← Real Estate Rookie
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- [00:00]
Ashley Kerr
Are you looking for the hottest markets to Invest in for 2025? Everyone has a different buy box but we're going to give our best ideas for where to start investing this year. I'm Ashley Kerr and welcome to the Real Estate Rookie Podcast. Tony just had a baby. So we have a special guest, Garrett Brown on from The Bigger Stays YouTube channel. Garrett Garrett, welcome to the show. Thank you so much for joining us on this episode of Ricky. Reply.
- [00:34]
Garrett Brown
I'm super honored to be here. Always a fan to jump on and talk talk real estate with you.
- [00:39]
Ashley Kerr
Yeah. So I pulled us a question today and this question is just curious on what's realistic and how some of these people posting on social media amassed so many properties. Seems like I see a lot of posts essentially claiming look at my life and how we managed three companies and 300 rental properties. Many of these folks appear to be early to mid 30s. I'm 44, have household income combined w2 wages near 400,000 and just acquired my third single family home rental. Am I going about this wrong by saving up for my 25% down payment and finding a deal? My three rentals are great and cash flow, but I can't fathom how to scale to something as monstrous as hundreds of properties. Where do these people get the funds? What am I missing? So Garrett, we both see the people on Instagram saying I have tons of properties. So there is, you know, some of them that really have amassed that and there's also some that maybe own 1% of those 500 properties that they're talking about.
- [01:49]
Garrett Brown
I will go ahead and lead off as somebody that has done social media for as long as I can remember and say that a lot of it is smoke and mirrors. You can always take that for face value and run. A reason people do that type of content a lot is because it performs well on social media. It gets the most views, it gets the most engagement. That is the beginning of why people will throw out these outlandish numbers. And like you mentioned, some of them actually do have some of these numbers. Some, some of them have probably never, you know, been in a real estate deal in their life and they're trying to sell you some mastermind course that they bought a course from somebody else. So that caveat alone will let you know that it's you should not put yourself in competition with other social social media people out there because a lot of it is smoke and mirrors.
- [02:38]
Ashley Kerr
And I think that relates to everyday life too. Like when you're looking at people, you know, and they say how can they afford that? Oh, they went on this family vacation. Like social media in general, it's very hard not to compare yourself to others. And that's like the evil of social media, I feel like. So just as you wouldn't compare someone else's life in your hometown, also don't compare yourself to other real estate investors. So as some of these investors that you may see on social media have amassed some of this, let's maybe talk about some of the reasons they could have done this where maybe it's not as achievable. And I really think the first place to start is today's market. A lot of people started in 2020, 2021, the low interest rates and just gobbled up deals.
- [03:28]
Garrett Brown
I agree completely. A lot of it was when people started and but I think the one thing that also, you know, investors need to think about newer or, you know, more seasoned one is what is, what are your end goals? You know, like just because you see people that are so, you know, they may have, have acquired 50 to 100 properties and things, but a lot of it that may be their end goal. Some people may have more, you know, maybe simple goals, if you, for lack of better words, you want to call it, that they strive to go after because that would fit, that's what fits their lifestyles. Like even me personally, I, I have had opportunities to probably scale a lot quicker in a lot of aspects, but I personally don't want 150, you know, rental portfolio. I, I try to make sure I am reinvesting into the properties I have and making them as profitable as possible and then also making sure that I'm not doing a deal just to do a deal. Like one thing I, I, I hear Luke Carl talk a lot about in STRS is door disease. People get this thing called door disease where they're so interested in getting as many doors as they possibly can and then they stress themselves so thin. So if that is one of your end goals to get that, that big, there are many steps you can take to get there. But you don't need to feel that pressure just because you see other people doing it. And that's the only way you think you can, you know, have some super successful portfolio. A successful real estate portfolio does not matter how many doors you have, it's how reliable the profit is coming from there each month and the ability for your own, you know, peace of mind where you wanted to build your portfolio.
- [05:00]
Ashley Kerr
Garrett I was actually diagnosed with that disease. I was in acquisition mode and it burnt me because I was just acquiring, acquiring. I was focused on how to fund deals, how to analyze deals, how to find deals. And then it was like, okay, I get, you know, I got tenants in place and, you know, I would just push the properties aside. And since then, I've learned that, you know, you need to actually have operations in place. You have to do asset management. There's actually a lot of money to be made there. And I was leaving so much money on the table because I wasn't paying attention. I was just so focused on acquisitions. And then I ended up. I sold the property. I only owned it for a year, but I just had to, like, relieve myself. I was so overwhelmed on the tenant management side of things that I just needed that breathing room. And I even had a goal when I turned 30, to get 30 units by 30, and I missed it by like three weeks. But it was like, that was so ridiculous to have that goal. It should have been like a cash flow number or something like that instead of how many units that I needed to acquire.
- [06:08]
Garrett Brown
I think the thing to pay attention to is the more profitable you can make the properties you already have, whether, you know, short term rental, long term rental, whatever it is that will be able to fuel your growth going forward if you do want to grow more, because then you'll be able to acquire partners probably a lot easier. You'll be able to, you know, be able to build your network a lot more into this capacity to where you're showing a more, you know, successful portfolio that you have, because you have, you have made it as, as profitable as possible with the assets that, that you're working with. And this will be, this will bring in, you know, partners and investors a lot easier when they're able to see, like, okay, the ROI on the properties you have right now is, is amazing versus the number of doors you have. And you're, and you're barely breaking even on a few of them. So that would be, that would be something I just wouldn't want any investor to get caught up in, because there are many ways that you can scale quickly, but you will be able to have more success and be able to network much easier within these, these circles that can help you expand. If you have a more profitable portfolio to begin with, doesn't matter how big or small it is, you showing that you have that ability to find a deal, make it to the highest and best use that you can achieve with it is going to speak volumes compared to the number of doors that you're able to acquire.
- [07:26]
Ashley Kerr
And I think that Kind of leads into the last part of the question is like how are people paying for all of these properties? And it's by having partners or having other people invest with them, raising capital. I actually had somebody who was a very rookie investor. They have a small business, they're looking to buy their first investment property which is a mixed unit building that has two residential, one commercial where they'd operate their business out of. And she was asking me, you know, like I'm trying to figure out how to make this work, how can I buy this. And I was texting her all this stuff and she's like, why do you keep saying raising money, it's not a charity. And it was just like, yeah, like a lot of people don't know about that as to like that you can also have people give you money to buy property and yeah, you don't get to just keep it and walk away. You know, there's has to be some value or whatever to that person giving you the money. But it is out there to raise money. So in most cases that for someone to grow and scale that fast, they're most likely taking on partners. They are, you know, using private money or even just like hard money lenders and then going and refinancing. They're doing fix and flips to build their own capital to put into rentals. They're doing syndications where they're, you know, raising money or they're actually just putting money into a syndication where they can say, oh, I own 500 units, but they own 0.1% of those 500 units. So there's a bunch of different ways that they could be funding those deals. That doesn't mean they're saving their W2 income.
- [09:11]
Garrett Brown
That's when getting in the room with like minded investors, it pays off as well too. Like attending bpcon, getting to the network convention in your local areas and just starting to meet people. You may not even have anything in particular like a deal or anything in particular to present, but establishing some of these relationships, that is how a lot of these people are scaling quickly and then finding, make sure you find the deal, the right deal like you need to get become almost, you know, obsessed with making sure the deals that you are underwriting and you know, putting your reps in that way when you have something that's a slam dunk, you'll be able to find money for it. And if you can analyze that to, you know, how make and make sure how profitable it's going to be, that's where you can be able to find these partners that are willing to lend money. So finding the deal and being able to get the reps in to understand it is, is one of the most tremendous skills you can have besides networking.
- [10:03]
Ashley Kerr
Now Garrett, this person also mentions 25% down. Are they going about it the wrong way by putting 25% down? What would you say are some of the advantages and disadvantages of you know, putting that much money down on a property?
- [10:17]
Garrett Brown
The advantages I would say to putting that much down on a, on a property is, I mean even with, you know, the climate of real estate today, you know, interest rates are a little higher than you know, some of these people that were grabbing them back in 2020 and 2021. So you having to put that 25% down, the advantage is you're going to have less on the interest side you're having to pay and you'll be able to find more lenders that are willing to lend to you because you have a 25% down payment. But there are a lot of FLE options that are out there just depending on what your goals are. You can, you can utilize things as low as a 3.5% owner occupied loan on a duplex or a triplex and get into it for much less. But you need to be willing to know what your, you know, the sacrifices you're willing to make in your portfolio. Obviously investors that are, are can only that don't want to go that route. You're going to have to find some more creative lending options that are out there. They're, you know, they're, if you're looking into short term rentals, there are vacation homes loans that you can put as low as 10% down. There's, you know, there's DSCR loans which are debt service coverage ratio loans. Some of on the long term side you can get as low as 15%. They're not as common but more in the 20% range. So there are different products out there and that's why working with a trusted lender that can give you a lot of these options really will help you kind of solidify what works best on your end when you are trying to scale in that kind of capacity.
- [11:42]
Ashley Kerr
Yeah. And if you do need help finding a lender you can go to biggerpockets.com/lender finder but also rookies. Tax season is coming up so if you need help navigating that check out biggerpockets.com/tax pros you can get matched with a tax professional or financial planner in your area. We're going to take a quick break, but we will be back with Garrett and to answer more of your questions.
- [12:07]
Tony
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- [13:23]
Unknown
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- [14:10]
Ashley Kerr
Okay everyone, welcome back to the Real Estate Rookie Podcast podcast. We have our second question today. I'm new to real estate investing and looking for guidance on where to Start. I currently live in upstate New York, but am considering relocating and would love advice on where to move based on strong real estate markets. I'm particularly interested in investing in either short term rentals like Airbnbs or long term rental properties. Markets with promising ROI potential and steady demand locations that offer a good balance between affordability and growth opportunities, especially for someone new to real estate investing. So Garrett Austin that works at Biggerpockets, we had him on as a guest and during our episode he drops this bomb that he literally relocated and moved to a market based on the data. So this person seems to be willing to do the same. So where would you start to analyze the market to move to?
- [15:15]
Garrett Brown
In Austin is definitely a great example of somebody that sees data and really will take action on it. And that's why he's, you know, such an amazing analyst. And then also understanding, you know, that some things will take a sacrifice depending on what you're trying to do. If you could, you know, if you're in New York, there are a couple markets up there in the short term rental world that I know still perform pretty decently there. There's Poconos being one of the main ones. But there's a big crackdown that is kind of happening in that area on how hard it is to get a permit. So that's something you really need to, to look into the regulations of that area. But it really will depend on where you are trying to go with with your goals. If you're willing to move across the country, then obviously your, your pool opens up quite tremendously. And my, my biggest advice for them would be search research the regulations for an area that you're looking into to understand if, you know, short term rentals are something that would be allowed there. You can go on something like Air DNA co they are basically the STR market data research leader and you'll be able to get a sense of what the occupancy rates, what the average revenue that you might be able to bring in depending on your home, then you're able to make a decision on if this is a market that you're actually wanting to possibly endeavor into. And I always tell people that if you're not 100% sure on if you want to be an STR host because there's a lot more to the operations side than long term rental. Just make sure that the deal pencils out as a long term rental as well in the city that you're possibly looking into, especially if you're on the fence. Some areas, if you're if you're full force ahead on short term rentals, then this changes just slightly. But if you're not, make sure it pencils out as a long term rental. You can use, you know, the bigger pockets rental calculator to understand if you know where the LTRs actually might land and if they pencil out in both of those areas, you know that you're possibly onto a market that could be a potential win for you and how far you want to travel. You know, that's, that's completely up to you and tough to say.
- [17:18]
Ashley Kerr
So yeah, I think one of the biggest things is really deciding on that strategy first as to do you want to go with the short term rental or do you want to go with the long term rental? And I really like Garrett's advice of, you know, if you do need to pivot, make sure that you have another strategy in place. Like even it could work as a midterm rental. We've known plenty of people that have started out doing short term rental and had to pivot to midterm or start out as midterm have to pivot to long term. So make sure you do have that second strategy. So there are some resources available at biggerpockets.com/resources, the three that really come top of mind for me. In the rookie resource area there is a market analysis template. So this template gives you every statistic and data that you should be looking at when you are comparing markets. The next tool is you should be looking at the top markets for 2025, which was actually created by Austin, who we were just talking about. And when you go into this, he gives you the top markets, why they're the top markets, and gives you the data behind it. Obviously, you know, maybe the number one market is not for you and that's why you really need to figure out, you know, what is important for you. So another tool that you should use in the resources is the buy box. This will really help you narrow down your search because Tony knows this statistic. But how many cities there are across the US to actually go through and just like throwing, you know, a dart at the wall as to, oh, let me start here and analyzing. So at least this, you know, this data can give you an idea of where to start when looking at analyzing. But you need to have some kind of buyback. So for example, if you're going to be living in this property, what are the must needs for you? Do you need a walk in closet if it's going to be, you know, used as a house Hack, are you going to do run by the room or do you need a whole separate unit? Maybe can you convert the basement to something? So I think really sitting down and building out your buy box and then also your budget and you can narrow down the markets based off of that. But starting by looking at the data too will really help.
- [19:36]
Garrett Brown
Absolutely. Figuring out your budget is also a tremendous key. Working with an investor friendly lender that understands these things because the markets that you may be interested in, you might not be able to find anything that even makes sense for what you can afford. And that eliminates a lot of your time going forward knowing those type of details.
- [19:53]
Ashley Kerr
So Gary, off the top of your head, do you have any like hot short term rental markets right now that if you were in this situation and you say you had to move and it had to be a short term rental, maybe we'll do a YouTube series, a reality TV show of Garrett has to move to a short short term rental out of his house for six months. What market would you pick? Or do you have several in mind?
- [20:20]
Garrett Brown
There's definitely several. I'm lucky enough. I'm. I'm in Houston, Texas. A lot of my short term rentals are in Texas. There are quite a few markets within Texas that are just with the sheer amount of people moving here and just the tremendous amount of people that visit are, you know, four major metro hubs. I would throw out San Antonio, Texas as one that still has relatively affordable markets that gets a lot of traction within the area. I know one market I particularly love and if I was a little more flexible in some different things and planning to. Logan, Ohio is probably the top market right now that it, it was up and coming in the last couple years and now is a little more established and might be a little too hot. But, but Ohio in general, between Dayton, Ohio, Logan, Ohio, a few other markets in that area, they seem to be getting a ton of traction with tourism. And their relative affordability still allows people to, to find out different avenues that they can take in those different markets.
- [21:21]
Ashley Kerr
What's in Logan, Ohio? Like what is driving people there?
- [21:25]
Garrett Brown
They have, I'm pretty sure there's a national park, but they have something called the Cliffs at Hocking Hills is the particular area. And this place has just kind of exploded. There's also a new one, New River Gorge in West Virginia, just became one of the newer national parks in the last couple years. And that's another one that's gaining a lot of traction that I've, I've kind of looked around myself to see what, what is available there. And yeah, I think those are two great markets. Hot Springs, Arkansas is another one that I've kind of divvied into. They're getting a little more strict on their short term rental regulations. But finding a place that relies on tourism dollars like these markets means that they're never going to fully eliminate them. They might become more strict on how many can operate there which allows the better operators to, you know, succeed and the, the ones that don't take hosting serious to kind of, you know, fall off a little bit. But those are a few markets out there. Air DNA is really a great resource.
- [22:20]
Ashley Kerr
Yeah. For our listeners that are regulars, they probably have heard of the New River Gorge, West Virginia because Tony had shared with us, I think it was last year, maybe the year before how he had a property under contract there. I think it was a for glamping and they were going to build all these glamping sites and things like this and then it ended up not working out. I think it was more the property, not the area. But it had been really interesting to, to follow along him looking at investing there.
- [22:47]
Garrett Brown
Ashley, what, what are some of the favorite markets you've been looking in for LTRs in specific? I, I'm sure you, you search, research them all, all day, every day and try to figure that out.
- [22:56]
Ashley Kerr
The tables have turned. Now you're putting me on the side.
- [23:00]
Garrett Brown
Yeah.
- [23:00]
Ashley Kerr
So luckily I've had the opportunity to do a lot of market analysis on the BiggerPockets real estate podcast with Dave Meyer. So some of the markets that I've looked into are Minneapolis. It's just a growing city. They're really growing their waterfront. And then also Columbus, Ohio, affordable market. There's a lot of tech coming into those areas. But honestly what I would do and I don't know the best market for this type of property but if I were to move to have a new primary residence that I would also have, you know, the availability to do short term rental or long term rental. I would go and I would buy a lakefront waterfront property somewhere. I would put it in my name as my primary residence. So in New York state at least you, if you're it's your primary residence, you get a tax break. You get the star savings by being the homeowner and living there. So I could save on those high waterfront property taxes. And then I would hold the property for two years and then I would sell it for tax free gains because I lived in it as my primary for two years. I'd have the best financing on it a lower interest rate at 30 you know fixed over 30 years and then I would do live in flips until I had the huge mansion waterfront property that I end up wanting to keep forever. So Columbus Ohio Minneapolis are two like realistic cities that I love but if you want to get adventurous then waterfront property because they're they are making waterfront property more as in these fake lakes are coming out but still not as it you know as lavish or abundant as just your normal everyday property on a lot. So I would invest in waterfront property.
- [25:01]
Garrett Brown
Great advice. Water always does tremendously well on for your revenue no matter what kind of your what what your exit strategy is.
- [25:08]
Ashley Kerr
Ricky's we want to thank you so much for being here and listening to the podcast. We want to hit 100,000 subscribers and we need your help. If you aren't already, please head over to our YouTube channel YouTube.com/at realestate rookie and subscribe. We have to take one final ad break, but we'll be back with more after this.
- [25:32]
Tony
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- [26:46]
Unknown
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- [27:54]
Ashley Kerr
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- [31:18]
Garrett Brown
To tremendously agree with that especially I'll tackle the event side just really quickly because I the answer I have for that is if you want to do events then that, that is one whole other beast of a business you will need to learn about or if you have a background in it makes a lot of sense. I hear people all the time in short term rental space say oh, I'll buy this property and then I'll have some wedding venues on it and do that. And I one of the first questions I asked him, I go have you ever like been involved in the wedding business and like know anything about it? No, it can't be that hard. And they don't understand the, the county red tape you have to go through to have this type of commercial property. The insurance regulations that you're going to be dealing with, it's, it is its own beast. So if you're not fully in the event space and you're just thinking about it, it's something I would never recommend to in as not it's not your original business plan unless you want to go that space. I kind of, I got to Briefly look at the property and I know actually the Amarillo area pretty well. It's something I've looked at. It's a, it's definitely a growing metropolis within Texas. The things I've seen from a lot of the short term rentals there are, there's a lot of mountain views and, and higher, the highest performing ones in that market. Market, it has a very high score according to Air DNA. They, they rank markets from 0 to 100 and I think it was in the 75 range which is on the higher end. But if you look at the properties that are performing the best there, they are all mountain view properties that are much large or in the large side, but they also have completely different aesthetics than this property particularly does. The other thing I like to point out when I'm looking at a market is the average estimated annual revenue in this area for something that big is about a hundred thousand dollars for what's performing there. I try to get about 20% of what the purchase price is in estimated annual revenue when I'm just diagnosing an str. So if it's averaging about a hundred thousand dollars, I would not want to go much higher than a five hundred thousand dollar purchase price. Obviously there are some properties that may waiver that a little bit, but as the data I just looked at in, in using Air DNA to see what your competition is and Airbnb as well, just going and seeing what are some of the more sought after properties in that area, you're going to see that more than likely this isn't going to be your highest performing STR because it doesn't seem like the market, the people traveling to that market are looking for this type of stay. So I would just. Anytime you're looking at a, a property in potential, if it doesn't hit that 20% rule of the revenue you're going to have versus the purchase price, it's going to be a lot harder to, to, you know, benefits the cash flow that comes from STRs. And because you're going to have to do the extra operations and, and everything that goes involved with it. So I want to have quite a bit of upside within the STRs that I do look at. So I would, I would definitely vote on researching a little more before you commit to this type of property just because you fell in love with the, you know, how it was redone and, and you know, older properties have their own, you know, things that, that definitely are a hindrance going forward even if it has been fully remodeled. So I'm sure You can even speak to all the, you know, different remodels and flips that you've done to kind of give that feedback on it.
- [34:31]
Ashley Kerr
Yeah, I mean, I'm doing a property right now that was built and I think it was 1870. And I bought it as a rental and it was remodeled. I mean, nothing super high end, so it made a great rental, but it was really nice. And so I bought it in 2020. And I've had a tenant in place since then, so, you know, almost five years. And the tenant, we just had them move out because we're actually going to sell it because the market has just appreciated so much in that area. The rent isn't keeping up with what the property values are. So we are going to cash out on this property. So we haven't been there in five years because we've just had the tenant in there and oh, my God, the house was like in the upstairs, sagging to the one end. Like, the tenant left behind some cat food. And I took one of the cans of the cat food, turned it on its side, and that thing just rolled so fast to the other side of the room. It was like you felt like you were drunk walking up there. So I. This is like my first real big structural rehab project. So I brought in a company and they've been going in and basically they, you know, there was a support wall that was taken out at one time before we owned it. And so they've just been kind of inching it up. They'll go in like every three days or something like that, and they jack it up a little more and they put in new support beams and all this different stuff. So it ended up being a $7,000 job. They originally quoted me, I think like 4,500, but like, that's just one issue. And that was when I bought that property. It was not like that. There was maybe a little slant, but just over the last five years, that slant, that has progressed when you are buying an older home. Exactly what Garrett said. Just because it's remodeled doesn't mean that everything is going to be perfect and okay. But I also have other properties from the 1800s that, you know, are built sturdier than, you know, if I built a house today, too. So there are definitely pros and cons, but I think a really important thing, and I learned this from James Danard, is know the construction time periods in your market. So James invests in Seattle and he'll. His primary goal is to, like, purchase properties within a certain time frame because that was the best construction that was done during that period of time. Or like he knows during this period of time they used, you know, you know, something, a product that he doesn't like that you would have to go back in and rip it out. Like say for example, asbestos. Like he knows during this timeframe all these homes have asbestos in them or different things like that. So also knowing your market as to time frame and materials of when things are built and how they were built.
- [37:20]
Garrett Brown
Too, how did he figure that out? Just from experience or talking with contractors. And did he have any tips on how he kind of learned a little more of, of how to kind of hone in on what may be the proper time frame in those areas?
- [37:34]
Ashley Kerr
That's a great question. And usually he just tells me things and I don't any follow up. I just listen. But I would assume because I think he's like getting to that he's done over like 3000 flips at this point right now. So I, I think it's probably from experience that he has learned. But I think that's something you could learn from reaching out to other investors. But builders too, you know, different contractors especially like businesses that have been around for a long time could probably walk you through. Well, you know, in the 80s we built houses like this in the 90s like this and how they changed too. But I don't know specifically how he did, but that's a great question. Well, well, Garrett will have to have him on to, to answer that for us.
- [38:25]
Garrett Brown
Always love, love talking with James.
- [38:26]
Ashley Kerr
Okay, well, thank you guys so much for joining us for this episode of Real Estate Rookie Reply. And big thanks to Garrett for joining me. Garrett, you actually have a new way for people to follow you and learn more about short term rentals.
- [38:43]
Garrett Brown
Absolutely. We just launched Bigger Stays YouTube channel here at Bigger Pockets that covers all things short term rentals, the whole big Bigger Stays ecosphere. We have a weekly newsletter, a lot of different content and downloadables. I actually just put out a download not long ago that covers how to choose an str market that's on Bigger Pockets right now is all you have to do is get your login to sign up and there's. It's going to be a great resource for anybody looking to get into the short term rental world.
- [39:10]
Ashley Kerr
Garrett, I saw your resource for the. The bookkeeping and taxes resource. This was with Baselane that did it. It's one of our favorite bank accounts to use. I use it for my security deposits and tenant screening. But with them you put together a kind of a guide for bookkeeping. And I thought this really complements well how we're launching the biggerpockets.com/tax finder too. So you can find that resource. If you need help with your taxes and your bookkeeping and not handing your CPA a box of receipts at the end of the year, you can go to biggerpockets.com/resources in biggerpockets.com tax finder. I'm Ashley and he's Garrett. Thanks so much for joining us. And we'll see you on the next episode of Real Estate Rookie.