BiggerPockets Real Estate Podcast

Episode: How to Invest in an Expensive Market ($500K+ Home Prices)

Host: Dave Meyer
Date: November 21, 2025

Episode Overview

In this episode, host Dave Meyer tackles a question on the minds of many aspiring and active real estate investors: "How can you invest in real estate when you live in an expensive market (where $500K+ homes are the norm)?" Dave shares practical strategies specifically tailored for high-cost areas, dives into alternatives to local investing, and outlines actionable steps—complete with real-world numbers—to help listeners overcome capital, cash flow, and scaling obstacles.

Key Discussion Points and Insights

1. What Defines an Expensive Market?

• For this episode, an “expensive market” is anywhere median home prices are $500,000 or more (00:58).
• These are cities like San Francisco, Denver, Boston, Seattle, or much of coastal California.

Challenges:

• Affordability: High capital requirements for down payments, renovations, etc.
• Scaling: Much harder to acquire multiple properties quickly.
• Cash Flow: Rents often don’t keep up with high property prices, reducing profit potential.

2. Value-Add Strategies: Flipping & BRRRR

Value-Add = Sweat Equity = Forced Appreciation: Buying distressed or underused properties and improving them to add value.

Flipping

• Buy low, rehab, and sell for a higher price.

• High returns but high risk and stress—be prepared for setbacks, delays, and rising material/labor costs.

• Quote (Dave Meyer):

  “Even good flippers lose money sometimes...but the opportunity to double your money is really appealing.” (06:13)

• In down cycles, “ugly” properties can drop in price faster than “pretty” ones, sometimes increasing the spread for value-add investors—but market timing remains crucial (08:15).

BRRRR (Buy, Rehab, Rent, Refinance, Repeat)

• Benefits in expensive markets:

  • Avoids forced selling in down markets—hold for better market conditions.
  • Can increase rents and generate cash flow by improving units.
  • Option for slow BRRRR: Renovate as units turn over, reduce capital outlay, lower stress.

• Quote (Dave Meyer):

  “With the BRRRR, you’re not necessarily selling it—you can refinance and hold onto it...that takes the pressure off.” (10:49)

• Both flipping and BRRRR require deep local knowledge—block by block, house by house.

3. Cash Flow “Superchargers” for Expensive Markets

Long term rentals rarely cash flow in expensive markets. Instead, consider:

1. Short-Term Rentals (STRs)

• Airbnb/VRBO-style—higher nightly rates can outperform long-term rent yields.
• Risks: Vacancy risk is higher, competition is stiffer, and STR regulations vary widely.
• Quote (Dave Meyer):

  “Short-term rentals…are very location specific. You have to really focus on competing and being the best product in your neighborhood.” (15:50)

2. Mid-Term Rentals

• Furnished leasing for stays of 30+ days (traveling professionals, corporate housing).
• Blends STR’s high rates with lower vacancy risks—useful in areas with strong demand for medium-duration stays.

3. Co-Living (“Rent by the Room”)

• Rent individual bedrooms separately (e.g., $1,000/bedroom in a 4BR house = $4,000/month vs. $3,000 as a unit).
• Appeals to renters seeking affordability in expensive cities.
• Quote (Dave Meyer):

  “Co-living really works in these expensive markets… it boosts your cash flow and serves tenants looking for affordable options.” (18:59)

4. Owner-Occupied Strategies: House Hacking & Live-In Flips

These strategies allow buyers to put as little as 5% down, making high-cost markets more accessible.

House Hacking

• Buy a 2-4 unit, live in one, rent the others.
• Goal: Offset/lower your housing cost, even if you’re not cash flow positive.
• Combine with co-living for more units and income.
• Quote (Dave Meyer):

  “The magic thing about house hacking is that it doesn’t need to cash flow—all it needs to do is lower your cost of living.” (22:47)

Live-In Flip

• Live in, renovate, and resell.
• Three main benefits:
  1. Easier/cheaper financing (owner-occupant loans, 203k rehab loans possible).
  2. Major tax benefit: Up to $250K (single)/$500K (married) capital gains tax-free if you live in it 2 of 5 years.
  3. Reduced time pressure vs. flipping (renovations can be done over two years).
• Quote (Dave Meyer):

  “When you combine the financing, the tax benefits, and the reduced time pressure, live-in flips are one of the best options in expensive markets.” (26:44)

5. Should You Invest In-State or Out-of-State?

Decision boils down to your goals:

• Compare the numbers:
  • Run the math on local investments vs. lower-cost markets elsewhere.
  • Cash flow/cash-on-cash return is usually better out-of-state in the short term.
  • Local investing may build more equity and appreciation over time.
• Use tools:
  • BiggerPockets calculators
  • House hack vs. buy/rent calculators (links provided on the BP site).

Quote (Dave Meyer):

“If your priority and goals are rental growth and cash on cash return, you should probably invest out of state. But if your goal is long term wealth and building equity, the house hack may be better for you.” (32:19)

6. Dave’s Personal Approach & Final Advice

• Dave splits his investing:
  • Value-add (flipping) for capital in expensive home market (Seattle).
  • Long-term rentals in the Midwest for passive income and tax benefits.
• As a new investor, pick one approach that fits your resources and goals. Diversify later.
• “Just get in the game, learn, and you can diversify later.” (38:46)

Notable Quotes & Memorable Moments

• On the challenge:

  “You want to invest in real estate … but you live in an expensive market and no deals seem to make sense. Today, I’m here to tell you it is possible…” (00:01, Dave Meyer)

• On flipping risks:

  “Even good flippers lose money sometimes…you have to be willing to know there are risks both in construction and in the market right now.” (06:13, Dave Meyer)

• On BRRRR benefits in down markets:

  “With the BRRRR, you’re not necessarily selling it—you can refinance and hold onto it and maybe you sell it one day, but you have the option then to wait…” (10:51, Dave Meyer)

• On owner-occupied strategies:

  “For a $500,000 property, instead of putting 20% down, you are putting 5% down. That is nearly half…much more achievable.” (21:53, Dave Meyer)

• On live-in flips:

  “The tax code says that if you live in a property for two out of the last five years…the capital gains…are tax free. That is amazing.” (25:04, Dave Meyer)

• Personal encouragement:

  “Don’t get discouraged. You can absolutely do this, you have a lot of options available to you…all of these things work.” (36:34, Dave Meyer)

Key Timestamps

• 00:00–05:00: Introduction; defining expensive markets and key challenges
• 05:00–11:30: Value-add strategies (Flipping & BRRRR); pros, cons, and tips
• 14:47–21:53: Cash flow accelerators (Short-term, mid-term, and co-living rentals)
• 21:53–27:34: Owner-occupied strategies (House hacking, live-in flips, financing options, tax benefits)
• 30:39–36:34: In-state vs. out-of-state investing; comparing returns and personal goals
• 36:34–end: Dave’s own approach; final takeaways and encouragement

Summary

Dave Meyer provides a comprehensive, candid guide to investing in high-priced markets, unpacking both tried-and-true and creative strategies to build wealth wherever you live. From value-add projects and cash flow “superchargers,” to owner-occupied finesse and out-of-state expansion, Dave emphasizes the importance of matching your strategy to your goals, your resources, and your risk tolerance—and urges listeners not to be discouraged. As he says:

“Pick the one that works for you...and you can absolutely get into the market and succeed as a real estate investor regardless of where you live.” (39:07)

For resources, calculators, and more information, visit BiggerPockets.com.