6. How to Diversify Your Self-Directed IRA Portfolio for Long-Term Growth
8. The Silent Profit Killer in Real Estate—Are You Paying Attention?
Journal Member Spotlight
Lisa Carter
After a successful corporate career in sales and marketing, Lisa Carter transitioned to full-time real estate investment in March 2020. Since launching her entrepreneurial journey, she has completed more than $5 million in real estate transactions.
Her attention is focused on finding emerging markets and a dedication to strategic growth. Her portfolio spans across multiple markets including Florida (St. Petersburg) and Tennessee (Jackson, Nashville, Chattanooga, Milan).
She became a licensed Realtor with SVN Accel Group of Brentwood in May 2021, specializing in commercial and business brokerage. Being actively engaged with other investors led to opportunities to serve the community as a Board Member of the Real Estate Investors of Nashville (REIN), CREW (Women in Commercial Real
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11. You May Have More Pets Than People... What Are You Doing About That?
15. Room for Rent: A Newcomer’s Guide
16. Lending Lockdown: How Real Estate Investors are Creating Their Own Capital Source
The Housing Market: A Look Back at 2024 and Ahead Through 2025
By Rick Sharga
While the old maxim that a savvy real estate investor can prosper in a strong market or a weak market may be true, having an in-depth understanding of market conditions—and what’s driving those market conditions—is critically important. With that in mind, let’s take a look at what happened in the housing market in 2024, some of the underlying trends that led to those results, and what that all means as we continue to move through 2025.
Economic Strength Provides a Solid Foundation
Despite all the concerns about a recession over the past few years, the U.S. economy continues to grow. The country’s gross domestic product (GDP)
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The Whole Story on Wholesaling
By Jeffery S. Watson
During the National REIA cruise earlier this year, considerable time was spent discussing wholesaling. I had the opportunity to speak to the audience regarding the trends we are seeing in multiple states as to wholesaling from both legislative and regulatory perspectives. When discussing wholesaling, it’s important to define certain terms. Most people would probably define wholesaling as the process of putting a property under contract and then assigning that contract to someone else so that the person to whom the contract is assigned is the one who buys the property, and the wholesaler is paid via an assignment fee. This typical definition of wholesaling needs to change!
There are a number of states that have taken the practice I just defined and made it against the law, the most recent two being South Carolina and Oklahoma. They now require that a person own the prop-
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In America, You Can Buy, Sell, Rent, or Develop Your Property With a Level of Freedom That’s Rare Elsewhere!
By Rebecca McLean Executive Director, National REIA
As I was recovering from the flu, I gave myself some permission for downtime and movie watching. When Brad alerted me that my article was due, the movie National Treasure was very fresh in my mind and then it hit me, this movie is great for REIA members!
Picture this: Nicolas Cage, as the intrepid Benjamin Franklin Gates, stands before the Declaration of Independence in National Treasure, a glint in his eye and a wild plan in his mind. “I’m gonna steal it,” he declares, not for kicks but to protect a legacy tied to the Founding Fathers’ greatest treasure—the idea that individual liberty, including the right to own property, is worth defending at all costs. Sure, the movie’s plot involves invisible ink and a mythical map, but beneath the Hollywood pizzazz lies a truth every National REIA member knows well: the U.S. is built on a foundation of property rights that are the envy of the world. And who better to tie it all together than Benjamin Franklin—printer, statesman, and, yes, landlord and real estate investor extraordinaire?
In National Treasure, the Declaration isn’t just a dusty artifact—it’s a clue to something bigger. In real life, it’s even more: a bold statement of individual rights that set the stage for America’s property obsession. Thomas Jefferson famously swapped John Locke’s “life, liberty, and property” for “life, liberty, and the pursuit of happiness,” but don’t be fooled—property was still the beating heart of the revolutionary spirit. When the colonists rebelled against taxation without representation, they weren’t just angry about tea tariffs; they were defending their land, homes, and livelihoods from a distant king who didn’t get it.
Fast forward to the Constitution, and the Founding Fathers doubled down. The Fifth Amendment’s Takings Clause—“nor shall private property be taken for public use, without just compensation”—is like a treasure for property owners, ensuring the government can’t swipe your land without paying up. The 14th Amendment adds another layer, promising no state can “deprive any
person of life, liberty, or property, without due process of law.” It’s no wonder National Treasure makes such a fuss about Independence Hall—this is where the U.S. locked in a system that’s made property rights a global gold standard and a playground for savvy real estate investors like you.
Let’s face it: the U.S. doesn’t mess around when it comes to property. Unlike some countries where land ownership is a privilege for the elite or a crapshoot under unstable regimes, America’s system is built for the individual. You can buy, sell, rent, or develop your property with a level of freedom that’s rare elsewhere. Compare that to places where governments can nationalize your holdings overnight or where tenancy laws trap landlords in red tape thicker than the Declaration’s parchment. Here, the “bundle of rights”—possession, control, use, and transfer—is yours to wield, backed by a legal framework that’s been stress-tested for over two centuries. For REIA members, this isn’t just theory—it’s the secret sauce behind flipping fixer-uppers, building rental empires, and turning vacant lots into cash-flowing goldmines.
And who helped make this possible? None other than Benjamin Franklin, a man who didn’t just sign the Declaration but lived its principles. Franklin wasn’t just a kite-flying genius; he was a savvy real estate investor. As a landlord in Philadelphia, he owned properties, leased them out, and even left a hefty estate in his will (sorry, son William, you got cut out for picking the wrong side in the Revolution). Franklin saw property as more than a paycheck—it was a path to independence, a way for regular folks to stand tall against tyrants and build something lasting. Sound familiar? Every time you snag a distressed property at auction or negotiate a lease, you channel Ben Franklin—turning bricks and mortar into freedom and fortune.
Now, as we settle into 2025 with a new administration in Washington, the real estate world is buzzing. Will they protect our sacred property rights? Early signs suggest a pro-business bent—think tax incentives for developers, deregulation to cut through zoning nonsense, and maybe even a push to streamline public land transfers to private hands, and a stop to the gov-
ernment’s interference in the ownership, development and management of a person’s property—goodbye CFPB (a National REIA favorite)! For real estate investors, this could mean more opportunities to scoop up undervalued assets, fewer hurdles for rehab projects, and a stronger shield against overreach. If they take a page from the Founding Fathers’ playbook, they’ll see property rights as the bedrock of economic growth and personal freedom.
Imagine a policy nod to National Treasure: a “Declaration of Property Rights Initiative,” ensuring landowners get fair shakes in EPA cases and landlords aren’t buried under overzealous tenant laws. With a fresh crew in D.C., there’s a chance to reinforce what makes the U.S. the best place to own—and invest in—a slice of the American Dream, whether it’s a Philly rowhouse or a sprawling ranch out West.
In the end, the real National Treasure isn’t about gold hidden under Trinity Church—it’s about the ideas encoded in our founding documents. Property rights aren’t just legalese; they’re the key to why the U.S. stands out and why real estate investing here is a cut above. Franklin, the real estate investor & landlord, helped inspire the Constitution’s ironclad protections, so we’ve got a system that lets individuals—and especially REIA members—thrive. Next time you’re closing a deal, fighting a zoning board, or scouting your next big flip, channel your inner Ben Gates. The Declaration might not have a map on the back, but it still guides us to the greatest treasure of all: a nation where your property and investments are yours, guaranteed.
Rebecca McLean is the Executive Director of National Real Estate Investors Association.
NREIA Legislative Update
The Branches: Executive / Legislative / Judicial
While each branch has a role to play in the federal government, we are in for a generational reshuffling of authority.
The federal government’s three branches are jockeying for position, and the housing industry is caught in the middle. The Executive Branch, with new leadership and appointees like Secretary Scott Turner, is driving deregulation—think fewer eviction notice rules. Congress, gridlocked and facing a mid-March budget deadline, might stall housing funds or tax breaks. Meanwhile, courts—like Kansas City’s—are redrawing rules on tenant rights and property control, shifting power dynamics.
This reshuffling means uncertainty: executive action could ease burdens, but legislative inaction risks funding cuts, and judicial rulings might upend local operations. Stay nimble—monitor executive orders, push your federal Representatives for budget clarity, and prep legal teams for court-driven changes. It’s a generational shakeup with the housing industry on the line.
No Budget, CR Expires Soon, Shutdown Looming
As of this writing, there is no federal budget, yet, and the current continuing resolution (CR) runs out in mid-March – the shutdown odds are rising. For housing pros, this could freeze HUD loan processing, stall inspections, and delay federal subsidies critical to affordable projects. At present, Congress is stalled, with partisan fights over tax policy and housing funds holding up a deal. The deal is all the more difficult to manage as there are slim majorities in the House and Senate and Republicans can only stand to lose a couple votes on in each house, with no expectation of Democrat support.
A shutdown could hit hard for developers and larger federally subsidized housing projects: expect cash flow hiccups and financing lags, additionally plan for inspection backlogs slowing for new builds or rehabs. Contingency plans are a must with less than three weeks to go. However, most of the country will be only slightly impacted while the Chicken-Little news agencies scare seniors about Social Security checks not going out (they will).
In the first Trump administration, the government shut down 3 times, for 9 hours, 3 days, and the most noteworthy, 35 days in 2018-19. Newspapers ranted that hundreds of thousands of bureaucrats were furloughed with some working without pay for a period of time. In the end, they all received backpay, even those who weren’t working! With DOGE auditing everything, those who aren’t working may find their job on
the chopping block as truly necessary.
Renewed TCJA—New Administration Tax Policy
The new administration is itching to renew the 2017 Tax Cuts & Jobs Act (TCJA), set to lapse in 2025, with talk of a single tax bill to simplify things. For the housing industry, this could lock in deductions for property upgrades or business expenses—essential to revitalize the rapidly ageing housing stock. The push is to renew & extend cuts while tweaking them for inflation and housing costs, a lifeline for developers and landlords. A streamlined tax code could cut compliance headaches, but don’t hold your breath—the detail required to truly reduce complications would certainly delay the process in Congress. It will be important to advocate for rental-property-specific credits and work Congress during the March budget talks; a TCJA renewal could juice investment, but only if it clears the slim partisan logjam.
Respect State Housing Laws Act (CARES ACT) and Tax Reform/Topics (Preserve, Enact, Protect)
The Respect State Housing Laws Act is gaining traction, aiming to scrap the CARES Act’s 30-day eviction notice requirement as interpretated by HUD and return this housing regulation back to states. The CARES Act presently impacts all rental property that receive federal funds or have mortgages that are held or insured by federal programs. S.B 470 and HR 1078, with bipartisan assistance from Rep. Gonzalez (D – TX) represent a bicameral and broad-based support.
For housing providers, this could mean faster tenant turnover and fewer federal hoops—as the market is bogged down by this pandemic-era rule. Expect a return to existing state laws if this passes, but housing providers should brace for local curveballs and advocates fighting the historic federalist policy or seeking to renew it at the state or local level.
Department of Energy Delaying Energy Efficiency Guidelines for Appliances until 3/21/25 and Longer, Hot Water Tank Concerns
The DOE’s delaying appliance efficiency rules—think hot water tanks—to March 21, 2025, or later, a relief for rehabbers and housing providers concerned with avoiding costly upgrades. While this buys time, uncertainty lingers: new standards could hike maintenance budgets down the line. While everyone wants efficient units – they also want them to actually work, and ap-
pliance industry feedback as well as consumer groups have been reflected poorly on the time and effectiveness of several of the appliance mandates. With hot water tanks, the substantially increased size is creating retrofit nightmare for rehabbers, resulting in increased costs of the appliance and a reworked and larger area for the appliance – this ultimately increase inflationary impacts on the cost of housing.
Guidance on ICE Enforcement, Importance of Law Enforcement Policy
New ICE enforcement guidance, rolled out in 2025, ramps up deportations and workplace checks—a heads-up for housing providers with immigrant tenants or labor. Expect tighter scrutiny that could shrink your tenant base or disrupt construction crews. HUD’s role here is unclear, but enforcement could hit rental income in immigrant-heavy markets.
Law enforcement’s priority means compliance is key - vet tenants and workers carefully to dodge legal snags. It is likely a tighter market ahead; adjust occupancy forecasts and lean on local insights to stay ahead of ICE’s impact. Be sure to work with your attorney to update your policy with regard to providing application and legal documents to law enforcement should they request it. Legal expertise will be needed to comply with local, state and federal law. Now is the time to update the policy – not when badge holders are asking for the documents!
Enforcement starts in March 2025!
For all properties receiving federal funds, such as housing Choice Vouchers (Section 8) smoke detector and carbon monoxide requirements changed. Beginning January 1, 2025 all smoke detectors must be tamper proof, meaning hardwired or having the 10-year sealed battery. A smoke detector must be placed in every bedroom and one in the common area of the home. If ceiling mounted, they should be more than 4” from the wall. If they are wall mounted, they should be between 4” and 12” from the ceiling. Basement detectors should be installed on the ceiling at the bottom of the stairs leading to the next level of the home. A carbon monoxide detector is required if there is an attached garage or fuel burning appliance in the unit. If a fuelburning appliance fuels the bedroom, one must be in that bedroom.
Kansas City Source of Income Court Case
A Kansas City court case on source-of-income discrimination is one to watch. It pits landlords’ right to choose tenants against laws protecting voucher hold-
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Published quarterly for chapters, associated real estate investor associations, their members and guests.
Editor Brad Beckett brad@nationalreia.org
For inquiries regarding Membership, Legislative, REIA organization information or to become a industry partner, call National REIA toll free at 888-762-7342
Fax: 859-422-4916
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RE Journal is published by Rental Housing Journal, LLC, publishers of Rental Housing Journal www.rentalhousingjournal.com
Minimize Your Risk With a Backup Plan
Publisher John Triplett john@rentalhousingjournal.com
Editor Linda Wienandt linda@rentalhousingjournal.com
Associate Editor Diane Porter
Advertising Manager Terry Hokenson terry@rentalhousingjournal.com
Uncertain times can allow for extraordinary returns, but they also come with more risk. Investors need to find ways to mitigate the risk so that they can capitalize on opportunities. The strategies we will be discussing here are important in any market but are critical in shifting markets, or uncertain times.
Stay Flexible
The ability to adjust your strategy is key to turning a loser into a winner. There are times in our business that everything is going up-up-up. Some investors put their heads down and go to work. They can make great money doing this, at least while the market holds. The question is, can they recognize a shift and adjust when they need to?
When you are buying a property to rent, you should never pay more than you would if you needed to resell it tomorrow. Will it pencil out as a flip if you need to sell it?
When you are buying a property to flip, make sure it will have positive cash flow if you need to keep it. Part of this strategy shift may involve different financing. Make sure that you have a plan for this if need be. A private lender or partner that would be able to pay off the short-term financing may be the answer. Or a conventional lender that agrees upfront to refinance it on the back end of the rehab work.
If you are buying apartments, can they be converted to condo units to resell them individually? If you have single-family homes that you have just rehabbed and they aren’t selling, would they work as short-term or mid-term rentals? If you have short-term rentals, can they be sold as regular housing if need be?
Make sure that you have the flexibility to shift between strategies as your life circumstances and the market dictate.
Balloons
I recently heard a speaker saying that we should never do a deal with financing that has a balloon. “If you can’t find fully amortizing financing, or pay cash, don’t do it.” I used to say, “balloons are for clowns,” but over the years I have come to realize that they have their place. Balloons are a tool that requires special handling.
A balloon is a one-time payment at the end of the term of a loan that is not fully amortizing. So, a loan with a 30-year amortization and a 10-year term would have you make payments as if the loan was going to last 30 years, but at the 10-year mark the lender expects you to pay the balance. This sort of financing is common in commercial real estate lending and is also common in seller financing. In commercial lending, the balloon payment is often at the 3-, 5- or 7-year point.
What happens when you reach the end of the term of the loan? The most common answer is you extend the loan. When all is good in the market this works. Your rate and payment may adjust, but all is good.
Surprise—things are not always good in the market. When interest rates climb, the property may not qualify for the new rates and most lenders will be reluctant to extend the loan. If property values drop, the collateral may no longer be adequate for the loan.
There are occasions where lenders need to prune their portfolio of loans— so even if you are making all payments on time and your property is great, the lender may not want to renew. If your circumstances have changed—let’s say you no longer have a “real job” —it may be tough to get a new lender to decide to make a replacement loan.
If you are not prepared with cash, alternate financing, alternate collateral, financial friends, or the ability to shift strategy, you may be a clown if you use a balloon. In the right circumstances and with the right preparedness, they can allow you to get rates and terms that would not otherwise be available.
Adjustable Rates
Like balloons, adjustable-rate notes need to be used with caution. They used to be more common than they are today. As interest rates have climbed, we are seeing this return to the lending market. Sellers buy down the rate for the first year or two on a loan. The buyer can more easily afford the payments and will pay more for the property. This works great, until it doesn’t. At the end of the buy-down period, the payments go up. The choices are then to refinance, sell, or make the higher payments. Refinancing might work to get lower payments, if the borrower has been paying extra toward their note every month, or if the rates have dropped. Selling might work
if the market is moving up, and they are willing to move. Making the higher payments might work, if the borrower can afford it.
If you decide to use adjustable-rate loans, make sure that the property would cash flow with the higher rate. If it is your residence, try to make payments at the higher rate so that your budget is used to the expense. This will make it easier to refinance if necessary.
Putting Other Equity to Work
When you have an issue with one property, and you have others, you may have extra flexibility. If you have come to a choke point, it may be time to prune your portfolio. To do this, you should look at the financials for all your properties (something you should do regularly), and see which properties are performing well and which are struggling. Selling a struggling property may allow you to clear up a problem with one you want to keep. Don’t put all your properties in danger by cross-collateralizing them. This could have you starting over if you get into a situation you can’t unravel.
Non-Recourse Financing
As a side note—when you can get it, non-recourse financing is the best! The property stands on its own. The lender is not looking to you for other income to qualify or to pay for this loan. And, if things go wrong, the only thing they will come after is the property that was provided as collateral. Typically, a large down-payment will be needed, and these will be more common on larger properties or when sellers are providing the financing.
Asset Protection
Asset protection techniques are important no matter what the market is like. Isolating problems is a very important part of any strategy. Like the rotten lemon in the bag of lemons, it is important to make sure that you remove weak properties rapidly before they infect the whole portfolio.
Jane Garvey is President of the Chicago Creative Investors Association.
How to Diversify Your Self-Directed IRA Portfolio for Long-Term Growth
By Carl Fischer
Diversification is a key strategy for building a resilient investment portfolio, and self-directed IRAs (SDIRAs) offer unparalleled flexibility to achieve this goal. Traditional brokerage-house IRAs limited to stocks, bonds, and mutual funds have their place for those who know and understand traditional investments. However, SDIRAs allow investors to explore alternative assets such as real estate, private lending, precious metals, and more to fully diversify your overall comprehensive portfolio. This breadth of options provides investors with a unique opportunity to build a well-rounded, risk-managed portfolio designed for long-term growth. Tax-deferred as well as tax-free accounts should also be incorporated in many cases for multiple reasons when diversifying your investment strategy. Invest in what you know and understand and if necessary, get the education.
Understanding the Importance of Diversification
Diversification is the practice of spreading investments across different asset classes to reduce risk. A properly diversified portfolio can help mitigate the impact of market fluctuations, economic downturns, and inflation. By holding a variety of assets with different risk profiles and growth potentials, investors can create a more stable financial future.
Self-directed IRAs provide a broader range of investment opportunities compared to traditional retirement accounts, making them ideal for those looking to achieve true diversification. By incorporating alternative investments, SDIRA holders can protect their portfolios against volatility in any single asset class while maximizing potential returns. Self-direction allows for individuals to invest in what they know and understand and can use their expertise to increase returns and mitigate risk.
A rule of thumb is to use your Roth account to invest in assets with high returns and low risk. Many self-directed clients put low LTV loans, tax liens, and leveraged single-family homes in that category.
Key Strategies to Diversify Your SelfDirected IRA
1. Real Estate Investments: Real estate is one of the most popular asset classes for SDIRA investors. Rental properties, commercial buildings, and raw land can generate steady income and longterm appreciation. Additionally, real estate acts as a hedge against inflation, as property values and rental income tend to rise over time. Investors can choose from direct ownership, real estate syndications, or Real Estate Investment Trusts (REITs) within their SDIRA. In addition, leverage, with a non-recourse loan, can be used to improve returns with property appreciation,
2. Private Lending and Mortgage Notes: Investing in private loans or mortgage notes allows SDIRA holders to act as lenders, earning interest income from borrowers. This asset class provides predictable returns without the hands-on management of real estate ownership. Loan terms, interest rates, and borrower qualifications can be structured to align with an investor’s risk tolerance and income goals.
3. Precious Metals: Gold, silver, platinum, and palladium are tangible assets that offer stability during economic uncertainty. Many investors include precious metals in their SDIRA to hedge against inflation and currency fluctuations. The IRS permits certain types of bullion and coins to be held within an SDIRA, providing a secure store of value.
4. Private Equity and Venture Capital; Investing
in private businesses, startups, or venture capital funds can yield high returns, though it comes with increased risk. SDIRA holders can purchase shares in promising companies, participate in business partnerships, or invest in private funds that align with their investment strategies.
Balancing Risk and Reward in Your SDIRA
While diversification can reduce overall portfolio risk, striking the right balance between asset classes is essential. Here are some key considerations when diversifying your SDIRA:
• Risk Tolerance: Before allocating funds to different asset classes, assess your comfort level with market volatility, illiquidity, and potential losses.
• Time Horizon: Long-term investments, such as real estate or private equity, may require years to realize gains, making them more suitable for investors with extended retirement timelines.
• Due Diligence: Conduct thorough research on each investment option, including legal requirements, market trends, and potential returns.
• Tax Considerations: Certain investments, such as real estate or private lending, may generate Unrelated Business Taxable Income (UBTI) or Unrelated Debt-Financed Income (UDFI). Consult with a tax professional to understand how these factors may impact your SDIRA.
• Ongoing Portfolio Review: Review and adjust your SDIRA holdings regularly to ensure they align with your long-term retirement goals and market conditions.
The Role of a Self-Directed IRA Administrator/Custodian
Since SDIRAs are subject to IRS rules and regulations, investors must work with a qualified administrator/custodian to facilitate their investments. An administrator, like CamaPlan, ensures that assets comply with IRS guidelines while providing account management services. Choosing a knowledgeable and experienced administrator/custodian is crucial to maintaining a compliant and well-diversified SDIRA.
Conclusion
Diversifying your self-directed IRA portfolio is essential for achieving long-term financial growth and stability. By incorporating a mix of real estate, private lending, precious metals, and private equity, investors
can reduce risk while capitalizing on different market opportunities. Thoughtful asset allocation, regular portfolio reviews, and working with a trusted SDIRA administrator/custodian will help investors maximize the benefits of their retirement savings.
A holistic approach to your investment decisions is important for implementing “true diversification.” Consider your personal investments and tax-advantaged (including tax-free and tax-deferred) investments together. In addition, you will need to determine what your present and future financial situation will require and that should be tailored to your plan. Consider tax brackets now and in the future, tax rates, age at retirement, estate planning, etc., when making investment decisions.
With the freedom to explore a variety of investments, SDIRA holders can take control of their financial future and build a resilient portfolio that stands the test of time. If you’re ready to expand your investment horizons, CamaPlan can provide the education, expertise, and support needed to successfully navigate the world of self-directed IRAs and 401Ks.
Carl Fischer is one of the founders and principals of CAMA Self-Directed IRA, LLC (dba CamaPlan). CamaPlan is a national, self-directed tax advantaged plan administrator company headquartered in Ambler, PA.
Members of National REIA can save up to $760, including a free consultation with the founder. Please visit https://web.iraasset.app/REJournal or Scan the QR Code to Claim the Offer.
The Silent Profit Killer in Real Estate— Are You Paying Attention?
By Gita Faust
Fellow investors! If you’ve been in the real estate game for a while, you probably know it’s a good idea to check in on your portfolio now and then—like going to the doctor for a checkup. Just like you wouldn’t ignore a property that needs repair, you shouldn’t overlook the health of your investments. But how do you know if your portfolio is indeed in good shape?
Don’t worry! Let’s walk through the key steps to determine if your real estate investments are in good shape. At the end of each step, I’ll give you an action step to help keep you on track!
Wait… Where Did the Money Go?
Let’s talk about cash flow, but don’t worry. There is no fancy finance talk here. It’s just a simple way of asking: “After you pay all the bills, is there actually money left over from your rental?”
Owning rental property sounds great, right? Passive income, equity building, and the dream of financial freedom. But here’s the kicker: if the money barely covers your expenses (or worse, falls short), you might have a problem.
Let’s break it down with an easy example: You rent out a property for $1,200 a month. That sounds like a win, but then the bills start rolling in:
Mortgage: $900
Maintenance: $150
Property Taxes: $100
Insurance: $50
That’s $1,200 gone—poof! You’re not losing money, but you’re not making any. And let’s be honest, breaking even isn’t the goal. The whole point of investing in rental properties is to make money, not just cover costs. If you’re not seeing a profit, it’s time to look at the numbers.
So, what now?
Take a step back and ask yourself: Are you actually making a profit or just covering costs? Sometimes, we assume that we’re doing fine as long as rent covers the mortgage. But what about all the hidden expenses—repairs, vacancies, property management fees? If your property isn’t making money after those, it’s time to rethink your strategy.
Can you raise rent (without scaring off tenants)? You might leave money on the table if your rent is way below market value. Check out local rental comps. Could you increase the rent a little? Even $50-$100 more monthly can make a big difference over time.
Can you cut expenses like maintenance or insurance? Call your insurance provider and see if you can negotiate a lower rate. Be proactive about maintenance so small issues don’t turn into costly repairs. And if your property management fees are eating into profits, consider whether self-managing is an option. At the end of the day, your rental should be working for you—not just keeping the lights on.
Is Your Investment Actually Paying Off?
Now, let’s talk about ROI (return on investment) in plain English. It’s asking: “For every dollar I put in, how much am I actually getting back?”
Here’s a super simple way to look at it: You buy a rental property for $100,000
After a year, you’ve made $10,000 in profit (after all expenses).
To determine your ROI, divide $10,000 (profit) by $100,000 (investment) = 10% return.
Not bad! But what if your return is lower than expected?
Time for a reality check:
Do the math — is your ROI actually worth the time
and effort? If you’re putting in tons of hours managing your rental but only making a 2-3% return, is it the best use of your money?
Got underperforming properties? Maybe it’s time to sell and reinvest. If a property barely makes a profit and has constant maintenance headaches, it might be time to cut your losses and move on.
Can you increase your income? Higher rent, fewer vacancies, or cutting expenses can make a big difference. Could you add a washer/dryer and charge a little more? Offer paid parking? Minor tweaks can improve your bottom line.
The bottom line is that your money should be working for you, not just sitting there. Look at your numbers and see if it’s time to adjust your strategy!
As an investor and controller/CFO, my mind is always focused on the numbers game, and I always say:
The Numbers Don’t Lie—Is Your Portfolio Telling You a Story?
But these figures are the starting point for understanding where you stand today. Once you have clarity, you can take the next step forward. Remember that sometimes owning an unprofitable property can be a strategic tax move. Are you aware of this? Is it even true?
Are You Riding on Too Much Debt?
Let’s talk about the Debt-to-Equity Ratio—but don’t worry, no finance degree is required. It’s just a way of asking: “How much of your property do you actually own, and how much is the bank’s?”
Here’s an easy example:
You buy a house for $200,000
You borrow $150,000 from the bank.
That means you’ve put in $50,000 of your own money
Your Debt-to-Equity Ratio is 3:1—for every $3 you owe, you only own $1.
Why does this matter?
The higher your debt-to-equity ratio, the more risk you’re carrying. If property values drop or unexpected costs hit, things can get messy fast. Being over-leveraged can put you in a dangerous financial position.
What to do next?
Run your numbers — are you over-leveraged? If you have multiple loans, check if your debt load is manageable.
Too much debt? Consider paying off some loans faster to reduce your risk. Use that cash flow to knock down debt if your property is profitable instead of spending it elsewhere.
Feeling the squeeze? Refinancing could lower your monthly payments. Refinancing could save money and improve cash flow if interest rates have dropped since you took out your loan.
At the end of the day, debt is a tool—but too much of it can become a trap. Make sure your borrowing is working for you, not against you!
The Numbers Don’t Lie—Is Your Portfolio Working for You or Against You?
Real estate investing isn’t just about buying properties—it’s about ensuring those properties are making money. Whether it’s cash flow, ROI, or debt management, the key is knowing your numbers and making adjustments when needed.
If your cash flow is tight, look for ways to increase rent or cut costs.
If your ROI isn’t meeting your goals, it might be time to sell underperforming properties.
If your debt is high, consider refinancing or paying down loans faster.
At the end of the day, your rental properties should be working for you—not the other way around.
Gita Faust is the founder & CEO of HammerZen, which helps businesses save time & money by keeping track of The Home Depot purchases and efficiently importing receipts and statements into QuickBooks. National REIA members receive discounts on QuickBooks services and software. Learn more by visiting www.hammerzen.com/nreia.
Key Deadlines and Considerations for Reporting 1031 Exchanges
By David Gorenberg
As Tax Day approaches, individuals and businesses are gearing up to file their tax returns. If you completed or started a 1031 Exchange in 2024, it’s important to be aware of the specific reporting requirements for your return. In this article, we cover key tax deadlines and provide guidance on how to properly report a 1031 Exchange for the 2024 tax year.
Reporting Deadlines for Different Entities in 2025
The due dates for 2024 tax returns, based on the type of entity and form being filed, generally follow these timelines:
INDIVIDUALS
• Standard Filing Deadline: Most individuals liv-
ing and working in the U.S. must file their 2024 tax returns (Form 1040 or 1040-SR) and pay any taxes due by April 15, 2025.
• Extended Filing Deadline and Extension: If you elect to file for an extension, you must submit it no later than April 15, 2025, which will allow you until October 15, 2025, to file your 2024 tax return. To obtain an automatic six-month extension, file Form 4868 and pay an estimated amount to avoid penalties and interest.
• Maine and Massachusetts Residents: Due to local holidays, individuals in these states must file their 2024 tax returns by April 17, 2025.
FARMERS AND RANCHERS
• Standard Filing Deadline: Farmers and ranchers who didn’t make an estimated tax payment by January 15, 2025, must file their 2024 tax returns (Form 1040 or 1040-SR, Schedule F) by
March 3, 2025.
• Extended Filing Deadline and Extension: If an estimated tax payment was made by January 15, 2025, the filing deadline aligns with the standard tax deadline of April 15, 2025. To obtain an automatic six-month extension, file Form 4868 and pay any estimated taxes due. The extended deadline is October 15, 2025.
CORPORATIONS
• Standard Filing Deadline: Corporations must file their 2024 calendar year income tax return (Form 1120) and pay any taxes due by April 15, 2025.
• Extended Filing Deadline: File Form 7004 and make an estimated tax payment by April 15, 2025, to receive a six-month extension and avoid penalties. The extended filing deadline is October 15, 2025.
The Housing Market: A Look Back at 2024, Ahead Through 2025 ...
consistently outperformed the consensus expectations throughout 2024, with quarterly growth over 2.5% each of the last three quarters—a full point higher than most economists predicted. The U.S. economy continues to outpace its peer group: the Chinese economy is a mess; most countries in the Eurozone are barely positive; and Canada has been flirting with a recession for the past year. The caveat here is the weakness of those other economies. In the event of a global recession, the U.S. economy is unlikely to emerge unscathed, so it’s worth keeping an eye on global trends.
The U.S. economy is heavily dependent on consumer spending, which accounts for about 70% of the GDP. And consumers have continued to spend at record levels since exiting the COVID-19 pandemic. They’ve also run up record levels of debt, totaling roughly $18 trillion. While about 70% of this debt is mortgage debt (which is offset by a record amount of $35 trillion in homeowner equity), consumers have also hit record highs in credit card and auto loan debt, and are close to an all-time high in student loan debt. All of this at a time when interest rates are extremely high. Despite this, delinquency rates on consumer debt are still well below pre-pandemic levels, and far below the serious delinquency rates we saw leading up to and during the Great Recession.
Part of the reason for this is probably the jobs market, which remains very strong. Unemployment rates are still right around 4%, job growth continues to increase (despite a decline in government hiring), and wage growth is outpacing the rate of inflation.
Low unemployment, steady job and wage growth, and a strong economy all provide the kind of solid foundation that the housing market needs to thrive.
Affordability, Low Inventory Keep Home Sales Low
Despite the strong economy, existing home sales ended 2024 at just over 4 million units – the lowest number of home sales since 1995. The primary culprits were poor affordability and the limited supply of homes available for sale.
According to research from the Atlanta Federal Reserve, affordability in 2024 was the worst it’s been in four decades—since the 1980s, when mortgage rates were routinely in the high teens or low 20s. In fact, there was a $40,000 gap between the median household income, and the income needed to buy a median priced home and spend 30% or less of the monthly household income on housing. Part of the reason for this limited affordability was that home prices had risen dramatically since the end of the pandemic (accelerated by the historically low mortgage rates available during the Federal Reserve’s “zero interest rate policy” period). Higher mortgage rates—rates that doubled in 2022—
were also a major factor in deteriorating affordability. Property taxes rose along with home prices, and soaring insurance premiums, which went up by 52% across the country over the past three years—were also contributing factors.
Those higher mortgage rates also impacted the inventory of homes for sale, by making it difficult for current homeowners to sell their properties. This is due to what economists refer to as “rate lock,” a scenario where a homeowner has a low mortgage rate, and can’t afford the higher monthly payment they’d be responsible for if they bought a new home with a mortgage rate twice as high. For instance, a homeowner with a 3% mortgage on a $300,000 loan buying a $400,000 home with a 7% mortgage would face a monthly payment at least twice as high as his or her current payment—an increase most homeowners simply can’t afford.
Low inventory, coupled with pent-up demand, keeps pricing from declining on a national basis. But market conditions vary, and home price trends tend to mirror inventory levels. Areas of the country with the most limited inventory—the Northeast and much of the Midwest—continue to see strong price appreciation, whereas markets which have more than adequate supply—parts of Texas and Florida in particular—are seeing year-over-year price declines. Escalating insurance costs in states hit hardest by recent extreme weather events are also contributing to weaker prices.
Affordability does appear to be getting better, albeit rather slowly. Home price appreciation has slowed down considerably: the FHFA reported annual increases of 4.5% (down from 6.5% the year before), and the Case-Shiller Index showed a yearly increase of 3.9%. Most forecasts expect appreciation to slow down further—perhaps around 2.5%—this year. The inventory of homes for sale is up by more than 25% from a year ago, and at its current rate will be back to pre-pandemic levels by the end of 2025. And mortgage rates are expected to tick down a bit by the end of the year (consensus forecast calls for rates around 6.4%). These factors, coupled with wage growth above 5%, should gradually enable more people to be able to afford to buy a home. But this limited affordability is causing first-time buyers to wait longer before entering the market: at the end of 2024, the median age of a first-time buyer was 38, 10 years older than a new buyer a decade ago. And there are millions of Millennials—soon to be followed by the Gen Z cohort—reaching this age over the next few years. So demographically-driven demand will provide a strong tailwind for the market.
New Home Sales a Bright Spot
While existing home sales languished, new home sales increased, ending the year with about 684,000 units sold. There are a number of reasons for this: Am-
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ple supply (there’s an eight-month supply of new homes for sale compared to about a three-month supply of existing homes); builder concessions (reduced prices and/ or upgrades equaling about 5% of the purchase price); and favorable financing (builders paying points to buy down mortgage rates). Interestingly, new home prices have also declined since the market peak in 2022, while existing home prices have continued to increase. So, the gap between the median price of a new home and the median price of an existing home is narrower than usual.
Builders are also very targeted in their efforts today, doing most of their construction in parts of the country where population is growing, like the South, Southeast and Midwest. And they’ve finally awakened from a decade-long slumber after the Great Recession and are building more homes: 2023 was the first time since 2006 that builders completed at least 1.5 million homes; the number of homes built in 2024 surpassed that by about 40,000 units. So, builders are doing their part to address the housing shortage that’s contributed to higher home prices, and are likely to surpass their 2024 sales numbers this year.
Outlook for 2025
While market conditions are improving, and the economy should continue to provide a strong basis for better home sales, affordability will still challenge many prospective buyers. But it seems likely that the market may have bottomed out in 2024, and we should expect to see existing home sales improve at least marginally, perhaps by 5-10%. New home sales are also well-positioned for continued growth, and could easily surpass 700,000 units in 2025.
Home price appreciation should slow down further, perhaps as low as 2.5%, as more inventory—both existing homes and new homes—comes to market.
Better buying conditions bode well for fix-and-flip investors as more buyers will be attempting to enter the market. But limited affordability will also provide opportunities for rental property owners, as many prospective buyers will continue to be priced out of the market. Overall, 2025 should be the beginning of what’s likely to be a slow, steady recovery in the U.S. housing market, and investors will continue to play a crucial role.
Rick Sharga is the CEO of CJ Patrick Company, a market intelligence firm geared toward real estate and mortgage companies; learn more at www.cjpatrick.com. Sharga has over 20 years of experience in the industry, including roles as EVP at ATTOM Data, Carrington Mortgage Holdings RealtyTrac, and Chief Marketing Officer at Auction.com.
ers and non-wage earners. A ruling either way could ripple through rental markets nationwide—upholding protections might force housing providers to accept Section 8 tenants, while a Housing provider win could tighten screening power. The outcome is pending, but it’s a hot topic for property managers.
Prep for both scenarios: if tenant rights win, ensure your leasing process complies; if housing providers prevail, you’ll have more flexibility but could face PR heat in voucher-heavy areas. Either way, this could reshape tenant pools and revenue strategies, especially in Midwest markets. The ultimate irony is that if Public Housing Authorities were efficient and effective, and less regulatory oriented than the alternate market customers, there would be NO NEED for this suit as property owners would welcome working with PHAs. As it is, these bloated, backward, red-tape heavy bureaucracies alienate housing providers on a very regular basis!
HUD Secretary Confirmed Scott Turner
Scott Turner took the HUD helm on February 5, 2025, bringing a cost-cutting mindset that’s already shaking things up for the housing sector. A former Texas lawmaker, he’s axing DEI contracts, $4 Million to date, and eyeing efficiency—think leaner operations for FHA loans and housing programs. His rural-urban focus could mean more funding for underserved markets, but details are thin as of now. Industry players relying on HUD-backed financing or inspections should note his “every dollar counts” mantra.
Turner’s approach could speed up loan approvals if staff cuts don’t gum up the works. But with rumors of big layoffs (see HUD DOGE below), expect potential delays in processing or inspections. If you are planning to build utilizing HUD funding of any sort, stay proactive—build buffers into project timelines and look for clarity on how his vision impacts your bottom line.
HUD DOGE Target, 50% Layoffs
Predicted, Impact on Inspection and Loan Processing
HUD’s “DOGE” plan—likely a cost-cutting push under Secretary Turner—hints at slashing 50% of staff, a bombshell for the industry. Fewer bodies could clog loan approvals and inspections, slowing project approvals or financing deals. Turner’s efficiency drive aims to refocus on rural and urban needs, but the trade-off might be operational gridlock. To overcome this, staff has been incentivized to bring forward red-tape cutting measures to save time and money. Typically, internal staff only nibble around the edges of real change. The
new executive leadership and 3rd party perspective of the DOGE audits implementing AI and trimming redundancies are the main hope!
In short, brace for delays: pad timelines for FHA loans or HUD inspections, and expect longer waits on affordable housing approvals. With HUD at record breaking staffing numbers and the majority passed the age of retirement, buyouts and reductions to new and updated processes are LONG past due.
State-by-State Update
States are moving fast as federal action lags. California’s tightening tenant rules—more headaches for landlords—while Texas offers tax breaks to spur rentals. New York’s eyeing marijuana cash for housing, and Florida’s speeding up evictions. The legislative response is in part a reflection of the varied economic conditions: opportunity in some markets, restrictions in others.
Key concerns: wildfire zones need rebuilding support, Midwest discrimination suits could shift tenant screening, and Northeast transparency bills (like New Hampshire’s) add admin burdens. Tailor strategies state-by-state—tap local rebates where you can, and brace for compliance shifts where you can’t.
Be sure to check out National REIA’s Bill Track site for a state-by-state tracing of bill progress!
New Hampshire Rental Registration/Rate Publishing Bill HB 558
New Hampshire’s bill to register rentals and publish rates is picking up steam in 2025. For housing providers, it’s more paperwork—listing properties and rents publicly—but it could level the playing field in a hot market. It is pitched as a transparency boost, though it is likely to chase off additional capital investment in NH housing.
If it passes, compliance costs rise, and low-ball pricing could squeeze margins. On the flip side, it might draw tenants hunting deals – if your property is the most efficient.
Ironically, the DoJ sued Real Page for publishing rental rates and then adjusting for surge pricing – like airlines have done for decades - and yet New Hampshire is going to prep the hard part, getting individual rental prices published, allowing for “adjustments” by housing providers ongoing!
On More Local Note: Uptick in Fines/ Inspections—Reduced Revenues
Fines and inspections are climbing, but local reve-
nues are tanking—a red flag for the housing industry. Stricter housing codes mean more likely penalties for noncompliance. Even with substantial increases in housing values and property taxes, cash-strapped cities aren’t seeing the payoff, potentially cutting services or increasing fees. Additionally, HUD staff cuts could shift more enforcement to locals, putting upward pressure on municipalities and ultimately increasing your costs.
Simply put, it’s a profit squeeze; proactive maintenance is your best defense. Audit your properties now—fix issues before fines hit. If new inspection programs are rolled out in your community, budget for higher upkeep, and expect slower municipal responsiveness if revenues keep sliding
Marijuana Income and Local Governments
Marijuana taxes are padding local budgets—good news for housing as states like Colorado and New York funnel cash into rentals and infrastructure to help offset high housing prices. While it can ease pressure from inspection-driven revenue drops and potentially fund subsidies or tax breaks for housing projects new and renovated, the funding source is unstable.
The catch: the Feds stance on cannabis is not good and federal rules limit banking options. Tap into local grants if available, but tread carefully—marijuana money’s a boost, but not a sure or long-time bet.
Finally, be aware of the crosswinds involved with often contradictory local and state laws relating to smoking bans and the ADA exceptions for marijuana. There are a growing number of court cases where the property owner is trying to balance the rights of non-smokers with the ADA exception of a marijuana smoker. Know the local rules and make sure your written policy is up to date!
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You May Have More Pets Than People… What are You Doing About That?
By Victoria Cowart, CPM, NAAEI Faculty
In 2023, there were approximately 45 million housing units occupied by renters. That equated to 34% of U.S. households. One driver of demand for rental housing is the cost savings and the gap between wages and home ownership.
Across 50 of the largest metro areas, renting is 37% less expensive than buying a typical home. Add to that, in many of these metros, the “median household income is insufficient to qualify for the median-priced home,” and what renters need in terms of a down payment, and you have renters who are not “climbing the property ladder.”
Despite the challenges facing renters in climbing that housing ladder, rent growth was under 1% in Q3 of 2023, across a spectrum of rental types, and vacancies rose 1%. These statistics are in light of an addition of 91,000 new renter households in this same quarter.
For management, this means renters, once earned, are precious and must be well served so that property management pros can retain them during their climb, remembering there is nearly $485 billion spent on rent each year. How can the industry appeal to these renters, attract and retain them? What matters most to them?
One thing that 70% of households LOVE is their pets! Pets are indeed the new kids; welcoming them is a key component in marketing, achieving, and maintaining happy renters. That said, managing this addi-
tional population of furry renters can be difficult. There’s data—there’s always data. Who and what lives in your rentals is a crucial data set. What do you have, and what reporting can you achieve in this space? What are your risks, and what are you doing to uncover and control them? And what about the all-important cost offsets and income from this population of furry renters? Property management professionals have ongoing costs here. How are they being recovered?
The first and best-in-class pawtner in these arenas is PetScreening. PetScreening’s services, which are free to PetScreening’s property management clients, allow companies to set and manage their pet policies, manage pet risk, obtain pet data for budgets and other decision-making, and scale pet-related income.
First, each company should examine its policies. The way to most renter hearts is through their furry family. Those 70% of households equates to 90 million homes owning pets, and 97% of those owners consider their pets to be family! Setting policies that welcome them is critically important. Each company should consider the most popular pets, and be intentional in setting their breed and weight restrictions. Here are some facts to consider:
• Seven of the top 32 most popular breeds are often restricted.
• The average weight of the top 25 most popular breeds is 36 pounds.
• Ten of the top 25 weigh more than that, coming in at 59 pounds.
After examining and setting policies, companies can use PetScreening to manage the pet policies across a given portfolio with PetScreening’s “landing pages” and proprietary algorithmic FIDO Scoring. Each household will declare their pet and assistance animal status, and each pet will receive FIDO scoring. This process will provide true insight and consistent pet policy management.
However, the work of property management professionals continues. After the no-pet households and those with pets are managed, every company needs to have a process for addressing reasonable accommodation requests for assistance animals from those with disabilities. This process should be interactive, individualized, and based on a good-faith dialogue. And yet again, PetScreening is the partner of choice for more than seven million rentals of all shapes and sizes across the country.
PetScreening has an assistance animal team of re-
viewers, authenticators, and attorneys, and they are serving the industry in this area, taking this work off their clients’ paws in seven million rentals! The reviewers take that initial look at service animal requests (two questions/two answers, per HUD) and the required documentation for support animals. If the request is complete and HUD-compliant, an authenticator will confirm with the provider of the support animal documentation that they drafted it for that particular requestor on the date in the documentation. This process gives PetScreening’s clients valuable confirmation of the authenticity of the documentation. Together, the reviewers and authenticators at PetScreening, guided by the PetScreening legal team, work to bring each request to the point of determining whether or not it can be recommended to their clients for admittance as an assistance animal.
With all of that work being provided, it’s again noteworthy to share that these services are free to PetScreening’s clientele. The only charge they pass along for the services is a nominal initial/annual fee for pet profiles, which the pet owner pays directly to PetScreening, making the process simple and seamless for the housing providers.
With Generation Z topping out at 27 years old and Millennials topping out at 43, they make up 72% of today’s renters, and they own nearly half of the pets in the country. They want a variety of pets, spoil their pets, and likely spend half of the almost $186 billion a year our country spends on pets! The industry should welcome them, pamper them, and offer healthier and better-managed pet environments for these furry children and their vitally essential pet parents. Let PetScreening be your pawtner with simple onboarding, integrated technology, and no costs. Learn more at PetScreening. com.
Victoria Cowart, CPM, NAAEI Faculty, and the Director Education & Outreach for PetScreening. For more information, please visit PetScreening.com.
Member Spotlight — Lisa Carter ...
Estate) and lead the Women’s REIN Group.
Please tell us a little about who you are and what you did before getting into real estate investing:
I am a second-generation investor. My mom started buying rental properties in the 1980s. I grew up around real estate but thought it was too slow and uninteresting. After college, I went to work in corporate America. I worked different roles and responsibilities that allowed me to gain invaluable leadership experience: the opportunity to lead geographically dispersed teams, to manage large budgets and strategic relationships within Fortune 50 clients. In 2018 I started to think about an exit strategy from my corporate career. I made offers to purchase small businesses, but after those plans didn’t materialize, I realized that real estate was always something that interested me since I bought my first primary home.
Where is your current market and what is your focus or area of expertise?
My focus in 2020 when I started as a full-time investor was to buy and hold. I wanted value-add opportunities in an emerging market. I would sprinkle in a flip a year but I focused on buy-and-hold. I like to purchase in secondary and tertiary markets. The purchase price to rental value is very strong. My dollar goes further and rent prices have less fluctuations because no one is building Class A apartments down the street. Once I am in the market, I try to add.
How did you get started?
It started with turning my primary home into a rental when I relocated to Florida in 2012.
Describe a typical work week for you as a real estate investor:
Mondays are meetings and networking meetings. Tuesdays are in the field with team members, walking properties. Wednesdays are meetings & continuing education. Thursdays are meetings and networking. Fridays are for financial matters, and team meetings.
How long have you been investing in real estate?
My first investment property was 2012 when I turned my primary home into a rental. I purchased one other rental house and later sold it in 2019.
Tell us about your first deal:
The first deal I got under contract never closed because I got scared and backed out. It was a brick ranch with interior obsolescence. There were two walls that
needed to be removed. It was in a great neighborhood and would have been a great property but I allowed fear to block me and I backed out. I lost $5,000 on that deal and I didn’t trust my own evaluations and instincts. However, the property sold later for $100,000 more than my contracted price. Lesson learned.
How do you fund your investments?
I use a combination of savings, and hard money lenders and I have utilized the BRRRR strategy frequently. After four years, I am closing on my first seller-financing deals.
Do you have a real estate license?
Yes. I am with a commercial broker.
What projects are you currently working on?
Closing on my first creative finance deal and will start the rehab on that project in early spring. It is a cosmetic rehab so we should have it available for rent relatively soon.
How much time do you put into your real estate education?
A lot. Education is so crucial for us to be successful. Investing in AI courses, commercial underwriting, creative finance, etc. I also have my team member(s) take classes as well. Continual learning is a must!
Has coaching or mentoring played a part in your success?
Absolutely. There’s a reason highly successful people, teams and organizations engage with coaching. My very first real estate coaching came from investors I met through my local investor group. Education has played a critical role in my success. I remember they coached me to get a VA very early in my start-up. I had left my corporate job and was worried about affording an assistant. The next coach helped me with all things commercial, including underwriting and deal analysis. Every year, I engage in a mentor/coaching program. This year is focused on entrepreneurship, with a strategic coach.
What are your current and future goals?
To create a business that is self-actualizing...doesn’t need me to grow. Create more opportunities for people to join the Bridge Equity team and for more families to have a safe place to live.
What has been your top struggle in this business?
Systems and processes. Making sure that I am investing in the tools and the infrastructure that will scale
with my business. There are so many tools, which one is the best value and the most scalable. Understanding if all the tools will work together seamlessly.
What do you like most about what you do?
There are several things that I like about what I do. I like the freedom to structure my life, my time and my energy into interesting projects. The opportunity to add value to neighborhoods. To provide clean, safe housing to families. To provide work to my team members.
Do you have a tip or advice that you would pass along to other investors?
Don’t wait for the perfect deal or the perfect time. Seize the market and opportunity, where you are with what you have. Engage with other investors. Find a local investor group and show up. Keep showing up. Give more value to your local group than the YouTube gurus. When looking for a coach, make sure that they are ACTIVE investors, otherwise you will just be sourcing deals for them. Continued
Lisa and her mom, Jannie.
At the 2018 Ryder Cup in Guyancourt, France.
Lisa’s first hole in one!
Member Spotlight — Lisa Carter ...
How important is joining a local REIA to a new investor?
This is crucial to any new investor’s success. Join and engage. Show up to meetings, ask questions, engage, volunteer.
What is your favorite self-help or business book?
Do you have any interesting hobbies or something unique that you like to do?
I am an avid golfer. I enjoy live theater, sports and traveling.
Social media accounts:
• Instagram-@Bridgeequityllc and @lisacarterrealestate
• Facebook- Bridge Equityllc
The Richest Man in Babylon, by George S. Clason
A finished rehab project.
Clockwise from left, before-and-after kitchen remodel.
erty before they can begin to advertise it. What stands out about that is that those two states are not known for being highly regulatory states, but are usually more free-enterprise, freedom-based states. States on the other side of the spectrum are also cracking down, like Illinois, Oregon, Washington and Colorado. There is also some case law in the last year or two from Tennessee that is averse to wholesalers.
You may have noticed that in the definition of wholesaling that I gave, I used the word “contract.” What exactly is a contract? In contract law, a “meeting of the minds” refers to the mutual understanding and agreement between all parties involved in a contract, meaning they all clearly comprehend and accept the terms and conditions of the agreement, which is considered a crucial element for a valid contract to exist; essen-
tially, it signifies that everyone is on the same page about the deal. That’s where things become problematic.
Wholesalers market by saying, “I buy houses” or “I close quickly” or “I pay cash,” and then they enter into contracts to buy houses. The problem is that they do none of those things. They don’t buy, they don’t pay cash, and they don’t close at all. They are saying things publicly that are not consistent with their actual business practices.
When a person enters into a contract, they are representing in writing that they have the intent, legal capacity, and financial ability to perform according to the terms of that contract, yet many wholesalers are putting a lot of properties under contract or are “tying them up” when they do not have the intent, capacity or ability to fulfill the terms of the contract. They are putting properties un-
der contract with the sole objective of assigning those contracts to someone else. Wholesalers might get defensive and say, “But Jeff, the contract says that I can assign it.” Yes, it does, but it doesn’t say that is exactly what you are going to do because if it did say that you were going to assign it, it wouldn’t be a valid contract since you are not the buyer. You are entering into a transaction for which you do not have the intent, capacity or ability to perform.
I think it’s only a matter of time before some state agency comes after a large wholesaling group by virtue of saying they are engaged in a fraudulent and deceptive business practice that is harming consumers because they say things in their advertising that they do not later perform. I’ve said it many times in many different forums. If you are a wholesaler, and your business is predominantly
or exclusively assignments, then you are engaged in fraudulent business activity, and you need to change your business model.
Now that I have probably made some of you frustrated with me, let me give you some good news about wholesaling. Many leaders in the industry are recognizing the need for a change. New resources are becoming available for wholesalers who desire to actually buy the properties and then resell them. Many wholesalers with whom I have worked have adopted the new model wherein they actually purchase the property in a fully-funded, stand-alone transaction and then immediately (or shortly thereafter) begin remarketing the property and sell it in a separate, fully funded, stand-alone transaction.
Those who follow this model are doing what I refer to as proper back-to-back closings. They are not seeking to use the end-buyer’s money to pay for their transaction. By the way, those transactions, called “dry closings,” are no longer permitted by every major title insurance carrier or underwriter.
After purchasing a property, wholesalers can expose the property to the market for a longer period while sometimes improving the condition of the property, although they often do absolutely nothing to it. Those who are doing back-toback closings have discovered that they can do fewer deals while making the same gross revenue. They are working less, have lower costs and fewer things that can go wrong, and they make more money. That’s not a bad way to do real estate!
National REIA has been a leader when it comes to educating investors in the right way to do wholesaling and remains committed to putting accurate information out into the market. They created a video with key regulators from the Ohio Division of Real Estate which has been used to influence the departments of real estate in many other states. You can find it on YouTube at:
https://bit.ly/3EUReAF
I know that the Ohio Division of Real Estate still requires this video as part of the continuing education and training for all real estate agents in the state, and it has been used to educate other state regulators and investigators as to some of the basics of wholesaling.
Jeffery S. Watson is an attorney who has had an active trial and hearing practice for more than 25 years. As a contingent fee trial lawyer, he has a unique perspective on investing and wealth protection. He has tried more than 20 civil jury trials and has handled thousands of contested hearings. Jeff has changed the law in Ohio four times via litigation. Read more of his viewpoints at WatsonInvested.com.
Room for Rent: A Newcomer’s Guide
By Scot Aubrey
Hula Hoop. Pet Rock. Rubik’s Cube. All are fads that had their moment and, every once in a while, resurface with a new generation. There is another old/new idea that is becoming a more popular option in an expensive and competitive real estate market: renting by the room.
A look back in history would show that renting by the room is not a new concept, in fact, it has probably existed for thousands of years in one form or another. But today’s environment brings challenges that likely never existed before. So, let’s take a deeper dive into this scenario and see how it may affect you as an owner and investor.
If you are like other investors, you have enhanced your portfolio with residential real estate, including single-family homes, condos, and apartments. However, as the market has changed, you may find your earnings are falling short of what you wanted or projected. One effective strategy to increase your return on investment is to rent by the room instead of leasing the entire property to a single tenant or family.
Renting out individual rooms can provide you as a landlord with multiple sources of income from several tenants, resulting in more consistent and profitable rental payments. While this approach can be financially beneficial, it does come with a few key things to consider.
• Cost Savings for Tenants: No landlord wants an empty property and by providing more affordable options, this becomes less likely. Renting a room can significantly lower living expenses for tenants. For instance, a three-bedroom home that typically rents for $2,000 could be split into three rooms renting at $800 each, making it more affordable for individuals.
• Increased Income for Landlords: The potential for increased income is music to every landlord’s ears. By renting to multiple tenants, landlords can maximize their rental income. The same three-bedroom home could generate $2,400 monthly if each room is rented separately.
• Increased Liability: Having multiple tenants with no connection to one another instantly adds liability and tension into the property. With the sharing of common spaces and bathrooms, there is an increase in opportunities for interactions that could cause discomfort. More than ever, doing proper background screening like
that available through Rent Perfect is critical in protecting your interests and your tenants.
• Potential for High Tenant Turnover: While renting by the room can yield higher revenue, there is a greater chance that you may experience more frequent tenant changes. As you know, every time a tenant leaves, this creates extra work in finding, screening, ad placing new tenants into the property. And renting by the room may limit your potential tenants as it may not be the perfect fit for everyone.
• Increased Communication: More tenants inevitably mean more calls about noise complaints, maintenance issues, and other issues that present themselves when you have unaffiliated individuals sharing a space. Are you ready as a landlord to take on the stress and extra workload that communicating with multiple tenants in the same property will bring?
• Hidden Costs: As this is an area which is new to most landlords, there are a lot of unknowns. There will be additional expenses, such as increased utilities and maintenance costs, that you previously haven’t experienced. Shared costs, like heating and landscaping, might not be easily passed on to tenants and could impact overall profitability. Shared costs also create one more tension point as tenants compare their “use” to the cost they are paying, opening additional hidden costs related to legal or management fees you weren’t expecting. In areas of the country that require separate metering for utilities, this creates another cost that many landlords did not
anticipate.
It’s not all gloom and doom, though. Most landlords typically lease their properties to a single family or individual. However, renting by the room can be a viable option, even in your primary residence. For tenants, especially young professionals or students, sharing a house can be a more affordable option in high-rent parts of the country.
While renting by the room can be an effective strategy for increasing rental income, as we’ve discussed, it’s not without its challenges. Landlords must weigh the benefits against potential conflicts, hidden costs, and the hassles of managing multiple tenants. Whether renting by the room is just the latest fad or the new normal, thorough consideration is key to determining if this approach aligns with your long-term investment goals.
Scot Aubrey is Vice President for Rent Perfect, a private investigator, and manages short- term rentals. Subscribe to the weekly Rent Perfect Podcast (available on YouTube, Spotify, and Apple Podcasts) to stay up to date on the latest industry news and for expert tips on how to manage your properties.
Members of National REIA can take advantage of special pricing from RentPerfect; the solution for rental property owners and managers for screening & managing tenants. Learn more by visiting www.rentperfect. com or calling 1-877-922-2547.
Lending Lockdown: How Real Estate Investors are Creating Their Own Capital Source
By Jason K Powers
The Current Lending Environment is Squeezing Investors
Real estate investors have always needed access to capital, but 2024 and beyond is proving to be a particularly difficult landscape. Banks are tightening their grip on credit, making it harder for investors to secure financing for both new property acquisitions and refinancing existing projects.
According to the Federal Reserve’s August 2024 Senior Loan Officer Opinion Survey, banks continued to tighten lending standards across all commercial real estate (CRE) loan categories. Loan-to-value ratios are being reduced, debt-service coverage requirements are increasing, and banks are scrutinizing borrower liquidity and reserves more than ever.
This tightening is not just a U.S. problem. In January 2025, the European Central Bank reported that banks across the eurozone had restricted credit access for companies during Q4 2024, with further restrictions expected. The global ripple effect is clear: lenders are nervous, and investors are feeling the squeeze.
How Does This Impact Real Estate Investors?
When banks pull back, it can cause ripple effects across an investor’s entire portfolio.
• Fewer Deals: Without financing, investors may need to pass on opportunities—especially distressed properties, which often require fast action.
• Slower Growth: Reduced leverage means slower portfolio expansion. Investors who rely on traditional financing risk missing the next wave of
growth when markets correct.
• Increased Risk: Tighter requirements, like higher personal guarantees and lower LTVs, place more of the investor’s personal wealth on the line.
• Lost Negotiation Power: Sellers often prefer cash or quick-close buyers. Financing contingencies with banks can weaken an investor’s position when competing for properties.
The Infinite Banking Concept as a Strategic Solution
This is where the Infinite Banking Concept (IBC) becomes invaluable for real estate investors.
IBC involves using a specially designed, dividend-paying whole life insurance policy from a mutual insurance company. Over time, this policy accumulates cash value, which can be borrowed against through policy loans.
The key benefits of IBC for investors, especially in today’s lending environment, are:
• Access to Capital on Demand: Once your policy has accumulated cash value, you can borrow against it whenever you need it—without approval from a bank.
• No Loan Committees: Policy loans are not dependent on your credit score, debt-to-income ratio, or the bank’s risk appetite.
• Speed and Simplicity: When an opportunity arises, you can secure funds within days, enabling you to act like a cash buyer.
• Control Your Repayment: Unlike traditional loans, you determine the repayment schedule on a policy loan, giving you more cash flow flexibility as you manage your real estate projects.
Real-World Applications: An Investor’s Advantage
There are countless ways savvy real estate investors can leverage the cash value from their policies to fund their deals and manage their portfolios. Here are some high-level applications:
• Down Payments: Covering the upfront capital needed to secure traditional financing.
• Bridge Financing: Accessing quick funds to close on a deal while waiting for longer-term financing to come through.
• Rehab Costs: Financing property renovations, repairs, or upgrades without relying on hard money loans.
• Property Acquisition: Making all-cash purchases on distressed or off-market properties where speed is critical.
• Earnest Money Deposits: Providing immediate liquidity to secure a deal under contract.
• Carrying Costs: Covering holding costs such as mortgage payments, property taxes, utilities, and insurance during a flip or vacancy period.
• Gap Funding: Filling financing shortfalls when bank financing or private money doesn’t cover the entire project.
• Partner Buyouts: Buying out a partner’s share in a joint venture or syndication.
• Tax Liabilities: Handling unexpected property tax bills or covering capital gains taxes when selling an asset.
• Rescue Funding: Avoiding foreclosure or resolving emergencies like a sudden major repair.
• Cash Flow Cushion: Creating a buffer to manage temporary dips in rental income or cover vacancies.
Lending Lockdown: Creating Your Own Capital Source
• Bulk Deals: Pooling policy loans with partners to seize larger multi-property acquisitions or portfolios.
These flexible uses of cash value empower investors to control their deals and seize opportunities on their own terms—without waiting on a bank’s approval or risking a good deal slipping away.
Why This Approach Matters More in 2025
Let’s face it—we are living in a time of economic uncertainty. The U.S. national debt is over $34 trillion, and interest rates are holding at their highest levels in decades. This kind of environment is precisely why real estate investors need financial independence from traditional banks. You need the ability to act quickly and decisively.
The Psychological Shift: Becoming Your Own Banker
The Infinite Banking Concept is not just about life insurance or policy loans. It is about changing how you think about financing. Instead of being at the mercy of banks, you gradually build your own source of capital.
Each deal funded through your policy loan is another step toward financial autonomy. You shift from being a borrower dependent on bank policies to a decision-maker using your own financial system.
Policy Growth Is Not Stopped by Loans
One of the most misunderstood aspects of IBC is how the cash value continues to grow, even when you take out a policy loan. Your cash value is not being spent; you are borrowing against it, using the insurance company’s funds as collateral.
This means your policy earns dividends and grows on the full cash value, regardless of any outstanding loans. The loan itself is repaid on your terms, often using rental income or profits from property flips.
Tax Efficiency and Protection
In addition to offering liquidity, IBC policies come with tax advantages:
• Cash value grows tax-deferred.
• Policy loans are not considered taxable income.
• Death benefit passes to heirs tax-free, offering a built-in estate planning tool.
Comparing IBC to Traditional Financing
Let’s break it down:
The Bottom Line
In 2025, real estate investors cannot afford to be handcuffed by bank lending policies. The Infinite Banking Concept provides a practical, proven way to unlock capital on your terms. It offers more than just an alternative financing tool—it represents a shift toward financial autonomy.
As the lending landscape tightens, those who embrace IBC will find themselves positioned to seize more opportunities, close deals faster, and ultimately build lasting wealth.
If you want to learn more about implementing IBC as part of your real estate investing strategy, visit 1024Wealth.com/ NREIA and discover how to finance on your terms.
Download the free e-book, A Real Estate Investors Guide to Infinite Banking, at 1024Wealth.com/NREIA.
Jason K Powers is a Multi-Business Owner, Real Estate Investor and an Authorized IBC Practitioner. In an exclusive partnership with the National Real Estate Investor Association, Jason is the go-to expert for all aspects of Infinite Banking and Life Insurance. Connect with Jason today to explore how life insurance can empower you to reach your financial goals. Visit 1024Wealth.com/NREIA.
Key Deadlines, Considerations for Reporting 1031 Exchanges
PARTNERSHIPS AND S CORPORATIONS
• Standard Filing Deadline: Partnerships and S corporations must file their 2024 tax returns (Form 1065 or Form 1120-S) and provide each partner or shareholder with their Schedule K-1 (or Schedule K-3, if applicable) by March 15, 2025.
• Extended Filing Deadline: File Form 7004 and make an estimated tax payment by March 15, 2025, to receive a six-month extension and avoid penalties. The extended filing deadline is September 15, 2025.
Any entity reporting a 1031 Exchange conducted in the 2024 tax year must report the exchange to the IRS by filing Form 8824 with their income tax return by the applicable deadline.
For a complete list of 2025 tax deadlines, visit the IRS website.
Tax Reporting Guidelines for Various Property Types
RAW LAND
For the sale of raw land, gains or losses must be reported on Form 8949, with the results transferred to Schedule D. If the property has been owned for less than a year, the sale is reported as a short-term gain or loss, while ownership of a year or more qualifies it as a long-term gain or loss. When calculating the adjusted basis, it is important to track the purchase price, associated costs, and any improvements made on the property. Although raw land itself cannot be depreciated, certain improvements to the land may qualify for depreciation and must be tracked separately for accurate reporting. Additionally, if the raw land is held as investment property, it is not subject to the $10,000 SALT (State and Local Tax) cap on property tax deductions imposed by the Tax Cuts and Jobs Act of 2017. If the land is part of a 1031 Exchange, Form 8824 must also be filed.
BUSINESS USE PROPERTY
For business use property, income generated from the property is reported on Schedule C for actively managed business property, or Schedule E for passive or rental property. Deductions for operating expenses, depreciation, property taxes, and business loan interest can be claimed to offset income generated by the property. When selling business property, the transaction should be reported on Form 8949, with the results transferred to Schedule D for capital gains or losses. Depreciation recapture is required for the depreciated portion of the property and must be reported on Form 4797. If the sale involves a 1031 Exchange, Form 8824 must also be filed.
RENTAL PROPERTY
For rental property, income is reported on Schedule E, allowing deductions for expenses such as mortgage interest, property taxes, repairs, and depreciation. When the rental property is sold, the sale should be reported on Schedule D, and any depreciation previously claimed must be accounted for through depreciation recapture, which is reported on form 4797. If the rental property is part of a 1031 Exchange, the transaction must also be documented on Form 8824.
Depreciation and How It Affects Your Tax Return
Depreciation allows property owners to deduct the cost of wear and tear on income-producing or business-use properties over time, which reduces taxable income during ownership. However, this benefit comes with tax implications upon sale due to depreciation recapture, which requires paying taxes on the amount of depreciation previously claimed.
Eligible properties include residential rental properties, which are depreciated over 27.5 years, and commercial properties, which are depreciated over 39 years. Depreciation is calculated by dividing the property’s cost basis (the purchase price minus the land value, as land is not depreciable) by its IRS-defined useful life.
DEPRECIATION RECAPTURE TAX
When selling a depreciated asset, the IRS requires you to “recapture” the total depreciation claimed during ownership. To calculate depreciation recapture:
1. Determine the total depreciation claimed over the ownership period.
2. Multiply the amount by the federal tax rate of 25%.
Form 4797 must be used to report the sale of business or income-producing property, detailing the purchase price, date, total depreciation claimed, and the resulting recapture tax. Details from Form 4797 are then included on Schedule D to calculate capital gains or losses. Adjust the sales price by subtracting selling expenses and the adjusted basis (original cost minus total depreciation).
To simplify calculations, utilize our Depreciation Calculator to determine your annual allowable depreciation.
*The calculator is for informational purposes only and provides an approximate estimate. Consult with your Tax Advisor for an accurate calculation based on your specific situation.
DEPRECIATION AND
1031
EXCHANGES
A 1031 Exchange allows you to defer taxes associated with the real estate transaction, including depreciation recapture tax and net investment income tax, when reinvesting proceeds into a like-kind property. The Net Investment Income Tax (NIIT) applies a 3.8% tax on certain investment income, such as capital gains, rental income, and interest. While 1031 Exchange defers the gain, Exchangers should be aware of how the NIIT may impact their tax reporting. When reporting a 1031 Exchange:
• Include a depreciation schedule on Form 8824 if the Relinquished Property was depreciated over the time owned. Accurate depreciation reporting is critical to accurate tax calculations and proper handling of the net investment income tax.
• The depreciation schedule helps calculate depreciation recapture, which affects your tax liability.
Since depreciation recapture rules can vary depending on the nature of the depreciable asset, consulting a tax advisor is highly recommended to ensure compliance, navigating net investment income tax implications, and maximize tax benefits.
Reporting a 1031 Exchange
When filing your taxes, any 1031 Exchange completed in 2024 must be reported using Form 8824, providing the IRS with a comprehensive record of your exchange.
DOCUMENTS NEEDED TO COMPLETE FORM 8824
Accurate and complete documentation is crucial for properly filling out Form 8824. Here is what you’ll need:
• Closing Statements: These include the final settlement documents for both the sale of the Relinquished Property and the purchase of the Replacement Property(ies). They provide key details, such as sale prices, transaction dates, and any adjustments made at closing.
• E xchange Agreement: The Qualified Intermediary (QI) will provide this document, which outlines the structure of the exchange and confirms it meets IRS requirements.
• Depreciation Schedules: If the Relinquished Property was used for business or investment purposes, the depreciation schedules must be included. These are essential for calculating depreciation recapture, which may impact your tax liability upon sale.
• Timeline Records: Maintain a detailed log of key dates, such as the date the Relinquished Property was sold, the date you identified potential Replacement Properties (within the 45-day identification period), and the date you acquired the Replacement Property(ies) (within the 180-day exchange period). Many QIs will provide this information as part of an exchange summary at the conclusion of the 1031 Exchange.
Special Considerations for 1031 Exchanges Conducted in 2024
1031 EXCHANGES THAT SPAN TWO TAX YEARS
When a 1031 Exchange spans two tax years, such as those initiated after July 5, 2024, the 180-day exchange period will extend into 2025. However, the entire exchange will be reported on the 2024 tax return, regardless of when the Replacement Property(ies) are acquired, provided the exchange was successful. Additionally, if any funds remain in the exchange account due to unacquired properties or failure to complete the exchange before the deadline, they cannot be returned before January 1 of the following year, potentially creating tax implications.
To fully utilize the 180-day exchange period without being impacted by the April 15 tax deadline, Exchangers initiating exchanges after October 18, 2024, must file a tax extension using Form 4868, which provides an additional six months to report the exchange and avoid forfeiting time in the 180-day window.
FAILED 1031 EXCHANGES
Understanding the distinction between a successful and failed 1031 Exchange is crucial to proper tax reporting. A successful exchange adheres to IRS rules, including identifying Replacement Property(ies) within 45 days and completing the acquisition within 180 days or the due date of the tax return for the year in which the exchange com-
menced, allowing for tax deferral to be reported on Form 8824. However, if an exchange fails, such as failure to identify or acquire Replacement Property(ies), as well as failure to fully utilize exchange funds, any unused funds are returned subject to the standard associated taxes including federal capital gain, depreciation recapture, state, and net investment income taxes.
For exchanges spanning two tax years, such as one initiated in late 2024 with funds returned in 2025, the gain is generally reported in the year the funds are received, unless a special election is made to recognize the gain in the sale year under IRS Section 453 installment sale rules. This option can provide shortterm tax deferral, offering flexibility in managing tax obligations. Additionally, if the exchange results in taxable “boot” due to partial Replacement Property acquisition, installment sale rules allow taxes on the boot to be paid in the following year, rather than being paid entirely in the year of the exchange.
STATE-LEVEL TAX IMPLICATIONS
State-level tax implications can add additional considerations when completing a 1031 Exchange. Certain states, like California, have specific reporting requirements. For example, California requires Exchangers to file Form 3840 to track deferred gains within the state. This is particularly important because California does not conform to federal tax deferral rules for 1031 Exchanges. Even if the Replacement Property is located outside California, the state requires Exchangers to report the sale of the Relinquished Property and the acquisition of the Replacement Property(ies) within its jurisdiction. Additionally, California imposes tax on any capital gains from the exchange if the Replacement Property is sold outside the state without a new 1031 Exchange, and failure to comply with these reporting requirements could result in penalties. It’s crucial to review the tax laws of all relevant jurisdictions, as states may have differing rules for reporting deferred gains and other tax obligations, ensuring full compliance with all state-specific requirements.
As always, we recommend that Exchangers work closely with their tax preparer, advisor, or CPA to ensure accurate reporting and compliance when filing their tax return for the 1031 Exchange. For a complete breakdown of tax items for the year, visit the IRS website.
The material in this article is presented for informational purposes only. The information presented is not investment, legal, tax or compliance advice. Accruit performs the duties of a Qualified Intermediary, and as such does not offer or sell investments or provide investment, legal, or tax advice.
David Gorenberg is a third-generation real estate investor, an attorney and Certified Exchange Specialist®, and serves as Director of Education for Accruit. Members of National REIA can take advantage of special pricing from Accruit. Learn more by contacting David directly at 215-770-6354, or by visiting www.accruit.com.
