BiggerPockets Real Estate Podcast

BiggerNews: How Much of a Return Should Your Investment Property Produce?

Nov 15, 2024

James Dainard, a seasoned real estate investor and author of 'The House Flipping Framework,' shares his insights on what constitutes a good real estate deal in 2025. He discusses the high returns from house flipping, weighing them against the associated risks. Garrett Brown, a vacation rental expert, reveals strategies for achieving impressive returns from short-term rentals. The conversation also covers crucial metrics like Internal Rate of Return (IRR) and when to choose reinvesting in properties over acquiring new ones.

39:03

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Episode guests

James Dainard

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Episode notes

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Quick takeaways

Evaluating cash on cash return is crucial for investors, helping them understand the efficiency of their property investments relative to cash invested.

Understanding market demand and unique property features is vital for short-term rental investors to achieve desired cash flow and appreciation.

Deep dives

Understanding Cash on Cash Return

Cash on cash return is a critical metric for investors to evaluate the efficiency of their investments. It calculates the annual cash income generated by a property relative to the amount of cash invested, focusing solely on cash transactions without financing considerations. A cash on cash return can vary widely, from modest percentages to higher figures depending on the investment's performance. This measure is essential for making informed decisions about whether to pursue a particular deal, as investors assess what their return will be on an annual basis.

Intro

2min

Analyzing Investment Metrics and Market Dynamics

6min

Balancing Risks and Returns in Short-Term Rentals

11min

Real Estate Investment Strategies

6min

Understanding Investment Returns and Operator Experience

6min

Strategic Real Estate Investments

9min

What makes a “good” real estate deal in 2025 and beyond? How much of a return should your investment property be producing? Are real estate returns good enough in this tough housing market to beat out other performing assets like stocks? Today, we’re sharing our exact investing criteria, defining what makes a “good” real estate deal to us, and how you can use key indicators to identify deals worth the effort.

We’re breaking this episode into a few parts as we touch on the primary types of investment properties: long-term rentals, short-term rentals, and house flips. Garrett Brown is our resident vacation rental expert and shares how he’s routinely getting twenty percent (or greater) returns by reinvesting in his short-term rentals. Next, familiar face James Dainard discusses the unbelievable house-flipping returns he nets, but are they worth the risk?

Finally, Dave shares the metric he goes after when investing in long-term, low-risk rental properties. Plus, we’ll share when it’s a better use of your money to reinvest in your current properties vs. going out and buying new ones!

In This Episode We Cover:

What makes a “good” real estate deal in 2025 and beyond

The massive return James is making with house flipping (and the HUGE risks he takes)

Garrett’s unique short-term rentals pulling in twenty percent (or higher!) average returns

IRR (internal rate of return) explained and why everyone should calculate this when investing

When to buy more properties vs. reinvest back into your performing portfolio

And So Much More!

Links from the Show

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Get a Quote on Your Next Short-Term Rental Loan with Host Financial

Calculate IRR with Dave’s Book, “Real Estate by the Numbers”