BiggerPockets Real Estate Podcast - 919: How to Use Real Estate to Quit the 9-5 Grind

Starting point is 00:00:00 This is the Bigger Pockets podcast show 919. What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast, and I brought back up with me. I'm joined today by Rob Abas Solo and Dave Meyer on a special show. And on this special show today, we're going to be answering the age-old question,

Starting point is 00:00:20 which real estate strategy works best, specifically if you want to leave your 9-to-5. So let's start with you two, Rob and David. How long have you been out of your 9-5? nine to five. I'm still in my nine to five. And how long did it take you to get there? Okay, first of all, technically, you are still in your nine to five, but you work at bigger pockets. Yeah. I mean, it's like you get the best of both worlds. So I don't want to glaze over that. Now, me, I have been out of my nine to five in advertising, oh, in the last, I would say three years, three, three and a

Starting point is 00:00:50 half years. Rob, how long were you investing before you got out of your nine to five? About four or five years. Okay. That's pretty solid. What about you, David? I'm so bad with dates. I think I left being a police officer in 2016 and joined. I got out of my 9 to 5 and got into like a 7 to 7 as I became an entrepreneur and just worked way more in real estate. But I bought my first investment property in 2009 and have been steadily buying ever since. And in today's show, we're going to be sharing the path out of the 9 to 5 jungle and into the world of full-time real estate. Well, you know, the reason we're talking about this today is because it actually came up pretty recently and it comes up pretty often in the bigger pockets forums. In this episode, you're going to hear about what some of our community members recommended and what we recommend as investors slash experts in the space. So if you are someone who's been listening to this podcast wanting to get out of your current job into a better one that's real estate related, this is a show for you. Let's get into it.

Starting point is 00:01:52 All right, this first question comes from a community member named Rodney Love. And it reads, which real estate strategy works best to escape the 9 to 5 rat race by Rodney Love? I love how we always call the 9 to 5 a rat race. I don't know if rats love that. Doesn't seem like it's quite fair to them. No one ever thinks about the rat's feelings. Exactly. It's not really fair.

Starting point is 00:02:14 I mean, what if rats just like exercise? There have been a lot of great rats in history. Rattatooey, the Ninja Turtle's dad. I mean, there's some good rats out there. Splinter, of course. Splinter. Oh, yeah, that's a great when he's a hero, right? Our producers are like, stop.

Starting point is 00:02:26 answer the question. Stop talking about rats. This is actually a great question because there's a lot of people that say, hey, I'll figure out the long-term wealth later. My most pressing need is to figure out how do I get my time back and how do I get out of this job that I don't like? Rodney goes on to say, what real estate strategy did you use? Example, if you had between 20 to 70,000 to invest in real estate, how would you use that to replace your income of $7,000 a month? Fix and flips, tax liens, mortgage notes, rentals, Airbnbs. Help me here, guys. Okay, so this was a very popular post. I got over 90 comments in the forums, and we're going to pull in a few of those comments, take you through those, but then after that, we'll hop into our advice and our recommendations based on our anecdotal journeys.

Starting point is 00:03:12 So an investor named James has three pieces of advice here. So I'm just going to read us through these tidbits, and then let's talk it out a bit. So first advice here, who replacing W2 income with rental cash flow is a much longer process than one might imagine, unless you're going to be a you're really aggressive, it's probably going to take 10 years or more. That's advice number one. Tip number two here. House hacking might be the quickest way. If you live somewhere, then you might as well get paid for it. I really love this. I think this is something that we talk about pretty often on the show. And the last tip here is, I think fix and flips are just another job. They're not an investment. If you stop working, the cash flow stops working. So, you know, he kind of gives, I think,

Starting point is 00:03:49 a pretty realistic representation of, yeah, it's not as easy as people say. What do you all think? Yeah, this is something that when I got into real estate investing, I asked similar questions. How do I get enough cash flow to replace my income or provide the lifestyle that I want? And then once I was in it for a while, I realized that was an oversimplified perspective. What actually works is focusing on building equity and then converting that equity into cash flow. And that's because you have more control over how you build equity in a property. You decide what price you pay. You decide what location you invest in.

Starting point is 00:04:22 You decide how you're going to add value to the property. cash flow is typically only increased as rents go up and expenses stay the same. Investors don't have as much control over that. We all sat at this last year when insurance doubled or tripled in some areas and property taxes are going up and rents haven't been able to keep up with inflation because people can't afford them because everything else is becoming more expensive. But if you focus on building equity snowball, then you cash that out and turn it into cash flow. You can get out of the rat race.

Starting point is 00:04:49 $20 to $70,000. That's almost impossible to turn into $7,000. thousand dollars of passive income you're going to have to have some kind of active effort if you want to be able to make seven grand a month yeah i think you can turn 70 000 dollars into seven thousand dollars a year it's a great point but yeah a month you know it's an uphill it's uphill battle yeah i think what david just said about focusing on equity and then converting into cash flow is super important and if i may i just want to share just sort of a little framework for thinking about this, but if you know how much money you want to make, and the original question said

Starting point is 00:05:27 $7,000 a month. So if you multiply that by 12, that means that you want to make $84,000 a year. If you figure that your average cash flow on a deal, let's say it's 6%, and it could be 5%, it could be 8%, whatever you're saying. But if you want to make 84 grand a year, divide that by your average cash on cash return, so 0.06, that will tell you how much equity you need to earn. So in this example, that means you would have to have $1.4 million of equity invested into real estate at that 6% cash on cash return. And that's what will allow you to replace your income. So I know that's a bit of math, but the point here is that if you think about it that way, then you can start to ask yourself, what is the fastest way to get $1.4 million?

Starting point is 00:06:17 in equity that I can invest rather than trying to build up cash flow bit by bit because generally speaking, I personally believe that that takes longer than just saying, all right, I need to get $1.4 million in cash flow. And once I have that, I can invest it into a 6% cash and cash return relatively easily when I'm actually ready to pull the trigger, quit my job and escape that damn rat race. Great perspective. Yeah. You know, the math that I use, Dave, is similar to you. I realize somewhere along the journey that if I get a 12% cash on cash return, $40,000 would turn into $400 a month. $60,000 would be $600 a month. And so I just sort of use that number.

Starting point is 00:07:00 So if I know that if I have $500,000 of equity, that can turn into $5,000 a month. So by this metric, this person would need $700,000 if they got a 12% return. Not very likely. Let's have that and say it's a six. return. So they're going to have to double the $700,000, which is $1.4 million of equity to get that $7,000. That gives you a great perspective on how much money you actually need to replace that W-2 income. And that gives people perspective into why we don't advise that you quit your job as soon as you get a little bit of cash flow coming from real estate. Rob, I know you made a YouTube video

Starting point is 00:07:39 about that recently where you were saying, hey, it's not like you hear. My two cents is that this is often spoken about from real estate influencers that are trying to get people to take their course. So they say, hey, I'll teach you how to make this much cash flow so you could quit your job. Who's not going to pay 20 grand to learn how to quit their job? It just isn't realistic. And that's why I think Rodney here has been under the wrong impression. Yeah, this is exactly right. I think one of the things that I made this video that's like, why you shouldn't quit your nine to five for real estate. And everyone's like, what? How dare you? And I'm like, well, you know, if you go the flipping route, you're just, it's exactly what James said.

Starting point is 00:08:12 It's just another job. Now, it doesn't mean that. it's not going to pay you well. It doesn't mean that you're not going to love it more than your current job. But what it does mean is exactly what he said, the moment you stop flipping houses, you stop making money. So as long as you understand this reality of being a full-time real estate investor still does require a bit of active work, then I think it's a fine goal to strive for, but just understand it's not like you're sitting on the beach drinking my tides. Not until, you know, later on in life, I suppose. Yeah, that makes so much sense. And I think it's important for people to remember, too, that they should be considering their current income, too.

Starting point is 00:08:50 Like, if you're trying to get to this $1.4 million or however you want to think about it, like if you have a good job that's going to make you more than flipping houses would and might be easier than making flipping houses would, then you should probably stick with that. I mean, I'm the only one of the three of us who still works, the quote unquote, nine to five job. And I do it because I like it. I do it because I like my job, but there's also a strategic element to it that it's a good job. And it gives me money with which I can invest into real estate. And if I didn't work here, I would probably start flipping houses, which would just be another job.

Starting point is 00:09:26 Oh, but there is something to be said that you are the most lendable person in this trio because you have a W-2. Oh, thank you. I do consider myself quite lendable, if that's worth. Very lendable. I've lent to you. Thanks, man. I appreciate it. And we're just trying to bring perspective because it's very easy to fall into a negative perspective on I have to have a job, especially when you got social media telling you that you're a sucker referring to as a rat race, all these negative connotations.

Starting point is 00:09:53 I can promise you. I've hired a lot of people just to be my assistant and said, hey, I need you to be an extension of me. 95% of them have quit. No thanks. I do not like this. I want to go back to my other W2 where other people handle the stress. Other people handled the pressure. I didn't have all the risk.

Starting point is 00:10:09 I liked just having my little rat race where I just had to follow this little tunnel around and do my thing. There are downsides to working a W2 job, but there are also downsides to leaving that job and taking on a whole bunch of risk. I work more hours than all the W2 employees that I know for not having a W2 job. Just a little bit of perspective. Sometimes it pays to be grateful for what you've got and just keep buying real estate planning for the future. Okay, so James made some great points here. And after the break, we'll come back to hear some of the ideas. that he brought up. Plus, we've got more advice from the forums, and later on, we'll weigh in with

Starting point is 00:10:44 our own advice, so stay tuned. 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, post it across 24 top rental sites. Avail 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. slash bigger pockets.

Starting point is 00:11:15 That's A-V-A-I-L-C-O-Sash Bigger Pockets. Have you ever lost a DSCR deal because the financing just took too long? Red flags popped up late. The lender needed more time. The deal fell apart. Well, our friends at Dominion Financial just launched a program to help prevent that.

Starting point is 00:11:32 With their new express rental loan, you can close in 10 days or less. And they still offer their price-beat guarantee so you can get great pricing and a timeline you can count on. Fast, simple, reliable. That's Dominion financial. Check them out at biggerpockets.com slash dominion. That's biggerpockets.com slash dominion. You've upgraded how to buy properties, but did your insurance get the memo? When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals, LLC ownership, short-term stays,

Starting point is 00:12:03 or properties mid-rehab. That's where blind spots can creep in. Enreg works exclusively with real estate investors. They understand portfolios, how risk compounds as you grow, and why insurance should protect your upside, not just a checkbox. One uncovered claim can undo years of progress. Before your next acquisition, review your insurance. Talk to NREG and get investor-specific coverage from specialists who actually understand real estate at NRE.com slash BPPod. That's N-R-E-I-G.com slash B-P pod. Okay, we're going to shift gears for a minute to cover something important, especially for new landlords. The shows often talk about getting stuck to doing everything ourselves and the cost of sweat equity.

Starting point is 00:12:41 The key question is simple. Is my time better spent elsewhere? I use a tool that cuts down on a lot of landlord hassles. And the wild part is, it's just $12 a month. It handles rental screenings, rent collection, maintenance requests, and accounting, all in one platform via a mobile app or desktop. It saves me time in tenant communication and keeps me organized for tax season. It's called rent-ready, and you can sign up for a six-month plan for just $1 with

Starting point is 00:13:04 promo code BP 2025. Pro users get it for free. because we believe in it. Just sign in through your pro account to get started. Rent Ready helps ensure on-time rent with auto reminders, keeps communication professional, and lets you post listings to multiple sites. Check it out at rentready.com slash bigger pockets. That's RentR-E-D-I.com slash Bigger Pockets. Welcome back, you beautiful investors. Rob Abas Solo, Dave Meyer, and me, Papa Pockets are diving into one of the hottest conversations on the Bigger Pockets forums right now. what's the best real estate strategy to ditch your nine to five let's jump back in all right so

Starting point is 00:13:42 those are some really good points just about flipping is another job and staying in your current job but when i was reading through the forums and saw some of the replies here i saw another interesting comment from someone named glen in the bigger pockets community and he said that the strategy you choose because that remember that was the original question like what strategies are best so the strategy you choose depends mostly on what you choose depends mostly on what you will enjoy most and will be good at. And as an example, he says Airbnb is really a hospitality business more than a real estate investing activity.

Starting point is 00:14:15 He just uses real estate. Or, for example, like we talked about flipping houses just like a job. Glenn says, I like long-term rentals mostly because it provides predictable, stable income, and that suits me and his wife better. Our short-term rental Airbnb is a little more exciting, but causes me to lose more sleep due to seasonal fluctuation. So curious what you guys think about this, just about doing stuff that you like that is good at, because if, as we say, this is going to take longer than more people think, you probably want to be doing something that you're enjoying for those 10 plus years that you're going to be pursuing this. My perspective, if you're going to go into the real estate, well, I mean, I am just, I've always been a proponent of never paying yourself from real estate rental income.

Starting point is 00:14:59 I'm a firm believer that you should figure out how to make money other ways, whether it's through real estate. whether it's through side hustle or hubbles, whether it's through other companies, whatever it is, right? And so I think that if you're really attacking this idea of going full time and let's say making $7,000 a month, there is absolutely a 50-50 component to both the active work that you put in and the passive work. So I like to say you buy rental properties, you build equity, you build your wealth, and then you have your cash flow from your rentals that you should feed back into your rentals to make as much money as possible. And you you use that to scale and build up your portfolio, and then you have your active income,

Starting point is 00:15:38 which can come from wholesaling or flipping or rehabs or whatever it is. And that's really where you're paying a salary from because you are actively working for that. So I think it's just one of those things where it's still pretty involved. Do you all have similar or contradictory thoughts to that? Yeah, I think a lot about this. Honestly, a lot of my new book is about this topic is like trying to find stuff that was like actually aligned with what you like. Because I know you guys have heard this, but this happens all the time where people quit their jobs, they start flipping. They're like, I don't even like flipping houses. Or they go and they become a landlord and they don't like interacting with tenants. And I think it is super important to try and find a

Starting point is 00:16:21 strategy in real estate that is aligned with your personality, your risk tolerance to, you know, the amount of resources that you have at your disposal, taking a little bit of time to think about that and carefully consider which ones are going to be good for you over the long run is super important. Flipping, it's just not for me. I've never flipped a house. I probably will never flip a house. But I like long-term rentals.

Starting point is 00:16:47 I like investing in syndications because I'm lazy sometimes and just want to have other people do the work. And those things suit me. And I like them because I can see myself doing these things for another 10 or 20 years. No problem. Like that, they don't cause me stress. I feel comfortable with them. But for some people, they wouldn't want to do either of those.

Starting point is 00:17:07 And they like the hands-on element of flipping houses and all the power to them. The way that I think about it is the equity portion is going to happen on its own. It takes a lot of time. It's delayed gratification. You pick the right market. You pick the right house. Hopefully you pay less than what it's worth and you speed up that process. But it just happens.

Starting point is 00:17:24 You don't have to pay attention to the equity unless you're adding value to a property or forcing equity, like I call it. The cash flow part will take a lot. lot of your attention. That's why methods like short-term rentals or medium-term rentals or Airbnb arbitrage, all of these ideas you hear people say will provide more of a return, but you're going to put your attention, which is what we call work, into that. You're still going to have to do it. Dave, like you mentioned, flipping houses, it's a lot of work and a lot of risk, and it will produce more of what we call cash flow, but it's definitely work just like you were doing before. What's interesting about what we all do here as investors is, let's say you

Starting point is 00:18:02 buy a short-term rental. You're going to get some cash flow out of that, which everybody talks about. It's like running a business, right? When you work in your business, you get money out of that business. But this is like owning a huge asset that also appreciates with the business. It's much better to own a bunch of short-term rentals and make 10 grand a month from the short-term rentals, even though you're working, than it is to own a bakery and make 10 grand a month managing employees, but you don't own the building. You're not also getting that appreciation. I think that's the point that I would like everyone to recognize. When you do this through real estate as opposed to starting a landscaping company or running some small business or working a job, you can get cash flow.

Starting point is 00:18:42 But you're also building massive equity for retirement. You're also building equity that you can get at a cash out, cash out refinance or put a he lock on a property or sell and move it into another opportunity where you can get even more cash flow. This is why real estate investing is in our minds. your best bet at building wealth because you're getting both sides of it. But you have to recognize it's still like running a business, just like running the bakery, just like running the landscaping company. I totally agree. And I'd like to hop down because you did talk about this idea of like instant gratification. One of the pieces of advice that James gave was house hacking and how that could be a potentially eye-opening experience too. It was for me in that he said if you're going to

Starting point is 00:19:23 live somewhere, you may as well get paid for it. And I really like something you said on the podcast about a week ago, David, where you basically said, you know, if you house hack and let's say you're able to make $1,500 a month or $2,000 a month from the rents that you get from roommates, you know, imagine how much money you'd have to have invested to make $1,500 or $2,000 a month. It'd be a very, very high amount of money. And so when you look at like the ROI on house hacking, I think it's a very powerful wealth generator that could pretty easily chip at that $7,000 a month, you know, maybe $1,000 or $2,000 right out the game. Yeah, do you want to dive into a little bit more, Dave?

Starting point is 00:20:00 Or would you like to comment on that whole idea that if you get into house hacking early, it's much better than trying to save up a bunch of money to invest? Well, so I kind of think that they're one and the same, right? I think there are opportunities where some people are house hacking and they're making a thousand bucks a month or $2,000 bucks a month. But I actually think one of the most powerful reasons house hacking is such a common way to get started is that it simply allows you to spend less money. So if you have a house hack and you have roommates, hopefully you're cash flowing a little bit.

Starting point is 00:20:33 But even if you're just, you know, reducing your own living expense down by, let's say, $1,000 per month, maybe you're still paying $100 a month, but you used to be paying $1,100. And so now you're saving $1,000 a month that you can invest in other properties. This is a way that you can save up money to put into additional deals because house hacking it's great, but you can only do one of them at a time. Of course, you can only live in one property at a time. So I think the cash flow is an excellent bonus to it. But I think the real benefit is like being able to save up money that you can go buy bigger and better deals over the course of your career with. All right. So to really just bring this one home, David, do you think you

Starting point is 00:21:14 could sort of math out the possible ROI on house hacking? Yeah, that's a great question. And a lot of people don't think about how saving money is even more powerful than making money. So let's say that you're currently spending $2,000 a month on your own housing expense, like you're renting an apartment somewhere. If you wanted to make $2,000 a month in cash flow at a 6% return, that means that you'd have to save $400,000. Well, how long does it take you to save $400,000? If somebody can save $40,000 a year. That means they probably got to make over $100,000 a year because they still have to live on it. That could be 10 years of savings. That takes you a long time. Now, how much is the real estate that you could buy today going to cost in 10 years? And how much could you have been paying down on the loan?

Starting point is 00:22:01 And how much will rents go up over 10 years that you're missing out on because you didn't buy it? You're putting yourself way behind the curve by trying to save up that money and go put 20% down on a rental property. Let's say instead of saving up the $400,000, you go buy a $4,000. You go buy a $4,000, $400,000 property and you put 3% down. That just takes $12,000. Most people can get there in six months or so. You don't have to even wait a year to be able to save up that money if you're making the same income that we just mentioned. Now that $12,000 that you put down, if you house out correctly and just get a break-even property, it doesn't even cash flow. If that saves you $2,000 a month in rent, that is the same financial impact as if you were able to save $400,000 and you don't have to wait 10 years to. to start. I don't even know. I'd let Dave Meyer figure out the numbers of that $400,000 compounded over a 10-year period of time. It's even more than the $400,000 if you have to wait. And so what we're getting at here is that making money in real estate can be incredibly hard, but saving money in real estate, especially if you're already paying more, is much easier.

Starting point is 00:23:07 I love it. That's what I'm talking about. The greatest return of all time, house hacking, which is one of the strategies, right? And I know we're batting around a ton of strategies. here flipping, house hacking. A lot of people might be asking themselves, what strategy should I be using if I want to at least start inching closer to this idea of becoming a full-time real-estate investor and leaving the 9 to 5 grind? We're going to give you our take on which strategy to use and what action steps that we would recommend right after this quick break. There are two kinds of real estate investors, those who have reviewed their insurance and those who think that they have. Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehab,

Starting point is 00:23:46 short-term rentals or LLC-held properties. These gaps surface only when filing claims. That's why investors work with NREG. They specialize exclusively in real estate investors, understanding portfolios, risk at scale, and cash flow protection. One claim can erase years of returns. If you own a rental property, don't assume you're covered. Have NREG review your insurance with someone who gets investing at NRE.com

Starting point is 00:24:07 slash BPOD. That's N-R-E-I-G.com slash BPPod. The rise of the tech-savvy investors here. You don't need a huge team or tons of over. overhead to manage rental properties. Just the right tools. So, I want to tell you about how I use rent-ready to get ahead. For landlords who treat their time-like capital and recognize the cost of sweat equity,

Starting point is 00:24:26 this tool gives you everything you need to scale. Rent collection, tenant screening, maintenance accounting, so that you're organized come tax season, and you can run numbers in preparation for future deals. And more. All in one platform via a mobile app or desktop. Modern landlords don't just own property. They optimize it.

Starting point is 00:24:42 Rent-ready will keep you organized, running leaner, and ready to grow. start with RentReady. Visit RentReady.com slash bigger pockets. That's RentR-R-E-D-I-com slash Bigger Pockets and use code BP 2025 to get RentReady's six-month plan for a dollar. If you think property management is expensive, try mismanaging a vacancy or an eviction or a maintenance issue that turns into a five-figure problem because no one caught it early. That's expensive. A good property manager isn't overhead. Their protection against small mistakes turning into big losses. And that matters more than ever in this economy. That's why I like Mind. Unlike other property managers, Mind manages your property like an investment. They obsessively

Starting point is 00:25:28 measure the things that matter for your bottom line. Things like occupancy, delinquency, and net promoter score, and they have the results to prove it. Go to mine.co slash show me to see how mine performs and get your first month free, which is much cheaper than learning the hard way. 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.

Starting point is 00:26:08 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,

Starting point is 00:26:30 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. Tax season reminder for all the real estate investors listening.

Starting point is 00:26:54 If you own rental properties, short-term rentals, commercial buildings, basically anything that's not your primary residence, you need to know about cost segregation. It's an IRS compliance strategy that lets you accelerate depreciation on your properties, which means you're paying less in taxes this year and keeping more cash in your pocket for your next deal. Cost Segregation Guys is the go-to firm, having done over 12,000 of these studies

Starting point is 00:27:20 with $500 million in total depreciation identified. Head to costsegregationguise.com slash BP to get a free proposal and see your potential tax savings. Hey, everybody. Welcome back to the Bigger Pockets, Real Estate Podcasts. Let's pick up where we left off. I know we're batting around a ton of strategies here, flipping, house hacking.

Starting point is 00:27:40 And a lot of people might be asking themselves, what strategy should I be using if I want to at least start inching closer to this idea of becoming a full-time real estate investor and leaving the 9 to 5 grind? Well, there's different strategies. You kind of got to find the one you like. And I do think that that's good advice because it's not like they're all equal. Different personalities, different skill sets, different minds will gravitate and have more success in different niches.

Starting point is 00:28:06 Like, Rob, you're a very creative person. you are a semi-goofy person. You really like short-term rentals that are like niched out and kind of unique, right? You got your pig pickle property. You're very good at going to thrift shops or I don't even know where you find those dinosaurs. I'll never tell. Yeah, exactly. Making these creative ideas on properties, you and I put our heads together and we come up with ideas.

Starting point is 00:28:29 And you're always coming from just a unique perspective. So short-term rentals that have a different flavor are right up your alley. Dave, you typically look at all of them. of your different options and you find the one that's the most efficient way. So it is not shocking to me that you're investing in syndications or you're just buying buy and hold in Denver and letting it do its thing while you put the majority of your computation power into a 9 to 5 rat race job. That's a really good job for you while you write books and build passive income.

Starting point is 00:28:56 That makes perfect sense to me why you two have adopted those strategies. What advice do you have for the people listening to find the strategy that's right for them? Well, can I shamelessly just plug this? because I wrote an entire book called Start with Strategy. It just came out. And the whole concept is looking at your own individual situation and identifying which real estate strategies work for you. So shameless plug, check out the book.

Starting point is 00:29:21 That will help you. But I'll just give you a synopsis here. If you haven't read the book, oh, thanks, Rob. Rob's holding it up. I look at it every day. It's on my desk. I think the real idea here is to sort of start with the end in mind. We've talked a lot about that today and just like figure out what your financial goal.

Starting point is 00:29:38 are, what your risk tolerance is, what you value, like, do you value your time? Do you value more passive income? Do you like your job? The book walks you through all these things. But if you want to do it on your own, just think about like really what you're trying to accomplish and then just use common sense and say like, does this strategy align with what I want? Like, am I comfortable talking to tenants? No, then don't be a landlord. Or you can buy long-term rentals, but you have to hire a property manager. So I just think like really just analyzing what your strengths are, what your weaknesses are, what your preferences are is the best way to start. And I know people just want this like cookie cutter answer where you're just like, it's rentals, but there is no cookie cutter answer.

Starting point is 00:30:20 This is entrepreneurship. Every business is going to be different. And every business is going to be based on the entrepreneur at the head of that business. And so you need to sort of take some time and think about who you are and what you're going to be successful at. Brian, what do you think? I think try a little bit of everything, to be honest. I know everyone's like, focus, like, focus, focus, niche down, blah, blah, blah. I don't disagree with that once you figured you don't want to niche down on something that you're bad at, right? When I got into real estate, I obviously started the Airbnb thing.

Starting point is 00:30:48 I very much quickly realized I'm good at this and I went all in. However, even now seven, eight years into this thing, I'm trying hotels, I'm trying flips, I'm trying creative finance. I'm worse at others and better at others. But I'm trying it out and I'm still realizing, hey, you know, the rental game is kind of my strong suit. But I would never know that without just trying stuff. And I think you exactly what you said, Dave, like maybe you figure out that long-term rentals is something that you hate because you hate tenant management. Fantastic. Now you know what not to do. Go try something else. Go try wholesale and go try flipping. If you're really bad at that, if you lose money consistently at flipping,

Starting point is 00:31:27 well, maybe flipping is not your gift and you got to try something else. It's fine, you know, as long as you're willing to try and fail a couple times. I'll give some advice here. If you're someone who tends to be drawn to spreadsheets, you like the numbers, you like predictability. Dave, exactly. This is you, right? There are some strategies that you'll be more inclined to enjoying. So investing in syndication makes perfect sense.

Starting point is 00:31:51 Commercial property investing is very number heavy. It's about finding an NOI, finding a cap rate, and figuring out how to put a tenant in that property that has a lease that goes up over time. And once you've got it down, there's not a whole lot that you have to do every single day to oversee it. Some people like that. They want to aim very closely. They want to take one shot and they want to let it ride. If you're into that type of investing, you'll probably like mobile home parks more.

Starting point is 00:32:17 But as opposed to triple net investing in your commercial properties, there's going to be a little bit more interaction. So some people like numbers, but they also like something to do every day. So if that's your personality, mobile home parks, trailer parks, RV parks, those are number heavy as far as how you add value to them, but they also require more hospitality. So if you like putting energy every day towards improving your financial picture, multifamily apartment complex investing or some of the methods I just said are going to be more up your alley. Other people are a full-blown psychopath. They want every single day to be paying attention to everything that's going on in their properties. That's going to be your house flipper. These are the James Danards. He literally wants

Starting point is 00:32:56 to go to the place where he's buying appliances and price out what a stove cost here than what it costs somewhere else in town and he loves it and he's great at it. So that's a better strategy for them. If you're in the FI movement and you're big on defense, you make your own soap, you stitch your own clothing, you turn your own butter, you should definitely be house hacking. You should definitely be looking into 401ks. You should be looking at some of these ways that you can save more money. Your mind will love that stuff. Maybe rent by the room strategies. All right, I can maximize my ROI on this property if I rent out the rooms to other people. It's not complicated. I don't need to know how to use Excel really well. I don't have to go

Starting point is 00:33:31 get approved for $5 million mortgages, but I do feel like I have some control over my financial future by renting out individual rooms. And then lastly, if you're someone like Rob that enjoys hospitality, enjoys making people feel good, enjoys providing them with an experience, maybe you're a little bit more creative, short-term rentals and medium-term rentals are definitely going to be something that you like doing and you're going to want to scale. How do I do? Very good. Great. Can I add one more? Please. I haven't done it yet, but I'm reading a book on it and I'm really into the idea of private lending right now if you want to get to cash flow. Once you have your equity up, private lending offers in a really good way to earn a strong cash on cash return.

Starting point is 00:34:11 I think that's one thing I was going to tell people, you know, you don't have to go right into a flip or right into a wholesale or right into a short-term rental. I think you can shadow. I think you can partner with somebody that's maybe further along than you, but maybe doesn't have $20 to $70,000 to go out and flip the house. You could provide the funds and say, we'll partner on this 50-50 if you show me your ways. And I actually, when I ran out of money, I partnered up with several financial partners that were like, hey, I want to learn how to do this short-term rental thing. I'll pay for it all if you just teach me how to do it.

Starting point is 00:34:43 So I still think there's an entry point. Even if you don't know what you're doing, you can partner with people that do. That's such a good point, Rob. I think it's super important. That's a whole other topic about partnership. But I totally, totally agree, especially if you're trying to get into some new strategies that you haven't done yet. Just find a way to learn,

Starting point is 00:35:02 even if you're not going to make a ton of money off your first deal. Well, thanks for joining me today, fellas. I love this question. I'm glad that we got a chance to address something that everybody's asking in the forums. Everybody's talking about at meetups. This is the number one question that comes across is, how do I quit my job with real estate? We would love for you to get to that point,

Starting point is 00:35:21 but real estate was not created to provide a way to quit your job. It was created as a tool that will provide big wealth in your health. future. Another thing we didn't talk about that I just want to address quickly before we leave. There are ways to make money in the world of real estate that do not involve just the cash flow from the real estate. You can get a job working to help real estate investors like I do. You can become a contract, a property manager, a CPA, a real estate agent, a loan officer, a handyman. You can open a business that supports investors. You can get into consulting. You can be a bookkeeper. There's tons of needs and Lord knows that we all have them.

Starting point is 00:35:54 when it comes to helping real estate investors and business owners, that if you don't like the job you're in now, like when Brandon Turner was working at Coldstone Creamery, you can get a job that you like more that still exposes you to the opportunity to buy real estate deals. Well said. I was just curious how many different jobs you were going to name there. I wanted to see how long you could keep going. I didn't know how many it was good. I just kept reaching into my hat and pulling out rabbits. And I figured at some point I'm going to have to run out. And then I ended up grabbing Brandon's beard and pulling him out. And I said, okay, that's enough. We can stop going into that hat.

Starting point is 00:36:24 you've seen Forrest Gump, you know, and Forrest and Bubba are just like, he's just like naming all the different types of shrimp. Shrimp. I feel like that's what you're doing with all the different real estate jobs. Short-term rental shrimp, medium-term rental ship, financial shrimp, flipping shrimp, living, flipping shrimp, mobile home park shrimp, rehab. Yeah. This is going to be a whole podcast of you just naming jobs.

Starting point is 00:36:47 Join us for the next episode where David just lists out jobs. If we missed a job that you think should be covered or a strapped. that you were listening and saying, ah, how come they did mention this one? Let us know in the comments on YouTube what you think we missed and what questions you have. If you've got another question from the forums that you want to address, let us know that on YouTube as well. Our producer will watch that.

Starting point is 00:37:08 We just may make a show about it. And if you've got a second, please go give us a review wherever you listen to podcasts. They help us out a ton. And we would love you if you do it. You can find our information on the show notes, David Green, Dave Meyer, and Rob Abasolo, if you want to reach out and let us know,

Starting point is 00:37:24 you thought of the show. And keep an eye out for the next Bigger Pockets podcast episode. This is David Green for Dave Meyer and Rob Obisolo. Signing off. 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.w.com.

Starting point is 00:38:21 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.

BiggerPockets Real Estate Podcast - 919: How to Use Real Estate to Quit the 9-5 Grind

There aren't comments yet for this episode. Click on any sentence in the transcript to leave a comment.