doing?

[James Dainard]

I'm good. And it doesn't need to be said. It's always a competition.

[Dave Meyer]

Henry, good to see you, man.

[Henry Washington]

Hey, glad to be here. This is always a competition and I want to win this time, so.

[Dave Meyer]

All right, well, I'll give you guys a little bit of a spoiler because I, I've read a little bit about the deals. We know so far that Henry's house that he's bringing to trying to win apparently with a house full of spiders when he closed. But it will be a part time vacation home for his family. Cathie found an incredible upside opportunity in one of the U.S. largest and fastest growing cities. And James is getting super creative with a multi part strategy to create profit other investors may have overlooked. So whether you're a new investor, you've been in real estate for a long time. Today's show will have some great ideas to get the wheels turning on your own next property. Let's get into it. All right, Henry, I'm gonna pick on you. You have to go first and share the deal that you're doing?

[Henry Washington]

Yeah. We've got a single family home that we purchased. It is coincidentally across the street from a lake and it's arguably the second nastiest house I've ever bought. It was so riddled with brown recluse spiders and webs.

[James Dainard]

You got me there.

[Henry Washington]

So first of all, when you walked in, you walk into a sunroom, the sunroom literally 3 inches thick on the ground of just cigarette butts. Like this guy would just smoke his cigarettes and then throw his butts out in the sun room. And then when you get into the house, like I took one step in and I was like, no, I'm good. So I. You had to get like a stick of some kind and then you just had to like wave it around in front of you from all the cobwebs.

[Dave Meyer]

Oh, it's like when they make cotton candy, you know, they take that little thing and roll it around.

[Henry Washington]

It was literally just like a thick stick of cotton candy, except spiderwebs. And then the subfloors were so rotted away that like we just had to put two by fours down so that we have something sturdy to walk on. Because I thought I was just going to fall through the floor.

[James Dainard]

You know what though? I like that Henry said that this is the most realistic deal. Who wants to buy a house where you're going to fall down and get killed by spiders within the first 30 seconds? It's realistic though, Henry.

[Henry Washington]

It is realistic because our listeners can afford it. We haven't talked to ears yet.

[Dave Meyer]

What did you like about it? I've heard some things that would turn me off, but what was attractive about this deal?

[Henry Washington]

I liked that it was across the street from the lake. I liked that I could buy it for $55,000. I think we paid for it.

[Dave Meyer]

Oh yeah, that's something to like.

[Henry Washington]

I mean, it needed more put into it than I paid for it. So we're putting 90 grand into it. But the ARV on the house is 265, conservatively, probably closer to 275, 285. And if we want to long term rent it, we could easily get $1,800 a month. Mostly because at as we bought it, it was a three bed, one and a half bath. But we were able to steal some room from a couple of closets and we made it a full three bed, two bath. So eighteen hundred dollars a month long term rent. But we're gonna actually short term rent it because it's across the street from the lake and I just wanna be able to take my family there and do like lake stuff. I don't really know what lake stuff means cause I'm not an outdoorsy person. But we're gonna figure it out.

[Dave Meyer]

You will find out soon.

[Henry Washington]

Yeah.

[Kathy Fecky]

I gotta ask you about this lake though because there's different. There's bougie lakes, there's redneck lakes and there's lakes you don't want to go near. What are we talking?

[Henry Washington]

I'm going to say one word and then you tell me what kind of lake it is. Arkansas. No, no. It is a pretty lake. There's actually a deck and pier that you can walk up to and like fish off of. They even have like a fishing house. So when it's cold outside you can go inside the little house and fish down into the lake from the little house. And there's a boat dock and all kinds of stuff. So it's actually. There's really nice. Sounds amazing lakes in this community.

[Dave Meyer]

Oh, nice.

[Henry Washington]

And so I like the price point. I like that I have multiple exit strategies. I can sell this one if I wanted and make a pretty decent profit. Cause like I said, ARV is pretty high. I could long term rent it for $1,800 a month and cash flow the property or I can short term rent it, which is what we're going to do. And we're estimating to make about $3,000 a month on the short term rent. But the real reason I want to short term rent it is because I haven't been able to get my wife to agree to let me put a golf simulator in my personal home. But if it's for a short term rental and it's going to bring us more income. I have gotten her agree to let me put it in the short term rental which is only like a 20 minute drive from my house. So it's basically like my own personal.

[Kathy Fecky]

Is Henry working on that house again? What could possibly be wrong with it?

[Dave Meyer]

Now wait, I have to ask you about this because I was going to put one in my short term rental because I have this detached garage that I don't use for anything right now. But I was worried that people were going to break it because it's like you need a computer and a software. Are you worried about that at all?

[Henry Washington]

There's cases that you can get for your launch monitor that can can secure your launch monitor to the ground so that no one can take it. And then you can also lock your computer up in a case so that no one can take that. Just a keyed entry Case. So, yeah.

[Dave Meyer]

Oh, maybe I have to come visit you in person and see how you created this just so I can replicate.

[Henry Washington]

It if you want to come and do some market research. Or I can come out there and consult and tell you exactly how to set all this up.

[Dave Meyer]

It's a writer.

[Henry Washington]

Yeah, easy piece.

[James Dainard]

But, Henry, so. So you bought this house. It's got no floors, it's got lots of spiders. Like, what does the permitting take? Because for us, if we have to wait nine months for a permit, it can be all the profit in the deal.

[Henry Washington]

Yeah, no, that's a great question. Actually, the permitting process was really easy. Actually, I just went to the permit office and told them what I was going to do, and then they made me draw it out for them, and I did. And then you pay for the permit and they issue it to you pretty much on the spot, as long as you're not asking to do something that doesn't conform to their normal standards. So I'm wanting to build a deck over the driveway of this property because the elevation is so steep that I don't want anybody to park at the top of the driveway. And so I actually want to build a deck over the steepest part. But the rules in this community say that every house has to have either a carport or a garage. And so when I asked them to do that, they said I'd have to come to the meeting and present and get approval, and then they give me a permit. So as long as what you're asking for is within their normal standards, you can get a permit pretty quick. If it's not, then you got to go present.

[Dave Meyer]

And how did you finance this, Henry? Because I imagine this deal you could not get a conventional loan on. So how do you. How do you make this one work?

[Henry Washington]

No, this was similar to a hard money loan. I financed almost 100%. I think I had to put about $5,000 down out of my own money, but they financed the majority of the purchase and all of the renovation. And then once we finish the renovation, we will refinance it out into a 30 year fixed on a DSER.

[Dave Meyer]

So you financed your own golf simulator, Just to be clear, yeah.

[Henry Washington]

For business purposes? Yes.

[Dave Meyer]

Yes, of course, yes.

[Henry Washington]

Purely business.

[Dave Meyer]

Yeah.

[Henry Washington]

I will get no personal joy out of this.

[Dave Meyer]

And how long are you expecting this renovation to take? Sounds pretty serious.

[Henry Washington]

By the time we're done, it'll be about five months.

[Dave Meyer]

Yeah. Seems pretty reasonable. So, as you said, this is the most relatable deal. Is this a deal you think you know, an average real estate investor could find and pull off.

[Henry Washington]

Absolutely. I think there are markets like this all over the country where you can buy houses for a reasonable price point and you can figure out a way to monetize them. I'm not saying it's easy. I am saying it's repeatable.

[Dave Meyer]

Well, what's hard about it?

[Henry Washington]

Tell me it looks easy because I just get to get on here and talk about the deal that I have. But what we don't hear me talking about is how long or how much marketing I had to do in order to find an opportunity like this. There's a level of consistently looking for opportunities, and then when we find one, we're able to capitalize on it. So it's not like I just found this one property sitting out there, nobody wanted and bought it. It took a lot of legwork on the front end to find this opportunity.

[James Dainard]

I mean, I love this deal. When the rehab is bigger than the purchase price, it typically means you're making money. Yeah, you're making some money on this.

[Kathy Fecky]

Thing, you better be making some money.

[James Dainard]

But you still have to control those costs. Right. And I think you have to be careful about buying the cheapest thing because the cost can explode. Like, I mean, what do you think? For somebody that was like brand new, what's their rehab number going to be?

[Henry Washington]

You could easily run this about 125 to 150. It's not just controlling your costs. It's also not over renovating. But I have this contractor doing like four jobs for me right now. And so he's able to source materials all at the same time. And I'm able to get a discounted rate because we're doing so many jobs with this one contractor. So.

[Dave Meyer]

But even you said 125. Right. So Henry, just as a reminder, he said his renovation cost him 90. So even if you went up to 125, which is like a 30, 35% increase over what Henry's paying, you're still into this deal for 180. And the ARV is 265. It's still a good deal.

[Henry Washington]

It's a stupid deal.

[Dave Meyer]

Yeah, right.

[Kathy Fecky]

You could mess it up left and right.

[Dave Meyer]

Exactly. So, like, yes, there are inevitably efficiencies that come with doing the volume of deals. Henry Doe, having a business for several years being great at building these relationships, that definitely helps. But even if you're starting, there's so much cushion in a deal like this that it gives you a lot of flexibility and allows for some of those inefficiencies that just exist for anyone when they're first getting started?

[Henry Washington]

Absolutely.

[Dave Meyer]

All right, well, that is Henry's deal. We are going to take a quick break, but when we come back, we're going to hear about Kathy's new property and we'll see if it's as relatable as Henry's deal that's filled with spiders and has no floors.

[Henry Washington]

We'll be right back.

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[Dave Meyer]

Welcome back to the BiggerPockets podcast. I'm here with Kathy Fecky, James Dard, and Henry Washington talking about deals that we are all working on right now. We heard about Henry's frightening deal with a lot of upside. Cathie, tell us about something you're working on.

[Kathy Fecky]

Well, this is a classic Kathy deal and it is quite opposite from Henry's and probably James as well. Shouldn't be any spiders in this one, but actually it is me helping my daughter get her first investment property. Because first of all, I don't know about my youngest yet, but my oldest, Karina listens to me and she bought a house instead of a car right out of college because she didn't get a car. Her debt to income ratios were better. She was driving an old car, she didn't need a new one. And that house helped her buy a house in Southern California. And just recently the bank contacted her and said, we can give you an equity line. All you have to do is just sign. And she called me, she's like, mom, what do I do? And I said honey, you buy an investment property.

[Dave Meyer]

That's what you do.

[Kathy Fecky]

And it's a pretty substantial equity line that they're giving her. So it's scary. She's very busy, busy, professional. She's got her own business and she lives in Southern California. So to find what Henry just described in her neighborhood would be about a million dollars for, you know, for that. So I wanted to show her how I've been investing and how we've been teaching people invest who don't live in areas where it makes more sense to do the types of things that Henry's doing and James is doing. So how do you have a full time job, two young kids, try to take care of your life, your home, all the things, and try to buy an old house and fix it up. It's really hard. So an alternative is to buy a new house that doesn't need any work and that still cash flows and is in a growth area where you today can negotiate to have the rate bought down. So, you know, Dallas has been hitting the news a lot as an area where prices are going down or there's just a lot of inventory, but they're not really talking about the outskirts. And if you go to north Dallas, it's a very different story. Very low inventory versus higher inventory places like the McKinney area and even further north where you can still get tremendous deals and they still cash flow and it's still in the path of progress. And it's all the things I love for buy and hold investing for busy professionals who just aren't in a situation to buy a spider house, you know, it's just not gonna, it's just not gonna work for them. So this deal is in an area in north Dallas, kind of in near McKinney. There's so much development coming in in this area. The purchase price is $214,000 for brand new.

[Henry Washington]

That's really good.

[Dave Meyer]

Wow.

[Kathy Fecky]

Crazy.

[Dave Meyer]

Yes.

[Kathy Fecky]

The median price in that area is Almost double that, $395,000. So getting it well under median price. I love that it's a three bedroom, two and a half bath. We're negotiating the interest rate down. We're trying to get it under 6% by negotiating with the builder. And the rent looks to be around $1,825. So again, not the numbers you're going to see with Henry, but also that's really hard to do when you live in Southern California. You're not going to find a $50,000 house and be able to put 100,000 into it, make it work. So again, this particular area has days on market is 65 months of inventory, 3.9. So kind of normalizing, not what you hear in the news, which is a flood of inventory in Dallas. You have to know that for the case Shiller Index. And a lot of these areas where they mentioned cities, they're not always talking about the metro area. And the metro area is very different than the city itself. Cities operate very differently than suburbs. So you just got to know your suburb really well and know where the growth is headed. Because if we want something that cash flows, if we want something more affordable. So do businesses, Businesses want to get out of expensive areas and into more affordable areas where they can get the land for cheaper, where they can pay their employees a little bit less than they might have to in a city. So you've got to always be looking at where our business is moving and where is housing needed as a result of that. So I'm super proud of her. She's going to be able to pull this deal off. It's her first investment and I like it so much. I'm going to get one too.

[Dave Meyer]

Oh, wow. Just double dip it. I love that.

[Kathy Fecky]

Yeah, you know it.

[James Dainard]

You know what I love about this deal right now though? You're catching the builders in the middle.

[Kathy Fecky]

Yeah.

[James Dainard]

You know, right now it's a little bit harder to sell inventory. So they're now selling to you at a discount. You're able to negotiate the rate buy down, which is a benefit to you. You know, I mean, essentially you're getting the property for cheaper by getting that rate buy down. And also we have tariffs coming that supposedly is going to raise construction costs 10 to 15%. And you're locking in on today's build costs where the builder is also working with you to get the invent. And that's what we're always chasing as investors is what's in the middle. No man's land. And that's how you can kind of crush that deal when you can get that rate negotiated down and you're buying below replacement cost because if construction cost is up 10, 15% in 12 months, you're buying below replacement cost. And that's what I really do love about that deal. It's the right price, it's the right affordability, and it should naturally go up in value just by the build cost alone.

[Henry Washington]

There's a couple of things I love about this deal. First of all, brand new construction home in a. In an area of the country that is going to continue to grow. There's a lot of land mass in Texas. They're not just going to stop growing. Right. So 214,000 for a purchase price for a brand new home.

[Dave Meyer]

Yeah.

[Henry Washington]

Like the home's not going to go down in value, like even in the short term. If it does over the long term this property is going to appreciate. And I know there's people looking at, listening to this and looking at the numbers and going oh, 214,000, only 1825 in rent. But you have to consider that this property is brand new construction which means you are not going to have the maintenance expenses and the capital expenses maybe that like I am going to have with my property that's a much older property. Right. And so that is going to help you with the cash flow in the short term and in the long term you're going to have equity and appreciation plus the tax benefits on a property like this. Like this is almost a no brainer if you're strat like at 214,000, 1825 rent in a market that's going to appreciate. Sometimes where you find new construction at these price points, you're probably not going to get the growth or the appreciation over time. So I think being able to buy something like this at that price point near a metro area like Dallas is pretty amazing.

[Kathy Fecky]

And then like you said, just not to get nickel and dimed. It's like buying a new car versus an old car. You're going to get a better deal on the old car but you might have to more fix it costs. Right. Than a new car hopefully.

[James Dainard]

Yeah.

[Dave Meyer]

And lower vacancy. Right. Like I think like when you go into these communities where it's more family oriented, you might have longer term tenants too. I mean this makes a lot of sense to me. You know Kathy, this might be a more relatable deal. It was, I think, you know, for an average investor who especially who lives in a high price market like this is a good option. Henry, your deal has a lot of juice in it to borrow James's turn. But you know it's, it's a little bit more work and it's going to be a little bit harder do. So I, I think you might be competing here on relatability, Kathy.

[Kathy Fecky]

All right, all right.

[Dave Meyer]

Well thank you for sharing with us Kathy. Sounds like a really good deal. Good example of something that you can buy anywhere in the country if you, you know, have the capital to afford something like that. Before we move on, I wanted to remind the whole Bigger Pockets community that the Bigger Pockets conference known as bpcon is back and we are heading to Las Vegas this year for our sixth annual conference. I know all three of you will be there. I will be there of course as well. Henry, tell me what are you looking forward to this year?

[Henry Washington]

Vegas is probably one of the best food Cities in America and I'm a fat kid so I'm excited to go eat food for sure. I'm excited to give some money away, make some donations to the casinos there.

[Dave Meyer]

And they are struggling.

[Henry Washington]

Yes, absolutely. And I'm excited to hang out with all of my friends. I, I don't get to see as often so I miss you guys.

[Dave Meyer]

Absolutely. It's going to be a great time. James, what are you looking forward to?

[James Dainard]

I got to echo Henry. It's Vegas, it's always going to be a good time. But you know one of my favorite things about bpcon is just hanging out in the hallways and talking to people when you just get a talk and talk and you get to find out what people are doing or what they're struggling with. Like every time I leave bpcon I'm excited to go do more things.

[Dave Meyer]

That conference high man, it's a real thing. When you get home you just buzzing. Kathy, what are you looking forward to?

[Kathy Fecky]

Well, of course your keynote, Dave. Can't wait.

[Dave Meyer]

Thank you. Putting the pressure on.

[Kathy Fecky]

Yeah, yeah, just a little bit of pressure. No, it's been so good these past years. I'm looking forward to that again. And of course Vegas is always fun but it's really fun with 2000 of your best friends. You know, we take over a whole casino. I mean BP style all the way. One thing, if people haven't been to bpcon, you need to know that they go all out and all out on the, the education, the networking, but also the fun. So I can't wait to see what's in store.

[Dave Meyer]

I know we never know what the parties are going to be, but they're always great.

[Kathy Fecky]

Yeah.

[Dave Meyer]

Well, thank you all for, I mean it's going to be a great time. I'm really looking forward to it. And if you all want to join the four of us and tons of other real estate investors, experienced, aspiring alike, you can go to biggerpockets.com conference and get all the details there and book your room, get your ticket and we'll hope to see you in Vegas. Alright, we're going to take a quick break but we'll be right back.

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[Dave Meyer]

Welcome Back to the BiggerPockets podcast. I'm here with James Danard, Kathy Fecky, Henry Washington, talking about deals everyone is working on right now. We've heard about Henry Spiderhouse, Kathy's new construction deal outside of Dallas. James, I'm guessing yours is probably worth more than both of theirs combined. What are we talking about here?

[James Dainard]

Yeah, my earnest money was double Henry's purchase price on this one.

[Dave Meyer]

He's like, that's pretty cute. 55 grand.

[James Dainard]

That's great. No, you know and I it doesn't matter the size of the deal. It's. Well, you got to play with what the cards you get dealt, right? And we're in Seattle. It's expensive. I would love to buy myself a $55,000 lake house. And Henry, I did just get a wakeboard boat so maybe we head out that way. My deal though, for the market we're in, we have to get pretty creative to come up with cash flow and build out your rental portfolio. Things are expensive and the reason I love my deal is because they only make so much land and I'm getting the land for almost free on this one. And how we're setting up.

[Henry Washington]

Love that.

[James Dainard]

You know what we have is I found a proper which is the equivalent to 55,000 in Arkansas. I found a two bedroom, one bath property in the central district of Seattle. So this is an expensive neighborhood. It's constantly growing on a 4,000 square foot lot. And we paid 600 grand for this property. And 600 grand in Seattle is cheap. So the reason I love this deal is there's potential in the backyard. It sits on a two sided street, there's access on the back and the front house is on the front of the lot. We can renovate that house and put in about 120,000, 125,000 in that house will be able to be sold for about 900,000. In addition to this property is zoned LR3 low rise residential to where we can build a row house in the back. And I can build a 2100-2200 square foot house in the backyard and subdivide it off off and sell that property for about $1.2 million. So the plan on this is we're going to renovate the house, put 125, 135,000 in, we're going to sell it for 899,000, which is then going to give us the back lot on that property. There's going to be about $35,000 in profit after we flip the house. So we're going to get our backyard for $35,000 cash to us and we're able to build that house out at a cost of about 700 to 720,000 to build a house that's worth 1,200,000. That property then has now created over 350 to $400,000 in equity, but it's not going to pay for itself. I'm going to have to write a check to either pay for it or leave some money in. And so that's why I love this deal. It takes a long time to build these things out so I can start collecting rent, start putting renters in and I can 1031 exchange this in one year. And so I'm going to flip off the front house, get the lot for essentially free in the back, build a house for 720,000, sell it for 1.2, create $300,000 in equity and profit, and then I'm going to take that 300,000, I'm going to go buy a four plex with no money out of my own pocket. And so the reason I do love this deal is you have to look at creative ways in expensive markets. Whether you're in la, Chicago, Miami, New York, the numbers don't pencil if you want to buy a rental.

[Dave Meyer]

Yeah.

[James Dainard]

And so for us it's a lot of work. This is going to take us about 12 to 15 months, but in two years I'm going to be able to get into a fourplex with no money out of my own pocket. And that's how you start creating the wealth. And that's how we built out our whole portfolio. Again. I would much rather buy a deal like Henry. If I had those in my backyard, I would buy them. But in my neighborhood I got to cut off my backyard to make any kind of money on this.

[Kathy Fecky]

This is how you do it in a high price market. In California you can do things like that with adus. There's such a push. The California legislation is all about building these ADUs in the back and increasing value. And I, I love what you said. You can have income coming in while you're working through the permitting process and so forth. You still can rent the main house and, and you know, be able to build and improve the back part. Love it. We're always looking for deals like this.

[Henry Washington]

So you're still able to sell these properties, one for 950,000, another one for 1.2. Even though they don't have the yards anymore.

[James Dainard]

Yeah. And so we've deducted that value down. So 899, if I build it in the back, if I actually don't build anything in the back, the property could be worth up to 999. But that comes down to the plan. So as I was permitting and start working on permitting that back unit, you want to make sure that you're not putting too many negative factors on that house. So things that we planned out is as we did our design, we made sure that this house still had a little bit of a backyard as a front yard. But we also got parking on it it and that was key to make the numbers work. If we couldn't have got parking, that house could go down to about $799,000 in value. And so these deals, they get a little complex and you have to look at all the comps and what the impacts are and they take a little bit of time to work through. And that's why it's really important to work with the right professionals that can give you the right values. Because if we don't have that parking stall. Instead of making money on it, I'm actually going to be paying a hundred thousand to 150,000 for the deal. And so it's all about that plan and how you lay it out. And just because you can build in the back doesn't mean you should either. And so you want to work with an architect, an engineer, a surveyor, and to figure out exactly what you can do. This is not guessing. This is all done in our feasibility when we bought the property. And the reason I love this deal is for some reason, if bill costs shoot up 30% because of tariffs in the next six to nine months and that my numbers change, I can still pivot my deal and sell the house for in the 900s, high 900s, and still make a profit and just cancel it. And the only risk I'm taking is the waste of plants.

[Dave Meyer]

James, I'm curious, like, how many different ways did you look at making this deal work before you settled on this particular strategy?

[James Dainard]

I looked at this deal five or six times. I said no the first three times. And then I just kept coming back to it because it was affordable. And I'm going, okay. You know, I love a no man's land deal. When everyone doesn't want it. It's like, well, how can we make this work? And so I probably looked at this six different times over a 45 day period. And even when I locked it up, I was like, man, this might not work. And then finally, after talking to my surveyor and architect, we came up with the right plan.

[Dave Meyer]

Yeah, I mean, I think that shows like, you know, getting creative in not just expensive markets, but just in the kind of housing market where we're in, where there's not that much inventory. Like, like this is something that a lot of people probably had a chance to buy. Right. But because you were disciplined about it and got creative with it, you were the one who figured out through that hard work that you did how to make this what other people couldn't make. Pencil into a really profitable deal for yourself.

[James Dainard]

Yeah, it's all about the plan that you're putting on things. And if you look at it straight over tackle, a lot of times it won't pencil because everybody's looking at it straight over tackle, tackle. So they're rushing in on that deal. I like the ones where it doesn't make sense. Straight over tackle. And you got to get a little creative and that's how you can create big pops. Like even on this deal, I might keep it as a rental, but I Still might tweak it at the end because I can 1031 that front house and for some reason if bill costs go up, I know I can sell that lot in the back for 15 to 20% of value. So that tells me that lot's worth 150 to 200 grand and I can combine it and then 10:30 want it out that way too. And so there's multiple different options in where I'm not going to get stuck having to build the house if I don't want to.

[Dave Meyer]

Awesome. Well, this sounds like another great deal, James. Thank you so much. And I know the prices may seem like out there, but a lot of the lessons that James is talking about on how to approach this kind of challenge I think is applicable to really any market. So thanks so much for bringing it to us. All right, well, thank you all so much for bringing these deals. Since we tend to always just make these things competitive for absolutely no reason. I think we often to vote for one deal that we would do. You can't vote for yourself. So James, what's your vote?

[James Dainard]

Well, even if I could vote for myself, I'd pick Henry's deal all day long. I love a massive fixer. Cheap, high equity growth, straight over tackle Renault. I'm jealous. That is my kind of deal.

[Dave Meyer]

I like it. All right, Kathy, what's yours?

[Kathy Fecky]

So I would pick James because I love opportunities like that where you have multiple X's. That's 600,000 might sound high to some people, but I know that is a good deal. And then all the options that you could do with it. And then I would just want to borrow, you know, James and his team.

[Dave Meyer]

Yes.

[Kathy Fecky]

For just a year or so and I'll take that deal.

[Dave Meyer]

Yes. Okay, so you're not buying just the property, you're buying the whole. I like that. All right, Henry, what's yours?

[Henry Washington]

Well, even though Kathy's hating on my deal, I would buy hers.

[Dave Meyer]

Oh, okay. Oh, I have to be the tiebreaker now, but tell us why, Henry.

[Henry Washington]

I just think those numbers are pretty amazing for a new construction. And we have to remember that real estate is a long term wealth game. And the more that I am into this space and the more that I'm looking at my rental portfolio, I'm most excited when I look at the newer properties that I've bought in the past couple of years. I bought a few new construction rental properties. Yeah, those are the legacy properties. Those are the ones that you're going to be able to hand off to your kids and they'll still be in pretty decent shape versus if I bought a 50 year old property and then I'm handing that one off to my kids. Right. There's a lot of problems that can come with those.

[Dave Meyer]

Here you deal with this.

[Henry Washington]

Right. So the idea of being able to buy something brand new at that low of a price point and knowing that appreciation is going to go up, up rents are going to go up over time. We didn't talk about that with Kathy's deal, but that's another upside to hers. It's 1850amonth now.

[Kathy Fecky]

Yeah, yeah.

[Henry Washington]

But if you're going to get appreciation over time and rent growth over time, that gap of wealth just continues to get bigger. I think that's a great option for people who probably have 15 to 20% sitting on the sidelines that they'd be willing to throw in a deal.

[Dave Meyer]

Well, I get to be the tiebreaker now. This is fun. You all voted for each other.

[Kathy Fecky]

Oh boy.

[Dave Meyer]

And normally I think I would actually pick your deal, Kathy, because those are the type of like more passive long term deals I like. But Henry got me a golf simulator. You throw a golf simulator on any deal. I'm taking it. So I'm picking Henry. All right, well, thank you guys so much. This was a lot of fun. Henry James, Kathy, we appreciate you being here and hopefully we'll have you guys back on again soon. And thank you all so much for listening to this episode of the Bigger Pockets podcast. We'll see you next time. Your home isn't just a place to live. It's your biggest investment. You spend time, time, money and effort making it valuable, comfortable and safe. Maybe you've upgraded the showerhead, added some new curtains, and finally figured out which light switch actually controls the porch light. But the best upgrade you can make is peace of mind, knowing your home is protected day and night. That's why I use Simplisafe. Unlike traditional security systems that only react after a break in, Simplisafe helps prevent them before they happen. Their active guard outdoor protection uses AI powered cameras and live monitoring agents who can actually see if someone's lurking, talk to them, activate spotlights, and they can even call the police if needed. It's proactive security that works in real time. And the best part is there's no long term contracts, there's no hidden fees, just award winning home security for about a dollar a day. And it's why over 4 million homeowners trust Simplisafe to protect their property and keep their home secure. Right now you can actually get 50% off a new Simplisafe system with professional monitoring and your first month [e-mail] pockets. That's simplisafe.com pockets. There's no safe like Simplisafe.