3% Interest Rates in 2025? This “Hack” Unlocks It

Want a 3%2025 is a brand new landscape for real estate investors. Whether you’re growing your portfolio or investing for the first time, you sort of need to understand the tactics that work today, not the tactics that work yesterday, not the ones that are going to work in 2026, the ones that work right now. So today I’m sharing my top five real estate hacks of 2025 that you need to move forward on your path to financial independence. Do you want a 3% mortgage? I bet you do. So watch and find out how to get more. Hey everyone, it’s Dave head of Real Estate investing at BiggerPockets and an investor for 15 years now. And honestly, a lot has changed in those 15 years and also in some other ways nothing has changed. For me, the big picture stuff is really all the same. I still take a long-term approach to real estate investing.I am always looking for the highest risk adjusted returns no matter what year it’s I look to buy great assets at good values. In other words, in good prices. I want to continue to earn active income as efficiently as possible, so that gives me more money to invest. None of that stuff really changes. That’s my big picture strategy. But the tactics, the stuff that you’re actually doing each and every day, that stuff actually has changed the type of assets I look for, the types of financing, actually even the markets that I invest in, those have and will continue to evolve. So in today’s episode, I’m going to be talking about five tactical things that almost anyone can use to get ahead in 2025. Some of these are things that I do myself, some of them are tips that come from the hundreds of conversations I have every single month with successful investors and then today I’m sharing them all with you.Alright, my first number one hack for tactics you should be using in 2025 is to be offer ready. And when I say offer ready, that means that you are ready to pounce. You have all of your ducks in a row so that when you find a good deal in this market and good deals will emerge in this market. We’ll talk a little bit more about that in just a minute, but if you have all of your ducks in a row, you will be able to capitalize on the transitional market that we are in right now. If you look at the data or you just talk to real estate investors who are doing things on the ground, what you see is pretty clear that there’s a split in the market. Inventory is going up and so there’s more deals and still the majority of them are bad.You don’t want ’em, and that’s kind of always the case in real estate investing. You’re never going to have a time when everything that hits the MLS is a good deal, but right now to me, the difference between good deals and bad deals is particularly wide because a lot of sellers are just stuck thinking that they can get prices from last year or two years ago. Well, that’s just not true in the majority of markets. Meanwhile, some people are getting more and more motivated. We’re having more motivated sellers. So that means better deals are coming, but they’re going to be few and far between, and that means the people who are going to succeed in 2025 find great deals, add to their portfolio are the ones who are ready to pounce on those opportunities when they find them. So that is sort of the overarching hack that I want to share with all of you, but there’s actually a couple of other steps that you should probably learn about in order to actually be offer ready.The four things you really want to focus on is one your team. That means having a great investor friendly agent because if you’re going to write offers for the majority of people, they need an agent to be able to do that. You also need an agent who is really good at comping in today’s market because as I just said, prices are all over the place, and so if you find a deal that you like, it’s a great asset. You need to not only make sure that it’s an appropriate price right now, but ideally in 2025 you want to be buying below current comps. A lot of markets right now are at risk of modest declines, one 2%, something like that. So ideally when you’re buying right now you buy one 2% undercurrent comps. That’s going to protect you and a great agent can really help you do that.We have ways to match you with agents on BiggerPockets. If you don’t have one of those, go to biggerpockets.com/agents. You can get match for free. So that’s one. Obviously you also need the other elements of your team as well. I think that’s important to have a lender of course, to have a property manager if you’re doing a buy and hold and if you’re going to do value add, I think it really helps to have some contractors lined up. Now, every deal you do, you’re going to have to go out and get it bid, but having initial conversations with two or three contractors so that you know that when you go out and make an offer on a deal that you can execute on your business plan quickly, that is going to be super important here in 2025. The second thing is of course, just educating yourself.This is kind of always true, but I find that a lot of people start looking at properties and looking at deals before they fully understand exactly how to operate their deal, and that is what gets people frozen when they actually see a good deal and then they’re unable to pull the trigger because they lose confidence, they don’t feel like they actually know what they’re doing. That’s the other step in being offer ready is just knowing exactly what you’re trying to do and having a game plan for what your buy box is, how you’re going to execute that and learning everything you need, whether it’s through this podcast, through YouTube, whatever it is, go learn what you need to know before you start looking at deals. The third thing you need to do to be offer ready is to get a pre-approval. This is super important because right now what I’m seeing at least in the deals that I’ve done in the last two years is that I’ve not necessarily had the highest offer for my deals, but I’ve had the strongest offer because I’m reducing the risk for sellers.I give them a very clear look at who I am and that I’m going to close on the property. The biggest problem for sellers right now is yeah, prices are going down. So that’s the biggest problem. So maybe the second biggest problem is that a lot of contracts are getting canceled. People put something under contract, then they can’t get financing or something falls apart. So personally, my strategy for bidding on properties has been to either put more money down, more earnest money, have a really good pre-approval prequalification ready to offer to show that I’m serious and unless there’s something bad that comes up on the inspection or there’s something on title, then I am going to close on this property. And so having a conversation with your lender to position yourself for strong offers is super important. In 2025, the last part of being offered ready is something I call benchmarking, and I should probably talk more about this on the show, but it is something I do pretty much every day and I really recommend that people do in their investing career.And this is basically looking at a lot of deals and figuring out what the average deal is in your area. That’s why I call it benchmarking. You need to come up with a benchmark of what you can get on an average deal in your market with your strategy. For example, if you were to go out and buy a duplex in St. Paul, Minnesota, what’s the cash on cash return you’re going to get? What is the financing you’re going to get? What is the rents you’re going to get If you don’t know that cold, it’s going to be really hard to spot these good deals. When you’re out there and there’s a lot of garbage, but a lot of good deals, you need to be able to compare it to a benchmark. You need to look at the deal in question and say, is this better than the average deal in my market?Is it worse than the average deal in my market? And if it’s better, which it needs to be for you to actually offer on it, how much better? Is it 5% better? Is it 50% better? This exercise, I think to me has always made me feel confident when I offer on a property because I know I’ve looked at 50 deals this year in certain areas of the Midwest, I haven’t offered on most of them, but when those come around where it’s like, oh man, this one is better in every way than all the other deals I’ve been looking at, that’s when you know how to pound. So I really recommend that you do this benchmarking. That’s by analyzing deals. That’s one way to do it. The second way is we have a tool, free tool in BiggerPockets called Bigger Deals that allows you to look at cashflow and expected returns on properties.And then the third way is just talk to other investors. Talk to people in your market who are doing deals, who have done deals recently and see what they’re getting. They’ll probably tell you whether it’s on the BiggerPockets forums, atea, local friends, whatever it is, ask them what their cash on cash return is, ask them what their mortgage rate is. Find that out because knowing what the average is and knowing that you as an investor, your job is to do better than that average, that’s going to enable you to go out and execute on those deals. So again, this is my first hack, kind of a conglomerate hack. It’s like five things in one. I know I’m cheating on my own episode format here, but I really think being offer ready is sort of the key to jumping on good deals right now. Again, those things that you need to do to be offer ready to educate yourself, have a great team, get that pre-approval locked up and you’re financing locked up, and then do benchmarking so you’re able to identify the deals and then go execute on them quickly.To me, this is going to be a huge divider for which investors succeed and which one just sit on the sidelines in 2025. This week’s bigger news is brought to you by the Fundrise Flagship Fund, invest in private market real estate with the Fundrise Flagship fund. Check out fundrise.com/pockets to learn more. The second hack is something I’ve used a few times in the last year now, and I feel like this is kind of the perfect tactic strategy for 2025, at least for me. And the way I approach real estate investing, it is called the delayed Brr. I need a better name for it. If anyone has a good name, drop it in the comments either on YouTube or on Spotify because I could use help branding this. But basically what it is is the BUR method, which stands for buy, rehab, rent, refinance, and repeat.The idea behind a burr is that you take a property, a rental property that is not up to its highest and best use, you renovate it, you increase the capacity to generate rents from it, then you rent it out to great tenants, you refinance it to pull some of the equity that you built by improving that property out, and then you take the money that you refinance and you invest it into the next deal. And what’s so appealing about a burr is that it allows you to sort of recycle your money. You are able to get a lot of the benefits of doing a flip, but you get to hold onto the property and get that passive income that over time is going to snowball and help you achieve financial independence. Now, the bur method, a lot of people have been saying that it is dead, and I think that is nonsense.We have guests on this show all the time who are successfully doing the bur, but I think the reason people think the burr is dead is because there is a period of time for a while when you could do this strategy and you could pull a hundred percent of your equity invested out of a deal, and that’s pretty hard right now. I think if you get 70% out, you’re doing great. If you do 80%, you’re doing excellent, that’s still recycling 70, 80% of your capital. That’s an amazing investment you can’t do pretty much anywhere else. So I’m still in personally on the Burr method, the way I’m thinking about this and trying to mitigate risk in a confusing market, but I am still trying to acquire rental properties for my portfolio. And the way I’m thinking about doing that is by finding bird deals that can work as rental properties today, even if I don’t do the renovation.So I think this is a tactic that works particularly well, one for people who have capital and don’t need to be perfectly optimized about recycling every single dollar that they have. The second one is for new people. If you are a newer investor, it can work really well to have a great low risk, high upside deal. The delayed burr is a really good thing to consider. Lemme just give you an example. I bought a duplex for about $250,000. The rents at the time were about $2,200 per month. So not quite the 1% rule, but getting close. So that property was cashflowing. It wasn’t incredible cashflow, but it was pretty solid cashflow to the point where I could hold onto this deal for six months. I could hold onto it for a year or two years if I needed to and still be earning a better return than I would be earning in the stock market or a lot of other places.And the reason I like doing this is because I bought this property with tenants in both units and they were good tenants, and so I didn’t really see a reason to kick good tenants out of a property to spend more money and renovate. Instead, what I decided to do is just see when these tenants chose to leave on their own. And when they did that, I would update the units as well as I could and hopefully drive up the rent. And that’s exactly what happened. It took about a year and a half, and I mostly invest in sort of downtown areas where it’s a lot of young professionals, so the turnover is relatively high. So I had a fair degree of confidence that this would be a year or two or maybe the first one didn’t renew their lease after about six months. So I spent three weeks renovating.It was just cosmetic. I didn’t need a ton. So three weeks renovating it, I drove up the rents on that particular unit. I think it was from 1100 to 1400, so that’s another $3,600 a year in income on this property with a relatively cheap renovation and only one month of vacancy. That’s the reason I love this delayed burr is because if you’re going to do it all at once, you sort of have to kick out your tenants and you have risk of just higher holding costs and higher vacancy costs. This way it was very minimal and I could plan it really well. Then I think it was like another six months after that, the other tenant left. I did the exact same thing. Right now, my rents on this property are about $2,800 per month. I think I put a total of 2020 $3,000 in.So I am now above the 1% rule even with all of my investment that I put into the rehab, and I was able to do this in a relatively relaxed way. I do this stuff out of state, and so it allowed me to not have to really nail the timing on everything to work perfectly. Instead, it just allowed me to do a really high upside deal, but over time without a lot of the risks of being so dependent on your schedule, that sometimes happens when you’re trying to really recycle your money as quickly as possible. I think this is a great strategy for 2025 because risk management is essential. I am looking for optionality. As I said earlier, I think there’s some markets where properties prices are going to decline by one or 2%. The labor market’s holding up pretty well, but there’s a chance we see an uptick in vacancies just nationally this year.And so I’m looking for ways to create optionality, and I think the delayed burr is a great way to capture upside. It can still be a home run deal, but it gives you more optionality and helps you mitigate risk. So that’s my second hack for you today. My third hack for 2025 is look at secondary and tertiary markets. Now, I know everyone wants to invest in the super hot markets. It’s the Tampas, the Austins of a couple of years ago. Those are the big sexy markets where everyone’s moving. They’re the headlines where all the companies are moving to and they’re great. A lot of them are seeing a correction right now, but these are great markets with strong fundamentals. I have nothing against these markets, but what I am seeing, and I look at this data quite a lot, is that a lot of the opportunity right now in 2025 lies in, I would call it secondary or tertiary markets.So these are smaller cities where they are still strong fundamentals. Don’t get me wrong. Don’t just pick a smaller city. It still needs to be a place with job growth and population growth, affordability, those kinds of things absolutely need to happen. But these second and tertiary cities just are more affordable. These are more affordable not just for people, but for businesses too. And you’re starting to see job growth pop up and accelerate around some of these smaller cities. And to me that means population will follow and it will mean housing prices and rents will follow as well. And I want to make clear that in some cases this does mean out of state investing, but it doesn’t necessarily have to be. You can still invest in a secondary and tertiary market even if you live in a big city. Just for example, I used to live in Denver and I invested there.I still do invest there, and honestly, I missed the boat on Colorado Springs. I was never even thinking about it at that time because Denver was a great market, but Colorado Springs about an hour south of Denver, and it was a much more affordable price point for a lot of the time I was living there and investing there, and I could have invested it in there and got a lot of appreciation upside. There are other cities close to Denver like Longmont that you can do. There are tons of examples of this all over the country instead of Cleveland, which is affordable, but maybe you go to Akron or instead of Nashville, you look at Knoxville, the economic engine that is Denver spills over sometimes into these secondary and tertiary markets. The same thing is true in other big cities throughout the country. And so look at Dallas, right?That’s kind of like a Megatropolis. Dallas itself has its own thing. Fort Worth has also grown as a product of Dallas, and so these are things that you can be thinking about as an investor, whether you want to do that out of state or in state. My thesis for two years, my investing thesis I’ve been saying is a lot about affordability. I really believe that the defining challenge and opportunity in the housing market is that housing is just unaffordable and it’s unlikely to get better anytime soon. And that reality or that thesis, I should say, it’s not a fact, but in that reality that I don’t think it’s going to get a lot better soon. I think it’ll get better. Slowly over time means that the markets that are affordable have more room to go up. That’s the basic theory, and so we’re seeing this in reality.The theory has so far proven true. We’ll obviously have to see where it goes from here, but that’s generally the hack that I am operating on myself. All right, that was our third hack just as a recap. Number one was being offer ready. Number two is trying the delayed burr. Number three was considering secondary or tertiary cities. The fourth hack that I have for you, I’m sorry I cannot avoid talking about this. It’s just such a good hack for the majority of people, is owner occupied real estate investing right now, the reality of the country and actually a lot of the world, it’s not just a US problem is that housing is expensive. No matter what you do, you want to rent, it’s going to be expensive. You want to buy, it’s also going to be expensive. Owner occupied strategies are one of the few ways that you can actually reduce your overall living expenses, and I know that a lot of very prominent real estate investors and educators say that your primary residence is not an investment.I think that is absolute nonsense. It is just not true. I have personal evidence to refute that. I think the way to think about it is that your primary residence is not always an investment. Some people go out and buy their dream home and it’s overpriced, and then it’s not an investment. That is true, but if you want to make your primary residence an investment, you absolutely can do it. There are two tried and true ways to make huge returns on your primary investment. Those are house hacking and the live and flip. We talk a lot about house hacking on the show because it’s just such a good obvious thing to do, but it is especially true when renting is super expensive, when ownership is super expensive, it’s just a great way to offset your expenses. Now, it doesn’t work in every single market. Sometimes in some markets, I’m going to pick on LA or Seattle where I live.Sometimes those markets, it’s so expensive just to buy and the rents aren’t proportionate enough that you’re better off renting and buying in the Midwest or something like that. But I’d say for probably 80% of markets, house hacking is a fantastic way to improve your financial position. If you’re not familiar with the concept, it’s basically where you buy a rental property that you live in, and that can either be in the form of living in a single family home, living in one bedroom, renting out the others to roommates, doing sort of the co-living model. For a lot of people that works because it’s super efficient. You can make a lot of cashflow that way, but some people don’t want that lifestyle, and so they choose instead to buy a duplex, a threeplex, a fourplex, live in one unit, rent out the others. This is part of the way I got started in real estate investing.It’s a great way to learn the business. It is a great way to lower your living expenses so you can save more money and invest more in the future. There’s all sorts of benefits including better financing, and so house hacking is always a great strategy, always a great tactic that you can use in real estate investing, and 2025 is absolutely no different. The other sort of light bulb that’s gone off for me in the last couple of years about owner occupied investing strategy is this concept of the live-in flip. This is basically when you buy, again, a property that is not up to its highest and best use and you renovate it and get it up to its highest and best use while you’re living in it, and that can mean a lot of different things. Some people are willing to buy a house that has a shoddy roof and there’s rain coming through.That’s not me. Some people are willing to just buy a property. The house I live in right now totally livable. It’s great. Are there renovations that need to be done? Yeah, but I can do them at my own time and expense as I see fit, and there are a lot of benefits to this model, but the main one is the tax benefits. You might be thinking to yourself, and it’s a good question. It’s like, why wouldn’t I just live in one house or rent a house and then flip another house? Well, the tax code is super advantageous for the live and flip because in the tax code it says that if you live in a property for two out of the last five years, so you just need to live in property for two years basically and then sell it within the next three. If you do that, you can get all of those gains from your flip tax free, no taxes.It’s amazing. There is a limit. I think it’s two 50 for individuals up to 500,000 for married couple. If you’re making over $500,000 on a live-in flip and you’re paying taxes, you should be happy. You should be thrilled to pay those taxes because you have hit an absolute grand slam on a flip. So that to me, the limits on the tax deductions are really sort of insignificant. So this is just another tactic that you can use to lower your own living expenses and turn what for most people is like your primary expense, your living expenses into an actual investment building equity, tax-free equity. That’s why I think the live and flip is a really viable option for a lot of people. So that’s the fourth hack is owner-occupied strategy. I’m agnostic. You want to do a house hack, you want to do live and flip.Both can be great investments. Now, let’s go to our last but certainly not least hack, and it’s building off our fourth one, which is the owner occupied strategy. The number five hack is to steal someone else’s 3% mortgage, and by steal, I don’t mean actually steal it. I mean legally acquire someone’s 3% mortgage. That’s probably a better way to put it. But basically the reality is we all know this, mortgage rates are still super high in 2025. We’re seeing six and three quarters right now. Hopefully they’ll come down a little bit. But there are millions of homeowners right now who are sitting on low fixed rate mortgages, whether these are FHA loans, conventional loans, VA loans. There are some mortgages that are that low and are what are called assumable mortgages. An assumable mortgage is this really unique thing that basically allows the buyer maybe you to take over the seller’s existing loan, including the interest rate, the loan balance repayment terms.This is not the same thing as subject to where you are a party to an existing mortgage. An ASSUMABLE mortgage is you are actually taking over your, are getting put on the loan documents for the new mortgage and it basically allows you, instead of getting a new loan at today’s rates, you step into a loan from 2020 or 2022 when rates were historically low. Now, like I said, this one is building off the previous hack because for most situations, consumable mortgages are only available for owner occupants. That’s not available for just a regular investor, it’s for house hackers. It’s for live-in flippers or even if you want to do a short-term rental that you live in part of this is another way that you can do it as well, and this is just such a game changer that I think most people aren’t actually looking for.Just think about it, you can get the same property and instead of paying 6.5%, you might be able to pay 4%. You might even be able to pay 3%. There are people out there with mortgages at two and half percent, something like that. Those savings can be hundreds or honestly even thousands of dollars every single month on your expenses and that obviously will let you save up more money to invest elsewhere. So this is such a great way to invest right now if you can find it. Now, not every mortgage is assumable, but the three things you can target are FHA loans, VA loans and USDA loans, and you want to find properties that were sold from 2020 to 2022. Those are the super valuable vintage of mortgages, right? It’s like fine wine. You’re looking for the perfect vintage here, you want a 2020 to 2022 FDA loan.That one is going to treat you just right. You can talk to your agent about looking for these properties specifically. You can actually ask a listing agent. You can ask the seller sometimes in the listing notes these days because people know that these are valuable, they’ll put ’em in listing notes. I haven’t done this myself, but I have seen in some of the listing notes you kind of notice that listing agents price these properties a little bit higher because they know how valuable the consumable mortgage is. But in some cases that might be worth it. You obviously have to run the numbers and do the math, but I can see scenarios where I’d pay a little bit more, not like a ton more, but I would pay more to get that rock bottom interest rate. If it’s a fixed rate loan at 3% on an asset that I want to own, I would pay a little bit more for that, and I don’t think you should write that off.Now, again, not like 10% more, but if it’s a couple grand more to get thatum mortgage, that is definitely going to be worth it. You could probably do the math and figure out for yourself or when that is not worth it. So that’s it. That is my fifth hack for 2025 is to try and find an assumable mortgage. Just to recap, like I said, for me personally, the big picture strategy of real estate investing hasn’t changed. I’m looking for long-term investments, great assets I’m going to want to own. I’m going to be proud to own for the next 5, 10, 20 years, and I’m going to invest as much of my capital as makes sense into acquiring those assets. But the tactics that I use to acquire assets, the type of assets that I acquire are going to change and have changed throughout my investing career, both for the stage of my investing career that I’m in, but also due to market conditions.You have to react to what’s going on around you, and so these five tips will hopefully help you adjust your tactics to 2025, and again, they are being offer ready considering the delayed brr, looking at secondary and tertiary cities using an owner-occupied strategy and trying to find an assumable mortgage. Of course, those are just my five hacks. I’m sure you all have other hacks that you are using, so I’d love to know them. If you’re listening on Spotify, drop us a comment or if you’re watching on YouTube, drop us a comment as well. We want to know what your hacks are for successful real estate investing in 2025. Thank you all so much for listening to this episode of the BiggerPockets podcast. I’m d Meyer. See you next.