Real estate investors are facing a very different market in 2025 than they did a few years ago. Interest rates remain high, inventory is still tight and prices are not rising as fast as they did in the boom years. Building a portfolio in this environment requires more than luck, it calls for strategic planning, data‑driven analysis and the right partners. That’s why RHOME, a professional property‑management company, and Sell2Rent, a sale‑leaseback marketplace, have teamed up to share insights on the BRRRR method and creative financing strategies such as sale leasebacks. These approaches help investors capitalise on today’s housing market while controlling risk.
This article provides a primer on key financial metrics, highlights current market trends, such as the fastest growing city in the US, the fastest growing states and states with no or low property tax, and explains how sale leasebacks can accelerate the BRRRR cycle. It also includes backlinks to RHOME’s site for professional management and to Sell2Rent for registration and more details on its investment model.
Understanding the Financial Foundation
Equity, ROE and Debt‑to‑Equity
When you buy a house or an investment property you are building equity, the portion of the property’s value you truly own. For example, if a property is worth $400,000 and you owe $250,000 on the mortgage, your equity is $150,000. Equity grows as the loan balance declines and the market value increases. Investors track their return on equity (ROE) to measure how efficiently their capital is working. A property generating $15,000 in annual net income on $100,000 of equity delivers a 15 % ROE. Leveraging debt can amplify ROE, but it also increases risk, which is why investors monitor their debt‑to‑equity ratio, the amount of debt relative to equity, to avoid over‑leveraging.
Cash‑on‑Cash and Cap Rate
Two additional metrics are crucial when evaluating deals. Cash‑on‑cash return compares the annual pre‑tax cash flow to the cash invested; after a successful BRRRR refinance, cash invested can drop to near zero, leading to a high or even “infinite” cash‑on‑cash return. Cap rate (capitalisation rate) is often used when comparing properties. According to J.P. Morgan, the cap rate is calculated by dividing a property’s annual net operating income (NOI) by its current value. A $14 million property generating $600,000 in NOI has a cap rate of 4.3 %, meaning it produces roughly 4.3 % of its value as net income in the first year. Higher cap rates generally signal greater risk and potentially higher returns. In today’s market, cap rates have been rising in many sectors because elevated interest rates increase borrowing costs.
Market Insights: Housing Market 2025
Recent research points to a stable but slower housing market through 2029. A RealWealth survey of housing experts forecasts national annual appreciation of roughly 3–5 % over the next five years. Mortgage rates are expected to stay high, around 6.5–7.5 % through 2027, and may not fall below 6 % until 2028–2029. High rates and elevated prices are pushing more households into renting, which means demand for rental homes should remain strong.
Housing Inventory and Buyer/Seller Balance
J.P. Morgan analysts describe the U.S. market as largely frozen; home sales and inventory remain lower than historic averages. Inventory increased slightly in late 2024, with existing homes for sale rising to 1.37 million and new homes hitting 481,000—the highest level since 2007. Nevertheless, supply is still constrained because most homeowners have mortgages well below current rates and are reluctant to sell. As a result, home price growth in 2025 is expected to be modest at around 3 % or less.
Are House Prices Going Down?
Given the tight supply and high borrowing costs, national home prices are not projected to fall dramatically. Instead, price growth is expected to slow but remain positive. Analysts expect the median U.S. home price to rise from about $410,700 in 2025 to $420,000 in 2026. Investors should temper expectations for rapid appreciation and focus on cash flow.
Best Time to Buy a House
For those wondering when is the best time to buy a house, Realtor.com’s 2025 Best Time to Buy Report found that the week of October 12–18 offers a unique opportunity for buyers. During that week, there are 32.6 % more active listings compared with the start of the year, potential savings of over $15,000 on a median‑priced home and 30.6 % less competition. Buyers also benefit from longer days on market and more price reductions. Many major metros, especially across the South and West, follow this mid‑October pattern, though some markets like New York, Chicago and Dallas may peak a few weeks earlier.
Fastest Growing City and States
Population trends inform which markets are poised for growth. U.S. Census data show that Princeton, Texas, a suburb of Dallas, was the fastest‑growing city between 2023 and 2024, expanding its population by 30.6 %. Many of the biggest numeric gains occurred in large southern and western cities such as Houston, Los Angeles and San Antonio. On a state level, forecasts from the University of Virginia (visualised by Visual Capitalist) project that Texas will gain about 8.55 million residents (a 27 % increase) by 2050. Florida is expected to add 5.15 million people (22 % growth), while Utah and Colorado will see some of the fastest percentage growth, around 35 % and 29 % respectively. Investors seeking markets with rising household income percentiles and housing demand should consider these fastest growing states when performing comparative market analysis.
States With No or Low Property Tax
Many people search for states with no property tax, but no U.S. state entirely eliminates real‑property taxes. Landlord Studio notes that every state levies some form of real estate tax, although a few cities such as Stafford, Texas have no municipal property tax. Investors can, however, target low property tax states. ATTOM data compiled by Kiplinger shows that Hawaii has the lowest effective property tax rate at 0.32 %, although high home values mean owners still pay about $4,108 annually. Idaho (0.40 %), Delaware (0.41 %) and Arizona (0.41 %) follow closely, with average annual tax bills around $2,400 to $2,340. Alabama offers a 0.42 % rate, resulting in an average tax of about $1,278 on a median‑priced home. Some of these jurisdictions also offer tax exemptions for seniors and veterans. Choosing markets with lower property taxes can improve cash flow and cap rates.
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*Annual tax bills are estimates based on median home values and ATTOM’s 2025 data and will vary by county.
The BRRRR Method: Build and Recycle Equity
The BRRRR strategy, Buy, Rehab, Rent, Refinance, Repeat, is popular among investors looking to grow portfolios with limited capital. Here is how it works:
- Buy an undervalued or distressed property, ideally in a market with strong growth prospects. Use resources like myRealEstateAnalytics to perform a comparative market analysis and forecast rental demand.
- Rehab the property to increase its value. Focus on improvements that appeal to tenants and appraisers and ensure you build a contingency budget to handle unexpected repairs.
- Rent the property. Setting the right rent level requires understanding local household income percentiles and market inventory. Partnering with RHOME can streamline tenant screening and management.
- Refinance. Once the property’s after‑repair value (ARV) has increased, obtain a new mortgage and pull out equity. In 2025 this step may be slower due to higher interest rates; plan for the possibility that rates remain above 6 %.
- Repeat. Use the cash extracted to fund the next purchase, creating a self‑sustaining cycle.
The key to BRRRR success is accurate ARV estimation. Overestimating ARV is one of the biggest pitfalls, so use conservative comps and verify with professionals. Monitoring cap rates and debt‑to‑equity ratios can help you determine whether the refinance makes sense at current valuations and interest rates.
Integrating Sale Leasebacks: Reduce Vacancy Risk and Boost Cash Flow
While the BRRRR method is typically associated with vacant properties, sale leasebacks offer a way to reduce vacancy risk and accelerate cash flow. In a sale leaseback, a homeowner sells the property to an investor and immediately rents it back. Here’s why combining sale leasebacks with BRRRR can be powerful:
- Immediate rent: The seller becomes the tenant, so you have an occupant from day one and avoid the downtime normally associated with rehab and leasing. This rental income helps service the mortgage while you prepare for refinancing.
- Prepaid rent: Some sale‑leaseback agreements include prepaid rent (e.g., six months up front), providing cash to cover closing costs or repairs without injecting additional capital.
- Deferred rehab: You can defer renovations until the initial lease term ends. In markets with limited housing inventory and strong rental demand, the steady rent allows you to pay down debt before launching major renovations.
Sell2Rent specialises in residential sale leasebacks. To explore opportunities, register here. You can also discover Sell2Rent’s investment model, which connects investors with homeowners seeking flexible cash‑out options. When paired with RHOME’s property‑management expertise, sale leasebacks allow you to expand your portfolio across the fastest growing cities in the US without sacrificing cash flow or tenant quality.
Measuring Success and Managing Risk
Sustainable real‑estate investing requires disciplined risk management:
• Use conservative valuations. Don’t overestimate ARV; base it on comparable sales and avoid assuming rapid appreciation.
• Build a contingency budget. Repairs often cost more than expected. Having reserve funds prevents project delays.
• Monitor interest rate risk. The refinance stage depends on access to affordable capital. Current forecasts suggest mortgage rates will remain around 6.7 % in 2025, so plan accordingly.
• Assess market dynamics. Fast‑growing states like Texas and Florida offer strong demand, while markets with low property taxes improve cash flow. Use cap rate comparisons to select properties that match your risk tolerance.
• Protect yourself with professional management. Partnering with RHOME can help mitigate tenant‑related risks, ensure compliance with local regulations and optimise rental income. Combining this support with Sell2Rent’s sale‑leaseback model creates a repeatable, scalable system.
Final Thoughts
The 2025 housing market is characterised by moderate price growth, tight supply and high borrowing costs. Investors looking to build long‑term wealth must be strategic. By understanding key financial metrics (equity, ROE, cap rate), staying informed about housing market trends, targeting fastest growing cities and states, and leveraging low‑property‑tax markets, you can improve returns and reduce risk. The BRRRR method offers a roadmap for scaling a portfolio, and integrating sale leasebacks through Sell2Rent and professional management through RHOME can further enhance cash flow and reduce vacancy risk.
To learn more about these strategies, visit RHOME’s website, register with Sell2Rent and discover the Sell2Rent investment model. Combining data‑driven insights, disciplined execution and the right partners can help you thrive in today’s real‑estate landscape.
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