After six years of focusing on acquisitions, I'm back to building.
Not because I'm chasing projects. Because the math changed.
For most of the last decade, the playbook for building wealth in rentals was straightforward. Find a deal. Make an offer. Buy. Repeat. The competition was real but the strategy worked. You'd refine your buy box, sharpen your underwriting, build your team, and grind through the inventory.
That playbook is breaking down. Inventory is scarce, prices are sticky, and the deals that pencil at today's rates are rare. Meanwhile, something else has been happening quietly in the background. Cities and states across the country have been tearing down the rules that kept new housing from getting built. And the investors who notice first are about to have a serious edge.
This is the shift I want to walk you through. What's changing, why it matters, what I'm personally doing about it (with real numbers from three current projects), and how to start positioning for it whether you've built before or not.
The math changed because the rules did
Here's what's happening across the country right now.
States like Washington and California have been removing the old "single-family only" restrictions on residential lots. Dallas recently created a new zoning designation that allows up to eight units on a single residential lot, as long as setbacks are met. Other major metros are following.
This is not a minor regulatory tweak. This is the death of single-family-only zoning in major American cities and states.
If you own a property with a decent-sized backyard right now, the rules that previously capped what you could build there have either changed or are about to. That backyard you've been mowing for ten years might be sitting on six figures of untapped value.
We've been preparing for this for years. Quietly buying properties with large lots, knowing the day would come when zoning would catch up with the housing shortage. That day is here.
Why I personally pivoted from buying to building
I sold our 7-unit in Michigan earlier this year and shifted that capital into new construction projects in Everett, Washington. The decision wasn't emotional. It was math.
When everyone is fighting for the same shrinking pool of existing deals, you're competing on price. Your edge gets thinner with every offer round. You pay more for the same asset and your returns compress. That's been the reality for the last few years for most investors I know.
When you build, you're not competing for anything. You're creating supply. You set the price. You set the rent. New units command roughly a 6 percent rent premium nationwide because tenants want what's actually new. And you create equity the day construction completes, not over the next ten years of slow appreciation.
We're now running six DADU builds in progress, plus a flip-plus-two-detached-ADUs project in Everett that's about to start demo, plus two more duplex new construction projects in the pipeline waiting on review comments. And honestly, I've never been more excited about a strategy.
Three projects, real numbers
Let me show you what this looks like with actual receipts. These are three real projects from our portfolio, each at a different scale.
Project 1: Storage shop becomes an aerospace Airbnb
Behind one of our rentals in Everett, Washington, there was a shop that had been rented as storage for $500 a month. Dead space, in revenue terms. Worth what storage is worth.
We're investing $90,000 to convert it into a fully finished detached home with an aerospace theme. (Everett is home to Boeing. The local theme writes itself.)
If we flipped it the day construction completed, comparable comps put it at around $525,000. That's roughly a 5x return on capital invested.
But we're not flipping it. We're running it as a short-term rental. Conservative revenue projection: $38,000 per year. That's 6.5x what the shop was earning as storage, on the same piece of dirt.
One project. Forcing appreciation and stacking cash flow at the same time.
Project 2: A duplex behind a duplex
We already own a cash-flowing duplex sitting on a large lot. The rents were solid. The property cash-flowed. By the old playbook, you leave it alone.
We asked a different question: what else could this land do?
We're now investing about $300,000 to build a brand-new duplex in the backyard. Expected value at completion: $775,000. That's more than double what we're putting in. Estimated rents on the new units: $4,400 per month combined.
One lot. One purchase. Now producing income like two properties.
Project 3: Timber and Tide
The third one is a 2-bedroom, 1-bath cabin with a game loft we built in Everett as a PNW lodge-style Airbnb. Barrel sauna installed. Landscaping going in. We just launched it.
The space was generating $500 a month as a storage rental. Same piece of dirt is now projected to do $4,000 per month as a short-term rental. Eight times the revenue, no additional acquisition cost.
This is why we build.
The three-step framework
Three projects, three different strategies, but the same decision-making framework underneath all of them.
Step 1: Identify demand before you create supply
Builders don't start with dirt. They start with demand.
The wrong question is "what can I buy?" The right question is "where is housing missing?"
Look at migration patterns. Look at rent trends. Look at absorption rates. Look at where employers are growing and where they're not. A tool like DoorProfit makes it fast to underwrite a lot and check the surrounding neighborhood data before you commit capital. The Sunbelt suburbs and workforce housing corridors of growing metros are where this strategy works. The shrinking small towns and over-supplied secondary markets are where it doesn't.
The U.S. population is expected to keep growing slowly until about 2080, with the West and South leading the way. Everyone needs housing. Most of the supply that exists today was built for a different family structure and a different price point. The opportunity is in building what people actually want to rent now.
Step 2: Engineer the math, not the floorplan
You don't have to be a builder. You have to be a deal architect.
The design process for a build-to-rent project is about math, yield, and financing. Not countertops. The decision filters I use:
- Can it rent quickly? If you don't have a clear answer to this before you break ground, you're not building. You're gambling.
- Does construction cost stay at or under 75 percent of after-build value? Below that, you're creating equity. Above that, you're just trading dollars for finished product. The step-by-step mechanics of pulling this off, from construction loan to refinance, are in build-to-rent and supported living.
- Does the yield beat what your current portfolio is doing? If you're building to underperform, sell instead.
Here's a real example of this thinking in action. On one of our current projects, we spent hours with our site plan designer trying to figure out how to fit garages on the new builds. We finally cracked it.
That single design decision adds $25,000 to $50,000 to each sale price. We hadn't even started house plans yet, and that one move made the entire project significantly more profitable. The money is made in the planning stage, not at the finish line. Don't accept the first layout. Push your designer until the math actually pencils.
Once a build is leased, the lease-up speed matters as much as the build budget. I virtual stage every vacant unit with RentStager so the new product shows up on Zillow looking like a finished, lived-in space, not an empty box. New construction with a great floorplan but blank, scroll-past photos still sits longer than it should.
Step 3: Deploy through partnerships
Execution isn't about swinging a hammer. It's about building the right capital stack and the right team.
Most investors who haven't built before assume they need to fund the project themselves. They don't. The whole game is partnerships. Private lenders for short-term capital. Equity partners who bring money and want a piece of the upside. JV structures where each party contributes what they have, whether that's capital, expertise, or sweat. The full menu of funding sources is in how to finance a rental portfolio with other people's money. You can own the project without owning the headaches.
The same is true on the construction side. You don't need to be the GC. You need to be the deal architect who hires the GC and holds them accountable. Different skill set entirely.
Don't take no for an answer when the code is on your side
A quick story that's relevant for anyone considering this strategy.
I spent four months going back and forth with the City of Arlington over a disallowed code item on two of our DADUs. Exhausting. By month three I was ready to either bend the design or walk away from the project entirely.
Instead I tried something different. I put Claude (the AI assistant) to work reading and interpreting the actual building code, line by line. Then I tipped off the state about a preemption issue (where the city's local rule conflicted with state law). Then I requested an in-person meeting.
Result: full approval. Official green light.
The lesson: don't take no for an answer when you know the code is on your side. The cities and counties processing these new zoning changes are often confused about the rules themselves. The senior planners I dealt with had read the code less carefully than the AI did. If you're dealing with a code dispute, feed the relevant sections into a capable AI tool and let it do the analysis. It's a real edge.
What this doesn't work for
Build-to-rent isn't the right move for every investor. Here's where I'd tell you to keep buying existing or to wait.
You don't have access to capital yet. A build-to-rent project ties up money for months between land purchase and first rent check. If you can't carry that, build-to-rent isn't the next move. Buy a stabilized cash-flowing property first and use it to build your borrowing capacity.
You haven't built a team you trust yet. Building requires a designer, a GC, a lender comfortable with construction loans, and ideally a local code consultant. If you don't have those people, your first build will eat your patience and your budget. Buy a turnkey rental first and use that experience to build your network.
You're in a market without zoning relief or population tailwinds. Not every city has opened up its rules. Not every market has the population growth to absorb new units. Do the migration and absorption work before you assume your market is ready.
You're impatient. Builds aren't fast. Expect a year, often longer, between land and first rent check. If you need cash flow next quarter, this isn't the strategy. Acquisition of a stabilized rental is faster.
The question worth asking
The hardest part about pivoting your strategy isn't the strategy. It's letting go of the version of the playbook that worked for the last cycle.
The acquisition playbook worked great when inventory was loose and rates were low. It worked less great when both of those changed. And it doesn't work as well now, when zoning reform is opening doors that didn't exist a few years ago and most investors are still chasing the same shrinking pool of existing deals.
The question worth sitting with: are you still using the playbook because it's working, or because it's familiar?
If you own property with a backyard, you might be sitting on the next thing. If you're shopping for properties right now, the highest-impact filter you can add to your buy box is "could this be a build-to-rent play in five years?" The answer changes the kind of property you're looking for entirely.
The next decade of wealth in real estate is going to be built where the old rules said you couldn't build. Most investors aren't paying attention yet. That's the opportunity.
