7 Best (Beginner) Markets to Buy Rental Properties in 2025 (Rookie Reply)
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Are you looking for the hottest markets to invest in for 2025? Everyone has a different buy box, but we're going to give our best ideas for where to start investing this year.

I'm Ashley Kerr, and welcome to the Real Estate Rookie Podcast. Tony just had a baby, so we have a special guest, Garrett Brown on from the Bigger Stays YouTube channel. Garrett, welcome to the show. Thank you so much for joining us on this episode of Rookie Reply. I'm super honored to be here. Always a fan to jump on and talk real estate with you. Yeah, so I pulled us a question today, and this question is, just curious on what's realistic?

and how some of these people posting on social media amassed so many properties. Seems like I see a lot of posts essentially claiming, look at my life and how we managed three companies and 300 rental properties. Many of these folks appear to be early to mid-30s. I'm 44, have household income combined, W-2 wages near $400,000, and just acquired my third single-family home rental.

Am I going about this wrong by saving up for my 25% down payment and finding a deal? My three rentals are great and cash flow, but I can't fathom how to scale to something as monstrous as hundreds of properties. Where do these people get the funds? What am I missing? So Garrett, we both see the people on Instagram saying, I have tons of properties.

So there is, you know, some of them that really have amassed that. And there's also some that maybe own 1% of those 500 properties that they're talking about. I will go ahead and lead off as somebody that has done social media for as long as I can remember and say that a lot of it is smoke and mirrors. You can always take that for face value and run a reason people do that type of content a lot is because it,

performs well on social media. It gets the most views. It gets the most engagement. That is the beginning of why people will throw out these outlandish numbers. And like you mentioned, some of them actually do have some of these numbers. Some of them have probably never been in a real estate deal in their life and they're trying to sell you

some mastermind course that they bought a course from somebody else. So that caveat alone will let you know that it's, you should not put yourself in competition with other social, social media people out there because a lot of it is smoke and mirrors. And I think that relates to everyday life too. Like when you're looking at people, you know, and they say, Oh,

How can they afford that? Oh, they went on this family vacation. Like social media in general, it's very hard not to compare yourself to others. And that's like the evil of social media, I feel like. So just as you wouldn't compare someone else's life in your hometown, also don't compare yourself to other real estate investors. So

As some of these investors that you may see on social media have amassed some of this, let's maybe talk about some of the reasons they could have done this, where maybe it's not as achievable. And I really think the first place to start is today's market. A lot of people started in 2020, 2021, the low interest rates and just boom.

gobbled up deals. I agree completely. A lot of it was when people started. But I think the one thing that also investors need to think about newer or more seasoned one is what are your end goals? Just because you see people that are so... They may have acquired 50 to 100 properties and things, but a lot of it, that may be their end goal. Some people may have more...

maybe simple goals, if you, for lack of better words, you want to call it that they strive to go after, because that what fits, that's what fits their lifestyles. Like even me personally, I, I have had opportunities to probably scale a lot quicker in a lot of aspects, but I,

I personally don't want 150 rental portfolio. I try to make sure I am reinvesting into the properties I have and making them as profitable as possible. And then also making sure that I'm not doing a deal just to do a deal. Like one thing I hear Luke Carl talk a lot about in STRs is door disease. People get this thing called door disease where they're so

interested in getting as many doors as they possibly can, and then they stretch themselves so thin. So if that is one of your end goals to get that big, there are many steps you can take to get there, but you don't need to feel that pressure just because you see other people doing it. And that's the only way you think you can have some super successful portfolio. A successful real estate portfolio does not matter how many doors you have.

It's how reliable that profit is coming from there each month and the ability for your own peace of mind where you wanted to build your portfolio. Garrett, I was actually diagnosed with that disease. I was in acquisition mode and it burnt me badly because I was just acquiring, acquiring. I was focused on how to

fun deals, how to analyze deals, how to find deals. And then it was like, okay, I get, you know, I got tenants in place and, you know, I would just push the properties aside. And since then I've learned that, you know, you need to actually have operations in place. You have to do asset management.

management. There's actually a lot of money to be made there. And I was leaving so much money on the table because I wasn't paying attention. I was just so focused on acquisitions. And then I ended up, I sold the property. I only owned it for a year, but I just had to like relieve myself. I was so overwhelmed on the tenant management side of things that I just needed that breathing room. And I even had a goal when I turned 30 and

to get 30 units by 30. And I missed it by like three weeks, but it was like, that was so ridiculous to have that goal. It should have been like a cashflow number or something like that. Instead of how many units that I needed to acquire. I think the thing to pay attention to is the more profitable you can make the properties you already have, whether, you know, short-term rental, long-term rental, whatever it is,

That will be able to fuel your growth going forward if you do want to grow more because then you'll be able to acquire partners probably a lot easier. You'll be able to build your network a lot more into this capacity to where you're showing a more successful portfolio that you have because you have made it as –

as profitable as possible with the assets that you're working with. And this will bring in partners and investors a lot easier when they're able to see like, okay, the ROI on the properties you have right now is amazing versus the number of doors you have and you're barely breaking even on a few of them. So that would be something I just wouldn't want any investor to get caught up in because there are many ways that you can scale quickly, but

you'll be able to have more success and be able to network much easier within these, these circles that can help you expand. If you have a more profitable portfolio to begin with, it doesn't matter how big or small it is. You showing that you have that ability to find a deal, make it to the highest and best use that you can achieve with it is going to speak volumes

volumes compared to the number of doors that you're able to acquire. And I think that kind of leads into the last part of the question is like, how are people paying for all of these properties? And it's by having partners or having other people invest with them, raising capital. I actually had somebody who is a very rookie investor. They have a small business. They're looking to buy their first investment property, which is a mixed unit.

unit building that has two residential and one commercial where they'd operate their business out of. And she was asking me, you know, like, I'm trying to figure out how to make this work. How can I buy this? And I was texting her all this stuff. And she's like, why do you keep saying raising money? It's not a charity. And it was just like, yeah, like a lot of people don't know about that as to like that. You can also have people give you money, right?

to buy property. And yeah, you don't get to just keep it and walk away. You know, there's has to be some value or whatever to that person giving you the money, but it is out there to raise money. So in most cases that for someone to grow and survive,

scale that fast, they're most likely taking on partners. They are using private money or even just like hard money lenders and then going and refinancing. They're doing fix and flips to build their own capital to put into rentals. They're doing syndications where they're

raising money, or they're actually just putting money into a syndication where they can say, oh, I own 500 units, but they own 0.1% of those 500 units. So there's a bunch of different ways that they could be funding those deals. That doesn't mean they're saving their W-2 income.

That's when getting in the room with like-minded investors, it pays off as well too. Attending BP Con, getting to the network events in your local areas, and just starting to meet people. You may not even have anything in particular, like a deal or anything in particular to present, but establishing some of these relationships, that is how a lot of these people are scaling quickly. And then finding, make sure you find the deal, the right deal. You need to get

become almost obsessed with making sure the deals that you are underwriting and putting your reps in. That way, when you have something that's a slam dunk, you'll be able to find money for it. And if you can analyze that,

to make sure how profitable it's going to be, that's where you can be able to find these partners that are willing to lend money. So finding the deal and being able to get the reps in to understand it is one of the most tremendous skills you can have besides networking. Now, Garrett, this person also mentions 25% down. Are they going about it the wrong way by putting 25% down? What would you say are some of the advantages and disadvantages of putting that much money down on a property?

The advantages I would say to putting that much down on a, on a property is, I mean, even with, you know, the climate of real estate today, you know, interest rates are a little higher than, you know, some of these people that were, were grabbing them back in 2020 and 2021. So, um,

You having to put that 25% down, the advantage is you're going to have less on the interest side you're having to pay, and you'll be able to find more lenders that are willing to lend to you because you have a 25% down payment. But there are a lot of flexible options that are out there just depending on what your goals are. You can utilize things as low as a 3.5% owner-occupied loan on a duplex or a triplex and get into it for months.

much less, but you need to be willing to know the sacrifices you're willing to make in your portfolio. Obviously, investors that don't want to go that route, you're going to have to find some more creative lending options that are out there. If you're looking into short-term rentals, there are vacation home loans that you can put as low as 10% down. There's DSCR loans, which are debt service coverage ratio loans,

Some of them on the long-term side, you can get as low as 15%. They're not as common, but more in the 20% range. So there are different products out there. And that's why working with a trusted lender that can give you a lot of these options really will help you kind of solidify what works best on your end when you are trying to scale in that kind of capacity. Yeah. And if you do need help finding a lender, you can go to biggerpockets.com slash lender finder.

But also, rookies, tax season is coming up. So if you need help navigating that, check out biggerpockets.com slash tax pros. You can get matched with a tax professional or financial planner in your area.

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Okay, everyone. Welcome back to the Real Estate Rookie Podcast. We have our second question today.

Mark.

with promising ROI potential and steady demand. Locations that offer a good balance between affordability and growth opportunities, especially for someone new to real estate investing. So Garrett Austin, that works at BiggerPockets, we had him on as a guest. And during our episode, he drops this bomb that he literally relocated and moved to a market based on the data. Yeah.

So this person seems to be willing to do the same. So where would you start to analyze the market to

move to. And Austin is definitely a great example of somebody that sees data and really will take action on it. And that's why he's such an amazing analyst. And then also understanding that some things will take a sacrifice depending on what you're trying to do. If you're in New York, there are a couple markets up there in the short-term rental world that I know still perform pretty decently. There's Poconos being one of the main ones, but there's a big crackdown that is

kind of happening in that area on how hard it is to get a permit. So that's something you really need to look into the regulations of that area. But it really will depend on where you are trying to go with your goals. If you're willing to move across the country, then obviously your pool opens up quite tremendously. And my biggest advice for them would be

Search, research the regulations for an area that you're looking into to understand if, you know, short term rentals are something that would be allowed there. You can go on something like AirDNA.co. They're basically the STR market data research leader. And you'll be able to get a sense of what the occupancy rates, what the average revenue that you might be able to bring in depending on your home is.

Then you're able to make a decision on if this is a market that you're actually wanting to possibly endeavor into. And I always tell people that if you're not 100% sure on if you want to be an STR host, because there's a lot more to the operations side than long-term rental, just make sure that the deal pencils out as a long-term rental as well in the city that you're possibly looking into, especially if you're on the fence.

Some areas, if you're full force ahead on short-term rentals, then this changes just slightly. But if you're not, make sure it pencils out as a long-term rental. You can use the BiggerPockets rental calculator to understand where the LTRs actually might land. And if they pencil out in both of those areas, you know that you're possibly onto a market that could be a potential win for you and how far you want to travel. That's completely up to you and tough to say. Yeah, I

think one of the biggest things is really deciding on that strategy first as to do you want to go with the short-term rental or do you want to go with the long-term rental and I really like Garrett's advice of you know if you do need to pivot make sure that you have another strategy in place like even a it

Could it work as a midterm rental? We've known plenty of people that have started out doing short-term rental and had to pivot to midterm or start out as midterm, have to pivot to long-term. So make sure you do have that second strategy. So there are some resources available at biggerpockets.com slash resources. The three that really come top of mind for me

In the Rookie Resource area, there is a Market Analysis template. So this template gives you every statistic and data that you should be looking at when you are comparing markets.

The next tool is you should be looking at the top markets for 2025, which was actually created by Austin, who we were just talking about. And when you go into this, he gives you the top markets, why they're the top markets and gives you the data behind it. Obviously, you know, maybe the number one market is not for you. And that's why you really need to figure out, you know, what is important for you. So another tool,

tool that you should use in the resources is the buy box. This will really help you narrow down your search because Tony knows this statistic, but how many cities there are across the U.S. to actually go through and just like

like throwing, you know, a dart at the wall and say, oh, let me start here and analyzing. So at least this, you know, this data can give you an idea of where to start when looking and analyzing, but you need to have some kind of buy box. So for example, if you're going to be living in this property, what are the must needs for you? Do you need a walk-in closet? If it's

going to be used as a house hack? Are you going to do rent by the room or do you need a whole separate unit? Maybe can you convert the basement to something? So I think really sitting down and building out your buy box and then also your budget. And you can narrow down the markets based off of that. But starting by looking at the data too will really help.

Absolutely. Figuring out your budget is also a tremendous key working with an investor-friendly lender that understands these things because the markets that you may be interested in, you might not be able to find anything that even makes sense for what you can afford. And that eliminates a lot of your time going forward knowing those type of details. So Garrett, off the top of your head, do you have any hot short-term rental markets right now that if you were in this situation...

And you say you had to move and it had to be a short-term rental. Maybe we'll do a YouTube series, a reality TV show of Garrett has to move to a short-term rental out of his house for six

months, what market would you pick or do you have several in mind? There's definitely several. I'm lucky enough. I'm in Houston, Texas. A lot of my short-term rentals are in Texas. There are quite a few markets within Texas that are just with the sheer amount of people moving here and just the tremendous amount of people that visit our four major metro hubs.

I would throw out San Antonio, Texas as one that still has relatively affordable markets that gets a lot of traction within the area. I know one market I particularly love, and if

If I was a little more flexible in some different things and planning to Logan, Ohio is probably the top market right now that it, it was up and coming in the last couple of years. And now it's a little more established and might be a little too hot, but, but Ohio in general is,

between Dayton, Ohio, Logan, Ohio, a few other markets in that area, they seem to be getting a ton of traction with tourism and their relative affordability still allows people to, to find out, um, different avenues that they can take in those different markets. What's in Logan, Ohio. Like what is driving people there? They have, uh, uh, uh, I'm pretty sure there's a national park, but they have something called the cliffs at Hocking Hills is, is the particular area. And, uh,

Um, this place has just kind of exploded. There's also a new one, new river gorge in West Virginia just became one of the newer national parks in the last couple of years. And that's another one that's gaining a lot of traction that I've, I've kind of looked around myself, um, to see what, what is available there. And yeah, I think those are two great markets. Hot Springs, Arkansas is another one that I've kind of divvied into. They're getting a little more strict on their short-term rental regulations, but finding a place that relies on tourism dollars like these markets is

means that they're never going to fully eliminate them. They might become more strict on how many can operate there, which allows the better operators to succeed and the ones that don't take hosting serious to kind of fall off a little bit. But those are a few markets out there. AirDNA is really a great resource. Yeah.

for our listeners that are regulars, they probably have heard of the new river gorge, West Virginia, because Tony had shared with us, I think it was last year, maybe the year before how he had a property under contract there. I think it was a, uh, for glamping and they were going to build all these glamping sites and things like this. And then it ended up not working out. I think it was more of the property, not the area, but, uh,

It had been really interesting to follow along him looking at investing there. Ashley, what are some of the favorite markets you've been looking in for LTRs in specific? I'm sure you research them all day, every day and try to figure that out. The tables have turned. Now you're putting me on the spot.

Yeah. So luckily I've had the opportunity to do a lot of market analysis on the BiggerPockets Real Estate Podcast with Dave Meyer. So some of the markets that I've looked into are Minneapolis,

It's just a growing city. They're really growing their waterfront. And then also Columbus, Ohio, affordable market. There's a lot of tech coming into those areas. But honestly, what I would do, and I don't know the best market for this type of property, but if I were to move to have a new primary residence that I would also have, you know, the availability to do short-term rental or long-term rental, right?

I would go and I would buy a lakefront waterfront property somewhere. I would put it in my name as my primary residence. So in New York state, at least you, if you're, it's your primary residence, you get a tax break. You get the star savings by being the homeowner and living there. So I could save on those high waterfront property taxes. And then I would hold the property for two years and

And then I would sell it for tax-free gains because I'd lived in it as my primary for two years. I'd have the best financing on it, a lower interest rate at 30, you know, fixed over 30 years. And then I would do live-in flips until I had the huge mansion waterfront property that I end up wanting to keep forever. So...

Columbus, Ohio, Minneapolis are two realistic cities that I love. But if you want to get adventurous, then waterfront property. Because they are making waterfront property more, as in these fake lakes are coming out, but still not as...

it, you know, as lavish or abundant as just your normal everyday property on a lot. So I would invest in waterfront property. Great advice. Water always does tremendously well on for your revenue, no matter what kind of your, what your action strategy is. Rikki's we want to thank you so much for being here and listening to the podcast.

We want to hit 100,000 subscribers and we need your help. If you aren't already, please head over to our YouTube channel, youtube.com slash at real estate rookie and subscribe. We have to take one final ad break, but we'll be back with more after this.

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Let's jump back in with Garrett. And we have our last question today. So this one is, I reside in Amarillo, Texas.

This home is for sale circa 1920s. The price seems right. Okay, so to give you some background on this property that he's mentioning, it is a five-bedroom, five-and-a-half bath, a state home with classical architecture. Square feet is $3,515. It is fully remodeled with updated finishes. It's a fully finished basement in Amarillo, close to the interstate, and plenty of off-street parking.

If you could buy it, what would you do with it as an investment? A short-term rental, event space, wedding venue, other things in advance for the ideas. Okay, so this question right here I think is filled with shiny object syndrome. And I know because I can relate. I have been there.

With this property, I look at it as to you fell in love with this property. You seem emotionally drawn to this property because it's so beautiful. It's so redone, but you're trying to make a strategy that will fit the property because you want the property.

not because it already fits your buy box or it fits the strategy that you want to do. Trust me, this has happened to me so many times where I've looked at a property and said, I need to have that. What can I do with it?

When really it should be the reverse. You should figure out your why, your goals, and then your buy box and, you know, what your strategy is. And then find a property that fits that strategy. Because if you are going to do event space, a wedding venue, even a short-term rental, those are all business plans that have to come into place. That's like heavy operations, right?

Which if that is what you want to do, if that's what you're looking for, then yes, go all for it. But make sure you're not a real estate investor and your plan isn't just to invest in real estate, but that you actually want to operate a business too. Tremendously agree with that. Especially I'll tackle the event side just really quickly because the answer I have for that is if you want to do events, go.

then that is one whole other beast of a business you'll need to learn about. Or if you have a background in it, it makes a lot of sense. I hear people all the time in short-term rental space say, oh, I'll buy this property and then I'll have some wedding venues on it. And one of the first questions I ask them, I go, have you ever been involved in the wedding business and know anything about it? No, it can't be that hard. And they don't understand the

county red tape you have to go through to have this type of commercial property, the insurance regulations that you're going to be dealing with. It is its own beast. So if you're not fully in the event space and you're just thinking about it, it's something I would never recommend to, it's not your original business plan unless you want to go that space. I got to briefly look at the property and I know actually the Amarillo area pretty well

That's something I've looked at. It's definitely a growing metropolis within Texas. The things I've seen from a lot of the short-term rentals there are there's a lot of mountain views and the highest performing ones in that market. It has a very high score according to AirDNA. They rank markets from zero to 100. And I think it was in the 75 range, which is on the higher end. But

if you look at the properties that are performing the best there, they are all mountain view properties that are in the large side, but they also have completely different aesthetics than this property particularly does. The other thing I like to point out when I'm looking at a market is the average estimated annual revenue in this area for something that big is about $100,000 for what's performing there. I tried to get about 20% of what the purchase price is

in estimated annual revenue when I'm just diagnosing an STR. So if it's averaging about $100,000, I would not want to go much higher than a $500,000 purchase price. Obviously, there are some properties that may waver that a little bit. But as the data I just looked at,

And using AirDNA to see what your competition is and Airbnb as well, just going and seeing what are some of the more sought after properties in that area. You're going to see that more than likely this isn't going to be your highest performing STR because it doesn't seem like the market, the people traveling to that market are looking for this type of stay.

So I would just, anytime you're looking at a property and potential, if it doesn't hit that 20% rule of the revenue you're going to have versus the purchase price, it's going to be a lot harder to benefit the cashflow that comes from STRs and because you're going to have to do the extra operations and everything that goes involved with it. So I want to have quite a bit of

upside within the STRs that I do look at. So I would definitely vote on researching a little more before you commit to this type of property, just because you fell in love with how it was redone. And older properties have their own things that definitely are a hindrance going forward, even if it has been fully remodeled. So I'm sure you can even speak to

all the different remodels and flips that you've done to kind of give that feedback on it. Yeah. I mean, I'm doing a property right now that was built in, I think it was 1870. And

And it, um, it, what I bought it as a rental and it was remodeled. I mean, nothing super high end, so it made a great rental, but it was really nice. And so I bought it in 2020 and I've had a tenant in place since then. So, you know, almost five years and the tenant, we just had them move out because we're actually going to sell it because the market has just appreciated so much in that area. The rent isn't keeping up with what the

property values are. So we're going to cash out on this property. So we haven't been there in five years because we've just had the tenant in there. And oh my God, the house was like in the upstairs sagging to the one end, like

The tenant left behind some cat food and I took one of the cans of the cat food, turned it on its side. And that thing just rolled so fast to the other side of the room. It was like, you felt like you were drunk walking up there. So I, this is like my first real big structural rehab project. So I, I,

brought in a company and they've been going in and basically they, you know, there was a support wall that was taken out at one time before we owned it. And so they've just been kind of inching it up. They'll go in like every three days or something like that. And they jack it up a little more and they put in new support beams and all this different stuff. So it ended up being a $7,000 job. They originally quoted me, I think like 4,500, but like, that's just one,

issue. And that was when I bought that property, it was not like that. There was maybe a little slant, but

Just over the last five years, that slant that has progressed, when you are buying an older home, exactly what Garrett said, just because it's remodeled doesn't mean that everything is going to be perfect and okay. But I also have other properties from the 1800s that are built sturdier than if I built a house today too. So there are definitely pros and cons. But I think a really important thing, and I learned this from James Dienard,

is know the construction time periods in your market. So James invests in Seattle and his primary goal is to like purchase properties within a certain timeframe because that was the best construction that was done during that period of time. Or like he knows during this period of time, they used, you know,

you know, something, a product that he doesn't like that you would have to go back in and rip it out. Like say, for example, asbestos, like he knows during this timeframe, all these homes have asbestos in them or different things like that. So also knowing your market as to timeframe and materials of when things were built and how they were built too. How did he figure that out just from experience or talking with contractors? And did he have any tips on how he kind of learned

a little more of how to kind of hone in on what may be the proper timeframe in those areas? That's a great question. And usually he just tells me things and I don't ask any follow-up. I just listen.

But I would assume because I think he's like getting to that he's done over like 3000 flips at this point right now. So I think it's probably from experience that he has learned. But I think that's something you could learn from reaching out to other investors, the builders to, you know, different contractors, especially like.

businesses that have been around for a long time could probably walk you through, well, you know, in the 80s, we built houses like this and the 90s like this and how they changed too. But I don't know specifically how he did, but that's a great question.

Well, Garrett will have to have him on to answer that for us. I always love talking with James. Okay. Well, thank you guys so much for joining us for this episode of Real Estate Rookie Reply. And big thanks to Garrett for joining me. Garrett, you actually have a new way for people to follow you and learn more.

more about short-term rentals. Absolutely. We just launched BiggerStays YouTube channel here at BiggerPockets that covers all things short-term rentals, the whole BiggerStays ecosphere. We have a weekly newsletter, a lot of different content and downloadables. I actually just put out a download not long ago that covers how to choose an STR market. That's on BiggerPockets right now. All you have to do is get your login to sign up and it's going to be a great resource for anybody looking to get into the short-term rental world.

Garrett, I saw your resource for the bookkeeping and taxes resource. This was with Baseline that did it. It's one of our favorite bank accounts to use. I use it for my security deposits and tenant screening. But with them, you put together a kind of a guide for bookkeeping.

And I thought this really complements well how we're launching the biggerpockets.com slash tax finder too. So you can find that resource if you need help with your taxes and your bookkeeping and not handing your CPA a box of receipts at the end of the year. You can go to biggerpockets.com slash resources and biggerpockets.com slash tax finder.

I'm Ashley and he's Garrett. Thanks so much for joining us and we'll see you on the next episode of Real Estate Rookie.