Summary

Real Estate Rookie Podcast Summary

Episode: This Real Estate “Rule” Is Costing You Wealth! (Rookie Reply)
Hosts: Ashley Kehr and Tony J. Robinson
Release Date: July 11, 2025
Description: The Real Estate Rookie podcast by BiggerPockets serves as a personal trainer for aspiring real estate investors with one to three deals under their belt. Hosts Ashley Kehr and Tony J. Robinson tackle beginner questions, offering real-world solutions and fostering a supportive community.

Introduction

In this episode, titled "This Real Estate 'Rule' Is Costing You Wealth! (Rookie Reply)," Ashley and Tony delve into three listener-submitted questions that highlight common challenges faced by new real estate investors. The discussions provide actionable insights on house hacking, refinancing amid high-interest rates, and managing tenant lease terminations.

1. House Hacking Dilemma: Ben's Story

Timestamp: [00:00 – 08:31]

Listener Profile:
Ben, a 26-year-old travel nurse, and his 29-year-old wife are expecting their first child. With a solid cash reserve from two years of travel nursing, they aim to purchase a two to four-unit property in Akron, Ohio. Their strategy involves living in one unit (house hacking) while renting out the others, intending to refinance and scale after a year.

Challenges:

High listing prices in their target market.
Rental incomes not meeting the traditional 1% rule.
Considering a duplex listed at $285,000 with one side renting for $1,100. Living in one unit would cost them $835 per month plus utilities, raising concerns about affordability and return on investment.

Hosts' Insights:

Ashley Kehr: Emphasizes that the 1% rule shouldn't be the sole metric for evaluating deals. In markets like Buffalo, high property taxes can negate the benefits of meeting the 1% rule. She advises investors to consider other financial metrics to assess a property's true profitability.

"The 1% rule doesn't always mean that it's a great deal. You need to look at other metrics of the property instead of just the 1% rule." [01:49]
Tony J. Robinson: Reframes the success of house hacking beyond the 1% rule, highlighting the reduction in living expenses and the potential for equity building over time. He points out that even modest savings on rent can significantly impact an investor's cash flow.

"You're getting reduced housing expenses. You have the ability to build equity with this property over the next, however long you tend to hold it." [02:48]

Key Takeaways:

Diversify Evaluation Metrics: Don't rely solely on the 1% rule; consider property taxes, maintenance costs, and long-term appreciation.
Value in Reduced Living Costs: House hacking can still be profitable by lowering personal living expenses and building equity.
Refinancing Considerations: Assess the feasibility of refinancing, especially in fluctuating interest rate environments.

2. Refinancing and Budget Overruns: Amos's Challenge

Timestamp: [10:42 – 18:06]

Listener Profile:
Amos and his partner have successfully utilized the BRRRR (Buy, Rehab, Rent, Refinance, Repeat) method, accumulating five properties in five years. Their latest project, however, faced budget overruns during rehabilitation and an elevated interest rate of 8.75%. Financing under these conditions would yield a modest cash flow of approximately $200 per month, prompting them to consider delaying refinancing to a later date.

Challenges:

Overbudget rehab costs.
High-interest rates affecting cash flow.
Deciding whether to refinance now or postpone for better financial conditions.

Hosts' Insights:

Tony J. Robinson: Encourages evaluating the return on equity tied up in the property. Suggests refinancing partially to free up some capital while retaining equity for future investments.

"Is that 1500 bucks per month, Is that a good enough return for you and your partner to say, yeah, we can wait another year?" [12:19]
Ashley Kehr: Recommends exploring various financing options, such as selling the property to free up capital or leveraging commercial lines of credit. She also advises shopping around with different lenders to secure better terms and considering adjustable-rate mortgages as a temporary solution.

"One option is you look at selling the property. What would you make if you sold the property? Would that be a large amount of money that it's actually worth it to unload and then you're just adding to your capital pile." [13:29]

Key Takeaways:

Assess Equity and ROI: Determine whether the current investment yields sufficient returns to justify immediate refinancing.
Explore Financing Alternatives: Look into partial refinancing, commercial lines of credit, and adjustable-rate mortgages to manage high-interest rates.
Shop Around for Lenders: Different lenders may offer varied terms; leveraging relationships with banks can lead to better rates.

3. Managing Tenant Lease Termination: Garrett's Situation

Timestamp: [23:01 – 34:17]

Listener Profile:
Garrett has a tenant in North Carolina who wishes to terminate her one-year lease five months early. She offers to pay three of the remaining five months' rent and retain her security deposit. The tenant cites safety concerns due to property damage and her unemployment as reasons for the early departure.

Challenges:

Deciding whether to allow the tenant to break the lease or enforce the full term.
Assessing the reliability and honesty of the tenant's reasons.
Considering the financial implications of a vacant unit during the holiday and winter seasons.

Hosts' Insights:

Ashley Kehr: Advocates for flexibility, emphasizing that maintaining a positive landlord-tenant relationship can prevent future headaches. She suggests conducting a move-out inspection to assess any damages and retaining the security deposit as necessary. Ashley highlights the importance of customer service in property management, ensuring that tenants feel satisfied to avoid potential eviction costs and legal complications.

"Being a landlord should be customer service to a degree... you want somebody to love where they live... if they don't want to live there, it is just going to be a headache for you." [25:04]
"I would let the person out of the lease because they're going to be a headache going forward." [31:38]
Tony J. Robinson: Supports Ashley's approach, noting that peace of mind is invaluable. He underscores the importance of separating emotions from business decisions, ensuring that choices are made based on objective analysis rather than personal feelings.

"But I appreciate you saying that, that your philosophy around this has changed as you've matured as an investor." [29:53]

Key Takeaways:

Flexibility Over Rigidity: Allowing tenants to terminate leases amicably can save time, reduce stress, and prevent potential financial losses from prolonged vacancies.
Protect Property Value: Conduct thorough inspections to assess and address any damages, utilizing security deposits appropriately.
Professionalism in Relationships: Maintaining positive relationships with tenants can lead to smoother transactions and better property management experiences.

Conclusion

In this episode, Ashley Kehr and Tony J. Robinson provide nuanced perspectives on common real estate investment challenges. They emphasize the importance of looking beyond traditional metrics like the 1% rule, exploring flexible financing options in fluctuating markets, and fostering positive landlord-tenant relationships to ensure long-term success and wealth-building in real estate.

Listeners are encouraged to adopt a holistic approach to property investment, balancing financial metrics with personal and professional relationships to navigate the complexities of the real estate market effectively.

Notable Quotes:

Ashley Kehr:

"The 1% rule doesn't always mean that it's a great deal. You need to look at other metrics of the property instead of just the 1% rule." [01:49]
Tony J. Robinson:

"You're getting reduced housing expenses. You have the ability to build equity with this property over the next, however long you tend to hold it." [02:48]
Ashley Kehr:

"Being a landlord should be customer service to a degree... you want somebody to love where they live... if they don't want to live there, it is just going to be a headache for you." [25:04]
Tony J. Robinson:

"But I appreciate you saying that, that your philosophy around this has changed as you've matured as an investor." [29:53]

Note: Advertisements, sponsor messages, and non-content sections have been excluded from this summary to focus solely on the valuable content provided by Ashley and Tony.

Summary

Real Estate Rookie Podcast Summary

Introduction

1. House Hacking Dilemma: Ben's Story

Timestamp: [00:00 – 08:31]

Challenges:

High listing prices in their target market.
Rental incomes not meeting the traditional 1% rule.
Considering a duplex listed at $285,000 with one side renting for $1,100. Living in one unit would cost them $835 per month plus utilities, raising concerns about affordability and return on investment.

Hosts' Insights:

Ashley Kehr: Emphasizes that the 1% rule shouldn't be the sole metric for evaluating deals. In markets like Buffalo, high property taxes can negate the benefits of meeting the 1% rule. She advises investors to consider other financial metrics to assess a property's true profitability.

"The 1% rule doesn't always mean that it's a great deal. You need to look at other metrics of the property instead of just the 1% rule." [01:49]
Tony J. Robinson: Reframes the success of house hacking beyond the 1% rule, highlighting the reduction in living expenses and the potential for equity building over time. He points out that even modest savings on rent can significantly impact an investor's cash flow.

"You're getting reduced housing expenses. You have the ability to build equity with this property over the next, however long you tend to hold it." [02:48]

Key Takeaways:

Diversify Evaluation Metrics: Don't rely solely on the 1% rule; consider property taxes, maintenance costs, and long-term appreciation.
Value in Reduced Living Costs: House hacking can still be profitable by lowering personal living expenses and building equity.
Refinancing Considerations: Assess the feasibility of refinancing, especially in fluctuating interest rate environments.

2. Refinancing and Budget Overruns: Amos's Challenge

Timestamp: [10:42 – 18:06]

Challenges:

Overbudget rehab costs.
High-interest rates affecting cash flow.
Deciding whether to refinance now or postpone for better financial conditions.

Hosts' Insights:

Tony J. Robinson: Encourages evaluating the return on equity tied up in the property. Suggests refinancing partially to free up some capital while retaining equity for future investments.

"Is that 1500 bucks per month, Is that a good enough return for you and your partner to say, yeah, we can wait another year?" [12:19]
Ashley Kehr: Recommends exploring various financing options, such as selling the property to free up capital or leveraging commercial lines of credit. She also advises shopping around with different lenders to secure better terms and considering adjustable-rate mortgages as a temporary solution.

"One option is you look at selling the property. What would you make if you sold the property? Would that be a large amount of money that it's actually worth it to unload and then you're just adding to your capital pile." [13:29]

Key Takeaways:

Assess Equity and ROI: Determine whether the current investment yields sufficient returns to justify immediate refinancing.
Explore Financing Alternatives: Look into partial refinancing, commercial lines of credit, and adjustable-rate mortgages to manage high-interest rates.
Shop Around for Lenders: Different lenders may offer varied terms; leveraging relationships with banks can lead to better rates.

3. Managing Tenant Lease Termination: Garrett's Situation

Timestamp: [23:01 – 34:17]

Challenges:

Deciding whether to allow the tenant to break the lease or enforce the full term.
Assessing the reliability and honesty of the tenant's reasons.
Considering the financial implications of a vacant unit during the holiday and winter seasons.

Hosts' Insights:

Ashley Kehr: Advocates for flexibility, emphasizing that maintaining a positive landlord-tenant relationship can prevent future headaches. She suggests conducting a move-out inspection to assess any damages and retaining the security deposit as necessary. Ashley highlights the importance of customer service in property management, ensuring that tenants feel satisfied to avoid potential eviction costs and legal complications.

"Being a landlord should be customer service to a degree... you want somebody to love where they live... if they don't want to live there, it is just going to be a headache for you." [25:04]
"I would let the person out of the lease because they're going to be a headache going forward." [31:38]
Tony J. Robinson: Supports Ashley's approach, noting that peace of mind is invaluable. He underscores the importance of separating emotions from business decisions, ensuring that choices are made based on objective analysis rather than personal feelings.

"But I appreciate you saying that, that your philosophy around this has changed as you've matured as an investor." [29:53]

Key Takeaways:

Flexibility Over Rigidity: Allowing tenants to terminate leases amicably can save time, reduce stress, and prevent potential financial losses from prolonged vacancies.
Protect Property Value: Conduct thorough inspections to assess and address any damages, utilizing security deposits appropriately.
Professionalism in Relationships: Maintaining positive relationships with tenants can lead to smoother transactions and better property management experiences.

Conclusion

Notable Quotes:

Ashley Kehr:

"The 1% rule doesn't always mean that it's a great deal. You need to look at other metrics of the property instead of just the 1% rule." [01:49]
Tony J. Robinson:

"You're getting reduced housing expenses. You have the ability to build equity with this property over the next, however long you tend to hold it." [02:48]
Ashley Kehr:

"Being a landlord should be customer service to a degree... you want somebody to love where they live... if they don't want to live there, it is just going to be a headache for you." [25:04]
Tony J. Robinson:

"But I appreciate you saying that, that your philosophy around this has changed as you've matured as an investor." [29:53]

Note: Advertisements, sponsor messages, and non-content sections have been excluded from this summary to focus solely on the valuable content provided by Ashley and Tony.

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This Real Estate “Rule” Is Costing You Wealth! (Rookie Reply)

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Summary

Real Estate Rookie Podcast Summary

Introduction

1. House Hacking Dilemma: Ben's Story

2. Refinancing and Budget Overruns: Amos's Challenge

3. Managing Tenant Lease Termination: Garrett's Situation

Conclusion

Summary

Real Estate Rookie Podcast Summary

Introduction

1. House Hacking Dilemma: Ben's Story

2. Refinancing and Budget Overruns: Amos's Challenge

3. Managing Tenant Lease Termination: Garrett's Situation

Conclusion