The Real Estate “Strategy” ANYONE Can Use to Build Wealth in 2024

Key Takeaways:

– Building wealth through real estate requires a real estate strategy.
– Many people think that buying rental properties or flipping houses is enough, but experts know that’s not true.
– To truly get rich and find financial freedom, you need to copy what the wealthy do and create a real estate investing strategy that fits your life and goals.
– The book “Start with Strategy” by Dave Meyer provides guidance on how to build wealth in real estate without a big portfolio or investing experience.
– The book helps readers create an investing strategy specific to their circumstances, develop a portfolio plan to maximize wealth, and design deals that align with their goals.
– A personalized real estate strategy is crucial in today’s market due to economic uncertainties and the need to match the right strategy to individual risk tolerance.
– The book emphasizes the importance of taking on the appropriate level of risk and identifies low-risk options like house hacking for beginners.
– Real estate investing has become more complex, requiring a multidimensional approach and longer-term thinking.
– Having a strategy that aligns with specific goals and considers market dynamics is essential for success in real estate.

BiggerPockets:

If you want to build wealth through real estate, you’ll need a real estate “strategy.” Most people THINK that just buying rental properties or flipping houses is enough, but the experts know that’s far from the truth. If you REALLY want to get rich, find financial freedom, live life on your terms, and own your time, you’ll have to copy what the wealthy do and build a real estate investing strategy that fits YOUR life and YOUR goals. Here’s how you do it!

In today’s show, Dave Meyer, BiggerPockets VP of Data and Analytics and author of Start with Strategy, shares how YOU can build wealth in 2024 without a big portfolio or any investing experience. Even if you’re a complete beginner, Dave will walk you through how to create an investing strategy specific to you, a “portfolio plan” that’ll explode your wealth, and a “deal design” that helps you lock in on the perfect properties for your portfolio.

If you want to build wealth in 2024, pick up Start with Strategy and use code “START870” at checkout to get 10% off PLUS pre-order bonus content!

David:
This is the BiggerPockets Podcast show 870.
What’s going on everyone? This is David Greene, your host of the BiggerPockets Real Estate Podcast, joined today by my good friend, partner, and co-host, Rob Abasolo.

Rob:
That’s right. And with me today is my friend, colleague, partner, confidant. Muse, real estate crush, David Meyer, who wrote a book. Welcome, Dave.

Dave:
I did write a book. Thank you guys so much for having me on it.

David:
Another one, it seems like you’re coming out with a book every four minutes.

Dave:
David, you are one to talk. You’ve released two books this year. I’ve done half as many as you, so I am just trying to keep up.

Rob:
Oh my God, I’ve done half as many of you, which is still literally a book. It’s something that everyone dreams of their entire life. You’re like, “I’ve only done one book this year, guys.”

Dave:
Well, this one nearly killed me, so it might be my last.

David:
That’s the thing is why we do that. It’s probably one of those things. I don’t have any kids, but I’ve heard from people that do that they’re like, “Why did we do this terrible idea? This is the worst thing ever.” It’s killing you, and then you’re like, “Let’s do it again. Let’s do another one.” Birthing a book can feel very, very similar to that.
Now, Dave, you actually wrote a real book. No pictures as far as I’m understanding. No comics. You are a numbers guy and you share number and strategy and we are going to be talking about your book today, Start with Strategy. So if you hear the show and you like it and you’d like to purchase a book, go to biggerpockets.com/strategybook. You can get a copy there.

Dave:
And if you want to grab the book, make sure to use the special coupon for podcast listeners. It is START870. START870, and that will get you 10% off the book and all the bonuses.

David:
All right. Let’s get into this thing. So Dave, why did you choose to write this book right now? What is it about strategy that’s so important in today’s market?

Dave:
I wrote this book because there are just so many good and exciting ways to make money in real estate. But for people who are just getting into it or even if you’re starting to scale, I find that it’s really difficult to figure out of all those amazing options, which ones are actually right for you and your personal circumstances.
I’m sure David and Rob, when you talk to other investors, you hear this all the time. People ask you, should they short-term rentals? Should they flip? Should they invest in California or should they invest in Texas? I think the truth is that there are limitless ways that you can make money, but there’s a challenge in trying to match the right strategy to you. I wrote this book to help people figure that out for themselves and to create their own personalized real estate strategy.

Rob:
That makes sense. I mean, I think getting into real estate, you need a strategy. But I’m curious if you feel that it is of utmost importance more than ever to have a specific strategy today, or if it’s just the same fundamentals of setting a strategy no matter what the landscape is.

Dave:
I think right now it is even more important than ever to figure out what your strategy is going to be because I see a lot of people who are interested in investing but look at the macroeconomic climate and get a little bit scared. And to me, the best way to sort of work through some of that fear or uncertainty about the market is to figure out the exact right things that work for you and your risk tolerance. A big part of the book talks about taking on the appropriate level of risk. And so I think for people who are just jumping in right now, they look at perhaps flipping a house and say, “That’s too risky. I don’t want to get into that.” And that might be fair. But there are other low risk options like house hacking, for example, that are a great way to get started in real estate investing, really in any type of macroeconomic climate. And so by setting your strategy, you can identify the types of real estate that are actually well aligned with your personal preferences about risk and how you want to invest your money.

David:
Yeah, Rob and I were just talking about this not too long ago, that when real estate was in its heyday, at least investing in it, and I say heyday, I mean our little microcosm of what we’ve seen from real estate heyday, was shortly after 2010 there was a huge crash. Real estate was this intriguing thing that was for the first time ever becoming accessible to the masses. You didn’t have to be a person who had sort of been mentored by someone in town or born into a real estate family to be able to get into it. And this was coinciding with an explosion in media. So YouTube was taking off, podcasts were taking off. For the first time ever, you could learn about this stuff for free. And it was a huge wave and BiggerPockets caught that wave and it was this explosion that took this to the masses.
It was kind of as simple as, “Here’s what you look for. Here’s what you look to avoid. Do the first thing and not the second thing and just keep doing it. And eventually you’re going to make money.” And we’re in a different scenario now. There are a lot of people that are after this asset class, the economic environment we’re operating in changes very quickly. It’s tough to nail down what type of market you’re actually investing in because they can swing so fast. You really need a multidimensional approach to real estate investing. It doesn’t mean it doesn’t work. You can’t be as naive as just, “Does it cashflow? Or does it not cashflow?” And you just buy cashflow and then wait.
So I love that you’re putting out a book about this because like you said, Dave, you need a strategy that works for your specific goals. You need to give yourself a longer timeline. And you kind of have to think maybe one step ahead, at times two steps ahead, but at least one step ahead when you’re buying real estate. Rob, you’ve got a pretty impressive portfolio of short-term rentals. When it comes to how you’ve seen the market change since you’ve been investing, have you seen that it was at one point more simple than it is today?

Rob:
That’s a good question. I guess it was more simple in that you could sort of throw a dart in the last five years and land anywhere on the board and be okay. I think now going into it, you got to be pretty precise. I think you got to hit more bull’s eyes these days to really hit it because I just don’t think properties are cash flowing the way that they were, which I know that that’s just one component of it. We don’t really know the state of appreciation. And so overall, I think the more precise you want to be with your calculation, the more skill that it takes, meaning it’s a little less simple. Does that make sense?

David:
Yeah, I think so. I mean, Dave, you’re also sort of sitting in the crow’s nest working at VP looking at numbers all the time. A literal data scientist, which by the way, you seem way too handsome to be a scientist. I’ve never seen you in the white coat.

Dave:
Hey, well, thank you. But people of all appearances can be data scientists.

David:
Yeah, you’re over here breaking down walls. That’s exactly right, showing that science can be cool. Are you seeing a bit of overwhelm right now that investors just can’t figure out either what area they should invest in or what asset class that they should be investing in?

Dave:
Yeah, definitely. And that was one of the main impetus for writing the book. And you sort of hit the nail on the head, David, is that a lot of this comes down to media. And we’re part of the media, so this isn’t disparaging people for posting about what they do.
But I imagine if you’re new to real estate investing, you go on Instagram or YouTube or get into BiggerPockets and you hear, “You should be a rental property investor. You should be a short-term rental property investor. You should go into creative finance. You should buy land.” There’s so many different exciting things that sort of get pushed in your face right now. It could be really hard to filter down to the things that actually matter to you and that are well aligned to your personal circumstances. I think to your point about the economy, that also makes this a little bit worse because people look at some tactics that traditionally worked and aren’t working as well right now. And so they’re trying to go through all these alternative or newer strategies and it can be really difficult to figure out which one of them is right.

Rob:
Awesome. And we’re going to break down how you, our listeners, can build the perfect real estate strategy right after the break.

David:
And we’re back with Dave Meyer talking about his new book Start With Strategy and how to pick the strategy that’s right for you.

Rob:
I actually kind of want to ask a follow-up because I just want to make sure that we’re all on the same page as to what even strategy is. Do you think maybe you can sort of define that? Because obviously, there’s flipping, there’s short-term rentals, there’s long-term rentals. Are those strategies or are those tactics within a strategy?

Dave:
I know everyone in real estate calls strategy something different. I think some people call “strategy” whether you’re flipping or whether you are buying a rental property. For me, when I talk about strategy, I talk about a portfolio level approach. So in the book, I call it portfolio strategy, which is basically looking at what you have to invest. That comes from money. It comes from time and skill. You don’t just invest money into your portfolio, you have to invest these other things into your portfolio as well. And then you need to make high level decisions about how to allocate those resources. Do you want to take all your money and put it into one deal? Do you want to spread it out between a bunch of deals? Do you want to do something that’s high risk? Do you want to do something that’s low risk?
Investing strategy is sort of like a business plan, right? You need to look at what you have, like anyone who has a business does this. They look at the resources that they have and decide how they can deploy those resources to get towards their goal. And so within the book, I present three parts to real estate investing strategy. The first one is vision, which is basically you have to just start by deciding what you actually want to accomplish. What are your goals as a real estate investor? Do you want to become a tycoon and a billionaire? Or are you just trying to move your retirement date up by a couple of years? You need to start there because there are so many different ways to invest in real estate that unless you have a good idea of where you want to head, you can’t really figure out how to get there. So you start with the vision and say, “Here’s where I want to go.”
Then you go to the second part, which is called deal design, which is basically where you look at all the different types of deals you can do in real estate and pick just the ones that are aligned with your vision. So you say, “This is where I want to go. Here’s how real estate can help me get there.” And then you get to portfolio strategy, which is the most tactical where you’re sort of making the day in day out decisions like specifically which properties you should buy, which markets to invest in, should you sell or refinance, how you should scale. And when you have all these things together, your vision, your deal design and your portfolio management plan, to me that is the best possible way that you can move towards your goals of financial freedom, whatever those might mean to you.

David:
Something I love about what you’re describing, Dave, is it sort of highlights the evolution of real estate investing. There was a time where the way that you got people into this was you just said, “Find cashflow and let the details figure themselves out.” Cashflow at any expense. If you get cashflow, you can do whatever you want. You can retire early, you can retire better, you can quit your job and take your dream job, you can start a business. Really, cashflow was sort of presented as this magic pill. And as cashflow has become increasingly harder to find… And by the way, cashflow was never the magic pill it was presented at because every real estate investor knows it’s very unreliable.
Rob, I love how you often advise not to live off your cashflow. Just put it right back into the account, keep saving that money. Don’t pull it out because you don’t know if it’s going to be there. It takes one bad tenant, it takes one eviction, it takes one nasty turn and that cashflow can be gone. Over time, yes, you want that, but it’s not going to solve all of life’s problems right now. There’s many ways that we make money with real estate, Dave, and you are highlighting of that fact, that this is a journey that you take, that you need to start the journey by deciding what destination you want to get into, what asset class is going to get you there and how you’re going to build a portfolio that’s going to get you there. It’s almost impossible to fail at. If you give yourself enough time and you make wise investments, you’re guaranteed to get there.

Dave:
I love that. And totally agree. This is really well aligned with what’s in the book. The book basically, it works sort of like a business plan. If you’ve ever read a book like Traction, it’ll be familiar to you where you make some of these decisions and decide how you’re going to grow your portfolio. And David, you hit the nail on the head with a couple of these. One part is your income plan. This is outside of real estate. But as part of your real estate investing strategy, you need to decide. Are you going to be making money from real estate or from somewhere else? For me, I work full-time at BiggerPockets. And so I can make decisions about my portfolio knowing that. I have an income that is steady and reliable. And so I can take risks with my real estate. As Rob said, I can reinvest all of my cashflow back into my portfolio because I have a job.
And so in the vision part of the book, you make these decisions like, “Am I going to have a job? If so, what is it? Am I going to reinvest my cashflow?” As you said Rob, that’s exactly a decision that you have to make. And what kind of financial goals are you trying to hit? Are they modest? Are they big? Are they somewhere in between? And so by setting all of these things, then you’re really putting yourself in a position to succeed because you know exactly what assets you have to help grow your portfolio.

Rob:
It feels like a pretty common thing to start with a number in mind. A lot of people are like, “I just want to make $3,000 a month in passive cashflow.” And I’d often argue that that’s not particularly a vision. I guess it is a vision, but it’s not really what we’re going for here. One of the biggest mistakes I see investors making is not starting with the end in mind. They’re just trying to get to that first goal. And so, they center everything around the first goal that they set versus the longevity of their career. So how do you kind of break down this vision from a short-term and a long-term standpoint?

Dave:
Yeah, so in the book, the vision is really long-term. It’s trying to get the end in mind. Like you said, it’s like what financial goals specifically are you looking for? And I know you asked people, you’re like, “What is your financial goal?” And most people are like, “I want a bajillion dollars.” But that’s not really all that practical. If you were to work for any sort of business or corporation, you have to work and set achievable realistic targets. You don’t just go into a corporation and say, “We’re going to make a billion dollars this year.” You have to come up with something that you can actually work towards. And I know it can be hard for people, but the book gives you some frameworks for doing that. But I think regardless of the book, you really need to have an idea of what sort of financial situation you’re trying to create for yourself. And maybe even more importantly, what kind of lifestyle are you’re trying to create for yourself.

David:
All right. The second part of your framework is deal design. Now some investors believe that deals are hard to come by right now. How should one go about selecting the right deal for them?

Dave:
Yeah. So I really think this is the most fun part about real estate investing, is that there’s just so many different ways that deals can work for you. And that’s why I call it in the book deal design, because although in real estate we often call this “finding a deal”. There is certainly part of deal design and strategy that is going out and identifying a property to buy, but there’s so much more than just picking the physical structure to a deal. You have to pick the financing, you have to pick the partnership structure, you have to figure out what kind of asset class you want to buy and what class neighborhood.
And so to me, that is what deal design is all about, is looking at all these different components of a deal and sort of putting together the puzzle in a way that works for you. Because David, Rob and I, each of us has a different vision. And even if we all were able to buy the same exact property, we may actually operate that property entirely differently. Rob might turn it into a short-term rental. David might BRRRR it. I might just long-term rental because I’m lazy a lot of the time.
And so it’s really just up to each investor to design the deal around their long-term vision. And to me this is really just… It’s a filtering mechanism. You basically start at the top with all the different ways that you can run a business, all the different financing mechanisms, all the different partnership structures and just filtering down to the ones that work well for you given your current circumstances and your long-term goals.

Rob:
Sure. I mean, okay, one of the big criteria that we start building early on in our real estate career, sorry, is our buy box, which is, “Hey, what is the parameters for which we’ll buy a property?” But it almost feel like deal design is a much bigger umbrella with a lot more moving parts than just your physical buy box, right? Well, I guess your figurative buy box. I don’t know. Whichever one of those makes sense.

Dave:
No, that’s exactly right. So I use both. So for me, deal design is the whole universe of things that I’ll consider. So for me, I just mentioned that I’m going to hold off on commercial for a little while. But in my deal design, I keep commercial in there because it’s something I’ll consider. And I participate in syndications and funds. And even though I’m not going to do that right now, I would still keep that in my deal design because I want to know what deals are aligned with my vision and what should be sort of in my universe of real estate investing toolkit, right? That’s sort of one way to look at it. Is like, these are all the tools that I can employ in the future throughout my investing career to move me towards my goal. And then at the end, during the last part of the framework, that is when I do get to a buy box because I do think that’s important, but I think there’s further narrowing down of your options that need to happen.
Like from deal design, what I personally do, is I do a lot of macroeconomic research and then I also do some benchmarking. So I go out and say like run deals in commercial, I run a short-term rental, I run a long-term rental, and I just say, “Of all those options today in January of 2023, which one’s going to be the best one for me?” And that’s what I turn into my buy box. But I don’t get rid of the other options. Those are still things I consider, but the buy box is sort of the final step before I actually buy a specific deal.

Rob:
That makes sense. Yeah. I kind of have a similar approach. Obviously, I have what I’m good at, which is going to be the short-term rental side of things. But I do have other things that I consider. Recently, I mean really for the first time ever, this year, I’ve been opening up a little bit the deal design side of things and what I’m willing to take on. I’ve done a flip. I’ve done a wholesale which is basically a wholesale into a retail, kind of like a micro flip if you will. And I don’t actively search those out, but I will consider them if the deal is within my city. If it’s something close to me, if it’s in my buy box, in my zip code, it’s something I’ll always take a look at. So it makes sense that you sort of have your bread and butter, but then you sort of have these auxiliary types of deals that you may consider.

Dave:
Yeah, that’s a perfect example. For me, I would also consider doing a short-term rental. I have some experience with that. I would do a BRRRR, I have experience with that. But in my deal design, I don’t do flips. To me that’s just too much work, I don’t want to do it. And so even if a good flip came to me, I still wouldn’t do it because it’s not aligned with my vision. When I look at my vision, personally, one of my goals is to spend 20 hours or less of time per month on my portfolio. And a flip would throw that out the window in a week. I just wouldn’t be able to do that.
And so the deal design sort of puts blinders on you in a good way where you can just sort of focus on the deals that are going to work well for you and you can ignore it. Because frankly, we all get this great job where we get to talk to real estate investors. I’m constantly facing FOMO. I’m like, “Man, that guy’s doing something so good.” Or this woman had so much success doing this one strategy, and I’m like, “I should do that.” But then I sort of come back to my deal designs and I’m like, “Actually no. I shouldn’t. These aren’t right for me. It might be right for these other people, but I need to stick to sort of what’s appropriate for me and what’s aligned with my personal strategy.”

Rob:
I’m really, really glad you said that because there is more context to what I just said, which is yes, I’ll consider more things. And then sometimes, this year I got into a flip and several times in this process I was like, “What have I done? Why have I gotten myself into this? There’s a reason I haven’t done this for the last seven years.” And so now that I’ve kind of at least gone through it, I would consider it, but there’s definitely something to be said like you want those blinders on because just because we can do something does not necessarily mean that we should. And yeah, we should just practice the things that we’re good at.

David:
Now, I would also add in the last 10 years we’ve had such a strong market. That the fear of missing out, the FOMO, the, “Man, look what somebody else is doing” has been at an all time high. It’s never been as high as what I’ve seen right now. And you throw in the fact that there’s a lot of people that see themselves as real estate gurus that want to teach other people how to do it. And so you just get hit with this marketing all the time of all these great deals that people put together and no one shares their losses. It’s been easier than ever to think, “I have to jump in and do something I’m uncomfortable with.” But this is sage advice, one of the rules in Richest Man in Babylon, one of my favorite books, I drew on it heavily in my book Pillars of Wealth, is don’t invest in something you don’t understand.
And if you’re not a house flipper, that doesn’t mean you can’t flip houses, but it does mean that you are much more likely to get yourself into trouble or burn energy that would’ve been productive put somewhere else if you stood on something that you do understand. So I love this idea that is okay to say no to the wrong deal in the pursuit of the right deal. And the right deal is subjective. It depends on what your goals are.
Now Dave, what advice do you have for investors trying to get into real estate investing right now today in this market?

Dave:
Yeah, David, I think that’s an excellent point about this FOMO and not taking a deal that you’re not going to be good at. I think it’s easy to think about this in terms of what type of deal you’re doing like flip versus a rental property or short-term rental. But I think this is also true for the other parts of what I would call deal design. If you are not good at self-managing a property, don’t do that. Just go out and hire a property manager. I learned that one a painful way. I’m just not very handy and I lost a lot of money trying to be, and I think that’s why deal design is more than just what type of deal you’re doing. You have to think about every element of it. And just identify the things that you’re good at and that you like doing and that you’re going to be willing to work on.
It’s okay if you don’t do every single part of your business, and I think most experienced investors would tell you that it’s actually better to identify early on what you’re good at, what you’re not good at, and just focus on those few things and you don’t have to bootstrap and do every little thing yourself.

David:
I can’t wait to get into the last segment of your book, which you have called the Most overlooked part of Real Estate Investing. It is on portfolio management, one of my favorite topics. But first, let’s take a quick break.
All right. Now the last part of your framework is to go through portfolio management, a topic I love talking about. Why is this so important?

Dave:
I think this is one of the most overlooked part of real estate investing and maybe the most important. I don’t know. Maybe not. But everyone loves to talk about buying deals, but so much of your performance of your portfolio comes down to how well you manage the deals that you actually have. That comes in reallocating resources. So selling bad deals or investing in good deals or reallocating your time to things that will make more money. And so in my mind, a really important part of strategy is constantly looking at your existing portfolio, your existing efforts, measuring them. I know I’m the numbers guy, but I really do think it’s important to measure all of your deals and look at how they compare to one another, how one deal performs against another, perform against another, and then constantly reassess. Is there any way that you can optimize your portfolio right now?
I think this is particularly important these days because it is harder to buy a property right now. We’ve talked a little bit about cashflow, but the fact is also that there’s just less properties on the market, so that just makes it more difficult in general, even if you can find good cashflow. And for a lot of people, you might be better off actually reinvesting some of the money you have back into your portfolio rather than buying a new deal.
For example, if you had some cash, maybe you should build an ADU, or you should renovate something to increase your cashflow rather than going out and buying a lackluster deal right now. And if you have the tools and you sort of have this thought process, it really is a mindset of portfolio management. You can constantly be tweaking and optimizing your performance to really get the most out of the deals that you have already done. And by doing this, it also helps you figure out what deals you should do in the future, right? Because if you buy a bunch of deals and see that they’re all really high risk, maybe you realize that your next deal should maybe be something that’s a little bit more low risk or you already have plenty of cashflow. Maybe you want to take a swing on some equity for your next deal. By constantly seeing what you have and visualizing it in an easy way, it will make decision-making about your portfolio a whole lot easier.

Rob:
I love that, man. I really, really do. This is something I’ve been talking about very heavily the past few months because most people are in search of that door count. This is something we talk about a lot. People just want more doors, right? That’s the magical number. The magical bragging rights number at a real estate meetup. I’ve got this many doors.
And so many people focus on getting more doors and they’re chasing this like, I don’t know, this metric of making more money. I’ve been telling people recently that with interest rates, the way they are, with the fact that it’s harder to squeak out a good return these days, I think that the best way to get an ROI on your money right now is through maximizing the revenue of your portfolio as it is.
This is something I’ve been doing over the past year. I’ve been reinvesting back into my short-term rentals. You could go out and buy another property and chase like a 15% cash on cash return, and it’s really hard to do that. You can go and you can scout the MLS and you can make an offer and you can do the due diligence and you can close on it, which is super, super hard. Or you can figure out how to reinvest that back into your portfolio and make that ROI a little bit quicker. I built like a deck. I’ve added some amenities and the ROI that I’ve been getting on this, they’ve been so much higher than going out and buying a property and so much easier to execute.
So I think this kind of goes into that a little bit, which is like, how can you maximize the revenue of your portfolio now versus focusing on acquiring more properties?

David:
Yeah, I’ve put a lot of this into play, not necessarily with the way that I am improving properties, but more so the areas that I’m buying them in and taking a longer term approach. So I noticed this pattern that when you buy in better locations with constricted supply and improving demographics, the properties appreciate at a higher level and the rent goes up at a higher level. Then when you get into something that’s easier to get into, lower price point, stronger price in rent ratios, 10 years down the road, it’s largely the same investment than when you get into something that’s harder to get into.
So I realized, “Hey, I’m still working. I’m still running companies. I’m still making money. I don’t need cashflow as much right now as what I want is a lot of tax-free wealth waiting for me when I decide I don’t want to work anymore.” So I just designed a strategy where I bought properties in the best locations that were very rare, hard to find that I thought would improve and appreciate more than others. And I just kind of planted the seed and I’m going to let the tree grow and then when I hit retirement, it should be waiting for me with a bunch of fruit. That was very fortuitous when you consider the fact that cashflow became much harder to find. So you had to sort of turn this into a game of chess instead of just checkers.

Dave:
I think that’s a perfect example, David. You have your own situation that’s probably very different than someone who’s approaching retirement, right? If you’re 55 and you’re just trying to build out some cashflow so that you can retire comfortably, the decisions that you’re going to make about your portfolio, your portfolio management strategy is going to be entirely different. And so it’s really hard. We come on here and talk about real estate so we can help educate people, but it is really hard for anyone to sort of adopt someone else’s strategy. I think that’s almost impossible. Even the people listening to this might say, “Oh, David’s got a great plan,” but maybe that’s not going to work for you. So hopefully you learn something from the examples David’s giving, but I hope you take what David and Rob are sharing with you week in and week out and try and apply it to your own life and realize that you sort of have to come up with your own situation and run your own race.

Rob:
Yeah. One final note that I want to say on that, Dave, that I think is just super smart is, you were saying if you have a lot of high risk properties, and maybe not a bad idea to consider a low risk property, and when I started obviously I went really heavy into short-term rentals, my whole portfolio is basically short-term rentals, there’s seasonality that comes with that. There’s highs, there’s lows, there’s months where I absolutely crush it. There’s months where I know I won’t make money because no one really makes money on a beach house in December. Not a big secret there, right?
And so I’m coming around to the idea of, “Okay, hey, as much as it’s great to have these high cash flowing properties. Maybe I should have a couple of base hits long-term rentals that consistently perform, consistently cash flow so that I just have a more dynamic portfolio that’s not just relying on seasonality.” So I think that’s a lesson that everyone can take home. It’s, as good as it is to go all in on one thing, there’s never really an issue I think with diversifying so long as it’s within your deal design. Would you agree with that?

Dave:
100%. I think risk and managing risk, managing cashflow versus equity is something that often takes people a while in their investing career to come around to. And hopefully by listening to the show, people will start doing it a little bit earlier. I think it’s extremely important. Personally, I have a pretty high risk tolerance and I also have what I would call high risk capacity, which is I’m in a fortunate situation where I can’t afford to lose money. If a deal goes bad for me, I can weather that. But I’ve also found that I don’t have to make every deal risky to meet my risk appetite. I can make some of them really risky and some of them a little bit safer so that I balance out to the right risk reward appetite.
It’s kind of like stocks, right? Some people want to buy 100% stocks that’s pretty risky. Some people want to buy 100% bonds that’s pretty safe, but you’re going to sacrifice. But most people who invest in bonds and equities find their balance, and I think that’s true in real estate too. You have to find your balance between cashflow and appreciation. You have to find your balance between risk and reward. And there’s no right answer here. It’s really just about trade-offs. You need to figure out what trade-offs you’re willing to make and ultimately build that portfolio that you are comfortable with and you’re going to be able to sleep at night with.

Rob:
Yeah, that makes sense. Let me ask you. Obviously strategy is something that is always evolving, but do you feel like going into 2024 that your strategy is constantly changing with the market? Or do you feel like you’re holding strong on what you initially set out to do?

Dave:
Yeah, that’s a great question, Rob. I think my long-term strategy, my vision hasn’t really changed. What I’ve always wanted to be able to do is buy a lot of free time so that I can travel, spend time with my friends and family. And I think I’ve largely accomplished that. But when I get into what deals and my buy box are, that actually changes all the time. And so going into 2024, mine is changing.
For those of you who don’t know me, I live in Europe. I moved here four years ago. And when I did, I really just went hard into passive investing. So I invest in a lot of syndications and funds over the last couple of years. And that’s worked out great, but I’ve decided that I need to diversify. To your point, Rob, I can’t just invest in other people’s. And I still do own rental properties in Denver, but I haven’t bought a lot of new rental properties. And so I’m going to start doing that again. And I am going to reread David’s book on out-of-state real estate investing. It’s been a while, but I’m going to pick some new markets and start buying rental properties again.

Rob:
Word has it that David’s actually working on out of country real estate investing right now. He’s on its final draft.

David:
Dave, thanks so much for being here, man. And thank you for writing another book for real estate investors that brings the truth, that it is more about strategy than it is about just finding whatever the new buzzword happens to be, that people think that they can beat the system if they just have some little edge or they know some approach to real estate that other people aren’t taking. That’s not the case. It is about winning in the long run and understanding what your strategy is going to be to do that. So if people want to get the book, where would you say they go?

Dave:
Go to biggerpockets.com/strategybook. And if you get to there before the book actually launches the pre-order, you’ll actually get some really good bonuses, including a strategy planner. So this is kind of like a business plan workbook, so you can read it alongside the book and sort of fill out your own strategy and business plan alongside the book. Normally, I forget exactly what that costs, but it’s basically the cost of a second book. But you get it for free if you actually go now and buy it as part of the pre-order.
So if you’re interested in buying the book, just go to biggerpockets.com/strategybook. You can find all sorts of information there. And make sure to use the coupon START870. That’s START870. And if you use that, you’ll get 10% off the book and all the bonuses.

Rob:
Thank you, Dave, for all the brilliance that you bring to the show. We always appreciate your insight, man.

Dave:
Thank you both. This was a lot of fun.

David:
So head over to biggerpockets.com/strategybook and get your copy today. And also, if you love the podcast, please consider leaving us a 5-star review wherever you listen to podcasts. Those help us out a ton and we really appreciate it. You can also check out biggerpockets.com for even more resources than you got here today. Almost all of them free because we love you that much. This is David Greene for Rob, my favorite [inaudible 00:33:11] Abasolo, signing off.

 

 

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Note By BiggerPockets: These are opinions written by the author and do not necessarily represent the opinions of BiggerPockets.

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Property Chomp’s Take:

If you want to build wealth through real estate, having a solid strategy is crucial. Many people mistakenly believe that simply buying rental properties or flipping houses is enough to achieve financial success, but the truth is that it takes more than that. To truly become wealthy, gain financial freedom, live life on your own terms, and have control over your time, you need to follow in the footsteps of the wealthy and develop a real estate investing strategy that aligns with your life and goals.

In a recent episode of the BiggerPockets Real Estate Podcast, Dave Meyer, BiggerPockets VP of Data and Analytics and author of Start with Strategy, shared valuable insights on how anyone can build wealth in real estate in 2024, even without a large portfolio or prior investing experience. Whether you’re a complete beginner or looking to scale your real estate investments, Dave provides a step-by-step guide on creating a personalized investing strategy, developing a portfolio plan, and finding the perfect properties for your portfolio.

The reason Dave wrote Start with Strategy is because there are countless ways to make money in real estate, but it can be overwhelming for beginners or even experienced investors to determine which strategies are the right fit for their specific circumstances. Many investors find themselves asking questions like whether they should focus on short-term rentals or flipping, or if they should invest in high-priced areas like California or more affordable markets like Texas. While there are endless possibilities for making money in real estate, the challenge lies in finding the strategy that suits you best. Dave’s book aims to help readers navigate these decisions and develop their own personalized real estate strategy.

In today’s uncertain market, having a clear strategy is more important than ever. Many people interested in real estate investing may feel apprehensive due to the current macroeconomic climate. However, by identifying the right strategies that align with your risk tolerance and preferences, you can overcome fears and uncertainties. For example, if flipping houses seems too risky, there are other low-risk options like house hacking that can serve as a great entry point into real estate investing, regardless of the economic climate. By setting your strategy, you can identify the types of real estate investments that are well-suited to your personal preferences and investment goals.

In the past, real estate investing was a relatively simple process, especially after the 2010 crash when the market started to become more accessible to the masses. With the rise of media platforms like YouTube and podcasts, people had free access to information on real estate investing. The key was to focus on cash flow and avoid bad deals. However, the current landscape is much more complex. The market can change rapidly, and it’s essential to have a multidimensional approach to real estate investing. It’s no longer enough to focus solely on cash flow; investors need to consider multiple factors and plan for the long-term.

Developing a real estate strategy that caters to your specific goals is crucial in today’s real estate market. By taking the time to understand your risk tolerance, preferences, and long-term objectives, you can create a roadmap for success. Dave Meyer’s book, Start with Strategy, provides valuable insights and guidance on building wealth through real estate. Whether you’re a seasoned investor or just starting out, having a well-defined strategy is the key to achieving financial freedom and living life on your own terms.

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