Real Estate Rookie Podcast – “How to Buy Rental #2, #3, or #4 When You’re Out of Funds (Rookie Reply)”

Host: Ashley Kehr & Tony J. Robinson
Release Date: February 13, 2026
Podcast: Real Estate Rookie (BiggerPockets)

Episode Overview

This episode is a “Rookie Reply” addressing three common obstacles that new real estate investors encounter as they look to progress from their first to subsequent rental properties. Hosts Ashley Kehr and Tony J. Robinson field specific questions from listeners, diving deep into topics like scaling without enough personal capital, unexpected expenses threatening deals, and navigating short-term rental (STR) investments for tax advantages amidst changing regulations. Their signature tone is practical, encouraging, and candid, making rookie investors feel supported and understood.

Discussion Breakdown

1. Scaling When Out of Funds: How to Buy the Next Rental

(Start: 00:27)

• Listener Question: After closing in on deal #1, the listener wonders how to buy deals 2, 3, etc., when their funds are low.
• Tony’s Advice:
  • Traditional Approach:
    • Save up for each deal (slower but simpler, requires less creativity).
    • Quote: "It's slower, but it's significantly less work and requires less creativity." – Tony (01:28)
  • Recycling Capital (BRRRR):
    • Buy, renovate, rent, refinance, and repeat to use the same capital for multiple deals.
  • Partners:
    • Leverage experience on deal #1 to attract partners who can supply funding.
  • Creative Financing:
    • Consider seller financing, negotiating with property owners directly.
    • Quote: "If you can do like seller financing, where you're finding properties that are owned free and clear...you're negotiating directly with the seller to have them loan you the money." – Tony (02:21)
  • Ashley’s Perspective:
    • Save while simultaneously searching for creative deals (hard money, seller financing).
    • Use online resources (e.g., Landwatch) to find seller-financed properties.
    • Use the seller’s own CPA to explain the tax advantages of seller financing for higher credibility.
    • Quote: "Have you talked to your accountant or your CPA about the tax advantages of, of doing seller financing?" – Ashley (03:36)
• Mindset Reminder:
  • Don't fixate on deals 2–10 before completing deal #1. Secure the first deal, adjust, then scale.
  • Quote: "Oftentimes I see people get so caught up in, 'How do I scale?'...that they lose focus on the fact that they don't even have deal number one yet." – Tony (04:18)

2. When a Deal’s Numbers No Longer Work Due to Unexpected Expenses

(07:27)

• Listener Question: A 22-year-old in Texas finds out underwriting reveals $6,000–8,000 annual insurance (plus flood insurance), ruining cash flow. They’re past their option fee. Should they back out (and is their earnest money lost)?
• Ashley’s Take:
  • Sometimes you must walk from a deal, even if it means losing earnest money ($2,000 example from her past).
  • Avoid being stuck in a negative cash flow situation year after year.
  • Quote: "I would have rather have lost that $2,000 than be stuck in a deal where I'm losing even more money." – Ashley (08:28)
• Tony’s Advice:
  • Compare earnest money loss to expensive insurance costs over time.
  • Don’t get emotionally attached—sometimes the smartest decision is to walk away.
  • Try to renegotiate with the seller; they may offer a concession.
  • Be honest with the seller about why you want to exit (e.g., uncontrollable insurance rates).
  • Quote: "It's easy to get emotionally attached to a deal...but sometimes the smartest thing to do is to walk away." – Tony (09:18)
• Empathy:
  • Both hosts praise the listener for taking bold steps at a young age.

3. Short-Term Rentals: Taxes, Licenses & Regulations

(14:46)

• Listener Question: Wants to use STR “tax loophole” for W2 savings but fears being denied a license, especially near NYC. Asks for regulation-friendly markets within three to four hours of the city.
• Tony Explains STR Tax Rules:
  • Short-Term Rental Tax Loophole:
    • Losses (like depreciation) can offset W2 income if “material participation” is met—unlike long-term rentals which require “real estate professional status.”
    • Quote: "With short term rentals...there's something called material participation. And as long as you can show that you materially participate...that then unlocks your ability to take the passive losses...and apply them against your W2 income." – Tony (15:26)
  • Regulation Factors:
    • Research local STR ordinances (some place caps, usage limits, etc.).
    • Evaluate the city’s economic dependence on STR revenue.
      • Large cities like NYC can ban STRs without harming their economy; vacation-dependent towns are more likely to support STRs long-term.
    • Quote: "We want to look for cities that have that element of economic dependency and not so much the big cities that have a lot of things driving that economy." – Tony (17:55)
• Ashley’s Market Suggestions:
  • The Poconos (PA): Year-round vacation area; generally more STR friendly.
  • Lake George (NY): Clean, desirable, “great destination area” with some local restrictions.
  • Always verify local rules permit STRs in your chosen township.
• Tony’s Buyer Mindset Advice:
  • Examine motivation for three-to-four hour search radius: is it self-use or just comfort?
  • Distant investing is common and workable if you have robust systems and vendors.
  • Quote: "Whether the property is four hours away or, you know, eight hours away, you're probably not going to be the person cleaning the Airbnb...If that is a better deal for your specific situation, I wouldn't say that you should necessarily avoid that just because it's not as close as you want it to be." – Tony (20:55)
• STR Usage Rules:
  • If using STR for tax purposes, personal stays are limited (usually 7–14 days/year for IRS and lender compliance).
  • Average guest stay must be seven days or less to qualify for the tax benefit (“material participation”).
  • Quote: "From the IRS perspective, your average stay duration for the year has to be seven days or less...then you're still able to quantify this as a business." – Tony (22:31)
• Ashley’s Anecdote:
  • Bought an A-frame intending frequent family use but rarely visits it due to its success as an STR.
  • Practicality outweighs emotional intention for dual use.

Notable Quotes & Memorable Moments

• "Don't get caught in that loop of thinking so far ahead that you forget to take that first step."
  — Tony Robinson (04:18)

• "Have you talked to your accountant or your CPA about the tax advantages of, of doing seller financing?"
  — Ashley Kehr (03:36)

• "Sometimes the smartest thing to do is to walk away."
  — Tony Robinson (09:18)

• "Your average guest stay, when you look at all your reservations is seven days or less, then you're, you're still able to quantify this as a business."
  — Tony Robinson (22:31)

• "I thought I would use my A-frame all the time ... We haven't stayed the night once."
  — Ashley Kehr (23:45)

Timestamps for Key Segments

• 00:27 – Scaling past the first deal: funding options and strategies
• 02:49 – Simultaneous saving vs. creative deal finding
• 04:18 – Mindset: Focus on deal #1 before worrying about deal #10
• 07:27 – Navigating unexpected expenses: when to back out (insurance example)
• 14:46 – Short-term rental tax loophole explained
• 17:55 – How to evaluate STR regulatory risk
• 19:29 – STR-friendly markets near NYC: suggestions
• 20:32 – Should you insist on being within driving distance?
• 22:31 – Tax rules: personal use and average guest stay limits for STRs
• 23:45 – Reality of personal use in STRs

Summary Takeaways

• Scaling up from your first rental is possible even when funds are tight: Recycle capital (BRRRR), seek partners, or use creative financing like seller deals.
• Unexpected expenses can and will happen: Don't be afraid to walk away if the numbers turn against you, even if earnest money is at stake.
• Short-term rentals offer unique tax benefits, but require careful attention to regulations: Research both the local laws and your personal motivations for location.
• Remote investing works if you put the right systems in place.
• Personal use of STRs is frequently overestimated by owners.

This episode is an encouraging, reality-based guide to common rookie obstacles on the path to building a modest—yet powerful—real estate portfolio. Whether you're working on deal #1 or strategizing for #3, Ashley and Tony offer actionable insights and honest advice to move you forward.