Pod Insights BiggerPockets Real Estate Podcast Agents Won't Bring You Deals? Tell Them This About this episode Your real estate agent is ignoring you and not sending you deals. You told them you’re interested in investing, but they’re leaving your texts on “read.” This happened a lot to Dave and Henry until they started saying the right thing to agents. Now, they have more investing opportunities than they can handle. What’s the secret to landing an agent who will put you first? They’re sharing the tactic today. We’re back, taking questions from the BiggerPockets Forums, helping you invest in real estate wherever you are. Speaking of locations, an investor is worried about this “big city” they’re about to invest in. But Dave and Henry push back, calling this one market a “sleeper” city for investment properties, one that Dave is actively looking to invest in. A house hacker with a high DTI (debt-to-income ratio) sees a property down the street that they want to buy. But with maxed-out credit, how can he make it work? We’ve got multiple options anyone can try. Would you buy a property with 0% down and a 100% loan? This investor is scared of overleveraging himself, but is it worth it for the low investment? Finally, we’re giving you actual steps to lower (or at least stabilize) your renovation budget even with rising material and labor costs. Do NOT start buying toilets in bulk, we’ll tell you why… In This Episode We Cover Signs of an investor-friendly agent, and the easy way to weed out average agents The most underrated real estate investing area in the country that is still affordable How to invest in real estate when your DTI (debt-to-income) is maxed out The real risk behind a VA loan (0% down loan) and how to ensure you’re not biting off more than you can chew Flipping or BRRRRing? How Henry and Dave keep their costs on budget And So Much More! Check out more resources from this show on BiggerPockets.com and https://www.biggerpockets.com/blog/real-estate-1214 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [email protected] . Learn more about your ad choices. Visit megaphone.fm/adchoices
Transcript Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.
0:00 Dave Meyer? How do you talk to a real estate agent? You're supposed to be on the same team and a good agent can be the key to finding profitable investment properties and growing your portfolio. But sometimes it can feel like they're not giving you the time of day. If you've ever experienced this, and a lot of investors have, stay tuned. Today, we're breaking down how to build relationships with agents that will get you access to the properties you need.
0:28 Dave Meyer? Hey, everyone. I'm Dave Meyer, rental property investor, head of real estate investing at BiggerPockets. And today, we've got Henry Washington on the show. Henry, what's going on, man?
0:39 Henry Washington? What's good, man? Glad to be here. I love answering form questions.
0:43 Dave Meyer? We teased that we're going to be talking about agents at the top of the show, but we're also going to share our opinions on a somewhat controversial big city in the Midwest about whether we would invest there, weigh the pros and cons of maxing out your leverage and financing, talking about controlling costs during a period of inflation, and much more. Henry, you ready to do this?
1:04 Henry Washington? Come on, let's do it.
1:05 Dave Meyer? We got good ones today. I'm excited. This first one, the title of this first question is just so funny. It comes from Samuel Shemtav, who says, "Why do agents not want to talk to me?" The question says, "I've been making some phone calls to agents and I'd say only one fifth or one out of five actually stay on the line to talk, while the rest, it seems, things are going well until I mention that I'm an investor. Why? I thought investors and agents work together. Why are they hanging off on me like I'm a salesman?" Samuel, this is a great question, and I love the way you wrote it for some reason. This is so funny. Why do you think this is happening, Henry?
1:48 Henry Washington? Oh, all right. You licensed agents listening to the show. I mean, I know the hate comments are coming.
1:57 Henry Washington? But I don't know, sometimes agents just suck.
2:00 Dave Meyer? Yep.
2:00 Henry Washington? And here's what I mean by that. People get their license a lot of the times because they think that selling real estate is not super challenging. And I think a lot of the times they start to realize that it's like another version of entrepreneurship. Like it's a sales and marketing business. You gotta go drum up your own business. Like it's hard to be a successful agent.
2:23 Dave Meyer? Lot of competition.
2:23 Henry Washington? And there's a lot of competition. And so I think he's probably getting hung up on because maybe some people don't know how to service investors. And then at the same time, there are a lot of people who say they're investors or want to be investors and aren't ready to pull the trigger or are not quite sure what to do. And so agents may spend a lot of time analyzing and sending investors' deals. And then the investors ghost them or don't put in offers. And they may feel like I do a lot of work for not a lot of results. So I think it's a little bit of both. Some agents just aren't good. And that creates a problem because they don't answer their texts, phone calls, emails,
3:05 Henry Washington? and don't know how to work with investors. And some investors aren't good and don't follow up on what they said they were going to do, which is put in offers so that the agent can make some money.
3:15 Dave Meyer? I think what you said first, that a lot of agents suck is true. And I want to call out that I think I've heard that phrase more
3:24 Henry Washington? From agents.
3:24 Dave Meyer? From actual real estate agents. Yes, exactly. Then from other investors or from homeowners. Like I, I see it. Some of my good friends are real estate agents and you see like they get hung up on too. The other agents hang up on each other too. It's just, there's no baseline of professionalism, it seems like for agents, which is annoying, but also an opportunity for good agents to really distinguish themselves. So I would say Samuel, number one, maybe you're calling the wrong agents. Like if you were just looking up regular home buyer agents, they might not want to work with investors for whatever reason. Maybe they just know they're not qualified to answer the questions that you have as an investor.
4:06 Dave Meyer? Maybe they're too busy. Maybe they think you're a tire kicker and they're not interested. So I would focus on finding investor friendly agents. We have tools on BiggerPockets to do that. You can also do that through networking, like meetup groups. You can usually find good agents through those types of things. So that's number one. The second thing is, because I call a lot of agents looking to invest out of state, I think the real important thing is to try and set expectations upfront for what you're trying to do. As an investor, sometimes I'll say, hey, listen, I'm still in market research mode. Like, I'm not going to pull the trigger on a deal in the next three weeks or four weeks. So like, don't send me your hot deals right now. And I think that just setting of expectation builds a little trust that like, I am serious
4:51 Dave Meyer? because I will buy a property, but like, here's where I am with my process. I show them that I do have a process, that I'm thinking about their time so that they're not wasting their time. And that type of expectation setting, I think usually works really well. Now, if they hang up on you right away, you don't have an opportunity to even get that out. But I do just generally think that's how you can approach a conversation with an agent.
5:15 Henry Washington? And just when you're speaking with anyone, it doesn't have to be agents, but any service provider, the best way to get them to do what you want is to speak to them in the what's in it for them. Right? People need to know how this relationship is going to benefit me. That's what they truly want to know, whether they're going to come right out and say it in the initial conversation or not. So obviously, we know agents want to get paid for the effort that they put in, especially if they're a good agent, because a good agent is game changing. Like, a good agent is one of the best people on your team. It's just sometimes hard to weed through the nonsense to find the good ones. So when you speak to them, the what's in it for them is closing transactions. So if you can say, yes, I'm an investor, I have done X amount of deals,
5:55 Henry Washington? or I'm an investor, I plan on doing X amount of deals, like you understanding your goals, where you're trying to go, so that they know the size of the prize. If you plan on buying one property over the next 12 months, like, just be upfront with them. They may not be the person for you, but they may be able to recommend somebody who wants that business, right? But if you plan on doing- Ten deals over the next 12 months, or you've done, you know, 10 deals in the past. Like, those are things that the agent needs to understand so they can go, okay, this guy's serious. This person knows what they want to do, and I know what's in it for me.
6:29 Dave Meyer? Yep, I think that's a perfect way to think about it. I know as the person who's spending money, you often want to be courted for the better world, you know? But like, you have to think about it both ways. You need to look for the mutually beneficial relationship, and absolutely should, but it does take some time. Like, there is a very big variance between good agents and bad agents. And take your time until you find someone. And if you do this, even if they talk to you, and you don't feel like they're really giving you their full attention, don't accept that. Like, just keep going until you find someone who will, because there is someone in every market who knows how to work with investors and is willing to give you the time that you need as an investor. And just like, that's your job as the investor, is to not stop until you find that person.
7:15 Henry Washington? Pro tip, call a title company and ask them who the investor-friendly agents are. They see them all day, every day. They'll probably give you three, four names off the bat.
7:21 Dave Meyer? All right, well, that was question one. Thank you, Samuel. Hopefully, you can get some more agents on the phone after this. All right, so question number two. Oh, this is good for us, Henry. Is Chicago worth investing in? We were both there this summer on the Cash Flow Roadshow. The question here comes from Matty Shanahan, and Matty says, "I'm looking at the property laws, the laws favoring tenants, and the current state of the economy, and I'm second guessing if Chicago is still a smart area to invest. I'd prefer to stay in Illinois because it's my home state, but I'm willing to look elsewhere too if it means I can get to quicker cash flow." Henry, got any thoughts on this?
7:59 Henry Washington? Well, she said she wants to get the quicker cash flow, but everything she mentioned that might be a problem had nothing to do with cash flow, so.
8:06 Dave Meyer? Well, taxes, I guess. If the taxes are high. The property taxes are kind of high in Chicago. But I was actually talking to an agent, an investor-friendly agent in Chicago the other day about deals, and he was telling me that multifamily actually, like, proportionally isn't taxed as high as single family in Chicago because they want to incentivize more multifamily. Development specifically in Chicago and so property taxes are not as big of an issue if you're buying at least two units as it is buying single families.
8:36 Henry Washington? Yep.
8:37 Dave Meyer? But here's what I'll say because I've looked into Chicago. I personally think Chicago is like a sleeper city for real estate investing. It's the third biggest city in the country. It has a remarkably big diversified and dynamic economy. It's you know, you can't fake a city like Chicago. Are there challenges? Yes, there are challenges in every city, especially big cities where parts are expensive or there are areas that you wouldn't want to invest in. But Chicago being massive has neighborhoods for everyone. That's kind of what I like about it and I like about big cities. If you want a cash flow area, you can absolutely find a cash flow area. If you want to find appreciation area, you can absolutely find it. The other thing I love about Chicago in particular is the
9:20 Dave Meyer? housing stock is great. If you like two to four unit buildings, there's a ton of them. That doesn't exist in other places or maybe in other places in Illinois. I'm not as familiar with other places in Illinois. I think there are areas like Springfield, Illinois that have a lot of cash flow, but are probably less likely to appreciate. There's less certain demand. I know there's places like Peoria that got hot for a minute, but I'm guessing that's not going to continue personally. I know that people have bet against big cities over the last couple of years, New York, San Francisco, Chicago, they're all coming back. They're all doing well. Chicago's had some of the strongest rent growth and strongest appreciation for the last couple of years. And most of all, it is still
10:04 Dave Meyer? affordable. It is the most affordable large city in the US, which I love.
10:08 Henry Washington? Absolutely.
10:08 Dave Meyer? So for me, I literally was talking to an agent about buying deals in Chicago. So I clearly am giving it away, but I think Chicago is a great market to invest in.
10:16 Henry Washington? Yeah, man. If you name five big cities, they're all unaffordable except for Chicago. So
10:21 Dave Meyer? Yeah.
10:21 Henry Washington? It's it's an amazing place to invest. Yes, there are challenges with landlords and tenants, but you will find that in a lot of places. There are tons of successful landlords in Chicago. So I would say getting into a local REA group and understanding what the successful investment Masters are doing to set themselves up for success as a landlord in Chicago is all you would need to do to get some level of comfort with those risks that you're thinking about. But oftentimes, when I hear questions like this, people don't think about what they give up if they move to a market that they don't understand as well. So maybe you'll find a market that has better landlord tenant laws and maybe even get you a little bit more cash flow. But what you'll
11:05 Henry Washington? give up in terms of understanding Illinois and understanding Chicago and the neighborhoods and the relationships that you may already have built with real estate agents or contractors, like you give up all that and you have to go build it again. And so, yeah, you may be able to quote unquote, get more cash flow, but are you going to be able to actually realize that cash flow if you are operating less efficiently because you don't have the same superpowers?
11:31 Dave Meyer? Yeah, I would also just say, is cash flow the right goal, depending on where you are in your market. I personally love these like hybrid markets that will probably appreciate and will have some cash flow. And that is definitely available in Chicago. The one other thing I want to add about multifamily in general, because Maddie did, I didn't read the full question, it was kind of long, but she did also talk a little bit about wanting multifamily, is that big cities like Chicago make it hard to build, which is pros and cons, but you don't have the risk of supply growth that you have in a lot of big cities like Houston, right? Chicago's third biggest city, Houston's the fourth biggest city. Houston has huge
12:12 Dave Meyer? supply growth. That doesn't mean you can't invest there, but it's just another variable that you have to think about. One good thing about Chicago is that you don't have that risk that you're going to like turn around next week and there's going to be 10,000 units under construction. Like that's just not going to happen in a city as dense with as strict zoning regulations as Chicago. So I think that provides a little bit of safety, you know, a little bit of a basement, you know, a floor for your investment, which personally I really like. All right, those are our first two questions, but we got plenty more questions from the BiggerPockets community to answer right after. After this quick break, stick with us. Running your real estate business doesn't have to feel like juggling five different tools. With ReSimpli, you can pull motivated seller lists.
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14:03 Henry Washington? Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self-manage it for the remainder of the year. Rent to Retirement then rents the home as a short-term rental to establish it as an STR for the year. No furnishing required, making this the easy button to save five or six figures in taxes this year.
14:45 Henry Washington? And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over one $100,000 against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.
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16:42 Dave Meyer? Welcome back to the BiggerPockets Podcast. Henry and I are answering questions from the BP community forums. Our next question comes from Jordan in Chattanooga. Jordan asked, "My wife and I purchased a duplex in March and moved into one of the units. After living here for a month, we noticed that another duplex down the street that's abandoned and trashed. We've reached out to the property owners, but I need some help before making an offer on the home." We used up most of our DTI, that's debt to income ratio, on our current property. So what would be the best way to make this happen? It will definitely cash flow about $300 a month. Just a couple of other provisions here. We can't move because we're only six months into our owner occupied mortgage and the homeowners
17:26 Dave Meyer? still have a mortgage, so seller financing wouldn't work. Should we pull out a HELOC and try to buy it as an investment property? Should we use a HELOC as a down payment? Should we use a DSCR or private hard money? Any other recommendations? Henry, I'm going to toss this to you, but just want to say, a lot of times we get these questions and like, it depends, but you told us a lot of information about yourself and your personal situation. So I do think we can actually answer this one. Henry, take a stab at it.
17:52 Henry Washington? Well, I think there are several ways to attack this. If you're going to live in it, then obviously, I know you said you've got about six months left, but that's not a ton of time. So you could contract it and then close on it.
18:04 Dave Meyer? That's true.
18:05 Henry Washington? After about six months.
18:06 Dave Meyer? Doesn't seem like the seller's in a rush.
18:08 Henry Washington? Yeah, right.
18:09 Dave Meyer? Right.
18:09 Henry Washington? Right. So you can just put it under contract with a six month close and then, you know, close on it the day you are able to. And then you can use the conventional for sure, which would limit your down payment to what, 5%? So that's one option. Option number two is you could buy it with a commercial loan from a small bank. So you could go to, you know, any local community bank there and get a loan for the purchase and the renovation. They'll want 85% of the purchase and they'll give you 100% of the rehab. So you'll need a 15 ish percent down payment in order to get into it. Now, the caveat with that is it's going to put you on like a three or five year adjustable rate.
18:50 Henry Washington? So if I were you, once you move into it, if you decide to move into it, you can refinance it onto a conventional loan and then that'll put you on a 30 year fixed and then you can pay off the adjustable rate mortgage once you move into it. But that'll get you in with only a 15% down payment. The other cool thing about that type of loan product is you can borrow the down payment. So if you bought this with a conventional loan or a DSCR loan, borrowing the down payment is going to be a little more challenging. So if you wanted to use. Funds that weren't yours, in other words, like borrowing from a private money lender or something. It might be a little more challenging, but with a loan from a commercial bank, then you could borrow that down payment. So that is a lot of leverage, but just giving you options here of what you could do.
19:34 Henry Washington? To limit your cash and then also if you do the loan from the small bank, they're going to care less about your DTI. And more about the value of the asset. So DTI is not going to be a big issue in that scenario either. A third option is to take out some of the line of credit to use it as your down payment. If you were to buy it traditionally and I would double check, did you get pre-approved to find out if a lender would lend to you? Given your current DTI position, like, don't just make an assumption.
20:02 Dave Meyer? Yeah.
20:03 Henry Washington? That you don't have enough DTI for a bank to give you a loan. Go ask. Start with the lender you already have their relationship with and see what they would say.
20:12 Dave Meyer? Yeah, I, I think that's all great advice. The one, the one option I will add is a DSCR loan. I think that could work really well and Jordan had also asked about a HELOC. Which I would maybe do a combo, like if this were me, I would maybe buy it with a DSCR and then use the HELOC to renovate. Cause we didn't talk about that, but he said the property was abandoned and trashed. So assuming you're going to need to get some financing, you might be able to pay for that out of pocket. I have no idea. But assuming you need to do it, I would just get the DSCR for the purchase and then use the HELOC for the expense. And then pay that off pretty quickly, just using income from the property and then keep the DSCR for.
20:57 Dave Meyer? Or if you move into a refinance and to conventional. All right. Next up is a question from Kevin, who asked us, is leveraging 100% with a VA loan a bad idea? I'm weighing out my options for using my VA loan for the first time. I'm very aware of the risk that comes with leveraging 100%. And I'd like to get your opinion on mitigating that risk if it should even be an option. The plan is to house hack a duplex to lower my monthly expense and save to grow my portfolio. I don't plan on purchasing a property that I can't comfortably cover while it's vacant. What are your thoughts?
21:33 Henry Washington? Yeah, I think is leveraging a hundred percent with the VA loan a bad idea? The answer to that is it depends because it's going to depend on your personal financial situation. Like if you're doing a hundred percent VA loan because you don't have any money to operate a property, then yeah, it's a bad idea because there's still expenses, things that are going to come up that you need cash for. And so like investing when you have no money is a problem because things end up costing money. Now, if you've got some savings and you can operate the property, then using a hundred percent leverage is way less risky. Think about it from this perspective. If I get into a property, I don't put any money down. And let's say that that property doesn't appreciate and I sell it in a year.
22:16 Henry Washington? You're probably going to lose money, but that money that you lose is essentially just a down payment you would have had to pay if you had to put twenty to twenty-five percent down on the back end. The benefit is if you borrow a hundred percent and you buy a property and appreciating area, chances are that property is going to appreciate. Chances are you are going to add value to that property. And then you have an opportunity to get out of that property if those things worked in your favor. So you could end up in a position where you maybe pay a little bit of money if you have to get out or you don't pay anything because of the appreciation and the value you added. So you can spend the money on the front side, you can spend the money on the backside. My biggest caveat when buying a hundred percent leveraged is if you don't have any money
22:59 Henry Washington? and that's why you're using a hundred percent leverage, you're probably putting yourself into a bad position.
23:04 Dave Meyer? I completely agree. People look at hundred percent leverage, which just for everyone, what this means is taking out a mortgage for a hundred percent of the purchase price, you're putting zero percent down. I know people get a little up in arms about this, but the risk in that is not really that your mortgage goes underwater. The risk is that you cannot pay your mortgage and it goes underwater. It's when those two things happen at the same time that there is a lot of risk. Because if you bought a property with a hundred percent leverage, if your property value went down two percent next year, you'd be underwater and know what would happen? Absolutely nothing, as long as you're still paying your mortgage. The problem is if that happens and Then you can't pay your mortgage. That's when trouble really starts. That's this is basically what happened in 2008.
23:49 Dave Meyer? Like this happened at scale. That sort of caused the whole market to collapse. And so I think Henry's advice about how sure are you that you can pay that mortgage even if there's vacancy? He said, I don't plan on purchasing a property that can't comfortably cover while it's vacant. What are your thoughts? So then I think it's probably okay as long as you're budgeting. Really understand that there are going to be expenses that you might have vacancies. And I think particularly in this market, I'm going to put on my Henry hat. And so you got to buy below market comps because in a lot of markets, I personally believe we're going to see one or 2%. Maybe 3% price declines in the next year or so. So you got to buy below market comps to make sure even if that happens, you're not going underwater.
24:33 Dave Meyer? Like I said, if it goes underwater and you're paying a mortgage, not the end of the world. But you might as well not have that situation by just buying really well. And you have the opportunity to negotiate, to be patient right now to buy deep. And so I would just really focus on finding that. And then I think you could do it. The other option, if you are worried about going underwater is just put 5% down. Like it sounds like you have some capital if you're saying that you can cover a vacant property. I would do that. The other last thing I'll say is I like this plan just because it is a house hack within duplex. I probably wouldn't give the same advice if it was a single family home that you were just living in. If you were just a homeowner, I wouldn't say that. But because it's a house hacker, you're going to get that additional income. I do think that provides an extra layer of protection.
25:19 Henry Washington? What seasoned investors use 100% leverage for is to scale, to keep their cash in their pocket. So that they can capitalize on opportunities that may come that require the cash. Versus if you can get into a deal that doesn't require the cash, that you're buying at a discount, that you know you can monetize anyway. And that you know you have cash reserves to cover, right? You're limiting your risk and keeping your cash in your pocket by leveraging 100%. Whereas a lot of people hear 100% financing and think, I don't have a ton of money, so I'm going to do that. That can get you into a tough spot financially. So it's a tool in the tool belt meant to be used in the right situation.
25:52 Dave Meyer? Absolutely. I was talking to someone at BPCon about it. There's a young guy who was about to get out of the Navy and was asking me with house hacking with a VA loan. I was like, that might be the best single way to get into real estate. If you've got access to a VA loan and you're going to house hack, like, that's, it's such a good way to do it.
26:10 Henry Washington? Yeah, get into real estate for free.
26:12 Dave Meyer? Yeah, it's an amazing opportunity that our service people deserve and have earned, and you should absolutely leverage that. All right, we got to take another quick break, but we'll be back with more community questions right after this. The Cash Flow Roadshow is back. BiggerPockets is coming to Texas, January 13th to 17th, 2026. Me, Henry Washington, and Garrett Brown will be hosting real estate investor meetups in Houston, in Austin, and Dallas, along with a couple other special guests. And we're also going to have a live small group workshop to answer your exact investing questions and help you plan your
26:53 Dave Meyer? 2026 roadmap. Me, Henry, and Garrett are going to be there, giving you input directly on your strategy for 2026. It's going to be great. Get all the details and reserve your tickets now at biggerpockets.com/texas. Hope to see you there.
27:09 Dave Meyer? For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming, and still, the site wasn't coming out the way I wanted it to. Then, I tried Hostinger, and everything was super simple. I asked Hostinger's AI to build a clean site for her business, and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps with SEO, website copy, and email marketing after launch. You get domain, website, email, all in one account. And right now, you can get Black Friday and Cyber Monday pricing
27:52 Dave Meyer? through December 14th. So snag Hostinger's services at their lowest prices before the sale ends. Create your website today for just $1.99. Go to hostinger.com. com slash real estate and use code REAL ESTATE for an additional 10% off Black Friday and Cyber Monday pricing. I just booked a ski trip to Park City and I've already got the whole thing planned out. Five days, first tracks every morning before the crowd show up, my knees reminding me I'm not 25 anymore by the second run, and an embarrassing number of overpriced burritos at the lodge. I don't even care. This is the trip I look forward to all year. But here's the part I actually appreciate.
28:33 Dave Meyer? The practical side of my brain kicking in is that my place doesn't have to just sit there empty the whole time I'm away. I can list my space on Airbnb and bring in a little extra income while I'm out getting humbled on a mountain. And with the co-host network, I'm not the one handling all of it. You can partner with a vetted local co-host who can create your listing, manage reservations, message guests, and even handle the styling. So I get to fully focus on my trip and my place is still working for me the whole time. Find a co-host at Airbnb.com/host.
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31:09 Dave Meyer? Welcome back to the BiggerPockets Podcast. Henry and I are answering questions from the BiggerPockets community. I should mention, if you want your questions answered, post them on the BiggerPockets forums and we might pick them. And you'll also get expert advice from literally thousands of investors who are there answering questions every single day for free. So you should definitely check that out. Our question now comes from Kelly Schroeder, who asks, "How do you keep renovation costs under control when prices spike?" Henry, this has your name all over it. The question is, "I've been hearing from a lot of investors lately about how renovation costs keep sneaking up, whether it's materials, labor, or even permit days. For those actively flipping, this can turn
31:49 Dave Meyer? a solid deal into a stressful one fast. I'm curious, what are your go-to strategies to keep rehab costs predictable and profits steady? Do you lock in materials early, build relationships with consistent contractors, or budget a certain percentage buffer?" I'd just say yes to all three. Would love to hear how you're adapting, especially with so many market shifts happening this quarter. I mean, I think Kelly kind of knows the answer, right? He put, "Do you lock in materials early?" If you can, I think that's kind of hard.
32:19 Henry Washington? That requires volume.
32:20 Dave Meyer? Yeah, yeah. So I think that's hard and also creates its own risk. Like, what if you don't use it? Then you're just holding inventory. Build relationships with consistent contractors, for sure.
32:30 Henry Washington? Absolutely.
32:31 Dave Meyer? Or budget a certain percentage buffer. I would always do that regardless of inflation. So I think those are good tactics, and I have some other tactics to share, as I'm sure. Henry does too, but I think the other thing here is being realistic and accepting that there's only so much you can do about this. Like you cannot change macroeconomics. That's literally why it's called macroeconomics. It is bigger than you. And so there's just things about the labor market. There are things about tariffs and supply chains and AI that are not in your control. And those are things that you need to handle in your underwriting. It is less in you're controlling the cost. It's finding
33:12 Dave Meyer? the deals that can accommodate the costs. And I think that is really the most important shift to have instead of being like, how do I get that toilet cheaper? You might, and if you can, good for you. But I wouldn't count on it.
33:25 Henry Washington? Absolutely. You nailed it. 100%. That is exactly where I was gonna go. Yes, the things he suggested are things you should think about. But the most important thing is to be aware of the environment and the economics, which it sounds like you are, listening to shows like this one, listening to shows like On The Market, so you can understand what's going on, so that you can update your underwriting. Because what he said in there was that if the costs creep up on you, then a profitable deal can turn into a nonprofitable deal pretty quickly. Well, to me, that says you didn't underwrite the deal with enough room for you to make a mistake. Which means if you know that costs are increasing, you need to increase your renovation budget and timeline. And that means you need to decrease
34:09 Henry Washington? what you're willing to pay for a property in this environment. And that's what's gonna save you. So that if and when things do run over, you're still gonna end up profitable because you bought such a great deal.
34:20 Dave Meyer? Yep, exactly.
34:21 Henry Washington? And then, yes, I do a little bit of a buffer in my rehab costs so that I have a little more room in the event that I need it. The contractor relationships is the huge piece. You know, right now, I have a contractor who bids labor and materials for me, and they bid them fairly well. And so that helps me keep the cost down because that contractor has his superpowers at getting whatever materials at the prices he can get them at. Now, as we do more projects, if I start to see that slide up, I can either change my underwriting to offer less, or I can try to go find materials cheaper myself. It gives me some options, but I have to be monitoring. What these things cost so that I can make game time decisions. But at the end of the
35:05 Henry Washington? day, it's being aware and adjusting your underwriting. There's tons of little secrets. I get a lot of my stuff on Amazon, which I can get fairly inexpensively. The finishes, Amazon beats the big box, Lowe's and Home Depot stuff in pricing all the time and buy a lot. And so a lot of the times, we're not buying finishes from Lowe's or Home Depot. We're getting them from Amazon and we're saving 10, 15, 20, sometimes 30 and 40% on prices.
35:31 Dave Meyer? I mean, shopping around, just going to local stores, seeing what's left over, those kinds of things work. But I think Henry nailed it too. It's just like you could do these things, but I also think you have to just accept too, that your contractor's costs are going up too. So like if their bids are coming in a little higher, well, materials are more if they're bidding labor and materials. Labor is going up, you know, construction labor is costing more. So like, these are just things that we have to accept. And in these sort of transitionary markets that we're in right now, it's a little bit harder. But eventually this is going to have to get baked into the price and sellers might be resistant to that now. But that's just how this works on a broad scale is eventually the costs get baked into the value of the properties that we're buying. And that might
36:15 Dave Meyer? not be good news to every seller out there, but that's just how it's, that's just how it works. So I think you're asking the good question and thinking about this ahead of time, but trying to figure this out before you buy something is going to be way easier than trying to figure out how to save costs. Once you're already in it. All right. Well, this was a lot of fun. Thank you for joining us here, Henry. And thank you all so much for these questions. These were really good questions. Keep them coming. Keep asking these questions, not just for the podcast, but on the bigger pockets forums. There are people answering questions, helping each other succeed. That is what the bigger pockets community is all about. That's what we want to see all of you doing on the forums. And we might just pick one of your questions for our next Q and A episode of the bigger pockets podcast. Thanks again, Henry.
36:58 Henry Washington? Thank you for having me.
36:59 Dave Meyer? And thank you all so much for listening. We'll see you next time.
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