EP335: If I Had to Start Over in Real Estate in 2025… Here’s EXACTLY What I’d Avoid

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We’ve been in the real estate business for 7 years and built a multifamily portfolio north of $400 million. But if we had to start completely over from scratch today, there’s ONE concept you absolutely have to understand first.

And we want you to be clear—it has nothing to do with how much money you have in the bank.

➡️ It’s not about being born into the right family or having the right connections. No. It’s something entirely different… something that once you see, you can’t unsee.

Here’s why this matters: the real estate investing landscape has shifted so dramatically that even seasoned operators like us have had to rethink our strategies.

If we were starting over today, there are critical mistakes we’d make absolutely sure to avoid—mistakes that could quietly destroy your wealth if you’re not careful.

And what we’re about to share with you is exactly what separates the 1% of investors who thrive from the 99% who follow outdated advice from people who’ve never actually built real wealth in real estate.

The rules that made us successful five years ago?

Half of them don’t work anymore. 🥵🥵

The strategies that worked in 2022?

They’ll get you killed in 2025. Even the approaches we used just last year have had to be completely overhauled.

But here’s what’s critical – we’re not just talking about this stuff, we’re living it every single day.

And that brings me to something really important – you need to be critical about who you follow and learn from. Ask yourself: Are they actually doing the things you want to do, or are they just talking heads chasing views who don’t know anything about the real world of multifamily investing?

We’re not general real estate investors – we’re multifamily specialists who’ve built a $400 million empire in just seven years by focusing exclusively on multifamily real estate.

When people think of multifamily investing, they think Kitti Sisters.

While other investors are still trying to figure out single-family strategies, we’ve been building multifamily systems. While they’re teaching theory, we’re sharing battle-tested strategies from the trenches.

We’re in the field. We’re dealing with this every single day.

When interest rates change, it affects our deals immediately. When insurance costs spike, we feel it in our cash flow.

And if this is your first time watching our content, you need to understand – we’ve been documenting this entire market transformation in real-time.

Every week, we’re sharing exactly what we’re seeing, what we’re buying, and what we’re avoiding. This isn’t just one video – this is an ongoing masterclass in real-world multifamily investing.

That’s why today, we’re going to share something we’ve never shared before – if we were starting completely over in 2025, knowing what we know now about where this market is heading, these are the exact mistakes we’d make sure to avoid at all costs.

We’re going to reveal five critical categories of mistakes that are destroying investors right now.

But more importantly, we’re going to show you exactly how we’re navigating this completely transformed market and seeking to buy hundreds of millions in properties while others are paralyzed by uncertainty.

The landscape has shifted so much that if you’re not constantly evolving your approach, you’re not just standing still – you’re moving backwards. And in today’s market, moving backwards means losing money fast.

Every day you wait is another day someone else is buying the deals you should be buying.

Market Timing & Strategy Mistakes

Here’s what’s really interesting – people will never behave consistently in a way that’s inconsistent with their programming. And most investors are still programmed with 2020-2022 thinking in a completely different market.

Most people will never understand this level of thinking – but you’re not most people, are you?

The FOMO and Emotional Attachment Trap

The biggest mistake we see investors making is combining FOMO from the 2020-2021 era with emotional attachment to properties. Back then, you had to move fast – everything was selling in hours, not days.

People got programmed to think, “If I don’t buy this today, it’ll be gone tomorrow.”

But 2025 is not 2021. You have time to analyze. You have time to negotiate. You have time to walk away.

Just last month, we talked to an investor who visited a property five times. Five times!

We said, “So you’re emotionally attached already.” He said, “But Palmy ➕ Nancy, it’s such a great property.”

We said, “Dude, it all boils down to math. You’re not marrying the property – you’re buying a business.”

When you get emotionally attached, you start justifying bad numbers.

You start saying things like, “Well, the cash flow is only $100 per month, but look at that beautiful lobby.” The lobby doesn’t pay your mortgage, and neither does your emotional attachment to a property.

The Negative Cash Flow Delusion

This is my biggest pet peeve.

We cannot understand why someone would buy a property that bleeds cash every month, crossing their fingers it will appreciate in value. That’s not investing—that’s gambling.

Take a 200-unit apartment in Dallas bought in 2022. The bet was simple: “We’ll make money when values go up 10% a year.” But appreciation didn’t come. Two years later, the value is roughly flat… while expenses are anything but.

• Insurance doubled — from around $90,000 a year to nearly $180,000.
• Property taxes jumped ~20% as reassessments came in higher, adding well over $150,000 to the annual bill.
• Payroll, repairs, and contract services climbed another 20–30% with wage and material inflation.

What looked like a deal that would throw off healthy cash flow now runs tens of thousands negative every month. Instead of real estate paying them, they’re paying out of pocket just to keep the property afloat.

The Outdated Assumptions Problem

Stop the video right now and ask yourself – who taught you about real estate? Are they actually doing deals, or just selling courses?

Most investors are still using 2022 underwriting assumptions in a 2025 market. They’re projecting 3% interest rates when we’re in a 7% world.

But here’s the deeper problem – they’re treating real estate like stocks, hoping for appreciation instead of building a business. Rich people understand that real estate is a business, not a stock. You don’t buy and hold hoping it goes up – you buy, improve, operate, and create value.

Stop learning from people who make money selling courses about real estate instead of making money FROM real estate.

Property Selection Mistakes

Now let’s talk about property selection, because this is where even experienced investors are getting crushed in 2025.

Here’s something that will blow your mind – most investors spend more time researching their next car purchase than they do researching a $100 million property investment.

Ignoring Demographics and Market Trends

Most investors are buying properties without understanding the fundamental demographic shifts happening right now. They’re not researching employment trends, population migration patterns, or supply pipelines.

We were looking at a market in Nashville that looked great on paper – growing population, job growth, rising rents.

But when we dug deeper, we found that 15,000 new apartment units were being delivered in the next 18 months in a market that typically absorbed 3,000 units per year.

That’s a five-year supply hitting in 18 months.

You have to understand where people are moving to and from. You have to know which employers are expanding or contracting. You have to know how much new supply is coming online.

Right now, we’re seeing massive population shifts. People are leaving expensive coastal cities for more affordable inland markets. But they’re not just moving randomly – they’re following jobs, following affordability, following quality of life. If you don’t understand these patterns, you’re going to buy in the wrong markets.

This is why we only do multifamily. This is why we only buy A-class. This is why we only work with serious investors.

The Deferred Maintenance Trap

Now, we don’t do this ourselves because we only buy A-class properties, but we think it warrants mentioning because this could be a very costly mistake for others.

When you buy a property with deferred maintenance, you’re not just buying the property – you’re buying all the previous owner’s problems. That $500,000 discount on the purchase price might turn into $2,000,000 in unexpected repairs.

Roofs, HVAC systems, plumbing, electrical – these are not small expenses. A new roof on a 200-unit property can cost $600,000-1,000,000+. New HVAC systems can be $200,000-400,000.

The “I Can Fix It” Fantasy

Again, we buy A-class properties, but I see too many investors thinking they’ll be the reason a bad property becomes good. As Taylor Swift might say about bad relationships – “I can make a bad guy good for a weekend.”

Unfortunately, this doesn’t work for multifamily real estate.

You can put lipstick on a pig, but it’s still a pig – and that applies to both bad boyfriends AND bad real estate deals.

If a property is in a declining area with high crime, bad schools, and no job growth, your renovations aren’t going to change the fundamentals.

Don’t think you’re going to be the hero who turns around a fundamentally flawed asset. Buy good properties in good areas with good fundamentals. Just trust us on this, you’ll thank us later.

Operational & Management Mistakes

This is where the rubber meets the road. You can buy the perfect property, but if you can’t operate it properly, you’ll lose money.

Most people will never understand this, but property management is where fortunes are made or lost in multifamily investing.

The Team and Property Management Mismatch

You absolutely must have a reliable team – contractors, handymen, property managers, attorneys, accountants.

But here’s what most people miss – you need to match the property management company with both the property type and the specific area.

A company that’s great with luxury high-rises might be terrible with workforce housing. A company that dominates in downtown might have no clue about suburban properties.

A company that’s excellent with single-family might be lost with multifamily.

We had a property management company that was fantastic with our C-class properties.

When we bought an A-class property, they were completely out of their element. They didn’t understand the tenant profile, the maintenance issues, or the local market dynamics. We had to switch management companies.

You need different management approaches for different property types.

For example, student housing requires 100% annual turnover management. Senior housing might have 30-40% turnover. The systems, processes, and expertise required are completely different.

The Loyalty Over Performance Problem

This is a big one.

Too many investors stick with underperforming property management companies because of existing relationships instead of performance. And we are also guilty of this as well.

Look, we know this sounds harsh, but we’d rather hurt your feelings now than watch you lose your money later.

That’s just who we are – we tell you the truth, even when it’s uncomfortable.

If your property manager isn’t hitting occupancy targets, isn’t controlling expenses, isn’t maintaining the property properly, or isn’t communicating effectively, you need to fire them.

Don’t let loyalty to a person destroy your investment returns.

We track our property managers weekly on occupancy, rent growth, expense control, and tenant satisfaction. If they’re not performing, they’re gone. It’s business, not personal.

We had hired a property management company because it’s owned by a very good friend of ours. Our friend is a great guy, but the team that ran the property management company was rigid, never accommodating our needs, and not responsive to the changes needed.

Overall, they were horrible at controlling the expense side. We kept him for six months longer than we should have because of the relationship.

Financial & Leverage Mistakes

This is where most investors get into serious trouble – they make poor financial assumptions and get the wrong loan structures.

Here’s something most people don’t realize – the difference between successful and failed real estate investors isn’t the deals they buy, it’s how they structure the financing.

The Dangerous Financial Assumptions

Most investors are making four critical financial mistakes:

First, they’re using too much leverage.

They’re putting 5-10% down and financing 90-95% of the purchase price. When you’re that leveraged, everything has to go perfectly for the deal to work.

Second, they’re under-budgeting expenses.

They’re using last year’s expense numbers for next year’s projections. Insurance costs have doubled in many markets. Property taxes are up 20-30%. Utilities, maintenance, payroll – everything is more expensive.

Third, they don’t have enough capital reserves.

They’re buying properties with minimal cash reserves, so any unexpected expense becomes a crisis.

We know an investor who bought a 50-unit property with $100,000 in reserves.

Six months later, the roof started leaking, the HVAC system failed, and the city required a new fire suppression system.

Total cost: $180,000.

He had to sell the property at a loss because he couldn’t fund the repairs.

We typically hold 6-12 months of operating expenses in reserves, plus additional capital for planned improvements. Most investors hold 2-3 months and wonder why they get into trouble.

The Loan Structure Disasters

Too many investors don’t pay attention to loan fine print, get loans that don’t match their business plan timeline, or use bridge loans without a clear exit strategy.

Bridge loans are particularly combustible right now. These are short-term, high-interest loans designed to be paid off quickly through refinancing or sale. But with higher interest rates and tighter lending standards, many investors are getting stuck with 12-15% bridge loans they can’t refinance.

We know a syndicator who used bridge loans on five properties, planning to refinance into permanent financing within two years. When rates went up and property values went down, he couldn’t refinance. He’s now paying 14% interest on $50 million in debt. The properties can’t service that debt, so he’s having to inject capital every month or lose the properties.

The lesson? Match your loan term to your business plan. If you’re planning a 5-year hold, get a 5-year loan or longer. Don’t use 2-year bridge debt for a 5-year strategy.

Education & Mindset Mistakes

Finally, let’s talk about the education and mindset mistakes that keep people broke.

Most people will never understand this level of thinking, but successful investors think completely differently about education and mentorship.

The Guru Problem

Most real estate “gurus” are teaching strategies from 2020-2022, not strategies that work in 2025.

They’re course sellers who happen to talk about real estate, not real estate investors who happen to teach.

These gurus make their money selling you courses, not from real estate.

If someone was making millions from real estate, why would they spend their time creating courses and doing webinars?

A client came to us after spending $50,000 on courses from various gurus. He said, “Palmy ➕ Nancy, I’ve been to five different seminars, bought every course, and I’m still broke. What am I doing wrong?”

We said, “You’re trying to learn how to make money from people who make their money selling courses, not from real estate. You’re learning from people in the education business, not the real estate business.”

These gurus are teaching you to think small – buy one house, then maybe two, then maybe three. They’ll never teach you to think like we think – how do I acquire 100 units? How do I build a business that generates millions in revenue?

The Deal vs. Operator Problem

The perfect deal can be purchased, but if it’s poorly run, it can sink the entire investment. You need to focus on the people running the investments, not just the properties themselves.

We spend more time vetting operators than we do analyzing deals. We want to know: How many properties have they managed? What’s their track record? How do they handle problems? What systems do they have in place?

A great operator can make an average deal successful. A bad operator can destroy a great deal.

We looked at investing with a syndicator who had a “perfect” deal – great location, great property, great numbers.

But when we dug into their track record, we found they’d never managed a property larger than 50 units, and this was a 200-unit property.

They had no systems, no experience, no team. We passed on the deal, and six months later, the property was in foreclosure.

What Would We Do Today?

So now that you’ve learned the mistakes to absolutely avoid, let’s learn the strategies that are working today ⏬

Strategy #1: Focus on Multifamily in Recovery Markets

We’re targeting multifamily properties in markets that are just coming out of the recession phase. Construction is down, supply is being absorbed, and we’re in the accumulation phase.

But we’re not buying just any multifamily. We’re looking for properties where we can add value through operational improvements, not major capital expenditures.

This is exactly why we only do multifamily – we understand the cycles, we know the operators, and we have the systems to execute at scale.

Strategy #2: Buy A-Class Properties with Operational Upside

We only buy A-class properties in A-class locations, but we look for value-add opportunities through:

• Improving management and reducing expenses
• Optimizing rent rolls and reducing vacancy
• Adding income streams like storage, parking, laundry
• Implementing technology to improve operations

Most people will never understand this, but A-class properties in A-class locations give you the most control over your destiny. You’re not fighting market fundamentals – you’re optimizing within strong fundamentals.

Strategy #3: Use Conservative Underwriting

We stress-test every deal for:

• 8-10% vacancy (even in 5% vacancy markets)
• 3% expense increases over 5 years
• Make sure the exit cap rate is at least .50 to 1.00% over your entry cap rate
• If the deal doesn’t work in these stressed scenarios, we don’t buy it.

Here’s something that will blow your mind – most investors underwrite for best-case scenarios. We underwrite for worst-case scenarios and still require the deal to work.

Strategy #4: Build Systems, Not Portfolios

We’re not just buying properties – we’re building systems for:

• Deal sourcing and acquisition
• Property management and operations
• Asset management and optimization
• Investor relations and capital raising
• Disposition and exit strategies

This is why we only work with investors who understand that real estate is a business, not a hobby. If you’re still thinking like a hobbyist, this probably isn’t for you.

Look, if you’re serious about building real wealth in real estate, you can’t do it with outdated strategies and poverty programming that’s been installed in your mind since childhood.

The landscape has changed so dramatically that what worked even two years ago will get you killed today.

But here’s the thing – while everyone else is paralyzed by uncertainty, we’re actively seeking to buy hundreds of millions in properties because we understand we’re in the accumulation phase.

The Reality Check

You have a choice to make right now. You can keep doing what you’ve been doing – following outdated gurus, making emotional decisions, buying negative cash flow deals, ignoring market fundamentals – and you’ll keep getting the same results.

Or you can make a decision – not a choice, but a decision – to learn from people who are actually in the field, dealing with these challenges every single day, and building real wealth in real time.

The Exclusive Opportunity

Our investors don’t just make money – they become part of an exclusive group that thinks differently about wealth building. They stop following the crowd and start following proven systems.

We only work with investors who understand that real estate is a business, not a hobby. If you’re still thinking like a hobbyist, this probably isn’t for you.

Right now, while others are sitting on the sidelines, we’re seeing opportunities that we haven’t seen since 2008-2010. Distressed properties, motivated sellers, favorable financing for qualified buyers, and demographic shifts that are creating sustained rental demand.

But you have to know what you’re doing. You have to avoid these critical mistakes. You have to think systematically, not emotionally.

The Final Truth

Remember what we said at the beginning – people will never behave consistently in a way that’s inconsistent with their programming.

If your programming says “think small, stay safe, follow the crowd,” that’s exactly what you’ll do.

But if you reprogram yourself to think like a wealthy person – to see opportunities where others see problems, to build systems where others buy jobs, to create value where others consume it – then you’ll start behaving like a wealthy person.

And when you behave like a wealthy person consistently over time, you become a wealthy person.

The Choice

Some will, some won’t, so what, someone’s waiting. The question is – are you going to be the one who breaks free from the poverty programming and outdated thinking, or are you going to stay stuck making the same mistakes that keep people broke?

Are you going to keep learning from talking heads who chase views, or are you going to learn from people who are actually building wealth in the real world?

Most people will never understand this level of thinking – but you’re not most people, are you?

And if you are curious how we went from broke to operating more than $400 million in multifamily real estate, then we’ll see you in the next video.