Tony:
Ever wondered how investors buy dozens of rental properties? The truth is most of them didn’t start with big trust funds or nest eggs or even a lot of cash. They just used a version of a very simple but proven strategy.
Ashley:
If you’re a new investor, financial freedom can seem so far away, but you could go from a single rental property to 10 rentals in just a few years, and that’s by using the stack method. This is probably one of the easiest ways to build a rental portfolio in 2026.
Tony:
And the best part is you don’t need hundreds of thousands of dollars to do this. If you can save up for a modest down payment for one single family home, you’ll have everything you need to set the strategy in motion. And before you know it, you’ll have your own rental portfolio and most importantly, a proven blueprint for scaling as far as you want to go.
Ashley:
This is the Real Estate Rookie Podcast. I’m Ashley Kehr.
Tony:
And I’m Tony J. Robinson. And with that, let’s talk about the stack method. So let’s explain what it is and how it works. So the idea of the stack method, 30,000 foot view, is that you start with a small property, single family home, and you basically with every acquisition, buy a slightly larger property. So for example, let’s say the first thing you buy is just a regular old single family home in year one. Then in year two, instead of buying another single family home, you buy a duplex. And then in year three, instead of buying a duplex, you buy a fourplex. And then in year four, instead of buying another fourplex, you buy an eighplex and so on. So you go one, two, four, eight, six, 32, 64, 128. I don’t know what comes after 128 times two, but you get the point there, right?
It’s like every time we’re doubling and in just a few years, you can actually build a decently sized real estate portfolio.
Ashley:
Sometimes this is also done by selling a property too. So you buy one property and then you do a 1031 exchange into a duplex, then you do it again into a bigger property. So instead of keeping all these properties, you can just exchange into bigger and bigger. But I think today we’re going to focus more on you’re actually going to keep these properties in your portfolio so that at the end of these years, you have a really nice nest egg that you’ve built for yourself over time. And I think one thing people get really caught up on is the how to get rich quick. And in real estate, there are ways you could flip a house and make a lot of money in that one transaction. But one of the safest bets is to use the stack method. It’s a proven method that will build you wealth, builds you cash flow.
It will create all of these financial opportunities for you, but it will take time. But this is a proven path that works that you can take if you want to be a real estate investor and build a nice portfolio.
Tony:
I think the other benefit too is that by stacking it up in this way, it’s just easier for a rookie investor to digest and believe as possible because telling someone, “Hey, you’re going to buy an eight unit when you’ve never purchased anything,” for a lot of people that might feel a little intimidating, but telling someone, “Hey, you’re just going to buy one single family home as your starting point.” It allows someone to learn the ropes. They gain the important skills and the confidence to then go on and buy the next deal. And Ash, we see it so often where we interview folks in the podcast and they’ve spent years thinking about buying that first property. And then when they finally get the first one, they get the second one super, super fast right afterwards. It’s like, “Hey, I’ve been listening to the podcast for five years.
Didn’t do anything. Bought my first one and six months later I was under contract on my second one.” So even just that momentum of getting into the first deal will help the stack method move you quickly toward a bigger portfolio.
Ashley:
Another advantage of this is if you’re buying every year, every couple years, you can actually use primary residence loans if you’re keeping this property as your primary residence for usually the loan product will require a year. So that means you could be putting down as little as three to 5% on the property. And then you live in there for a year. First year you have your single family, live there for a year, you move out, you turn into rental, and then you’re moving on to a duplex and you’re living in one unit renting out the other unit. And you can do this all the way up to four units. So five unit, it becomes commercial and you wouldn’t be able to get a residential loan on that product anymore. I mean, you could still probably… Actually, I don’t know if a commercial loan would allow you to live in one of the units with a five unit.
Do you know that?
Tony:
I actually don’t. I would believe so. I feel like we’ve interviewed people on the podcast who’ve purchased larger properties and they’re like, “Yeah, I live there to help save on costs.” I even think about Heather Blankenship when she bought her first RV park. She was like, “I was literally living in the back office.” So I would assume that there’s probably some place where it makes sense to do that.
Ashley:
But yeah, that’s another advantage as to using this method too, is the financing that you can get by spreading it out over time. DSER loans have become very popular where they’re not looking at you personally, they’re not looking at your debt to income. They’re looking at the actual property and the revenue it generates and what its expenses are and making sure that the property can actually cover the mortgage and the expenses. And with that, you can go ahead and get a lot more loans because they’re not looking at you personally, but you’re also paying way more in closing costs. There’s a lot more fees associated to get this loan product and you’re also paying a higher interest rate than you would if it was your primary residence or if you went to a small local bank and just got a conventional loan for an investment property too.
Okay, so the stack is sounding pretty good. This is a path maybe you want to take and we’re going to show you how to do it. We have to take a quick break, but when we come back, we’re going to give you the full playbook. So right after a word from our show sponsors.
Okay, welcome back. Now let’s get stacking. Sorry guys, Tony made me say that to be corny, but here’s the full stack playbook. Okay? So here’s a little side note. If you can house hack while stacking, you’re going to have a huge advantage. So like we talked about earlier, that down payment is going to be easier to achieve by only having to put three to 5% down if you’re doing an FHA loan or if you’re doing a primary residence conventional loan. And it will be easier to save up for those down payments because you’re not putting down 20% for each property. But you don’t have to do that for the stack method. If you only want these as investment properties and you don’t want to house hack, this can happen for you too if you don’t want to live in any of the properties. And I guess I should clarify on that.
When I say house hack, you don’t have to live with other people in that first unit because you’re buying a single family home. But if you’re going to stack the method into a duplex, a triplex, you’re most likely going to want to rent out the other units at least. So just keep that in mind as you decide which path you want to take as to how much you actually want to house hack and be involved. But you could always house hack the first one, single family home, and then going forward, you could always just buy those as investment properties and not house hack them.
Tony:
Now, one of my favorite ways to also kind of leverage, especially in a single family home, the house hack is called the Craig Kurlap method where our friend Craig who wrote the BiggerPockets book on house hacking, he talked about the first time that he house hacked. He bought, I don’t know, a four bedroom house as a single guy and he rents out every single one of those four bedrooms and he slept on the couch. So that is like house hacking to the extreme, but it worked out really well for him and he sacrificed for a few properties and he was able to build a pretty meaningful portfolio. So if possible, rent out the other rooms in the single family and then just try and save as much of that extra cash as you possibly can so that once your occupancy period does end, you now have the ability to hopefully have some cash shape to then step into that next one.
And again, at three and a half percent down, depending on the market that you’re in, if you’re not spending anything on your first mortgage because you’ve rented out all the extra space, your ability to accelerate this becomes a lot easier. So renting out the room, super helpful.
Ashley:
So now we’re going to go into step two, and that is you’re going to buy a duplex next. So you could decide to house hack this again where you’re putting three to 5% down or you could just have this as investment property and put 20% down. So your timeframe is going to be how long it takes you to actually save up the down payment for this next property plus having the money in reserves and money for closing costs. One thing that you should do, which Tony just did this, and this is a very smart move to do before you acquire and move to the next property, is get a HELOC, a home equity line of credit on your current primary residence. So if you’ve only lived there a year, there’s probably not a ton of equity available in that property, but some is better than none.
Even if you’re taking a $20,000 line of credit, that’s $20,000 that you can use for your next deal. That’s $20,000 that can help cover a rehab that you’re going to pay off. So get your line of credit because it is much harder to get a line of credit on an investment property and you’re not going to get as great of terms. Tony, on your line of credit that you just got for your primary residence, what was the introductory rate? What was the discounted rate they gave you for six months or whatever it is?
Tony:
I want to say it was like 4.99% was the introductory rate. It was a pretty reasonable rate. And after that it’s variable based on one of the index rates, I can’t remember which one, but 4.99 for the initial term, which I think was like six months.
Ashley:
Yeah. And on my commercial loans, I think my lines of credit, one is at 7.75% right now and the other one’s at 8%. So as you can see, a big difference right there that he’s getting that introductory rate on those lines.
Tony:
But even at 8%, you compare that to other types of credit, like tell me a credit card that’s going to give you 8%. So even at the elevated rates, it’s access to really, really solid terms to then be able to go out and fund your next acquisition. And that’s exactly what we did. We pulled the HELOC on our first primary and we just took that money and use that as a down payment on our second one. And the rents from the property we’re moving out of will cover the initial mortgage payment and the HELOC payment. So we’re not out of pocket anything for this HELOC, so it worked out really well.
Ashley:
So in step two, you’re going to get your HELOC on your property before you close on your next one or move into your next one. If you are not moving to the duplex, then not a rush because this other property will stay your primary, but you want to do it while it is your primary. Then after that, you can go ahead and close on your next property and move into it and you can still keep that HELOC. You don’t need to close the HELOC if it is no longer your primary residence. You still can keep the HELOC open for the life of the HELOC, whatever the term is and your mortgage acts there, their line of credit docs. So next, if you’re going to continue to house hack, you’re going to move into the duplex, rent the other side out, and make sure that you rent out your single family home, your first property.
If you’re not going to move into your next investment, then you’re going to want to get both of those units rented out.
Tony:
So then the next step is to, again, slightly scale up the size, go from a duplex to a triplex. And we don’t need to belabor this, but basically you’re going to move out, rent out the whole duplex. Now you have your single family home, which maybe you’re still renting by the room to really juice the cash flow. You’ve got your duplex, but now you’re renting out.
Ashley:
So then you only have to rent out your room.
Tony:
Yeah, that’s what I’m saying. It’s just your room you got to rent out. So you rent out your room, then you rent out both sides of the duplex, and then you move into the triplex and repeat that same process. 3.5% down, 5% down. You rent out the other two sides. If you’re someone who can even do it, rent out the additional rooms in your third of the property as well. And we just repeat, rent and repeat. And then step four becomes the same thing where you buy a fourplex, rent out your space inside the triplex and repeat that same process. And guys, in the span of just a few years, you’ve got a 10-unit portfolio. Now, just the thing that I’d add to, because someone might be thinking, “Well, Tony, Ashley, sure, this sounds great, but am I really going to be able to make enough in 12 months to then have enough money for a down payment?” Maybe not.
Even if it takes you two years, three years to save another three and a half percent, the process is still the same. But the thing that I would challenge you on is think through the ways that you can juice more cashflow out of the properties. So again, we already talked about renting by the room in the single family home. Well, can you expand that same strategy to the duplex and the triplex? Instead of doing a traditional long-term rental, can you do a furnished midterm rental in your market? Can you do a short-term rental in your market? There are other cashflow levers we can pull within these rentals to more quickly get you to the point of being able to have another three and a half to 5% down. So focus on that as opposed to, “Hey, this doesn’t feel super realistic for me.”
Ashley:
And a couple notes too, as you’re going from property to property, don’t forget that you can do that HELOC on each one if it’s your primary residence. So at the duplex, the triplex, you can go before you move on to the next one is to pull more lines of credit. And even that’s the nicest thing about a line of credit. If you’re not using them, you’re not paying anything. So they can just sit there and you may never use it, but at least you know you have that money to tap into if you want to. And I think too is a lot of line of credits, especially if you’re going to small local banks, is they won’t charge you for an appraisal. They won’t charge you any fees. It is literally free for you to go and get these lines of credit. And then some of them have mine has if I close the line of credit, so if I sell the property or I close the line of credit and don’t want it anymore within, I think it’s three years, I owe them 1200 bucks because I didn’t use the line of credit for as long as they wanted me to or have it open for that long.
So there are a couple things like that, but you keep it open. And in our kind of scenario here, you’re going to have the property, you’re not going to sell them right away, so that shouldn’t be an issue. But that’s another thing to keep in mind as you’re going step to step, you’re going to do these other little things too. With the HELOCs, they will be looking at your debt to income. With the mortgages on these properties, they will be looking at the debt to income. Sometimes when you are house hacking a property too, they’re only going to take into consideration a percentage of the rental income that you’re getting. So even if the tenant is paying you $1,000 a month and say your mortgage is 2000, so that’s half, sometimes they won’t take into account the full thousand dollars. Sometimes it may only be like 70% of the rent they’re actually going to include and count towards your income to offset the mortgage payment too.
So in this scenario, if you are doing house hacking, you will have to be careful of the lines of credits and the mortgages with your debt to income as you go along. So don’t quit your W2 job on the triplex in year three. Keep it until you finish the stack method to really help you qualify for these loans to be able to get these properties too.
Tony:
So guys, that’s how the stack method works and how we’ve adapted it for the rookie audience. But next, we’re going to dig into some numbers so you can see the real power of the strategy. So stick around. We’ll be right back. All right guys, how does the stack method compare to just buying a bunch of single family homes? Let’s do the math. So we’re going to talk about scaling with the stack method that we just walked through versus just buying more single family rentals. So for the single families, let’s assume that it’s a $300,000 single family home and you’re making between 1,800 to $2,200 a month in rent at 20% down, let’s say $60,000 investment. Guys, the truth is that you’re unlikely to cash flow in a lot of markets with just kind of like the vanilla strategy in this way. There are also a lot of markets where it will work.
So there’s 20,000 cities in the United States.This isn’t us saying that there aren’t any markets in the country where traditional single family homes don’t work, but there are also a lot of markets where the numbers are pretty tight given where prices and interest rates are today. And even when putting down 20%, it’s just sometimes tough to find properties that’ll cash flow. So you might need 20 or 30 of them to actually achieve financial freedom. So just a much bigger portfolio and maybe some more headaches around managing it as well.
Ashley:
So let’s go through an example of the stack from year to year. And we’re going to start off buying 300,000 single family home, making 1,800, 2,200 in rent, and say we needed 10,000 to 15,000 for a down payment if we’re thinking of three and a half to 5%. So this might not cash flow at first, but while you’re living there, you can save a lot of money in rent, you’re getting mortgage pay down on the property. Then once you move out in a year, you’re going to rent out the property. 20% down was 60,000. So we went from like 10 to 15,000 to 60,000 if you’re just going to have it as an investment property and that can be unlikely to cash flow in many markets. But then we’re going to skip to the duplex. We’re going to save 400,000 for a duplex. This is making 1,500 to $1,900 in rent per a unit.
So if we’re going to house hack it, we’re looking at 14 to $20,000 down. 20% down, we’re looking at $80,000. So again, these numbers will depend on how much you want to save or how fast you can save these amounts of money and how much you are willing to sacrifice by house hacking. For example, in order to get a duplex sooner, are you willing to house hack to spend $60,000 less on your down payment? So how long will it take you to save that $60,000? If you’re saying you can save $20,000 a year, you could get into this duplex in a year compared to waiting three years if you have to save another 60,000, four years actually. So the next we’re going to the triplex 475,000. That’s saying again, 1,500, 1,900 per a unit. 3.5 to 5% down is 16,000 to 23,000. 20% down is 95,000.
And when you’re putting down the 20% down payments, the property is more likely going to cash flow because your mortgage payment is going to be less because you’re putting more money down. So also your risk should play a factor in tier too. As we’re comparing these numbers, yes, it sounds great to put less money down, but also you have less risk if you’re putting more money down. So just something to think about too as to what your risk tolerance is also. And then we’re getting to the quadplex purchase for 550,000, and that’s the same 1,500, 1,900 in rent per unit. So if you’re doing three and a half to 5% down, that’s 20,000 to 27,000. And this will most likely cash flow in a lot of markets at this price, and you could potentially live rent-free for here while you’re in this property. And then the next one 20% down would be 110,000 to be able to get into this property.
Now remember, while you have these other properties stacking over time, you should have cash flow from them, at least something, and you can be using that cash flow to save for each additional investment that you’re buying for each down payment going forward too on these properties. All
Tony:
Right. So let’s talk a bit about which markets this strategy will work best in because not all markets are made equal. So first, and I alluded to this earlier, is that not all markets have a bunch of small family inventory. Again, where I’m located in Southern California, we just simply don’t have a lot of small multifamily properties, a lot of large multifamily, big apartment complexes, but the duplexes, the triplexes, those just aren’t super common. We’re very kind of suburban sprawl type area where there’s more single family homes or large apartment complexes. But if your market does, I mean, you could give yourself a big advantage through house hacking. Otherwise, you might need to consider investing out of state. So we’re really looking for markets where there are affordable home prices and really where the price to rent ratio is strong. So if I look at what the properties can rent for and I compare that to the purchase price, is there a strong ratio there?
Day one cash flow, can we actually get in today and make some meaningful cash flow? And then also maybe to a lesser extent is the appreciation potential. Because if the stacking method of the goal here is like, hey, can we quickly build up cash flow? Then maybe appreciation’s a lesser important metric, but still something to at least look at. And then in terms of the markets that we might want to consider, actually BiggerPockets guys, they just put out a kind of summer 2026 rent to payment report. And these are markets across the country where you can still sell cash flow. So if you just search rent to payment report BiggerPockets, I’m sure it’ll pop up for you for summer 2026. But in there, we’ve got cities like Indianapolis, Cleveland, Memphis, Kansas City, Missouri, Birmingham, Pittsburgh, St. Louis, Columbus, Oklahoma City, Cincinnati, Louisville, Detroit, Milwaukee. So all in a similar part of the country.
We’re not seeing a whole heck of a lot on the West Coast. Actually, nothing on the West Coast, nothing in the Northeast, nothing even in the Southeast really. So we’re all kind of up and down in that Midwest corridor there. Those markets tend to be a little bit better as it relates to cashflow.
Ashley:
Now, just a couple things to remember before you start stacking is you don’t have to buy a property every single year. Even if it takes you several years to purchase that next property, you’re still going to be better off than somebody that’s not starting, even if you take longer to grow and scale. And honestly, there are days that Tony and I both regret growing and scaling as fast as we did. And I didn’t even grow and scale that fast. It took many years to acquire my properties, but in one year I acquired eight properties, I think. I think Tony did 20 in one year and that was overwhelming and that we didn’t have the systems and processes in place. So sometimes the slow and steady actually can make you better off in the long run. So don’t feel rushed that you have to hit any kind of timeline, that you have to meet any expectation for this to work, that this is on your own timeline.
This is when you’re ready to execute on the next deal, when you have that down payment saved, when you have reserves, when you’re ready to move. And then also, even if it takes time to find better deals, that’s better than rushing into a bad deal. So even if you’ve got the down payment, you’re ready to move, you’ve got someone that wants to rent your house, don’t rush into the next deal. Make sure it is a good deal before you go and purchase that property. Well, thank you guys so much for joining us today on this episode of Real Estate Rookie. I’m Ashley, he’s Tony, and we’ll see you guys in the next episode.
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