BiggerPockets Real Estate Podcast

Episode: The 2026 Value-Add Real Estate Playbook (30%–50% ROIs)

Host: Dave Meyer (Chief Investment Officer, BiggerPockets)
Guests: Henry Washington, James Dainard
Date: February 11, 2026

Overview

The main theme of this episode is building wealth and achieving strong returns (30%–50% ROI) through value-add real estate investing—in essence, transforming properties to create your own equity rather than relying on finding "easy" cash-flow deals in a tight market. Dave Meyer, alongside seasoned investors Henry Washington and James Dainard, systematically break down the four main categories of value-add strategies: cosmetic updates, light renovations, heavy/gut renovations, and new development. They discuss practical approaches, the types of investors these strategies best fit, and how to skill up for larger projects—even spotlighting how partnerships and community learning can accelerate your journey.

Key Discussion Points & Insights

1. Why Value-Add is Essential in 2026 (00:00–04:04)

• Modern investors can’t rely on the MLS for cash-flowing properties as in years past; they need to create equity and opportunity.
• Value-add ranges from simple improvements (paint, flooring) to major renovations—or even new development.
• This approach isn’t just for flippers: “If I want to be a good rental property investor in today’s day and age, I at least need to be doing light renovations and maybe doing heavy renovations to maximize my performance.” — Dave Meyer (06:24)
• Conference Announcement: The hosts reveal a hands-on, value-add investing conference (March 28, Seattle), providing a rare learning experience.

2. The Four Categories of Value-Add Investing (04:05–07:15)

Henry Washington's breakdown:

• Cosmetic Updates: Paint, floors, minor refreshes; doesn’t usually require permits.
• Light Renovation: Cosmetic plus some simple structural work (e.g., new windows, removing non-load-bearing walls).
• Heavy Renovation: Major systems (plumbing, electrical), moving walls, adding rooms/bathrooms, potentially down to the studs; requires permits and often professional expertise.
• New Development: Building from scratch—often more predictable once plans are set, but a leap in complexity and resource requirements.

“Heavy renovations… you might need to get an engineer involved, you might need to get somebody involved to help you draw up plans… this is a full-blown, almost new construction project.” — Henry Washington (05:07)

Memorable Analogy:
“A heavy renovation is like you have a bucket of Legos from many different sets, poured out on the ground. Now go build a house. You have to make it up as you go along.” — Dave Meyer (05:36)

3. Deep Dive: Cosmetic Updates (08:29–12:02)

• Best for beginners: Less risk, easier management, no-strain on budgets.
• Out-of-state and busy investors: Property managers can oversee these limited-scope jobs.
• Cost control: Easy to get multiple quotes and manage sub-contractors for things like flooring or paint.
• Added benefit: Boosts rentability (not just sales value).
• Limitation: Harder to “add delta” (big increases) to value in the current market just with cosmetics.

Quote:
“Anyone can do this. You’d be amazed by how much [cosmetic updates] can improve… not just value if you’re selling, but just the rentability too.” — Dave Meyer (09:53)

4. Light Renovations: The Next Step Up (16:43–23:43)

• Light renovations: modest reconfiguration; don’t add new rooms but may open spaces, replace windows/roof, refinish interiors while keeping layouts.
• Great fit for:
  • Investors ready for a bigger challenge.
  • Properties with opportunity for square-footage addition with minimal structural changes (e.g., sunrooms, unfinished basements).
• Henry’s Tips for Finding Opportunities:
  • Look for properties with unused covered square footage or mismatched bed/bath counts relative to size.
  • Repurpose spaces (closets backing to half-baths to create full baths, rarely used formal living rooms to beds).
• Essential skill: Developing an “eye” for possible tweaks and maximizing space, not necessarily taking on huge projects right away.

Quote:
“Pay attention to what rooms back up to each other. If there’s a half-bath with a closet next to it, you might be able to steal that space and add a shower to make it a full bath.” — Henry Washington (21:48)

5. Moving Up: Gaining Skills, Building Your Team (23:44–27:48)

• You don’t have to leap straight into complex projects.
  Progress gradually—start with smaller projects, learn from more experienced investors, and participate alongside them before taking on full responsibility.
• Critical: Build a core team:
  • Architect
  • Engineer
  • At least three general contractors to get multiple bids
• Partnering: Even experienced investors bring in partners for complex rehab/new build projects—finding strengths and sharing risk is industry standard.

Quote:
“Everyone wants to chase the deal, and I always tell them: chase the resources and the team. Because the team will help you get through that deal.” — James Dainard (24:39)

6. Heavy Renovations: High Risk, High Reward (27:55–34:51)

• Defining “heavy”:
  Touching all systems, moving structural walls, major plumbing/electrical, often multiple permits and inspections.
• Potential for highest returns:
  In Seattle, James sees 30–35% cash-on-cash returns for cosmetic/value-add projects, and 50% for heavy renovations.
• Expertise required:
  Mistakes are easy and costly—need strong project management, deep market knowledge, and the ability to hire/manage skilled professionals.
• Market advantage:
  These properties are often avoided by homeowners or newer investors, opening up high-equity opportunities for those with the know-how.

Quote:
“This is how you create value. If I’m spending $100 a square foot [on a basement], but I can sell it for $400 a square foot, that’s where I can 3x and 4x my money.” — James Dainard (31:15)
“A differentiator [is] the amount of subject matter expertise… the decisions on what they’re doing, where they’re moving things to, what kind of value that creates, what kind of product that creates, that's on you as the investor.” — Henry Washington (32:10)

7. The Progression: Comfort One Flip at a Time (38:55–42:27)

• Gradually scale up your involvement (money partner → passive observe → co-lead the project).
• Even seasoned pros still create new partnerships and build their skills through colleagues and conference contacts.

Quote:
“I brought the deal, I’m even bringing the financing. But he’s going to manage the renovation… that’s a partner I met at a real estate event.” — Henry Washington (41:16)

8. New Construction / Lot Splitting: When & Why (44:02–46:00)

• New construction is sometimes more systematizable but requires even more upfront analysis and reliable teams.
• Splitting lots can be the value-add move itself:
  • Renovate/sell existing house, split off and sell or develop a second lot—sometimes doubling profit.
• Practical advice:
  Avoid “nightmare” properties (e.g., on hills, wetlands, or environmental hazards).

Quote:
“You don’t always have to build to actually create value. You just have to create the value.” — James Dainard (44:57)

Actionable Takeaways

• Choose your “value-add” level based on experience, bandwidth, and risk tolerance; each stage offers opportunities.
• Progress with guidance:
  Start with cosmetics, find partners, join local events or conferences, and build your core team.
• Look for hidden value:
  Pay attention to how to reconfigure existing spaces, not just surface appearance.
• Control costs and build equity:
  The key to creating wealth isn’t just improving properties but managing costs efficiently with the right team and strategy.

Notable Quotes & Moments with Timestamps

• “Anyone can do this. You can figure out what flavor floors to put in, what paint to do… you’d be amazed by how much that can improve the value or rentability.” — Dave Meyer (09:50)
• “A heavy renovation is like you have a bucket of Legos from many different sets, poured out on the ground. Now go build a house.” — Dave Meyer (05:36)
• “You don’t have to jump right in… start participating with other people… It's better to give away more upfront and learn to prevent losses down the road.” — James Dainard (24:39)
• “If I’m spending $100 a square foot [on a basement], but I can sell it for $400 a square foot, that’s where I can 3x and 4x my money.” — James Dainard (31:15)
• “This is a perfect example… every investor I know partners all the time. Every single one.” — Dave Meyer (42:27)

Suggested Listening

• Episode 1088: “10 Ways to Add Value for Under $10,000” — practical, actionable strategies for beginners or anyone seeking quick wins.

Closing Thoughts

This episode provides a true playbook for 2026’s value-add investing landscape, reminding listeners that resourcefulness, team-building, and creative vision are the new market edge. Whether you’re just starting out or looking to scale up, this conversation offers practical steps, mindsets, and strategies for maximizing returns and building long-term wealth through real estate.

Attend the Value-Add Conference March 28th in Seattle (biggerpockets.com/seattle) for hands-on learning, internal documents, and community connections directly from the BiggerPockets team.