How to Fail at Real Estate Investing in 2026

If you want to generate passive income with rental properties, reach financial freedom, and make the most money with the least stress, do not do any of these six things. There are six ways to fail at real estate investing in 2026, and if you get even a couple of these wrong on your first or next deal, you could be out of the game for years to come. Trust us, we’re now dealing with five-figure emergency costs because we didn't follow the tips we’re sharing today. Both Henry and Dave have reached financial freedom in around a decade by doing real estate the right way. But that doesn’t mean they haven’t made very costly mistakes. Whether it’s tenants, repairs, using the wrong calculations, or waiting to talk to this specific person, there are a few crucial landmines to avoid on your next investment property. So, we’re going through the six ways to fail at real estate investing. If you do the opposite of these six, you’ll make money faster, with way less stress, scale smarter, and probably reach financial freedom even quicker than Henry or Dave. In This Episode We Cover What Dave does every single time before he hires someone to work on his rental The one mistake that led to an $80,000 (that’s right) repair bill The wrong way to calculate “cash flow” that will have you losing money every month Why most new investors waste months or years by not talking to these two people Are home inspections really worth it? This is who should (and shouldn’t) pay for one The one true way to tell if a tenant will be a great renter or a nightmare And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠h⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1272. Interested in learning more about today’s sponsors or becoming a BiggerPockets partner yourself? Email ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠[email protected]⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠. Learn more about your ad choices. Visit megaphone.fm/adchoices

Speaker names marked ? are inferred from speaking time and the show’s known hosts — they are not voice-verified.

• 0:00Henry Washington?

  This is how you fail at real estate in 2026. Dave and I have more than two decades of combined real estate experience. And let me tell you, that means a lot, a lot of failures. I have a deal right now that I'm going to lose at least $10,000 on.

• 0:16Dave Meyer?

  We've all been there, dude.

• 0:17Henry Washington?

  But the good news is we've learned enough to create an entire blueprint of real estate investing failures. Now, all you need to do is the exact opposite of these mistakes. The crazy part is I still achieve financial freedom in less than 10 years, even with all those errors along the way. So imagine how quickly you could do it if you learn from these failures first.

• 0:42Henry Washington?

  What's going on, everybody? I am Henry Washington and I am joined by my co-host, none other than Dave Meyer. What's up, buddy?

• 0:49Dave Meyer?

  Not much, man. I'm excited to talk about this because hopefully everyone listening to this could just do the opposite of all the things we've done wrong and just coast through real estate investing with no issues.

• 1:00Henry Washington?

  Yeah, that'll be exactly what happens.

• 1:02Dave Meyer?

  You'll be the first person to ever do that. But maybe at least reduce the amount of mistakes that you make.

• 1:08Henry Washington?

  If anybody tells you they've never lost money in real estate, either they're not doing deals or they're lying to you. What we want to do is be transparent, share with you the mistakes that we've made. So you don't have to make them and hopefully that makes your journey a little bit easier. Are you still going to screw up? Yeah, yeah, you will. But hopefully those screw ups won't be as impactful by learning from knuckleheads like Dave and I.

• 1:32Dave Meyer?

  Losing a little bit of money on one deal or not being perfectly optimized is part of the game. The goal in real estate is just don't have a catastrophic error. And that is definitely possible.

• 1:42Henry Washington?

  Well, with that, let's jump right in. And Dave, I'm curious to hear what you think the number one way of how to fail in real estate is.

• 1:51Dave Meyer?

  The number one way to fail in real estate is overly trusting other people or random people.

• 1:59Henry Washington?

  Just trust no one.

• 2:02Dave Meyer?

  It just, yeah, I know it sounds incredibly cynical, but I am not saying that there are some people are trustworthy. It is me just like not doing my due diligence on the people that I am going to be working with is probably the thing that has led to the most difficulties and losses in my real estate investing career.

• 2:23Henry Washington?

  There's some truth to this one. There is some, I hear you. And you know what I like about this one for real is that when you're new, you depend heavily sometimes on other people's analysis and perspectives and opinions. And I think you do need to weigh those things out. But I also think you've got to get yourself to a place where you can do enough analysis on your own and feel confident in doing a deal based on you and not what someone else is telling you.

• 2:53Dave Meyer?

  I see this all the time. I work with new real estate agents now, and I'm looking at new markets and they'll send me deals and probably earlier in my career, I would have just taken their word for what the rent comps were going to be, or what the ARV of the project was going to be, or what vacancy was in that particular area. Now I am much more skeptical, not that they're always wrong, but I'll talk to several agents and really do my due diligence almost more on them than the deal, especially if you're building a permanent team, like an agent or a lender, like these are people you're going to work with a long time. You should be learning about them, calling references, calling other people who have worked with

• 3:36Dave Meyer?

  them and gotten their experience. Like, I know it sounds like a pain in the butt, and it is a little intimidating, but yeah, it is. But it is so worth it. And I want to be very clear here that I am not trying to blame other people for my failures. It's my fault. I did not do enough due diligence. Or just as like the simplest possible example, if you were to go out and just use the first quote you got on any deal, like you call a contractor, you call a tradesperson, and they show up, they give you a quote, and you're like, oh, that seemed reasonable. I'll take that quote. As we all know, quotes can vary by tens of thousands of dollars. So like, those are like the basic kinds of things you need to do and not just trust that the first person that you interact with is the right

• 4:21Dave Meyer?

  person for you and your business. All right. So then what's number two? What is the number two way to fail in real estate?

• 4:27Henry Washington?

  Man, Dave, I remember as I was getting started in real estate and I was seeing the things that people were buying. And hearing how people were making this calculation. And I just remember thinking, this is wrong. Why do so many people do this? And that is calculate cash flow the easy way.

• 4:49Dave Meyer?

  No.

• 4:50Henry Washington?

  Other words, they would just take their mortgage, subtract that from the rent they get. And tell me that's how much cash flow they were making. The amount of people that were doing this was just mind boggling to me.

• 5:05Dave Meyer?

  Crazy.

• 5:05Henry Washington?

  The conversations I would have with people, oh, this agents too, everybody, this deal cash flows a thousand dollars a month. Your mortgage will be a thousand, the rent's 2000. And I'm like, this is wrong.

• 5:18Dave Meyer?

  Yeah.

• 5:19Henry Washington?

  That is not cash flow. What you want is net cash flow. Rent minus mortgage, minus taxes, minus insurance, minus expenses. All expenses equals net cash flow. All expenses includes things like vacancy, not just maintenance and repairs. Calculate vacancy and calculate real vacancy, not calculate, you know, I put 3% for vacancy. That won't cover one month's rent. You need to figure out what does two to three months of vacancy look like? Be realistic with your expense numbers.

• 6:04Henry Washington?

  Underwrite them so ridiculously conservative that if you're cash flowing on top of your underwriting, it's a bonus because you're obviously hopefully going to perform better than that than the other expense. The other one people love to leave off is property management. I'm going to self manage. Yeah, you may, you probably are until you get to a certain point or until your job changes or until your spouse is like, no more self managing. You don't know how long that's going to last. Calculate management fees so that when and if you decide not to be your own property manager, you don't give away all your cash flow because you didn't underwrite properly.

• 6:46Dave Meyer?

  You want to ensure the highest probability of success. Underwrite conservatively and then you'll know what could happen and the downside because you're underwriting for that. You're saying, hey, what if things don't go well? That's why you have a vacancy contingency. What if rents aren't what I thought they were going to be? You already know what that's going to look like. To me, the only times I've ever really gotten like upset about a real estate deal is when I didn't see the risks coming or didn't account for them. I personally, I don't know about you, I don't get upset. Like if I'm like, oh, you know, there's a vacancy for a month. It's like, yeah, I planned for that. That's fine. It's frustrating. I'd rather not have it, but you know, I planned for it. Or maybe, you know, the rent comps were 1500, I got 1400. It's like, okay, I planned for that too.

• 7:31Dave Meyer?

  I underwrote for that. And I actually put all the line items in my underwriting. Like as I said, vacancy, capex and all these things drives me absolutely insane to see people say they're getting 10, 12% cash on cash return when they're just not counting half of the expenses.

• 7:49Henry Washington?

  I think what makes it challenging is when you do underwrite conservatively and you start making offers based on those conservative numbers, obviously the offers that you're making are lower than what maybe some other people are offering. And then you start to get beat out on deals that you really wanted. And that's when people make the mistake. That's when they start going, oh, well, I can come up 10 grand on my offer. Oh, I can come up 20 grand. I'm tired of losing out on these deals. It's not the initial underwriting. It's the monotony of making several offers, not getting a yes. So that you're like, well, these other investors seem to be doing it. They're paying a little more. So maybe I'm missing something. I'm going to pay a little more because I feel like I'm missing out on deals.

• 8:32Dave Meyer?

  Totally.

• 8:32Henry Washington?

  You're not missing out on deals. What you just signed up for is losing sleep.

• 8:37Dave Meyer?

  This is a hard balance to strike because we also say on the show all the time, we're like, go out and get your first deal. It's like, go do a deal. That is true. You should go do that and not expect a home run. I think like, that's kind of the point. Like you can't analyze your way out of any risk. You can't analyze your way out of. But you need to analyze your way out of the big risks, the known risks, the known things that you have some control over, which are things like doing your numbers right and your rents and your vacancies. When you find a deal that works with all those things, that's when you go execute. Don't just go out and buy anything, but also don't expect to find some perfect deal.

• 9:22Dave Meyer?

  That's going to have every number perfectly lined up for you and you're never going to have any chance of failure. That's also not going to happen.

• 9:29Henry Washington?

  All right. Obviously, I think these are great points, but I'm curious to know what you think the third best way to feel in real estate is. And we'll jump into that right after the break.

• 9:38Dave Meyer?

  Most investors only think about insurance when something goes wrong. A tenant injury, storm damage, loss of rent. Then suddenly the cheapest policy doesn't feel like the best one anymore. That's why a lot of bigger pockets investors use steadily for landlord insurance designed specifically for rental properties. Whether you own one property or a growing portfolio, they make it simple to get covered properly. And bigger pockets pro members get an extra 5% off their landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to get a quote today.

• 10:12Henry Washington?

  Here's a strategy that most W2 employees have never heard of. Normally, if you want to write off a rental property against your regular income, you need real estate professional status. That means tracking hundreds of hours a year. Rent to Retirement just launched a program that skips all of that. It's called the STR loophole tenant placement program. Here's how it works. You buy one of Rent to Retirement's Class A new construction investment properties. You set up an Airbnb listing and self manage it for the remainder of the year. Rent to Retirement then rents the home as a short term rental to establish it as an STR for the year. No furnishing required, making this the easy button to save five or six figures in taxes this year.

• 10:54Henry Washington?

  And because you're the sole manager, there's no hourly minimum to meet. That lets you use a cost segregation study to accelerate the depreciation and potentially write off over $100,000 against your income, even on your first rental.

• 11:09Henry Washington?

  Add in cash back up to 13% of the home price, which exceeds $60,000 on some properties. With this massive cash back incentives, investors are seeing total returns up to 126%. New construction, A-class properties, and inventory is limited. Learn more at biggerpockets.com/retirement or text REI to 33777. Again, text REI to 33777.

• 11:36Dave Meyer?

  I just booked a backpacking trip through Olympic National Park. Two nights out on the trail, no cell service, nothing to do but eat trail mix and stare at mountains I'll never get tired of. That's the whole appeal. But while I'm off-grid, my place doesn't need to sit empty. I can list my space on Airbnb and make a little extra income while I'm away. And with Airbnb's co-host network, I could partner with a vetted local co-host to help take care of the details, from guest communications to onsite support, so I can fully unplug and enjoy my time out in the backcountry. If you've got upcoming travel plans, you can find a co-host at Airbnb.com/host.

• 12:18Speaker 02

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at Indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 12:51Henry Washington?

  All right, we are back on the BiggerPockets Podcast and Dave and I are talking about how you fail in real estate in 2026. We've already covered Dave's number one way to fail, which is don't trust anyone. And my number one way to fail, which was the second item on our list, was to stop calculating cash flow the easy way and just subtracting your mortgage from the rent and calling it cash flow. So Dave, what is the next way people fail in real estate?

• 13:20Dave Meyer?

  The number three way to fail in real estate is not talking to a lender or agent until you are quote unquote, ready to buy. I get it. I know people want to think about the end in mind. They want to create these businesses and have a perfect business plan, but you need to go in a logical order of operations to get to your first deal and talking to a lender and talking to an agent, even if those conversations go poorly, is an absolutely essential. I don't know if you call it first step, but it's in the first two or three steps to being a successful investor. And if you don't do this, you will fail, right? Like you're not going to get a deal if you're unwilling to talk to agents and lenders.

• 14:04Henry Washington?

  What I would add to this is talk to more than one. Every lender is a little bit different, especially if you're talking to local community bank lenders. And also, I think people just have a lack of understanding of exactly how many different types of loan products there are. So yes, go talk to a lender and find out how much you're qualified for, but be specific and ask them, hey, are there any types of loan products that are specifically for the kinds of deals that I'm doing? Or are there any kinds of loan products that are new or that are coming out soon that I need to be aware of?

• 14:41Dave Meyer?

  What about asking them for down payment assistance programs or grants that are available in your area? Cause that might mean you're eligible or can borrow more or have down payment assistance that you never knew about.

• 14:54Henry Washington?

  Absolutely. And lenders will talk to you as if they speak for every lender. So don't take what they say as the holy grail of getting a loan. Take it, write it down, take the notes and then go talk to another one. You'll learn something different, but the more lenders that you talk to, A, the more you can prepare yourself and B, the more information you'll have about what types of loan products are out there.

• 15:19Dave Meyer?

  Yep.

• 15:20Henry Washington?

  And then the other key with this guys is it will help you figure out what it is that you need to go fix. If you're not getting the answer you want.

• 15:29Dave Meyer?

  Yep, exactly. Yeah.

• 15:30Henry Washington?

  Don't just get a no or get a, hey, we can't pre-qualify you or hey, we don't think you're ready. Ask them why. What is it that I need to fix? What would give you more comfort to lend to me? So that now you at least have a plan for what to go fix to make you more bankable.

• 15:48Dave Meyer?

  All right. Well, that was the number three way to fail in real estate. Henry, what is the number four way?

• 15:54Henry Washington?

  This is especially if you're new, not getting an inspection.

• 15:59Dave Meyer?

  Oh.

• 16:00Henry Washington?

  And I know that's a lot for me to say because I do not get inspections when I buy properties now.

• 16:04Dave Meyer?

  I've always gotten inspections.

• 16:06Henry Washington?

  Yeah. Well, you buy mostly on the market, right?

• 16:08Dave Meyer?

  Yeah. And I don't flip. So.

• 16:09Henry Washington?

  And you don't flip. I buy off market and I typically don't get inspections because I'm experienced enough now to walk a property and feel comfortable on whether that thing is going to cost me a ton of money to fix.

• 16:21Dave Meyer?

  You're your own inspector.

• 16:22Henry Washington?

  I'm my own inspector at this point, but it takes a lot of looking at houses, a lot of buying houses, a lot of renovating houses and a lot of dispositioning those houses before you can feel as comfortable as I am doing that. So if you are not in that boat, you better be getting an inspection. You just don't know what to look for. And there are things that you can miss with the naked newbie eye that can literally price your deal out of being profitable and put you in a very tough financial position. It's a few hundred dollars.

• 17:05Henry Washington?

  Spend the three to $600.

• 17:08Dave Meyer?

  Yeah.

• 17:08Henry Washington?

  And sleep better at night. It is well worth it. Even if you get that inspection report back and there is nothing wrong, good. That's what you wanted. I will pay three to $600 for peace of mind all day long.

• 17:19Dave Meyer?

  There's no reason to do this anymore. Like during COVID, I guess you could have made the argument that. You know, things were so competitive and if you knew you had a great deal, like maybe you waive the inspection, that has totally changed. Like honestly, not only inspections help protect you, right now, they're one of the best ways to save money. Like, most people are getting leverage during the inspection period and negotiating concessions or discounts off of the sale price during the inspection. So for most people, this is not going to be true for everyone, but you're actually going to probably make money by having an inspection because it's going to cost you 500 bucks, but you're going to get five grand back in concessions from the seller, or they're going to fix something that you would have had to come out of pocket for. So I just like,

• 18:03Dave Meyer?

  there's no reason to do it. The one thing I will say that I have done that has been pretty effective when I'm trying to be aggressive about a bid is doing like a pass fail inspection, where you basically say, I'm not going to nickel and dime you on the inspection, I'm going to get one, and then I'm going to tell you if I'm buying the property or not, but I'm not going to ask you for money.

• 18:24Henry Washington?

  Yeah, no, we have done that in the past, where we said, look, I just need someone to get eyes on this property with a little deeper look. I'm not going to ask you for anything. I just need to know what's going on. And I will give you a decision, buy or no buy, right after I look at that inspection report. Because you're right, a lot of the fear that sellers have with buyers doing inspections, it's just that most people understand that inspectors are paid to find things and they're going to give you a list of things that they think is wrong with the property, and then the buyer's going to want you to fix those things, and that's going to cost them time and money. But at the end of the day, if you're new in this business and you want to do an inspection and you're dealing with a seller who does not want you to do it, walk away. There's more deals.

• 19:05Dave Meyer?

  Yep, totally.

• 19:06Henry Washington?

  Even if you think it's a great deal, don't take that risk, because there's probably some reason. And if they're not going to tell you what that reason is, and they're not going to allow you to at least get a professional's eyes on it, just move on. There's other deals.

• 19:18Dave Meyer?

  100%.

• 19:19Henry Washington?

  All right. So there's my number four. Make sure you get those inspections. Dave, I'm curious to know what you think the fifth way to fail in real estate is. But again, we'll find out after the break.

• 19:31Dave Meyer?

  For my wife's birthday, I wanted to make her a new website for her landscape design business. So I researched a lot of different options. I tried out a couple, but honestly, it was really overwhelming. It was pretty time consuming and still, the site wasn't coming out the way I wanted it to. Then I tried Hostinger and everything was super simple. I asked Hostinger's AI to build a clean site for her business and it had a working version up in minutes. No coding or designer needed. Plus, its AI agent helps with SEO, website copy, and email marketing after launch. You get domain, website, email, all in one account. And right now, you can get Black Friday and Cyber Monday

• 20:14Dave Meyer?

  pricing through December 14th. So snag Hostinger's services at their lowest prices before the sale ends. Create your website today for just $1.99. Go to Hostinger.com/realestate and use code REALESTATE for an additional 10% off Black Friday and Cyber Monday pricing.

• 20:32Henry Washington?

  Buy smart, drive for less, and trade for more. That's Toyota affordability. And it all starts with a great deal from your local Toyota dealer. Make a smart buy on an all-wheel-drive Camry, Corolla Cross, or get a Corolla sedan packed with the latest features, advanced tech, and head-turning style. Take a test drive in two of Toyota's most popular SUVs, the spacious, family-friendly Grand Highlander and adventure-ready RAV4. And with so many hybrid and plug-in hybrid models available across the lineup, plus efficient all-electrics like the BZ, BZ Woodland, and all-wheel-drive CHR, you can drive your way and skip the pump. And long after you leave the lot, your Toyota keeps delivering with legendary resale value built on a reputation for quality and reliability.

• 21:16Henry Washington?

  So when it's time for your next Toyota, you could trade in for more from a great deal today to a great value tomorrow. A Toyota is right for you. Shop toyota.com for deals and details, or stop by your local Toyota dealer today. Toyota, let's go places.

• 21:32Dave Meyer?

  I just booked a ski trip to Park City and I've already got the whole thing planned out. Five days, first tracks every morning before the crowds show up, my knees reminding me I'm not 25 anymore by the second run, and an embarrassing number of overpriced burritos at the lodge. I don't even care. This is the trip I look forward to all year. But here's the part I actually appreciate. The practical side of my brain kicking in is that my place doesn't have to just sit there empty the whole time I'm away. I can list my space on Airbnb and bring in a little extra income while I'm out getting humbled on a mountain. And with the co-host network, I'm not the one handling all of it.

• 22:13Dave Meyer?

  You can partner with a vetted local co-host who can create your listing, manage reservations, message guests, and even handle the styling. So I get to fully focus on my trip and my place is still working for me the whole time. Find a co-host at Airbnb.com/host. Investing in real estate has always been smart, but it hasn't always been simple. Now it's both, thanks to the Fundrise Flagship Fund. The Fundrise Flagship Fund launched more than five years ago with a mission of delivering low-fee access to blue-chip private market real estate. Today, the Fundrise Flagship Fund has grown to manage more than $1 billion of real estate on behalf of hundreds of thousands of investors, making it one of the largest funds of its

• 22:58Dave Meyer?

  kind. For those who believe real estate has an important role to play in their portfolio strategy, the Fundrise Flagship Fund has positioned itself as both a simple and a smart option. Whether you're starting with $10 or $10,000, the Fundrise Flagship Fund makes adding real estate's unique potential for both passive income and consistent growth, just visit Fundrise.com/pockets to make your first investment today. Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise Flagship Fund before investing. This and other information can be found in the fund's prospectus at Fundrise.com/flagship. This is a paid advertisement.

• 23:39Speaker 02

  This episode is brought to you by Indeed. You're ready to level up your business, but the pressure to find the right person to make that happen is intense. Indeed sponsored jobs can help carry the load. It boosts your job post to help it reach quality talent fast. Cut through the chaos with Indeed sponsored jobs. Get a $75 sponsored job credit at indeed.com/podcast. Terms and conditions apply. Hiring now? Then this is a job for Indeed sponsored jobs.

• 24:12Henry Washington?

  All right, we are back on the BiggerPockets Podcast. Dave and I are breaking down our list of ways to fail in real estate. We are working on number five. Number one, don't trust anyone. Number two, stop calculating rent the easy way. Three, don't wait to talk to lenders. Talk to lenders as soon as you can. Number four is not getting inspections. That'll kick you in the teeth every time. Number five is what, Dave?

• 24:39Dave Meyer?

  All right, this is a mistake I've made in the past. I see it all the time, but the number five way to fail in real estate is to not repair things properly and allow deferred maintenance to accrue on a rental property.

• 24:54Henry Washington?

  Are you talking directly to me right now? I feel personally attacked right now.

• 24:57Dave Meyer?

  My wallet is feeling personally attacked recently for some bad decisions I made about this. People love buying, right? It's fun, you know, you feel good. You get to tell your neighbor that you got more doors. But man, the way you make money in real estate, or you fail in real estate, is how you operate your business over time. Acquisitions are important. You gotta do the underwriting, but a surefire way to screw something up is to ignore what's going on at your property each and every day, because these things compound. A problem that costs 200 bucks to fix, a year later will probably cost $2,000 to fix. I know this because I'm replumbing a house that just cost me $80,000 to fix. So yeah, just pay the money upfront.

• 25:41Dave Meyer?

  One of the reasons you need to underwrite and have cash reserves is to pay for this stuff upfront. There is no point, if you're in your first or your fifth or your 10th year of investing in real estate and saying, you know, I'm going to save 300 bucks and not do it right now. You're investing for 10 or 20 years from now, 30 years from now, pay the money upfront. It is worth it every single time. You know, meet with a lot of contractors, find the best person to do the job and just do the job.

• 26:06Henry Washington?

  There's two ways that this has bit me in the butt. The first way is buying something that does need work that I planned on working on, but there was tenants in the property, right?

• 26:18Dave Meyer?

  Oh, yeah. Oh, yeah.

• 26:19Henry Washington?

  So what that means is I bought it, but I didn't put the tenants out because they're paying decent enough rents. They've been living there. They want to keep living there. That's cool. They do. What is supposed to happen is when they move out, then you do the renovation. But what happens, guys, is

• 26:37Dave Meyer?

  You forget.

• 26:39Henry Washington?

  By the time they move out, I'm flipping three houses and I'm renovating two other rental units. And you just forget and it just gets re-rented. And so now I didn't do the renovation and that's lingered and it's lingered. And the maintenance bills start coming in and this property is costing me a ton of money. And I'm like, what? Oh, yeah. I was supposed to spend $40,000 renovating that unit and I just didn't, right? Bad operator problems. I wasn't organized enough to be ready to jump on that renovation when it happened. And it ended up costing me more money in maintenance along the way. And I've sold properties because of that, because I just didn't get to the renovation in time.

• 27:20Henry Washington?

  And now I'm at a place where I don't have the bandwidth to do it and I'll sell that property. And is that the right thing to do? Probably wasn't. I should have jumped on it right when I needed to. But it requires you to be a good operator. So that's one way it's bit me in the butt. The other way is maybe you did renovate the property when you were supposed to, but it just got super maintenance heavy. And when you have a bigger portfolio, you get maintenance requests all the time. And sometimes you're just approving things or you're not approving things. And you don't realize like, hey, this is the sixth time I fixed something at this unit. When you have 60 units, right? It's hard to sometimes remember that like, oh, I fixed this thing at this place several times,

• 28:05Henry Washington?

  or I've spent money at this place several times. And you realize that maybe this is a property that I should have stopped taking a holistic look at and figured out, how much money do I need to spend to stabilize this thing? Or do I need to sell this thing?

• 28:17Dave Meyer?

  Exactly.

• 28:18Henry Washington?

  I am guilty of these things. So I am speaking from experience. You've got to stay on top of your maintenance. You've got to be able to look holistically at your properties and see how much you're spending on maintenance and do it more than once a year. So you can recognize these trends before you get that $7,000 bill and make informed decisions. But this is real. This is real right here.

• 28:39Dave Meyer?

  All right. So that was number five, but Henry, let's finish it up. What's the last way to fail in real estate?

• 28:45Henry Washington?

  Number six on our list, and one of the ways that can absolutely cause you to fail in real estate is not screening your tenants. Dave, it blows my mind when I talk to people who self-manage and I ask them, did you call your tenants references? Did you call your tenants past landlords? Not just the one they just moved out of, but two landlords ago? And they say, ah, no, we didn't. I just, it blows my mind. And I think it's because it's a tedious thing to do and calling random people sometimes is uncomfortable. Maybe that's why they avoid it.

• 29:25Henry Washington?

  But the amount of landlords that I talk to that don't call tenant references, that don't call tenant employers and that don't call past tenants beyond just the one they just left, it is mind boggling to me. But our job as landlords is not to rent properties. I mean, it is, but our job is to get really good at tenant selection. If you want to make money in real estate investing as a landlord, tenant selection The way you do it, because what kills you as a landlord isn't just bad tenants who hurt your properties, but what really kills you is vacancies.

• 30:07Henry Washington?

  And so finding good tenants with a good history who want to be in your properties, like it's a skill set that you have to develop. And part of that is due diligence and part of that due diligence is uncomfortable, but it will literally put money in your pocket or keep you from bleeding money out. Like it just mind boggling to me that people don't do this consistently.

• 30:30Dave Meyer?

  Like you said, it's not just about limiting vacancies, but you, when you have a good tenant, they're going to let you know about the problems, like the stuff we were just talking about, like the repairs. Like when you have a good tenant, they're going to come to you and be like, hey, this problem is the issue. I really think we need to fix this and this and this. And you trust that because you know them, you've screened them, you have a good rapport with them. It saves on so many different things. I, I've had units where I've had tenants move in for four or five years. You know, I'm not even talking about families. I'm talking about young professionals. Stay for a long time. They take responsibility for the property. They meet with contractors for me regularly because they're people that I've built a rapport with. Like this is a business. These are your customers.

• 31:14Dave Meyer?

  It is your job to be a good service provider to them and find people who you feel like you can work with. It is a mutually beneficial thing. This is someone's home. This is where they live. It matters to them. Find someone who's going to treat it and think about it in the same way that you can, and you're both going to be so much better off.

• 31:32Henry Washington?

  The best screening technique that I have found for tenants, the thing that's usually worked out well for me is calling tenants current and past employers and asking them, what kind of employee were they? Did they show up on time? They'll tell you, they're like, oh man, this guy, they were always late. They never did what they said they were going to do, right? That feedback has always translated well for me. And then one question I always ask them, as I say, if it was your house, would you let them live in your house? And if they've said no to that, and I've let them live in my property, I've regretted it. And if they've said yes to that, and I've let them live in my property, it's usually worked out pretty well.

• 32:13Dave Meyer?

  Yeah, I think this is just a no brainer. It's honestly crazy to me that people wouldn't do this. This is someone who's moving into your house. Like I, I dropped my car off to get a tire repaired and I was like interviewing the person to make sure they were going to do it.

• 32:28Dave Meyer?

  Maybe this is just me that I'm skeptical of everyone.

• 32:30Henry Washington?

  Well, your number one rule was don't trust people. So it is not a surprise.

• 32:34Dave Meyer?

  This is such like, I grew up in New York. This is such a good New York.

• 32:36Henry Washington?

  Oh, that's so true. That's so true. I forgot about that. Yeah, that is very New York.

• 32:40Dave Meyer?

  It's such a New York.

• 32:41Henry Washington?

  New Yorkers don't talk to anyone. They don't trust anyone.

• 32:45Dave Meyer?

  Yeah, it's just like, oh, you're talking to me? What the you? What do you want from me?

• 32:50Henry Washington?

  It's so New York. You're right about that.

• 32:52Dave Meyer?

  No, but I really mean that. I just like, I, I think I approach it like in a friendly way, but I just want to make sure I know who these people are. Like, this is the, this is the challenge of real estate is you were working with so many people.

• 33:04Henry Washington?

  Yes.

• 33:04Dave Meyer?

  Work with great people. There are, I, I am not saying don't trust people because most people aren't trustworthy. I actually find that most people are trustworthy and most people do a good job. But it is your job as the investor to make sure you, you screen out the people who are the exception to that rule.

• 33:20Henry Washington?

  And you make a good point that like typically, once you get to the point of calling references, you already have a pretty good idea if you want to rent to this person. And you're doing some confirming. So it's not like you gotta go do this for every applicant. That is not what we're saying. Once you've gone through your normal application process and you've narrowed it down to a couple of people, even if you've got that good feel, even if they've given you the good vibes, confirm those vibes. If you've got the good vibes, somebody else should have the good vibes about them too. And if what you're hearing doesn't fit the good vibes, well, you've got a hard decision to make.

• 33:56Dave Meyer?

  Yep.

• 33:57Henry Washington?

  I'm telling you, when I have talked to past employers, that is where I've got the best feedback.

• 34:03Dave Meyer?

  All right. Well, we've given you six ways to fail. Any other last thoughts, Henry?

• 34:07Henry Washington?

  The last thoughts for me are, is a lot of these just seem like trust, but verify, verify these things. You've got to do due diligence, not just due diligence about the purchase process, but due diligence about the renovation process and inspection process and due diligence about the tenant screening and tenant process. These are the places that are gonna make or break you. These are the places that are gonna either put money in your pocket or take money out of your pocket. And what can really hinder people, especially when they're first getting started, is taking a big loss on your first deal. It can set you back years. If you've saved up a bunch of money to finally buy a deal and you stumble on one of these six items, it could set you back to where you've got to save up a whole lot of money again,

• 34:50Henry Washington?

  or just put a bad taste in your mouth so that you you don't end up investing and setting yourself up for a future of financial freedom. So, trust us. We're saying these things not because they're trendy things to say, but but we've made these mistakes. On some level, Dave and I have made all these mistakes. Don't do it.

• 35:08Dave Meyer?

  Take that one extra little step. When you want to quit and you're tired and you don't want to make that extra phone call, that's the way to not fail. Like, if you had to summarize it, is just take that one extra step and you can be successful. Your chance of failure, if you're willing to put in that little tiny bit of extra work, is pretty low. So that I think is is super encouraging.

• 35:27Henry Washington?

  And I know it's going to be hard when you're staring at a deal that you think could be profitable and one of these things that we've talked about just isn't computing. And you're like, man, do I really want to walk away? Yeah.

• 35:38Dave Meyer?

  Yes, you do.

• 35:39Henry Washington?

  Live to fight another day. There are more deals to buy. Just don't bend on these six things and it will keep you safe. It will keep you in the game and it will keep you on the path to financial freedom.

• 35:51Dave Meyer?

  Well said.

• 35:51Henry Washington?

  All right, guys. Thank you so much for joining us on this episode of the Bigger Pockets Podcast. Hopefully you have learned from Dave and I's mistakes, or you will learn from Dave and I's mistakes and it will keep you safe. It's been great talking to you. We'll see you on the next episode.