• 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."