The Housing Market Is Shifting. Here’s What Rookies Should Do. (Rookie Reply)

Ashley Kehr:The housing market in 2026 is starting to look different than it did 12 months ago. Prices are softening in some markets, rates have eased slightly and sellers are more willing to negotiate than they have been in years. The question is whether you are positioned to take advantage of it.

Tony Robinson:And if you finally got a property under contract, c ongratulations, but the work is not done. We are going to walk you through exactly what needs to happen between now and closing day so nothing slips through the cracks.

Ashley Kehr:This is The Real Estate Rokie Podcast. I’m Ashley Care.

Tony Robinson:And I’m Tony D. Robinson. And with that, let’s get into our first question and our first question today comes from the BiggerPockets Forums. And it says, “I’ve been reading that 2026 could be a good year to buy because the housing market is starting to loosen up a little after a few tough years. Mortgage rates have come down slightly from 2023 and 2024 highs, and I’m seeing more price reductions in my market than I was a year ago. My question is, how do I actually read what is happening in a local market to know if conditions have genuinely improved? I do not want to convince myself the timing is right just because I want to buy. What data should I be looking at and how should a rookie be adjusting their strategy going into 2026 compared to what was working or not working in 2024 or 2025?” It’s a fantastic question.I agree with a lot of what this person who asked this question has said, but I think there’s one caveat or maybe correction that I want to add. From pre – COVID, if you call it 2018, 2019, all the way through the peak of COVID 2020 to that moment afterward when things just were going crazy, super low interest rates, 2020, call it to maybe late 2022. And even through 2023 and 2024, we saw different versions of the real estate cycle. We saw incredible competitives coming out of COVID. We saw really, really low interest rates. Before COVID, it was a little bit more of a stable real estate market. But I share that to say that during all of those different versions of the real estate market, people were still buying. Investors were still investing. And I think if a rookie investor gets too caught up on answering the question of, is now a right time to buy?They may inevitably talk themselves into the answer always being no and that they’re always waiting for maybe a better time to get started and better conditions and better interest rates and more willing sellers and whatever it may be. As someone who’s done a decent number of deals and had the good fortune of talking to people and way more successful than I am in the world of real estate investing, one thing holds true is that while maybe the volume and speed of your transactions may ebb and flow over time, the idea is that you’re continuing to look, you’re continuing to purchase. And what dictates whether or not you buy a deal is not necessarily what are interest rates today or how willing are sellers to sell something. The bigger question is, if I’ve underwritten this deal conservatively, does it work? And as long as you can say yes to that question, everything else kind of doesn’t matter.So I just want to highlight that first just from a mindset perspective because I feel there’s a lot of rookies who are probably hearing this question thinking, “Man, I’ve been thinking the same thing,” when really the question should be slightly different.

Ashley Kehr:Yeah. I really think that you can’t time the market, so you shouldn’t even be considering if right now is the good time have conditions genuinely improved because you should be basing it off the numbers of now. So if you’re going to wait for the perfect timing, you’re never going to know. You can have every expert tell you what they think is the perfect time to buy, but really any time can be good to buy if you find a good deal. And you’re looking at if you’re running the numbers based off of what the actual numbers are and the property still cash flows, then it is still a good deal even if you’re paying 8% interest rate. And all that means is that, especially, and I want to also clarify that this stays true for long-term buy and hold. So that could be a short-term rental, that can be a long-term rental, but a property that you intend to hold for a long period of time and have multiple options with so that you’re not going to have to sell this property in a couple years because that’s where you do get into trouble where you purchase the property and you did pay higher because the market was up, but now you need to sell it two years later and the market is down and you’re not going to be able to recap what you put into it, let alone get enough to pay off your mortgage.But if you are going after a deal where you’re able to hold it for a long time, interest rates may come down, they may not, but your deal needs to work at whatever percentage you’re buying it at.Down the road rates drop, you can refinance and that’s a bonus. You should never buy the deal based off of the fact that you can refinance later on and it will make money then. So don’t get caught up in what’s happening right now. If the market is bad in your area, there’s probably going to be good deals. If the market is hot in your area, it’s going to be harder to find good deals. So don’t get caught up too much on what’s actually happening as far as interest rates and things like that. Look at specifically the deal and do the numbers make sense? And yes, you want to take into all of the things for market consideration such as is there growth rate? Are there people coming to this area? Will you have renters and all of those things? But if you get caught up in timing the market, you’ll either never invest or when you do invest, it will surprisingly be the perfect time that you bought a property or it will not be, but there’s no way to actually time the market.So I would not let that be the deciding factor whether you purchase a deal or not.

Tony Robinson:All right guys, we’re going to take a quick break, but when we come back, we’re talking about what happens after you get a property under contract because this is where a lot of rookies make expensive mistakes and we want to make sure that you are not one of them. We’ll be right back after this.

Ashley Kehr:Okay. Welcome back. Here’s our second question for today. I just got my first investment property under contract last week and I am equal parts excited and terrified. I did a lot of research before making an offer, but now that I am actually under contract, I am not sure what I am supposed to be doing. I know I need an inspection, but beyond that, I feel a little lost. What the full checklist of things I need to do between now and closing day? What are the most common mistakes rookies make during this period and what are the things that can kill a deal that I should be watching out for? Okay, well first of all, I want you to go to biggerpockets.com/resources, make sure it’s plural because they’ll also take you somewhere else. And this is where we have a whole rookie library of different checklists and templates for you.So one of them is an actual acquisition checklist, so things that you should be doing when you’re under contract on a property. We have your first deal checklist. We have a property walkthrough checklist, what you’re going to be looking for when you do your due diligence. We also have another due diligence checklist. We have a property closing checklist. So all of those are free for pro members. Go to biggerpockets.com/resources, download them all and use them however you’d like. So really what these checklists do for when you’re under contract is they go over the things that you should be doing when you get your offer accepted. So like in New York State, you have an attorney, so you’re going to need to notify your attorney that you have a real estate deal that you’re doing. They get the contract and then they do an attorney aproval on it.So if you’re not in New York State, you would just use the title company directly. It’s setting up your inspection. You need to call an inspector. Sometimes your agent will do this for you. Then you go ahead and do your due diligence on the property. We have the due diligence checklist that shows you everything you should be looking for in the property and it’s not just maintenance items too. After you’ve gone through the due diligence, if you’re doing financing, then it’s time to work with the lender, get them everything that they need to actually make this deal cross the finish line. Any utilities, set up accounts with the utility providers. If you’ve never had a gas account before, go ahead and set one up so that when it’s time to switch the utilities on closing day, you have that all set up. Then when it gets closer to closing, you’re going to get your insurance in place.You’re going to have your utilities to start on that day that you take ownership. And then you’re going to set up any contractors to start right after closing that you need changing the locks on the property the day that you take ownership. So if you just go to biggerpockets.com/resources, have a ton of guides that you can just download that go through each of these steps that you need to take. And it makes it a lot easier than having to listen to me ramble on and read them off to you. So we’re going to take a short break, but when we come back, we’re going to be getting into the question that almost every investor in a high cost market eventually ask, “Can I make out – of-state investing work? And where do I even start?” We’ll be right back.

Tony Robinson:All right guys, welcome back. The last question today, and this one is for anyone living in a high cost of living market who’s been staring at deals that just don’t make a ton of sense and they’re just wondering if there’s a different path forward. So the question says, “I live in Southern California and the numbers on any property I look at locally just do not work. A decent rental in my area costs 700,000 to $900,000 and it rents for maybe 3,000 to 3,500 per month. There is no realistic scenario where that cash flows. I’ve been researching out – of-state investing in the Midwest where prices are lower, but I’m nervous about managing a property from 2000 miles away, not knowing the market, not having a contractor and not being able to physically check in on things. How do other investors actually make this work? What do I need to have in place before I pull the triger on my first out – of-state deal and what market should a SoCal investor be considering in 2026?Okay, all great questions. As someone who’s invested both closer to home and long distance also living in Southern California, I feel like I can speak to this from my own experience. I think there’s a few things I would say first is are you not investing in California simply because the numbers aren’t working or are you not investing in California because you can’t afford to buy there? If you can’t afford to buy in California, then maybe what I would challenge you to do is can you choose a different strategy aside from a traditional long-term rental? Can you short-term? Can you midterm? Can you do assisted living? Can you do a sober living facility? There are so many other ways that you can leverage real estate to still get an amazing return on your investment. Obviously I do short-term in California. We interviewed Han Stone who does assisted living facilities and he’s gotten the benefit of amazing appreciation and amazing cashflow.We interviewed Devonna, I can’t remember what episode Devonna was on, but she did sober living facilities in Southern California and she gets great appreciation, great cashflow. So there are other strategies that might work better than a traditional long-term rental where you get both the upside of long-term appreciation and you get the upside of increased cashflow. Now, if you do want to go out of state, again, my very first deal, I live in California, I invested in Louisiana. Didn’t really know that market well at all, but I built a team out there that gave me the confidence to be able to execute. Like you mentioned, physically checking on things, and I hear that often from aspiring rookie investors. But my question is, are you going to be the person swinging the hammer? If a pipe burst, are you going to be the person fixing it? Probably not.You’re going to pick up the phone and call a plumber anyway. So it doesn’t really matter if you’re there or if you’re remote because you’re going to pick up the phone and call someone regardless. So the first thing that I would do is if you want to get familiar with the market, go to the market, book a weekend trip, get there on Friday morning, leave late Sunday night, have an agent or multiple agents or property managers walk you around, show you the properties, give you the lay of the land. That way you get a better sense of what the city actually looks like. And then once you have your agent, have them start sending you deals that match your buy box and then ask your agent, “Hey, do you know a good contractor? Do you know a good HVAC person? Do you know a good plumber?Do you know a good this? Do you know a good that? ” And if you’re connected with the right agent, oftentimes they can be your conduit to then get you connected with all the other folks in that market. So biggerpockets.com/agentfinder, best place to go find an agent and they can be your starting team member to help you build confidence and build your roster in that market. So there’s a quick two-minute crash course on how to be successful, either investing locally in a high cost of living area or going to another market where the prices are more reasonable.

Ashley Kehr:Well, thank you guys so much for joining us today on Real Estate Rookie. If you have a question, make sure you head over to the BiggerPockets forums and it may be featured on our rookie reply episodes. I’m Ashley Heystony, and we’ll see you guys next time.