Houses suck as rentals! Here's why

There are some glaring problems with single-family investing right now. On today's episode, I'm going to go over what the biggest hurdles are, and I'm going to make a case for you on why you should shift your business model. Not because single-family never works, but the ways that you make it work are not sustainable and not scalable. I'm going to go into this in detail, and I'm going to propose a business plan that will work much, much better for you on this episode. And I think it's going to be a lot simpler. So if you're looking at building single-family, duplex, triplex, fourplex, maybe it's the price point, maybe there's some angle or gimmick that you found online where you're like, hey, I think I can scale this and push my margin. I'm going to make a case that is going to save you a lot of time and ultimately make you a lot more money. Oh, by the way, welcome to the channel. Why would you listen to me? Well, I've done a whole lot of these businesses. I've done Airbnb. I've done short-term. I've bought duplexes. In fact, I've bought 11 duplexes in my portfolio. Today, I own almost none of them. I've done the small property thing. I've done large properties. I've also done boutique resort. I own the Robin Hood Village Resort, an 18-cabin resort with waterfront. So when you're talking short-term, long-term, multifamily, single-family, I have done it all. I will tell you what works. If you want to know how to make the most money with the least amount of effort and ultimately, I think, have the most fun, I'm going to show you how to do that exactly in this episode. So let's dive right into it. The glaring issues, and you've probably seen this all over online, there's a whole bunch of influencers that are going, oh, rentals no longer work. You just can't buy for cash flow anymore. Well, first of all, that's absolutely BS. I would never in a million years buy a deal that doesn't cash flow day one. Tried it, don't like it. Every time that you buy a rental property, it needs to increase your income. That way, every time you close, you get a raise for the rest of your life. If you repeat this again and again and again, ultimately you end up with a ton of money coming in relatively passively every single month. If that sounds good to you, I'll tell you, being on the other end of this, it feels pretty good. It's nice to not have to worry about the money coming in and minimal hours of working on acquisition and management. I really like it. I highly recommend. So why doesn't single-family work? Well, the first thing, and I think the most important, single-family is not designed to be an investment. It's designed to be a house for people who want to live at the property. People want to buy houses. This has always been the American dream. Now, yes, we're slowly shifting to a renter nation, but we're not there yet. The core American dream is still, hey, I want to save up one day, buy a house. And as someone who's owned multiple houses that I've lived in, it's fun to own your own space. It's fun to get to design the own space, especially as people get into the age where they want to start a family. There's a lot of advantages to homeownership that they don't teach you on the financial classes or the like, oh, just always rent your space. Sometimes you just want to own where you live. And I think that's a lot of Americans. Which means the pricing is designed for people who want to own where they live. What else is single family designed for? Now, over the past few years, because of the difficulty in getting cash flow in single family that was never designed for cash flow, people have found different ways to push the margin. Airbnb was the big one, though it's slowly dying. There's still a lot of Airbnb. There's midterm rentals that are currently actually working very well as a strategy for a lot of people. I actually think it's the best single family strategy currently available. Higher margin, midterm leases, and there's a bunch of different ways to get them. And then you have the people who are doing the co-living. It's my least favorite way to push the margin, but they essentially make everyone roommates. It's management heavy, it's difficult to scale, but it's a way where you can push that income much, much, much higher for an individual single-family property. Because of this, people are finding ways to make more money with them, which means people will pay more money. So if you do conventional purchase and you're competing with people who want to live in the house and call it their own, or people who have other methods to make a higher yield than you, other people are willing to pay more than you are for the same property. Therefore, you no longer can cash flow in single family in most markets. The only places that we're consistently seeing cash flow is areas with declining population. You can buy so cheap that you can get to cash flow. Now you have to ask yourself, do you want to have an entire portfolio full of cheap properties? Is your goal, hey, I want to have a cheap— I want to be the best slumlord in the country? I don't think so. At least that's not a business I'm interested in. Not rewarding. And also because they're inexpensive, you have to do a ton of transactions. You're talking about adding like $100, $200 of cash flow a month every transaction. If you're trying to get to $10,000 a month or more, you're going to have to buy again and again and again and again and again. And one disaster happens at one property, it can wipe out most of your cash flow. So single family doesn't work for a series of reasons. Too many transactions to get from A to B. The competition's wrong, and it's a business that's not designed to be a business. You are taking a normal single family residence and trying to make more money off it. Here's the case for multifamily and why I really like this, or if you want to do the short-term rental thing, why you should do boutique hotel as opposed to the individual Airbnb. It's easy to get in the mindset of, well, it costs less money, so it's easier for me to get in. I'm going to dispel that right now. The bigger the deal, typically the easier the raises. Until you get into the multi-million dollar raises, it's more attractive for more people to invest in something that's bigger than they can do on their own. So your actual ability to buy these low to no money out of pocket is going to increase dramatically. And again, boutique hotel and midsize multifamily— we're talking 5 to 50 units. We're not talking Titanic properties. We're not talking the 300-unit mega complex that just got built right down the street. We're talking about something built in the '80s, '90s, early 2000s. It's 5 to, you know, 50 units at the most. That is a sweet spot where you can operate. It's low capital raises. It's not capital intensive. You can track investors too, and it's designed very specifically to cash flow. So that's argument number 1. Buy bigger will actually make it easier. So if you're stuck in the mindset of like, well, it costs less, so it's easier to obtain. I need to find less money. Stop doing that immediately. You create an opportunity. That opportunity, the cash flow and the upside of the actual opportunity is what attracts capital. In my experience, and I do have a good deal over the last 32 transactions, it is much easier to raise $1 million for a fantastic cash flowing deal than a speculative single-family house. Your investor pool is actually much larger. $1 million in multifamily, much easier to find. Than $100,000 in single-family. So that's my first piece of advice for you. Second is the scalability. I only need to succeed about once a quarter, and really twice a year would still do it. If you bought a couple of 25-unit buildings and each of these cash flow $3,000, $4,000 a month, you add $8,000 a month for life and it adjusts with inflation. So every year it goes up a little bit over time. On average, you do very, very well here. But if 2 transactions can get me to $8,000, $9,000, $10,000 a month, and I do this every single year consistently, once every half year, once every quarter, maybe up to 4 deals, you start accumulating hundreds of rental units without doing a lot of volume. The sustainability of this, the management of this, the systems— you can build a business that spits out tens of thousands of dollars instead of scraping your way to your next $5,000 or $10,000 over multiple years with tons of transactions and a lot of headache. My last argument, negotiating deals. Single family, you tend to get a whole lot of problems in the small properties buying from the small mom-and-pop owners. They're usually selling because there's some problem with the property. They bought it to be passive, they've run it incorrectly, it's not passive at all. You're coming in and fixing substantial problems. That's the majority of the deals we see. So you have to push the margin by building an ADU. So you have to be a little micro developer, or you have to switch the use to Airbnb and spend the time time, money, and risk to get it there. On multifamily, you are negotiating the deals based on the cash flow today and the future upside, which is just a factor of how well you run the property. The appraisals are done on your net operating income, not on what your neighbors just sold their property for. So your ability to find debt products, to find capital, the transaction volume— everything is easier. And at the end of the day, walk around a 25-unit building or a 50-unit building, the feeling you get being like, I own this, versus walking in front of a random house somewhere that you'll probably never go in again, it's a different feeling. It's a bigger business. You— it's more rewarding. And ultimately, you're providing housing to people who want to rent. You're not taking homes off the market. You're not competing with everyone else. So hopefully those 5 or 6 reasons is enough to change your mind if you're looking at single family. To go, hey, this year— right now I'm filming this in 2026— right in the beginning of 2026, if you're sitting here going like, hey, 2026 is my year to dive into real estate, I think I'm gonna go buy my first investment house, here's my challenge to you: increase it by 5 units. Do something commercial. It doesn't have to be huge. Buy a 5-plex, buy a 12-plex. Do a slightly larger property where you're going to find easier to manage, more availability, more cash flow, easier to find the money, easier to close. And easier to manage. Hope this helps. I'll see you guys on the next episode.