BiggerPockets Real Estate Podcast Summary

Episode: How to Find Profitable Rentals in 2025 (Lazy + Expert Methods)
Release Date: August 13, 2025
Hosts: Dave Meyer & Henry Washington

Introduction

In this episode of the BiggerPockets Real Estate Podcast, host Dave Meyer teams up with Henry Washington to delve into effective strategies for locating profitable rental properties in 2025. The duo addresses real-world questions from their community, offering both expert and more relaxed ("lazy") methods to help investors navigate the evolving real estate landscape.

Finding Off-Market Deals: Direct Mail Strategy

Timestamp: 01:02 – 08:19

Question from Bobby (Philadelphia):
Bobby, a budding investor, is struggling to find a small multifamily property for house hacking through traditional platforms like Zillow, Crexi, and Realtor.com. He seeks alternative sources for off-market properties.

Henry Washington's Expert Approach:
Henry advocates for a direct mail strategy as a highly effective method to uncover off-market deals. Here's a breakdown of his approach:

1. Build a Targeted List:

   • Utilize list-building services such as PropStream, ListSource, or DealMachine.
   • Filter properties to focus on small multifamily units, particularly those owned by senior owners or retiring baby boomers.
   • Look for properties with significant equity (80% or more) to facilitate negotiation, especially seller financing.

2. Craft Personalized Letters:

   • Avoid generic offers. Instead, personalize communication by expressing a genuine interest in the property and the owner's experience.
   • Example Quote:

     “Send a more personalized letter. I send a letter that says, 'Hey, I'm Henry. I invest in real estate here in Northwest Arkansas as well. I see you on the house on 123 Main Street. I would love to sit down and have coffee with you and learn from your experience as a landlord over the years.'”
     (05:00)

3. Engage and Build Relationships:

   • Meet tenants in person to establish trust and rapport.
   • If sellers aren’t immediately interested, they might refer other potential sellers within their network.

4. Persistence and Scale:

   • Send out between 1,000 to 3,000 personalized mails.
   • Maintain consistent follow-ups every two to three weeks over a span of three to four months to increase response rates.

Cost Consideration:

• Direct Mail Expenses: Approximately 50 to 75 cents per piece of mail, varying based on the type (postcard vs. letter).

Key Takeaway:
Henry underscores that while this method requires time and investment, it offers a higher success rate compared to traditional listing sites by directly tapping into motivated sellers with substantial equity.

Raising Rents for Existing Tenants: Creating Win-Win Scenarios

Timestamp: 08:43 – 20:05

Question from Joshua (Los Angeles):
Joshua owns a duplex where one unit is vacant, and the occupied unit's tenants are paying half the market rent under a month-to-month lease. He seeks advice on how to adjust rents to market rates while maintaining a positive relationship with his long-term tenants.

Henry Washington's Compassionate Approach:

1. Evaluate Tenant Quality:

   • Ensure that current tenants are reliable and have a history of timely payments and property care.

2. Transparent Communication:

   • Meet tenants in person to introduce yourself as the new owner.
   • Clearly explain the financial necessities driving the rent increase, such as mortgage payments, taxes, and insurance.

3. Provide Comparative Data:

   • Present market rent comparisons within a one-mile radius to justify the increase.
   • Example Quote:

     “I pull rent comps and I show them, I'm like within a one mile radius, properties of the same level are renting for.”
     (16:30)

4. Collaborative Negotiation:

   • Ask tenants what rent they believe is fair and affordable, fostering a sense of involvement.
   • Propose a phased rent increase over several months to ease the transition.

5. Flexible Solutions:

   • If tenants cannot meet the new rent, discuss alternative arrangements or assist in finding more affordable housing.

Dave Meyer’s Perspective:

Dave highlights the importance of a respectful and relationship-focused approach, emphasizing that treating tenants as valued customers can lead to mutually beneficial outcomes.

Portfolio Assessment: Knowing When to Hold or Sell

Timestamp: 20:15 – 27:58

Question from Renee:
Renee observes that some local investors are reassessing their portfolios amidst current market conditions. She inquires about the criteria used to decide which properties to retain or sell, considering factors like cash flow, tenant turnover, maintenance issues, or intuition.

Henry Washington’s Strategic Evaluation Process:

1. Regular Portfolio Reviews:

   • Conduct quarterly assessments of each property's Performance and Loss (P&L) statements.
   • Determine if properties are meeting their underwritten performance expectations.

2. Decision-Making Framework:

   • For Underperforming Properties:
     • Assess potential improvements (e.g., kitchen upgrades, adding bedrooms) and associated costs.
     • Evaluate whether investing capital to enhance performance is more beneficial than reallocating funds elsewhere.
     • Example Scenario:

       Henry discusses converting a duplex unit to a midterm rental, increasing monthly rent from $1,200 to $2,200 by furnishing it, thus optimizing returns without additional capital expenditure for property improvements.

3. Alternative Investment Opportunities:

   • Consider diverting funds from underperforming assets to higher-yield investments, such as midterm rentals, private money lending, or real estate syndications.

4. Return on Equity (ROE):

   • Use ROE as a key metric to measure how effectively each property generates cash flow.
   • Compare ROE against other investment vehicles to determine the best utilization of capital.

5. Framework for Selling or Holding:

   • Decide to sell if another investment offers superior time and risk-adjusted returns.
   • Hold onto properties that continue to perform well or have strong potential after strategic adjustments.

Example Quote from Henry:

“Every investor should be analyzing their portfolio, preferably on a quarterly basis...you have to make sure that your accounting is set up properly so that you can look at each property's performance, look at each property's P and L, and then you can make a determination.”
(21:16)

Dave Meyer’s Insights:

Dave echoes the importance of portfolio monitoring and introduces the concept of return on equity, encouraging investors to continuously assess and optimize their asset allocation based on performance data and alternative opportunities.

Optimizing Passive Income: Effective Use of Capital

Timestamp: 32:46 – 38:35

Question from Damon:
Damon is in his 50s with $400,000 in cash and seeks advice on generating passive income to secure his financial future.

Henry Washington’s Recommendations:

1. Private Money Lending:

   • Allocate funds to lend directly to experienced real estate operators.
   • Understand the risk by thoroughly underwriting deals and selecting reputable borrowers.
   • Potential Returns: 10-16% annual returns through interest and points on loans.
   • Caution: Emphasize the importance of lending to trustworthy operators to mitigate risks, such as borrower defaults.

2. Real Estate Debt Funds:

   • Invest in debt funds where money is pooled and managed by professionals, offering diversification and reduced individual deal risk.
   • Advantages include truly passive income without the need for personal deal underwriting.

Dave Meyer’s Additional Strategies:

Dave suggests diversifying further by considering:

• Investing in multifamily properties (e.g., a 4-plex) with a portion of the $400,000 to generate consistent cash flow.
• Balancing between active investment (property ownership) and passive investment (lending or funds) based on personal preferences and risk tolerance.

Henry’s Final Advice:

“Put that thing on a 15-year note and then you're free and clear by the time you're ready to chill out.”
(38:27)

Dave and Henry’s Light-Hearted Closing:

They conclude with a humorous exchange, reinforcing their approachable and supportive stance toward helping listeners achieve financial freedom through informed real estate investments.

Conclusion

This episode provides valuable insights into alternative methods for finding profitable rental properties, effectively managing existing assets, and optimizing capital for passive income. Henry Washington and Dave Meyer emphasize strategic planning, personalized approaches, and continuous portfolio evaluation as key factors for success in real estate investing in 2025.

For more detailed strategies and expert advice, listeners are encouraged to engage with the BiggerPockets community forums and explore upcoming resources such as the BPCON conference.

Notable Quotes with Timestamps:

• “Send a more personalized letter...you will get a much higher response rate.”
  (05:00) – Henry Washington

• “I pull rent comps and I show them...properties of the same level are renting for.”
  (16:30) – Henry Washington

• “Every investor should be analyzing their portfolio, preferably on a quarterly basis.”
  (21:16) – Henry Washington

• “This is your home...this conversation is about us trying to figure out how we can help you stay here in your home.”
  (18:55) – Henry Washington

• “Put that thing on a 15-year note and then you're free and clear by the time you're ready to chill out.”
  (38:27) – Henry Washington

Resources Mentioned:

• List Building Tools: PropStream, ListSource, DealMachine
• BPCON Conference: biggerpockets.com conference
• BiggerPockets Community Forums: biggerpockets.com forums

This summary aims to encapsulate the core discussions and insights from the episode, providing actionable strategies for both novice and seasoned real estate investors.