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BiggerPockets Real Estate Podcast

3 Types of Rentals That STILL Make You Rich

34 min episode · 2 min read
·
Henry Washington,Kathy Fecky,James Danyard

Episode

34 min

Read time

2 min

Topics

Personal Finance, Investing

AI-Generated Summary

Key Takeaways

  • Distressed property strategy: Purchase severely distressed properties at $55,000, invest $90,000 in renovations for $265,000 ARV, creating multiple exit options including short-term rental at $3,000 monthly or long-term rental at $1,800 monthly with significant equity cushion for beginner mistakes.
  • New construction cash flow: Buy brand new homes in growth suburbs like North Dallas at $214,000 (half the median price), negotiate builder rate buydowns below 6%, and achieve $1,825 monthly rent with minimal maintenance expenses and strong appreciation potential in path-of-progress locations.
  • Subdivision arbitrage: Purchase $600,000 properties on oversized lots in expensive markets, renovate front house for $899,000 sale, subdivide and build 2,200 square foot rear unit costing $720,000 to sell at $1,200,000, creating $300,000-$400,000 equity for 1031 exchange into fourplex.
  • Hard money to DSCR refinance: Finance distressed acquisitions with hard money loans covering 95% of purchase plus full renovation costs, complete five-month rehab, then refinance into 30-year fixed DSCR loan to extract equity while maintaining cash flow and building long-term wealth.

What It Covers

Three real estate investors share recent property purchases ranging from $55,000 to $600,000, demonstrating profitable strategies across different markets including distressed rehabs, new construction turnkey rentals, and creative subdivision plays in expensive cities.

Key Questions Answered

  • Distressed property strategy: Purchase severely distressed properties at $55,000, invest $90,000 in renovations for $265,000 ARV, creating multiple exit options including short-term rental at $3,000 monthly or long-term rental at $1,800 monthly with significant equity cushion for beginner mistakes.
  • New construction cash flow: Buy brand new homes in growth suburbs like North Dallas at $214,000 (half the median price), negotiate builder rate buydowns below 6%, and achieve $1,825 monthly rent with minimal maintenance expenses and strong appreciation potential in path-of-progress locations.
  • Subdivision arbitrage: Purchase $600,000 properties on oversized lots in expensive markets, renovate front house for $899,000 sale, subdivide and build 2,200 square foot rear unit costing $720,000 to sell at $1,200,000, creating $300,000-$400,000 equity for 1031 exchange into fourplex.
  • Hard money to DSCR refinance: Finance distressed acquisitions with hard money loans covering 95% of purchase plus full renovation costs, complete five-month rehab, then refinance into 30-year fixed DSCR loan to extract equity while maintaining cash flow and building long-term wealth.

Notable Moment

One investor discovered a lakefront property so infested with brown recluse spiders and rotted subfloors that contractors had to lay down two-by-fours just to walk through safely, yet the massive renovation spread created enough profit margin to absorb beginner investor cost overruns.

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Episode Transcript

Hey, everyone. This is it. The last Bigger Pockets podcast episode of 2025. We released 153 episodes this year, and I hope you found them inspiring, educational, and entertaining. I know I had a great time making each and every one of them. We will have a new episode Friday to kick off 2026, and then the following week, we're gonna do my state of real estate investing, which you're gonna wanna listen to. And we have a very fun, very exciting announcement coming next week as well. To close out the year, we are republishing one of your favorite episodes of 2025. This is a conversation I had with Henry Washington, Kathy Fecky, and James Danyard back in April about properties that we had each recently purchased. It was a lot of fun, and I think it showed that you can make real estate investing work for you in almost any market at almost any price point. So enjoy it. Have a happy New Year, and thank you all for listening. Here's my conversation with Henry, Kathy, and James. Hey, everyone. I'm Dave Meyer, head of real estate investing at Picker Pockets, where we teach you how to achieve financial freedom through real estate. And today on the podcast, I am joined by three expert investors who are my cohost on the On The Market podcast, James Danyard, Kathy Fecky, and Henry Washington. James, Kathy, and Henry are each gonna tell us about an investment property that they've bought within the last few months with purchase prices ranging from $55, so sort of at the low end of the spectrum, all the way up to $600 at the high end of the spectrum. Well, thank you guys for being here. Kathy, great to see you. Great to see you. Can't wait to hear what these guys are up to now. Are you nervous? I mean, not that this is a competition, but we always make it well. It's gonna be a competition. It always is even if it's unsaid. Okay. Well, you usually hang pretty well in these competitions, so we'll see. James, how are you doing? I'm good. And it doesn't need to be said. It's always a competition. Henry, good to see you, man. Hey. Glad to be here. This is always a competition, and, I wanna win this time. So Alright. Well, I'll give you guys a little bit of a spoiler because, I I've read a little bit about the deals. We know so far that Henry's house that he's bringing to trying to win apparently with a house full of spiders when he closed, but it will be a part time vacation home for his family. Kathy found an incredible upside opportunity in one of The US largest and fastest growing cities, and James is getting super creative with a multipart strategy to create profit other investors may have overlooked. So whether you're a new investor, you've been in real estate for a long …

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