Real Estate Rookie Podcast Summary
Episode: The Best Rentals for Beginners (& How Much Money You’ll Need) (Rookie Reply)
Release Date: June 6, 2025
Hosts: Ashley Kehr and Tony J Robinson
Platform: BiggerPockets

Introduction

In this episode of Real Estate Rookie, hosts Ashley Kehr and Tony J Robinson delve into crucial questions faced by novice real estate investors. Focusing on hesitation, strategy, and contingency planning, the duo addresses queries from listeners about the optimal first investment, required capital, and handling stagnant property appreciation.

Section 1: Choosing Your First Real Estate Investment

Question Highlight:
Keegan from the Bigger Pockets forums asks:
“I am very new to real estate and I wanted to ask what the best first time investment would be to start looking into and how much approximately should I have saved up to do this?”

Key Discussions:

1. Understanding Your “Why”

   • Ashley Kehr emphasizes the importance of identifying personal motivations, such as:

     • Cash Flow: Generating monthly income.
     • Long-Term Appreciation: Building wealth through property value increase.
     • Tax Benefits: Leveraging tax incentives related to real estate.
     • Co-Living/Vacation Rentals: Creating community-focused living spaces.

   • Quote:
     Ashley Kehr [00:34]:
     “Choosing your strategy is very dependent on what you want out of real estate investing.”

2. Beginner-Friendly Strategies

   • House Hacking:

     • Renting out rooms in your primary residence.
     • Benefits include favorable financing and dual-purpose use of the property.

   • Co-Living:

     • Renting by the room while fostering a community atmosphere.
     • Referenced through the Co-Living Guide available on BiggerPockets.

   • Turnkey Rentals:

     • Purchasing fully renovated properties with existing tenants.
     • Ideal for investors with limited time but sufficient capital.

   • Quote:
     Tony J. Robinson [04:23]:
     “Turnkey rentals are exactly what they sound like. You just write a check and collect income.”

3. Determining Investment Amount

   • Down Payment & Closing Costs:

     • Typically 20% of the purchase price plus approximately 2% for closing costs.

   • Reserves:

     • Maintaining 3-6 months of property expenses to cover vacancies or unexpected costs.

   • Quote:
     Tony J. Robinson [08:05]:
     “If you buy a home and it's $100,000, $2,000 is what you'll spend potentially in closing costs.”

Section 2: Evaluating Capital Allocation for Real Estate

Question Highlight:
A Bigger Pockets member asks:
“I have $200,000 in cash and no other debt besides a $1930 monthly mortgage. Is it dumb to buy real estate right now when I'm getting a great risk-free return on my money or is there still a way to jump in with higher interest rates?”

Key Discussions:

1. Risk Management with Capital Deployment

   • Ashley Kehr advises not to invest all available capital at once to mitigate risk.

   • Suggests deploying a portion (e.g., $50,000 out of $200,000) to test the waters.

   • Quote:
     Ashley Kehr [16:44]:
     “Don't use all of it, keep some of it. Maybe you only use half, maybe you only use $50,000.”

2. Assessing Return on Investment (ROI)

   • Tony J. Robinson recommends modeling potential returns against current risk-free investments.

   • Encourages setting personal benchmarks for acceptable returns to justify the additional risk in real estate.

   • Quote:
     Tony J. Robinson [20:22]:
     “What is the premium you would need to make it worthwhile to actually invest into real estate?”

3. Real-World Example:

   • Tony shares a personal experience where a property sale resulted in a $30,000 loss due to unforeseen repairs.

   • Highlights the importance of having reserves and not overextending financially.

   • Quote:
     Tony J. Robinson [20:22]:
     “We end up losing $30,000 on that deal to get it sold.”

Section 3: Handling Stagnant Property Appreciation

Question Highlight:
A listener inquires:
“Need advice? My rental property hasn't appreciated after one year. What would you do?”
Details include:

• Purchase price: $225,000
• Current value: $225,000
• Total investment: ~$70,000
• Cash flow: $200/month before expenses
• Tenant turnover: Two tenants in one year
• Potential loss if sold: $30,000

Key Discussions:

1. Patience in Real Estate Investment

   • Tony J. Robinson underscores the importance of a long-term outlook (5-10 years) for property appreciation.

   • Quote:
     Tony J. Robinson [29:18]:
     “Looking at real estate over long periods of time, 5 years, 10 years, is where you really see the growth in property values.”

2. Evaluating Tenant Turnover

   • Ashley Kehr advises examining reasons behind tenant departures to improve retention.

   • Suggests enhancing lease agreements and being selective with tenant approval to minimize future turnover.

   • Quote:
     Ashley Kehr [30:42]:
     “Why have you had that much turnover in one year? Or maybe does the property need to be changed into a different strategy?”

3. Exploring Alternative Strategies

   • Switching Utilization:

     • Converting traditional rentals into co-living or short-term rentals to increase cash flow.

   • Operational Adjustments:

     • Improving property management practices to enhance tenant satisfaction and stability.

   • Quote:
     Tony J. Robinson [32:06]:
     “If you already have the asset, is there a better utilization of that property?”

Conclusion

Ashley Kehr and Tony J. Robinson wrap up the episode by emphasizing strategic planning and informed decision-making in real estate investing. They encourage listeners to assess their financial capabilities, define their investment goals, and remain patient for long-term gains while adapting to market dynamics and operational challenges.

Final Quote:
Ashley Kehr [32:22]:
“Take a look at that too, as to why have you had that much turnover in one year… There's always a better utilization strategy.”

Additional Resources

• Co-Living Guide: Available on BiggerPockets Bookstore.
• YouTube Channel: Subscribe to the Real Estate Rookie YouTube channel for more content.
• Podcast Subscriptions: Available on all major podcast platforms.

Note: This summary excludes advertisement segments identified between timestamps [13:27] and [26:26], focusing solely on the content-driven discussions between Ashley and Tony.