Real Estate Rookie | BiggerPockets

Episode: 2025 Investing Update—Mortgage Rates Fall, New Tax Laws Coming
Date: September 3, 2025
Hosts: Ashley Kehr & Tony J Robinson

Episode Overview

This episode dives into the current landscape of real estate investing in 2025, focusing on the effects of recent tax legislation, fluctuating mortgage rates, and changing market conditions. Ashley and Tony discuss shifts in their own investment strategies, provide portfolio updates, and share actionable advice for newer investors grappling with today’s environment. The conversation balances big-picture policy impacts with tactical, on-the-ground perspectives, offering nuanced insights for anyone starting or growing a small-to-modest real estate portfolio.

Key Discussion Points & Insights

1. Tax Law Changes and Impacts (00:36–06:45)

• Return of the Short-Term Rental "Loophole"
  • Tony explains how the new tax bill restores 100% bonus depreciation for short-term rental (STR) properties, allowing W-2 earners to leverage depreciation against their active income without needing to qualify as a "real estate professional."
  • Quote:

    "With the one big beautiful bill, it's back up to 100%. So I think there's going to be a renewed interest in short term rental investing if no other reason than the tax benefits that come along with it." —Tony, 01:31

• Will This Spark a New STR Gold Rush?
  • Tony is skeptical that the reinstated loophole will cause a 2020-style STR buying frenzy. He expects targeted renewed interest among high-income earners focused on tax strategy rather than broad investor speculation.
  • Quote:

    "I would be surprised if we saw the massive amount of folks getting into the space of what we saw before. But I do think we'll see maybe renewed interest within that specific subset..." —Tony, 03:05

• Preservation of 1031 Exchanges
  • The bill also retains 1031 exchanges, letting investors defer taxes when rolling sales proceeds into new properties. Ashley notes the flexibility and strict timelines involved.
  • Discussion on potential policy ideas under consideration regarding raising or removing the primary residence capital gains tax exclusion, prompted by increased property values.

2. Current Mortgage Rates and Investment Strategy (06:45–12:26)

• Interest Rate Trends

  • Mortgage rates hover just below 7%, with indications they may drop by year’s end due to a cooling economy.
  • Tony and Ashley both urge caution: investors shouldn’t base deals on hopes for lowered rates but find cash-flowing deals as they are now.
  • Quote:

    "I would rather challenge you to find a deal that makes sense today. And then if the opportunity presents itself to refinance ... then you take that opportunity." —Tony, 08:46

• Warning Against Negative Cash Flow Speculation

  • Ashley points out risks in buying properties that depend on refinancing soon to work financially, noting closing costs and prepay penalties.
  • Quote:

    "Don't get into a deal saying, 'Oh well, I'll just refinance when rates go down... I can weather this property for a year with negative cash flow.'" —Ashley, 09:13

• "Date the Rate, Marry the House"

  • Discussion touches on the logic of prioritizing a solid property deal over waiting for better interest rates, given the likelihood of increased competition from pent-up buyers once rates drop.

3. Regional Market Trends (12:26–16:34)

• Buffalo, NY (Ashley’s Market):

  • More inventory and days on market, but well-maintained "mom & pop" starter homes are selling fast, often over asking.
  • Quote:

    "The property type that is actually selling the best is the mom and pop home that isn't updated, but it is extremely well taken care of." —Ashley, 13:31

• Southern California & OKC (Tony’s Markets):

  • Flipping margins in SoCal have tightened—dangerously so—leading Tony to shift flipping efforts to Oklahoma City (OKC) for better risk/reward balance and lower entry price points.
  • Quote:

    "Do I want to go out there and risk half a million dollars to maybe make $15,000... or can I go into a different market?" —Tony, 15:13

4. Portfolio Updates (18:59–39:51)

Tony’s Portfolio (18:59–26:10):

• Short-Term Rentals (Smoky Mountains & Joshua Tree):

  • Sold some underperforming units; performance in the Smoky Mountains remains steady, while Joshua Tree saw a post-pandemic dip and gradual recovery.
  • Underperforming properties tend to be older, renovated homes, not new construction—newer builds with modern amenities are consistently outperforming.
  • Enhancement strategy: adding pools and amenities to older properties to compete.

• Motel Investment (Utah):

  • Tony touts his 13-room motel as a bright spot—simpler management, lower guest expectations, and greater OTA (online travel agency) diversity compared to individual Airbnbs.
  • Financials: Bought for just under $1M, $400K rehab, ~$310K in past 12 months’ gross revenue, with projections tracking close to expectations.
  • Motel qualifies for STR tax benefits by operating as self-check-in, limited service.
  • Emphasizes operational discipline and avoiding "scaling too fast" mistakes.
  • Quote:

    "I'll tell you guys, just like hands down, managing the 13 room motel [is] significantly easier than managing 13 separate single family Airbnbs." —Tony, 23:05

Ashley’s Portfolio (31:27–42:23):

• Sale of Single-Family Rental:

  • Sold a 2020 purchase for ~$100K profit (after $20K escrow for septic repairs), extracting equity due to strong appreciation and low cash flow.
  • Partnership dissolved with each partner redeploying funds individually, bypassed a 1031 exchange.

• Short-Term Rentals:

  • Transitioned to self-management after manager took a new job; learning new platforms (e.g., VRBO, plans for Booking.com) and noting heightened guest expectations compared to 2018–2020.
  • Quote (on self-management evolution):

    "I feel like I'm relearning how to properly manage a short-term rental and really make it unique ... now it's like if you're not responding within five minutes, it's considered a big deal." —Ashley, 34:50

• Live-In Flip:

  • Moved into a property after a month of essential renovations, continuing work at a “relaxing” pace.
  • Highlights tax-free gains from primary residence appreciation, comparing returns to after-tax W2 income.
  • Already scouting next live-in flip; planning strategy to maintain two-year rule for primary residence tax exclusion.
  • Quote:

    "Thinking about how much equity … I can put into this property without paying taxes on it is really motivating. Thinking about how much I would have had to work at a W2 job to actually make that same amount of money after taxes." —Ashley, 38:09

5. Strategic Tips for Investors (Throughout)

• Don’t Speculate on Rate Drops: Focus on current cash flow, buy when numbers work now.
• Analyze and Offer Aggressively: Even advanced investors like Tony submit dozens of offers to land a single deal, echoing advice often given to beginners.
• Be Flexible and Region-Savvy: Shifting markets may present opportunities or warn of risk; adapt accordingly.
• Tax Strategies Matter: Use the return of bonus depreciation and 1031 exchanges wisely—but plan your ownership/partnership structures in advance.

Notable Quotes & Moments

• On tax benefits driving strategy:

  "We did a lot of cost savings in the last few years. We've got like a good bank of, of tax benefit, but I think it is starting to run out. So if we kind of get back into the acquisition mode, I think it'll help us make sure that we can keep those taxes offset." —Tony, 01:44

• On regional differences and investing risk:

  "We're starting to see some of those trends reverse and I think part of it is insurance costs. Places like Florida are getting harder to insure... buyers are at, where sellers are at, the type of risk that we're willing to take on..." —Tony, 12:26

• On scaling and operational discipline:

  "You and I did an episode not too long ago where we talked about mistakes that we made and both of us kind of reflected on the, the mistake of scaling too quickly..." —Tony, 30:30

• On enduring rookie tactics:

  "Tony is no longer a rookie in a lot of things, but he is still sending out as many, many, many offers as he can. Because ... it's actually an effective tool to get your next deal." —Ashley, 43:32

Timestamps for Key Segments

• 00:36 — New tax law changes & implications for STR investors
• 04:25 — 1031 exchanges and potential changes for primary residence tax exclusions
• 06:45 — Current state of mortgage rates and strategies for buying/refinancing
• 12:26 — Regional market shifts and insurance-related risks
• 13:31 — What’s selling locally in Buffalo and Southern California
• 18:59 — Tony’s current portfolio breakdown (STRs & motel)
• 23:05 — Motel case study: Operations, returns, and lessons learned
• 31:27 — Ashley’s portfolio: Rental sale, shifting to self-managed STRs, live-in flip strategy
• 38:09 — The financial power of the live-in flip (primary residence advantage)
• 42:23 — Tony’s move to flipping in Oklahoma City and offer strategy

Final Thoughts

Ashley and Tony close by reiterating that the fundamentals of real estate investing—working the numbers, adapting to the market, employing sound tax strategies, and focusing on operational excellence—are as important as ever amid a dynamic 2025 market. They advocate for action over waiting, highlighting the continued relevance of diligence and adaptability for both rookies and more seasoned investors.

For more practical tips, deal breakdowns, and real estate rookie advice, catch new episodes every Monday, Wednesday, and Friday on the BiggerPockets network.