10 Things We Wish We Knew Before Buying a Rental Property

Dave Meyer:The biggest risk in real estate isn’t buying the wrong property. It’s never buying it all. The perfect rental property, it does not exist and waiting to find it is costing you thousands of dollars per month. Most beginners spend months or even years stuck in analysis paralysis. They’re waiting for the perfect deal, the perfect time, or the perfect market. Meanwhile, they’re missing out on years of appreciation and cashflow. But right now, we’re going to tell you the 10 things we wish people had told us before we bought our first rental properties, so you can stop overthinking and start building wealth. If you’re watching this video, you’re probably anxious about pulling the trigger. You’re worried about making a mistake, buying the wrong house, or losing money. I’ve bought dozens of rental properties I’ve been investing for 16 years, and it took me a long time to learn the principles to grow a successful business, but you don’t have to wait.Here are 10 things about rental property investing we wish we knew before we got started. Welcome to BiggerPockets. I’m Dave Meyer. He’s Henry Washington. So Henry, start us off. What is the number one thing you wish you knew before you bought your first rental?

Henry Washington:The number one thing I wish I knew was that goals should dictate your strategy, not your strategy dictating your goals.

Dave Meyer:Yes. Yes. Thank you.

Henry Washington:I hear all the time from investors, “I want to be a house flipper,” or, “I want to be a landlord,” or, “I want to operate short-term rentals.” But why? But yeah, but why? All of those things are exit strategies. They’re ways to monetize your real estate deal, but the way that that money comes in may not actually fit your goals. And so getting started, I know it sounds cliche, but having your goals clearly lined out in your head should help you pick the strategy or the exit strategy that you use because your goals should be a function of how much money you want to make and in what timeframe you want to make that money in. And not every strategy is going to fit a particular set of goals. So if you’re somebody who’s saying, “I don’t need cash flow now. I need to supplement retirement.I need cash flow later.” Well, you’re probably looking at some strategy that involves you buying established good assets in parts of a community where there’s going to be appreciation. You may not get the best dealer cashflow now, but in 10 to 15 years, 20 years, those things could be close to paid off and you’ll have great assets. But if you’re somebody who’s like, “I need large sums of money in short periods of time,” you may need to look at flipping a house. And then you look at where in the country can you do that strategy. I think people do this backwards all the time. They say, “I want to buy cash flowing assets in a cashflowing market, but they don’t have any money and they need money sooner than later.” Well, then you probably don’t need to go buy houses in Cleveland. You probably need to look at flipping house, maybe where you live.

Dave Meyer:For me at least, real estate is a means to an end. And if you don’t know what the end is, how are you going to figure out what the means are? There are probably some people out there who invest in real estate because they just love real estate. I like real estate, but what I love is the stuff that real estate gets me, the financial freedom, the time freedom, that kind of stuff. That’s my actual goal. My goal is not to own 10 houses. My goal is to have more flexibility, to have more time with my family, to do the things that I love. And so I choose real estate investing strategies that support that. That’s why I don’t flip houses because it would be the opposite of what I want because it’s too time intensive for me given where I am in my life.

Henry Washington:Absolutely. You’re right. If you’re looking for freedom, the strategy you may pick can be very labor intensive, even though it might hit your financial goals. So you need to think about your lifestyle as a part of your goals as well, or else you just build yourself a job where you’re working more hours in your real estate business than you are in your day job anyway.

Dave Meyer:100%. Everyone wants to jump in and I get that sentiment. You should be excited about this. It’s fun and it’s empowering, but take a minute, take an hour and just think about exactly where you want to be. And I promise you, every decision you make for the rest of your investing career will be easier if you just think about this upfront.

Henry Washington:If you take your goals, once you have them, take them, write them down and stick them where you can see them often. I have sticky notes with my goals on it. They were all over my shower when I first got started. But what happens as an

Dave Meyer:Investor- Is sticky notes in your shower? Oh

Henry Washington:Yeah, it’s awesome.

Dave Meyer:Does that work?

Henry Washington:That’s my best ideas. I can’t

Dave Meyer:Lose a

Henry Washington:Good idea because I’m taking a shower. I got to write it down.

Dave Meyer:Your wife must hate you.

Henry Washington:But seriously, stick them everywhere because one thing that happens as an entrepreneur or as a busy person in general is you get decision fatigue. And then you sit here spending so much time thinking through something and it’s really easy to just look at your goals and say, “Okay, is the decision I’m trying to make aligning me to my goals?” If the answer is yes, then it helps you make that decision. If the answer is no, you can literally forget about it. So it’s like your North Star treat it as such. Put it where you can see it, use it to guide your decisions. Dave, what you got for number two?

Dave Meyer:Number two is you are an entrepreneur, not an investor. I know this is going to make people mad. I know people are going to get mad. Real estate investing is not pure investing. It’s not opening up Robinhood and buying stock or cryptocurrency. You are starting a business. This is entrepreneurship and you have to treat it as such. You have to work. And that is just an inevitability of real estate investing. Maybe one day you do what I do now, which is mostly passive investing, it’s still work. I still spend time on my business every single week. It’s not a lot of time, but it is still time. It is not actually passive. And I think for people who are starting out this idea that you’re an investor and you’re just … Investing just means putting money in someone else’s business. That’s not what you’re doing.You’re putting money in your own business. And even though we call it real estate investing, I think it really helps to think of yourself as a small business person, as an entrepreneur. And that puts you in the right mindset to do what it takes. This isn’t passive. You have to go out and do the stuff to make yourself successful.

Henry Washington:Investing in real estate involves you having a customer, an end client. And you have to provide them a customer service. You have to provide them the product or service you’re promising to provide them. And then you also have to do what most business people do in businesses outside of real estate, which is strategically plan your business. And that’s not something that you think about when you’re first getting started.

Dave Meyer:Which is true about your goals. If I go out and buy Tesla stock, I don’t have a goal for my stock. You are playing- Make money. Yeah, exactly. This is a good goal. But yeah, this is the reality of it. But it’s also the opportunity and the cool part about it. You are not passive. People knock on real estate. They’re like, “It’s not passive.” Well, that also means you have an opportunity to turn into anything you want it to be. You can create and craft a business that supports your lifestyle, that highlights the things that you’re good at, that avoids the thing you don’t like doing. That’s what’s so cool about it is that you get to design the business that gets you the lifestyle that you want.

Henry Washington:And the not passive part, the active part is actually what helps you mitigate the risk. When you’re working in stocks and crypto, you don’t control the decisions these companies make once you buy the stock. But in real estate, you control a lot of the levers. You get to choose what to buy, where to buy, how to buy it, how much to spend, who gets to live in it, what kind of finishes you put in it. You control the risk levers, but that control comes at a cost. It comes at a cost of time.

Dave Meyer:You are investing and betting on yourself instead of someone else.

Henry Washington:Absolutely. All

Dave Meyer:Right. So that’s number two of the 10 things we wish we knew before we bought our first rental properties. Henry, what’s number three?

Henry Washington:Number three is you’re not going to go broke on a single family home. Look, real estate is scary. It is. Buying an asset. Most people’s largest expense of their life is buying their home. And now you’re doing this as a sport. It’s a business for you. Now you’re doing something that people wait their whole lives to be able to do. They save up all this cash. I get how scary and overwhelming it can be. And also, yes, you’re borrowing money, you’re leveraging to buy this asset. That’s also scary because if you screw up, now you’re in debt. So it’s this scary thought of like, I don’t want to put myself in financial ruin. At the end of the day, that’s what people are really scared of when they’re first getting started. But that’s what I love about being able to buy single family homes. Now I get it.Single family homes are very expensive in certain markets and not as expensive in other markets. But if you follow basic real estate principles, which is buy at a discount, buy in an area that people have a desire to live in, buy a property that’s in demand, you protect yourself pretty heavily. And can you make a bad decision that’s going to cost you some money? Sure. Can you make a bad decision on picking a contractor that’s going to hurt your business? Sure. But the likelihood of you going completely bankrupt when you’re starting out with a three bed, two bath, single family home in a great neighborhood is probably pretty low. I’m not saying go buy a bad deal. And I’m not saying just go buy anything. What I am saying is to check yourself when you’re feeling that fear of like, “Man, should I do this?” You get to control some of these levers. So if you’re scared, start small. Start with a smaller single family home in a neighborhood where you know people like to live in a place where you know that the market is appreciating with a mortgage that you can afford and plan for the worst case scenario. If I buy this asset and I don’t rent it for what I want, can I sell it or can I rent it and can I cover the overage if it doesn’t work out? And if the answer to those questions are yes, you’re going to be fine.

Dave Meyer:I think a lot of people maybe around our age grew up through 2008. Feels like housing and real estate is super volatile and risky. But actually when you look at it, the risk of going to zero is extremely small. I’m not going to get into it because you’re going to make fun of me, but I actually calculated the risk of it. It’s very- Of

Henry Washington:Course you did.

Dave Meyer:I did. It’s in my book. But it’s way lower than stocks or anything else. And I think I find that comforting. Yeah. Could you lose a little money if you sell it and buy it an inopportune time? Of course there’s risk in real estate investing, but especially with single family home, the demand is extremely high. The risk that you’re going to lose it all is extremely low. And I personally find that comforting because as we talked about, this is entrepreneurship, the risk of going to zero in other businesses is very high. You start a restaurant, you start a store, a failure rate is super high. Real estate’s actually pretty forgiving. And it doesn’t feel that way because it’s capital intensive, but when you actually look at it, it’s pretty forgiving.

Henry Washington:I was talking to an investor when they were first getting started and they were like, “I’m so scared. I don’t know if I should buy this duplex, yada, yada, yada.” And I was like, “Man, it’s a duplex in Northwest Arkansas. In five years, you’ll look like a genius.

Dave Meyer:Just

Henry Washington:Buy the duplex.” And in real estate, you don’t really lose until you sell at an inopportune time. So your goal is to figure out, can I afford to hold this if it gets bad? And if you can, you’ll look brilliant in five to 10 years. Just buy the asset.

Dave Meyer:Yep. 100%.

Henry Washington:Okay, Dave, what’s number four?

Dave Meyer:Number four is no one will ever care as much as you do.

Henry Washington:You’re right. No one will care as much as you do and we’ll hear about that when we get back from this break. As a real estate investor, the last thing I want to do or have time for is to play accountant, banker, and debt collector. But that’s what I end up doing every weekend, flipping between a bunch of bank apps, bank statements, and receipts, trying to sort it all out by property and figure out who’s late on rent. But then I found Baselane and it takes all that off my plate. It’s BiggerPockets official banking platform that automatically sorts all my transactions, matches receipts, and collects rent for every property. My tax prep is done, my weekends are mine again, plus I’m saving a ton of money on banking fees and apps I don’t need anymore. Get a $100 bonus when you sign up today at baselane.com/bp.BiggerPockets ProMamers also get a free upgrade to Baseline Smart. That’s packed with advanced automations and features to save you even more time. All right. We’re back on the BiggerPockets podcast and we’re talking about things we wish we knew before we got started investing. Dave says no one’s going to care as much as you.

Dave Meyer:That’s right. This is actually one of the best pieces of advice I got before I got into real estate investing, but I didn’t apply it to real estate investing. I’ve started a bunch of businesses. I’ve been pretty entrepreneurial my whole life. And I had started a tech company and I was meeting with this advisor and I was basically just complaining about how a business partner of mine and a vendor I was working with and they just weren’t putting in the hustle that I was putting in. And he was like, “You’re the founder of the business. No one is ever going to care as much as you. It doesn’t matter what you pay them, how much you talk to them, how well you treat them. It’s your business and no one is ever going to care.” And since then, I’ve sort of developed this mental model of every degree of separation you get from you, people just care less and less and you have to hold on tighter and tighter.So if you have a team, a great agent, property manager, they’re going to care, but they still don’t care as much as you. And then if they sub something out to someone else, they’re not going to care that much. And if they sub it out, they’re not going to care that much. And ultimately, I think the lesson is the buck stops with you. That is ultimately what you have to accept if you’re going to get into this business, is that you can hire people. They might be well intentioned, but they have other things going on in their life and it’s up to you to keep the business on track. And if you’re not willing to do that, it’s probably not the right business for you.

Henry Washington:I learned a very similar lesson from my property manager and I basically said the same thing to him. It’s like, “I don’t want to turn over my properties to property management because you’re not going to care about my properties as much as I am.” And he said the same thing. He was like, “You’re right. I am not going to care, but I am well positioned to be more efficient than you in operating these.” And so I found trust in knowing that this guy is going to operate my properties as efficiently as possible because that’s what he takes pride in. And no, he’s not going to care about as much as I am, but the efficiency is what was important there. So find people who you want to work with who have a common goal with you. And if that common goal suits your business needs, then you can trust in that because you’re right, they’re not going to care as much as you do.

Dave Meyer:Yeah. I think property management is kind of the perfect example. I’ve fired property managers and most of them started great. And I don’t think they were bad business people. Their business just went in a different direction than mine and they were prioritizing different things. And it was my responsibility to say, “You know what? This relationship is no longer mutually beneficial and we got to part ways.” And it’s like, I don’t hold it against them. It’s my job as the entrepreneur to say, “I’m doing what’s best for my business. You’re clearly doing what’s best for your business.” And you just have to think about it that way. It’s not nefarious. People aren’t trying to screw you over most of the time. They’re just trying to do what’s best for them. And no two people, no two businesses are ever going to be perfectly aligned along the same path.

Henry Washington:Agreed. All

Dave Meyer:Right, Henry, what is the fifth thing you wish you knew before you bought your first rental?

Henry Washington:This one is, I wish I understood the construction process a little better before getting into my first deal. When you study real estate investing, listening to podcasts, reading books, you hear about to know how to find deals, you got to know how to find the money for those deals, you got to know how to select the right tenants. You hear about all the things in the process, you hear very little about construction or understanding the construction process

Dave Meyer:Of

Henry Washington:The background. And I remember after closing on a series of duplexes, we were evaluating contractors and one of the contractors showed up to look at the job and he was like, “I don’t want this job.This was a big waste of my time.” He’s kind of fussy with

Dave Meyer:Me

Henry Washington:About it. And he basically said, “You should just do scopes of work and send those out so that we can see what’s going on the size of the price.” And he told me, he’s like, “Some jobs are going to be too big for some people. Some jobs are going to be too small for some people, but if you approach it this way, you’re not going to waste my time or waste other people’s time.” And A, I had no idea to think like that. And B, I really didn’t understand how big the job was I

Dave Meyer:Was

Henry Washington:Asking him to do. And a lot of new investors end up losing money on deals, not because they bought the worst deal, it’s because they didn’t budget properly on their renovation, they end up overspending and you get in a tough situation. So understanding more about construction, how to do scopes of work, what an actual rehab is going to cost you, like spending the time to learn those things I think would be a value to you prior to doing a first deal.

Dave Meyer:I think probably my biggest regret as a real estate investor is my weakness in understanding construction. It took me, I mean, I’ve said it on the podcast, I think in 2024 I made a goal 14 years into real estate investing to learn construction better. And I’ve done rehabs on pretty much every project I’ve ever bought, but I’m just not that good at it. I don’t understand it that well. And I actually think in my experience, it’s not as much losing money on deals. It’s avoiding deals that I could have made money on because I was like, this is too big of a project for me and I didn’t want to take on really big rehabs. And so in 2024, I was like, my goal next couple of years is to get better at this. And I’ve been lucky working and doing some flips. At first I did passively and started to learn it.Then I invested and started getting in on the planning process a little bit more. And I did that in sequential steps before actually doing my own. And I found it super helpful. It’s honestly not that hard. There’s just moving pieces. And I think just understanding what I would call the order of operations was what I needed to understand. It’s like when you do each thing, what’s like basically a checklist in your mind of things that you need to do? And once you do that, it’s not that hard. Value add just is the most reliable way to make money in real estate these days. So getting comfortable with some level of construction, it doesn’t need to be structural, big lifts, but getting comfortable with it and just ripping the bandaid off is something I wish I did way, way earlier in my career.

Henry Washington:All right. Number six, Dave, what you got for it?

Dave Meyer:Door count doesn’t matter. I know people get mad about that. Efficiency does. I think that is the most important thing. I joined BiggerPockets in 2016 as an employee and everyone’s just talking about how many doors you have. It’s

Henry Washington:Your badge of honor.

Dave Meyer:Yeah, I know. It’s like you go into any meetup, people are asking how many doors you have. I think it’s not only just an ego thing for people. I think it’s actually counterproductive and hurts people’s effectiveness as real estate investors because first and foremost, depending on what your goals are as we started this conversation, and having a lot of doors might not be your goal. At this point in my career, my goal is to have fewer and fewer doors and to have more and more passive income, whether that means investing passively, doing lending, or just owning a couple of paid off properties. Those are the things that I prioritize, not scaling more and more. But the reason I really, this drives me nuts is because someone may come up to you and have 50 doors and they’re 50 terrible doors. It is not a measure of success to buy assets.A measure of success is buying performing assets. So I would rather brag to people about what my return on equity is. To me, your efficiency as an investor is a much more important metric to hold yourself accountable to. How good are you at this? That’s what ROI or return on equity measures. Door count is like, you can just go out and buy stuff.

Henry Washington:And it matters what kind of assets you buy. It matters what your strategy is because you could buy an asset tomorrow that doesn’t produce a great return, but the goal for that asset could be to provide you the kind of return you’re looking for in 10 to 15 years. This isn’t a short term game and it’s not the same for everybody. So measuring somebody’s success based on the amount of doors that they own literally means nothing. And I like what you said about measuring the efficiency, the return on equity. That is a good measure of are you getting the return on the money that you put into the business? Because you and I talked about this on an episode recently. You can go pay cash for a house and it cash flows. No cash flow. That doesn’t mean that it was a good deal. It doesn’t mean that you’re getting a great cash on cash return or a great return on equity.Just paying cash means nothing. It’s about what are you getting in exchange for the money you had to put into the deal?

Dave Meyer:You have to think really carefully about what you’re holding yourself accountable to. And if my goal personally was to go out and just get to 50 or 100 or 200 doors, I could go do that. I’ll go buy bad multifamilies and then I’ll get to my goal. But my goal is time freedom. And so I hold myself accountable to that instead of the number of doors.

Henry Washington:And honestly, don’t you envy somebody who has like five to 10 paid off properties and is living a great life more so than the guy who owns 3,000 units and is stressed out.

Dave Meyer:100%. I was looking at this the other day. I have a triplex I’ve owned for 10 or 12 years now. That one property I think makes me 4,500 bucks a month in cash flow. Yeah. Give me more. It’s not even paid off. When that’s paid off, it’s going to be eight grand a month. I need three of them. What else do you need? Absolutely. So I just think it’s silly. What you should be holding yourself accountable is like, are you working towards your goals and figure out what your goal is and make a metric that matters to you, not this metric that other people think are important. All right. We’ve done six of our 10 things that we wish we knew before we bought our first rental property. What seven?

Henry Washington:Number seven is to treat your properties, especially your rental properties like a business. And what I mean by that is when I was getting started, I wanted to find good deals, buy good deals, rent those good deals out, right? But I didn’t think about-

Dave Meyer:You didn’t want to operate them. Or you don’t think about it.

Henry Washington:Operating it. Yeah. It’s more about like rental properties are a business like flipping a house as a business. If you tell somebody that they’re going to flip a house, they’re thinking about what finishes to put in it. They’re thinking about that end customer and how they can add value to it in a way that that end customer will want. But for some reason with rental properties, people just don’t think about that. They think, “I want to get a property. I’ll just clean it and we’ll throw it out there and somebody will come and live in it. ” And in some markets, maybe that’s true, but I think I had to learn, you need to think about your rental properties in the same way that you think about a flipping business. Who are the people that are going to come and live there? What kind of amenities do they want?How can I add value to this in a way that those people are going to want? Because vacancies kill rentals. And if your property looks just like everybody else’s property, it doesn’t stand out. There’s no guarantee somebody’s going to want to rent yours over somebody else’s. But if you add the right amenities, if you think through who your end customer is, and if you position your property in a way that stands out, you get your properties rented faster and saving in vacancy is literally putting more cash flow in your pocket. So think about your rental properties and marketing your rental properties just like you would think about your flips. I

Dave Meyer:Don’t know if you get this question, but speak at meetups and stuff. People always ask this question like, “I have this property that’s sitting on the market, vacant. You have any advice?” Yeah, have a better product. Your product’s not good enough. It’s just not competitive. You have to think about it in the same way that if a coffee shop’s competing against another coffee shop, what’s the value proposition? What’s the difference between your coffee shop? Are you competing on value? Are you competing on quality? Are you competing on convenience? Think about it in a way, if you were a tenant. Everyone listening to this probably at one point in my life has rented a property. What were the things that were going through your head perspective? When you were deciding which one to rent, I want to buy the cheapest place I can afford. I really want to be close to the store.I need two bathrooms. How are you going to differentiate yourself? And that shouldn’t be after you buy your property, by the way. Yes. This is something you absolutely need to think about. It’s probably the first thing I think about. It could

Henry Washington:Underwrite it into your deal to pay for the things that you need to do appropriately.

Dave Meyer:100%. How many times have you walk into a rental, it’s a two-two and you walk in and you’re like, the layout doesn’t work. People are going to walk into this and be like, “I don’t like it. It doesn’t make sense for my life.” You got to avoid those deals. You have to put yourself in the shoes of your customer and your customer as a tenant.

Henry Washington:And then there’s a bonus to this one in terms of operating your rental business like a business is having some sort of system to help you track tenants and track collecting rents. Because when I got my first rental property, they could have paid me in a sack of pennies. I was like, “Somebody wants to pay me to live here, give it to me. ”

Dave Meyer:I did that for 10 years. Give it to me. I would lose checks and I’d have to be like, “Can you write me that check?” A little old lady had to wrie.

Henry Washington:I did that too. Little old lady was like, “Do you know what you’re doing? Oh man, I’m figuring it out lady.” But once I used the property management system and it just collected everything for me, it saved me driving around town and taking things to the bank. And it doesn’t seem like a big deal now because you’re just so excited to have somebody pay you, but I promise you the sooner you do that, the easier your life gets.

Dave Meyer:Well, I think those things go together because treating your tenants like a customer is not just about you, it’s about their experience as a tenant. And if you’re more organized, I think that’s what ultimately got me to be more professional is like, not because I couldn’t handle it. I’m not doing a good job for my tenants if I’m losing their checks, right? Or if you forget about a maintenance request or you don’t follow up on a lease renewal proactively that you should have just had software ping you about.

Henry Washington:Because you don’t want your tenants to hit you with the UNO reverse card and be like, “I gave you the check.”

Dave Meyer:You did it already. You’re like, “Did you? I have no idea.” So yeah, totally agree. All

Henry Washington:Right. We’re going to get into number eight on our list of things we wish we knew before we started real estate investing right after the break. All right, we’re back talking about things we wish we knew before we started investing in real estate. Dave, what’s number eight?

Dave Meyer:Number eight is that the 10 years it takes for the average person to achieve financial freedom, it goes really fast.

Henry Washington:Boy does it.

Dave Meyer:And it’s kind of fun. Right?

Henry Washington:It absolutely

Dave Meyer:Is. I mean, I started doing this 16 years ago now, and I didn’t really know what my goal was when I was first starting, but all of a sudden I’m 15 years into this. I’ve made a lot of friends. I’ve had a good time. I’ve built a portfolio and I honestly have been more financially successful than I ever dreamed that I would have been when I started. And I think the reason is because I just took it a deal at a time. I kind of knew sort of what I wanted to do, but I just worked hard every day and kept going after it and did other stuff and had fun and enjoyed my life and didn’t get too crazy about any particular deal or anyone losing 500 bucks and it went fast and it’s been fun.

Henry Washington:Yes. The time does seem to go quicker, but what I like about this strategy and what I think people who haven’t started yet need to hear about this particular thing I wish I knew before is when I look back at my portfolio, the deals that have the most equity, the deals that have the most cash flow, the deals that give me the most flexibility in terms of being able to leverage and do more real estate are all the deals I bought in my first couple of years. And that’s not because I just bought the best deals in my first couple of years, it’s that I bought them in the longest period of time, right? Real estate compounds over years. 100%. Your value goes up, your equity goes up, your debt gets paid down by your tenants, and the longer you hold the asset, the more typically financially beneficial it gets to be.And you start to see some of that after about five years in the space. Because when you’re buying a property after five years in and you’re looking at the performance of your property that you bought in year one or year two, you’re like, “Man, how do I do more of that? ”

Dave Meyer:Yeah, exactly. Well,

Henry Washington:You’re actually doing it. You wait.

Dave Meyer:Yeah.

Henry Washington:Yeah. You just need to wait.

Dave Meyer:Yeah, 100%.

Henry Washington:And so what I’m saying and what I hope people hear from this lesson is that you just need to get started. You need to buy smart, use the fundamentals, and you’ll look back in five years and think, “Man, I’m so much closer to that financial freedom than I thought I was when I’m looking at the performance of these assets because real estate truly is a long-term game. 10 years sounds like a long time, but I promise you it goes fast and there is a lot of upside along the way.”

Dave Meyer:Well, this might be different for you than for me, so I’m curious your opinion. But for me, it’s like, “Oh, I’ve been doing this for 16 years, but I work full-time and the energy I’ve had to put into real estate comes in bursts. I’ll buy a new deal. It takes a couple months to stabilize something and then it’s pretty chill for a while.” And so that’s why it’s always gotten quickly for me because I’m not grinding on real estate every day. I work at BiggerPockets, but I’m curious how you feel about that. I

Henry Washington:Mean, I am full-time in the Business, right? And I look at my business in kind of two separate windows. As a flipper, there’s one thing and that is much more active and on a day-to-day basis. But my rental properties, I don’t think much about. My property manager handles most everything. And then I get to look at my P&L at the end of the year and be like, “Oh, look, I have a lot of equity over

Dave Meyer:There.”

Henry Washington:And so I think about it in separate veins. So if you’re a buy and hold investor, the power is in the hold.

Dave Meyer:Yeah. I mean, if I think about the total amount of time I’ve spent on my portfolio, it’s not like eight hours a day for 15 … I don’t know what it would be, but it would probably be more like a year of work or two years of work. It’s minutes a day. Yeah, exactly. It’s like minutes a day. I will calculate that.

Henry Washington:He’s not lying.

Dave Meyer:All right, Henry, what’s number nine?

Henry Washington:Number nine is your goals will change over time and that’s okay. That is

Dave Meyer:All. Mine changed by the minute.

Henry Washington:My very first goal when I got into real estate was to buy one house a year for the next five years. And after I did my first deal, I ended up doing like four more in the same year. And that’s because I didn’t know what I was actually capable of because I hadn’t done a deal. I didn’t know that you could find financing and people would lend you money even though you didn’t have a ton of experience. I had all these thoughts in my head about what was possible. And then that theory got blown out of the water after my first deal. And so my goals changed and they should change because your lifestyle’s going to change. Your family dynamic’s going to change. What you want out of life may change. Everyone’s different. And so I think we should all be evaluating our goals on at least a semi-annual basis because sometimes things change that we don’t have control over that

Dave Meyer:Forces. That’s so true. That’s a good point.

Henry Washington:What we need to be able to do. And so it’s okay to change your goals. It’s like right now, my goal was to grow my portfolio. I wanted 200 doors. And we talked about how door count doesn’t matter. Now I want to be somewhere around 50 paid off assets. And I don’t care because my life changed. The things that I want out of life changed. I had kids. It’s okay to pivot. And the cool part about real estate is there is a strategy that fits almost any lifestyle goal that you want.

Dave Meyer:My goal when I first started, I hadn’t heard of BiggerPockets. I was 22 years old. I was literally to pay rent and have some money to go out with my friends. That’s it. I was like, “Could I get 200 bucks a month?” Because I was waiting tables. I was like, “That would be awesome.” I hadn’t really thought that much more about it. And this was 2010, real estate was kind of cheap. So you’re

Henry Washington:Saying you wanted to buy a house for drinking money?

Dave Meyer:Literally, yes. Yes. I’m not going to pretend it was that different. I wanted a ski pass. I wanted to go drink some beers with my friend, and I didn’t want to be worried about rent every month, which was … I was. I was straight out of college. So of course your goals are going to change, but I think where people sometimes struggle is we started the show by saying, “Think 10 years out, ” which is true, you should, but it can change. It’s just a reevaluation. You need to iterate on your goals. And it’s kind of the fun part of real estate too, is to keep dreaming, to keep being inspired and thinking about the things that this business can get you because that’s what keeps you motivated. And it’s cool because I think you’ve seen this for me. I’ve totally shifted the way I do real estate in the last couple of years based on how my goals have changed.

Henry Washington:And I also think people set goals based on things that they think they’re going to like, but if you’ve never actually done it, then you don’t know if you’re going to like it. I remember one of my goals was to buy an over a hundred unit apartment building. I don’t want that. I do not want that in my portfolio now that I’ve operated other properties. And it’s not that I think large scale multifamily is a bad thing. No, some people are great at it. And it can be a great asset class. I just don’t enjoy it as an

Dave Meyer:Asset

Henry Washington:Class and that doesn’t make it bad or wrong. It just, that’s not what I want in my goals anymore.

Dave Meyer:Totally. People always talk about raising money. Oh,

Henry Washington:I don’t want

Dave Meyer:Any part of that. Yeah. I would be so anxious. 0%. Once someone gave me their money, I’d be like, “Take it back.” And I don’t need to at that point in my career. And that’s like what has changed. If someone had said, “I’ll give you money to go buy rental properties to me 10 years ago,” I’d be like, “Give me every damn dollar you have. ” But life changes, right? And that’s the cool part about it. And the market changes too. You have to adjust to what’s possible, not just what you want. All right.

Henry Washington:Well, we got through nine things that we wish we knew before we started investing in real estate. Take us away with number 10.

Dave Meyer:Number 10 is something I really wish I knew. It was when in doubt, buy the best asset that you can afford. I just think as a buy and hold investor, who’s someone in this for the long run, there are a lot of things that can confuse you, what strategy to go after, what tactics, short-term rentals, long-term rentals, midterm, whatever you’re going to do. At the end of the day, if you control a high quality asset, you’re going to be okay in this business. Don’t buy something in a fringe neighborhood speculating that it’s going to turn around. When in doubt, if you want to take the safe path to real estate, if you’re in this for the long term, I would rather buy an amazing asset that breaks even than a questionable asset that gets a 10% cash on cash return. I don’t know if you agree with that, but for me, because I’m thinking 10, 15 years down the line, the best asset’s going to win the marathon, not this, maybe not the sprint, but the marathon it’s going to win.

Henry Washington:Similarly, a lot of people look at real estate and think, “I want to pick a market where houses are cheap.”

Dave Meyer:Exactly. Or

Henry Washington:A neighborhood where houses are cheap. And even though they may be able to afford a more expensive asset, they go and buy the 30, $40,000 house that needs $100,000 rehab. And if you’re new, there is so much that can happen in that rehab and there is so much that can happen with who you’re going to rent that property to and are you going to be able to get the return that you’re looking for? My better assets aren’t the ones I paid the least for. I’ve often end up selling those.

Dave Meyer:For sure. Exactly. And I should clarify, the asset doesn’t need to be in the best shape today. I just mean the highest and best use of this property. It’s in a great location. If I fix this up, it’s going to be a beautiful place that has demand from renters. It has demand from homeowners. It’s in a great neighborhood. It’s close to a park. It’s near a job center that people want to be. Those things, they say it in real estate true. The things you can’t change, how much you pay for it and the location of the property, you also don’t normally change the total layout or structure of the house. You might, but I don’t. So as a buy and hold investor, I’m thinking I can make something great out of this house over the long run. It’s buying that and figuring out the way to operate it to me is so much easier than trying to figure out how to make money off a place that has a bad layout or has bad architecture or is it a neighborhood that doesn’t have a lot of demand.That to me is way harder.

Henry Washington:I think you’re right. And I think the key to this rule is the first part of the sentence, which is when in doubt. So in other words,

Dave Meyer:If you’re good

Henry Washington:At it. No, and you’re uncomfortable buying a better quality asset that you can afford is going to be a safer play. Yes, there are cheap houses and yes, people make a ton of money buying cheap houses, but there are lots of intricacies and risks involved with that. And if you’re new and you’re unsure, then I totally agree with you. Buying a safer asset that maybe costs you a little more, but is better positioned to be successful in the long run is a much safer play.

Dave Meyer:I have literally never regretted buying a house in a great location. Even if I quote unquote overpaid for it, it has always been the best returns on every single deal. I think it’s not just location, but it’s quality of the house, housing stock kind of thing. But I think that it just matters so much if you’re in it for the long run.

Henry Washington:I’m selling a house right now that I overpaid for in a great neighborhood and I’m going to overpay, make 70 grand.

Dave Meyer:Someone’s going to overpay you 70 grand to take it off your hands. Yes. All right. So those are our 10 things that we wish we knew before we bought our first rental property. Hopefully this is helpful for you. And if you’re watching this on YouTube, let us know in the comments, what’s one thing that you wish you knew before you started investing in real estate? I’m Dave Meyer. He’s Henry Washington. Thank you so much for listening to this episode of the BiggerPockets Podcast. We’ll see you next time.