Chad Carson (1:49)

Thank you Dave. Great to be here.

Brandon Turner (1:50)

I love having you on. This is always a fun show. I always like to hear from other investors I respect like you. Chad, what do you think the state of real estate investing is here in the beginning of 2026?

Chad Carson (2:02)

As a real estate investor who's been in this for 22 years, I really resonate with the idea that this is a good buying opportunity compared to the last five years. I feel more optimism in my own local market in the number of motivated sellers who are willing to play ball. I feel optimistic in that people I'm working with and I know are buying properties consistently at below market prices and locking in long interest rates. So if you just look at from a fundamental standpoint for real estate investors in particular, yes, there's a lot of choppiness, yes, there's a lot of changes, but this is a this is a prime time. That's what I'm saying.

Brandon Turner (2:36)

I love it. Well, I completely agree. I think, you know, I've shared some of my thoughts on the, on the show over the last couple of weeks, but it just feels like we're getting back to more of a normal environment where the last couple of years it's.

Dave Meyer (2:50)

Like either buyers had all the power.

Brandon Turner (2:51)

Or sellers had all the power. And it felt really difficult. And we were just like operating in the extremes of the housing market. And although people have gotten used to that and this new sort of normal era of the housing market might feel strange to people, I think for those of us who have done this for a while, I haven't done it as long as you, Chad, but I've been doing it for 15, 16 years now. You know, this feels good to me. An era where you can have reasonable conversations, reasonable negotiations with sellers and agree on a price that is mutually beneficial. Like that's what this is all about. And I am feeling good about this. You said, you know, you're getting more excited about acquisitions. What are some of the trends that you're seeing that are making you feel that way?

Chad Carson (3:36)

Well, one of them is the one that you pointed out was delistings. Yeah, you know the stat better than I do. But there's like a record number, maybe the most you've seen in the last eight to 10 years. Is that right?

Brandon Turner (3:46)

Yeah, yeah, I think, you know, the study was from Redfin and they haven't been around that long, so they have like 10 years of data. But in all of their data, it's the, it's the most delistings we've seen since 2017.

Chad Carson (3:57)

Right. So the opportunity I see there, like I'm always thinking acquisitions, how can you buy new properties? And those are people who listed the property, they didn't get the price they wanted. And there's a lot of them who are saying, I'm just going to take it off the market now. But the, the question I think about is like, well, what, what are they going to do now? And some, for some of them, they're like in good shape. They're just going to stay in the house and not move. Some of them are just going to rent the property out and they're going to turn that rental and that 5% interest rate into a long term rental. And that's good for them too. But there's some people there who have life changes where like they moved across the country or they don't want to be a landlord or they need Some cash, and they're willing to sell that property at a discount and give you a good deal on a, on a site. It might not be a fixed or upper property. It might be like a solid, nice house in a good neighborhood that fits my buy box. I think that's a huge opportunity.

Brandon Turner (4:44)

Absolutely.

Chad Carson (4:44)

I used to do that all the time. I used to market to expired listings. I would have a real estate agent who would give me a list of expired listings. I would mail to all those listings, and if I ever bought one of those, I would give them a finder fee just for sending me the list. There was a nice little relationship, and it was just a source of lead flow, and I think that would work really well this year.

Brandon Turner (5:01)

Oh, yeah. I think there's going to be so many of those, too. And it's not even if they have to delist. There's just stale properties all over the place. Yeah. Similar kind of thing where something that's stale, I think Redfin defines that as like 100 days on market or more as stale.

Dave Meyer (5:14)

But there's way more of those, and.

Brandon Turner (5:17)

Those people are going to be willing to deal. I, I, I told the story on your podcast, Chad, but I flipped a house, I put it on the market, and it sat for a while, and I wound up selling it for what I think is less than the actual value that what comps would support just because I wanted to get out of the deal. And it still turned out to be a solid investment for me. So I was, like, happy doing that. But just goes to show, like, even people who know what they're doing, even savvy sellers are going to be willing to move deals right now just because of cash flow management or wanting to reposition that money into something they want to acquire themselves. And I never delisted that property. But, you know, after 90 days, you kind of get to that point where you're like, I'll, you know, I'm willing to chat, I'm willing to negotiate and sit down. And I'm certainly not the only one who's thinking that way.

Chad Carson (6:07)

Yeah. And I think the key is the psychology of you as a buyer, an investor buyer. You can't be embarrassed making lower offers. Yeah, it's just, it's just a number. I mean, it's just if they reject you and they say no, cool. Like, every once in a while, realtor is going to be mad and say, that's 20% below the list price. You're crazy. But you know what? I've had several situations in the past Where I made an offer where the real estate agent said, that's crazy, they'll never accept it. And the seller accepted it. Or they were the least counter operated totally. But the real, the real estate agent doesn't always know what that seller is going to do. And sometimes the seller doesn't even know until they have an offer. And if you make a, like when I'm talking about the strong offer, this for me, it would be like, hey, it's, it's a Monday, I will close as soon as you get me a clear title. I'll have cash at the attorney's office. It could be this Friday, it could be next Friday, you tell me. And so that person who's receiving that offer has to decide, all right, this offer is, you know, 20% below the $300,000 I want to get. That's a big haircut. And I was kind of in my mind thinking I was going to have to drop my price anyway. And I have cash sitting there two weeks from now that I could take and to go do something else with. And whether that's a person who's motivated to move across the country or another investor who's just like, look, I have opportunity over here, I could buy another deal. You just have to try it. And I think that voice in our head that says, oh, don't make that offer, I would never do that. But you're not them. The seller has might have a different situation. That's, I think that's the key is you got to get used to making a little bit embarrassing offers.

Brandon Turner (7:27)

I feel like just the quality of deals I'm seeing already are better than they've been since probably 2022, maybe even earlier than that.

Chad Carson (7:37)

Like maybe 2020.

Brandon Turner (7:39)

Yeah, maybe 2020.

Chad Carson (7:40)

Yeah, 2020 was interesting because you had low interest rates. I mean, it was just weird environment. But people are bidding them up. To me, this is, this is going back to the old school real estate investing that when I started in 2003, 4 and 5, it was a little bit more, you know, you had to compete hard to get deals or you had to make offers and you had to negotiate hard. But even if you study the history of real estate investing, which I like to do, I like to talk to like the, you know, person who's been in the business 40, 50 years and say when you get that perspective from them, you know, there's been all sorts of weird, choppy markets for the last 50 years. And the common theme as a real estate investor is you have to go create deals. The time where you had like 3 or 4% interest rate rates and you can pay retail price and put 20% down and have it cash flow. Like that's, that's never been like that except for a few years in the last, last 10 years, you know. So I think that's the mindset of like, okay, as a real estate investor, we have to go create the deal, we have to negotiate, we have to make offers. My kind of approach to investing is I either have to buy it low on the price or I have to borrow low with the terms. Meaning either way I'm going to buy a good, a good location, a good property that I like. But it's either price is low and, or I get really good terms from the seller, seller financing, creative terms. And so that if I have a really good property, it's at a great location and I can negotiate a 3 or 4% interest rate from the seller. And maybe they're like a landlord who's, who's just kind of ready to move on or something. Like I bought some properties like that. Those are my long term keeper properties and I'm making cash flow today and I'm willing to pay 95, 100% of the price of the property because over the long run that price is going to be much higher and the rents are going to go up. So it's more about being a dealmaker than it is just, you know, waiting on the market to kind of tell you that what to do.

Brandon Turner (9:19)

I love the terminology specifically that you're using. I think the idea of deal finding, which is often the term that is used in our industry, it's such a misnomer. You don't just go out and find them. It's not like you're, you know, hunting on ebay and all of a sudden you just like go and find a deal. Like Chad said, you have to make it, you have to design it. You have to build a deal that works for you.

Dave Meyer (9:44)

And there are multiple levers that you.

Brandon Turner (9:47)

Can pull to design the deal that works for you. Chad just named several of them, right. You know, he talked about the purchase price, he talked about the interest rate that you pay. You can design a deal that has development upside.

Chad Carson (10:01)

You could have asked the seller to stay in the deal with you and partner with you on a deal. I'm doing that on. It's a potential development deal and it's the seller, you know, they could just take a price and take their money and run, or they could be in the deal with us and we could have a Whole lot of upside. And they could get a piece of the upside. Like the thing is. But that takes an attitude of being willing to sit down with a person. And this is one of my favorite negotiation strategies to just take it slowly. Like, if you can talk to the seller one on one, it's kind of hard through real estate agents, but if the real estate agent is willing to let you just, let's just have a conversation. I call my. I wrote about this in the Small Mighty Investor book on my chapter on negotiation. How we're basically solving a puzzle and a negotiation, just taking the puzzle pieces, putting them on the table. And when you ask questions and you listen to the seller, you're basically turning puzzle pieces over so that you can then put things together. And I'll tell a seller, like, I don't know that I can solve this puzzle. Like, maybe I'm not the right fit for you. But if you're willing to talk to me for 30 minutes or an hour, like, I bet I can think about some things and give you some ideas and give you some offers and then if they're good for you, awesome. If they're not, like, no harm, we'll just keep moving. And that, that approach, though, opens up so many different ideas and the job for us as a real estate invest. This is where BiggerPockets comes in and our podcast is you gotta increase your knowledge of all these strategies and this toolboxes and you've gotta increase your knowledge of how tax taxes work and the tax implications for your seller. Like, you gotta be knowledgeable yourself. That's what, that's the value you're bringing to the negotiation is the guide helping the seller get from point A to point B. And it being a win win for them too. Like that, that takes work and that's not an easy thing to do.

Brandon Turner (11:34)

I really like what you just said about being win win, because that is really the key to this negotiation. Right. Is when you say turning over puzzle pieces, right. You're just discovering what the seller values. Yeah, Right. You get to talk to them and figure out, oh, maybe price point is super valuable to them. That's the most important thing.

Dave Meyer (11:52)

So now I'm going to work with.

Brandon Turner (11:53)

Them on maybe other terms that we can negotiate that makes this mutually beneficial.

Dave Meyer (11:58)

Maybe they don't care about the price.

Brandon Turner (11:59)

And what they really want is to get out quickly. Or maybe they want a lease back because they don't want to move for six months. You know, like there's all these things.

Dave Meyer (12:08)

That are not just the top line Number.

Brandon Turner (12:09)

And I really appreciate what you said, Chad, about just trying to learn and hear people out to understand what they're looking for. And if you have the appropriate tools, as Chad said, you can offer solutions to them. Maybe they take it, maybe they don't. But if you know that as an investor, that is such a valuable skill to have. And I think it's one that if you want to pick a skill to.

Dave Meyer (12:32)

Learn and work on this coming year.

Brandon Turner (12:34)

That'S a really good one because that's going to be super valuable, I think, for years to come in the real estate market.

Chad Carson (12:40)

Yeah, that's the highest paid skill, I think, in real estate investing. If you can negotiate a deal that gets you an extra 10,000 bucks or an extra lower interest rate, 2, 2 points of lower interest rate over the next 20 years. I mean, your hour per dollar on that, that skill is just off the charts compared to anything else you could do.

Ian K (12:55)

I love it.

Brandon Turner (12:56)

So that's a great thing for everyone to take away here because we're still at the beginning of the year. It's still sort of resolution season. So if there is a skill that you want to learn this year, that's a good one. I really like that. Learn how to negotiate. There's going to be way more motivated sellers. You're going to have the opportunity to just get more practice this year. You couldn't even practice this two or three years ago. No one would even talk to you. It's like, how much are you offering me? Can you close tomorrow? Are you going to waive every single contingency possible? That's what it was like. This is a new opportunity for you. Learn a highly valuable skill that will benefit for you for your entire investing career. So this is a really good one for everyone to think about. We got to take a quick break, but we'll have more with Chad Carson when we come back. Stick with us.

Dave Meyer (13:36)

As a real estate investor, the last thing I want to do or have time for is play accountant, banker and debt colleague, collector all at once. But that's what I was doing every weekend. Flipping between a bunch of apps, bank statements and receipts, trying to sort it all out by property and figure out who's late on rent.

Brandon Turner (13:54)

Then I found baseline, and it takes.

Dave Meyer (13:56)

All of that off my plate. It's BiggerPocket's official banking platform that automatically sorts my transactions, matches receipts and collects rents for every property. My tax prep is done and my weekends are mine again. Plus, I'm saving a ton of money on banking fees and apps that I don't even need anymore. Get $100 bonus when you sign up today at baselane.com BP BiggerPockets Pro members also get a free upgrade to Baselane Smart, which is awesome because it's packed with advanced automations and features to save you even more time. So go to baselane.com bp Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy and one of the smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly. That's why more real estate investors are turning to steadily they focus exclusively on landlords. Whether it's a single family rental, a BRRR Builders risk policy, or midterm holiday guests, you get fast quotes, flexible coverage and protection for property damage, liability and even loss of rental income. Now is the perfect time to review your rates and coverage. Get a quote in minutes@biggerpockets.com landlordinsurance steadily landlord insurance designed for the modern investor do you need fast, reliable funding for your next investment Property? Join over 17,000 real estate investors nationwide who tr Kiavi for quick, flexible financing. Whether you're flipping houses or growing your rental portfolio, Kiavi offers high leveraged loans and closing in as few as seven days. And that includes loans for fix and flips, new construction and DSCR rentals, all through an easy online platform that gets you access 24. 7. Get pre qualified in minutes at kiavi.com biggerpockets and turn your next deal into reality. Terms and Conditions apply. Visit kihvi.com for details and MLS ID number 112-5207 My assistant's great.

Ian K (16:05)

He's also terrible because he's me. Turns out multitasking isn't a great business model. Belay knows real estate investors grow faster when they spend time closing deals not buried in admin work. That's why they built the Executive Assistant Task Calculator, a free tool that reveals how much valuable time and money you're losing every week. Once you know your number, Belay can match you with a US Based executive assistant to take those tasks off your plate so you can get back to building wealth. You're just one assistant away from doubling your deal flow. Text biggerpockets no space to 55123 to download the free calculator today.

Dave Meyer (16:36)

Want to invest in real estate but don't have the time or know the best local markets. Rent to Retirement has got you covered. Here's the deal. They've helped thousands of investors just like you find turnkey homes across the best US Markets. And best of all, they do all the heavy lifting for you. With over 255 star ratings on bigger pockets, Rent to Retirement experts help you build strategies to retire early through real estate. And right now, Rent to Retirement offers some amaz incentives on turnkey new construction properties. Just for example, you can get up to 30% off new build prices or you can get 0% down loan options or interest rates available as low as 3.99%. So don't miss out. These deals will not last. Text REI to 33777 or visit biggerpockets.com retirement to start investing in top cash flow markets today. Welcome Back to the BiggerPockets podcast.

Brandon Turner (17:28)

I'm here with coach Chad Carson.

Dave Meyer (17:32)

Chad and I have been talking just.

Brandon Turner (17:33)

A little bit about what we're seeing in the market here in 2026. But Chad, I want to talk to you a little bit more about your, your big picture philosophy about small and mighty investing. Maybe you could just fill our audience in sort of the high level points there.

Chad Carson (17:49)

Yeah, I started the Small and mighty idea because the sort of narrative that at least I heard in the real estate business when I first started was to be successful you have to have the most units, you have to get there the fastest. And you know, you hear different names in the industry like 10x and go big and all that kind of stuff. I like to like kind of flip that on his head. And I, I tried the go big thing and it didn't really work for me. And I found that a lot of real estate investors want to have just more a deliberate business where they have lifestyle and maybe they're working two hours per week and the rentals are paying for their, their lifestyle and they can travel. And like my, my wife and I lived with our kids in Ecuador one time and Spain and, and we've gone on all sorts of amazing trips and had flexibility. Like to me it's about being a time billionaire and having the most time and not having the most properties. And so that's the small mighty philosophy is how can you have the least number of properties possible and that still might be a good number of properties, but the least number of properties possible, that still accomplishes your financial goals instead of being the biggest. And that requires a more elegant, simple solution. And for some people that might mean like five properties or two properties. Like that's that's okay. Like, that, That's. That could be successful. And so it's an idea to help validate people who find that they have enough. And that's. That's totally fine.

Brandon Turner (19:01)

I love this philosophy so much. If it was up to my wife, I would own one property.

Dave Meyer (19:05)

She's just like, just buy one.

Brandon Turner (19:06)

I'm like, it doesn't. I can't.

Chad Carson (19:08)

A little bit. I need a little. A little bit more.

Brandon Turner (19:09)

Yeah, I know I need more. But I think this, this is my philosophy as well. I hate the idea of door count. I think it's the most misleading stat that people just do for ego. Honestly, they just want to say how many units they own. It's not hard to acquire units if you don't have standards. You can buy a lot of bad stuff. But, you know, I'm bringing this up sort of in the context of the state of real estate investing because maybe you feel differently, but I kind of feel like the winds have shifted. And this idea that you've always been consistent about, about being small and mighty, being consistent, being patient, is becoming the more mainstream again. Where, at least to me, it felt like for a couple years there, everyone, you know, is about doing multifamily and going big or short term rentals or midterm rentals, none of which I have a problem with. I'm just saying, like, it was kind of like, what's the flavor of the month? Like, let's chase the biggest return. And I feel like maybe the thing that's happened because the market's been so.

Dave Meyer (20:12)

Weird for the last few years is people are kind of like, maybe just.

Brandon Turner (20:15)

Go back to the fundamentals. Just go back to the boring stuff, which to me feels validating. But I'm curious how you feel about that.

Chad Carson (20:21)

Yeah, I think a football metaphor comes to mind for me. I used to play football and, you know, in like, college football or the NFL, you'll see these, like, kind of fancy offenses come and go here and there. Like, oh, you know, the running shoot. I grew up as Atlanta Falcons fan, and we had this, like, run and shoot offense. And, you know, we could. You may make a bunch of passing yards, but you never won any games. I'm like, all right, yeah, like, what's the deal? What's the deal with this? And I think sometimes real estate strategies are like that. There's nothing wrong with the strategy itself, but I think it sort of ignores, number one, use offense and defense metaphor in sports. Like, you can play offense, but you also have to play defense. And like, Real estate investing, you can go acquire a bunch of properties, but you also have to like, keep those properties. Like, you actually have to like withstand the ups and downs of the market. And, and so I think Small and Mighty kind of acknowledges that this is a long game. You have to be conservative while also moving forward and growing. So it's not about not growing. It's just about, I want to be here 20 years from now, 30 years from now, and I want to have wealth and cash flow over the long run forever. Not just this fly by night, you know, get really big, really fast, and then crash and burn kind of thing. And that's the problem with some of the go big strategies is you, you hear the success stories, like, those are great, those are amazing. But you don't see all the fallout and the people who like crash and burn because it's a much more risky strategy. So I think you're right. I think it has. I've noticed a lot more people, you know, just talking about it, and I hope that it's just validating that, you know what, there's just more people who are thinking long term, they're thinking about the downside and saying, I want to, I want to have a strategy that grows and that gets me to my goals. But also it's not going to, I'm not going to lose everything and have to like, start back over. Like, I want to, I want to make this thing work. And sometimes just the simplest solution is the right solution for that.

Brandon Turner (21:59)

Yeah, I agree with you. It's, it's sometimes sounds boring, but it's not really boring. I, you know, I think people are like, oh, I've done rental properties. What should I pivot to? I'm like, I'm just going to keep buying rental properties. Like, you know what's not boring is just having very stable, predictable income every month. Like, that's just great. It's, I can tell you from experience having done this 15 years now, like, it goes by quickly.

Dave Meyer (22:22)

It's not like you're going to be.

Brandon Turner (22:23)

Grinding away for your whole career. Like we're saying slow and steady. But 10 years, 15 years, you're going to be in a fantastic financial position.

Dave Meyer (22:30)

And I also think people often overlook.

Brandon Turner (22:33)

Sort of the incremental value of real estate. People always say, like, oh, it took me 15 years to get to financial freedom. Seems like a long time, that's fine. But I bet you in your second year, you were a little bit better off than you were in year zero. And then in year four, you were better off and then six and then eight and 10. And that incremental benefit matters still. Like, I don't see it as this binary where it's like, I was not financially free and now I am financially free.

Dave Meyer (22:59)

It's like every step, every property you acquire is an incremental improvement. And that's awesome.

Brandon Turner (23:05)

And you should be excited about that.

Chad Carson (23:07)

Yeah. And a lot of happens below the surface. Some of it is just your own knowledge compounding. I know for me, like the first five years I was kind of spinning my wheels, but I was, I was learning and I was growing and I was building a team. Another metaphor is kind of like farming. Like, it's not sexy to watch an orange tree grow for the first five, six years. Yeah. But you got to plant the seed, you got to water it, you got to do all this stuff and you can't, you can't speed up nature. Like, the natural process happens. And I think sometimes we just want to force it a little bit faster. And so rental properties are like a seed. You plant them, you grow them. There are ways to go faster. But I think let's separate investing from entrepreneurship and starting a business. Like, so you can start a business. A side hustle, you know, I used to flip houses a lot. That's how I kind of generated extra cash flow. But many people listening to this, they have a full time job that's 50, 60 hours a week. Like they're doing real estate on the side for five hours a week. You need to keep it boring. Like, don't, don't try to get your excitement from real estate. Go, go learn to fly an airplane or go on a vacation or something. If you want excitement. Like, don't do that in your real estate. Like, real estate does not need to be exc. It needs to be, it needs to be like boring, boring, boring stuff.

Brandon Turner (24:05)

I love that. Yeah, yeah. Get your thrills somewhere else. There's no need for adrenaline in real estate investing. So for those of our listeners who subscribe to this belief or who are at least intrigued by this idea of small and mighty, what are the kind of deals you recommend people look for in 2026?

Chad Carson (24:22)

I would separate this into a couple categories. And this has been kind of something I've realized lately is that people who have five to 10 hours per week, I'll put in like one category. So if you have, if you, if you can at least spend like 20 minutes a day during your lunch break and maybe a couple hours on the weekend, I would put you in like the five hour investor category. And I think people like that should avoid fixer uppers and major kind of like projects. They should just look for the boring real estate that's a little bit, a little bit more turnkey. That doesn't mean you have to buy from a turnkey provider. That just means something that needs maybe light cosmetic work, maybe you get a 10% discount, maybe you pay full price for it. The strategy there is to, to buy a really solid property in a solid location that has, has growth potential to it and then you put as much money down as you need to to get a property that cash flows at the, in today's interest rates over the last couple years that's meant like 30, 40% down for some properties. And, and so like I think that's one category of investor. What you're looking for is good properties in good locations that you can buy and hold for a long time. And that's just going to be super, there's just gonna be a super boring structure there. There's nothing like fancy about that. If you have more than five to 10 hours per week, you know, if you have a, you know, a partner or a spouse who has extra time on the side or, and, or if you have, you know, a job that allows you two or three days a week to kind of do this extra. I think you can get more into what we were talking about earlier. Maybe do some direct mail, maybe do some off market strategies like the Henry Washington and other people talk about a lot, like actually go and try to do that negotiation with people who might be a little bit more motivated. Those are going to be your best deals, but it just, it requires a little bit more time and effort. And so I think those are, those are the two kind of paths I think about for different people in 2026.

Brandon Turner (26:00)

All right, well, I love this. I really agree with the way that you broke it down. Like I love Henry. The way he approaches real estate is totally different than I do because I'm group one. You know, I work full time at biggerpockets. I have stuff to do. I've flipped houses and I've done brrrs. But that's because I have partners who, who have the time and who I essentially pay to do that. Similar to what you were talking about earlier, Chad, like I, I would be generous giving myself a B minus on renovations. I think you're probably better than I am.

Chad Carson (26:30)

But you're a plus on spreadsheets though.

Brandon Turner (26:32)

Exactly.

Chad Carson (26:33)

I'll give you that.

Brandon Turner (26:34)

So I do what I'm good at, like analyzing Deals, analyzing neighborhoods, underwriting deals, that's what I'm good at and that's how I spend my five hours a week on real estate.

Dave Meyer (26:44)

So I think about that.

Brandon Turner (26:45)

But I want to just dig into each group a little bit. So I agree with the turnkey thing. The biggest way to set yourself up to fail if you're in that group one, is to take on more than you can choose. It's going to be stressful and even if you wind up pulling it off, you're going to hate it and you're not going to scale your portfolio because you're just going to be miserable the whole time. So I buy into that, buying something relatively turnkey. I've done this over the last couple of years. But tell me more about putting more down because I think that that's a hard thing for people to wrap their head around. One, if you're capital constrained, you might not be able to do that. But two, it sort of goes against this idea of trying to scale and get to give as many properties as possible. So why do you make that recommendation and what are some of the trade offs you have to consider?

Chad Carson (27:31)

Yeah, I think the reason people don't like putting more down, if I had to guess, is that their return on investment is going to be lower, they're going to have a low, they're going to look at their cash on cash return and it's going to go like 1 or 2%. Or they're going to say I'm going to be out of the game for two years now until I save up another down payment. Those are probably the reasons they say that. And what I would say is like, like that's true. But the, the biggest risk I've seen in real estate investing, the only way I've seen anybody go out of business is that their mortgage, they had negative cash flow, they got a bad mortgage and their mortgage led to them going out of business. Yep. And so to me, like, if you're going to get in this business, the number one thing you want to take care of is staying in the business as long as you can. And so I think when you get into a deal, you don't ever want an alligator, you don't want negative cash flow. So priority number one is buy a deal. The cash flows today. And with interest rates a little bit higher, there's no secret, like the only way to get your cash flow higher on a property that has a certain rent to price ratio is you have to borrow less. That means you either put more down or you Buy it at a lower price. There's no magic there. Like you can do both. And so I do think this is why we talk about you. If you have cash now to go buy a property, even if you're the five hour investor, negotiate hard, like try to get a 10%, 15% discount on a nice property. Like you could do that. Like that's very doable in today's market. It, if you, you have to make a lot of offers, not everybody's going to do it. So let's say you buy, buy a 300, 000 property for 270000 bucks and it rents for $2,200 or something. So you buy it for 270, but you might have to put 70 to $100,000 down in order to get a 6% mortgage that actually cash flows with a $2,200 payment. And so the, the question is, is that a good deal? And I would make the argument that you have to look at all the different metrics that make a good deal a good deal. If you, if the property cash flows today and you have a really low cash on cash return, you're also getting principal pay down. And hopefully you also bought it in a location that has a, even if it's flat for the next two or three years. The reason you're buying that location is there's a limited supply, there's population growth, all those things that are like the most important parts of buying a good location over the long run. You're buying a property that hopefully is going to grow at least at the rate of inflation. Yeah. And so you got to, you got to run your numbers. Like if, if it doesn't work, putting $100,000 down and you're getting abysmal return on that money over the next 10 years, then don't buy the property, buy another one. But don't just say I have to put less money down to make a good deal. Like putting a lot of money down. It's a safer way to invest if, if you're wanting to survive and stay in the business.

Brandon Turner (29:54)

Absolutely. And I think it gives you the optionality to invest in areas that may not be cash flowing at 20%, which.

Dave Meyer (30:02)

Are often the best areas.

Brandon Turner (30:03)

I, I think this is a common mistake that people make is they'll invest in a class, class C, class D neighborhood or a class C or class D property because that's what they can afford and that's what will cash flow at 20 or 25% down.

Dave Meyer (30:16)

But you're missing out on Some of the best neighborhoods.

Chad Carson (30:19)

Yeah.

Brandon Turner (30:19)

I think this makes so much sense. If I look at my own investing career. I don't think I've ever regretted buying a good asset in a good location ever. Even if I had to put 50% down, 70% down to make it work.

Dave Meyer (30:34)

I've never regretted it.

Brandon Turner (30:36)

And honestly, the few deals I've regretted, I don't have too many. But the ones that I feel just like meh about, like not super excited about were like ones that kind of, you know, cash flow to 20% but weren't in the best neighborhood or didn't have that much upside potential and just were deals that I didn't want to own. Long term. I have completely shifted my focus to I don't buy a deal that I don't want to own for 10 years anymore. I think the, the, hey, I'll own this for a couple of years, it'll do something for me because it works at 20%. Like that's just not worth your time. I would rather take the long view on every single deal I personally buy.

Chad Carson (31:14)

Yeah. And I think it also goes back to like, what kind of investor are you? Like, know who you are. And if you're the five hour investor who has, you already have a full time job, you've already got a job, don't, don't, you don't need a second job, you need an investment. And so that's why like a little bit higher quality, maybe a little bit, there's gonna be a little bit lower cap rates because of that. That's your style. I mean, when I first started though, I was buying the cash flow properties and I don't regret doing those because I think it taught me a lot. I had to work harder to get that cash flow, but it, but I had lower down payments, lower prices. So I think there's a time and place for that. So like people are listening to this, just know, know what role you're in and know what you lean towards. But I just think so many people avoid the higher down payment, the lower cash flow properties because they think, oh, that's just not a good deal. But that's, they're intelligent investors. Dave. Other people myself who are buying properties that maybe other people kind of turn their nose up at, but over the long run could still be a good investment.

Brandon Turner (32:05)

Great advice. So that's category one of investors. The people who are working full time maybe have up to five hours a week. But there's this whole other category of people who want to invest more time into their investing career. We're going to get into that, but we got to take one more quick break. We'll be right back.

Dave Meyer (32:21)

If you want a short term rental, here's something worth knowing. Not all landlord policies are built for your type of property. And with holiday bookings, chilly weather and higher guest turnover, having the right coverage is more important than ever. Steadily offers insurance designed specifically for short term rentals, covering property damage, liability, lost rental income and even unexpected issues like bed bugs. Steadily works exclusively with real estate investors so they understand the details that make short term rentals unique and they build coverage to match. A quick review of your rates and coverage every year can help you protect your property and your cash flow. Get a quote in minutes@biggerpockets.com landlordinsurance steadily rental property insurance for the modern investor do you need fast, reliable funding for your next investment Property? Join over 17,000 real estate investors nationwide who trust Kiavi for quick, flexible financing. Whether you're flipping houses or growing your rental portfolio, Kiavi offers high leverage loans and closing in as few as seven days. And that includes loans for fix and flips, new construction and DSCR rentals, all through an easy online platform that gets you access 24. 7. Get pre qualified in minutes at kiavi.com biggerpockets and turn your next deal into reality. Terms and conditions apply. Visit kihvi.com for details and MLS ID number 112-5207.

Ian K (33:40)

You know you're in trouble when your assistant is also you. Imagine getting hours back each week so you can focus on growing your portfolio, not managing busy work. That's the reality with Belay. They match real estate investors like you with remote staffing solutions that save time and help you scale faster. Because the truth is, you're one assistant away from spending your time where it matters, finding deals, funding opportunities and closing contracts. Belay even created a free tool that shows you how much time and money you're leaving on the table by not delegating. Want to see Your number? Text BiggerPockets no space to 55123 to get Belay's free executive assistant task calculator.

Dave Meyer (34:15)

Do you want to invest in cash flowing rentals but don't have the time to manage the properties? Is your local market too competitive or expensive to invest in? In rent to retirement Offers new construction turnkey investment properties that you can buy with as little as 5% down and rates as low as 3.99%. Their team handles everything from financing, management, insurance and more so you can live where you want and invest in the markets that offer the best returns. Rent to Retirement has the best reputation in the industry with more five star reviews than any other company on the BiggerPockets website. To learn more, visit biggerpockets.com retirement or just text REI 233777 to start investing in the best markets today. Tired of traditional lenders holding you back? Host Financial is here to change the game. They've ditched the DTI restrictions and they zero in on what really matters. Your property's income potential. So no more chasing papers for tax returns or personal income statements. Think about it. A lender that values your property's worth.

Brandon Turner (35:15)

Over your paycheck, that's the Host Financial.

Dave Meyer (35:17)

Difference approved in 47 states. They are ready to help you make your next big move. Curious if you qualify? Just head over to host financial.com and find out. Stop letting outdated lending practices hold you back. That's HostFinancial.com where your property's potential meets unlimited financing. Welcome Back to the BiggerPockets podcast. I'm here with Chad Carson talking about.

Brandon Turner (35:41)

What we're about, talking, thinking for 2026. Chad, you talked about this. First bucket of investors, people who don't have too much time for the break. Second bucket of investors, you know, what are the kind of deals, what kind of cash flows, what kind of numbers do you think they should be looking for here in 2026?

Chad Carson (35:57)

Yeah, when you have more time, then you can be a little bit more ambitious with the types of deals you get. And so this is like, I mean, the classic deals people have heard about, like the burst strategy, which more broadly means going after properties that need work, they have some kind of problem. I had a mentor early in my career. He used to say, he's, you know, Southern folksy kind of conversation. He'd say, chad, you need to look for, you know, good dogs that have fleas. That means a property that's a good, a good potential property in a good neighborhood. But man, it's like the worst house in the worst house on the street. It has, it needs work. There's issues with it. Very often it's the remodeling that needs to be fixed. And so this is like instead of just a cosmetic fixer upper that we talked about with the five hour investors, a white light cosmetic. This is, I mean, you could be a little more ambitious. Buy a property that has, you know, it needs, it needs to remodel the whole kitchen or it needs to have bathrooms that need to be updated or maybe if you're like, really, if you have really good contractors and you're more ambitious. Maybe you're adding an ADU to the property and doing new construction. So I think there's a spectrum of your skill set and the amount of time you have to add to that. But that's where the best deals come in from. Like the deals that you can buy where the property is worth in the end, you know, 300,000 and you're in it for 70% of that. You know, maybe you're buying it for 200,000 or something like that. So, so those deals are out there, but they're gonna, they're gonna start off really ugly. Like in some way they're either gonna stop because the remodel's ugly, you know, the property looks ugly.

Brandon Turner (37:15)

Yeah.

Chad Carson (37:16)

Other people don't see it yet, but because you understand underneath the surface that there's potential there either through the, the, the value by fixing it up or by changing the zoning or something. Those are the deals that have the really high equity growth potential and also better cash flow potential. Because as we mentioned earlier, the cash flow, there is no secret. You have to borrow less money in order to make the property cash flow. But our five hour investors probably are going to have to put more money down to make that work. But the more entrepreneurial investors who have more time, you could buy a deal way below its value and then use cash to buy it and then refinance it and be at 70 cents on the dollar with your loan and still make it cash flow because, and you might have very little cash in the deal. Like that's, that's a great deal, but it is, it takes, there's more to it. You know, that's, that's why I think, think I kind of reserved that for the second category of investors instead of the, a lot of the people who don't have that much time.

Brandon Turner (38:04)

This market in general, like I just feel like it's not the time to take a lot of risk because you don't have to. But also if you're newbie, like there's just no reason to take a lot of risk. Like you said earlier about cash flow, this key is to stay in the game. Don't lose like just, you don't even need to win, you just need to not lose, especially in your first couple of deals. And so I think that's excellent advice here. I love your framework, by the way, Chad of Starter Builder and Harvester. So you, you're in the Harvester phase of your career now, right? So tell us a little bit about that and like, what's that's been like for you? Because I think this is where everyone wants to be eventually.

Chad Carson (38:43)

So I'm a. I'm more of a harvester now, and I've been doing it for 22 years. But to me, the difference, like most of the investing we talk about, is either in the starter phase, getting your first deal or two, or the builder phase, where people are. You're trying to take a hundred thousand dollars that you saved up and turn that into a million dollars. Like, that's. That's the builder phase. And it's all about leverage, and it's all about maximizing the amount of growth you make and your return on investment. And that's great. Like, there's nothing wrong with that. But the harvester phase is almost like you're switching to a different, different laws of physics. Because the goal isn't just to grow and maximize your wealth, although you want to keep growing, but it is also to increase your cash flow. It's also to reduce your risk, and it's also to increase your time. Like your. The amount of time you have to actually go take those trips and enjoy your life. And like, this is the reason we did it in the first place. So harvesting is really about transitioning your portfolio from one that has a lot of equity but not much cash flow, which is very common in real estate, by the way. Like, I've seen so many people who have, you know, million dollars or $3 million in wealth, but they're making a much smaller cash flow than they should for that amount of wealth. And so what Harvester is all about is making these harvester moves, which could mean selling some properties, it could mean refinancing strategically, it could mean paying off debt, which for me has been all three of those. All of the above. We've gone from. Instead of having like, my whole portfolio is at 70% debt to value, now we're more like 15 or 20% debt to value. Some of that's just been amortizing the loans over time, but some of us just been deliberately paying properties off. Like, we have 150,000 saved up from selling a property and cash flow from our rentals. What do we do with that money? You know, most people would say, well, go buy three more rentals and put 50,000 down, or buy two rentals and put 75,000 down. That's a builder move. The harvester move is to say, no, I want to keep my portfolio as simple as possible. I'm actually going to go pay off $150,000 loan, that's at 8% interest, which is a little higher than my other loans. And now I own that property free and clear. And I've freed up, you know, 1200 or $1500 per month with zero risk. I didn't add any risk and I increase my cash flow. And that's a, that's a very good move. As a harvester, I wouldn't recommend it as a starter, but as a harvester, that makes a ton of sense because you shifted to a different goal than just trying to maximize your return on investment.

Brandon Turner (40:52)

Yeah, I love this, this framework. I think it's so good for everyone listening to. Just keep this in mind because there's so much advice out there about real estate. All of it is good advice. But where you fall within this framework I think is so important to your decision making. Like the stuff that Chad was just talking about of paying down debt, it's where a lot of us get to. Once you've been doing this for 10 or 15 years, you realize you just.

Dave Meyer (41:16)

Want this simple, but it makes sense. It's not what you're going to do.

Brandon Turner (41:19)

On your first deal.

Dave Meyer (41:20)

You're not going to buy something for cash.

Brandon Turner (41:21)

You're probably not going to take out a 15 year mortgage instead of a 30 year mortgage because you want to pay, you have less debt. So just keep that in mind. And I think especially now at the beginning of the year, it's really important to just sit down and say to yourself like, this is what I'm doing. I'm still a starter, so I'm going to make starter moves. Or I'm a builder and I'm going to make builder moves. Or I'm a harvester and I'm going to make harvester moves. I think that will really help simplify all the noise out there because it's not that it's bad advice, but there's.

Dave Meyer (41:49)

Just so many different things you can.

Brandon Turner (41:51)

Do in real estate. You can't possibly consider them all. And it's better to just sort of narrow down on the things that make sense for you.

Chad Carson (41:58)

It's psychologically, it's hard sometimes because it's easy to compare ourselves to others. That's what we humans do. So I get why it's hard to do. You see, you see your buddy over there who's flipped three houses and done two bird deals and isn't that amazing? And you're just as smart as them. Like, how come I can't do it? But I think the strongest investors know themselves and they're okay, and they accept the fact that this is where I am. I have five hours per week and I'm a builder. I'm not a harvester. This is what I'm going to do. Or, hey, I have five hours per week and I've built enough wealth. I think this is enough. Like, that's a really hard thing for investors to say because we're very ambitious, myself included. But to acknowledge that, you know what, I'm, I have transitioned where I have enough wealth. Here, it's time to take some risk off the table. That is a very difficult thing for people to do who are, who've been building for years. And the way, the trick that I've tried to get in my head is that this isn't a forever thing. Like, this is, this is me winning the game so that I can stay in the game for the rest of my life. Like, you know, I've won the game. Don't, don't take. Warren Buffett always says, you know, this ridiculous or insanity to risk what you already have, this wealth that you've built for something you don't even need. Yep, you got enough. You've got enough. Like, why would you risk the thing you already have for this extra property, this extra wealth that you don't even need? Like, take some chips off the table.

Brandon Turner (43:13)

All right, well, Chad, thank you so much for being here. It's always fun chatting with you. Any last advice to the audience for 2026?

Chad Carson (43:19)

I would say it's gonna be an exciting year. I mean, you're gonna have to, you're channel the news and the information you get. Listen to Dave, listen to my podcast, listen to people who are going to be more optimistic but realistic. Like, we're not, we're not like saying, wear rose colored glasses and say everything's going to be rosy. We might hit a recession, we might have bad news. But I think the, the message that I'm trying to convey is that if you think long term, it's almost like you're going to cross the ocean. You're definitely, you're going to hit some storms, you're going to have some waves, it's going to go up and down. But like, keep your eye on the prize. Like, the prize is getting to the other shore, the other side of the shore and be a, the more long term thinking you are, the more long term investor you are. It's just, it's a calming effect. You don't, you don't have to worry about the ups and downs as much in fact, when you have downs, that's an opportunity and I think that's really where we are. Who knows. I'm not good at good at predicting, but I think this is an opportunity year and so keep keep your eye on the prize long run and then be disciplined and safe with your approach. But then go out and do it like go out and buy some properties. Find your lane. Whether you're a five hour investor or a 20, 30 hour a week investor, find the lane that you're good at and then let that be enough.

Brandon Turner (44:21)

I love it. Well, thank you so much Chad for being here. It's always great to have you.

Chad Carson (44:24)

It's a pleasure. Thanks for having me.

Brandon Turner (44:26)

And thank you all so much for listening to this episode of the Biggerpockets Podcast. We'll see you next time.

Dave Meyer (44:30)

Thank you all for listening to the Biggerpockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K. Copywriting is by Calico, Content and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.