Podcast Summary: BiggerPockets Real Estate Podcast

Episode: Real Estate is Getting Riskier…and It’s Making Investors Wealthy
Date: October 22, 2025
Host: Dave Meyer
Guest: Henry Washington

Episode Overview

Theme:
This episode dives into the increased risks in real estate investing in 2025, and how savvy investors can turn today’s uncertainty into wealth-building opportunities. Dave Meyer and Henry Washington candidly discuss overlooked risks (beyond just price declines), practical strategies to mitigate them, and how to find discounted deals in a riskier market. With a focus on tangible math, underwriting, and mindset, the episode targets both new and experienced investors seeking to thrive—rather than withdraw—during turbulent times.

Key Discussion Points & Insights

1. Current Real Estate Market Risk Profile

• Dave’s Opening Thesis:
  Investing is inherently about taking on risk for greater returns. Risk in real estate right now is higher than in previous years, but with that comes unique opportunities.

  • “Real estate investing is more risky today than it was a few years ago. Yeah, I said it…with risk also comes opportunity.” (00:00, Dave Meyer)

• Henry Agrees:
  Success is less about finding risk-free investments and more about managing and mitigating risk.

  • “There is no 100% bulletproof investment…successful people have figured out ways to manage the risk that they take on.” (02:15, Henry)

• Mindset Adjustment:
  Don’t fear risk—recognize, measure, and strategically embrace it. Market timing is less important than strategic adaptation.

2. The Most Overlooked Real Estate Risks (With Solutions)

a. Vacancy Risk

• Vacancy Is Operator-Dependent:
  Many landlords underestimate the real cost of vacancy, which can vary by the operator’s speed and efficiency, not just by market vacancy rates.

  • “One of the main risks people overlook is vacancy…your property can stay vacant longer if you don’t turn your unit fast enough.” (05:08, Henry)

• Mitigation Tactics:

  • Use property managers with proven track records for short turn times.
  • If self-managing, have a streamlined process for turnovers.
  • Underwrite higher vacancy (up to 10%) in today’s climate to be conservative.
  • Price listings competitively rather than chasing maximal rent increases to minimize downtime.
    • “Be pessimistic short term, optimistic long term…protect yourself short term in this kind of risk-off environment.” (10:15, Dave)

b. Over-Optimistic Rent and Underwriting Assumptions

• Investors often assume “top of market” rents in their pro formas; real returns require realistic, “middle of the road” underwriting.
  • “Everyone anchors to the highest number…you’re not guaranteed to get the top-of-market rent.” (09:51, Henry)

c. Property Price Declines

• Risk Is Real:
  Prices are expected to be flat or down next year.

  • “They’ve been pretty flat this year…even on a nominal basis, they’re probably going to go down a little bit next year.” (14:38, Dave)

• Mitigation Tactics:

  • Buy at a substantial discount relative to real comps (not just off an inflated list price).
  • Focus on assets where a 5%-10% decline is survivable.
  • Ensure properties have multiple exit options; flexibility is paramount.

d. Cash Flow and Reserves

• Non-Negotiable in 2025:
  • Deals must cash flow—don’t speculate on appreciation alone.
  • Keep adequate cash reserves to withstand negative shocks (expensive repairs, prolonged vacancies, market downturns).
    • “If you have cash flow, not only can you wait, you’re making money…loss that you see in your property value is just on paper.” (21:12, Dave)

3. Risk Mitigation Strategies for Today’s Market

• Three Rules for Rental Property Investors: (20:11)

  1. Buy at a discount (8-10% below current comps).
  2. Ensure cash flow on every deal.
  3. Keep strong cash reserves to weather storms.

• For Flippers:

  • Choose renovation projects where your finished product is the best-looking AND the lowest-priced among the comps—not just “a bit better,” but a clear standout.
    • “I want to price it lower than almost all the other comps. It looks better and it’s priced less.” (15:01, Henry)
  • Be conservative; target higher profit per deal to buffer against surprises.
    • “If I spend $100k, I want to make $60k–$100k, not $20k–$30k.” (33:25, Henry)

• Dollar-Cost Averaging for Buy-and-Hold:
  Don’t try to time the bottom perfectly. Buy steadily, focus on the long-term average, and let compounding do the work.

• Precision Beats Volume:
  In riskier environments:

  • Slow down.
  • Wait for great deals in prime locations.
  • Avoid marginal neighborhoods and weak properties.

4. Defining the “Perfect” Risk-Adjusted Deal in October 2025 (26:49)

Henry’s Criteria:

• Single-family or small multifamily.
• Quality neighborhoods, appealing to first-time homebuyers.
• Priced for at least two viable exit strategies (sell or hold/rent).
• Conservative underwriting; better to miss out on marginal deals.
• Avoid high-risk projects (expensive renos with thin margins).

Dave’s Criteria:

• Located in prime, resilient neighborhoods.
• Must cash flow within the first year (after stabilization/renovation if necessary).
• Upside potential (rent growth, appreciation, zoning).
• Fixed-rate financing only—avoid ARMs to ensure the ability to hold long-term.
  • “I’m not interested in adjustable rate mortgages right now…my risk mitigation strategy is I got to be able to hold on.” (36:16, Dave)

5. Mindset: Investing When There’s “Pain” in the Market

• Counterintuitive, But Proven:
  Wealth is built by buying quality assets during tough times, not sitting on the sidelines.

  • “If you’ve decided you want to be a real estate investor, this is what you asked for—an opportunity to buy when there’s pain so that you can get things at a discount.” (27:29, Henry)
  • “When I bought my first deal in 2010…it was terrifying…people were like, real estate’s dead…on paper, best deal ever…I got a 650% equity return in eight years.” (28:49, Dave)

• Be Patient, Not Paralyzed:
  Don’t overextend, but don’t miss the moment for future returns.

6. Emerging & Underappreciated Risks

• Insurance Costs and Availability (37:30)
  • Particularly acute in states like Florida and California.
  • Must underwrite accurately for higher costs.
  • Ensure the correct policy matches your use/strategy (flip, rental, short-term).
  • Consider portfolio umbrella coverage for lawsuits above policy limits.
    • “Insurance is a big risk factor that people don’t pay enough attention to, and now it costs more to have insurance.” (38:58, Henry)
  • “If your insurance doesn’t actually do the thing that you need it to do, then you’re not actually…you just lost extra money.” (39:09, Dave)

Notable Quotes & Memorable Moments

• On Risk-taking:
  • “Be optimistic long-term, be pessimistic short-term. That is the best way to be a good investor.” (10:15, Dave)
• On Market Opportunity:
  • “You want to do a low risk investment in this environment? Buy a great asset at a discount. That works always.” (19:50, Dave)
• On Market Cycles:
  • “There is no period in the United States over 10 years where you could lose money having bought a house…” (21:28, Dave)
• On Mindset:
  • “People want to buy the asset when there’s no pain, but for the painful prices…if you want to be a real estate investor, this is the opportunity.” (27:29, Henry)

Important Timestamps

• 00:00 – Dave’s introduction and the premise of increased risk.
• 02:15 – “No bulletproof investment” (Henry).
• 05:08 – Vacancy risk, mitigation ideas.
• 10:15 – Underwriting: pessimistic short term, optimistic long term.
• 14:38 – Price declines and how to protect yourself.
• 19:50 – Buying at a discount, why it matters now.
• 21:12 – Three rules for rental investors: discount, cash flow, reserves.
• 26:49 – “You asked to be a real estate investor…This is what you asked for” (Henry).
• 28:49 – Dave’s story of buying in 2010, courage in scary markets.
• 33:25 – Henry’s criteria for flips/rentals, margin expectations.
• 34:19 – An example of a current “good deal.”
• 36:16 – Dave’s emphasis on fixed-rate debt.
• 37:30 – The insurance crisis and how to protect yourself.

Closing Notes

The episode wraps with a call for the audience to share their own risk mitigation strategies and stories, encouraging community learning during a period of turbulence and opportunity.

Bottom Line:
Investing in today’s real estate market requires more diligence and risk awareness than in recent years—but with discipline, patience, and a focus on fundamentals (discounts, cash flow, reserves, prudent underwriting), this risky market is producing the kind of discounted opportunities that create tomorrow’s real estate millionaires.

Recommended for:
Anyone considering buying real estate in 2025, whether for flips or long-term holds, or for those rethinking their strategy in light of today’s challenges.