# 3 Types of Rentals That Make You Rich (Actual Investments) Source: https://www.youtube.com/watch?v=n3Cbxz9OfYg Recap page: https://rapidrecap.app/video/n3Cbxz9OfYg Generated: 2025-12-31T14:33:26.878+00:00 --- ## Quick Overview The three types of rentals that can make an investor rich, especially in competitive markets like Seattle, are properties that allow for immediate cash flow, significant appreciation, and creative financing opportunities, such as the deal Henry Washington discussed where he bought a lot for $55,000, added a DADU for $720,000, yielding an ARV of $899,000, and James Dainard's deal where he bought a first house for $600,000 and built an additional ADU on the back lot to multiply cash flow and appreciation. **Key Points:** - Henry Washington acquired a property in Seattle for $55,000, built a DADU for $720,000, achieving an ARV of $899,000, which he plans to short-term rent for $3,000/month. - James Dainard's first house purchase was $600,000 with $130,000 in renovation, an ARV of $899,000, and he secured a low interest rate (<6%) through negotiation. - The strategy for making deals work in expensive markets involves creative solutions like building ADUs (Accessory Dwelling Units) or DADUs (Detached Accessory Dwelling Units) to maximize lot value. - James Dainard plans to sell the main house and keep the backyard DADU as a rental to generate immediate cash flow and long-term appreciation. - Kathy Fettke shared her first investment property purchase in Southern California for $214,000 (median price $395,000) with a sub-6% interest rate, yielding $1825/month in rent. - Kathy is proud of her daughter, Karina, who successfully executed a deal similar to her own first investment, proving the strategy is teachable. - The guests emphasized that successful investing involves diligent planning (like knowing local zoning for ADUs/DADUs) rather than just buying the cheapest property. ![Screenshot at 06:26: Henry Washington explains his creative strategy of building an ADU on the back lot of his property to increase cash flow and overall deal profitability, even if the main house sale is challenging.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-06-26.jpg) **Context:** This podcast episode of BiggerPockets features host Dave Meyer interviewing real estate investors Henry Washington and James Dainard, along with co-host Kathy Fettke, to discuss specific examples of real estate deals that generate wealth. The discussion centers on creative strategies, particularly the use of ADUs/DADUs, that allow investors to maximize returns even in high-cost, low-inventory markets like Seattle and Southern California. ## Detailed Analysis The discussion reveals three types of rental strategies that can lead to wealth: deals with strong immediate cash flow, deals with high potential appreciation, and deals achievable through creative financing. Henry Washington presented his Seattle deal where he purchased a lot for $55,000 and invested $720,000 in building a DADU (Detached Accessory Dwelling Unit), resulting in an ARV of $899,000. He plans to short-term rent the DADU for $3,000/month while selling the main house, which he expects to sell for $899,000 to $999,000, netting significant profit without using personal capital for the build cost. James Dainard shared details on his first house purchase: $600,000 purchase price, $130,000 renovation, $899,000 ARV, and a rental income of $1,800/month. He highlighted the importance of negotiating the interest rate down to under 6% and structuring the deal so he could potentially sell the front house while keeping the newly built DADU as a long-term rental, maximizing cash flow and equity. Kathy Fettke shared her first investment in Southern California: a $214,000 purchase price with a median price of $395,000, netting $1,825/month rent at an interest rate under 6%. She emphasized that these deals require hard work, especially in high-cost areas, but the ability to negotiate construction costs and utilize features like DADUs is crucial for making the numbers work, even when dealing with less favorable inventory markets. ### Podcast Introduction and Year in Review - Host Dave Meyer announces the final BiggerPockets Podcast episode of 2024, featuring Henry Washington, Kathy Fettke, and James Dainard, discussing recently purchased properties. ### Henry Washington's Seattle Deal - Henry details acquiring a lot for $55k, spending $720k on a DADU build, yielding an $899k ARV for the main house, and plans to short-term rent the DADU for $3k/month. ### James Dainard's First House Strategy - James discusses his $600k purchase, $130k renovation, $899k ARV deal, focusing on creative financing (like securing a low interest rate) and the importance of the DADU providing immediate cash flow and future equity. ### Kathy Fettke's Southern California Deal - Kathy shares her $214k purchase (median price $395k) with sub-6% interest, yielding $1,825/month rent, emphasizing that success in high-cost areas requires finding deals in developing suburbs where inventory is lower. ### Creative Deal Structuring and Risk Mitigation - James explains how his deal is structured to sell the main house and retain the high-cash-flowing DADU, minimizing risk if the market shifts, as the DADU adds significant value. ### Financial Takeaways and Advice - The investors stress that deals are made by finding creative value (like adding ADUs) and diligent planning, noting that low inventory markets reward those who are proactive and disciplined in executing complex deals. ![Screenshot at 00:00: Host introducing the final BiggerPockets Podcast episode of 2024.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-00-00.jpg) ![Screenshot at 01:01: Intro graphic for 'Real Estate with Dave Meyer' featuring an upward trending arrow over suburban homes.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-01-01.jpg) ![Screenshot at 06:26: Graphic overlay showing the details of Henry Washington's deal: Purchase Price $55,000, Reno Costs $90,000, ARV $265,000, Rent Income $1800/Month, 3 Beds/2 Bath.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-06-26.jpg) ![Screenshot at 11:22: Screen recording of the RESimpli platform dashboard, highlighting the seller list generation feature.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-11-22.jpg) ![Screenshot at 11:55: Promotional graphic for The Cash Flow Roadshow event in Houston, Austin, and Dallas, January 13th - 17th.](https://ss.rapidrecap.app/screens/n3Cbxz9OfYg/00-11-55.jpg)