We’re in a “Buyer’s Market”…But Where Are the Real Estate Deals? (Rookie Reply)

Ashley:If you’re having trouble finding deals, this is the episode for you. We’re going to break down what strategies work in today’s market.

Tony:We’re also going to talk about when, if ever it makes sense to buy a deal at negatively cash flows, which is a hot topic for Ricky Investors. Today

Ashley:We’re going to cover what makes a good investment versus a bad investment, and Tony and I will actually give our own personal opinion on this. Welcome to the Real Estate Rookie podcast. I’m Ashley Kehr.

Tony:And I’m Tony j Robinson. With that, let’s get into today’s first question.

Ashley:So this question comes from the bigger pockets forums. We just recently sold our house and finished our first deal. Congratulations. We’ve been looking for deals and haven’t had much luck, cold calling or driving for dollars. Any other strategies that have worked for you guys? So I thought this was a perfect question for right now, we’re getting to the end of 2025 going into 2026, and the market has definitely changed since a year ago even, and we’re definitely seeing it more as a buyer’s market. So Tony, what are the ways that you have found deals this year or I guess even leads even if they didn’t turn into deals?

Tony:Yeah, I mean I think the first thing I’d say before I even answer that question is they didn’t give a whole heck of a lot of context. They just said, we’ve been looking for deals and haven’t had much luck, cold calling or driving for dollars. I think the first thing I would ask is how much activity has gone into how much effort and time have gone into cold calling and driving for dollars? Did you call 100 people or did you call 10,000 people? Did you drive for two hours or did you drive for 200 hours? I think oftentimes Ricky Investors underestimate how much time it takes to really build that pipeline of going off market for deals. We’ve interviewed multiple folks who, wholesalers or just people that do a lot of direct to seller marketing and typically if you can get your first off market deal within your first 10 to 12 months, you’re actually doing pretty darn good.So if it’s been any shorter period than I’d say even six months, I think maybe you just need to continue to work at it to make sure that you’re doing it long enough to have that momentum start to build. So I think that’s the first piece. The second piece is the actual strategy that you’re following within cold calling and driving for dollars. If we look at cold calling, you and I could both have the same exact list, but how we approach those phone conversations can make all of the difference. Have you trained yourself up on best practices when it comes to sales or are you just kind of winging it every time you hop on the phone with someone? Do you have a script that you’re working from that’s been validated and tested and iterated? Or are you flying by the seat of your pants because someone picks up the phone, you’re calling them out of the blue one question, Hey, this is Tony, I’m looking to buy your house.I went to the main street is very different than, Hey, is this Ashley? Hey, it’s super weird question, but this is Tony. I hate to call out of the blue, but I think you own 1, 2, 3 main street. Which one of those is going to entice that person to continue that conversation, right? So working on your script for the cold calling could have a big impact as well. And same for driving for dollars. Where are you driving? What kind of properties are you taking down as you’re driving? Are you looking at the properties that are big and beautiful and like, man, that’s just a really nice house. Lemme see if I can get that one. Or are you only taking down the ones that have the overgrown weeds in the front yard, the garage doors is broken, the windows are boarded up, what type of property are you adding? So I think before we just say, what else should I be doing? Let’s make sure that we’ve actually done everything that we can within the strategies that are in front of us to validate that we’re doing it the right way.

Ashley:And I just think right now with the market, there’s a huge opportunity just to buy off the MLS as to there are off market deals and there’s huge opportunity there. But what about, what’s actually on the MLS too? I look to pull up Zillow list sort everything by most recent, and then I go to the very end of the list and see what’s been sitting. I would try to find out why it’s been sitting. I go and I look at, see if they have any debt on the property, how much could I offer? Do they have a ton of debt on there that there’s really not any wiggle room they need to pay that off? So I think using right now the market as an opportunity to make those low ball offers where there are more and more properties that are sitting longer on market than they were say a year, two years ago, three years ago.So that would be the first thing I’d look at. But also what type of properties are you cold calling and are you door knocking? So is it just you’re driving by and you see a house that looks distressed? Is it you’re dropping by and you see a house that looks vacant so then you’re finding their information and calling them? So one thing that has worked very well for me in the last couple of years is older people’s homes that either passed away or they’ve gone to assisted living or gone to live with a family member. And until I just read that question, I didn’t even think about this, but in the last few years, four or five of the houses that I have bought have been from somebody that passed away or moved out to assisted living or a nursing home. And if you include my sister, that’s six houses actually.So I think really defining what your list is as to what types of properties, is it properties in pre foreclosure, is it properties that there’s an owner out of state? So for me, what has been working, and I haven’t even realized it is actually going after homeowners who maybe are moving out, going to assisted living. And a lot of these came from just word of mouth. People know that I buy houses, people reach out to me, my dad is going to assisted living, we have this property, do you want to come and see it? And actually the property I’m sitting in right now was word of mouth. The mom had moved in with one of her kids and I was able to purchase the property off market from that too. So really define what you’re going after, what type of person, what type of seller you’re looking for, because if you just do all across the board, it’s going to be a broader net and it’s going to take more of your time and more of your money to contact all of these people. But if you can kind of narrow down the actual seller you’re looking for, that will help.

Tony:Yeah, you made an important point, Ashley, about where we’re at in the market cycle. And I think right now the MLS still does have a lot of good opportunities. Last year that we bought was right off the MLS and we got it at a pretty steep discount. So the MLS is definitely still an option, but I think the last piece here is maybe you’re just not good at cold calling. Maybe you’re just not good at going direct to seller and not everyone is. And if that’s the case, then maybe just focus on networking with the people who are good at that. We recently interviewed Dominique Gunderson on an episode and the majority of her deals come from wholesalers that she’s networked with and she just super hard hit the local meetups in the area that she was investing in looking for wholesalers. Now she gets a lot of her deal flow from those relationships.So you could do the same thing. You could continue to invest time, effort, and energy in trying to specialize or improve your skillset when it comes to going direct to seller. Or you could just say, my time is better spent networking with wholesalers who are doing that work for me or I know I have a friend Brian Avio, who’s based out of Vegas and he wholesales both in California and in Vegas. And the majority of his deals comes from networking with agents. So he just cold calls agents all day and he says, Hey, do you guys have any off market deals that look like this? Things maybe don’t make sense to go on the MLS. And that’s how he gets a lot of his deal flow. So you can just bypass the work of trying to find it yourself and go network with people who are already doing that and they can probably do it better than you can.

Ashley:We’re going to take a quick break, but when we come back we’re going to talk about what happens if you have a negative cashflow. We’ll be right back.

Tony:Alright guys, welcome back. Alright, so let’s go to our next question, which also comes to the BiggerPockets forum. And this question is from Vin. Vin says, after hearing a lot of episodes about negative cashflow, I’ve got a question. I’m currently living in my primary residence and I’m planning to purchase an investment property and it’s going to be negative cash flow. It’s in the bay area of northern California, very expensive market. But I am of the opinion that as long as the rent on the investment is at least going to be greater than my current primary residence mortgage, it can still be considered as a positive cash flow investment. The investment property is going to be in a much better location than my primary residence. I might be totally wrong in my thinking. What am I missing? So let me just make sure that all of us here are understanding what the question being asked here is.So VIN is saying that they have a primary residence already, and for round number’s sake, let’s say that their primary mortgage is $1,000. They’re going to buy this investment property and say the mortgage is $2,000, so double their primary residence and the rent is call it $1,500. So we have their primary residence at 1000. The rent’s being collected at 1500, the mortgage on this investment property at 2000. Their question is, does it make sense to buy this investment property that is technically losing $500 per month? But it still maybe makes sense because 1500 is more than what they’re paying on their primary residence, which means that money can be used to offset the $1,000 that they’re paying and still have some money left over. It’s a good question and I get the train of thought they’re trying to follow, but I think they’re looking at it from the wrong perspective because even if they’re making money on this investment property, they’re still losing money at the end of the day, right?There’s still worse, and I’m using air quotes here, financial position than if they just didn’t buy the investment property from a purely cashflow perspective. I do think though that there’s nuance to this and Ash, I’m curious what your thoughts are as well. I do think there’s nuance because it does depend on what your personal financial situation is and what your motivations are for investing in real estate. If you’re buying this because you believe strongly in this area that you’re buying and that is going to appreciate incredibly well, and your goal is just to have this paid off in the next 30 years. So you’ve got maybe a multimillion dollar property in the bay area of California that you can then use to fund your retirement and you’ve got maybe a lot of active income, maybe you work in tech, you get a lot of active income from your day job.So whatever 500 bucks a month that you’re losing is negligible, then sure do the deal because it makes sense for you. But if your focus is, I’m doing this because I want income or I want to maybe subsidize my living cost, this is a bad deal because you’re losing money. It will make more sense maybe for you to go out and buy a duplex or fourplex and house hack or a house with an A DU. So that way you really are subsidizing your living cost and not trying to wrap it into an investment that’s losing money. So that’s my initial take. Ash, what are your thoughts?

Ashley:Yeah, I think the point that I would add is that they did say this investment property is in a better location. So maybe there is more opportunity for appreciation that okay, you want to invest $500 extra every month into this property knowing that in five years you’ll be able to make that money back when you sell the property, plus make a ton more money off of the appreciation. And David Green talks about this as to breaking even and how appreciation is a play. And there’s a bunch of other investors that actually followed this where they’re okay paying into these negative cashflow properties because even though they’re paying a couple hundred dollars each month, they are banking on appreciation that in several years, five years, 10 years, they’ll be able to sell the property, recoup all of that money, they invested it into it, plus make a bigger return and cash out then.So that could be the thing, but you really have to define what your why you’re investing if you can afford to cover that additional amount and you want to for the long term. I mean right now we’re not seeing, if you were to buy a property right now, we’re not, probably not going to see huge appreciation in that property from today to next year today just because we’re seeing it become a buyer’s market. And even properties that I saw up for sale a year ago, some of those are still sitting including one of my properties. So I think if you’re able to afford to hold the property long-term and continue to pay into it and think about it, you also have to cover any capital improvements that come up, any repairs and maintenance that come up. You have to cover any vacancies now you’re going to be paying your mortgage and the mortgage on the investment property. So just remember there’s more that goes into it than just that $500 in negative cashflow a month too.

Tony:Ash, incredible point. And I would encourage Vin who asked this question to run this deal through the BiggerPockets calculator so that way you can make sure that you’re really accounting for all of those other ancillary expenses that maybe you hadn’t considered because maybe that delta is a lot bigger than what you initially anticipated.

Ashley:Okay, we’re going to take our last break here, but when we come back, we’re going to get into what you should actually know before getting into real estate. We’ll be right back. Okay, so our last question here says, what should I know before getting into real estate? Is there a technical analysis part everyone should know, like cash on cash return or other metrics? What separates a good investment from a bad one? So this is definitely a loaded question here and there’s so much to look at and so much to consider and very individual as to what will matter to you and won’t matter, I guess. So Tony, I want to start backwards actually on this. For you personally, what is a good investment versus a bad one? How would you differentiate in as little words as possible? What is a good investment from a bad one?

Tony:My motivations for investing in real estate are in priority right now. Cashflow, tax benefits, appreciation.

Ashley:I’m going to add one more to your list. And as in time, how much time I have to actually put into the property into the deal, like the operations, things like that too.

Tony:Absolutely. So for me, as I’m analyzing different potential opportunities, it’s against that lens of will it generate a good amount of cashflow? Will I be able to perform a decent cost segregation study on this property and will it give me some meaningful appreciation so that in 30 years when the loan is paid off, that it’s appreciated? At least to some extent. And since I have very strong clarity on what my motivations are, for me, good deals are easier to spot than maybe someone else who doesn’t have that clarity. So a killer deal for me right now, north of 20% cash on cash return is probably really good. If it’s in the single digits, it’s probably not worth my time. Bigger deals typically give better cost, segregation, tax benefits versus smaller deals. Super, super rural cities aren’t going to give me any appreciation, whereas maybe ones that are in two or three hours outside of major cities or in maybe more popular tour destinations will give me that. So that’s a good deal for me. What about you, Ash?

Ashley:Yeah, the three that you said. Plus the fourth thing I think are the great metrics of understanding. I’m definitely, we’ll take a little bit less cashflow if I can be more hands off on the property too. So there’s that give and take of like, okay, how far do I want to take the scale to here’s my income, but also that means I’m going to be putting way more time, energy, and effort into the property too. So I try to find that happy medium, but also another metric or measurement that I use that isn’t just cash on cash return or anything like that. It is when I am looking at the property, what else could I do with that capital? So if I’m putting $50,000 into this deal, what are my other options that I could do with this? Could I invest that in any other way?And not even could I buy another property or invest in a syndication or things like that, but are there other ways to grow my business? Could I take that 50,000 and say, you know what, this year I’m actually going to hire a project manager and I’m going to have him work for me and give it a year and see if he’s able to take my rehab projects from here to here to the ceiling, like 10 exit. And so I think that is a big thing I think about too, or what are the other opportunities I have. And then also just along with the time commitment, the stress as in, is this going to be cause me a lot of stress? Am I confident in what I’m going to be doing in this deal? Am I confident I can take it on? And a big piece of that is I don’t like to take risk financially and stress myself, stretch myself because it stresses me out. And I think that’s a big piece of it too. I could have a good deal, but in order for me and my situation to take that deal down, I would have to stretch myself financially. I’m probably going to say no and not take that risk, even though the reward could be amazing and great. I don’t like that feeling of being stressed financially. And that would be something that I would avoid in a good deal.

Tony:Yeah, and I think part of the question too is just what else should I know? So we just talked about, hey, what’s important to you? How do you determine what’s a good deal? But I think you should also just have a good foundational knowledge of the different things that go into being a real estate investor. And at a high level, if we were to kind of split it up into different chunks, there’s the acquisition, which is choosing a market, getting approved for financing, finding deals, all of that is part of the acquisition buckets. You’ve got to have some foundational knowledge there. It’s the intermediate, what happens when you find the deal. So negotiating your purchase agreement, your due diligence phase, what does that look like from going under contract to actually closing on the deal? And then it’s what happens afterwards. It could be just the management. If it’s something that’s more turnkey, it could be the rehab. So just having some sort of working knowledge in all of those big buckets I think are important to give you the confidence to be able to step out and take that first step of actually getting that first deal done.

Ashley:Well, thank you guys so much for joining us today. For our rookie reply, I’m Ashley. He’s Tony, and we’ll see you guys on the next episode.