Over-budgeting is critical to ensure that renovations don’t eat into your profits.Market Fluctuations: If property values in your area do not appreciate as expected, or if you face a market downturn, the amount you can refinance for may be lower than anticipated.Financing Challenges: Securing financing for the initial purchase and rehab, as well as refinancing after the property is rehabbed, may be challenging, particularly if the property is located in an area with fluctuating values or if the rehab work doesn’t immediately improve the property’s appraised value.Tenant Risk: Rent collection and tenant management can be unpredictable.

@Hank Bank BRRRR is probably want you want to do.Buy, Renovate, Rent, Refi, Repeat.Before you go all in and either find out you don't like being a landlord or you make costly mistakes, start with just the next one.You'll have some challenges with tapping the equity in the townhouse:1) What loan amount can you qualify with your credit & income?

I have not had to do that yet.Getting good contractors at decent prices can be a challenge in small towns if you are not close to a larger city.

@Holly Thorsen see above for potential challenges tapping your equity in the rental.You only need 5% down for a regular mortgage, 3% down for an FHA mortgage - so why don't you have the funds?

However, some challenges to consider are the additional paperwork, property inspections, and potential tenant turnover.

@Mindy PerryReally doesn't matter what software you pick as long as it has the features you want.Two biggest challenges with ALL software:1) None are perfect, so deal with the tradeoffs2) Most users rarely put in enough time to really understand how to utilize the software.

By year end I will tackle a MF, value add with my son that would be sweet if we can swing the coop/tic (handling the finance challenges is the hurdle) so he ends up with a unit at below 50% of retail.  

Really the main challenge is going to be making sure that your wife understands what she needs to do to document her hours and activities.

As inflation drives rent growth, properties in stable markets like the Midwest can continue to deliver returns even in higher-rate environments.Market Conditions Favor Real Estate RecoveryThe commercial real estate (CRE) market has faced significant challenges in recent years, but signs point to a recovery:Bottom of the Market Cycle: CRE appears to have reached its low point in late 2024, with 2025 marking the start of a slow recovery phase.Limited New Supply: High interest rates have curtailed new construction, which should drive rent growth in the coming years.Policy Changes on the Horizon: There is growing discussion about potential policy shifts under the new administration, including a return of 100% bonus depreciation and lower interest rates.

And if you dare to challenge anything their Messiah states, you're immediately booted.