Real Estate Rookie Podcast Summary Episode: The Beginner’s Blueprint for Building (Not Buying!) High-Return Rentals
Release Date: July 2, 2025
Hosts: Ashley Kehr and Tony J Robinson
Guest: Chad Carson

Introduction

In this enlightening episode of the Real Estate Rookie Podcast, host Tony J. Robinson welcomes Chad Carson, a seasoned build-to-rent expert who has successfully transformed empty lots into lucrative rental properties. The conversation delves into the strategic shift from purchasing and renovating fixer-uppers to building new rental homes from the ground up, offering invaluable insights for novice investors eager to embark on their real estate journey.

Why Build to Rent Instead of Fixer-Uppers

Tony J. Robinson opens the discussion by addressing the changing landscape of real estate investment, noting the challenges posed by rising interest rates and decreased affordability. He asks Chad why investors are favoring build-to-rent strategies over traditional fixer-upper approaches.

Chad Carson responds by highlighting two primary reasons:

1. Supply Creation: “You’re creating supply. So you’re creating something that wasn’t there before” (00:55). With limited existing properties, building new rentals allows investors to address the supply shortage.
2. Lower Maintenance Costs: New constructions typically require less maintenance in the early years, reducing unforeseen expenses related to repairs like roof replacements or sewer line issues.

Chad emphasizes that build-to-rent not only offers competitive advantages but also aligns with long-term investment goals by ensuring more manageable maintenance profiles.

Tactical Elements: Costs and Margins

Tony digs deeper into the financial aspects, prompting Chad to share real-world examples of build-to-rent projects. Chad discusses a recent project in Seneca, South Carolina, where they built five single-family homes with an average total cost of $232,000 per property. These properties appraised for approximately $275,000 each, representing an 84% cost basis relative to their market value.

Chad outlines different investment tiers in build-to-rent:

• Direct Development: Building and managing the entire process personally.
• Joint Ventures: Partnering with builders, which may slightly reduce margins due to profit-sharing.
• Turnkey Purchases: Buying fully developed properties at retail prices, often resulting in lower profit margins.

He underscores the importance of maintaining a balance between land costs and construction expenses to ensure profitability.

Steps in the Build to Rent Strategy

Chad breaks down the build-to-rent process into two main categories:

1. Land Acquisition and Development: Selecting the right piece of land involves understanding municipal laws, zoning regulations, and the physical characteristics of the lot. Chad emphasizes the necessity of hiring engineering and surveying professionals to navigate these complexities.
2. Construction: This phase mirrors the remodel process but on a larger scale, requiring coordination with contractors for foundation work, plumbing, electrical systems, and finishing touches.

He notes that successful build-to-rent projects depend on meticulous planning and the ability to add value from the outset.

Securing Approvals and Managing Permits

Navigating the approval process is a critical step in build-to-rent projects. Chad advises:

• Engage with Local Authorities: “They know a ton. And their job is to serve the public and help people” (12:22). Building relationships with zoning officials and inspectors can streamline permit approvals.
• Utilize Professional Partnerships: Collaborating with experienced builders or engineering firms can mitigate common hurdles and ensure compliance with local regulations.
• Prepare Comprehensive Documentation: Submit detailed engineering and survey drawings to avoid delays and rejections.

Chad emphasizes patience and thoroughness, especially in areas with stringent building codes like California.

Financing Build to Rent Projects

Financing is a pivotal component of successful build-to-rent ventures. Chad outlines several financing methods:

1. Private Money Lenders: Typically offering 7-12% interest rates, these lenders provide flexibility through shorter-term loans. Chad prefers private money for its accessibility and speed.
2. Commercial Construction Loans: Local banks may offer construction loans with structured draw schedules tied to construction milestones. These loans often come with lower interest rates compared to private lenders but require robust documentation and relationships with the bank.
3. Self-Funding and Joint Ventures: Utilizing personal savings or partnering with investors can reduce reliance on external financing sources.

Chad advises establishing a clear repayment plan and discussing worst-case scenarios with lenders to build trust and ensure financial stability.

Managing Construction Costs and Contractors

Controlling construction costs is essential for maximizing profitability. Chad shares strategies such as:

• Efficient Contracting: Partnering with reliable contractors who offer consistent quality, even if it requires patience and advanced scheduling.
• Standardized Designs: Implementing cookie-cutter floor plans and material lists to reduce variability and bulk purchase costs.
• Quality Over Cost: Investing slightly more in key areas like higher ceilings or upgraded kitchen appliances can enhance property appeal without significantly inflating costs.

He warns against compromising on quality for speed, citing personal experiences where choosing cheaper contractors led to increased overall expenses and project delays.

Making Rentals Stand Out

To ensure properties attract and retain tenants, Chad recommends:

• Strategic Upgrades: Focus on specific features that offer high impact, such as higher ceilings or modern kitchen finishes, which can make a property feel more spacious and desirable.
• Location Enhancements: Selecting sites near amenities, employment hubs, and excellent schools can significantly boost property attractiveness.
• Selective Investment in Aesthetics: Maintaining a balance between cost-efficiency and appealing aesthetics to create a “wow” factor without overextending the budget.

Chad emphasizes that thoughtful, targeted improvements can differentiate properties in a competitive rental market.

Mindset and Long-Term Success

Chad concludes with essential mindset advice for aspiring build-to-rent investors:

• Patience and Learning: Embrace the learning curve and be patient with the complexities of new strategies.
• Partnerships and Value Addition: Seek partnerships where you can offer value, whether through financial investment or sweat equity, to foster collaborative success.
• Abundance Mentality: Adopt an attitude of abundance, focusing on building strong relationships with contractors, partners, and tenants to ensure long-term sustainability and growth.

His philosophy centers on creating lasting value and maintaining flexibility to adapt to market changes.

Conclusion and Resources

Tony wraps up the episode by encouraging listeners to connect with Chad Carson through his YouTube channel, Coach Carson Podcast, and other platforms to further explore build-to-rent strategies.

Chad Carson is a valuable resource for those looking to diversify their real estate portfolios through innovative build-to-rent projects, offering practical advice and proven methodologies for achieving high-return rentals from the ground up.

Notable Quotes

• Chad Carson on Supply Creation: “You’re creating supply. So you’re creating something that wasn’t there before” (00:55).
• Chad Carson on Maintenance: “New construction just has a leaner maintenance profile” (02:11).
• Chad Carson on Financing: “Every lender I’ve ever known...they are very pessimistic. We're thinking about those that we're already thinking about it.” (33:27).
• Chad Carson on Mindset: “If you do that, like there's always, there's plenty of pies out there.” (43:57).

Timestamp References

• 00:00 – Episode Introduction
• 00:55 – Shift to Build-to-Rent
• 02:11 – Advantages of Build-to-Rent
• 04:53 – Essential Steps in Build-to-Rent
• 12:22 – Overcoming Rookie Challenges
• 16:57 – Securing Building Plans and Approvals
• 19:04 – Navigating the Approval Process
• 21:26 – Detailed Cost Breakdown
• 24:43 – Land vs. Construction Costs
• 26:59 – Financing Options and Strategies
• 30:49 – Structuring Private Money Deals
• 33:27 – Managing Construction and Contractor Relationships
• 37:23 – Selecting Reliable Contractors
• 43:57 – Adopting a Successful Investor Mindset

Note: Click on the timestamp numbers to jump to specific sections if the podcast platform supports it.

For more detailed insights and ongoing education in real estate investing, visit Chad Carson’s YouTube channel or subscribe to his Coach Carson Podcast. Stay connected with Real Estate Rookie for weekly tips, tools, and roadmaps to build a successful real estate portfolio.