• Dana Bull has invested in long-term rentals throughout her entire career.
• She's experimenting with a mid-term rental in 2025 to combat high interest rates.
• Generally, mid-term rentals offer higher revenue but require more management than long-term leases.

Dana Bull started building her real-estate portfolio in 2012 when she bought her first property.

Over the next decade, she expanded to more than 20 units in her Massachusetts market and hit financial independence by sticking to the same general strategy: buying quality properties with upside and filling them with long-term tenants.

Bull, who is also a real-estate agent and consultant, told Business Insider that she "swore off investing a couple of years ago." Managing properties is time-intensive, noted the mother of four.

But when a charming single-family in Marblehead came on the market in the fall of 2023, she broke her promise.

"This little place in my town caught my eye, and I really wanted somebody else to buy it," said Bull. "It was when the interest rates were the highest that they've ever been, like 7.75%, so nobody wanted to buy anything. And I was like, 'You know what, I'll do it.'"

Listing it as a mid-term rental to combat high rates

Higher interest rates mean a higher monthly payment. For an investor, that can make it more challenging to generate positive cash flow.

To make the numbers work on her latest acquisition, Bull decided to experiment with a "mid-term rental," which targets people looking to stay for one month or more, but less than a year.

"It's my first experience with something other than a long-term rental. I'm kind of in uncharted waters, but it's been great," said Bull, who plans to test out the mid-term rental strategy for at least 18 months. It's more work than managing a long-term tenant, but she said she's bringing in more revenue doing shorter leases.

She could earn even more if she had more time and could lease the unit herself, rather than working with an agent.

"I have a leasing agent who I pay a lot of money because it's a lot of work to continue to keep it leased," she said. "It's a great strategy for anybody that has the availability to do the leasing on their own."

The leasing aspect of the mid-term rental strategy is the most challenging because it's less mainstream than the short- and long-term strategy.

"If you want a long-term rental, you know you're going to be on Zillow or work with a real-estate agent. If you want a short-term rental, you also have set channels: You have Airbnb, Vrbo," Bull explained. "There's a website called Furnished Finder geared toward mid-term rentals, but it's not very well known, and it's not nearly as big as something like Airbnb."

She advertises her place on Furnished Finder, takes it on and off Zillow depending on when it's available, and sends neighborhood mailers.

It helps that she's starting to understand her typical tenant, she added: "The trend is that grandparents want to come and help out with the kids, but the parents don't have room in their home, or the grandparents want their own space, so that has been my target audience."

Mid-term rentals as a viable strategy for 2025

Bull doesn't expect mortgage rates to drop in 2025. She also doesn't advise letting rates or other factors outside your control dictate when you buy real estate.

"I wouldn't base my whole plan around, 'Well, I keep hearing rates are supposed to drop,'" she said, noting that current rates are in line with the historical average. "This is kind of where rates sit. So, if they were to drop, that would be great, but I wouldn't be banking on it."

If you're financially prepared to invest in real estate in 2025, rather than waiting, run the numbers to see if a short- or mid-term rental could make sense in your market.

"Look at some alternative leasing approaches. Usually, they're more lucrative if they're shorter," said Bull. "One idea would be to start with something like an Airbnb, with the goal of transitioning after two or three years into something more passive, like a long-term rental."

Real estate is a long-term game, she added: "You have to look beyond year one — the numbers are always going to be tight year one, no matter what the market conditions are — so, what are your projections going to be by year five?

"And then, what can you do in the interim to maybe make this property work? That would be focusing on neighborhoods and communities where you can balance both of these plays: It's going to attract a short-term rental tenant but, down the road, you can pivot into a longer-term tenant."

That's likely what she's going to do, especially if she can refinance again.

Bull has already refinanced once, which shaved about $250 off her mortgage, she said: "I'd love it if they dropped again and I could save another 250. At that point, I probably would transition it to a long-term rental because it would be lucrative enough and less of a headache, but right now I'm just experimenting for my own curiosity and I want to understand more about this niche."

• Real-estate investors shared their predictions for 2025 and top advice.
• One investor says to think long-term and don't expect interest rates to drop.
• Another says to spot opportunities by looking at 'days on market' on a listing.

Experienced real-estate investors don't expect mortgage rates to drop significantly in 2025, but they tend to agree that it could be an excellent year to invest in a property.

Arguably, any year is a good time to dip your toe in if you're financially prepared.

"Some of the best advice I can give somebody is just understand that you can never perfectly time anything," said Matt Laricy, a Chicago-based investor and agent who has done over $1 billion in sales and closed thousands of deals.

His advice applies to prospective homeowners, as well: "You have to live somewhere, so is it really worth waiting one or two years to maybe get it for 10% less, but in the meantime, you spend 20% more on rent? Are you really winning?

"Just know that the best time is when you're financially ready."

Here's what Laricy and other veteran investors and agents predict will happen in the real estate game in 2025.

Dana Bull says to think long-term and not wait for rates to drop

If you're looking to buy a home or invest in real estate in 2025, don't wait for rates to drop before making a move.

"I wouldn't base my whole plan around, 'Well, I keep hearing rates are supposed to drop,'" said Massachusetts-based investor and agent Dana Bull, noting that current rates are in line with the historical average. "This is kind of where rates sit. So, if they were to drop, that would be great, but I wouldn't be banking on it."

Instead, figure out how to make the numbers work in a high-rate environment. That'll mean getting creative.

"Look at some alternative leasing approaches. Usually, they're more lucrative if they're shorter," said Bull, who has always done long-term rentals but is experimenting with mid-term in 2025 to improve her cash flow. "One idea would be to start with something like an Airbnb, with the goal of transitioning after two or three years into something more passive, like a long-term rental."

Real estate is a long-term game, she added: "You have to look beyond year one — the numbers are always going to be tight year one, no matter what the market conditions are — so, what are your projections going to be by year five?

"And then, what can you do in the interim to maybe make this property work? That would be focusing on neighborhoods and communities where you can balance both of these plays: It's going to attract a short-term rental tenant but, down the road, you can pivot into a longer-term tenant."

Matt Laricy predicts the market will 'take off like a rocket ship'

"I expect 2025 to be the best market since 2022. I think the market is going to take off like a rocket ship," said the top Chicago real-estate agent, adding that, "obviously, every market is extremely local."

In his market, rents are very high, and, "it's almost cheaper, when you factor out your down payment on a monthly basis, to buy than it is to rent," he explained. "So, you are getting a lot of people who are going to buy just as a result of that." Plus, employees should have more certainty around their company's return-to-office plan, which could promote settling down and buying: "A lot of people rented because they were uncertain of their future."

Laricy also predicts that prospective buyers will adjust their rate expectations: "I think people have now realized that 2 and 3% are never going to happen, and are like, 'At a certain point, I either have to continue to be a renter for the rest of my life, or I have to be a buyer.'"

His advice for navigating a competitive market is, first and foremost, understand the basics: where you want to buy, what type of property you want to buy, and a realistic budget.

"It sounds easy. But for buyers, it's really hard," he said.

Regarding your budget, Laricy said to assume a home will sell for higher than what it's listed at. Study your market to see how much homes typically go over the asking price and factor that in. If it's $50,000, for example, and your budget is $500,000, look at homes listed for $450,000.

If you know exactly what you want and what you can afford, you'll be able to move quickly, which is essential in a competitive market.

"Know that you have to do things on their time, not your time," said Laricy, referring to the seller. "When something comes on the market, you need to move, and you need to move fast."

Mike Zuber says it'll be a good market for investors and to focus on 'days on market'

California-based investor Mike Zuber expects 2025 to be a "unique" opportunity for investors.

"I think there are some people that will just have to sell — life events, death, divorce, all of that," he said. "And unless the house is perfect, no owner is going to buy it. The general public is basically out of the housing market. So if you have a house that's a little dated, a little old, a little bit too close to busy streets, you're going to eventually have to sell to an investor — and we're going to write offers that make sense at a high cost of capital, call it 7, 8%."

His advice is to pay attention to the number of days a property has been on the market to land the best deals.

"Go on the general MLS, Realtor.com, Zillow, Redfin, and just look for homes that have been on the market for 50 days, 60 days, 90 days, 100 days," he said. "We're seeing days on market explode, and that just tells you that that seller is eventually going to be motivated or they're going to just take it off the market. So, do they need to sell or do they want to sell?"

If they need to sell, you'll be in a better position to negotiate.

As for what number to look for exactly, start by understanding the average 'days on market' in your area. Then, look for listings where that number is double, said Zuber: "Anything that's two X the average days on market is a good sign to go fishing."

Nyasia Casey says to know the laws in your area and understand seasonality

Rules and regulations that may affect real-estate investors are constantly shifting. In New York City, where investor Nyasia Casey lives, a new law going into effect in June 2025 shifts the burden of broker fees from renters to landlords.

"Essentially, landlords have to pay broker fees now — not the tenants. So, if you're a landlord, you have to factor in that cost now," said Casey, who rents in NYC but invests in Baltimore. "A lot of landlord and tenant laws are changing in certain areas that you need to be mindful of because it will affect how much money you're putting in and how much money you have to set aside."

She also emphasized that seasonality matters, whether you're buying and holding or buying and flipping.

She said that as a general rule of thumb, "buy in the winter, sell in the spring."

Whether you're listing a rental or trying to sell a flip, you want to find a tenant or a buyer in the summer.

"Once you get past October, you're going to have a difficult time, and you may lose money, whether it be you have to lower your price for a flip, or you have to lower your rental price just to get someone in there so that you don't bleed money," she said. "So just be mindful of when you're putting that house on the market, when you're buying it, and when it's going to be finished."

Ludomir Wanot encourages investors to save up to make a move

"As of October, we're seeing about a 29% year-over-year increase in homes for sale, so what I'm seeing is the market is showing signs of balancing and the conditions are becoming more favorable for buyers compared to the last five years," said Seattle-based investor Ludomir Wanot, who built his wealth wholesaling and now runs an AI company that helps lenders communicate with their clients. "And so the best thing right now we could do is save our money for opportunities that arise."

He doesn't expect rates to drop significantly in 2025, "so learning and utilizing creative financing is going to be your go-to," he said, recommending strategies such as seller financing, subject-to agreements, and private lending could help investors lock in better terms and avoid excessive borrowing costs.

Wanot's top advice heading into the new year, however, is to actually implement what you learn about online. Taking action could be as small as joining a real-estate community and networking.

"People are buying programs, they're going to the events, they're watching people come up onstage and talk about how wealthy they got through a particular strategy. But very few people actually implement anything they're being taught," he said.

"The day we actually stop listening to and reading all these stories, podcasts, and YouTube videos and actually apply ourselves is the day we're finally going to start seeing progress in our lives."

• Real estate investors share the strategies they're using in 2025.
• One investor is buying mobile home parks for tax incentives.
• Another is leaning into mid-term rentals, which tend to cash flow more than long-term rentals.

Prudent real estate investing can create long-term wealth, and while every investor has their own unique circumstances — from how much risk they're willing to take on to how much cash they have accessible — there are lessons to be learned from veteran investors.

Business Insider asked top real estate investors who have achieved financial independence or are on their way to doing so about their plans for 2025.

Here's a look at how they are positioning themselves as we head into a new year and what trends are driving their decisions.

Ludomir Wanot is buying mobile home parks for the tax incentives

Seattle-based investor Ludomir Wanot, who built his wealth wholesaling and buying long-term rentals, is adding mobile home parks to his portfolio.

They can be depreciated at a faster rate than other investment properties and significantly reduce an investor's taxable income, he explained: "The government actually allows you to depreciate at least up to 60% of the purchase price of the value of the asset in year one. I bought a million-dollar property in New York. I was able to depreciate up to $600,000 of that in the first year, and so that basically reduced my taxable income to zero."

It's a win-win, he added: "I'm providing housing for people that only make maybe $1,000 a month and I'm providing it to them at a significantly lower rate, around $200 a month. They get to live in a good community, I get to rebuild a community, and I get this crazy incentive from the government."

Mike Zuber is looking for motivated sellers

Mike Zuber, who built a portfolio of rentals in Fresno that allowed him to retire early, is expecting to see "more motivated sellers" in 2025.

"I think there are some people that will just have to sell — life events, death, divorce, all of that," he said. "And unless the house is perfect, no owner is going to buy it. The general public is basically out of the housing market. So if you have a house that's a little dated, a little old, a little bit too close to busy streets, you're going to eventually have to sell to an investor."

That's good news for Zuber and other property investors looking for deals. He's prepared to "write offers that make sense at a high cost of capital."

Dion McNeeley is considering selling a property and capitalizing on an IRS rule

Dion McNeeley, who spent over a decade carefully building a portfolio of rental properties throughout Washington State, has never sold a property.

"I'm the slow, boring investor: Save up a down payment, buy the next place; save up a down payment, buy the next place," he said.

That may change in 2025, partly due to an intriguing tax benefit he'll be eligible for.

McNeeley's most recent real estate project was buying and rehabbing a duplex. He lives in one unit and rents the other. In July 2025, he'll have owned and lived in the duplex for two years, which qualifies him for the Section 121 Exclusion, an IRS rule that lets taxpayers exclude up to $250,000 of the gain from the sale of the property. The main requirement is that you must use the home as your main residence for at least two of the five years preceding the sale.

"I could sell it, make a couple hundred thousand dollars in profit, and not have to pay a penny in taxes — and either go and repeat the process somewhere else or go buy something with the gains and have a bigger, nicer place," said McNeeley, who plans to make a decision in July after doing an appraisal.

Nyasia Casey is testing a strategy she might want to scale: Building tiny homes

Nyasia Casey, who lives in New York City and owns investment properties in Baltimore, is excited about a new 2025 project: building a tiny home on a plot of land that her friends own in upstate New York.

"I'm going to buy a trailer and build a tiny house. I'm going to keep it on wheels so I can transport it if I wanted to go somewhere else with it — if I buy my own land," said Casey, who is starting the build in the spring.

She'll likely experiment with listing it on a short-term rental platform like Airbnb, she said: "I like the idea of it being a more affordable option for people to go and explore instead of renting something for $300 a night. So, it's something that I'm testing out and then if it works, I will definitely consider buying land and doing a couple more."

Dana Bull is experimenting with mid-term rentals

Massachusetts-based investor Dana Bull built wealth by following a specific strategy: buying quality properties with upside in solid areas and filling them with long-term tenants.

However, with the most recent property she purchased and renovated in 2023, she decided to experiment with operating a mid-term rental, which is a lease agreement that typically lasts between three and nine months.

"It's my first experience with something other than a long-term rental. I'm kind of in uncharted waters, but it's been great," said Bull, who plans to test out the mid-term rental strategy for at least 18 months. It's more work than managing a long-term tenant, but she said she's bringing in more revenue, which is helpful since she bought when interest rates were relatively high.

Bull has already refinanced once, which shaved about $250 off of her mortgage.

"I'd love it if they dropped again and I could save another 250," she said. "At that point, I probably would transition it to a long-term rental because it would be lucrative enough and less of a headache, but right now I'm just experimenting for my own curiosity and I want to understand more about this niche."

Karina Mejia is expanding her portfolio, starting with a BRRRR

Karina Mejia, who owns investment properties in Boston, where she lives, and Augusta, Georgia, sat out 2024 in terms of acquisition but plans to expand in 2025.

"I definitely would like to continue purchasing property primarily because of the tax advantages," she said. "This year, I didn't close on anything, and so I'm really going to see the effect of that on my taxes."

She's under contract for a three-family home in Boston and plans to close at the end of January.

"I'll end up renovating and BRRRR-ing it," said Mejia, who is also an agent and jumped on this property when she saw it. "I have it under agreement for 850 and the appraisal came back already at 930 in its as-is condition. I'm projecting to put some money into it and I know that the ARV, or the after-repair value, will end up being over a million so I may even be able to get back more money when I refinance than I'm putting into it, which would be great because then I get my money back and I can invest that in another property next year."

Peter Keane Rivera is leaning into his rent-by-the-room strategy

Part-time investor Peter Keane-Rivera, who owns single-family homes in the greater Seattle area, is leaning into his rent-by-the-room strategy.

"I'm looking to expand my single-family home, room rental portfolio," he said. "My strategy will be to accelerate my purchasing of real estate while learning how to scale my room rental operations."

Finding tenants to share a space hasn't been a challenge yet for Keane-Rivera, who lists his rooms on Roomster, Roomies, and Facebook Marketplace.

"There are a lot of different subgroups looking for something more economical: people coming out of college, people getting their first job, people who just got divorced," he said. "I would say everyone that rents with me is looking to save money."

The room rental strategy produces generous positive cash flow, around $1,000 a month per property, and lowers his risk, he said: "You diversify your cash flow by having four tenants under one roof instead of one. Very rarely will you have all your tenants move out, and if you do, that's indicative of some bigger problem that you should probably go fix."

• Real estate investor Ludomir Wanot shares strategies anyone can use to find deals.
• He doesn't expect rates to drop in 2025 and encourages investors to lean into creative financing.
• Strategies such as subject-to financing can help investors avoid excessive borrowing costs.

Real-estate investor Ludomir Wanot wants other investors to know that there are deals to be found — you just have to know where to look.

"I love rentals. I love to see the physical, tangible assets," the Seattle-based millennial, who built his wealth wholesaling and now runs an AI company that helps lenders communicate with their clients, told Business Insider. "The proven, consistent strategy that's worked for me over the last seven years is sticking with the rental strategy of buying at a 30% discount to appraised value, making sure it cash flows at least $500 a month, and the property has to be in an opportunity zone — and I find these properties all the time."

He's acquired five units in Oregon in the last five months, which BI verified by looking at settlement statements.

"They're definitely out there," he said. "But sometimes they're not in Washington. Sometimes you have to look outside the state."

Wanot shared strategies that any investor can use to find deals, what types of properties he's looking for and what he's avoiding, and the simplest way for anyone to break into real estate investing in 2025.

Source off-market deals through wholesalers

One strategy for finding deals is to look for off-market properties — meaning, properties for sale that are not listed on the multiple listing service. While more difficult to find, they're typically easier to negotiate thanks to less competition.

There are various ways to find off-market properties, from real-estate auction websites to Craigslist to door-knocking. There's also wholesaling, which is when the person acting as the wholesaler finds and buys a discounted property and then sells the contract to another buyer.

Having done wholesaling for years, Wanot is aware that "there are wholesalers that consistently find discounted properties, and you can find those people on Facebook, through investment communities, they're all over."

He encourages investors to meet with wholesalers in their area and provide them with specific property criteria. If you're new to investing and haven't yet built a network, start by attending real-estate meet-ups or joining online real-estate communities.

As Wanot has learned, "Surround yourself with people who know more than you, ask questions, and build relationships with all different kinds of people you meet because you never know when you can work with them down the road."

Maximize cash flow with creative financing

Wanot doesn't expect rates to drop significantly in 2025. To get a property to generate positive cash flow in a higher-rate environment, he recommends leaning into creative financing.

"With interest rates remaining high, traditional financing methods may not yield the best returns," he said, but strategies such as seller financing, subject-to agreements, and private lending could help investors lock in better terms and avoid excessive borrowing costs.

Seller financing is when the buyer buys directly from the seller. The seller acts as the lender and provides a loan with agreed-upon terms about things like the interest rate and schedule of payments.

With subject-to financing, the buyer takes over the existing financing. The buyer doesn't actually assume the mortgage — it remains in the seller's name with the same terms — but will make mortgage payments on behalf of the seller.

Private money lending is another way to avoid a bank or traditional mortgage lender, and can be a "great way to avoid high interest rates and fees," said Wanot, adding: "I've had a lot of luck sourcing private money lenders through real estate Facebook groups."

Look for single-family homes that need work

"If you're a new investor, I'd definitely go after the distressed, small single-family homes," said Wanot.

Another tip is to look for property where the seller has "at least 50% equity in the home and has owned it for a long time," he said, as they might be more motivated to negotiate, especially if they're managing it from out-of-state. "I'm looking at owners who are over the age of 50 because the older owners tend to want to get out of the real estate space. It is so draining and requires a lot of physical and mental work."

Wanot owns multi-family properties but has found that they're more difficult to make the numbers work, at least in his current market.

"If you're a sophisticated investor, yes, small or large multi-families are good if you actually have run your numbers 1,000 times and you know exactly what you're looking for," he said. "There have been probably five properties that I was going to buy in the last year that I didn't pull the trigger on because the profit and loss statements that were given to me were significantly different from the actual bank statements."

A common mistake he's seen investors make, especially when it comes to these big multi-families, is just paying attention to the P&Ls, "which are made by the property managers or the owners of the property and show one story," he said. "They're not actually going through the bank statements and seeing what actual revenue is coming in and what expenses are going out."

He also advises avoiding the BRRRR — buy, rehab, rent, refinance, and repeat — method in a high-rate environment: "It hasn't really been working the last couple of years because the interest rates are so high right now, and so smart investors are moving away from that."

The easiest way to get started: Rent a portion of your home

For most new investors, the simplest and most risk-averse way to get started is "creating rentable units in their single-family home space," said Wanot, referring to a strategy known as "house hacking."

This requires owning a primary residence and converting a garage, basement, or even a bedroom into a rentable space. If you have a bigger budget and meet zoning requirements in your area, another option may be to build an ADU.

At a minimum, renting out a portion of your home will reduce your mortgage — and could even fully cover it. Lowering your monthly housing payment could then help you save up to buy a proper investment property.

Wanot's top advice heading into the new year, however, is to actually implement what you read about and learn. Taking action could be as small as joining a real estate community and networking.

"People are buying programs, they're going to the events, they're watching people come up onstage and talk about how wealthy they got through a particular strategy. But very few people actually implement anything they're being taught," he said.

"The day we actually stop listening to and reading all these stories, podcasts, and YouTube videos and actually apply ourselves is the day we're finally going to start seeing progress in our lives."

• To find deals, Dion McNeeley focuses on how many days a property has been on the market.
• The investor targets properties that have been listed for at least three times the average.
• The 'days on market' strategy helped him negotiate a seller down by $100,000.

Real-estate investor Dion McNeeley used to prioritize speed when making an offer.

"The first 10 years of investing, I wanted to be fast. I wanted to get an offer in within a day or two of a property hitting the MLS," the veteran investor told Business Insider, referring to the multiple listing service.

Now, with a 16-unit portfolio that generates enough cash flow to more than cover his lifestyle, McNeeley is less focused on acquiring properties quickly and more concerned with finding the best deal. To do so, he's paying attention to one specific metric: the number of days a property has been on the market.

Generally speaking, the longer a home has been on the market, the more motivated the seller will be. "Long" is relative to the average time a home sits on the market, which varies by location. In some areas, the average could be 10; in others, it could be 30.

McNeeley, who studies his market in Tacoma, Washington by looking at listings daily, knows that the average home sits for six to nine days, at least in December of 2024.

His rule of thumb is to take the average and triple it. That's the number you're looking for when looking at listings. In his case, he rounded up the average to 10 and is looking specifically for homes that have been listed for at least 30 days.

When he comes across a property he likes that meets his days-on-market criteria, he makes an offer that will get him the return he's looking for.

For example, the latest property he purchased — a duplex that needed a lot of work done — had been on the market for over 100 days. It was listed for $500,000, but based on the renovations McNeeley would need to complete, he calculated that the deal would only work if he could buy it for significantly less. BI verified all of his property ownership claims.

"I offered 400,000 because that's the number that made sense for me," McNeeley said. His offer initiated a two-month negotiation. "I never moved from 400. It went from 500 to 477 to 444 to 422. When I got another offer accepted somewhere else, I contacted them to say I was pulling my offer. They said, 'We'll take your 400.'"

If you're going after a home that's been on the market for longer than average, there may be something wrong with it, and it's important to do your due diligence. Or, it could simply be listed poorly.

"Maybe the agent was lazy and took bad pictures or doesn't have it listed correctly," said McNeeley.

In his case, it was a bit of both: The property, which he purchased in July 2023, ended up needing $62,000 worth of renovations, which he was prepared for, and it wasn't what it appeared on the listing. It was listed as a single-family home but was actually a duplex, which he found out by calling the gas and utility companies and asking how many meters there were.

"It had two meters for electric and two meters for gas. Everything about this was duplex, but the picture looked like a house, and the realtor listed it as a house," he said.

Talking to the gas company, he learned that the gas hadn't been paid in months and had been shut off, further indicating that he could be working with a motivated seller.

"That's one of the reasons when I offered 400,000, I didn't raise the number," he said, figuring, "If the seller has to sell, they'll take my number. If they don't have to sell, they'll just leave it listed, or they'll take it down and not sell. So, you're not always guaranteed to get a low offer accepted. Sometimes people don't have to sell — they are just willing to for a higher amount."

• Dion McNeeley used a buy-and-hold strategy to build a 16-unit rental portfolio.
• He experimented with the BRRRR method by purchasing and renovating a duplex in 2023.
• He could eventually sell the property and leverage an IRS rule to avoid capital gains tax.

Dion McNeeley spent over a decade carefully building a portfolio of rental properties throughout Washington State.

"I've never sold a property. I've never done a cash-out refinance. I've never taken out a home equity line of credit," he told Business Insider. "I'm the slow, boring investor: Save up a down payment, buy the next place; save up a down payment, buy the next place."

His buy-and-hold strategy allowed him to quit his day job in 2022 and retire in his early 50s. He had enough rental income coming in from his 16-unit portfolio to sustain his lifestyle and then some.

In 2023, he decided to experiment with the BRRRR — short for buy, rehab, rent, refinance, repeat — method and purchased a beat-up duplex outside Seattle.

"I don't think people should start investing with the BRRRR strategy. There are so many mistakes that you can make with the after-repair value, the estimated cost, and the estimated time of doing repairs," said McNeeley, who scaled his portfolio by "house hacking," a strategy that involves buying a multi-family property, living in one unit, and renting out the rest. "I didn't do any BRRRRs to reach financial freedom and retire early."

The early retiree shared his experience doing a "live-in BRRRR" — he lived in the duplex while doing renovations — including how he found the property and added value, and the strategy he could eventually use to sell and sidestep capital gains tax.

Finding a deal by focusing on 'days on market'

The first step to successfully executing a BRRRR is finding a distressed property with potential.

Real estate investors tend to agree that you make your money on the purchase — not on the sale. To land a good deal in 2023, McNeeley focused on one specific metric when combing through listings: the number of days a property has been on the market.

"I'm watching what are called 'days on market,'" he said. Generally speaking, the longer a home has been sitting, the better chance you have of negotiating a deal with the seller. "Long" is relative to the average days on market, which varies by location. "In some, it's 10; in others, it's 30."

In his area in Washington, he said the average is between six and nine days. He narrowed his search to properties that were listed for at least three times the average, or about 30 days.

The duplex he ended up buying had been on the market for over 100 days and was listed for $500,000.

"I offered 400,000 because that's the number that made sense for me," said McNeeley. After about two months of negotiating, he got it for the number he wanted. "I never moved from 400. It went from 500 to 477 to 444 to 422. When I got another offer accepted somewhere else, I contacted them to say I was pulling my offer. They said, 'We'll take your 400.'"

Putting $62,000 worth of renovations into the property

When McNeeley bought the duplex, one of the units was "completely destroyed," he said. "It needed drywall, plumbing, electric. It wasn't livable."

The unit he moved into wasn't much better. It was "close to not livable," he described.

He said he spent $62,000 and 10 months renovating. In May 2024, a tenant moved into the second unit.

"With the appreciation of the last year and the other unit being rented, the property is worth about $700,000, so I've made close to $300,000 in profit," said McNeeley, who bought the house in cash.

Avoiding financing was important to him.

"One of the biggest problems with the BRRRR method is the funding source," he said. "For the 'repair' part of BRRRR, a lot of people borrow hard money because they want to buy a property that you can't get traditional lending on. That hard money will have a higher interest rate — and usually within six months or a year the interest rate goes up a lot, so you want to get the repairs done and get it rented out within that six months or a year, whatever your timeline is, and then refinance to a traditional mortgage."

He bought in cash to avoid the time crunch.

The price of doing a 'live-in BRRRR': Living in a construction zone

The 'live-in BRRRR' has been lucrative for McNeeley. When he started the project, he moved out of the unit of one of his properties — a fourplex — and filled it with a tenant. Now that all four units are rented, the property is "almost making $4,000 a month without me living there," McNeeley said.

He moved into the duplex, which he purchased in cash, so he doesn't have a mortgage. He pays taxes and insurance, but the unit he fixed up rents for $2,125 a month and more than covers his expenses, "so I'm being paid to live where I'm at," he said.

The major tradeoff was living in a construction zone and without a kitchen and bathroom for months during the renovation

"I would literally go to the state park up the street to take showers. It was almost like camping for two months," said McNeeley. "I was willing to do some things that people aren't."

What's next? A cash-out refi or selling and avoiding up to $250,000 in capital gains tax

Now that the rehab is complete, the next step of the BRRRR method would be to refinance.

"I could do a cash-out refinance and get my money back because I've added the value to the property," he said. "I could take $500,000 or $600,000 out and go buy another rental and increase my cash flow. That's a good outcome."

Or, he could divert from the BRRRR and sell the property. This option intrigues him because of the Section 121 Exclusion, an IRS rule that lets taxpayers exclude up to $250,000 of the gain from the sale.

The main requirement is that you must use the home as your main residence for at least two of the five years preceding the sale, which McNeeley will satisfy in July 2025. If you're selling a vacation home, for example, you can't use the exclusion. You can also only use the exclusion every two years.

"I could sell it, make a couple hundred thousand dollars in profit, and not have to pay a penny in taxes — and either go and repeat the process somewhere else or go buy something with the gains and have a bigger, nicer place," he said, adding that he likely won't do another live-in BRRRR because of the rougher living conditions.

"I probably won't know until July when I have an appraisal done on if I'm going to do a cash-out refinance or I'm going to sell the place," he said. "It's really hard to make a decision when both outcomes are positive."

• Real estate agent and investor Dana Bull says don't count on rates dropping in 2025.
• Instead, she offers two tips for securing a lower mortgage rate in any environment.
• She advises talking to at least three lenders and considering temporary rate buydowns.

If you're looking to buy a home or invest in real estate in 2025, don't wait for rates to drop before making a move.

"I wouldn't base my whole plan around, 'Well, I keep hearing rates are supposed to drop,'" said investor and agent Dana Bull, noting that current rates are in line with the historical average. "This is kind of where rates sit. So, if they were to drop, that would be great, but I wouldn't be banking on it."

As of December 2024, the average 30-year mortgage rate fell to 6.30% from around 6.56% in November.

That doesn't necessarily mean you'll end up with a rate in the 6-7% range if you're buying property in 2025. Bull, who is financially independent thanks to her personal real estate portfolio and works with buyers in Massachusetts, shared two strategies to lock in a lower-than-average mortgage rate in any environment.

1. Negotiate

"People don't really realize that you can negotiate your rate," said Bull. "I know it's uncomfortable in our culture to feel like you're haggling over a rate, but I think it is really important going into a purchase that you are trying to negotiate the lowest rate possible."

It's especially important in today's environment, she added, as purchase rates are lower than refinance rates: "If I were to go and refinance property right now, I would have a higher rate than somebody who wants to go and buy that same property today. I know everybody just says, 'Buy it, don't worry about it, refinance if rates drop.' But rates need to drop significantly enough for you to be able to go and secure a lower rate as a refi."

Bull recommends talking to three different lenders, including at least one bank and one mortgage lender.

"The banks can be a little bit more nimble," she explained. For a first-time homebuyer, for example, "a bank is going to have access to certain programs versus a mortgage company." That said, "the mortgage companies are often really big, so there are some advantages there."

If you talk to three different lenders, you'll likely get three different rates — and they could vary more than you think, Bull said: "We are seeing so many fluctuations."

If you have a rapport with a lender, you can always give them the chance to match the lowest rate you were offered.

"If they can't, unfortunately, it's a business transaction, so you'll have to make a hard decision," she said. "If somebody comes in with a significantly lower rate and everything else is the same essentially, it does make sense to go with that lower rate, so long as that lender is going to be able to close the deal."

2. Consider a temporary rate buydown

Temporary rate buydowns, which reduce the buyer's interest rate for a limited period, typically between one and three years, have become more popular as rates have increased.

"It's in the form of a buyer credit," explained Bull. "There is a max amount which will depend on several factors, like purchase price and prepaids." As an agent, she works with the lender to determine the exact numbers for each property.

Bull says that she and her clients are turning to buydowns, which are negotiated between buyer and seller, in cases where the properties aren't as competitive, don't have multiple offers, or if they're working with a motivated seller.

"Instead of negotiating something like a closing cost credit or negotiating on price, we might be negotiating something called a '2-1 buydown,'" she explained. This lowers the interest rate for the first two years of a loan. "For instance, the first year, if they were ordinarily going to get an interest rate of 6.5%, we can figure out what amount of money is needed to get them down to 4.5% that first year, and then the second year maybe it steps up to 5.5%. That can shave thousands of dollars off."

This could make sense for a buyer who predicts the first few years of ownership will be cost-heavy, and a lower rate could provide some cushion.

"It's not always something that you can negotiate, and it doesn't always make sense, but there are definitely situations where we're doing it because why not?" said Bull, adding that it's important to consider your priorities before doing so because you can't negotiate everything.

"If you have a seller that's willing to negotiate, then you can decide, 'Should I be negotiating a buydown? Should I be negotiating a credit? Should I be trying to get them to repair stuff at the property?' It's looking at the bigger picture and deciding, as a buyer, what would be most helpful for me at this point?"

• Real-estate agent Dana Bull advises submitting home offers two days before Christmas.
• In general, buyers are distracted during the holidays, so it can be a good time to score a deal.
• Another good window of opportunity is the Fourth of July weekend.

If real-estate investor and agent Dana Bull was looking to expand her portfolio, she'd be putting in offers in late December — specifically, two days before Christmas.

December 23 is her "favorite day of the year to submit an offer," she told Business Insider. "I find that sellers are very interested in getting a deal done going into the holidays or going into this year."

Bull works in real estate in a variety of capacities: She's a licensed agent, does real-estate consulting and coaching, and is a seasoned investor who owns multi-family and single-family homes throughout Massachusetts.

She's learned that if you want to land a good deal on a property, timing matters.

"It's always a good time to be deal hunting during a distracted market," Bull said — and people tend to be distracted over the holidays. "Most people are just in coast mode, but if you're not in coast mode or if you can take yourself out of coast mode, this is such a great time."

Starting a negotiation a few days before Christmas is a good time for several reasons.

"In general, people are in good spirits, and sellers tend to feel a sense of relief if they receive an offer because they usually aren't expecting one," she said. "Christmas Eve puts a deadline to get things wrapped up with the negotiating and creates a sense of urgency."

She says she would avoid submitting an offer on actual holidays — "it's a bit rude and unrealistic to get a response" — but the days following Christmas are fair game. "I almost always submit an offer that week. It's a time of great reflection, and sellers are generally motivated to put a deal together so they can enter the new year with a plan in place."

The holiday window of opportunity is small. A couple of weeks into January, "it's like a light switch comes back on," she said, noting that mid-January is one of her busiest times of the year for consultations. "What I've noticed is this herd mentality where everybody just ebbs and flows at the same time, so if you can be flowing when everybody else is ebbing, this is when you can negotiate."

That said, "You don't want to make a bad purchase just because it's a good time of year," Bull added, but if you can carve out time to look for deals when most other investors aren't, you could be rewarded.

"There are always these pockets, like the Fourth of July is another great time where people have signed off, and I'm almost always working with somebody that weekend to try to scrounge something up."

Seasonal swings aren't a myth, and they can be significant. In her market, for example, "Massachusetts has huge seasonal swings in average pricing by like $100,000."

Regardless of your market, however, in the winter, "prices always come down," Bull explained. "And then they're going to start to climb. Then, in the summer they come back down again and they climb again in the fall. Every year it's the same quarterly trend, so if you are looking to buy a house, right now is one of the best times."

• Jose Palafox used a DST 1031 exchange to defer taxes on his Portland rental sale.
• The strategy allows reinvestment into a trust, so Palafox no longer has to manage a property.
• It wasn't the simplest strategy to execute and involved a lot of paperwork and moving parts.

In the summer of 2024, Jose Palafox took advantage of a little-known tax strategy called a DST 1031 exchange, which allows investors to avoid capital gains tax on the sale of a rental property.

Palafox was ready to sell his Portland rental, which had become more of a headache than a cash cow.

"My HOA fees had increased, my taxes had increased, and rents in Portland had gone down, so I wasn't making much if anything," the San Francisco-based millennial told Business Insider. "And I hadn't ever wanted to be a landlord."

He found himself a landlord when he got a job offer in the Bay Area while living in Portland. Rather than selling his primary residence at the time, he converted it to a rental, heeding common advice to hold onto real estate: "Everyone told me, 'Buy a house and don't sell it.'"

Executing a DST 1031 exchange, in which you sell a property and reinvest the proceeds into a Delaware Statutory Trust (DST), not only allowed him to defer capital gains tax — it also released him from landlord responsibilities. He essentially exchanged his Portland condo for a DST, which holds commercial real estate assets, and now owns fractions of high-grade institutional properties. He receives a $550 dividend payment each month, which BI verified by looking at a deposit made into his checking account from the DST.

Palafox says he's bringing in more from the DST than he was when he was renting his condo, and the investment is completely passive.

It was the right move for him and his financial situation — he didn't need to touch the proceeds from the property sale and could afford to reinvest it — and he avoided a tax consequence while gaining exposure to real estate assets he could never have afforded as an individual investor.

Of course, the process, which Palafox completed in the summer of 2024 according to an exchange statement viewed by BI, didn't come without its barriers to entry. Here are the challenges he faced before and during the exchange.

1. You have to be an accredited investor. To do a DST 1031 exchange, you have to be what's called an accredited investor. There are a few ways to qualify: having a net worth over $1 million, not including the value of your primary residence; having an annual income of $200,000 as an individual or $300,000 if you're married and filing jointly (this is how Palafox qualified); or having certain professional certifications, such as the Series 7, Series 65, or Series 82 licenses.

Unless you're an accredited investor, it can be difficult to even find information about various DST sponsors, noted Palfox, who hired a financial advisor to walk him through his options: "You have to be a qualified investor in order to even see the list of available DSTs."

2. Prepare to deal with a lot of paperwork and multiple parties. In Palafox's experience, there was a lot of paperwork — he said he signed about 10 documents via Docusign from start to finish — and there were a lot of moving parts. In addition to his advisor, he worked with a real-estate agent to list and sell his rental, two separate title companies (one for the property sale and another for the DST), and the DST sponsor.

He also had to find a qualified intermediary (QI). This is a neutral third party that holds the home sale proceeds until the investor buys their replacement property.

3. It can be an emotional roller coaster, especially when your money is with the QI. The most unsettling part of the process for Palafox was immediately after he sold his rental.

"For a period of time it felt like I had no idea where my money was from the sale," he said. On paper, his six-figure sale proceeds were in an escrow account, "but beyond a piece of paper I docusigned and the general say-so of people I'd never met on email I didn't really know how I would get my money back if I had to. My wife accused me of getting into a Ponzi scheme for a while."

He still has some anxiety about his investment because it's so different from anything else he owns. The only "proof" he has that he owns anything is an email from his DST sponsor congratulating him for his purchase, "which is still kind of terrifying," he said.

4. It could complicate your tax situation. "One thing I am not looking forward to is paying taxes," said Palafox. "Depending on the product you could be paying taxes in multiple additional states. I will use an accountant but I expect some increased costs and complications to file come tax time."

Even once you've gotten past the major barriers to entry to doing a DST 1031 exchange, "it's still a lot more challenging and in some ways less satisfying than clicking a button on your favorite trading app and buying stocks or crypto," he added. "There's no ticker to watch, these are boring investments that produce boring returns."

Still, he'd deal with the paperwork and stress all over again if he could go back, particularly because of the "UPREIT" option. Palafox said that what really sold him on this strategy was another tax code "loophole," of sorts, known as the 721 exchange, or UPREIT.

Eventually, a DST will end (most have a predetermined lifespan of five to 10 years), at which point his options are "to either 1031 into another DST or, ideally, be bought by a REIT fund that wants to own and operate these buildings longer term," he said. "Using a 721 exchange, I can roll into the REIT fund, again deferring taxes. At the end of this process, I would own shares in a private or public REIT, which I could fractionally liquidate. So, if I want to sell half of my investment, I could."

In short, at the end of his DST, he could get into a REIT without causing a taxable event.

"When I finally understood the flow from my investment into a REIT fund, the light really went off for me," he said. "I remember saying, 'Wow, this is the future,' and now I'm a bit of a fan, I guess."