Real Estate is Getting Riskier…and It’s Making Investors Wealthy

Real estate investingReal estate investing is more risky today than it was a few years ago. Yeah, I said it. I’m not here to lie to you. So why then am I still actively trying to add more properties to my portfolio right now? Because I know that with risk also comes opportunity. You just need to know how to find it without jeopardizing the financial future you’re dreaming about and have worked so hard to create. In today’s episode, we’re going to share an experienced investing perspective on how to spot hidden risks in properties and the simple math you need to do before you buy anything. But this episode is not just about avoiding risk, it’s also about finding those opportunities about spotting the discounted deals that only exist in this kind of market. We’ll share how scooping up those properties now could totally change your financial picture when the market inevitably shifts in the future. Stay tuned and we’ll break them all down. Hey everyone. Welcome to the BiggerPockets podcast. I’m Dave Meyer here with my friend Henry Washington to talk about low risk investing. Henry, what’s going on, man?What’s up Dave? I am glad to be here and this is a fun topic to talk about.It’s a little ironic that this is the first episode we’re recording following BP Con where I saw you taking on some high risk financial behavior, perhaps at some of the casinos in Las Vegas.Yes, I was engaging in high risk behavior and I have the scars to show and prove itA giant hole in your bank account right now.100%.Likewise, I also was doing the same thing, so I’m not trying to throw stones from a glass house, but really I am excited to talk about this topic. I think the concept of risk is just not really talked about that much in real estate investing at all. We talk a lot about motivation and why you do this and financial freedom, all super legit, but investing the whole premise of it is risking something to have an outsized gain, but we never seem to talk about risk or how to mitigate that risk.Yeah, absolutely. There is no 100% bulletproof investment at all real estate, stock market crypto investing in businesses. They all have risk and the successful people have figured out ways to manage the risk that they take on.That’s exactly right. The way I think about risk in general is that it’s not something to be fearful of. People hear this word risk and they get scared, but I think you sort of have to embrace it and just as long as you recognize risk, I think then it’s okay to take it on. You just don’t want to be blindsided by some risk that you don’t understand. So I think that’s something we need to get into today’s episode among other things is how to actually risk. But before we do that, I kind of want to just run an idea by you and get your feedback for it. I believe we’re in a higher risk real estate market than we’ve been in for the last couple of years. Would you agree with that?That’s 100% accurate.Okay. Glad we’re on the same page there. And for me, that doesn’t mean that you shouldn’t be investing. I strongly disagree with the idea that being a good investor means that you’re trying to time the market or only investing when real estate investing conditions are perfect. I think what you need to do is adjust your strategy to mitigate the real risks that are in the housing market.Absolutely. I mean, I think we’ve talked about it on a previous episode, just what we’re doing in this environment, and for me, this isn’t an environment where I’m going to take on a large luxury flip in 20 20, 20 21, a large luxury flip, man, you were a genius. If you bought something, you slap some lipstick on it, stuck it back on the market, you can make yourself a hundred thousand dollars
Easy peasy just because the value’s going up. That was the time to shoot your shot on projects like that. And I’m not saying that if that’s your main niche, that you shouldn’t be doing it right now. What I’m saying is it wasn’t my main niche. My main niche was the single family, small multifamily, first time home buyer type home. And so now those leads, I’m not acting on them. I’m not buying those properties. I am making less risky investments by buying things that I can exit out of multiple ways. That’s my way to manage the headwinds of risk that we’re seeing right now is because if my plan A doesn’t work, I have a plan B, I even have a plan C because I am not as certain as I was a few years ago that one exit was going to pan out.So let’s just talk about risk in general and real estate. What are some of the risks that you think people need to be keeping an eye out for? Because obviously people know about price declines. Everyone looks at that and it’s like that’s the risk, but I think there are other ones. What are some of the other risks that you think people overlook?I think one of the main risks that people overlook with specifically when it comes to being a landlord is the risk of vacancy.Yes,Yes, there is what’s called a vacancy percentage, which is the percentage of properties that are vacant compared to the available properties, and that lets you know what’s your vacancy percentage in your market. But the amount of time a property is vacant is dependent on you. Yes, your market can have, in my market typically about a 5% vacancy, which means 95% of the things that are on the market get rented fairly quickly. But your property can stay vacant longer if you don’t turn your unit fast enough, if you don’t operate efficiently. And so yes, you can budget for a 5% vacancy, but if you’re not efficient at turning your unit and getting it rent ready, then your particular vacancy rate is going to be higher. You’re going to be vacant longer, it’s going to cost you a lot more money. So I don’t think people take vacancy into consideration as much as they should, and I don’t think they pay attention to how much of your vacancy cost is your own fault for not being a great operator.I think vacancy is one of the most overlooked expenses and risks even by experienced investors. People look at rent growth and look that it’s going up, but if you’re not positioning and marketing your properties well that comes with tremendous risk. And going from one month to two months of vacancy for a unit could be the difference between an okay year and a bad year or a good year and an okay year. That makes a pretty big difference on a lot of properties, especially if you’re in a single family game, that’s your whole income. If you’re missing out one or two months of rent, you’re screwed on a lot of those deals. So that is definitely one. Let’s just talk about what is a way to mitigate the risk of vacancy.One of the best ways to mitigate the risk of vacancy is to be efficient at operating your property. So either have a property manager who can tell you pretty quickly what’s their average turn time on a unit. If they’ve been operating for any substantial amount of time and they have a substantial portfolio, they should have the data to tell you. On average, it takes us 10 days, 20 days, 30 days, 60 days to turn a vacant unit. And that can help you understand what that means to your cashflow in your portfolio on average. If you’re doing it yourself, then you better have a pretty good understanding of what it takes to get a unit rent ready and how long it’s going to take you to get a unit rent ready and get that property rented. So yes, you do need to take into account the vacancy percentage of your market, but I would add a little on top of that to account for your actual operation of that unit. So yeah, if you have a 5% vacancy, you’re like, all right, I’ll just factor 5% vacancy into my numbers. No, you probably need to factor somewhere around 10%I think in this kind of market, depending on what kind of asset you have and the market you’re in, increasing your vacancy numbers and your underwriting is a good idea. Right now, there’s not been a big sign that vacancy is increasing in most markets, in certain markets that have a lot of multifamily, that’s definitely happening, but I just think it’s prudent in this kind of market. We’re seeing the jobs market like kind of decline. I think people in these types of economic environments, they’re just slower to make decisions too. I think you just have to assume that we’re going to go back to a more normal leasing schedule, whereas during the pandemic, people were signing leases like crazy, it was hard to find apartments. We’re just going to go back to a more normal sign. So even if your vacancy levels were very low over the last couple of years, you might want to jack those up a little bit.
The second thing that you really need to do is check current rent trends. You might not, depending on where you are, get the same rent that you were last year. Maybe you’ve been scheduling in 5% rent growth every single year you have a vacancy, you put it up 5%, you might not be able to do that. Some markets, some assets, absolutely, but you really need to research these numbers to reduce your vacancies. If you post that too high, you might be sitting on the market for a while, and let’s say you have a thousand dollars rent, you raise it 5%, that’s 50 bucks a month. That means that if that increase is going to cause you one month of vacancy, you’re better off not raising the rent. You lose a thousand dollars in vacancy costs to make $600 in rent. That is not worth it. So in my opinion is much better to just list your properties at a no doubter price right now to make sure that you keep your units notVacant. I think people typically underwrite at the top of the market rents.They always do. Everyone anchors to the highest numberAnd you’re just not guaranteed to get the top of the market rent. What you’re saying is, I’m going to produce the best possible rental property of all the comps. I’m going to have all the best amenities.I’mGoing to have all the best finishes, and someone’s going to be willing to pay me more money than they’re willing to pay anybody else for the same property. And that’s just not likely. You just need to underwrite to the middle of the road.And there’s a lot of seasonality in rents that people don’t realize too. If you’re renting in November, December, you’re not getting top rent.
There’s just too many variables. I just cannot stress this enough with underwriting these days. Be pessimistic, be pessimistic, be optimistic long-term, be pessimistic short term. That is the best way to be a good investor. You have to be optimistic. Real estate is going to grow. That’s just what it does. You got to protect yourself. That is the whole game in this kind of risk off environment is like how do you protect yourself short term. So vacancy, that’s a really good one that I think we need to talk about. So vacancy risk, that’s a big one, but there’s a lot of other risks that we should talk about and manage, right? We’re not trying to list these out to be downers and make you scared. We’re trying to teach you how to mitigate the risks that exist in today’s market. We’ll have more of that right after this break.
Okay. Tell me honestly, how many nights have you spent scrolling listings only to come up empty? It’s exhausting, isn’t it? You crunch the numbers, you drive to showings, and still the deal doesn’t work. After a while, the grind makes you wonder if it’s even worth investing. But Lennar investor marketplace gives you rent ready and brand new homes. You get clear pricing, brand new homes in a direct path to closing without the usual delays. That means you have more time building cashflow, equity and real wealth. Find your next deal now with Lennar Investor [email protected] slash lennar. That’s biggerpockets.com/l E-N-N-A-R. Welcome back to the BiggerPockets podcast. I’m here with Henry Washington talking about risks in the market and how to mitigate them. Before the break, we talked about vacancy risk, but I think we need to get to the elephant in the room, right? We got to talk about property prices falling.Yeah,I think they’re going to personally, they’ve been pretty flat this year as expected. I think even on a nominal basis, they’re probably going to go down a little bit next year. So how do you manage that?Me, as someone who’s flipping homes, the way I mitigate risk of a crisis dropping is by adjusting what I’m willing to pay for a property based on what I think that property will sell for. And so again, we are never aiming for the top of the after repair value. And so the two ways I mitigate this risk is one, I want to aim to sell a property at the middle of the RV scale or the lower end of the scale. Because essentially what I want to do is when I put a property on the market, I want to be able to give it the finishes that make it the nicest or one of the nicest of the comps that are in my price range, but I want to price it lower than almost all of the other comps. And essentially what I’m doing is mitigating my risk by getting more eyeballs on my property.
Every good realtor will tell you that there’s a ratio between showings and offers. So in your market, a good realtor should be able to tell you, for every six showings, you should get an offer. Or for every nine showings, you should get an offer. Or for every 20 showings, you should get an offer. It’ll be different in every market. And in this market where competition is increasing because inventory is increasing and where prices are kind of staying flat, people have options. And so in order to mitigate that risk, you do that by getting the most people through the doors of your property to help you increase the offers. And the best way to get people through the door is to have it look the best and cost the least. So when I’m underwriting deals, I am looking at the comps and I’m saying, what are the comps have in terms of finishes? Can I renovate this property to a higher level than that? And how much are they listed at? Can I list my property? Not like prices, right? $1 below, I want to list it. 10,000, $20,000 lower than the comps. So when people are looking for houses to go see, there is absolutely no reason why they’re not going to come Look at mine, it looks better and it’s priceless. That’s way number one that we mitigate risk.I love that I am flipping my first house with my brother-in-law right now. I’ve participated in a few, but actually doing it right now, and we were having this exact same conversation yesterday where people are saying one of the ways to mitigate risk is to really control your costs, which is true, but I was kind of like, well, I don’t want to be the cheapest looking house in this price point. I want to spend perhaps a little bit more actually, which might be counterintuitive, but I want when people walk in and see the house that we’re creating versus another house in a similar price point that we chose the nicer finishes because we’re probably going to get the fastest offer, and that means we’re going to have less holding costs and less opportunity costs. I made that up. You’re experience flipper. I know nothing is that sort of what you’re saying is just like make it a no doubter, right?Yeah, 100%. And there are ways to make properties nicer without spending a ton more just based on where you source your materials or do you have a connection with cheaper labor costs, right? But the idea is yes, nicer than the competition though. And so when people say this, what I want to make sure you understand is it’s not just making it nice because that’s what you think nice is. You’ve got to look at your comps and then analyze those comps and say, okay, this is the standard. These four comps are what people are looking for. How much more will it cost me to go just a smidge above that so that when people are looking at these houses that ours looks the best? So don’t just say, we’ll spend more and we’ll make it nicer. You have to look at the comps and say, okay, it needs to look better than this particular comp, not just nicer because I think it looks nicer.Personally, I don’t buy deals at that big of a discount, but I am looking for stuff. Can I get it five to 10% below current market comps for me as a rental property? That’s fine. Good enough for me. I don’t really realistically think in most markets I invest in, we’re going to see more than a 10% decline. So if I can find properties that are not below listing, I think that’s the real keyThatI think some people get held up on is some people say, oh, I got it. 5% off list. Okay, it might’ve been 10% overpriced and you still just paid 5% more than you should have. You need to get on a rental property right now. Ideally eight, 10% below current comps. That’s what you believe it is worth today. Can you get it below what it is worth today? That is one of the three best risk mitigation strategies for rental property investors that I think you really need to be focused on right now.
And the good thing is you can do this right now. I know you’re probably like, oh, sure. Dave’s saying, oh, go out there and just get 10% off list price. The benefit of this market is that there is more inventory on the market. There are more motivated sellers. You see it all the time. Henry’s talking about he’s a more motivated seller right now than he was a year ago. This is happening all across. So take what the market is giving you, which is the ability to negotiate these deals and focus on great assets. If you can buy a great asset at a discount, you do that all day. Absolutely. That is risk off, right? You want to do a low risk investment in this kind of environment, buy a great asset at a discount. That works always.One of the things that I think is a benefit to Dave is Dave’s not doing massive volume. So if he buys a couple of deals a year at 10% off and the market shifts, Dave’s probably not even going to look to sell that asset, right?No, I’m not.He has enough cash reserves to be able to hold on through the rough patch, and then when things turn around in the future, he is going to look like a frick fucking genius.That’s exactly right.So you need to understand if you’re just going to buy at a five to 10% discount, if you’re going out and you’re buying 10 houses a year at a five to 10% discount and the market shifts and you don’t have the cash reserves, you might be in a little bit of a place of hurt because you’ll have to unload those assets and you don’t have the cash to hold onto them because you were using too much leverage and growing too quickly when the market took a turn on you. So you got to understand it’s not just can I buy at a discount? Can I buy at a discount? And if things shift, how long can I hold on forA hundred percent? I think the strategy for a buy and hold long-term investor and a flipper and based on volume totally differs
For me. I’m basically trying a dollar cost average into the rental market. So I’ve bought at great times. I know there’s times I’m going to buy at suboptimal times. I just believe in the longterm growth of the US housing market. And so if I can hitch my wagon to the average that’s what dollar cost averaging is, then I’m going to be doing pretty good. I still want to protect myself and get the best possible deals. But I said that was just one of my three mitigation strategies for rental property investing right now. The second one is it has to cashflow. It absolutely has to cashflow because those two things combine are what give you the ability to win in this kind of market. If you can buy at a discount and you can hold on, there is no period in the United States over 10 years where you could lose money having bought a house in the United States, even if you bought in 2006 at the height of the market in almost every market in the US prices had recovered in less than 10 years.
Sometimes it took about 10 years on the high end. So my whole risk mitigation approach is if I happen to buy even at a 5% discount and maybe it goes down 10%, all I have to do is wait. That’s the risk mitigation strategy. Wait, and if you have cashflow, not only can you wait, you’re making money, you are actually earning a return, and the loss that you see in your property value is just on paper loss. It’s not actually a loss. It is a paper loss. And so that is to me, why this whole year I’ve been stressing deals have to cashflow. I know some people say, you can invest for appreciation. You would’ve won if you did it in 2020. In 2021.ThatDoesn’t mean it’s a fundamentally sound strategy, and right now you need to have cashflow. And then the third one I was going to say as well is cash reserves. You got to have enough money to weather a storm because the way you lose in this kind of market is you’re forced to sell. Like Henry said, either you don’t have cashflow or some big expense hits and you can’t afford it, and then you have to sell at the bottom of the market. That’s really the only way you lose. If you can hold on, you’re eventually going to do well on these deals. And so the way you hold on is by having cashflow and cash reserves and underwriting so you understand those numbers, that you actually get the right number for cashflow, the right number for how much reserves you need to have. And if you do those well to me, that’s great risk adjusted investing. You are going to make money on these deals. The risk is actually pretty low if you do all three of those things. And the upside is still just as good as any other deal that you’re going to do. It just might take a little longer. So we’ve covered some of the big risks in real estate right now. Let’s talk about what a good risk adjusted deal looks like. But first we got to take a quick break. We’ll be right back.
Welcome back to the BiggerPockets podcast here with Henry Washington talking about risk, how to mitigate it. Henry, tell me what your perfect risk mitigated risk adjusted deal looks like right now in October of 2025.Yeah, Dave, I’ll be happy to do that. But first I want to say something.Are we having the talk?We are having the talk people. You asked to be a real estate investor, which means you asked to be able to buy something and then the value goes up and then you monetize it at the highest value. That’s what investing is. Stock market, crypto, whatever it is, you buy low, you sell high. That’s the point. You cannot just buy low because when you buy something low, it’s because there’s pain. There’s something that is causing people to be uncomfortable or uncertain, and that is causing the value of the asset you’re investing in to go down. That creates an opportunity for you to buy that asset when there’s pain and then you hold onto that asset through the pain, and then you make a lot of money after the pain.
And what people want is they want to be able to buy the asset when there’s no paying, but they want to buy it for the painful prices and think that they’re going to make money. If you’ve decided that you want to be a real estate investor, this is what you asked for an opportunity to buy when there’s pain so that you can get things at a discount. All of these things that we talked about are opportunities for you. There is uncertainty in the real estate market right now. There is fear in the real estate market right now. There are people waiting on the sidelines because it’s uncomfortable right now. That’s why inventory is going up. That creates this opportunity for you to get very educated so that you can take calculated risks and buy assets at a discount while they’re on sale right now, so that you can make money in 2, 3, 4, 5 years and look like a genius. You asked for this opportunity, so you need to be able to take advantage of it.Yeah, I told this story at BP Con in my keynote. I was saying my first deal I bought in 2010, and people nowadays, when you look back at that, they’re like, oh, what an amazing time to buy. It was terrifying to buy back then. You were in the middle of literally a market in free fall. It was just going down like crazy. And there’s a lot of differences between today’s market and that market. It’s way more expensive now than it was back then, but the sentiment was the same. People were like, real estate’s dead. You can’t buy real estate. But to Henry’s point, those are sort of the opportunities that you need to look for. And we’re not saying go out and buy anything. This is a time for precision. You need to really focus on buying great assets. But I said this at BB Con on paper, that deal that I bought, probably the best deal I ever bought my whole life, I got a 650% equity return in eight years.
Unbelievable. It went down on paper for three years after I bought it. It was a breakeven cashflow deal when I first bought it. I stabilized it and all that kind of stuff. But those are the kind of things that you need to have a little bit of vision. You need to be able to see through what is going on right now. And it could be a weird couple of years, but it was weird from 2008 to 2013, and I don’t think anyone who held on during those years regrets it. I don’t think a single person regretsIt. Absolutely.Everyone looks pretty smart for holding onto those things, and there are differences in this market. We’re trying to educate you on some of those differences, but it’s kind of the mentality that you need to adapt.Alright, now back to our regularly scheduled programming.Yeah. What was the question I asked you?What’s the risk adjusted asset I’m looking for?Yeah, what’s your perfect deal right now?Yeah, so again, this is me. My strategy is I’m a single family and small multifamily buyer, and I’m going to buy these assets and I’m either going to fix them and rent them longterm, or I’m going to fix them and flip them. That’s my normal strategy. So that’s the caveat because like we said at the beginning of the episode, everybody has different strengths. Everybody’s in a different market. Your strategy could be different. So with that baseline, what I am striving for right now are single family and small multifamily homes that are in quality neighborhoods or that are in areas where I feel like they’re going to sell to first time home buyers and they have more than one exit strategy. So a great asset for me is one that I know that I can renovate and sell fairly quickly to a majority of buyers. So first time home buyers are going to be looking for this property.
This isn’t your second tier four five bedroom house. This is your three bed, two bath, two bed, one bath, single family home starter home. I’m going to renovate that and I’m going to sell it or I’m going to renovate that and I’m going to rent it. And I have that option because of the price point that I underwrote that deal at. I underwrite them very conservatively so that I get less deal volume right now, but I have more equity built in on day one, or I’m able to sell my properties and make more profit than the average flipper because I’m so conservative in my underwriting. And so my ideal property is that single family or small multifamily,I like it thatI can buy at a discount, which allows me to pivot if I can’t sell it for how we underwrite it to sell. I’ve got two properties this year that we’ve listed for sale that didn’t sell where I wanted it. Would they sell eventually? Probably. But I was able to just say, you know what? Let’s throw a tenant in there and let’s get a little bit of cashflow. Let’s refinance our money out and move on to the next one. And I’m not hurt financially. I’m actually doing just fine because I bought an investment at a good price point that allowed me to pivot multiple exit strategies. Right now, I’m not buying the deal. That’s the layout’s too funky and I can’t fix it. I’m not buying the deal. That is going to be a crazy expensive renovation, and then my margins are thin. There are some people willing to spend a hundred thousand dollars on a renovation and make 20 or 30 grand profit. I’m not doing those deals right now. If I spend a hundred, I want to make 60, 70 to a hundred thousand dollars. I have to underwrite it that way, and a lot of people are willing to take those risks, but I’m not taking that risk in that market because on a hundred thousand dollars renovation, one mistake can cost you 20 grand and now you’re losing money. So single family home, first time home buyers, easy peasy stuff.Yeah, exactly. One thing you said that I think is really important is that this approach, risk mitigation may mean that you slow down in volume. You have to be pickier, right? It just means that you have to be more disciplined. The margin for error is lower.This is the lowest year by volume that I’ve had since I started investing.That is one of the realities of this. We’re saying, yeah, maybe you don’t stop investing. There’s good deals. There’s ways to make money. A hundred percent. I’ve said this many times, I’m seeing better and better deals than I’ve seen in years personally. Someone sent me a deal the other day yesterday in a market that I like. They were like, okay, this is an average deal. I don’t know. It doesn’t seem like a home run. It was an on market fourplex with a, I looked at the numbers, conservative underwriting, six and a half cash on cash returns. That’s really good onMarket. That’s really good,Right? I’m like, this is like we’re getting back to good deals.
He sent me a lot of other deals that stink, but that one, I was like, Hey, that’s actually a good deal that you can buy in the market. It’s not going to be high volume, but there are actually good things out there. There are still ways to make money. You just need to be precise about it. All right, so I’ll give you all this is similar to what I’ve been saying all year. It’s not going to be a revelation for anyone who listens to this show, but for me, the perfect deal right now has to check a couple of boxes to me. Number one, it’s got to be in a great location. The old saying about real estate, two things you can’t change is the price you pay and the location of the house. That is a hundred percent true. And if you’re a buy and hold person like me, location matters a lot because if you are going to hold on and you want it to come back, properties in good locations, they’re going to go down the lease.
They’re going to come back the fastest. That is a good risk mitigation strategy. I, during the pandemic, bought some stuff in secondary, tertiary neighborhoods. I’m not going to do that right now. I’m buying in really good neighborhoods that I want to hold onto for a long time. Number two, they got a cashflow within a year. Obviously, there are a lot of deals that don’t cashflow on day one. That’s fine. If I’m going to do a burr or a renovation, it just within the first year I needed to cashflow because that’s something I can plan for. Number three, I wanted to have upsides. I talk about this all the time. I’m not just going to take a mediocre deal and hold onto it forever. I need to feel that if I hold onto this property for five to 10 years, there’s going to be some force multiplier that comes in that takes this from being a solid deal to a great deal that’s being in a great location.
I think rents are going to grow. There’s zoning upsides, stuff like that. And then the fourth one that I think people really miss and I think is increasingly important right now is I have to have fixed rate debt. I am not interested in adjustable rate mortgages right now. I think pricing on eight units, 12 units is actually really good right now, but I would only buy them with fixed rate debt because again, my goal, my risk mitigation strategy is I got to be able to hold onto this and holding onto it for five to 10 years. And if I have a five year arm, I don’t know if I’m going to be able to hold onto it for 10 years. That means I might pay a little bit more on my mortgage right now or on my commercial loan. I’m okay with that personally because I know that I’m going to be able to pay it for 10 years, and that to me is risk off investing. I’m not going to take the risk of paying less on an arm. I’m going to lock in my fixed rate debt because again, no worries for me. I’ll hold onto it for 10 years. I’ll collect my cashflow. Anything else is a paper loss, and to me, that makes everything possible. That lets me sleep at night. Personally and honestly, I think that’s possible. These deals are possible right now. So that’s what I’m looking for.That’s a great risk mitigation strategy because it’s almost like a set it and forget it strategy, which is what you want when there’s turmoil for you to not have to be thinking about what happens in this scenario with this property. You’ve mitigated your risks. The property pretty much operates itself. If you’ve got a decent manager and you go to bed comfy. And before we go, I’m going to bring up one more that is pretty new to the current environment that they’re in,Please.A newer risk that people need to pay attention to right now is insurance and making sure a, that you can get the proper coverage for your property. There are places like Florida and California where it’s very hard to get insurance for your properties. Those are things you should absolutely consider, and the cost of insurance has gone up so high all over the country. You need to make sure you’re underwriting for insurance appropriately. But on top of all of that, you need to also make sure that if you can get insurance, that you’re getting the right kind of insurance that covers you for the things that can typically happen in a property. I think insurance has kind of been an afterthought for people like, Hey, can I just get a policy on this? And you get a policy in place. You never read it. You don’t know what it covers.
Something goes wrong and you lose a lot of money. So you need to make sure that you’re getting the right kind of coverage for the exit strategy of your property. Don’t get fix and flip coverage on a rental property. Don’t get rental property coverage on a fix and flip. If you’re doing a short-term rental, your insurance policy needs to be different than a long-term rental. You just need to make sure that your policy covers your exit strategy. And then if you’ve got a portfolio, you might want to consider getting an umbrella policy on top of your other insurance policies because that’s going to cover you. If you get sued, you lose the lawsuit and your insurance coverage doesn’t cover the amount that you have to pay. Your umbrella policy will kick in. Insurance is a big risk factor that people don’t pay enough attention to, and now it costs more to have insurance. Please pay attention.That’s a good bonus. One, because people get insurance because they think that’s their risk mitigation strategy. But if your insurance doesn’t actually do the thingThatYou need it to do, then you’re not actually protecting it. You just lost extraMoney.Exactly. You’re just paying to not have any protection, which is, that’s a great point. But I would love to know how people think about this topic and how they’re managing risks. So if you are listening to this episode, let us know in the comments we would really appreciate knowing other risks that you want us to talk about in future episodes or things that you’re doing to mitigate risk in your own portfolio. Be super helpful to share that with the rest of the BiggerPockets community. All right, that’s what we got for y’all today. Thanks so much. We’ll see you next time.