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Dave Meyer (13:48)

There are two kinds of real estate investors. Those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, short term rentals or LLC held properties. These gaps surface only when filing claims. That's why investors work with nreg. They specialize exclusively in real estate investors understanding portfolios, risk at scale and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing@nreg.com bppod that's n r e I g.com bppod my home and I have a very one sided relationship. I work hard to pay for it and it mostly just sits there. It's got no side hustle, no part time gig, just four walls living its best life While I'm covering the mortgage, here's something I recently learned. When you're away from home, it doesn't actually have to sit empty. You can list your space on Airbnb. And now there's something called the Co Host Network, which makes it a lot easier to do and takes a lot of the pressure off getting started. A co host is a vetted local with hosting experience who can help take care of all the details. They can help set up your listing, manage reservations, message guests, and even provide on site support. So hosting stays stress free and manageable. So instead of your home just sitting around waiting for you to come back, it could actually help bring in a little extra income while you're away, whether you're traveling for work, visiting family or just taking a vacation. And that feels like a much healthier relationship, honestly. Find a co host@airbnb.com host welcome back to the Bigger Pockets podcast. I'm Dave meyer giving our March 2026 housing market update. Before the break, we shared that housing prices have been largely flat over the last couple of months. We we are seeing affordability improvements, which is great news even though the market is still really slow. But that's sort of where we are today. That's a snapshot in time and kind of looking backwards. But if we want to understand where things are going, that's when we look at inventory. It's something that allows us to look forward a couple of months and predict where prices are going to be. Now. It doesn't predict a year in the future, two years in the future, or anything like that. But we're heading into the busy spring buying season and I think it's useful to start looking at inventory to understand in your market what prices are likely to do now. When I looked at inventory data this month, it's kind of interesting because different sources are saying different things. Just for an example, or looking@realtor.com and I'm not saying either is better than the other, Realtor delivers good information. They are saying that inventory still rising, but it's sort of plateauing. We've been for the last couple of years in really, really low historical levels of inventory. And although it's been rising rapidly and some people say that's signs of a crash, I think most housing market analysts would say that that's just a recovery from where we were artificially low inventory levels during COVID back to normal levels. What Realtor is saying is that even though active listings, it's a measure of inventory, climbed 8% over the last Year growth is slowing like it used to be, 15% year over year, 20%. And that rate of growth has slowed nine consecutive months.

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And.

Dave Meyer (17:08)

And actually, if you're worried about a crash or you're worried about some 2008 thing unfolding, just want to remind people that even though Realtor says inventory is up, they are saying that we're still 17% below pre pandemic levels. So keep that in mind. That doesn't mean that prices can't go down at these inventory levels. They absolutely can, and we'll talk about that in a minute. But it does mean that inventory is not spiraling out of control, which is good. That provides a stability to the housing market. Now, where inventory is growing the most really depends on where you are regionally, and it also depends what price tier you are in in the market. So most of these inventory gains, as you probably can guess, are in the south and the West. That's why we've seen housing prices come down there. Again, inventory is a great predictor. When you see inventory go up usually means the market is going to soften. And so we've seen concentrations of supply growing in the south and West. That's why we see markets going down in those areas. That's something we've talked about a bit, but the thing I want to call out here is that we're actually starting to see inventory really go up below $500,000. So that's, you know, that's a little bit above the median. But I would say the lower half of the market is starting to see inventory go up, whereas the higher end of the market is still holding relatively strong. So that's where we're staying with active inventory. According to Realtor, they're also saying that new listings, which is a measure of how many people are listing their properties for sale, grew 2.4% year over year. And that's pretty low. I think that's pretty good sign if you're worried about a crash. I mean, if you want a lot of more inventory, if you want more deals to find it's not the best, but 2.4% is a reasonable growth rate. And so what we can see when we look at these things combined, if you say, hey, inventory is up, you know, almost 10%, but new listings are up 2.4%, you can sort of deduce what's going on here. The reason there's more inventory is not because more people are selling, it's because less people are buying. So you could just basically say that demand has declined a little. Bit over the last couple of years based on those two numbers. Now, when we look at Redfin, another great source of data, they're actually saying something a little different. This is sort of like what's representative of going on in the market. One day you hear like, inventory's up, the next day you hear inventory's down. And it's kind of hard to distill what's actually going on. And even on a national level, with two large reputable companies, the same thing is going on. We saw that Realtors said that inventory was actually up 8% year over year. Well, Redfin is saying that inventory is actually down 2% year over year. It's a pretty big difference. Realtors said that new listings were up two and a half percent. Redfin is saying that new listings are down 1%. So what do you make of this kind of thing? I think as an analyst, what you do in these kinds of situation is try to get the general vibe of both data sets, see what they're saying, and see what commonalities you can find. I know that doesn't sound scientific, but this is actually what you do. You want to try and look for something that would be called like a directional trend, meaning it is hard to determine the exact number because both of these companies are going to have different methodologies for doing it. So we don't know which one's right. We don't know if inventory is down 2% or up 8%. But what we can see among all of the data is that inventory growth is slowing. That recovery in inventory that I was talking about, it's losing steam. Even if it's up a little bit, and it will again depend largely on regions, it is losing steam. And we'll talk about that a little bit more in the risk report. But to me, that is a sign that we are in a normal correction. When prices start to flatten, when they start to go down, you would expect fewer people to want to sell. You would expect lower demand. That's exactly what we're seeing. If a crash was starting to unfold, you would see inventory going up and up and up. The pace of inventory growth would probably be going up. And so that is not what we're seeing. And that's the major thing that you should know if you're worried about risk. But I think the other thing that you should know is that if you're looking to buy right now, you should expect a relatively soft market. And that means you're going to be able to negotiate in a climate where things are sitting on the market. And that's happening right now. Days on market are up about a week over last year. They're way up from where they were in Covid. Sellers are going to be more willing to negotiate in these markets where inventory is up and going up more. So that is something everyone should be doing is looking at new listings, looking at inventory for your market and figuring out out how aggressive you have to bid. If you're in a market in Connecticut where inventory is 50% below where it was in 2019 and days or market are still 10 days, you're going to have to be aggressive. But if you're in Florida and your inventory is going up, this is an opportunity for you to negotiate and to be really picky. And so inventory is the number one thing. If you want to be active in the spring market, go do some research. Go pull these numbers from Redfin or from Realtor, go on ChatGPT, ask them to pull inventory numbers for you and see what's going on in your market. That's what's going to help you actually set your tactics and your strategy for the next few months. So all in all, as we look at the housing market as it stands today, we're in the great stall. I am not taking any victory laps yet, but so far the market is doing pretty much what I said it would do when I made predictions back in October or November last year. It's pretty flat, it's pretty slow. But there is more inventory and better deals are hitting the market. Next we're going to move on to our deep dive for the month, which is about insurance prices. It's something that we get to a little bit here and there on the show. But this month it's something I want to dig into the data on because I think it's more important than ever that investors understand what's going on with insurance so they can properly underwrite, so they can properly assess the performance of their deals. Because premiums have been going crazy. And this is sort of new for investors, right? In the last couple of years, it used to be so boring to talk about insurance. I honestly never used to even think about it. Now it is a real variable you need to consider the big picture here is insurance rates are still going up, unfortunately. I wish I had better news there, but I don't. Over the last year, insurance premiums have gone up 6% percent, so that's like double the pace of inflation. But there is a little bit of a silver lining here. It's the slowest growth rate since 2020. So the onslaught that we have been facing for five or six straight years now is at least slowing down. I know that's probably not a lot of solace to people who are paying more and more for insurance, but at least there are signs that we are out of this era where we were seeing literally 15, 20% insurance jumps in a single year. Now it's down to six. We can swallow that, but it's still not the best. So why is this happening? Why is insurance going up? Well, first, there's a big thing, and this is sort of unfortunate, because it means that prices aren't going backwards, but it's because of home values. This is sort of the one of the downsides to appreciation and equity growth. I think it's a small downside considering how much wealth has been created and equity has been built in real estate over the last couple of years. But when a property is worth more, it just costs more to insure, right? This makes sense. A $200,000 home is going to be cheaper to insure than a $300,000 home. So the average price is bound to go up during a time of massive appreciation. Now, I know this hurts cash flow a lot, but when you weigh the benefits of massive appreciation versus increases in insurance premiums, I'm sure most people who have hold properties for the last five years would take it. But it does matter going forward if you want to hold on to these properties or what you're going to do with these properties. So home prices going up, that is, you know, increasing the cost of insurance. But it's also, let's just be honest, insurance companies are just charging more. There's actually a metric. They basically track how much it costs to insure $1,000 of home value, right? And that's now up to $6.21 per year. That is only up 2% this year. So that is relatively good because previously, the two years before combined, it went up 30%, which is a lot. So if you put these things together, the average insurance premium is now basically double what it was in 2017. Used to be $107 a month on average. Now it's $201 a month. Yikes. That is brutal. It is basically double. And I know a lot of things have gone up like crazy over the last couple of years, but if you break it down, you actually see that insurance costs have gone up the most proportionally of all expenses, basically, for real estate investors. Because if you look since COVID started, basically since December 2019, it's up 72%. Right. Even with home prices skyrocketing, the average interest that you pay is only up 35%. Principal you pay is 22%. Taxes are up 31%, but insurance 72%. So insurance is the most, relatively speaking. Now, the good news here is that I think it's probably going to slow down. Like I said, it's slowed down a bit. And the fact that insurance carriers are not really jacking up their rates, per $1,000 of insured, it's only up 2%. And because I think home prices are slowing regionally, from the research I've done, it does look like we're going to get back towards more normal paces of insurance growth over the next couple of years. So for investors who are doing their underwriting, I get this question a lot. Should we expect insurance to keep going up 10% a year? It is regional and I'll get to that in a second. But I think generally speaking that like 3 to 5% range around inflation is probably what we're going to get over the next couple of years. That doesn't help the increases we've seen over the last couple of years, but it does make it more predictable, which is super important for investors. And I think that's good news. Now quickly want to just talk about the regional changes. I mean, California just getting absolutely hammered over the last couple of years. Double digit increases still. We see this in parts of Washington, Georgia, parts of North Carolina, parts of the Northeast. But there's good news here too. This is going to be surprising to some people, but after years of just relentless increases, Florida and Texas actually saw decreases in insurance costs for the first time in years. Some markets seeing as big as 6% declines, which is a welcome relief to investors and homeowners alike in those areas. So that's what's going on with insurance, hopefully slowing appreciation. But you're probably wondering, what do I do about this? And for that, there's basically one simple, totally underutilized strategy. Change providers shop around for insurance premiums. I know this sounds absolutely stupidly simple, and it kind of is. But actually, when I was digging into this, I saw that on average people who own homes, only about 11% of them change providers each year. That means 90% are just sticking with whatever premium increases their insurance brokers send to them. They're just sticking with it. And maybe that's fine, maybe it is the best thing for you. But I am betting for the vast majority of you out there, if you're looking for a simple way to improve your cash flow Switching insurance providers is a no brainer and that maybe don't even need a switch, but at least shopping around absolutely works. There is some data from the ICE mortgage monitor. It's something that we look at every single month and that they show that for people who switch, they on average save money and sometimes they save a lot. On average they're saying it's at least a 5 to 10% savings. And some markets it's even more. Just as an example, if you look at Orlando and Houston, they sort of dug into these two markets. They showed that about 20% switch in those markets. That's higher than average. And, and their average savings was 4 to $500 per year in premiums. That's really meaningful. That is a great way to improve your cash flow each and every year. And I should mention that those markets, Houston, Orlando, those are relatively affordable markets and those are for single family homes. So if you extrapolate that out to a duplex or a four unit even in those markets, or you extrapolate it to a more expensive place where you're buying a duplex for 400, 500, $600,000, those savings on insurance could be upwards of $1500 per year. That's over 100 bucks a month in cash flow. Just doing a little bit of shopping now. If you look at the big picture here, I told you that mortgage payments are down $200 per month. Now if you shop around for insurance premiums now we're talking maybe three, $400 a month in improved cash flow over last year. That doesn't even mean buying a different kind of deal. That just means by the fact that affordability is improving, by the fact that you can shop around for insurance, you can get significantly better cash flow each and every month. This is why I'm saying even though prices are flat right now, there is opportunity to generate better cash flow than we have seen in a while. And insurance is a big part of that. And I know insurance may not be the sexiest part of investing, but if you want to maximize cash flow in your next deal, shop around for insurance. It's the same thing as getting multiple quotes from contractors. You don't just go out there and accept the first bid, find the best deal for the coverage you need. And I should mention, if you want to shop around and you're a BiggerPockets Pro member, you can actually get 5% off immediately just by being a Biggerpockets Pro member with steadily they're a great landlord focused insurance company. Definitely check that out. But Just to summarize, this deep dive into insurance costs are still going up, but I think underwriting for 3 to 5% premium increases in the coming years makes sense. Make sure you don't get caught, but hopefully it's going to come back down to earth closer to the rate of inflation, and that's going to be welcome news to most investors. But in the meantime, shop around. We still got more in our March Housing Market update. After this quick break, I'll share my risk report and the opportunities I'm seeing in the market. Stick with us. We'll be right back. People love to call real estate passive income, which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they picked the wrong market. Rent to Retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value, in top rental markets across the country. Their local teams handle the build, the property management and the details so you don't have to. In some cases, Investors even receive 50 to 75% of their down payment back at closing. And there are interest rates as low low as 3.75%. They've been trusted partners with BiggerPockets for over a decade. And if you want to learn more, visit biggerpockets.com retirement if my house had a resume, it would probably say great at structure and not much else. I'm the one paying the mortgage. My house mostly just stands there looking supportive when you're away. It doesn't actually have to sit empty though. You can list your space on Airbnb. And now Airbnb has something called the Co Host network which makes it a lot easier to do. A co host is a local, experienced host who can help manage all the details. So hosting stays stress free and manageable. So instead of your home just sitting there while you're away, it could actually help bring in a little extra income. Find a co host@airbnb.com host you just

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Dave Meyer (34:18)

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To simplify your workflow, book your free demo at bill.com biggerpockets and get a hundred dollar Amazon gift card. That's bill.com/biggerpockets real estate investors the April 15th tax deadline is coming fast. If you own rental property and haven't visited cost segregation.com yet, you could be handing thousands of dollars to the IRS that you don't have to. Cost segregation.com is self guided software that helps you write off up to 25% of your building and to generate huge tax deductions. With pricing under 500 bucks and average tax savings of $25,000, costsegation.com is fast and affordable, making it perfect for single family rental properties, condos, townhomes and even ADUs. What's more, audit Defense is included in the price and backed by KBKG, the number one cost segregation company in the U.S. cost segregation.com was launched over 10 years ago and has a 100% success rate under IRS audit. You heard that right, a 100% success rate and that's over 10,000 studies. Go to cost segregation.com and use code tax deadline to get 10% off your first report. Don't overpay the IRS. Head to cost segregation.com before April 15th. Welcome back to the BiggerPockets podcast. I'm Dave Meyer. This is our March 2026 housing market report. Now we're going to turn our attention to the risk report, something I do every month, because there's a lot of news out there. There's a lot of scary headlines, there's a lot of people saying stuff on social media that's not always true. But there is real risk in real estate investing. There always is. There's risk in any type of investment. And I just want to share with you what I'm seeing in the market and where I think the risks are. Big picture though, things are fine, right? Things really are fine in the housing market. If you listen to this show, you know that I think like the big canary in the coal mine for a housing market crash is delinquency rates. If people stop paying their mortgages or cannot pay their mortgages, that's a big red flag. That would really increase what I think is a 20, 25% chance of a, of a crash in the coming years to something much higher than that. But as of right now, that's not really happening. Delinquencies actually went down for the second month in a row. Now that was mostly led by early stage delinquencies. It's measured in different stages, how, you know, how many people are 30 days late or 90 days late or actually in pre foreclosure or foreclosure, all these different things. Their early stage stuff is getting better. Actually. Fewer people are going into those early stages of delinquency and foreclosure. That's good news. The later stuff is actually getting a little bit worse. So it's a little bit of a mixed bag. Foreclosure starts are up six and a half percent over last year, but I should mention still 20% below pre pandemic levels. So when you see those headlines that say foreclosure starts are up, you know, over last year, that's true. Still below 2019 levels when no one was worried about foreclosure crisis. So keep that in mind. 90 day delinquencies, more serious delinquencies are going up and are rising. And so that is a real risk. These are things that we need to keep an eye on. But again, they are rising, but not to any sort of concerning level, nothing like we saw during 2008. If they keep rising, that is something we're going to have to talk about. But right now it's relatively stable. And personally, I think the fact that more serious sort of later stage delinquency stuff is getting worse actually makes sense to me because we're still working our way through a lot of the post forbearance program issues in the housing market. Right. A lot of people who couldn't pay their mortgages during COVID basically got a break for a couple of years. And then when those programs stopped, they started making their way from 30 days to 90 days into pre foreclosure into regular foreclosure. And so the later stage stuff that is working its way through, but I am at least encouraged right now to see that the beginning stages, the early stage delinquencies are going in the right direction. They're actually going down. So overall fine in terms of delinquencies, but that's something we are absolutely keeping an eye on every single month because again, it's the earliest indicator we're going to get for severe market risk. Right now we don't have that severe market risk, at least in any of the data. There's no evidence of it right now. But that said, I do want to just call attention to the fact that I do see more risks coming into the market right now. Things like the war in Iran, like, we don't know what this is going to mean. We hear conflicting information every day. We're going to be there for a long time. It's going to be quick. We don't know oil prices went from $65 a barrel up to $100 a barrel. Now they're down to $80 a barrel. We don't know. But when things like this happen, when there is more geopolitical uncertainty in a very interconnected global economy, that just raises risk. Right. I don't even know specifically what those risks are. But as an investor, you just want to say, you know, things aren't as stable as they were a couple of weeks ago because oil prices could lead to higher inflation. Right. And if inflation goes up, mortgage rates go up. Right. So these things can trickle into the housing market for sure. I'm hopeful oil prices will go back down. I'm hopeful inflation doesn't get worse. But I think there's risk of inflation and mortgage rates going up. Now that didn't really exist in the last couple of weeks. And I also just think it's going to slow down the market more. We, I already said, you know, we are at 4.1 million home sales. The market is slow, but people don't make decisions in uncertain times. They try not to. And so I think this is going to weigh on transaction volumes. I think it's going to weigh on demand in the housing market because people are uncertain. Yeah. About the war, but also about the bad jobs data. Like that's the other thing that got announced this month. January was actually surprisingly good jobs data. But if you look at the overall trend and you look at February specifically the most recent month that we have data for, it's not looking particularly good. Right. We are seeing that the US lost 92,000 jobs and I think a lot of that is concentrated in higher income areas. I do think there is a high risk of a white collar recession and that could weigh on overall housing demand and that could be for both rentals. So in terms of, you know, vacancies could go up and for housing prices. Now, I'm not saying we're going to get to 10% unemployment, but I'm just saying these are things that weigh on the market. It's things that could take us from a flat market to a slightly declining market. I've said at the beginning of the year I think we're going to be in a slightly declining market. So I think things are progressing largely in the way that I imagined in terms of the labor market. But when you introduce these new variables like the war, it does put more downward pressure on potential pricing and demand than we had just a couple months ago. Now, none of this, I just want to be clear. It means that I am predicting a crash. I don't want anyone to think that it is always possible. I always say that on the show. Is a crash possible? Yes, it absolutely is. I made my predictions back in November. I said there's about a 15% chance of a crash right now. I'd say it's a little bit higher. By crash, I mean more than 10% declines this year. Are we going to see 10% declines in housing prices in 2026? I don't think so. Is that chance bigger than 15%? Yeah, I think it's gone up a little bit. Maybe it's 20%, maybe it's 25%. But I still do not believe that it is the most likely scenario. We are not in 2008. Homeowners have a lot of equity. Like I said, forced selling is still unlikely. We see people paying their mortgages. The real risk here, I think that the only chance we get a full blown crash is if we see a massive increase in unemployment. Like if the AI fears really start to come true and unemployment goes from 4 and a half to 7 or 8%, people start freaking out. We see A lot more new supply coming on the market. We see way less demand then a crash could happen. Can that happen? Sure, yeah. Like I can imagine a scenario where that unfolds. But again, the evidence, the data as of today doesn't support that. Right. We're seeing slowing inventory growth, we're seeing delinquencies relatively stable. Unemployment did tick up a little bit, but the worst AI fears have not yet come to fruition. So I think like most things in the housing market, the big dramatic thing is not going to happen. What's probably going to happen is some combination of these things in little bits where we just see a weak, slow market. So I'm not really changing my overall prediction about what's going to happen in housing. I just want to raise the reality that the risks are going up. And I'm not telling you that to scare you. I just want to be honest about where I think things are heading and where the potential risks are. And I'm also mostly telling you to help you focus on opportunities and where they're going to be because there are going to be more and more deals in the coming months if inventory is going up, if people are scared, those are often the best times to buy. I started in 2010. People love talking about how easy it must have been. Everyone was so scared to buy real estate in 2010. But if you bought right, it was one of the best times to buy. And although this is a very different situation in 2008 and 2009 and 2010, generally speaking, when people are fearful, when inventory starts to go up, that means there is going to be better deal flow. I really believe in the coming months we're going to see more and more motivated sellers, which means that you're going to have the opportunity to pick up good assets at a discount if you are a buy and hold investor. This is what many of you have been waiting for. People have been saying, I'm going to buy when prices are going down well relative to inflation, prices are going down. The averages I've been giving you of 1% growth, that's for home buyers. As an investor, you might have an opportunity if you buy right, if you bid right, if you find the right deals to buy 5 or 10 or, or 20% under current market comps, these are the opportunities that you should be focusing on. Now. Yes, you need to be patient and specific about what you buy, but there are good things out there. And you know, you couldn't buy under market value in 22 and 23, maybe even in 24, but now you can, and that's what you should be focusing on. I know it's scary to see some headlines where people are freaking out, but as an investor you should be thinking about now I can get value. Where do I find value in the market? Because there's better opportunity for value than you've been able to find in I think like five years now. Personally, I think the good value is going to be in the B and C class, buy and hold assets. Again, I think there is pain coming, is not reflected in data. This is just an opinion I'm just going to share with you. My opinion is that the pain in the housing market that's coming is mostly going to be concentrated at the top end of the spectrum. We see the biggest risks to the labor market and wages and layoffs with white collar workers. That is where AI is coming for a lot of jobs. We haven't seen that fully impacted in the market yet. But I do think it's going to happen more and more. I think if consumer spending starts to slow down, companies are going to look for any excuse to not hire expensive people and maybe they start laying off. And I think we're going to see the high end of the market be kind of weak. It's not in every market. But I think generally speaking I like the idea of focusing on workforce. Housing, starter home kind of assets make a lot of sense to me because if you look at the employment trends in the trades or in health care or sort of blue collar jobs, employment's great, it's doing really well there. And I think that's going to lead to solid demand for both rental properties, meaning low vacancies. And if you're a flipper and you're selling homes, there's going to be opportunity there as well. So that's basically what I'm trying to do. And these are the basics of the upside error, right? This, this is what we've been talking about for years. Good investors are going to see the current market and say, yeah, there's going to be slower appreciation, there is some risk of price declines. But I'm in this for the long run and I'm going to be active and selective and opportunistic and find great assets that I couldn't afford afford or couldn't compete for in previous years. That's what the market is giving us right now. And that's where I'm going to be focusing my attention for the foreseeable future. Buying good value and positioning myself for long term upside. That's our housing market update for today. I'm Dave Meyer. Thank you so much for listening. We'll see you next time. 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 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. Bigger Pockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast. Attention Passive Real Estate Investors. Make sure you have the Passive Pocket Summit on your calendar. 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