Yes, You Should Start Lowballing Offers (Buyers in Control!) (Rookie Reply)

Summary

Real Estate Rookie Podcast Episode Summary

Episode: Yes, You Should Start Lowballing Offers (Buyers in Control!) (Rookie Reply)
Hosts: Ashley Kehr & Tony J. Robinson (BiggerPockets)
Date: November 14, 2025

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Episode Overview

This episode of the Real Estate Rookie podcast centers on answering common rookie investor questions, with an emphasis on partnerships in multifamily deals, lowballing offers (especially in a shifting market), and strategies for scaling your real estate portfolio. Hosts Ashley Kerr and Tony J. Robinson use listener questions to dive deep into real-world situations many new investors face, offering practical advice, personal stories, and actionable takeaways for listeners who are early in their real estate journey.

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Key Topics & Discussion Points

1. Structuring Partnerships for House Hacking & Multifamily Purchases

[00:23 – 09:19]

• Listener Question (Jackie): How to partner with a friend to buy a small multifamily, with one partner living in a unit and the others as short-term rentals. Questions around loan eligibility, structuring, material participation, and equity split.

• Ashley’s Experience:

  • Ashley shares how she and her sister partnered: sister (primary resident) secured an FHA loan; Ashley provided the down payment as a “gift” (FHA requires gifts from family members only).
  • Quote [01:48]:
    “...the benefit to her was she didn't have a down payment. The benefit to me was I was getting into a house for three and a half percent down... and I was getting 50% equity.” – Ashley

• Mortgage & Down Payment Complications:

  • FHA Specifics: FHA loans require down payment gifts to come from family, not friends.
  • Seasoned Funds: If money is in the borrower’s account long enough, lenders may care less where it came from (always confirm with your lender).
  • LLC purchases are generally not compatible with primary residence mortgages; commercial/DSCR loans allow LLC purchases but with worse terms and sometimes occupancy restrictions.

• Advice for Rookies:

  • Consult multiple lenders who understand investment properties [04:29].
  • Contractual Agreements: Have legal documentation between partners that outlines roles, equity, and future plans (e.g., what happens when the resident moves out).

• Potential Pitfalls:

  • Future issues (damage, move-outs, repairs) must be anticipated in the operating agreement.
  • Seek out investor-friendly lenders through tools like the BiggerPockets Lender Finder.

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2. Lowball Offers: When, Why & How to Submit Them

[10:57 – 19:24]

• Listener Question (Henry): As an agent, how to approach clients wanting to make substantial lowball offers (example: $230k offer on a $300k property on the market for over a year in Texas)?

• Ashley’s Approach:

  • “I 100% lowball, low ball, low ball offer. If I had a property sitting on the market for a year... I would take a significant reduction to get rid of it.” [11:40]
  • Recommends using Propstream to assess the owner’s equity and potential openness to price reductions or seller financing.
  • No reason to fear submitting low offers—worst that can happen is rejection.

• Agent Tips:

  • Investors want agents willing to present lowball offers.
  • Consider starting with a verbal offer to “test the waters” and avoid unnecessary paperwork [15:48].

• Tony’s Contextual Analysis:

  • In a seller’s market, lowballing rarely works; in current buyer’s markets (higher interest rates, fewer buyers), buyers have more leverage, making aggressive offers more viable.
  • Quote [16:03]:
    “Now you can say, hey, there actually are some issues with this house and I don’t think your price is a reasonable or fair expectation.” – Tony

• Making Offers Stand Out:

  • Justify your numbers: share repair estimates, comps, and explain your offer.
  • Sweeten the deal: offer fast closings, waive repairs, reduce contingencies if you can.

• Humorous Moment:

  • Ashley jokes about telling her kids she had to “give one up” for a house deal as a play on real estate negotiations and the story of Rumpelstiltskin.
    [17:13]:
    “I’m going to read them Rumpelstiltskin and I’m going to say, but I had to give one of you up... You’re going to go live with Rumpelstiltskin.”

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3. Scaling a Rental Portfolio (and When NOT To)

[24:00 – 28:20]

• Listener Question (Grant):

  • Already has five properties but maxed out on cash for down payments.
  • Wants to reach 30 rentals, asks about scaling strategies, private lending, and long-term loan options without selling existing rentals.

• Tony’s Challenge to “Big Goals”:

  • Asks Grant to define WHY 30 rentals is the goal—sometimes fewer, better cash-flowing properties are preferable to more mediocre ones.
  • Quote [25:14]:
    “Scaling for the sake of scaling isn’t always the right option. Sometimes 10 rental properties... could be better than 30 mediocre properties.”

• BRRR & Private Lending for Long-Term Rentals:

  • Use private money for new construction or BRRR deals; after rehab, refinance with a traditional lender (cash-out/long-term loan) to pay back the private lender.
  • This process allows for repeatable use of limited capital.

• Ashley’s Financial Perspective:

  • Assess whether it’s better to use extra cash flow to pay off a property and boost cash flow, or invest in another deal (consider interest rates and loan terms).

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Notable Quotes & Memorable Moments

• On Partnership and Documentation:

  • “You need to have something very concrete in writing, besides just giving your friend money and saying, let’s wait a year...”
    — Ashley, [05:46]

• On Shifting to a Buyer’s Market:

  • “Buyers have more leverage in negotiations today than the sellers do, because the sellers just simply don’t have as many people submitting offers.”
    — Tony, [16:03]

• On Scaling for the Right Reasons:

  • “Scaling for the sake of scaling isn’t always the right option.”
    — Tony, [25:14]

• Comic Relief:

  • “I’m going to read [my kids] Rumpelstiltskin and I’m gonna say, but I had to give one of you up. And this is what’s going to happen—you’re going to go live with Rumpelstiltskin.”
    — Ashley, [17:13]

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Key Takeaways for New Investors

• Do your homework on loan and entity structuring. Partnerships are powerful but complex, especially with varying occupancy and loan requirements.
• Don’t be afraid to make lowball offers—especially in today’s market. Worst case is a “no,” and you might get terms you like if you justify your numbers and stay professional.
• Don’t scale for bragging rights. Focus on quality cash flow and your personal financial freedom goals, even if that means fewer properties.
• Leverage private money, especially for value-add or new construction, and use refinance strategies to recycle capital and repay lenders.

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Useful Timestamps

• 00:23 – 09:19 — Multifamily partnership structure & pitfalls
• 10:57 – 19:24 — Lowball offer strategy, buyer’s market insights
• 24:00 – 28:20 — Scaling your portfolio, private lending, and cash flow focus

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For more answers to your rookie real estate questions, subscribe to the Real Estate Rookie podcast and follow Ashley Kehr and Tony J. Robinson for future episodes!

Transcript

[A]

What if your very first offer gets rejected not because of price, but because you insulted the seller?

[B]

Today we're breaking down three questions every rookie investor needs to hear. From partnerships to lowball offers to avoiding classic beginner mistakes.

[A]

This is the Real Estate Rookie Podcast. I'm Ashley Kerr.

[B]

And I'm Tony J. Robinson. And with that, let's get into today's first question question. Okay, so our first question today comes from Jackie in the bigger pockets forms. Jackie says, I'm new to real estate investing. I currently have one long term rental and I've been wanting to get into short term rentals. I have a friend who is looking to move from her rental home to her first home to purchase and I wondered if we could buy a small multi family home with her living in one unit and then short term rent the other units. We have just started talking about this and she's very interested in doing it so far. Also, we both have W2, so we could split the workload and both potentially benefit from the tax advantages and income. We would have a lot to talk about and a lot to learn and research to do before embarking on this, but I'm looking forward to the process. My question is if we buy this together, how should it be structured? I'm presuming the partnership should be in some form of llc. Since she would be living in one unit, could we get a mortgage for a primary residence with the structure? Could we both qualify as materially participating as long as we both put in the hours?

[A]

I.

[B]

So a lot of, lot of questions here, right? So there's questions on how should it be structured? What are the limitations if, if the friend is living in this as a primary residence and then material participation. So I guess let's talk about the, the structure first and as actually maybe you can start, right, because you and your sister did something similar where you know, it was her primary residence but you guys both bought the deal together. How did you structure that with, you know, hey, primary residence plus joint real estate venture.

[A]

Yeah. And there actually is a very big difference between buying with a friend and buying with a family member. So especially if it's going to be the primary residence. And the way this worked for me and my sister is, and I think it's along the lines of how Jackie wants us to work with her friend is that we bought the property together. It would be my sister's primary residence and then rent out the other unit. My sister was going to live there, so she went and got an FHA mortgage on the property. It was Only her going to be on the mortgage because she was the only person that was going to be living there. Me and her both went onto the deed. My contribution was the down payment, and my sister would be living there, paying the additional amount in the mortgage. The benefit to her was she didn't have a down payment. The benefit to me was I was getting into a house for three and a half percent down and I didn't have to come up with 20% down to actually buy this house, and I was getting 50% equity. The difference here is if your friend is using an FHA loan is that they have to show where the funds came from for the down payment. And I was able to gift my sister the down payment money. So I had to write a letter saying that at no time my sister has to pay me back that $14,000, which is true, she doesn't have to. And so I was able to gift her that money and then she was able to go ahead and get the loan with gifting funds. It has to be a close family member. I can't remember specifically, but like a sibling, a parent, like maybe an aunt, uncle or grandparent. I can't remember the rules exactly, but you couldn't get the money gifted to you for. From a friend. So that's where I think the complication would come into play as to when she went to get this loan for her primary residence. They would look at where are all the funds coming from? And so would your friend be okay with providing all of the capital for this deal and then still giving you, you know, putting your name on the deed of the property too, and giving you equity in it? So I think that's like one hurdle you would have to overcome is that it's not like you Both can bring 50, 50 of the capital that you need to purchase the property, because as their primary residence, they're going to want to see where that money is coming from to purchase the property. That said, I guess I just want to clarify that it was. Because I don't. I don't know, is it conventional loan too, that you would have to.

[B]

You make a great point, Ash, about it being fha. And I've never done FHA before, but I believe. And obviously, guys, go talk to a lender. Go talk to multiple lenders. Actually, I think that's the advice here. First is, Jackie, you and your friend should go shop around and talk to multiple lenders. Explain what it is you're trying to accomplish. You guys want to buy a small multifamily, Let her Live in one unit. You guys both kind of contribute financially towards the purchase, but it's her primary residence. And let them guide you on what the best loan product is. Because maybe it's not an FHA loan for the reasons that Ashley mentioned. But I believe, and again connect with your lender. I believe if the money has been in your account long enough, like if it's seasoned long enough, then they're not as concerned about where the money came from. Now I could be wrong, definitely go double check this. But I feel like when we were buying our primary residence, I was like, I feel like I remember hearing that at one point, like if, you know, so you guys, you know, so you give her your 50% today, right? And you guys say, hey, our budget is, you know, $50,000. So you give her 25k, is sits in her account and say it's been a year. I think if the money's been in there that long, I'm not sure if they're going back to, to check. So I think there's like a seasoning period, like hey, if it's been in there long enough, they were not as concerned. But go talk to lenders. So I think that would be the first piece of advice.

[A]

Go shop it around, wire me 25k and in a year I would buy a thousand.

[B]

We'll be able to, we'll be able to get an answer to that question.

[A]

I'm already seeing red flags of this because you need to have something very concrete in writing besides just giving your, your friend money and say let's wait a year to like, yeah, that side of things too.

[B]

Totally, totally agree with that as well. Right. And I think that gets into like the structure, how you guys put this together. What is the agreement state? So usually if you're going to buy a primary residence, it's not going to be able to be purchased in an LLC or like an LLC is a business entity for business use and your, your primary residence is exactly that, it's personal use. So I, again, lender can check me here if I'm wrong, but I doubt you would be able to buy a primary residence in, under any circumstances and have it deeded to an llc.

[A]

Just on that note, real quick is what you could do is just buy it in the LLC and still live in the unit. You would just have to get LLC financing, which is usually on the commercial side of financing and you're not getting the lower interest rate, usually not the 30 year fixed, like unless you are doing a DCR loan, but a DSCR loan usually requires it to be an investment property only. And you can actually, you cannot live in the property where there is some kind of commercial lending where you know, or conventional loans where you could buy it in your LLC and, and live in the property technically if you wanted to, but you're not going to get as good financing at all.

[B]

So we're seeing a lot of if this, then that's for, for this. Right? But I think, because there, there is a lot of nuance to this question, but I, I, I think again, going back to the, the structure of the partnership, I would still make sure that even if it's not necessarily owned in an llc, that you guys still have some sort of contractual agreement between the two of you about what this partnership looks like. And 50 50, obviously that's like the easiest thing to do. But think about all of the other responsibilities to go into this. Like she's going to be living there, Is she also going to be the property manager? If so, does 50, 50 still make sense? Right, right. You know, is, is, is one person bringing all of the capital? Right? Are you bringing all the capital and she's just getting the debt in her name? Maybe there's a different structure that makes sense. So just look at what everyone's bringing to the table and think about everything from the acquisition to the closing process to the management. Think about all those different pieces and divvy up who's doing what and then make sure that your partnership aligns with those responsibilities.

[A]

And I think too one thing that me and my sister didn't talk about is what happens when my sister moves out of the property. So when you rent the property out, is it then, you know the cash flow is split 50, 50 is you know, the one, the, your friend that lived in the unit, is she getting all of that cash flow because she took care of the property and lived there and it's her primary. So like I think thinking down the road too as to what happens when she moves out of the property. What if like your friend has trashed the place and it needs this big costly turnover before you can even rent it out? Is that the responsibility of you to bring capital to make those repairs and things like that? So I think thinking down the road too as to how to structure it, but you can go to bearpockets.com lenderfinder to get yourself connected with a lender, especially an investor friendly lender, even though supposed to be a primary residence, since it would be an investment for you, you can find a lender that would be able to tell you different loan options that are available in that market for you. Okay, we're going to take a quick break, but coming up, what happens when you submit a low ball offer, which I've done plenty of times. Let's just say not everyone takes it. Well, we'll break it down right after this quick word from our show sponsor.

[C]

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[A]

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[B]

And Ash, I think context matters here as well. If we were having this discussion when interest rates were 2.5%, then, yeah, lowball offers aren't going to get you anywhere in most markets. Right. Because there's just too much buyer interest. They have their pick of the litter for what offer they want to accept today. Very few buyers. Right. And I think the competition isn't nearly close to what it was, you know, two or three years ago when rates were a lot lower. So I think we have shifted toward a buyer's market where buyers have more leverage in negotiations today than the sellers do, because the sellers just simply don't have as many people submitting offers. And what that means is that you don't have to come 10k over asking with no contingencies and giving up your firstborn child to get a deal accepted. Now you can say like, hey, there actually are some issues with this house and I don't think your price is a reasonable or fair expectation or, or representation of the value of this property. And here's my offer this significantly below what you're asking for. So I think the context of where we are at in the real estate cycle is an important thing to consider as well.

[A]

You know, that actually gave me a really great prank to do on my kids. This next house that I'm trying to buy, if I get it, I get it under contract. I mean, they're going to be excited about it. I'm going to tell them, I'm going to read them Rumpelstone Stillskin and I'm gonna say, but I had to give one of you up. And this is what's going to happen. You're gonna go live with Rumpelstiltskin.

[B]

And that's. And that's like the PTSU that makes your kids hate real estate investing. Like my mom, My mom sold me away for a good deal.

[A]

If you guys haven't seen it. A real recently came out of me at bpcon. I, I guess by the time this air is not so recent, but Turbo Tenant interviewed me at bpcon and they are asking me, you know, different questions. And then one was, who is your favorite child? And they wanted me to tee it up as Turbo Tenant. And then it pans to my kids that were there just shaking their head at me that Turbo Tenant was my favorite and not that. So they're used to it by now.

[B]

I think the last thing I'd add to you is just there, there are ways to maybe make your offer more competitive aside from just pricing. I think first, like, don't, you know, feel free to justify your offer. If, if they're asking significantly more than where that deal makes sense, then walk them through your math. Say you're, you're asking for 500k, but this kitchen and bathroom hasn't been renovated since the 80s. There's mold, the roof needs to be repaired, and the house next door that was fully renovated, sold for 480. So, so there's a disconnect. Here, Mr. And Mrs. Seller, here's the scope of work that I need to do to be able to bring this house up to 20, 25 standards. Here's what it's going to cost me to do that. And yeah, I'm an investor, so I'd like to make some level of profit. So here's the justification behind my figures. And then there are ways you can kind of sweeten the offer. Maybe you, you close faster, tell them they don't have to worry, but you're not going to ask for any repairs during the closing process. There's no contingencies around financing, whatever it may be. But those are the ways that you can justify your low ball offer to make you feel even more confident as you go to submit it. All right, hey guys, we're going to take a quick break before our last question, but while we're gone, be sure to subscribe to the Real Estate Rookie YouTube channel and you guys can find us at realestate rookie. And we'll be back with more right after this.

[C]

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[A]

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[B]

All right, let's jump back into our final question. This one comes from Grant. Grant says, I've heard people saying that they've got their first seven properties in like 11 months, some even crazier. I currently have five properties, but I've used all of my money to purchase these properties at 25% down and now I'm renting them out. I would like to have 30 rentals. I have the deals. I just don't have the capital to move on all of them at once. I know there's private money lending that can fund some of these new construction deals, but I don't want to sell them for a profit either. I want to keep them as rentals. Are there lenders that would let me pay them like a traditional mortgage over that long period of time? What do you guys think I can do to get to three properties per month? So first, Grant, congratulations to you said you've got five properties. You're better than 99% of the people living and living in the United States right now. But I think let's break down some of what you're talking about first. You've got this goal of 30 rentals. And I think my first question to you is why? What is it about 30 that makes you believe that that's the right number for you? Is it because 30 gets you to a certain amount of cash flow? Is it because 30 gets you to a certain amount of equity? Is it just, you know, 30 sound like a nice neat round number? Are you like Ashley, where you want to get 30 before 30?

[A]

Like what I was waiting for you to say.

[B]

So what is it? Right? Like, what's driving that? Because, and Ash and I, we've talked about this a lot as we've grown both of our portfolios. But scaling for the sake of scaling isn't always the right option. And sometimes 10 rental properties, they're just like punch above their weight class, could be better than 30 mediocre properties. So I think the first question is why is it that 30 is, is the right number for you and do you actually need to get to 30 or is there some other number lower than 30 where if you could just produce more cash flow, you could still achieve the same goal? The second thing that I'd say is I think you've hit the nail on the head when it comes to private money, but you don't necessarily need the private money for long term debt. It sounds like you're looking to do maybe new construction or some combination of new construction and burrs. And that is actually a great scenario for using private money. So the way that it would work is say you've got a deal, you're trying to go take down and between your land acquisition and your construction, it's going to cost you 300K. But those will appraise for, you know, 400. When they're done, you could go out, raise the 300K fund. All of your land acquisition and your construction. Say it takes you 12 months to do that. At the end of the 12 months, you now have a property that's worth 400k, that costs you 300 to build. You go out, you refinance that you get, call it, I don't know, 80% of the appraised value. 80% of $400,000 is $3,320,000. Right. So you have 320, you only owe 300, you can pay them off with their interest. And now you own this property free and clear, or not free and clear, but without any cash out of pocket. Right. So that is a very repeatable process to build your portfolio using other people's capital and then still paying them back every, you know, six to 12 to 18 months. So they're getting their principal and their interest back. So if you have the ability to raise private capital and you've got the skill set to do new construction or burrs, that is probably the approach that I would take because it sounds like you've got the deals, you've got the capital, you just got to marry those two things together and structure it in a way that, that allows you to pay them back quickly.

[A]

Yeah, I think the thing that would stand out to me the most when you first read this question was I was thinking about paying off the properties or paying down the properties. I'd be interested to see how the numbers would compare as to taking that cash flow and taking your savings or whatever you build up over time to invest into another deal is if you were to pay off one of those properties, how would that change your cash flow compared to investing into a new deal like three years ago, like when you were getting low interest rates? I definitely wanted to recommended this. So I guess it depends too as to what the interest rate is on your properties that you know if you're 2, 3% then it doesn't make sense to pay off the property. But that'd be my only recommendation as to looking in that in addition to what Tony mentioned to well thank you guys so much for joining us today for this rookie reply. I'm Ashley, he's Tony and we'll see you guys on the next episode.

[C]

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[D]

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