Mike Swenson - Top 5 Real Estate Investing Tips for 2025
What does 2025 hold for real estate investing? 2025 may prove to be a pivotal year in the real estate investing space. Interest rates are still higher than hoped. Deals are tough to come by and get to pencil out. Insurance costs seem to keep going up. However, don't let that stop you from hitting your goals for your family's financial future. The deals you find this year may turn out to be some of the gems in your future portfolio. So don't give up! Make this year an amazing year on your investing journey. Join me for a great conversation about 5 of the top tips that I have for investing this year.
In this episode, you will be able to:
- Master the top real estate investing tips for 2025 and stay ahead of the game.
- Uncover creative financing strategies in real estate to maximize your investment potential.
- Discover the importance of property and asset management for long-term real estate success.
- Learn how to analyze real estate investment opportunities like a pro to make informed decisions.
- Navigate insurance costs for property investors with expert insights and tips.
The key moments in this episode are:
00:00:00 - Creative Financing in Real Estate
00:02:50 - Taking Action in Real Estate
00:09:43 - Smart Investing Decisions
00:12:10 - Property and Asset Management
00:16:00 - Importance of Budgeting for Property Management
00:20:29 - Watch Your Insurance Costs
00:23:36 - Real Estate Investment Opportunities
00:24:10 - Looking Ahead to 2025
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Read the full transcript:
Mike Swenson
Would the seller be open to any creative financing opportunities on this property? They might come back and say no. And what might happen too is they say no initially, they find out that the market's a little bit softer than what they're originally thinking, then they might come back on that a little bit. And so following up with properties that haven't sold, following up with people that you've talked to that have said no on the creative financing certainly is well worth that time.
Mike Swenson
Welcome to the Real Freedom show where we inspire you to pursue your passion to gain time and financial freedom through opportunities in real estate. I'm your host, Mike Swenson. Let's get some real freedom together.
Mike Swenson
Hello, everybody. Welcome to another episode of Real Freedom, where we talk about building time and financial freedom through different opportunities in real estate. I'm your host, Mike Swenson. If you want to get started on your real estate investing journey, check out our website, free Freedom Through Real Estate Dot com. That's Freedom Through Real Estate Dot com.
Mike Swenson
We've got a lot of great information on there, articles, videos, strategies that you guys can use to get started. And today, what we want to talk about is we're still early in our 2025 year, so we're going to talk about the top five real estate investing tips for 2025. And so if you have been thinking about investing, analyzing deals, whatever that might look like, we want to be able to help you this year. I think that this year is a very pivotal, realistic investing. And so there's certainly some great opportunities out there.
Mike Swenson
They're much harder to find. I tell people it's like looking for a needle in a haystack. And we're actually trying to find that needle to decide what deal we want to do. And so it can be a challenge. And so I want to give you guys five good pieces of information, tips for you guys for your investing journey here in 2025.
Mike Swenson
Now, number one, I'm always going to push towards figuring out how to take action, figuring out how to get in the game. You can't figure out where you're gonna go, what you're gonna do, how that's gonna look, what you're gonna like, what you're not gonna like unless you take action. And so I always tell people, find a way to manufacture a win here. So if I haven't done any real estate investing, what's a way to get started? If it's not my own deal, can I join up with somebody else?
Mike Swenson
Can we do a deal together? If I'm in some Deals. And I'm trying to get into bigger deals. Who are some relationships, who are some people that I need to meet to try to get into some of those bigger deals? If I'm considering a different type of asset class, who can I find that's already doing it at a high level and find a way to partner with them?
Mike Swenson
And so you've got to find a way to manufacture a victory, manufacture some success as a way to take a step forward. So one of the things that I've been thinking a lot about is Hunter Thompson has a conference called Race Fest. And we went last spring and there was a quote there that I still have and still pops up a lot of times throughout my weeks. It says, over the next 24 months, you, you'll see the best deals that you've seen in years. And it might be 10 plus years till you see deals like that again.
Mike Swenson
Now what I'm not saying is deals are all over the place. However, the deals that we can find, we'll probably look back on here in a few years and say, dang, that was a really good deal. I wish I would have done more deals like that. And that tends to always be the case. Right.
Mike Swenson
Everybody wishes that they could have invested back in the last market crash. But the problem was, is when the market was crashing, everybody was trying to get out or they were losing so much money. And so you've got to figure out, you know, as folks are running out of the fire, how do you find a way to run into the fire? And so I'm always going to push towards taking action. Now that doesn't mean doing something stupid.
Mike Swenson
So the disclaimer with that is, you know, you don't, you don't have to do something stupid. But think about how do I find a way to get some success? How do I find a way to take that next step? Because if I wait through 20, 25 and I don't take a step forward, you're behind the eight ball. You've got to figure out a way to get a win, get a tally on the board.
Mike Swenson
And it doesn't have to be 10 properties or a property month. I know sometimes we tend to get blown away by these big gurus that are doing big things. Just find a way to move the ball forward and then say, I'm not going to stop until I figure that out. I'm not going to stop till I find the deal. I'm not going to stop till I find that business partner.
Mike Swenson
But find a way to take that action. Imperfect action will outperform perfect inaction. I always tell people I'm a recovering perfectionist. And I say that as a way to ingrain in myself that it's okay to not be perfect. I tried to be a good student, I tried to get good grades.
Mike Swenson
I always tried to do the right thing. And so sometimes that keeps me from taking action. And so when I tell people I'm a recovering perfectionist, it's. It's my own affirmation that I need to figure out a way to take some action. We often hear people, you know, they're, they're very good on paper because they've listened to a lot of casts, they've read a lot of books, they've talked to a lot of other gurus out there, but they haven't found the way to take action.
Mike Swenson
They keep getting ready to get ready to get ready versus getting in the game. So step one, tip. Find a way to take action. This is going to be your year. 2025 is going to be your most awesome year in real estate.
Mike Swenson
But you've got to figure out a way to take that action. Okay, number two, look for seller or creative financing opportunities. We've talked a lot about creative financing. It's been kind of a buzzword, especially after people like Pace Moreby have, have made it much more popular. But the reality is this, creative financing has been around for a long, long, long, long time.
Mike Swenson
And with interest rates still trending high, you know, I think a lot of folks last year were hoping that rates would be lower by now. They're not. It doesn't look like they're gonna get significantly lower here in the near future. Finding ways to take advantage of previous interest rates, previous deals that were done, will be helpful to you. And I think that people are gonna be a little bit more open to it because it's being talked about a lot more now.
Mike Swenson
On the residential side, what tends to happen, right, is when we sell the house, we're going to use that money to go buy our next house. So it tends to be a little bit more of a struggle. Not saying you can't find creative financing opportunities. They're absolutely out there. However, it's a little bit more of a challenge on the single family homes.
Mike Swenson
When you get into multifamily, it's, you know, just a matter of kind of how much am I going to close with, what am I going to do on the next deal, if I can maybe make a little money as a seller with a buyer, you know, doing some type of seller financing that might be A good opportunity. What we find doing commercial properties is that sellers are much more open to creative financing opportunities because they know the market's a little tougher right now. Maybe I can get a higher price if I'm willing to do some seller financing. And so those opportunities are out there. You just have to ask, right?
Mike Swenson
And so something that I typically say is, hey, would the. Would the seller be open to any creative financing opportunities on this property? They might come back and say no. And what might happen too, is they say no initially, they find out that the market's a little bit softer than what they're originally thinking, then they might come back on that a little bit. And so following up with properties that haven't sold, following up with people that you've talked to that have said no on the creative financing certainly is well worth that time.
Mike Swenson
The other thing is, it doesn't have to be seller financing on the entire purchase. Maybe there's a portion of the purchase that seller financed. Two of the deals that we have, we struck deals with the sellers where it was just a portion. The interest rate was a lot lower than what our total rate was with our lender. And so it brings that, you know, kind of blended rate down just a little bit.
Mike Swenson
We're looking for, you know, can I shave off 50 bucks a month, 100 bucks a month, 200 bucks a month of cash flow by getting a little bit lower interest rate with a seller versus, you know, having that loan with the bank at a higher interest rate? And then there's one other deal where. Where we just took over the mortgage. I think the lender saw the writing on the wall that it was going to be tough for the previous sellers, in this case, to be able to keep up with the mortgage. We came in, we were well funded, and we saw kind of the plan for the future here.
Mike Swenson
Talk to the bank and said, hey, here's what we' to do. Would you allow us to just continue to take over this existing mortgage? And they said yes. And we got a letter from the bank acknowledging that and kind of approving of that. So they're out there.
Mike Swenson
And so I would just say if. If you're somebody out there that's looking, just ask the question. And if they say no, like I said, if it's a really good deal, just follow up in two weeks, see what they say. They might change their tune. We have a property that we're looking at that we've been kind of in discussions.
Mike Swenson
We looked at the property two years ago. Seller wanted to sell for a certain price. Then all of a sudden now they're willing a little bit more flexible on seller financing. And we made an offer, it didn't work out, and now they're willing to be maybe a little bit more flexible on seller financing and maybe the prices come down a little bit. So those things tend to happen.
Mike Swenson
You just have to realize that, you know, you don't have to convince everybody. I think sometimes when I've been selling multifaceted, I get calls from prospective buyers and it's like they're trying to convince me why the seller should sell with seller financing. And I was like, I get it. You don't have to convince me as an investor agent why they should do it. It's not in everybody's wheelhouse to do it, or maybe they don't want to do it, or maybe they're, they're not in a position to be able to do it.
Mike Swenson
And so if you're reaching out on these properties, it's not your job to convince the agent. Now, I will say a lot of agents may not understand it and sometimes what, what they don't understand might seem a little bit scary and they're hesitant to do it. It just shows you need to go knock on more doors, you need to go make some more offers. You need to reach out to more people. And so don't let people being resistant to seller financing help you to get down on yourself.
Mike Swenson
You just gotta go, go talk to more people. So I think there's a lot of value there in those, those creative financing, those seller financing opportunities. So certainly look to that. That is tip number two. Tip number three is if the numbers pencil out now about where they're gonna look better in the future.
Mike Swenson
I say that with a little bit of a disclaimer. If we never know what's going to happen with interest rates. So when they're certainly higher today than they've been a couple of years ago, we tend to think, oh, they're just going to go down. So you still need to make a wise decision. It doesn't just mean scoop up anything and everything right now, but be smart with it.
Mike Swenson
However, you can look to refinance in the future depending on the type of deal that you're doing. And hopefully in that period of time, interest rates would go down. So I'm never going to suggest to do something that you shouldn't do or something that's not going to cash flow. If you guys are looking for, you know, I need something to cash flow X amount if that deal's not there. Then, you know, don't, don't overextend.
Mike Swenson
However, we are tending to run into the wind a little bit here. And so maybe in the future, as interest rates come down, we might draft, be able to draft a little bit, have the wind at our back to where some of these deals make sense. And then that also comes back to those creative terms, right? If you can get the numbers to pencil close enough and then you are able to do some things creatively with the seller to get those numbers to be a little bit more in your favor, that's awesome. In addition to that, it's not just spreadsheet, right?
Mike Swenson
We still have to continue to look at the neighborhoods that we want. What's the rental demand? Like, what's the tenant mix look like? What's the property condition? What is my repair budget?
Mike Swenson
How's that going to look? And so don't skimp on some of those things. Like maybe you might, you know, think vacancy rate, like, oh, I can kind of make that a little bit lower. Or maybe my capital improvement budget, I can make that a little lower to try to get the numbers to work. Don't cheat your numbers to get the numbers to work.
Mike Swenson
However, if you can get the numbers to work right now, I think you'll be in a more favorable spot here than when rates do go down. So the numbers don't pencil out now, you can look to refinance later. But like I said, that comes with a heavy disclaimer of don't do something stupid. Don't overextend. Real estate agents, are you tired of letting the busyness of life get in your way from achieving your real estate investing goals?
Mike Swenson
I'm super excited to announce we've created the Real Freedom Investor Agent Tribe. It's a place for you to come, get educated and network with others so that you can make sure that you're hitting your real estate investment goals. So find out more on our website, realfreedom.com, click on the store link. We've got a membership, we've got a mastermind group, and some private coaching as well. Check it out.
Mike Swenson
I've priced it super low. The goal is to get you and not have price be a determining factor to keep you from your goals. So come check it out, schedule a call with me and we're happy to see where your real estate journey is going to take you. Number four, property and asset management is crucial. A lot of people get so excited when they look at that initial spreadsheet.
Mike Swenson
Right. I'm analyzing a Lot of deals. I'm plugging a number of deals into my deal calculator and all sudden I see one that seems to pop and it's got a really good number. And so for somebody like me that loves spreadsheets, you start to imagine, okay, what would life be like with that cash flow number that what I've projected, what would life be like with that appreciation number? I've project and when I look to sell in a couple of years, look at what my potential profit's going to be, man, I'm going to make a lot of money.
Mike Swenson
All that is is good. However, it's just numbers on a spreadsheet. So what happens between the time that I purchase the property and the time that I sell the property? That property gets managed, right? And so all of my assumptions that I've put in, my vacancy rate, the capital improvement budget, what the property management budget, how much I'm putting aside for reserves, all that stuff turns from a spreadsheet into reality.
Mike Swenson
And what we can't overlook is the value of great property management. It's no coincidence that the properties that we've had where we've entrusted to property managers, we've had good relationships with those things have continued to perform well. We've extended a little bit to some properties where we didn't previously know the manager or in areas we haven't invested before. Maybe the numbers look good on paper and we've had some challenges. That being said, real estate investing is always going to have its challenges and so nothing's going to be perfect.
Mike Swenson
However, don't overlook the value of great management. So just as an example here, one of the deals that we did we closed on a property was eight units, two one bedrooms, six two bedrooms. The property manager before that may have been a bit lazy, may have not had attention to details. I often tell people previous property managers are lower performing property managers. They're just looking for easy, right?
Mike Swenson
I'm trying to do as little amount of work. So if the tenants are in the property, great, let's just keep them in there at the same price they were before. Because if I try to raise rents and they move out now, I go to go find new management. And so if we continue to do that time over time, over time, what happens is we're actually losing out on a lot of monthly rent, which would really help the bottom line. And if property managers are compensated based on a percentage, they would get a much higher percentage.
Mike Swenson
However, we tend to go towards avoiding work, right? So we had a building, one bedroom, rents were 625 and 660. So these were the two build. The two one bedrooms that we had 625 to 660, the two bedroom units were renting from 735 to 800. Now when we came and looked at the numbers, we said, oh my gosh, these are well under market rates.
Mike Swenson
So one of the value adds that we had was we can increase the rents. The property honestly didn't need a lot of work and so a portion of it was just increasing the rents to market rates. And we also discovered that there was a tenant that hadn't been paying rent for a year that the seller didn't know about because the manager hadn't let them know about it. And so that's just, you know, just improper management. So we come in within a few months time.
Mike Swenson
We just let tenants know, hey, here's what we're looking to do. We're looking to update some units, we're looking to increase some rents. Here's what we want to do. And actually one of the tenants that was in the one bedroom unit and this is where, you know, challenging your assumptions, you might think, gosh, if we're going to raise rents, tenants are going to want to leave. The reality is if it's still a good building and they, they understand that market rent is, is what it's supposed to be and they're getting it well under market rent, they might be more flexible to stick around.
Mike Swenson
So we actually had somebody, they stayed in a, they were in a one bedroom unit. We talked about, hey, here's what we're looking to do for two bedroom units. And this tenant said, hey, actually I've been wanting to increase from one bedroom to a two bedroom. So not only did they have, you know, kind of the natural rent bump, but they had the rent bump from a underperforming one bedroom unit to market rent of a two bedroom unit. And they were willing to make that move.
Mike Swenson
And with a couple of the other tenants, we said, here's going to be the, the new rates. And they said, okay, because they recognize this is a property I want to stay. So I think sometimes we tend to think that keeping things under market is a challenge. I've, I've heard some great stories from other people that have bought properties well under market rents where they, they increase and it's actually kind of outperform formed what their assumptions were on who leaves and who tends to stay. So in this case, yeah, we brought one bedroom rents up from 625 to 660 up to 825 and 850.
Mike Swenson
And then we brought the two bedroom rents up from 735 to 800 up to 1100 to 1200. So in that case it's, you know, about 400 bucks a month on the two bedrooms and 200 bucks a month on the one bedrooms. We increased the rent by 32%, really, just with negotiating with the tenants and a couple left and we got a couple new people in. But because it was a good quality property and we had good quality market rents, we were able to find tenants. And so we still do have one vacant unit there.
Mike Swenson
It was one that we renovated more heavily. So still trying to find that tenant. So once again, not everything's perfect. Right. However, we had an increase in market rent.
Mike Swenson
00:17:09As other things to think about with property management, you know, how does it work for rent collection? Are they staying on top of the tenants? For the tenants that get behind, are they just letting it slide or are they doing what they need to do? Negotiating or following through on potentially kicking somebody out that's not paying? Are they staying on the ball with that?
Mike Swenson
Are they just being lazy and not doing that? So that's one thing to consider, other things to think about. What's the communication like with you as the owner? Right. We would hope that property managers would communicate better than us, than they probably do with their tenants.
Mike Swenson
So if a property manager is having a tough time getting back to you as the owner, what does that look like with their tenants? They're probably not getting back to their tenants better, then they're getting back to you as the property owner. So think about that. And then managing the budget, you know, if, if you guys lay out a budget of, here's what we're looking to spend for certain repairs, here's what we need. Are they going out and getting quotes from multiple people?
Mike Swenson
Are they reporting back to you? Are they just moving forward with things that are a little bit more expensive? So all those are things that you need to watch out for. And as a property owner, right, your property manager, somebody that you hired, so you have to stay on top of them. Just like we're asking property managers to stay on top of their tenants.
Mike Swenson
It's your job to stay on top of your property managers, making sure that you're getting what you need when need it and getting that communication, getting that reporting and making sure that they're managing your asset well. And if not having those conversations with them. So I think, you know, a lot of times, you know, early me would be really excited Looking at what that spreadsheet looks like, oh my gosh, here's all the money that I can make. And I think where a lot of people fall short is, hey, it actually didn't perform like I thought it did on the spreadsheet. And so now I'm either not making as much money or I'm losing money.
Mike Swenson
And then you've got some problems. So oftentimes we see properties that I saw a lot of had duplexes, triplexes, four plexes that would get sold about every 12 months, every 18 months, because it probably didn't perform the way that they wanted it perform. So don't underestimate the value of great property management. Now, if you're doing property management yourself, still factor in in your budget before you go to buy something. What would it cost to hire a property manager?
Mike Swenson
Because what you don't want to have happen is there's no margin there. And then life gets busy. You're not able to manage the property. Maybe you have to move. Maybe you, you know, have work and your, your job requires you to move.
Mike Swenson
Maybe you add, you know, extra kids to the family and life gets busier, you know, work gets more stressful, whatever it might be. You decide to hire a property manager, well, now all of your little margin that you had available is squeezed out, and now you turn negative because you end up having to pay a property manager. So I always encourage people put that number in there for a property manager, make sure that that property hits your goals, including a number for a property manager. Because then if you do try to hire somebody down the road, you've got that cushion already built into there to do that versus having to go negative if you do have to hire a property manager. The other thing I will say is if there is that margin in the budget, a great property manager is well worth it to not have to figure out how to do everything, how to learn how to be a property manager, how to figure out how to go get quotes on repair work or something like that.
Mike Swenson
Or you get a call in the furnaces out in the middle of the winter in Minnesota here. What do I do? A property manager's already got that Rolodex of people that they can reach out to and contact. So tons of value in the property manager. Number five, really thinking about your insurance costs, make sure that you watch your insurance costs.
Mike Swenson
Now we're recording this episode kind of after the California wildfire stuff has happened. Even before that, we've seen insurance costs just continue to creep and creep and creep for A few different things. Not only the higher cost, but a lot of insurance carriers are just not covering certain types of properties. Now we're in the apartment space, the larger multifamily space. And so depending on the age of the building, the age of the roof, the age of the mechanicals, you know, whether it has fuses versus breakers, things like that, you know, the wiring is something that's being much more scrutinized.
Mike Swenson
And so there's just not as many carriers out there. And so because we buy different buildings in different areas of different sizes and different spaces, I encourage folks take a little bit of a shotgun approach out there with insurance, just to see what other rates are out there, because we've seen numbers all over the board. And while you may have a favorite carrier that you used before, that helps to keep them sharp, but at the same time, it also helps to make sure your budget works out. And so, you know, just say, hey, I'd love to use you if it works out. I'm going to send out for these other quotes just to make sure we're sharp and to make sure we're getting the best value that we can.
Mike Swenson
And so if you have a great relationship and an insurance company is proven to, to pay out quickly and handle your claims when time comes, that's okay. If, if the price is close, great. Stick with the person that you like. However, what we found is better to at least just see what those numbers are. And so I'll reach out to, on an apart building, five to 10 companies, maybe 12 companies, most of them don't get back to me.
Mike Swenson
Most of them say, no, we won't cover it. And then maybe there's three or four that we actually look at and see what that cost is. So insurance costs are going up, deductibles are also going up. And so, hey, we can, we can match that rate of what we did last year, but deductible is going to be a little bit higher. Right.
Mike Swenson
So you're still not getting that same value. So you've got to take a look at that in addition to, you know, everything else is happening. But yeah, as we had, you know, 20, 24, where, you know, we got beat up by hurricanes and then these wildfires in California. Insurance is a tough, it's a tough spot right now. And so you don't want your, your margins, right.
Mike Swenson
As we talk about the properties on the spreadsheet, you don't want those margins to get eaten up by a ton of insurance costs. So there you have it. Top five tips for me for investing in real estate in 2025 just to summarize here. Number one, find a way to take action right? Get in the game, manufacture a win, get started, get to your next property, upsize, whatever that like, but figure out a way to get in there and get in the game.
Mike Swenson
Number two, look for creative financing opportunities. Open up that discussion, see if you can find something. Number three, if the numbers pencil out now, hopefully you can find a way where they're going to get better in the future as you experience better rates. With that being said, don't overextend. Number four, property and asset management is crucial.
Mike Swenson
Make sure you find great people that are going to manage that asset for you and doing an awesome job. Number five, watching out for insurance costs, making sure that you're doing great due diligence to understand what that insurance looks like, what those deductibles look like. So you get the best deal possible. So there you have it. Top 5 Real Estate Investing Tips 2025 if you guys want to get started, we are looking for people to invest with us on our deals, the apartment buildings that we're looking for.
Mike Swenson
So if, hey, there's a lot of barriers to entry for you. You can partner with us. So go to our website realfreedom.com that's R E L freedom.com invest. You'll also see a pop up menu on top as of this recording that you can click on that'll take you right to that page to figure out what it looks like to invest with us. We'd love to have a conversation, we'd love to see what your real estate goals are and see if we can do a deal together.
Mike Swenson
So I think 2025 can be an awesome year. Really excited for you guys to chase your journey, chase what your your goals are and get into a property, get into a bigger property, whatever that might look like and hope you guys have an awesome and successful 2025.
