BiggerPockets Real Estate Podcast - 922: Seeing Greene: Signs It’s Time to STOP Investing in Real Estate

Starting point is 00:00:00 This is the Bigger Pockets Podcast Show 922. What's going on, everyone? This is David Green, your host of the Bigger Pockets Real Estate podcast. Here today with a Seeing Green episode, and I'm joined by Rob Abbas Solo. We've got an awesome episode for you. If you've never heard a Seeing Green show, we take questions from you, our listener base, and we answer them for everybody to hear. Today's show starts off with a live question where we go back and forth with the caller.

Starting point is 00:00:26 And then we have some recorded and written questions that we share with everybody. We're going to talk about house hacking. We're going to talk about options to scale when it comes to house hacking. We're going to be talking about what happens when you hit lightning in a bottle and you grow a big portfolio and you're not sure what to do next. And we're going to be talking about if you should keep a property with a lot of equity and a great rate or if you should sell it and start scaling a new portfolio. All that and more in today's seeing green. Rob, how you feel today? I'm excited.

Starting point is 00:00:53 I'm excited for the curveballs that are going to be thrown our way. I'm excited to hit some home runs, hopefully for everyone at home. help them get a little perspective on how to do this whole real estate thing. Yeah, so let's see how Rob does when he takes his at-bats. Let's get into our first question today from Ethan. Oh, before we jump into it, just a quick reminder, if you ever want to submit your own questions for a seeing green episode, head on over to biggerpockets.com slash David.

Starting point is 00:01:18 And who knows, maybe we'll pick a rooski one of your cues. All right, our first question comes from Ethan here. Ethan's got quite the portfolio. 20 single family homes in Nebraska, two flips, a short-term rental in Scottsdale, a short-term rental in the Smokies, 11 single-family houses in Chattanooga, Tennessee, and 50 doors in Illinois, as well as a farm ground in New England and Kansas. England, I don't know if I left anything out there. Maybe you also own a private jet, some oil rigs, perhaps a yacht and put on peru. Maybe it'd be better to ask where Ethan doesn't have real estate. being diversified is always a good thing. I don't own anything in New England. That's Nebraska, but I'll have to take a look in New England. Good point there. That does make sense.

Starting point is 00:02:05 There's not a lot of farms I would imagine in New England. Nebraska does make a lot more sense there. I was also like, does that farmland go from Nebraska or New England to Kansas? It's like a giant farm. I'm in Vegas at a Keller Williams event and I have not been sleeping enough and it is very visible here. But don't worry. I am still awake enough to answer your question. So Ethan, and let me know what is on your mind? Simple question I get from my wife often. You know, I've been actively growing this portfolio the last decade. I probably have no end in sight as far as, you know, what is going to be the destination.

Starting point is 00:02:42 And my wife asked me, every time we talk about a property or even our existing portfolio is when is enough going to be enough. We have a big family, six little kids, oldest is 11, youngest is going to be three. here in about a week. So I understand those things are, there's a lot of expensive things coming down the roads with medical weddings, school. We go to a Catholic school here in Nebraska. So again, it's a high operating cost family. And I understand that and try and want to prepare. But she's very humble and very simple. And I know you guys are actively growing. It seems like those wheels never stop, kind of relatable to that. So curious, curious where the finish line is for you

Starting point is 00:03:24 guys. Well, let me ask you this. Are you still working a W-2 or are you like a full-time real estate investor? I do have a full-time job. I'm an independent contractor, but I do have a full nine to five job, yes. Wow. Okay, cool. And then what is your income from your real estate portfolio? I actually updated it today. My monthly cash flow is about $3,400. That's just in Nebraska. The other stuff is with the partnership, so it's him and I, so I didn't figure anything that into our monthly income. No worries. Well, I think it really depends, man. Honestly, on like what your goal is. And you can kind of start to sniff it out pretty quickly. Like, I talk to people, you know, friends in this industry that their goal is like, I want to be a billionaire. And I'm like, okay, well, that's, then I don't

Starting point is 00:04:09 know when enough is enough because you'll, it'll take a very long time to get there. But then there are people like me that I've realized there is sort of like this, there really is this moment where a certain amount of money doesn't really change happiness or anything like that. And so for me, I always find that where I'm trying to go is to where I could make the income that I was making at my full-time job in real estate. I'm not going to say passively, but consistently with doing some work. I would never really count on this idea of retiring and being completely passive in real estate. I think you'll still have to work for it. But I mean, it depends on how much you love real estate. And I understand your wife is wanting to keep it more simple. But if you feel like you want more out of this and you want to

Starting point is 00:04:55 keep doubling or tripling up where your income is, then you may not really be close to enough yet. I mean, I don't know enough about you to know this yet, but how much do you love real estate? And let's start there. I enjoy it a lot. I mean, honestly, I go back to the original Bigger Pocket Days a decade ago. And I was reading through some of the forums last night and some of my inboxes with guys and it's really kind of got to be fired up again, the interaction that we can find amongst the real estate space. So it is something I really enjoy, whether that be the tenant relationships or even just the finding new deals. I really like to travel. And I think that's one thing my wife, I know that she likes to travel as well. And I try and push her like these these future

Starting point is 00:05:40 opportunities are going to allow us to go wherever we want to. So that's one thing I try and push, kind of try and plant that seed a little bit and water it as much as I can. Sure. And the other thing I was going to ask that I probably should get some clarity on is like, do you want to work your job for the rest of your life? Because that's important too. Some people are like, I hate working for the man. I need to get out of this. And then there are other people that are like, yeah, I want to work my solid job for the rest of my life. And so I think that kind of factors into your decision a little bit too. Right. And I do have a great job, work for a great group of guys. So that is probably something. I mean, I would say normal retirement age.

Starting point is 00:06:16 you know, that 50 mid-50s range, which is going to be 20 years, which as fast as the life goes right now, especially with young kids, it's going to come quick. So I'd say 20 more years of that, you know, full-time job and I'll be ready to, I'll be ready to be done. Yeah. So then honestly, this is like my favorite scenario to be in, to be completely honest with you, because there's so many people that want to replace their salary with real estate, quit their job. And if you make $50 to $100,000, that's really hard. hard to replace with real estate. It's like really, really, really hard. You're not super far off from that, but you would have to triple how much you're making right now to make $10,000 a month.

Starting point is 00:06:55 Where the power of real estate comes in for many, many people, especially in your circumstances, if you're okay with working, you know, for the rest of your career and working a nine to five and that's where you're going to make your money, then you're in such an amazing spot because if you have an extra $3,500 bucks, let's say you scale that up a little bit to $5,000 a month coming into your pocket, that's life-changing money for a family. That is vacation money. That's where the fund of real estate starts to really ramp up because you actually have cash flow to use for expendable income and vacations and everything like that. And then where it all comes to ahead is when you're 65 and you do retire from your job, and not only did you make $5,000 a month

Starting point is 00:07:36 doing real estate, you now have this portfolio of 20 single family homes and this and that and all that stuff that's all paid off worth multi-millions is my guess. And then you can sell all that and retire a millionaire. That to me is like the best place to be versus the person that's trying to get to $10,000 a month in real estate and wants to quit their job tomorrow. So I actually think you're probably going to find a lot more happiness being a small and mighty investor as our friend coach Chad Carson, you know, would talk about. And we did an episode with him back on episode 795 talking about his book, Small and Mighty. That's awesome.

Starting point is 00:08:13 Good perspective and definitely relatable. I've always said it, the real estate I don't think provides my family any value, even when I'm, you know, whether it's on our deathbed or down the road. So I'm sure the plan long term would be to start selling. A house at a time will pay for a wedding, hopefully, at that point. Absolutely. I mean, you buy one $150,000 a house and, you know, 15 years from now, I'd like to think that that house has been paid down considerably and has it

Starting point is 00:08:44 appreciated a lot more as well. And at that point, maybe you can sell it and use some of those to fund those things. So I think I find happiness with real estate funding the life that I want versus trying to like chase some big arbitrary goal of, I don't know, like I said, a billion dollars. I have a lot of friends that want to be billionaires. I'm like, why? If you make a million a month or $100 million a month, your lifestyle probably isn't going to change all that much if you're actually a prudent investor and you are frugal. If you got to a billion dollars, you know, I don't know. To me, it all, it's like, it becomes this really weird competition with real estate investors. And sometimes I'm just like, honestly, I'm pretty good where I'm at.

Starting point is 00:09:24 I like to be happy in real estate. And I think for me, the whole enough question really comes down to at what point does real estate make you unhappy? And that's when real estate is enough. That's awesome. That is so very, very solid insight. So it helped this year we were able to travel to Scottsdale and stay in our own Airbnb, my wife and I and our two friends. I do think that provided a good insight for her to say, okay, maybe this is why we're doing it. But I'd love to have an Airbnb or a how I'm in every travel, you know, high travel or high vacation place in the country. That'd be a future goal of mine. Well, and I could have given you a much shorter answer and just said, enough is when your wife says it's enough. And that's the right answer to that question. But yeah, I think you have to kind of throw her bone and make sure that she's down for the ride to. Otherwise, yeah, there's a turning point with real estate where it's like, man, I'm making $3,400 a month to, oh, I'm only making $3, $3,400 a month. And you want to try to stop that second sentiment from ever coming in. Right. Understood. All right, Ethan, do you mind if I offer you another perspective here? Of course.

Starting point is 00:10:35 All right, before I do, let's take a quick break and we'll come back to hear my thoughts. 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, rehabs, 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. claim can erase years of returns. If you own a rental property, don't assume you're covered.

Starting point is 00:11:05 Have NREG review your insurance with someone who gets investing at NREG.com slash BPPod. That's NREIG.com slash BP pod. 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.

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Starting point is 00:12:19 That's bill.com slash bigger pockets. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress? Here's a better question. What if you could buy brand-new construction homes, 10% below market value, and the best markets across the country, without making real estate your second job? That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company, handling everything for you.

Starting point is 00:12:47 In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade, helping thousands invest smarter. If you want to do the same, visit biggerpockets.com slash retirement to learn more. Did you know your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids.

Starting point is 00:13:14 Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money. Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all.

Starting point is 00:13:52 A co-host can handle guest communications, it can manage reservations and keep things running smoothly so you don't have to, to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taken care of and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. And welcome back. We're here with Ethan, who's got a lot going on in the real estate world and he's trying to figure out when enough is enough. When we say things like like when is enough enough? The answer is typically like I have as much as I need. How much more do I need? And it starts to feel like it's a greedy. And then implied in that is life would be better

Starting point is 00:14:37 if I wasn't doing this, which oftentimes very well may be the case. It's like I'm not spending as much time with my kids. I'm not doing as many things as I could be doing that I want. And that is a great question to ask is like, is accumulating more real estate the best move for my specific life? But for a lot of people, I think the assumption that it's like what I have is good and it could only get better is erroneous. I went through a two-year period. I'm kind of barely now climbing out of it, it looks like, where business got decimated, my portfolio got decimated. I was the victim of like a lot of property fraud where people stole titles to my properties. That forced me into a 1031 where I had to buy a lot of real estate in a really short period of time.

Starting point is 00:15:22 right when I did that because I had a lot of burr properties projects going on, interest rates doubled. Everything went wrong at one time. And what had appeared at one point to be way more reserves and way more conservativeness than what I would have possibly needed actually became, thank God I have that because the plane would have crashed if I didn't have a buffer that was that big. And everyone had asked me that same question. Well, David, when is enough enough? Why are you working so much?

Starting point is 00:15:48 Why are you doing this? And I think in my gut, I knew the answer and this confirmed it. It's because the more real estate that you accumulate, the more risk you're taking on. We don't talk about it like that a lot of the time. And it doesn't get presented that way because the market's done nothing but go up. We've had a great 10-year run where everything just went up. And so you don't think about the risk you're taking on because it rarely ever occurs. But when those rates shot up really quickly, it got exposed that, oh, this is actually a risky thing.

Starting point is 00:16:14 And things can go wrong. And it was to me, it was like a perfect storm. I hope to God, nobody else ever has the perfect storm. of like what I had, but I am very glad that I had a lot of equity in my properties. I am very glad I had way more in reserves than I thought. I am very glad I was still working and I had not retired and I didn't have the ability to make money through stepping up, you know, efforts with whether that was flipping houses or selling properties or running businesses more. I just want to put that out there for you and for everybody else. If it's just getting more to get more, it's a good question

Starting point is 00:16:43 to ask. Why am I doing this? But if it's getting more to offset the risk that we've taken off building big portfolios, well then I would say keep working, keep saving, but do it in a way that doesn't take away from the goals you have in life, your family. Do the things that you like doing, do the things you enjoy doing, but don't just be like, well, should I quit the whole thing? I get that. Yeah, and that's been a big part of why we started to go out of state. It was, and it was through a lot of the stuff, again, through bigger pockets that I realized you, I thought I had to be able to touch it, see it, feel it, to invest in real estate, and quickly realized that wasn't the case. So we've been kind of backing off what we have here in Nebraska

Starting point is 00:17:22 and moving out of state. And my wife knows I can't touch those. So that's made her happy on that side of it. Yeah, that's great. Rob, is that, I mean, you're scaling probably one of the fastest real estate investors slash content creators out there on the interwebs, right? Is this something you've thought about as much as you're taking on right now and as fast as things are growing, what you're doing to kind of counter some of the risk that you're taking on as your portfolio grows as fast as fast as is. Yes, David. This is. all I think about, especially as someone that's looking at getting into developments and buying developments that are typically three to $10 million at a time. What I've learned is that we have

Starting point is 00:17:57 this idea that we want to make cash so much on the front end and like cash flow, cash flow, that we never want to hire people because when we hire people, we see that as making less money. But what I'm discovering is to really scale, you do have to hire people, make less money on the front end. But in the long term, you'll actually build so much more wealth because of what you can do with teams. And that's the thing that I've never really unlocked building a 40-unit short-term rental portfolio is I was just doing it all by myself and I was too greedy. And now, as I've learned, if I can bring more people on, be a little less greedy right now, it'll actually set me up for the rest of my life. So yes, existential question that you just asked me there, David, but it's the

Starting point is 00:18:37 only thing I think about whenever it comes to real estate. Well, Rob, you need to read scale. If that's where you're at, the book that you talk about all the time and haven't actually read. I guess so. I guess so. Ethan, anything we can tie up for you there? I do have one last question, especially Rob, you mentioned, you know, these bigger portfolios or bigger books or properties that you guys are buying. Do you get any sort of anxiety or like buyers remorse when you get the acceptance on an offer or if you sell a property? It's like every time that offers accept, it's like this rush of dopamine. And I can't decide if it's fear or anxiety or joy. but it's the same thing every single time. I'm just curious in your guys' experience if that's the same thing. No, I'm usually pretty relieved, but I'm a little scared, but I'm always happy that I did it. That little

Starting point is 00:19:24 buyer's remorse is really short-lived and will never compare to whatever the opposite of buyers remorse is. When you miss a good deal that you know was in front of you, that's a lot more painful to see this property that I just stalled on for like 12 hours or a day and it just went because I knew deep down it was a good one. and it flew off the shelf and I'm like really sad at myself and disappointed that I didn't move faster, that's a way worse pain than the short-lived buyer's remorse that I'll have on having an offer accepted. That's common. Everyone has that. But for the most part, the excitement typically takes over pretty quickly. Ground on. Good. All right. Thanks, Ethan. Keep us up to speed with what goes on there, man. Appreciate you. Thanks, guys. All right. Thank you, everyone for submitting your

Starting point is 00:20:10 questions. We would not have a show without you. So give yourself a little pat on the back for making all this possible. And remember, I want more of them. So head over to biggerpockst.com slash David and submit your questions. And who knows, maybe we can feature you on a future episode of Seeing Green. All right, if we've changed your life or if you're just enjoying this show, let us know. Make sure that you like, comment and subscribe to the channel and let us know on YouTube what you think about today's show.

Starting point is 00:20:35 All right, moving on. We have an Apple review to go over and then we will move on with the show. The review says, the more you know, the better you do. I've been listening and learning from the bigger pockets podcast for the past three years. This free resource has led me to making some really solid real estate decisions. Did I say it's free? I share the podcast often and I really hope that others see the value in this podcast from Great B-8 via the Apple Podcast app.

Starting point is 00:21:00 Well, thank you for that. That's awesome. I remember Rob when you first stumbled upon our show and we had you on and you were an amazing guest and you thought that I hated you, but I didn't. I thought you were really cool. And you had similar things to say. So if you, did you ever leave us a review, Rob? Curious.

Starting point is 00:21:15 I was too hurt. I was like, David doesn't like me. We got over that. Now we're besties. Besties trying to change the short-term rental landscape one property at a time. But how funny would that be if I went and left us a review right now? Hey, I've been listening to the show for five years. This is a five-star show.

Starting point is 00:21:33 It's my favorite. Rob is so handsome. That would be funny. You should do that. You should leave a review and say why you're better than David. All right, everybody, we hope that you're enjoying the show so far. We're going to take a quick break, and then we're going to be back with a question from Zach about what to do after his house hack. There are two kinds of real estate investors, those who have reviewed their insurance, and those who think that they have.

Starting point is 00:21:54 Most don't realize their coverage wasn't built for how they actually invest. Vacancy periods, rehabs, 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 NREG.com slash BP pod. That's NREIG.com slash BP pod. People love to call real estate passive income,

Starting point is 00:22:27 which is interesting because most of the investors I know are very busy. Busy finding deals, busy managing teams, busy worrying they pick the wrong market. Rent to retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value in top rental markets across the country. Their local teams handle the build, the property management, and the details, so you don't have to. In some cases, investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with BiggerPockets for over a decade, and if you want to learn more, visit BiggerPockets.com slash retirement.

Starting point is 00:23:05 Did you know, your house gets bored when you leave? I can't actually prove that, but it probably misses out on the action, the footsteps, the late-night fridge raids. Yeah, when you're gone, your place is basically on unpaid leave. It's sitting there in the dark thinking, I could be contributing right now. Your side room wants a side hustle. Even your Wi-Fi is like, we could be networking. You're on vacation, spending money like it's a sport, while your staircase at home is fully capable of sending your income upwards. Here's the twist. You can go on a trip and actually earn money.

Starting point is 00:23:42 Airbnb makes that possible with the co-host network. If you're away for a while or have a secondary property, you can hire a vetted local co-host with real hosting experience to handle it all. A co-host can handle guest communications, it can manage reservations and keep things running smoothly so you don't have to check your phone between beach days. That means less stress and more time enjoying your trip. You can relax, knowing guests are taking care of, and your place is in good hands. You travel, your house works. Everyone wins. If you're ready to host but could use some help, find a co-host at Airbnb.com slash host. 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

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Starting point is 00:26:14 podcast. That's Indeed.com slash rookie. Terms and conditions apply. Hiring Indeed is all you need. All right. And we're back. Thanks for sticking around. Zach's got a question about house hack strategy. And Rob and I are going to get into it. Let's hear Zach's question. Hey, David. Zach Schucheski here 27 years old. I'm a biomedical engineer by day and I try to be a house hacker by night. I just bought my first single family home in Dearborn, Michigan. Looks like a good market for medium term. There's a hospital, DTW airports right there and just general visitors of Michigan. My question is, after this rent by room, house hack strategy, do I, shift towards Airbnb, which seems like a market could get me about 2x, what a long term can get.

Starting point is 00:27:10 Where I understand recommended 3 to 5x, do I rent my room continuing once I leave, rent out my area, getting around the same with arguably less work, or do I just go to a long-term rental sacrificing some long-term cash flow that I would need to supplement my current job. Appreciate it to help. Always awesome. Thanks. So with his buffet of options, where should he start? So basically he could just hit the easy button right now, replace himself with someone else to rent his room in that home and cash for like $800 a month. A little bit more than that. But I think that's a pretty good option. So you're saying that he should continue to rent by the room? I think so. I mean, if we examine his other options, he could do a long-term rental. Long-term rentals in his area.

Starting point is 00:27:56 He mentioned our $1,500 to $1,800 to do that. So he wouldn't make as much. money doing that. And then short-term rentals in the area are looking at around a 31% occupancy. Again, this is information that we have on the back end. So for him to try to make money on Airbnb would be tough. What most people don't consider with short-term rentals is that there's a huge operational expense that goes into running a profitable short-term rental, whereas long-term rentals are just fixed expenses for the most part. Short-term rentals, you start adding cleaning and what you pay to Airbnb and Verbo. And it really takes a lot more money to be profitable in an Airbnb than a long-term rental at first glance.

Starting point is 00:28:36 So I don't know if that's going to be his best route. And then, of course, you can always go the medium-term rental route. A three-bedroom in his area goes for about $2,600 a month. However, it's not like you can just snap your finger and fill your place with the midterm rental tenant. Like, it's hard to do that. And you really have to work to find those tenants. And so because it seems like the safest option he has is to rent by the room, I would go that route. He's making a little less than he would with the midterm rental,

Starting point is 00:29:04 but he won't have to work super hard to source that midterm rental tenant. So I think it's pretty clear. He just transitions from House Hack to rent by the room. You know what I love about your analysis there, Rob? You went over all the options and you wait each of them on their own merit. And it became pretty clear at the end of the day, hey, there's a lot of vacancy as a short-term rental. Hey, traditional rentals aren't bringing enough money. The rent-by-the-room strategy here is like the perfect answer for this property. And then, And it's not that much work, especially if he goes forward with economies of scale. He gets another house hack.

Starting point is 00:29:36 He does the same thing. He rents by the room. He's got all the same systems he's using with his first property that he could just transfer over onto the second one. And then he could do it again and then again and then again. Now he's got five houses he's doing rent by the room. Now there's enough income that you can hire a person to sort of manage that little mini portfolio and just handle whatever little disputes come up with all the tenants.

Starting point is 00:29:56 And it's going to be the same disputes that happen all the time. So that person isn't going to take a ton of time. And you have a pretty efficient system that allowed you to scale five properties. And if you hit the point where you're like, you know what? It's too much work with all these rooms that I'm renting. Fine. Sell all five 1031 into a small little apartment complex by a 10 unit place somewhere and start over scaling again with these smaller little houses doing the same thing that you'll move

Starting point is 00:30:18 into hotels. This is not a bad way to get started in a tough real estate market, building a portfolio and creating some equity. Yeah. And he's pretty much already doing the rent by the room. all he has to do is put one tenant in there. Easy peasy. Go make your, you know, your extra $880 a month, my man. That seems like a pretty solid plan to me. This next question comes to us from Robin in Idaho, who posted this question in the Bigger Pockets forums. Her question, should she sell her primary

Starting point is 00:30:44 residence and use it as equity for her rentals? She says, we have a home worth about $650,000. We owe $350,000 in a place where we couldn't afford to sell and buy another property. They got it back during COVID times, interest rate was 2.8% and it was before a crazy boom out in, out in Northwest Idaho. She says, we're stuck because my husband makes just enough to live. We've cut every possible expense and really want to acquire rentals but can't find the capital. We have $250,000 in equity in the home after realtor cost. Is it crazy for us to sell, take the equity, and move to a better cash flow market like Atlanta or Fayetteville, North Carolina, and start our rental acquisition there? And then she asked,

Starting point is 00:31:27 what are some great, even if they're crazy, strategies for building the real estate empire with $250,000 if we could go anywhere and we will do anything? All right. That's an interesting question. You know, short answer here, I don't think it's crazy, actually. When I started my whole bur run in North Florida, that's where I'd buy most of them, I sold a property in Arizona that had appreciated more than the rents had kept up with it. It was basically a property that had a new housing development.

Starting point is 00:31:57 that was being built close to this house. And so the value of my house kept going up because the comps that were being built were brand new homes that were more and more expensive. But there were so many of these new homes that were built that were bought by investors that I really couldn't keep getting tenants in my area or rents to keep going up because they had too many options. So what I found is the value of the home went up faster than the rents could keep up with. So scrolling around in the forums here, some of the answers were it sounds like they're

Starting point is 00:32:24 living on a single income. So one solution is get a job. job and work on that double income to save up money so that you can buy another rental. Some other people said you should house hack. And then other people said it's too risky right now to sell. I'll give you my take. First and foremost, I think that, I mean, I hate to sound like a broken record, especially since we just did a whole question on this.

Starting point is 00:32:48 I love house hacking. And I think for you, getting a job might be pretty tough. Maybe you're accustomed to a certain lifestyle. I would go the route of figuring out how I can make money the fastest. There's two ways to do that. One, you can house hack, rent out a room in your property. Maybe that makes you an extra 300, 400, 400, 500, 600, I'm not really sure in that market. But let's just call it 500 bucks a month. That right there, that helps. It's not going to be what turns into a real estate millionaire, but it definitely puts a dent in things over time. That's one. Two is, I probably would try to get some

Starting point is 00:33:21 sort of extra job. You don't have to go full-time. You don't have to go back to corporate life. You don't have to work a nine to five. Maybe if it's even 10, 15, 20 hours, that alone right there, the money that you make there can compound pretty quickly with the money that you're making on a house hack. I'm not a big fan necessarily of selling. I mean, you always have this age-old question of like, well, if I sell it, where am I going to go? And you mentioned that, hey, we live in a place where we can't afford to sell and buy another property. Well, if that's the the case, you kind of have this once in a lifetime opportunity to own this house that you can afford to live in because you bought it at the right time. That to me is always going to be the

Starting point is 00:34:00 safest, more conservative route. I'm an aggressive investor by nature, but I always tell people, if you get this magical primary residence with the 2.8% interest rate, that should be your backup plan. That should be your rip cord in the case of like everything goes wrong. You can sell this property and cash in, you know, $250,000 if you really, really, really needed to. So for that reason, I'm always a big advocate of just hanging on to it. I know it's not a super sexy answer to say, hey, get a job, house hack, make an extra $10,000, $20,000 a year. But, you know, it's not a, it's not a sprint. It's a marathon. And if you save up $10,000 this year, house hacking and getting another job and you do that next year as well, well, great. Two years of hard work,

Starting point is 00:34:44 saving and preparation can actually put you into a position where maybe you do invest in a different smaller market where 40,000 bucks or $50,000, depending on what you can save up, does allow you the luxury of buying another rental property. But my answer is, if you sell it, where are you going to go? So for that reason, stay there. 2.8% interest. That's a, that's a beautiful thing in 2024. Don't mess with it. What do you think, David? I mean, that's my approach. I think a 2.8% interest rate in this world in 2024, it's the most beautiful thing ever. I think getting lucky and buying at the top of a boom is like amazing. And I think that they should build their net worth based on this amazing purchase that they made in 2021 and not sell it.

Starting point is 00:35:27 I know it's a bit of a conservative answer, especially considering I am a little bit more aggressive, but that's how I feel. Sue me. All right. I'm going to play devil's advocate here. I had a property in Arizona that I bought and then they built a housing development right next to it. They built more and more expensive houses making the value of my house go up. but a lot of those houses were bought by investors. So the rents never went up on my house because they couldn't raise them too high because

Starting point is 00:35:52 they would just go rent one of the new homes. So I had growing equity without growing cash flow. I sold that property. I took the equity. I took it into North Florida and that's what was my first bur. I pulled the money out. I bought my second burr and I burred up to about 40 properties, maybe 50 at one point in that area, off of that seed money from the one thing.

Starting point is 00:36:14 So even if they do something like that and they, lose that 2.8% interest rate. If you can turn it into a whole portfolio of other properties, it can make sense. The beauty of this dilemma is both options work. You keep a great rate. You keep a lot of equity. You win. Or you sell it and you take 300 grand, 250 grand into another market. And if you can execute growing that capital, you win. I think the key here is, are there other opportunities and can you execute on them? Do you have the experience of an investor? Do you know what you're going to be doing? Do you feel confident in what you're going forward in? Or are you kind of just like slow and steady wins the race and you still need to slowly acquire properties.

Starting point is 00:36:51 That's what I'd be looking at here. This is not the market where you can just go throw a quarter million dollars into something and trust that it's going to work out well. There's a learning curve to whatever strategy you get into because there's a lot more competition. So in today's show, Rob and I talked about when enough is enough, when you should keep scaling and how you should keep scaling, which is great to know in case you ever hit that great run where you buy a whole bunch of property, including a farmhouse in New England. We talked about how to evaluate your opportunities after you do a house hack. That's something to think about.

Starting point is 00:37:23 Once you get the first one down, where do you go from there? We talked about selling a primary resident to build a rental property portfolio. And we talked about Rob's perspective as seeing solo. We also got into what's going on in Rob's life and in my life and in what you can do to support us. And we want to know what can we do to support you all. So let us know in this. YouTube comment what we at Bigger Pockets can do to help you with your goals. We will read those and we just may put those in a future episode of Seeing Green as well. Remember to submit your

Starting point is 00:37:52 questions at BiggerPockets.com slash David so we can put you in a future episode of Seeing Green. And I'm going to let you get out of here. This is David Green for Rob Seeing Solo Abasolo, signing on. Do you ever notice how every passive investment somehow turns into a very active lifestyle, active spreadsheets, active phone calls, active stress. Here's a better question. What if you could buy brand new construction homes, 10% below market value in the best markets across the country, without making real estate your second job?

Starting point is 00:38:41 That's exactly what rent-to-retirement does. They're a full-service, turnkey investment company, handling everything for you. In some cases, investors get 50 to 75% of our down payment back at closing, plus interest rates as low as 3.75%. They've partnered with bigger pockets for over a decade, helping thousands invest smarter.

Starting point is 00:39:01 If you want to do the same, visit biggerpockets.com slash retirement to learn more.

BiggerPockets Real Estate Podcast - 922: Seeing Greene: Signs It’s Time to STOP Investing in Real Estate

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