BiggerPockets Real Estate Podcast - 816: Seeing Greene: How to Invest with $20K and “Luxury” House Hacking

Episode Date: September 10, 2023

Don’t know how to invest in real estate? If you’ve got $20K (or less) sitting around, there’s a good chance that you could start TODAY. With home prices still sky-high and most Americans under the impression that buying is out of the picture, David Greene comes in to save the day with the “sneaky rental tactic” that can help you start building a real estate portfolio for less than it costs to buy a car! Welcome back to the long-awaited return of Seeing Greene. We’ve taken some of the BEST questions from BiggerPockets listeners just like you and rapid-fired them at David to get his take. In this show, a military couple is looking to start investing but doesn’t know where to begin. A wholesaler wants to buy rentals with a partner but doesn’t know how they should form an LLC. A high-earner debates whether a “luxury house hack” is worth the extra money. Finally, an active-duty family debates selling their homes, and a deputy sheriff wants to know where best to put her leftover cash from a home sale. Want to ask David a question? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot! In This Episode We Cover: How to invest in real estate with $20K using the “sneaky rental tactic” “Luxury house hacking” and why buying better properties may be worth the lower cash flow Rental property LLCs and whether or not to form one for your future partnerships When to sell your properties and whether or not a housing crash could be on the horizon The “base hit” rental properties that will make you RICH when you retire And So Much More! Links from the Show Find an Agent Find a Lender BiggerPockets Youtube Channel BiggerPockets Forums BiggerPockets Pro Membership BiggerPockets Bookstore BiggerPockets Bootcamps BiggerPockets Podcast BiggerPockets Merch Listen to All Your Favorite BiggerPockets Podcasts in One Place Learn About Real Estate, The Housing Market, and Money Management with The BiggerPockets Podcasts Get More Deals Done with The BiggerPockets Investing Tools Find a BiggerPockets Real Estate Meetup in Your Area Davids's BiggerPockets Profile David's Instagram Subscribe to David’s YouTube Channel Meet David at BPCon 2023 Hear Our Episode on Real Estate Partnerships Luxury House Hacking Explained Books Mentioned in the Show Pillars of Wealth by David Greene Real Estate Partnerships by Ashley Kher & Tony Robinson Click here to listen to the full episode: https://www.biggerpockets.com/blog/real-estate-816 Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email [e-mail]. Learn more about your ad choices. Visit megaphone.fm/adchoices

This is the Bigger Pockets podcast show 816. This is a play where you're trying to grow equity. You're trying to turn that $20,000 of cash into $100,000 of equity. And in the future, that $100,000 of equity can be reinvested into more properties as your snowball grows. Now it's time to put some solid fundamentals and a little bit of elbow grease into that $20,000 that you have and start building some equity in the future so you can make big moves later. What's going on, everyone is David Green. with another episode of Seeing Green. This is your first time listening to one of these.

I think you're going to love it. In the Seeing Green episodes, I take questions from you, the bigger pockets community and answer them for everyone to see the type of stuff you would never get answered unless you are fly on the wall in my office, listening to the consultations that I do with David Green Team or one brokerage clients or at one of my events, but you're in luck. You don't have to actually get out of bed or even put on a pair of pants. You can listen right now to all of the questions people are asking. hear my answers from the comfort of your own home, car, or commute. Today's show we cover what to do

when you're feeling overwhelmed just trying to get started. I'm sure a lot of you can relate to that. If you're starting to partner, what do you need to know and what should you be aware of? And is it ever okay to move into a luxury property? That and more on today's episode of Seeing Green. Before we jump into the questions, today's quick tip. When you're struggling, you need to lean on your community and Bigger Pockets is the best place to do just that. If you're looking for an extra personal touch or you like to be around people in person, consider checking out BPCon this year in Orlando. You can learn more about tickets and times at biggerpockets.com slash events.

And remember, I will be there along with my team and other BiggerPockets personalities like my co-host, Rob Abas Solo. And remember, if you want to have one of your questions answered on this show, I'd sure like to have you. Head over to Biggerpockes.com slash David, where you can submit your question there or share it with a friend if you're shy. Also remember that if you're listening to this on YouTube, please leave a comment as you're listening. Let us know what you think we read those all the time. All right. Let's get into our first question. Real estate investors, the April 15th

tax deadline is coming fast. If you own rental property and haven't done a cost segregation study yet, you could be handing thousands of dollars to the IRS that you don't have to. These studies let you write off as much as 25% of your building and generate huge. huge tax deductions. Costsegregation.com is an online self-guided software that makes cost segregation fast and affordable. So it finally makes sense for smaller rental properties purchased for as low as $100,000. With pricing under $500 and an average savings of over $25,000, it's just a no-brainer. What's more, audit support is included by the number one cost segregation company in the U.S., but you must complete it before the tax deadline. Go to

Costsegregation.com and use code tax deadline to get 10% off your first report. Don't overpay the IRS. Head to costsegregation.com before April 15th. Here's why savvy real estate investors are obsessed with bonus depreciation. It lets you take that rental property or commercial building you own and depreciate most of the cost against your income. Legally, 100% IRS compliant. That's instant cash flow improvement.

Cost segregation guys is the number one firm nationwide, specializing in identifying these faster depreciating assets in your property. They've completed tens of thousands of studies across all 50 states from remote cabins to apartment complexes. So if you own investment property, this is a no-brainer. So visit Costsegregationguise.com slash BP for your free proposal and find out how much you could save this tax season. If the new year means getting rentals back in order, listings are a good place to start. Avail.

Part ofrealtor.com makes it simple to list a rental for free and get it in front of millions of renters. One listing, one click, posted across 24 top rental sites. A Vale even helps generate listing titles and descriptions to save time. More visibility means fewer days sitting vacant and getting your property rented quickly. It's a fast, free way to find renters without the usual hassle. Get started at Avail.co.combeckes. That's A-V-A-I-L-C-O-Bigger Pockets. Hi there. My name is Jacob Klavitz. I live in Suffolk, Virginia. My wife and I have recently gotten ourselves out of some debt. You know, we're in the military, so it's not like we make the most money in the world,

but we find ourselves about $20,000 in savings. And we are just kind of overwhelmed on where to start investing that to really make it work for ourselves. And I think real estate's a great spot for us. But, you know, the question that we just kind of have is where should we start? You know, what should we start looking for and how should we go about using this money in the most efficient way to build something for ourselves. First off, Jacob and Jacob's wife,

congratulations on getting yourself out of debt. That is a much bigger accomplishment than a lot of people realize that it is. In the world that we live in now, we tend to focus our congratulations on growing a portfolio, acquiring a property, adding cash flow. It's always something that we are gaining, but getting rid of debt is just as important.

So not owing people money, putting yourself in a position where your finances are stronger will actually kind of be like shedding weights so that as you run this race of real estate investing you're able to run faster. I love that you focused on that. I also love the habits that are built to get yourself out of debt and plain good old fashioned defense. In fact, I talk about that in my upcoming book, Pillars of Wealth. I've got an advanced copy right here.

If you're watching on YouTube, you can see it. How to make, save, and invest your money to achieve financial freedom. And I talk exactly about this. Like it's getting out of debt, putting yourself in a position of financial strength, and then using that position of financial strength to safely scale a portfolio, which I recommend people do like a financial fortress. It's not about how fast you can get big or how much you can acquire. It's about how safely you can acquire it.

So on that note, let me give you some advice that comes out of the concepts that are in pillars of wealth. First off, you've got 20 grand. Let's look at how this could be invested in a way that is synergistically beneficial to both of you. So if you're going to spend $20,000, how do you make it go as far as it can? Well, first off, you're going to want to use leverage. The more leverage that you can borrow from someone else like a bank, the more you can make that 20 grand go. The lowest down payment you can get away with in the world of real estate is generally an FHA or a conventional loan. That's three and a half to five percent down, which means we're going to be having a conversation about you buying a primary residence to live in and not paying rent to someone else.

Now, if you already live in the property that you own, that's okay. you could either sell it or you could keep it and make it a rental depending if it cash flows, but I'd like to see you guys buy another primary residence. Now house hacking is where I'm going with this, especially to get started. You want to buy an area that's going to grow over time. You want to buy something that hopefully you can add value to, so either adding some square footage, developing a basement, developing an ADU, doing something to make the property worth more, and you want to do it in a way that you can move out of this house next year

and make it cash flow. You see where I'm going at here? We call this the sneaky rental tactic. How can you buy a property that can function as a rental property for you in the future, but you didn't have to put 20 to 25% down on to buy like an investment property. This is not illegal. This is not any kind of fraud. It is absolutely 100% copacetic to buy a property to live it and then move out of it later

and make it a rental property. The sneaky rental tactic is what we call it. And I think this is a great way for you to get started. Now, to recap on this, I want to see you do this with a property. that will cash flow when you move out, which means it probably needs more than one unit. That means you're probably going to have to add some value to it, which means part of the property is going to have to be developed or created to function as additional rental units. And I want to see you do it in the best area that you can get into so that over the long term,

the rents and the value appreciate over time. This is a play where you're trying to grow equity. You're trying to turn that $20,000 of cash into $100,000 of equity. And in the future, that $100,000 of equity can be reached. reinvested into more properties as your snowball grows. Congratulations to you for getting off to the great start that you did and getting out of debt. Now it's time to put some solid fundamentals and a little bit of elbow grease into that $20,000 that you have and start building some equity in the future so you can make big moves later.

All right. Our next question comes from Omar in Chicago. Omar says that he has done a handful of wholesale deals in the Chicago metro area to accumulate funds to start doing Burrs. I've recently started taking action and have successfully completed several wholesale deals to accumulate funds for buying rental properties. I recently connected with an old friend and we are now actively searching for deals together. My question is regarding the establishment of a limited liability company, also known as an LLC, should we form a single LLC as 50-50 partners or should we each create separate LLCs to form a joint company entity? All right, first off, since you're asking questions about partnerships, I highly recommend you and everybody listening to this.

Goes and listens to episode 801 of the Bigger Pockets podcast, where I talk with Ashley and Tony about partnerships. They even wrote a book on partnerships. So you didn't ask about that. But I think if this is something that you and our listeners are interested in, you should definitely go check out that episode. But not yet. You've got to finish seeing Green first before you go see Ashley and Tony, see Green.

All right, there's different ways that you can set this up. You're going to need to talk to your CPA about this and your friend's CPA, because they're going to have much better advice for me. And the reason is it depends how your specific taxes are set up. LLCs are known as pass-through corporations, which means the money that they make passes through them and to you, which means that here's the way I understand it, at least in my mind. And remember, I'm not giving tax advice because I'm not a CPA.

Money flows into this LLC. I tend to look at money like water flowing into this bucket of an LLC. Ride-offs come out of the LLC. So that could be dinners, that could be trips, that could be expenses that are associated with the business, but you often would do them in life anyways, okay? So you and your business partner go to dinner or you travel to a different area to look at these properties, or you attend an event or you seek legal advice that you are going to do anyways, but now you get to ride it off against that business income. So some of the water right off the bat is sucked out of that bucket. what's left passes to you and you're only taxed on that. So if you're able to take expenses that you already had, remember this is not additional

expenses. We're not talking about buying a car you don't need or going out to eat for dinners that are not necessary to, because it's a ride off, that's a terrible idea. We're talking about things that you were already spending money on and you're able to legally write them off of this business. Maybe you buy a vehicle or some of the registration for your vehicle or the mileage that you're putting on it can be deducted out of the LLC. Now the rest of the money that didn't get taken out of the ride off passes through to you.

That's what you're taxed on. But if you have some depreciation going on in your own world, other properties that you've bought and you're a real estate professional, so rep status, now you can shelter the income that came to you from the LLC by some of that depreciation. And that's the name of the game when you're a full-time real estate professional. The bad news is you always got to be buying properties. You can't stop. But the good news is if you're doing that and you can use bonus depreciation. you can significantly lower your tax bill.

I say all this to say whether it runs through an LLC and then flows to you or it flows directly to your LLC is a question for your CPA because I don't know how they have your tax situation structured. There may even be a way where money goes into an LLC that you own 50-50 with them, then passes out of the LLC you own with them into your LLC or into your own name. That's what I would check with the CPA is like, what's, the most efficient way to set this up? Now, my concerns are not just about taxes, which I think is what you're asking as far as how you want to establish the business. I'd be more concerned with the relationship. Okay, so let's say that you guys are buying properties and you're putting them in this LLC that you own 50-50. And then while you're using the company's resources, you find a deal that you go put into your own name or a different LLC than your partner.

How are they going to feel about that? If they thought that you guys were doing this together, but then you had a deal come to you from an outside source, right? Maybe it wasn't through the funnel that you guys built. It was a friend of yours or a person you met before. In your mind, you think that's okay. In their mind, they think that deal should have went into the thing you own 50-50. It can cause a strain in the relationship.

Then they might go do the same thing. Well, fine, if you're going to do that, I'm going to do it too. And the next thing you know, you're each running your own separate businesses, but kind of co-mingling company resources to do it, and the relationship starts to deteriorate. So I'd like to see you have an upfront conversation with your partner about what you're going to do when deals come your way that you don't think that they should be a part of the company

or if all the deals are going to be a part of the company. And if they are, what if one of you works harder or is more successful than the other one? What are you going to do if at some point you realize that you're responsible for 80% of the success of the company, but you're sharing the profits 50-50? So as long as you get all this stuff worked out, you're okay. But you got bigger fish to fry than just how the income is going to be taxed and the title is going to be held.

Make sure you go check out episode 801 for some more advice on this topic. Hey, David, thanks for taking my question. Dude, you're amazing. Hey, what do you think about luxury hacking? For context, we are basically financially free. I would say after taxes and everything, maybe 100, 120 every year from just being an agent. So I usually buy another hack or another rental. What do you think about luxury hacking?

because we're used to, we're house hackers, we're used to it covering everything or close to everything. So now with a three-month-old, we're thinking about luxury hacking in an amazing area, amazing schools and everything, and then paying an extra two to three grand per month for that, even with whatever the other unit gives us. We're not used to it. So what do you think about it? I can cover it, no problem. But I don't know if I'm being too emotional to live in a more luxurious place because we don't live in a bad place at all. It would just be better for schools, later on once you turns like three, four, or five, whatever. So what's your take?

Thanks, Matt. See ya. Hey, Brandco. Thank you. Love this question. These are the exact kind of questions that you should be asking and the exact kind of questions that the BP community wants to hear. At what point can I get rid of my, uh, FI guilt?

Is it ever okay to spend money on something? Do I need to be making my own soap, turning my own butter, stitching my own clothes? Or is it okay to spend two to three thousand? a month to go buy a property that I really like. You called it luxury hacking, but what you're really describing here is house hacking on a house that doesn't cover 100% of the income. I can't tell you if it's okay or not, though I am leaning towards selling you, yes, it's fine because you said you can cover it, no problem. I'm going to give you a different way to look at it, all right? Most people that learn about house hacking, that learn about real estate investing, you sort of get taught

in the most simplistic way possible. Like the same way you teach a little kid to ride a tricycle or if you're my age, a big wheel. Those were all the rage. It's different than riding a bike, but the fundamentals are similar, but we don't give a five-year-old a bike so that they can fall off of it. We give them a trike or something with training wheels so it's easier. Then when they learn how to ride a bicycle, there's a transition. Like, but, but I thought it was supposed to be this way.

It is when you're five. But we're now transitioning into some more nuanced and slightly more complicated wealth-building principles. So let's just understand the way that you have been taught to, real estate is overly simple, and it tends to focus on nothing but what I call natural cash flow. Natural cash flow is if you just grab a property and run it out, what is the income, what are the expenses, is there a difference and is that difference, positive or negative? That's as simple as most people get when they're learning how to build wealth. But now that we're transitioning from

checkers into chess, I'm going to give you a slightly more nuanced way of looking at money that should make a big difference as you're building your wealth. Wealth is a form of energy that is stored. You go pour energy into work. You are compensated for that work from the energy that you put out, the amount of time, the amount of skill, the amount of value that you brought, all affects how much energy comes your way. And then we store that energy in a dollar. And when we store the energy in a dollar, we call it savings. When we store the energy in stocks, we call it a stock portfolio. When we store the energy in real estate, we call it equity. But it's all a form of energy storage. And again, this comes out of the book, Pillars of Wealth,

how to make, save, and invest your money to achieve financial freedom, which everyone can get a much deeper understanding of this at biggerpox.com slash pillars. And I highly, highly, highly recommend you do because it will change the way that you look at building wealth and make it make much more sense. When you're only looking at cash flow, you miss all the other ways that the places you store your money in can cause growth. So when you put your energy into a property and you measure the cash flow that it puts

out, that's a form of your energy growing, but it's not the only way that it grows. You could move into a property that saves you two to $3,000 a month so that you have no living expenses at all. But what if the property isn't going up in value? It's not bad, right? That's saving you $24,000 to $36,000 of energy every single year, not having a mortgage payment, but you're saying, hey, I want to live in this area over here. And it's going to cost me $24,000 to $36,000 of energy. to live this luxury as you're referring it to. But what if the property appreciates by more than $24,000 to $36,000 a year? You mentioned it's in a much better school district.

It's in a much better area. I'm assuming this means it's harder to get into those places, which means that you have got constricted supply, which is always a great thing. When demand remains constant or improves and supply is constricted, value will go up. In this case, that means equity go up, which means your energy is growing at a disproportionate rate that's positive for you.

Do you see where I'm going with this whole thing? And we haven't even gotten into the fact that rents tend to increase overtime more in the better areas. So you're going to be coming out of pocket. Let's say $2,500 a month. Let's put it right down the middle. Well, next year, it may be $2,300 a month you're coming out of pocket because the rent went up by $200. Next year, it might be $2,200, then $2,050, then $1,8,50. You see where I'm going?

Every single year that you own this property, the amount of money that you have to pay to live in it is going to be, decreasing, which builds wealth in your favor. At the same time, all things being equal, it should be appreciating in a much higher rate than the properties that are in areas with less demand, so to speak, not as good as school districts. Maybe supply isn't as constricted. There's not as much demand to live there. When you understand the way that energy flows within wealth building, you will start to recognize that buying the property that you spend money every month to get into could very well lead to you making significant. more wealth than buying the cheaper property.

Now, where you have to be careful of this is when you're not making enough money through your job, through your savings, or through your investing strategy, that you cover the two to three a grand a month that's coming out. This is a terrible idea for your first property when you don't have a lot of cash. When people are getting started and they don't have a lot of energy and savings, I would never tell them to go buy the property where they're going to be spending $2,500 a month of their own money. I would tell them to buy the areas where they can keep their savings high and their expenses low.

But you've already got several properties. It looks here in my notes like you've got 10 tenants over four properties, which are a mix of long and midterm rentals. You've got a solid portfolio. In my idea of portfolio architecture, which is mentioned in the book, Pillars, I talk about building a very strong base of low risk and low reward assets. Once you have those, you can step it up, which would be like your midterm rentals. Now you've got some medium risk and medium reward assets. Now you get into elevated risk, which is what we're talking about right now, but there's also elevated rewards.

You see what I'm getting at? You don't have to choose between equity or cash flow, between big wins or boring plays. You can get enough boring plays that you stack up that cover you in case something goes wrong with the big win, and then you can chase the big wins, which are going to be what build big wealth for you in your future. So don't feel bad as long as you're financially secure,

putting your family in a house that you like living in, especially when you can still house hack, and only be spending $2,500 instead of $5,000 or $6,000 a month, which is what all your neighbors are going to have to be paying. Great move. Congratulations on you for what you're doing. And congratulations on being the poster boy of what a real estate investor should look like. You build wealth through real estate so that you can have a better life. Thanks for the question and let me know in the YouTube comments if you'd like me to address anything else. All right, thank you, everyone, for submitting your questions. We literally could not have the show without the awesome questions that you all submit.

So thank you for doing it if you're listening to this and you'd like to submit your question. I'd sure like to see it. Please head over to biggerpox.com slash David, where you can upload your video or leave your written question there. And hopefully you can be featured on an episode of Seeing Green and help a lot of people while getting the advice that you're looking for. Also, make sure that you like, comment, and subscribe to the channel. If you're watching this on YouTube, you'll see the ever-present. fidgeting that I do in the chair what I'm trying to talk and think at the same time. And if you're not listening to this on YouTube, if you're listening to it on Apple Podcasts or

Spotify or Stitcher or anywhere else, please go give us a five-star review so the other people can find this channel and we can make it even better. All right, let's get into some of the YouTube comments from episode 777 and 789 and see what you all are saying. Louis Vargas 764 says, I'm a new investor starting off in Connecticut with my first three family. One day I'll be on your show to share my story. I appreciate all the gems. Thank you, Louie. And for everybody who's listening to this who doesn't know what a three family is, that means you don't live on the East Coast because on the East Coast that is literally how they

refer to a triplex. A four family is a fourplex and a two family is, as you guessed it, a duplex. A little bit of real estate trivia there for you. From what to sell on Amazon, I am not going into real estate, at least not anytime soon, but I watch your YouTube videos on a regular basis because I absolutely love how you give your viewers realistic expectations in terms of the amount of work, dedication, and perseverance it takes to be successful at anything. I think oftentimes many people wonder if content creators actually practice what they preach and you are not afraid to tell us the truth about just how hard and competitive it is in real estate and even how long it takes for success.

For me, that is the proof that you make your money doing the business and not just by selling a course full of pipe dreams for people looking for an easy route. In fact, you don't even really make content for people that are not willing to do the necessary work that is unavoidable. I really respect you and thank you for that. Well, I wish I knew your real name what to sell on Amazon, but thank you. That's probably the biggest compliment you can possibly get. For those of you listening, there is absolutely a difference between people that try to hype you up and sell you on the dream because they want you to spend your money on their course versus the people that are making money through the dream, which usually don't portray it like

a dream. It's hard work just like everything else is hard work. And we at bigger pockets are going to shoot straight with you and let you know. But that doesn't mean you shouldn't do it because all the best things in life come after some hard work. From Pope of Cholos, that's a pretty funny name. Still the cleanest shirt in the dirty laundry. David, 2023 words to live by great quick tip. Yes, that is real estate. It's not as good as it was, but it's still better than everything else. the cleanest shirt in the pile of dirty laundry. From 2004 CBR, I believe that's a motorcycle. I'm going to have to run with my production staff,

but I think a CBR is a Honda. What do you think? Judges? Judges confirm. I was right. I don't know how many CCs this is. So, Honda, 2004 CBR, let me know in the comments if you're rocking a 600 CBR or a 1000.

We all have to know. Now, your comment was, another great show. thanks for all the great guidance. I would like to correct you on your Cali comment. I'm born and raised in California and definitely call it Cali, as do many others. Again, that might be my upbringing in the East Bay and listening to West Coast hip-hop music since it's the 90s. It's all about perspective. Okay, this is a good comment.

I see why my producer chose it. I just got to say, I don't know if I believe you. Like, rap is the only place you hear anyone talk about Cali, and it's always rappers that are not from Cali. Like, Notorious BIG is going, going back back to Cali, Cali, but I don't hear a whole lot of other people say it, unless it's someone like Tupac who is making music that will be listened to by people that are not, in fact, in California. So I'm not sure.

In fact, let's make this a poll. Audience, as you're listening to this, if you live in California, first off, you need to know who I am. We need to be connecting because I'm here too. But second off, let me know in the comments. Do you call it Cali living in California? or is this something that people outside of California tend to say about Cali? To me, the litmus test, if someone's from California, they definitely say hella and they probably

don't say Cali, but I could be wrong. I'll be the first person to admit, I don't know at all. So let me know, do you say hella and do you say Cali if you're from California? Let's take this to the masses. All right, we are going to be getting back into the show in a second here before we do. I've got a quick Apple review from the Seeing Green episode 789 that one of you are Awesome people left us. This is labeled giving non-real estate advice to team.

David, you are the man. There is no better thing to do for that youngster than to tell him that he needs to work hard and be an example to his siblings. Life is not about how many doors you have or how much money you want. It's about being a good example for others to follow and all that family needs to have someone to model after with their parents being gone. You and Rob and Bigger Pockets have made our lives change and made going to work fun because we get to listen to your podcast.

May God continue to bless you too and bigger pockets from time. via the Apple podcast review section. Tom, I really appreciate it. And I remember this episode. We had a young man who I believe his parents had passed away not too long ago. He was living with a family member, possibly grandparents, had two younger siblings that was asking me, hey, I need to make money. My family needs me.

What can I do to make money in real estate? I believe he was doing some day trading or maybe some crypto trading. And his heart was in a beautiful place as he was taken on the responsibility of leading his younger siblings, which is a. exactly what I love to see. But his head wasn't quite there. His head was still thinking, how do I make quick money in real estate? And guys, if there's one way to make sure you lose money in real estate, it's to try to make quick money in real estate. It can happen, but this asset class is not designed to make quick money. It is designed to literally build wealth slow.

If you look at the way amortization schedules work, where higher degrees of payments go towards principal and not interest over time, how this is a highly inflation sensitive asset class, which means over time the values go up and the rents go up. And you look at the fact that we can get fixed rate mortgages spread over 30 years so that your expenses don't go up. It starts to make sense that the literal architecture of real estate is designed to be something that makes more sense as you build wealth slowly. So if you're getting sucked into some program that you think you can make quick money in real estate,

not going to tell you it's a guaranteed scam, but I would be extra, extra cautious because that's not how the people that I know that built their wealth in real estate made it. That's how the people that I know that lost their money in real estate did it. So thank you, Tom, for recognizing that. And to the young man, I can't recall your name, who is trying to do this for your siblings. If you're listening to this, my heart is with you, my thoughts are with you, my will is with you. I would love to see you make it.

Focus 100% on being the best person you can be, bringing the most value that you possibly can to the workplace, show up every day in work like it's the last day of tryouts and you don't want to get cut and you will be successful. Managing properties can feel like a full-on circus. You're juggling vendors, tracking payments, chasing approvals across multiple properties, and maybe a few HOAs, all while trying to keep tenants happy and owners confident. One delay can throw everything off, and suddenly your day is all clean up, no progress. That's why hundreds of property managers rely on bill to streamline their finances.

Bill for property management lets you add all your properties, assign permissions, pay bills, and receive payments quickly and efficiently without the usual bottlenecks. It syncs with platforms like QuickBooks, Zero, NetSuite, and Sage intact, so your accounting stays aligned. You can automate bulk payments across properties and HOAs. Choose flexible payment methods like Same Day ACH,

international wires, card or check, and set custom roles in approval policies. There's even a dedicated bill inbox for each property to keep everything organized. Ready to simplify your workflow? book your free demo at bill.com slash bigger pockets and get a $100 Amazon gift card. That's bill.com slash bigger pockets. You just realized your business needed to hire someone yesterday.

How can you find amazing candidates fast, easy? Just use Indeed. When it comes to hiring, Indeed is all you need. That means you can stop struggling to get your job notice on other job sites. Indeed, sponsored job posts help you stand out and hire the right people quickly. Your job post jumps straight to the top of the page where your ideal candidates are looking. And it works. Sponsored jobs on Indeed get 45% more applications than non-sponsored post. The best part, no monthly subscriptions or long-term contracts. You only pay

for results. And speaking of results, in the minute I've been talking to you, 23 people just got hired through Indeed worldwide. There's no need to wait any longer. Speed up your hiring right now with Indeed. And listeners of the show will get a $75 sponsored job credit to get your jobs more visibility at Indeed.com slash rookie. Just go to Indeed.com slash rookie right now and support our show by saying you heard about Indeed on this podcast.

That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. All right, rental property investors, listen up. Our friends at Dominion Financial already have some of the best DSCR rates in the industry.

Now they're the fastest too. They just launched 10-day DSCR closing. That's right. days and they're still the only lender with the DSCR price beat guarantee. That means faster closing. The best terms. Zero guesswork. That's Dominion Financial. Check them out at biggerpockets.com slash dominion. Again, that's biggerpockets.com slash dominion. All right. Our next question comes from Whitney in Eastern Europe. Let's see what Whitney Shea has to say. Hey, David, my name is Whitney, and I'm hoping that you can help me. We are

an active duty military family. My husband's been in the Marine Corps for 27 years. We're still sort of going strong, but maybe going down towards the retirement path within the next few years. We kind of became accidental landlords because we were upside down in our homes when we had to change duty station. So it's turned out to be a blessing in disguise because we do have a home in South Carolina, and we also have a home in Florida, and they are both paid off. They are both rented out, and so we are, again, very grateful to have that cash flow. At the same time, currently we are living, we're stationed in Eastern Europe, and we are going to be heading back to the states in a few months to Arizona. So with all of that said, all that background, we also have a child heading off

to college. And so lots of little details, but we're really kind of at a crossroads. where we're kind of like listening to other people say, oh, you should sell your houses because of the way the market is. We're sort of more the buy and hold people thinking that way. So we'd love to just get your position, your perspective, your thought process on best next steps for this Marine Corps family. Thanks so much. All right. Thank you for that, Whitney.

Man, this is a, I love problems like this because no matter which direction we take it, you're in a positive place. So you've got properties paid off in South Carolina and Florida, and you're beginning to build a home in Tucson, Arizona, which is relatively affordable for Arizona. You're in a really strong place. I don't know that I agree with people that say sell off your homes because there's a market crash coming.

I hate saying this because you never know. Tomorrow there could be a market crash, and then everyone's coming for me with pitchforks to the swamp, trying to get green like Shrek. Wasn't there a thing in Shrek where they were all chasing? him down to the swamp and he's get out of my swamp like I'd hate to have you guys coming after me that way I'll just share I'll show my work I'll tell you how I came to the conclusion I don't think we are likely to see a crash in real estate I actually think if we do see an economic crash

real estate could go down I think it would go down much less compared to everything else in fact I think if we see asset classes getting hit real estate would probably be the last one to go and that's not because I'm a homer for real estate is because I think that the support supply demand fundamentals of real estate right now are incredibly strong. And we've seen this with the resilience in the market. Interest rates for mortgages keep going up and up and up. We've seen the commercial space start to get hammered. There's a lot of people, and this is a, I don't know a nice way to say it. A lot of operators that did a good job. They increased the NOI on their properties. They managed it as well as they could, but cap rates expanded faster than the market could keep up

with because they just increase interest rates so quick and so suddenly. And a lot of those operators are going to lose money on their assets or lose their assets. See what I did there? Altogether. It's a problem. And yet the residential space in spite of all of this has been so resilient. The property values have not plummeted. In some places, they've dipped a little bit, like you mentioned Arizona, that Phoenix market, the Vegas market. They've come down some, but that's because they were going up so fast. It's relatively really strong compared to everything else. I think the stock, market would be much more likely to take a hit other than real estate. So I would not listen to the people saying to sell your homes, especially because they're paid off. Your homes are paid off.

It does not matter if they drop in value a ton. And remember, if you go sell them, you probably have to buy something else. People always forget this. If you sell high, you got to buy high. If you sell low, you got to buy low. It's very difficult to get the best of both worlds unless you're selling out of one market and into another, in which case you should probably read long it's real estate investing, where I detail the strategies and systems you need to do that well. But even then, it's usually roughly the same. You can't win by selling high and then buying low. It's incredibly difficult to pull that off.

So when your friends are telling you to sell, I would say, well, where are you going to go put the money? You're going to have a bunch of taxes, a bunch of commissions, a bunch of closing costs, a bunch of headaches, a bunch of make-ready costs to get the most for the house. Then if you do have a successful sale, where are you going to put the money? You're going to probably have to put it right back into real estate. now maybe you have to do a 1031 exchange you're just complicating your life to not really get that big of a gain so i don't know that there's anything wrong whitney would just hang in tight you're in a really good position okay like when i'm playing poker which happens about once every four years i have no idea how i do so

well in poker in fact i'm going to tell you my strategy so if anyone ever plays with me now they'll know how to beat me but what i typically do is i try to win a couple hands early and get a big stack of chips and then I just fold every single hand that isn't killer. And I probably should be admitting this online, but that is what I do. And I tend to end up in the winner's table almost every single time that I play. You're in that position right now. You've got a big stack of chips.

There is no reason to make a move. You do not need to rush into anything. Don't let the pressure of the people at the meetups or I have this many doors and you don't have this many doors or I'm up to this many units or all the things that people get into don't matter. That's their race. And they might not even be running their race. They might just be trying to get significance and attention from people at these meetups because they're insecure. Your race is all about your family. You're in a great position. You've got a lot of equity built up in these properties. You don't need to move it, right? If you're going to do something, let's just make some small safe

bets. When I'm playing poker and I got a huge chip, I'm only going to play the best hands and I'm not going to over-extend myself. I'll play the hands that are great. And if the cards come out and my hand becomes not so great, I just fold. I took a small loss, right? Or if I win, it's only going to be on a monster hand unless everybody else just folded. I really think that strategy works for you and your family here. Build your house in Tucson. You probably are building a house you like. The next property you get into, maybe build another one. But whatever it is, make sure it has more than one unit. Try to get into something with at least three units. So you have several units that you can rent out in the same property, which significantly decreases your risk and just,

slowly grows your cash flow. Base hits are all you need. Even just taking a walk to get on base is fine when you've got a big lead like you do. Don't go making any big risks. Don't go making any big moves. Don't try to throw the long bomb here if we're using a football analogy and risk and interception. Just keep running the ball in a boring way. Keep making boring moves.

And over the next 10 to 15 years, you've accumulated real estate, hopefully in the best areas you can get. You guys will be doing great and you'll never have financial worries. And that is a big win. All right, our next question comes from Amanda Lane in Florida. Amanda says, I'm 30. I've been a deputy sheriff for 10 years, and I bought a house when I was 21. No kids? And now I'm selling a house.

On that $200,000 from it conservatively, which is like winning the lottery to me. I'm moving back to Chattanooga, Tennessee and have a few duplex options in mind. I want to do this as smart as I can for obvious reasons. Amanda, your life so far sounds suspiciously like a country song. you're working as a deputy sheriff no kids sold your house in florida you're moving back to your hometown and chattanooga tennessee you got a couple options in mind let's move on here i feel like i have a reasonable graph on the first basic steps for what i think i should do with a substantial sum of cash but myself 20 years from now might wish i could go back to this very moment and do it

smarter. So pretending that we're back in time now, like I'm living 20 years in the future looking backwards, how can I either route my plan better or who can I connect with that can explain answers to questions I don't have? Well, if you had given me some of those questions, I'd be answering them now. You can always DM me and we can try to set up a consultation or something for you. But I don't know that there's a whole lot of people that you can go to and say, here's what I think you should do. You really do need a person who's done this before. which is why I understand you're reaching out to me because I have that understands not just your risk tolerance and not just your options but your skills. People forget that. There are certain

parts of real estate that I would be good at and other parts I'm not good at and vice versa for other people. You really want to build a strategy around the skills that you're bringing to the game. Now because I don't have enough details to answer your question like I'd like to, let me give you some practical advice that I think will work for everyone listening. If you're in a good position. You've got $200,000 saved up. Don't make a move in a market like this that's not terrible, but it's definitely not the market we've had in the last decade where they were just printing money like candy out of a pez dispenser. And it was very likely that real estate was going to keep going up, which it did. Be more careful. There's nothing wrong with staying debt

free right now, even if your wealth isn't explosively growing. You don't need huge wins in a market like this. What you want to avoid is big losses. Consider house hacking. Again, I love the strategy of house hacking every year. You get into the best neighborhoods. You put the least amount of money down. You get the better interest rates. You don't rush and go too fast to where mistakes get made. You can add value to the property slowly while you live there. You can do this by renting out the rooms, adding units, finishing off square footage that wasn't developed. There's so many options that you have and you can do it for 5% down. I love this.

Really, if you just did that, Amanda, you just bought a new house to house hack, you moved into it. In 10 years, that first house you bought will go up a lot, especially if you're buying in Chattanooga, which is one of the markets I think we're likely to see significant appreciation in over the next decade. And then the house that you bought,

the second year is going to have nine years of appreciation. The house you bought the third, seven years, right? Those first five are going to do really well 10 years from now. Now, if you're going 20 years in the future, imagine if you just bought one house a year, that's it. At 5% down, no huge risk. 20 years from now, you've got 20 homes. You've got an accumulation of 20 years of rent increases, of value increasing, of you saving money continually because you never had to pay mortgages. You're in a position that you may never have to worry about money again. Don't race forward competing with other people.

Don't think you have to go buy seven properties and develop these lots and do something huge. If you're bored with your life and you're not super skilled with real estate, don't feel the pressure to get out over your skis and do more than you need to. You're one of those people like the last question we took in a really solid financial position. Use that to your advantage. When you're running out of chips and poker, you've got to go all in whenever you get a halfway decent hand. there's some people in life who are in a really rough position. They hate their job.

They owe a lot of child support. They're having a hard time making ends meet. Those people probably need to go start a business, become an entrepreneur, work 80-hour weeks. They got to do something drastic to get out of the situation they're in. But that's not you. So enjoy what you've earned. Enjoy some of the fruits of your labor.

Make smart sound financial decisions. Continue to play defense. Continue to avoid lifestyle creep. Put your money into properties that over the long term are going to appreciate and will not cause you headaches and run your own race. Now, let's say that you do want to make some bigger moves in the real estate space, and that's why you're reaching out, because you want to be more involved. My advice in that case is to find a person that has done a significant number of deals.

That could be flips, that could be commercial, multifamily properties they bought, but definitely someone that has some experience under their belt, and maybe bring some of that money that you made into a deal that you do with them. Not only does that decrease your risk of losing the money in the deal because they're experienced, but it increases the likelihood that they're going to teach you something that might catch on and get you excited and you could follow that path and pursue that end with your own real estate investing career. I'd much rather see you do that than get hooked up with some other really excited newbie who hasn't done anything and then just close your eyes and hope for the best.

And that was our last question. What do you guys think? Was this a good show? Do you like hearing this advice? Do you like staying up to date with information going on the market because it's changing so fast. Was there something that you wish that I would have said or I would have been asked that never got brought up? Well, good news. If I didn't answer the questions you had, you can always ask them yourself. Biggerpox.com slash David. Feel free to share that URL with somebody else if you are shy, but they are not. And then also remember, we read the YouTube comment. So go in there, leave me a comment. Tell me what you thought about the show. We just may read it on a future episode, but even if we don't, we'll definitely see it and incorporate the information into the show. I love you

guys, you can follow me at David Green 24 on all social media, or you can go to Davidgreen24.com and see what I have going on. I help people like you every single day, trying to grow their wealth and responsibly manage the finances that have come under their control. I'd love to see you guys continue to do better every day more than you were the day before, and I love the perspective of what's this going to look like in 20, 30 years instead of what's this going to look like tomorrow. If you got a minute, check out another bigger pockets video.

and if not, I will see you on the next episode of Seeing Green. Thank you all for listening to the Bigger Pockets Real Estate podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday, and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, copywriting is by Calico content, and editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com.

The content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk. So use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose. And remember, past performance is not indicative of future results. Bigger Pocket's LLC disclaims all liability for direct, indirect, consequential, or other damages arising from a reliance on information presented in this podcast.