He Bought After 2008, Sold at the Peak, and JUST Bought Again

Dave Meyer:
Assets are going on sale. This is how you buy them. In some segments of the real estate market, owners are looking to unload their properties. They didn’t make the right deals a couple of years ago, and now they’ve run out of time. That means opportunity is coming. Someone, after all, has to buy these properties at discount prices, some of which are 60% lower than they were sold for just a few years ago, and that someone could be you. Today, we’re speaking with one of the most popular investors in the BiggerPockets community about how you can spot these deals, how to separate the good from the bad, and how to structure transactions to maximize upside and minimize risk. Hey, everyone. I’m Dave Meyer, Chief Investment Officer at BiggerPockets. Henry Washington, co-host of the BiggerPockets Podcast is here too. Henry, what’s going on, man?

Henry Washington:
Hey, what’s going on? And I’m excited to chat with Brian. This will be my first time on a show with him.

Dave Meyer:
And by Brian, Henry means Brian Burke, who is an extremely successful investor who has been in the game for several decades. Because he’s seen just about everything that can possibly happen in real estate. We like to bring him on the show when the market is changing or feels uncertain because frankly, he’s just been super right about market timing for a really long time. So I don’t know about you, Henry, but things feel super uncertain right now, so I could use a little note of Brian’s knowledge. So let’s bring on Brian Burke and hear his takes. Brian Burke, welcome back to the BiggerPockets Podcast. Thanks for being here.

Brian Burke:
Dave Meyer, glad to be here. Thanks for having me on again.

Dave Meyer:
Yeah, it’s always fun. Let’s just start. You’re well known for being very good at predicting market cycles and timing your portfolio to market cycles. So let’s just get your big picture thoughts on where we sit generally with the economy and the housing market these days.

Brian Burke:
Aside from the fact that luck is a really good virtue.

Dave Meyer:
Well, that’s very humble of you to admit, but you’re either very good or you’re very lucky.

Brian Burke:
Well, one of the two. I don’t know. Sometimes it’s better to be lucky than good, but I’ll pick either one because they both work.

Dave Meyer:
Fair

Brian Burke:
Enough. Okay.

Dave Meyer:
It’s true.

Brian Burke:
Big picture. Where are we? Big picture. Well, I came on this show a couple years ago and I said end the dive in 25. It’s fixed in 26 and buyer heaven in 27. And I’m not really changing my story yet, Dave. I think I’m still pretty close. I think 26 is going to be a transition year. 25, the dive kind of stopped in commercial real estate, I think. I think 26 is going to be a transition year where we kind of find the bottom, we go through that bottoming process, and then we get everything set up and ready for 27 when you’re going to have a little bit more distressed sales, some more sellers that are really pressured to make a move. And a chance for buyers of not just commercial real estate, but residential as well, to have a really good opportunity, I think, to start scaling up their portfolios.
And you and I talked about this, what, six months or a year ago about we’re kind of close to the bottom. This is the time to scale your portfolio if you’re a long-term thinker. If you’re one of those three to five-year holder guys, you’re too early. But if you’re a 20, 30-year player, this is a really good time to buy if you’re comparing it to say 2021.

Dave Meyer:
So what is happening right now that’s making you think this? What are the dynamics that are going on behind the scenes that are changing this? Because I felt like we’re always a year away from hitting bottom the last three years. It’s like you wait for this distress to come. And you’re right, I think it’s both in commercial and residential. You’re like, sellers are just unrealistic. It’s really hard to get deals still. So what’s sort of the catalyst that is going to change that and go from this sort of stalemate that we’ve been in to one where buyers are going to finally have a bit more leverage?

Brian Burke:
Well, I think the first thing is, is that the seller’s having to change their attitude. I mean, a year ago, I knew a lot of people that were sitting on challenged assets, to say the least.

Dave Meyer:
It’s a nice way to put it.

Brian Burke:
Yeah. I’m trying to be nice. Their saying was survive till 25. They had a different saying than I had. They were a little more optimistic, I guess. And it was like, “Hey, I’m just going to wait this out and everything’s going to be fine and interest rates are going to fall and cap rates are going to recompress and rent growth is going to come back and all these things are going to happen and they’re going to be fine.” And of course, when you’re in that situation, you really want to believe that because it’s really difficult to admit to yourself like, “I’m sitting on a house of cards.” Nobody wants to say that. I get it. Now I’m hearing more from people I know who are saying to me, “I’m going to have to let this go back to the bank, or I’m going to have to hand in the keys or I have to sell at a complete wipe out just to get my lender paid off.” I just had two conversations like this a week and a half ago with people I know that are in that situation that a year prior to that were like, “Oh yeah, we’re going to hang onto it and things are going to be fine and everything’s going to work itself out.
” So I think that behind the scenes and the data you don’t see, I think the human factors are beginning to change where owners are coming to grips with the fact that they’re going to have to make some moves here and they haven’t been up until recently.

Dave Meyer:
That makes sense to me. It does feel like the can’s just been kicked down the road a lot. People, like you were saying, just hoping just from some external macroeconomic thing to change that’s going to save them and it just doesn’t feel like it’s coming. And so as those operators, what do they do? Do they just try and sell before they have to hand the keys back? Or what’s the order of operations? Because maybe for people want to buy, is there opportunity as distressed sellers are trying to unload these assets?

Brian Burke:
We just bought several senior housing properties that were through lender short sales where this is a situation where the lender will agree to take less than the loan amount. And we bought these assets at about 45% of the loan balance, which is an extraordinary-

Henry Washington:
They agreed to

Brian Burke:
That. And the lender wrote off all the rest. And I’ll tell you what, I haven’t bought a short sale since probably 2011. So it’s been a lot of years since short sale has been kind of a word going circulating around in real estate investing, but that’s coming back and I think we’ll see more of that. Not so much in the single family home space though. There’s a lot of home equity. So I don’t see that being an issue there, but on the commercial real estate side, I think we’ll see more and more of these types of kind of structured sales and coordinated workouts.

Henry Washington:
Yeah, that makes a lot of sense. It’s unfortunate, but it definitely makes a lot of sense. And I am hearing a lot more of investors using strategies to buy properties like REO properties right now and doing some short sales. And that’s typically when people said they were buying REOs in short sales, there was like 2017 behind that number. 2026, that doesn’t seem like a legitimate strategy, but it does seem like it’s coming back. And I’m even hearing some of that in the single family space. And I agree, there’s a lot of people that have a lot of equity, but it does seem like foreclosures are on the rise as banks are starting to now actually foreclose on people who are behind on their mortgage.

Brian Burke:
Yeah, you’re actually seeing that in the data too. The delinquency rates are up and serious delinquency rates are up even on the single family side, but they’re up from zero to 0.0. They’re still

Dave Meyer:
Below 2019, at least for single family, not for multifamily.

Brian Burke:
Yeah, indeed, yes. And so in multifamily, multifamily delinquency right now is the highest it’s been since the great financial collapse, and it’s increasing, and I think we’ll continue to increase. On the single family side, you’re just not quite seeing that. But I think what you are seeing on the single family side is some general overall market weakness. And
I think, Dave, you and I have talked about this before, and I think that general market weakness is what’s presenting opportunities to single family home investors because you can go out and put offers out on properties that need fixing up and so on without having to bid against 86 other all cash over asking buyers, and you can actually get a decent deal. On the commercial real estate side, there’s still a lot of capital chasing these assets. And by and large, if the pricing is right, they’re trading. There’s just a problem with pricing expectations I think that is still kind of hanging over the market.

Dave Meyer:
You’re saying the irrationality is from sellers expecting something and you think that will come down for multifamily generally speaking?

Brian Burke:
Yeah, that’s right. I think that the psychology is changing where some of these owners are now realizing it’s time to do something and it’s going to be painful and they’ve been trying to push it off, but they’re going to be taking some losses. And I think that they’ll start to see that play out. So yes, that’s exactly right.

Henry Washington:
Do you feel like what you saw with the retirement communities that you purchased, do you feel like short sales are going to be a thing within the commercial real estate asset class as well? Because that I have not seen a lot of.

Brian Burke:
Yeah, you haven’t, but I think you will. And here’s something I’ve been saying about this all along is the biggest problem you see, especially in commercial multifamily, which is large apartment complexes or pretty much any multifamily over five units is considered commercial. But I think this problem is the worst or the most widespread in the largest of properties, over 50 units, over 200. There’s a lot of distress in that sector. And the main way that lenders have been dealing with this has been to kick the can down the road and say, “Well, okay, your loan maturity is now, but if you pay us $500,000 principal reduction, we’ll give you another year.” And the owners/borrowers, their psychology behind that is, “All right, these guys are working with us. They’re going to help us. They’re going to here to save the day.” But really that’s not it at all.
All the lenders are trying to do is maximize their chances of principal recovery. And the moment that the market comes back enough for them to either get all their principle back or get enough principle back that they can stomach the loss, that’s when they’re forcing their hand. And that’s when I think we’re going to see more short sales even in the commercial sector. There have been some already. I think you’ll start to see that increase. And that’s why I say buyer heaven in 27. And I’ve been saying that since I think late 2024. I know everybody’s saying like, “Oh, the market correction is next year.” I’ve been saying 27 for two or three years now because there’s so much out there that’s creating the situation that has to get worked through. And a lot of it is that attitude of kicking the can down the road.

Dave Meyer:
So if you’re a potential buyer, how do you take advantage of this? How do we be you, Brian? We want to be you. I want to buy stuff for 45% of loan balance.

Brian Burke:
Yeah. Well, in the multifamily side, I’m not buying. So well, here’s the difference. So it’s sector specific, right? You have to learn how to play the cycles. This is how you be me, is you learn how to play the cycles. And so I’ll give you kind of a couple of contrasting examples. I’ve just mentioned commercial multifamily and other types of commercial real estate are still kind of in the figuring it out phase of their bottoming process. It takes a little bit of time to let all this stuff kind of work through. I started doing senior housing deals a little over a year ago because I recognized that that market cycle was actually a little bit ahead of the commercial multifamily market cycle and it was coming out of its cycle. And kind of to my point a minute ago, when things start to come out of the cycle and they’re starting to get better, that’s when the good deals are really found because you can start getting the, the lenders are like starting to force hands and saying, “It’s time to move.” Buyers are finally like, “Okay, we’re past the bottom.
We can finally sell now, but they’re still selling at an incredible discount.” Multifamily’s not quite there yet. I think that happens next year. And I think next year we’re going to start to see something similar happening there. So if you’re sector agnostic, you go where the opportunity is. That’s what I did. If you’re really like dead set, multifamily is my thing, that’s all I’m going to do, then you just let the clock work that self out. And you just spend more time this year playing more golf or spending more time on the beach. I did that for three and a half years. I didn’t buy a single multifamily deal. Sometimes you just got to sit on the sidelines and let this play out.

Henry Washington:
I think one of the things that, to your point is why the multifamily sector hasn’t quite gotten down where people want it to be to start buying is because it still seems like even with a substantial discount, some of these deals still don’t pencil. And you bought yours at such an outrageous discount. Is that because that was the price point where the deal penciled and where buyers were actually willing to pay? Because my concern is when these things do start to come up, even investors with new expenses and higher interest rates are still going to have a hard time making a discounted price work on some of these assets that people overpaid for. That’s fair.

Brian Burke:
Yeah, you’re absolutely right, Henry.That’s a very astute observation. And so on a couple examples, okay, on the deals that we bought, I’d mentioned these assets we bought at like 45% of the loan balance. It was an 11% cap rate on newer assets built after 2000. So those numbers work. Those really, really work. I’ll

Dave Meyer:
Take it.

Brian Burke:
Yeah, right? Yeah. Who wouldn’t? And it’s possible because we were doing principle to principle off-market transactions that were coordinated directly with the lender and that kind of stuff. When you’re just going out and talking to brokers and being the highest bidder on listed assets that are widely marketed across a broad buyer pool, then the numbers are really challenging. It’s really difficult to make those work. And I mean, you guys know this, you’ve done residential flips and you know that if you go on the MLS and try to buy a brand new property on the MLS, you’re not getting into discount that allows you to do a flip profitably. You find it in the margins, writing letters and going to foreclosure sales and all the other things, that’s where you find opportunity. So sometimes you got to get a little scrappy and look for opportunity kind of across the niches because that’s really where that opportunity is.
And I agree with you in multi right now, it’s really difficult. I don’t know how you get five cap deals in a 6% borrowing climate to work. You’ve got a negative 1% leverage and it doesn’t work. Now, how do these deals work? A couple of ways. One is as rent growth comes back, the income stream from the property will increase and that will increase the property’s value. So even if the price stays the same, kind of like the value of proposition begins to get better because you might pay the same price for the asset, but has a higher income stream, or maybe the expenses get more under control. Insurance, believe it or not, has actually started to come slightly down in price, at least across our portfolio. So we’ve seen some relief there that increases income. So it doesn’t have to be fixed by cap rate decompression necessarily, although that still may be a factor, a little bit lower interest rates, a little bit higher cap rate, but a lot more income because we have rent growth and expense compression will make a lot of difference.

Dave Meyer:
I want to learn more, Brian, about these ways to get scrappy. How do investors listening to the podcast right now find these deals? Because I’m with you. I think they’re going to be there, but like you said, you’re going to have to position yourself to get this deal flow. We got to take a quick break, but I’m hoping you can enlighten us right after this. Stick with us. Welcome back to the BiggerPockets Podcast. Henry and I are here with Brian Burke talking about opportunities that he sees coming in 2027 for commercial multifamily. I do want to get your take on the residential market, Brian, as well. But before the break, you talked about getting scrappy, finding opportunity in the margins. Can you give us some specific examples, maybe some actionable things that the audience can do to position themselves to at least see these deals when they start to materialize?

Brian Burke:
Yeah. I think no matter what it is that you’re buying, you’ve got to be out there and looking for this stuff actively. It’s not going to come to you. I think that’s probably the biggest thing. People want to say like, “Well, I’m going to wait for the email to come into my inbox about this great off-market deal.” Truly. Yeah. Right, exactly. It’s like that’s probably not a deal. I mean, you’re looking at a deal that everybody else passed on and now it’s hit your inbox. So you got to get yourself out there. So some specific examples of what we’ve done. So going to conferences and talking to people, especially where owners are present, I think is really good. Even brokers, and I don’t want to discount brokers to say that they don’t earn their commissions because they do. I mean, brokers are out there talking to all kinds of people.
And if you can have conversations with brokers and be well positioned to be that buyer that gets the call when the broker says, “You know what? Our deal just fell apart. Escrow got canceled and we’re desperate. They got to get this thing back in contract. We know you can perform,” that kind of stuff. There’s a lot of deals to be found just like that. Now, that requires a lot of reputational capital, right? Yeah. How can you get yourself in front of lenders, special servicers, banks? One great way is management companies. People always want to be like, “Oh, property management companies, they all suck and this and that. ” Well, come on. I mean, property management companies are the ones that are getting called by these lenders to say, “We’re going to take over this asset. We need you to come manage it. ” You want to know these property management companies and they can sometimes give you leads into things.
So try to go through the management company side. I bought several REO apartment complexes back in 2011, 2012 after the great financial collapse at extraordinary discounts that were brought to me by the property manager that was brought in by the lender. It’s a great way. Another way on the residential side is foreclosures. I’ve bought probably over five or 600 houses at foreclosure auctions on the courthouse steps where you’re bidding against other professionals, not a lot of amateurs who are just driving the price up to the moon. So there’s a lot of different channels you can look for these assets, but they all require an extensive amount of work and the deals won’t just come to you.

Henry Washington:
Brian, I want to play a little game with you. Since I am not a large scale multifamily buyer, I’m just a normal real estate investor and I want to try to connect the dots for maybe somebody else who’s just your average everyday normal real estate investor, but wants to prepare themselves for taking advantage of some of these opportunities. So I’m just going to spit off to you some of the things that I think I might do if I wanted to get in front of these opportunities, and then you tell me with your experience if these are good ideas or if they make sense.

Dave Meyer:
Or if they’re dumb.

Henry Washington:
Or if they’re dumb. Yes, please feel free.
So here’s how I’m thinking about it. If I have an idea that some of these things might be coming, especially if I’m a backyard investor, so let’s kind of narrow it down. I’m not nationwide. I want to buy in my market. First place I would start with are banks that I currently have a relationship with. Maybe I have loans there, maybe I have deposits there, and letting them know to let me know, because if I’m a good operator, to let me know if some of these opportunities come up and they’re looking for good operators to take over some of these assets, to put me on the front of their radar, contact me, let me take a look at the deal and see if it’s something I could do with it. That’s probably the first place I would start because I have a warm intro already.

Brian Burke:
First of all, it really depends upon the bank that you’re talking to. If you’re talking to Chase, Bank of America, et cetera- They don’t care. They’ve got REO departments. They don’t care. Yeah. 100%. Yeah. They’re not even going to deal with you. Most banks, what they do is they have a specific broker list that they’ll go to when they have an asset that comes back and they hand it off to a broker for that broker to list it and sell it on the open market. And they’ve got this whole channel set up already. Now, where you may find that this would work is if you’re at a smaller local bank, maybe something that has one or two branches. That

Henry Washington:
Is what I was thinking.

Brian Burke:
And they have a lot of small multifamily and small balanced commercial lending. If they’re lending out $50 million on 200 unit apartment complexes, you’re wasting your time, but if they’re loaning out a million five on a 10 unit deal or a $700,000 loan on a commercial strip, small little strip center kind of a thing or a little retail property, there you might get some traction if you can get in front of the right person. And there are banks like that. So that’s where I think if you’re going to employ that strategy, focus on it, employing it that way, as opposed to any of the other larger banks.

Henry Washington:
My two other strategies were going to be to call the title companies and find out who are the brokers that are selling the REOs, because they’ll at least have some exposure to who those brokers are that are representing, or the agents that are representing those REO deals when they get transferred, when they get sold, and then try to build relationships with them. And the last strategy would be to manufacture warm introductions to lenders. And I do that in the residential space right now by being members of the chambers of commerce and all the cities where I transact, because all of the community banks are members there, and I now magically get warm intros or they just will take my call because I’m in the same chamber.

Brian Burke:
Yeah. Now that’s a good idea. Getting the relationship, not like, “Hey, I’m looking for a deal.” Not like, “Hey, I’m a real estate investor. And if you get an REO, you need taken off your hands, put me on the top of your list.” That’s not it. But just general networking of having everybody know who you are and taking your call when it’s important. And maybe you find out about an REO that they get, you can call your friend who happens to be the bank president and say like, “Hey, what are you guys going to do with this thing?” And maybe you’d be able to head it off that, “Oh, we’re going to list it with so- and-so broker.” “Oh, I know so- and-so broker. He’s in the chamber too. I’ll give him a call and kind of work on it that way. “I mean, I will say this, no amount of effort, what I say is a total waste of time.
All the things that you mentioned are all things that you should probably do, but if you’re asking me to handicap your results and say,” Okay, 80% of your results are going to come from 20% of all the things you’re talking about and you only want to focus on that 20%, “that 20% wouldn’t include going to Chase Bank and saying,” Hey, if you get a REO, put me on the top of your list. “That’s not going to be in that 20%, but it only takes one, right?
So getting yourself out there every way that you can is the right thing to do, but I think you’re going to get the most of your results with management companies, brokers, and to a lesser degree, maybe smaller bank presidents at smaller commercial lending banks.

Dave Meyer:
We do have to take one more quick break. Stick with us. Welcome back to the BiggerPockets Podcast here with Henry and Brian Burke talking about the market, how to take advantage. Brian is a hot topic these days, but curious your opinion on syndications. You’ve obviously raised syndications, but you’ve been on the GP side of things, but a lot of them aren’t doing well. And I think that is given the premise, the whole financing structure of syndications a bad name. I have my own opinion, but let me just ask you, do you think those are coming back? Do you think syndications are things that investors should be looking at as we go into 2027? If you’re not someone who’s going to go out and do these strategies, could you still get in on these opportunities by investing in someone else’s deal?

Brian Burke:
Are syndications still a viable path? The answer is yes, but you have to be investing in a syndication that’s investing in a viable path. So if you’re investing in assets that are just going nowhere like multifamilies that don’t pencil, that’s probably not going to work out very well for you. And I think if it’s a little bit early right now to invest in multifamily syndicates, if I’m being quite honest, and it pains me to say this, being a multi-decade multifamily syndicator, but one that hasn’t bought anything in three and a half years and still isn’t, I think it’s still just a little bit early. And here’s why. And this is a distinction I think is really important, Dave, because we’ve talked about on this show and we’ve talked about on prior shows about a distinction between owning long-term assets like smaller multifamily, single family rentals, those types of things in your own personal portfolio for a long-term hold.
That’s much different than investing in a syndication that has a three to five year, we’re going to get a 20% IRR in this short window of time type of a mentality. That just does not really work right now because there’s still so much uncertainty about when is the market correction going to begin to happen and it hasn’t started yet. So you’re treading water until it does. I would just wait. And when the market starts to show clear evidence that it’s recovering, that’s the time to get in because your three to five year window is going to produce some really incredible results. Do you buy on the exact day of the bottom? No, but you don’t have to. If the market corrects for 10 years, it doesn’t matter if your three-year window begins now or a year from now or two years from now, you’re still out in three years and you’re still capturing the upside gain.
So I think there’s just no rush to get into those right now. And except of course, some types of real estate really are on fire right now and syndicates in those spaces are working out quite well.

Dave Meyer:
Yeah, I completely agree. I’m glad you explained that distinction that syndications just means investors pooling their money essentially to buy a bigger asset. So it frustrates me when people are like, syndications are bad. It’s like, no, you might have invested in a bad syndication. Operators are bad. Yeah, they’re bad operators. They’re bad deals, bad market timing, but the concept of putting your money with other people and experienced operators, I still think is a good one. But to Ryan’s point, you need to be able to underwrite the business plan, you need to understand the market cycle that you’re buying into. But if you understand those things, there’s nothing wrong with investing with an experienced good operator.

Henry Washington:
I mean, there’s two parts to it, right? You have to be able to evaluate the deal, so evaluate the underwriting, but you also have to evaluate the operator and evaluate the syndication itself. And I think those are two completely different skillsets. I mean, most people have a general understanding of how to underwrite a deal when they get into a syndication, but is there any quick tips or tricks of the trade you can give us to like, how do we vet these operators that are putting these syndications together?

Brian Burke:
Well, I happen to know somebody that wrote a book on this entire subject that gives you about 350 pages on exactly everything you look for.
And BiggerPockets published that book. It’s called The Hands-Off Investor. I wrote that in 2020, and it’s just as applicable today as it was back then that there are a lot of things you need to be looking at. And all the things you just mentioned, Henry, 100%. You need to be able to look at the asset and kind of the underwriting and the sponsor, but there’s one more piece to it. You also have to be able to understand the structure and what does the debt look like, when is the loan maturity, and where are we in the cycle? And some people would say, “Oh, all floating rate loans are bad, or all bridge loans are bad. It’s toxic.” Well, not necessarily. They sure as heck are bad when you’re doing them at the very top of a cycle. When you’re 10 or 12 years into a bull run, that’s not the time to get aggressive on short-term loan maturities and bridge loans.
But at the very bottom of a cycle, they serve a very useful purpose and are a really good tool, and you have a lot less risk of maturity at the bottom of a cycle than you do at the top. So kind of understanding and being realistic with where are you in the cycle, how is the capital being structured? What’s the experience of the sponsor? What’s their track record? Have they ever suffered through a down cycle and how did that work out for them and what was the outcome and what did they learn and maybe what do they do differently now than they did before the market cycle or important factors? But also the underlying real estate and its very thesis. Is it a sector of real estate that’s working right now with the overall macro environment or is it one that’s just not ready for prime time yet and you’re just trying to get ahead of it and you’re taking a gamble, that’s a bit of a roll of the dice.
So there’s a lot of different factors to think about and you need to think about all of them.

Dave Meyer:
Thanks, Brian. I think that makes a lot of sense and really good advice for people who want to get into the more passive side of real estate investing. Still a great way to do it. Highly recommend, Brian, I did read your book before I made my first syndication investment. I think I’ve read it two or three times and highly I recommend it if you want to learn how to do this stuff well.You’ve appropriately made some distinction between commercial and residential. We only got a few minutes, but tell us what are your thoughts on residential right now and the way that investors should be approaching residential deals in this climate?

Brian Burke:
Well, I think the residential market has gotten weaker over the last couple of years. I think four years ago, the residential market was really hot. Multiple offers, especially in my local area in Northern California, multiple cash offers on every listing, frequently well over the asking price. But now we’re not seeing that. I’m still a small time house flipper. I have a little side house flipping thing going on and we had one of our flip houses sat on the market for 11 months before we finally got it sold. And we made a profit on it still, but it was a long … That never would’ve happened two years ago. Two years ago it was like if you were on the market for more than three weeks, something was really wrong. Home sale transaction velocity is at its lowest rate since the early 1990s, if you would believe it.
And another interesting statistic that I saw is that the percentage of homes owned as rentals is declining and is at a significant low point from prior history. So that tells me that there’s an opening for residential landlords because there’s fewer of them. And I get it. A lot of them are frustrated and don’t want to deal with some of the landlord tenant laws, in which case you just invest somewhere else. But there’s fewer landlords in the single family space now, and prices are softening, transaction velocity is down. All of those things are kind of spelling opportunity to me, to the long-term holder. If you’re a newer investor trying to just make your first real estate deal and you’re looking … A lot of early real estate investors turn to single family homes because it’s accessible and understandable. It’s a great place to start. That’s where I started.
I think this is a better time to be deploying that strategy than it has been over the last five or six years or so, for sure. And if you’re in this for the long game, which I think you should be, then this has some compelling opportunities. And I think this is a really good season for you to really get out there and start to build that portfolio you’ve been dreaming about.

Henry Washington:
I agree with you. And some of the things that we’re seeing are, first and foremost, we’re seeing some of the best spreads on deals that we’ve seen in several years if you subtract COVID. Now, what’s not as good is rents aren’t growing as much as we would’ve previously anticipated. And so what I hear right now a lot of is flippers are getting out of the business because the market is slowing down. And some of that is true. But when I hear that, what I really hear, it’s not people are bad at flipping. It’s that flippers are bad at buying and they’re not adjusting their numbers to account for how different the market is. And I love the single family asset class because of the protections that it provides, because yes, it’s a smaller asset. It’s easier to understand. It’s easier to hold onto if things aren’t going as you planned because it doesn’t cost as much.
But that only works if you’re adjusting your underwriting and you’re truly buying them at a price point that allows you to do that. And the flippers and people I see that are struggling right now, it’s not that they don’t know how to renovate a house and it’s not that they don’t know how to market or sell a house, it’s that they didn’t buy it right and that is killing them.

Brian Burke:
Well, I couldn’t have said it any better than that, Henry. You nailed it 100%. But one thing that I think is key for people to listen to and what you just said right there is that flippers are getting out of the business. And what does that spell to you as a aspiring real estate investor?

Henry Washington:
It’s money for me, baby.

Brian Burke:
Yeah. It’s one less competitor writing an offer on the property you’re trying to buy. And so that’s music to your ears, right? So I think that’s 100%. Now here’s one reason why I like single family residential as an asset class, and that’s because I say that the best deals out there are like a needle in a haystack. Well, there’s about 300 million haystacks in single family residential. There may only be a hundred thousand haystacks in commercial multifamily, but there’s a lot of haystacks to look for needles and there’s a lot of deals out there. And if you look hard enough and you look in the right places, you can find them. And that’s really all it takes.

Henry Washington:
And I got my metal detector, baby. I’m good.

Brian Burke:
That’s what you

Henry Washington:
Need

Brian Burke:
Here.

Dave Meyer:
Yeah. I didn’t realize how easy it would be to find a needle at a haystack if you had a battle to three. That’s right. All right, Brian. Well, thank you so much for being here. As always, really appreciate your insights.

Brian Burke:
Thanks for having me back.

Dave Meyer:
For BiggerPockets, I’m Dave Meyer. He’s Henry Washington. Thank you all so much for listening. We’ll see you next time.