Late Starter’s Guide to Real Estate (Start in Your 40s!)

Is it too late to invest in real estate if you’re in your 30s, 40s, or 50s? No! Today, we’re giving you the exact blueprint to retire in 10-15 years, even if you’re starting in your 50s with a median income and average savings. Got a small sum stashed for retirement and looking to real estate for relief? If you follow this strategy, you too could have retirement with plentiful passive income not too far in the future. We did the math—it’s totally doable. Tired of seeing 23-year-olds flaunt 50-unit portfolios on social media? You DON’T need to be in your 20s, have a high income, or get a large inheritance to retire early with real estate. The average American can still do it in just over a decade. Dave is giving you steps to take today to start on that journey, and he shares his fully mapped-out strategy for achieving early retirement in 10 to 15 years, regardless of your current age. Plus, how to “audit” your resources so you know the best strategy for you to take to reach your (early) retirement goals on time! In This Episode We Cover How to start investing in real estate in your 30s, 40s, or 50s “Auditing” your time, money, and skills to find the best strategy for investing The math that proves you can retire with real estate in just 10-15 years Dave’s exact blueprint for a 40-year-old who wants to retire by their mid-50s What to do if you don’t have much money saved for investing (you can still invest) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠https://www.biggerpockets.com/blog/real-estate-1155 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.

• 0:00Dave Meyer?

  You can get into real estate at almost any age and still pursue and achieve financial freedom. Do you feel like it's too late to start investing in real estate? It's not. And today, I'm sharing my late starters guide to real estate investing. So whether you're 30, 40, or even 50, investing in real estate today will likely improve your financial situation and allow you to retire early. If you have a stable career or already own a home, you even have some advantages over the 20-year-olds you see on social media showing off their massive portfolios. On this show, I'll explain how to maximize the benefits of starting later, and I'll share the exact strategy I think works the best for anyone starting in this age.

• 0:47Dave Meyer?

  Hey, everyone. It's Dave Meyer, Head of Real Estate Investing at BiggerPockets. I've been investing now for 15 years, and on this show, we teach you to pursue financial freedom through real estate. One of the questions I get most as a real estate investor and a real estate investing educator is, is it too late for me to start? And I can tell you right here at the top of this episode that the answer is definitely no. You can absolutely and should get started in real estate investing because there are just so many benefits regardless of when you start. But there are real good reasons why this question about whether it's too late to start come up. First and foremost is just social media. You probably see this all the time.

• 1:30Dave Meyer?

  You see these really young people seeing incredible success. They might be exaggerating or straight up fabricating that success, but nevertheless, we see it all the time. And then the second reason is that the benefits of compound interest are real. The longer you are in the real estate market, the better. But even though that is true, it is still better for you to start today than not get started at all. And that's what we're going to talk about in today's episode. In order to address this question, we do need to also answer what starting late means in the first place, because I've had people who are 25 years old ask me if it's too late to start, which is kind of crazy. But I've also had people who are 60 years old ask me that question.

• 2:13Dave Meyer?

  And the span of what people think is the right time to start or too late to start is really, really broad. So for the purposes of this episode, I think we sort of need to hone in on an age as an example, and I'm going to use the age 40 for the example. Not for any real reason, but I just figured sort of quote unquote midlife would be the most relevant example. But the lessons and the strategies I'm going to talk about today will really apply to anyone who is starting from basically their late twenties up until their sixties. So with that, here it is. The Late Starters Guide to Investing in Real Estate. So we're going to walk step by step how someone who's, again, as our example, 40 years old,

• 2:56Dave Meyer?

  should start investing in real estate. And one more time, just want to reemphasize that if you're 35 or 45 or 30, these are probably the same things. I'm just going to be using the example of a 40 year old. So what then is the first step in the Late Starters Guide? It is setting your goal. And I know if you listen to this show, you're probably like, you say that for everyone, whether they're 20 or 40 or 60, and that's exactly the point. Setting your goal and figuring out your strategy is always the first step. I wrote an entire book called Start with Strategy to emphasize this point and help people set their goals because I really genuinely believe that is the most important thing that you get started.

• 3:39Dave Meyer?

  So we know that we got to set our goals, but what is a good goal? And what is a realistic goal? Because if you just pick something out of the hat, you might say, I want to retire in three years. Sure, most people do. But that is not really a realistic goal, regardless of when you're starting. Now, I've done the math repeatedly, and what I've shown is that almost regardless of what your current income is or where you're starting, if you dedicate yourself to real estate investing for 10 to 15 years, you can replace your income. I want to say that again, because this is an amazing goal. This is what's so cool about real estate investing is if you start today at 40, win

• 4:19Dave Meyer?

  10 to 15 years, so by age 50 or 55, you can absolutely replace your income and retire early. So that is the goal that I recommend most people anchor themselves to, is trying to create a sustainable, low risk, high probability strategy that is going to take you from where you are today, which can be zero rental properties, and get you to full income replacement through real estate in the next 10 to 15 years. That is the goal that has always gotten me excited. And hopefully that's getting you excited because it can cut your time from now to retirement in less than half, even if you're starting at 40. That is 10 to 15 years less of work if you start investing in real estate today.

• 5:04Dave Meyer?

  So if you agree with this goal, which I hope you do because it's an exciting one, we can then move on to step two, which is to assess your resources. This is a big point I often make with people, and I wrote a whole lot about this in my book. It's called the resource triangle. It's basically this concept that every single deal and every single real estate portfolio needs three distinct resources to be successful. That's capital, otherwise known as money. You need to have money to purchase real estate, even if it's not your own, but you need some money. You need time because real estate is not entirely passive, regardless of what people say. You need to at least put some time into it.

• 5:46Dave Meyer?

  And you need skill because someone needs to operate your business with some degree of proficiency to actually make sure the things that you buy wind up producing money for you. And the cool thing about real estate is even though you need all three of these resources for every single deal, you don't need to bring all of them to the table. When I got started, I had time and I had a little bit of skill, but I didn't have any money. And I was able to trade my time and tiny bit of skill at that point for other people's money. Some people, particularly those who are starting a little bit later, might be in a different position. You may have saved up some money right now, and that means you can bring that to the table

• 6:29Dave Meyer?

  when you're figuring out how to grow your portfolio. And as I mentioned earlier in the show, a lot of people talk about the amazing benefits of getting started early, but most 22, 23 year olds that I know don't have any savings. And that's a disadvantage for starting really early. Whereas if you're 40, you may have some money that you can contribute. Even if you don't, that's fine, but I'm just saying this is one potential advantage of starting a little bit later. But regardless of what you have. This second step of assessing your resources is really important. You need to figure out what you're going to bring to the table. Because even if you have a lot of hustle, you can't create something out of nothing. You can't create a portfolio out of thin air.

• 7:14Dave Meyer?

  You need some resources that you can bring to the table, whether it's capital, time, or skill. You need some of that to make your dreams of a real estate portfolio of retiring early more realistic. So I recommend what you do is sit down and think through what you can bring to the table. Start with money. Look at a couple of different things. First, look at how much money you actually have saved up and that you can realistically contribute to real estate investing. Now, even if you have $50,000, let's call it 50 grand saved up, that's a lot of money. That can absolutely get you started in real estate. But you may not want to invest that all into your portfolio.

• 7:57Dave Meyer?

  You may have kids or a family or people that rely on you. You might want to save some money for emergency funds. All of those are really important. So think through that and subtract those other funds that you have from your savings and figure out what you realistically and responsibly can put towards real estate investing. So maybe that's $40,000. That's great. That's a great place to start, even if it's $10,000. Just knowing that number and how much money you can contribute to your portfolio is going to be really, really beneficial to you. That's the first part of capital. The second part of capital that I think is really important for late starters is figuring out whether you want to stay in your job or not. And this is a really sort of controversial thing that always comes up in real estate.

• 8:42Dave Meyer?

  A lot of people want to prioritize quitting their job, which is totally fine. Some people choose to stay in their job longer. My recommendation for late starters is to really think through how you can maximize your current income.

• 8:57Dave Meyer?

  The sooner you can get more income in the door to invest into your portfolio, the better it is going to be for you. We talked about this a little bit earlier, that compound interest is a really important, powerful force. The more money you get to invest in the market sooner, it's just going to grow and grow and grow and help you achieve that retirement faster. And so when people ask me, should I quit my job to go into real estate? Should I stay in my current job? My recommendation for late starters is which option is going to help you maximize that income short term? If you're in a high paying job that you can live with, that's not making you miserable, it doesn't even need to be your favorite. But if you are in a high paying job that's going to allow you to get loans and is going

• 9:40Dave Meyer?

  to give you excess money that you can save and then put towards your portfolio. If you want to retire early, I would do that. I know a lot of people want to retire right now, but remember retiring in three to five years, if you're just getting started, is not super realistic. So prioritizing and thinking sort of long-term about how do I retire in 10 years? Maximizing your current income is going to be really important. There are some people though, that are out there who are like, I hate my job. I literally can't stand it. That's a different story. Or I actually like my job or hate your job, whatever, but I just don't make a lot of money. Then those to me are then scenarios that you may want to consider going into real estate. If you think you can make more money as an agent or a loan officer or a property manager, go do that.

• 10:25Dave Meyer?

  You're going to get the benefit of learning the business and you're going to make more money and you might get real estate tax professional status at the same time. Like if you can make more money doing that, go do that. And if you would like it, right? You know, if you would like it, do that as well. So this is again, the first sort of steps in assessing your resources. How much do you have saved up? And then how are you going to get money to pour back into your portfolio? Sort of make a decision for yourself. Is that going to be staying in your current career or switching into one that can make you more income in the short term? All right. So that's the first assessment in the resource triangle, but we got to talk about time and skill, super important audits you need to do to allocate your resources. But we got to take a quick break. We'll be right back.

• 11:08Dave Meyer?

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• 11:21Dave Meyer?

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• 12:02Dave Meyer?

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• 12:35Henry Washington?

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• 13:18Henry Washington?

  after spending $400 on your Aven card. Enough to cover your entire annual Pro membership. Head over to aven.com/biggerpockets to see if you qualify. Aven Financial, Inc., MLS #2042345. Cards issued for 2020 license from Visa USA Inc. by Coastal Community Bank. NMLS number 462289, member FDIC, equal housing lender, subject to approval. Terms apply. Visit avon.com for details.

• 13:38Dave Meyer?

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• 14:25Dave Meyer?

  Welcome back to the BiggerPockets Podcast. We're here talking about the late starter's guide to getting into real estate. Our goal here is to help on average, someone who's about 40 years old, give or take 10 years, retire in 10 to 15 years using real estate, which is entirely possible. The first thing I told everyone to do is to set that goal. The second thing is to do a resource audit and figure out what you can bring to the table to build your portfolio. The first step was assessing finances, but we have two more to go. We got to talk about time and we have to talk about skill. Time, I think, is one of the most overlooked elements of building a portfolio for real estate investors, especially when you're first getting started.

• 15:08Dave Meyer?

  Because in reality, there's this big spectrum of how much time it takes to own and operate a real estate investing business. You could be house hacking and self-managing everything. You could be flipping properties and that's super time consuming. And for some people, that might work. On the other end of the spectrum, maybe you're super wealthy and you just want to invest in syndications, or you want to split the difference and you buy duplexes and hire someone else to manage them. All of them work. It really just depends on your own personal resources. If you're someone who's going to prioritize a high-paying job that maybe takes 40 or 50 hours a week, you might not want to be self-managing every property because you're going to burn out and that's really tough.

• 15:50Dave Meyer?

  So maybe you lean towards the more passive end of the real estate investing spectrum, where you hire a third-party property manager. Maybe instead you work a job that you're okay with that has flexible time and you work 35 hours a week and you have five to 10 hours a week to manage your own property and that will increase your cash flow. You should do that. Again, the whole idea of this resource assessment is to just figure out what's realistic for you and your lifestyle. And as a late starter, you may have a family, you may have responsibilities. And it's really important to think about what time you can sustainably put into your portfolio. Because one of the worst things you can do is get into real estate, take on deals that are super time-consuming and not be able to put the requisite time to make those things successful.

• 16:35Dave Meyer?

  You're either going to burn out or you're going to fail. And that's worse than just hiring a property manager, right? Like if you hire a property manager, you could just make these successful and sustainable over the 10 to 15 years that you need to make this sustainable for in order to realistically retire. So that's the second thing. And the third thing is your skill set. This, again, another thing people overlook, but it takes a variety of skills to be a successful real estate investor. And figuring out what you're good at and what you're bad at, what you're going to hire for, what you're going to do yourself, is another really important part of building your portfolio. As an example, I'm good at data analysis. I like analyzing deals. I like analyzing markets.

• 17:17Dave Meyer?

  I'm not very handy, so I outsource a lot of my property management, all of my repairs and maintenance. I outsource my billing and my CPA work because I'm not good at that either. And again, could I realistically do this all myself? Sure. Am I going to do that? Well, no. And as someone who is, I'm not 40 yet, but I'm getting pretty close. I have other priorities and things in my life and I don't want to spend all of my time working on real estate. So just thinking through the things that you like doing, that you think you're going to be good at versus the ones that you would rather hire out is going to help you. Every successful investor I know hires out at least some of the skills and stuff that you

• 17:59Dave Meyer?

  need to successfully run a portfolio. This is not copping out. It is not cheating. It is not being lazy. It's just smart business. Like this is just what you gotta do. And so take some time to think through this. This is the resource audit, thinking through how much money you have, how much time and how much skill you have. That is step two in your late starters guide and brings us to step three, which is mapping out your strategy. Strategy, the definition of it is a plan to achieve a goal. And we know our goal right now. And so the strategy that we need at this point in our plan for late start is to figure out like, how am I actually going to get

• 18:40Dave Meyer?

  from here today to the goal that I have of replacing my income in 10 to 15 years? And that might involve rentals, that might involve short-term rentals. But at this point, I really think you need to kind of go a little bit higher level. And of course, every person is going to have their own approach to this. But because you're listening here and I'm giving you a guide, I'm just going to tell you what I think is the highest probability strategy for trying to retire, starting at age 40 in 10 to 15 years. Here are my strategies. Number one, I already told you this one. Maximize your current income however you can, whether that's staying in your current job, working a side hustle, going into real estate.

• 19:22Dave Meyer?

  Get as much money as you can to put into your portfolio as quickly as can. That's the best strategy. Second, focus on building equity for the next seven to 10 years. So you can build your net worth as quickly as possible. And this means not focusing as much on cash flow. I'll explain that in a minute. But I think the real focus, when you're getting started and trying to scale up, is get that net worth, your investable assets, the total amount of equity you have. Grow that as quickly as you can. That can be passive, that can be active, that can be flipping, that can be burr. However, you want to do it, the strategy behind it is to grow your net worth and equity as much as you can as soon as possible.

• 20:07Dave Meyer?

  The third part of the strategy is once you reach an appropriate amount of equity, which may be $2 million for some people, it might be $1 million for other people. But once you figure out how much money you need and how much equity you need to achieve that, then you shift to a cash flow focus. This can be in year seven, it can be year eight, in year nine. But that's it. That's my plan for retirement. Maximize your current employment, spend the first two thirds of your growth stage, building equity, and then the last third of your growth stage, shifting from an equity focus to a cash flow focus. That's it. Then you retire. I don't often prescribe strategies to people, but I really like this one.

• 20:50Dave Meyer?

  So for the purpose of this episode, I'm going to assume you like this one too. And we're going to use it and I'll share an example of you so you all understand sort of what I'm talking about maximizing income and also the shift from equity to cash flow over time. I'll explain that all in an example as we keep going. Okay, so let's just talk about goals and sort of working backwards towards, once you have the strategy, how this might actually play out for you. So when we talk about goals and doing this resource audit, one of the things that you should do at this point, when you're building out your strategy, is figuring out what income replacement means to you and what retirement actually means to you. Do you need $10,000 a month? Do you need $5,000 a month? Do you need $20,000 a month?

• 21:35Dave Meyer?

  That's going to vary a lot per person. But The cool thing about real estate is that if you figure out what amount of money that you want, you can pretty easily work backwards and figure out, one, how much cash flow that you're going to need monthly from your rental properties. But two, how much equity that you're going to need to actually generate that cash flow. And this is a super important concept that I really want everyone to think about here. Cash flow is really a function of two things. How much money you have invested into your portfolio and the rate of return that you earn on that portfolio. Just as an example, if you had $1 million invested into your portfolio and you earned a rate of return, like a cash on cash return of 10%,

• 22:20Dave Meyer?

  you can know that you're going to have $100,000 per year. That's amazing, right? On the contrary, if you only have, let's say, $400,000 invested into your portfolio, which is still a lot of money, and you have that same 10% rate of return, you're only going to be earning $40,000 a year. And I don't know your personal lifestyle, but I would imagine you can all see that earning $40,000 a year from your rental portfolio versus $100,000 a year in your portfolio is pretty different. And although conditions change and the rate of return that you can earn will change based on where you live, how good of an investor you are, what's going on in the macroeconomic environment, the rate of return doesn't change all that much.

• 23:05Dave Meyer?

  You know, on the low end, you might be getting 5% cash on cash return. On the high end, if you're crushing it and doing value add, you might be getting a 15%. So that is a pretty big range. But I think for the average investor, for who's just getting started, you need to assume that you're probably going to be getting a cash on cash return. Let's call it of 8%. Let's say you average an 8% cash on cash return. So if you spend the next 10 to 15 to 20 years putting all the money that you have into your investment property and you wind up building up enough equity, let's call it $250,000 of equity. That's an amazing amount of money, right? You have an 8% cash on cash return, pretty good cash on cash return. Your cash flow at that point is $20,000.

• 23:48Dave Meyer?

  Nothing to sneeze at, but probably not retiring off $20,000.

• 23:53Dave Meyer?

  Even if you got that cash on cash return, let's just say you had a fantastic cash on cash return, and you got it up to 15%, that's great. That's a really high cash on cash return. At that point, you're doing better, but you're still only earning $37,500 per year in cash flow. That's a big difference, but again, it's probably not that retirement number that most people want. Instead of focusing on getting our cash on cash return from 8% to 15%, if we spent the majority of our growth period of our portfolio building, trying to build equity instead, let's say we had $1 million in equity at the end of seven years, which may sound like a crazy high number at this point,

• 24:37Dave Meyer?

  but trust me, if you commit yourself to real estate investing, that is an achievable goal. So if you say you have $1 million of equity invested, and then you go back to that lower rate of return of 0.08, you would actually be earning $80,000 a year. Now, that is getting pretty darn close, I think, to almost everyone's retirement number. That is actually higher than the median household income in the United States right now. And of course, I'm pulling numbers out of thin air, but what I'm trying to illustrate here is that what's going to matter to your retirement more is how much equity you build up in the first few years, not how much cash flow you're earning in the next few years. If you can build 500, or a million, or a million and a half dollars of equity

• 25:21Dave Meyer?

  in the next seven or eight years, taking that equity and generating cash flow from it is actually going to come easy. You could buy properties for cash. You could buy it for low leverage. You could do all sorts of things. Having that equity to invest at the highest rate of return close to the date when you actually want to retire, that's what's going to empower your retirement, for sure. Almost every real estate investor I know has this realization that focusing on cash flow in the first few years is not that important. What you need to do is maximize your equity and then focus on cash flow later. So again, this is why I'm proposing this strategy. Again, three-part strategy. Number one, maximize your current income however you can, because that's going to help you invest and build up that equity.

• 26:07Dave Meyer?

  Number two, focus on deals that will help you build equity in the next 10 years, seven years, whatever it is, as quickly as possible. And then three, when you're getting close to the date where you actually want to retire, shift to a cash flow focus, and that's it. That's the high level strategy. This is what I would recommend to most people. This is what I do myself. Over the last 15 years of my own investing career, I have focused majority of my time and effort on building equity. And you could do that through tons of different deal types. You can do it through rental properties. You can do it through the BRRRR method. You could do it through house hacking. You could do it through flipping. But it does represent a difference between going out and just buying the highest cash flowing deal right away.

• 26:51Dave Meyer?

  There is a inherent trade off in real estate. Some of the properties that cash flow the most are probably not going to have the same amount of appreciation, especially if you're not doing a heavy renovation. If you do a renovation, you can get both, which if you can do both, absolutely do that. But as a newbie, what I would recommend to you, if you want a retirement in that 10 to 15 years, is to pick the deals that are going to give you those big pops of equity and prioritize that more than generating the maximum amount of cash flow in the short term. So that's my strategy. I'm giving you all the strategy that I use and I recommend to pretty much everyone. But I want to hammer home this point a little more with a more specific example and just share with you the numbers behind how this can actually work.

• 27:35Dave Meyer?

  Because I actually built an entire calculator that can show to you and prove to you that this really does work. I'm going to walk you through it right after this break. 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 Hostingr and everything was super simple. I asked Hostingr'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.

• 28:20Dave Meyer?

  You get domain, website, email, all in one account. And right now, you can get Black Friday and Cyber Monday 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. 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.

• 29:03Dave Meyer?

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• 29:47Dave Meyer?

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• 31:24Dave Meyer?

  Everyone, welcome back to the BiggerPockets Podcast. We are talking through the late starters' guide to real estate investing. Before the break, I shared with you my personal strategy and the one I recommend for any late starters. As a reminder, it's basically maximize your current income, focus on equity in the short run, and then turn to a more cash flow focus as you get closer to your retirement date. In this example, I'm talking about a 40-year-old who wants to retire. Let's call it 10 to 12 years. So I would say focusing on equity seven to eight-ish years, trying to build up that net worth, and then selling off assets or repositioning your money to more cash flowing assets for years eight to 12, that's going to get you there.

• 32:06Dave Meyer?

  And I know that sounds overly simplistic, but it's honestly really not. I've done the math here and I can show you that this really works. I have this thing, it's called the FI5 Financial Independence Calculator. It's free on BiggerPockets. Go to biggerpockets.com/resources and download this for yourself and see the math for yourself. But I'm going to walk through the example that we're talking about. I actually Googled, what is the median income for a household at age 40? And it's about $85,000 per year. So I'm going to use that as my assumption here. So if I'm starting with $85,000 per year, and I have $50,000 to invest upfront. Now, not everyone might have 50 grand. That's fine. I honestly, again, just Googled,

• 32:50Dave Meyer?

  what is the median household savings for a 40-year-old in the United States? And it was about $50,000. So I'm just taking the average person in the United States, making 85 grand, has 50 grand saved up. If this person goes out and starts acquiring properties with the average property price of $250,000, and they do this as frequently as they can, and the whole calculator will show you the math, but it's basically, it does the math for you. How long is it going to take you to save up between properties? Is it going to take you three years, two years, one year? But basically, trying to buy properties at that price as quickly as you can, this person would retire in 13 years. Think about that. Think about that, actually, for a second. This is the average person, working an average job,

• 33:35Dave Meyer?

  with an average amount of savings, buying a totally average deal. This isn't some special off-market deal. It's not some heavy value add. It's just following the strategy that I just laid out for you. They can retire in 13 years. Now, if you're thinking 13 years is too long, fine. Go out and do a more advanced deal than I was talking about. Do a BRRRR. Do a FLYP. Do a creative finance deal. If you can do one of those a year, or you can sprinkle those in over the next six or seven years, you might be able to retire in 10 years. You might be able to retire in eight years. Remember, this 13-year number is the most bland, boring portfolio that you can possibly do,

• 34:18Dave Meyer?

  and it's still getting you retired in 13 years. So that is why, at the beginning of the show, I said, when people ask, is it too late to invest in real estate? No. If you have 13 years, if you're starting at 40, you could retire by 53. The average person in this country retires around 65, 66. So if you're starting at 40, you can essentially cut your time to retirement in half. By just buying boring old rental properties. That's incredible. So that is why I'm so bullish on this strategy. If you want to check out the FIVE calculator for yourself, you can get it for free. All you gotta do is go to biggerpockets.com/resources. There's a little section on there called Financial Freedom and Wealth Planning.

• 35:03Dave Meyer?

  If you go in there, there is a Financial Independence Calculator. You can download that for free. Now that I've explained this and sort of just walked through how the math can work, I want to just leave you with a couple of tactical points here because we focus mostly on strategy here. But I want to talk about sort of the system that you need to be able to do this repeatedly. Because as I said, you're going to need to do this for somewhere between 10, 12, 15 years. So the things that you're going to need are first and foremost, a market where you can buy at a rate that is affordable to you. So I picked 250,000 relatively randomly. Just I figured someone making 85 grand a year, that is realistic for them to buy pretty frequently. So, starting in the first year, you would buy one deal.

• 35:48Dave Meyer?

  Then, two years later, you would buy your second deal. Two years after that, you would buy your third deal. And then you'd buy every year after that. That's just kind of how the math works out. In the beginning, it's going to take you longer to save. But as you have cash flow and you build up equity in your properties, you're going to be able to buy at an increasing pace. And so you need to be able to build a system to buy a property every two years and then every year after that. So what do you need? First and foremost, a market where you can buy at that affordable rate to you. For some people, that might be in their backyard. For others, it might be in other parts of the country. Figure that out. We have tons of resources on BiggerPockets to help you. The second thing that you're going to need is to build a team.

• 36:31Dave Meyer?

  First and foremost, you need an agent because you need deal flow. You need to be able to see all the deals in your neighborhood that are going well. And again, what I recommend to you is find an agent who can help you find, yes, cash flow. I always recommend people find deals that at least have break even cash flow. I should have said that earlier. When I say that you shouldn't focus primarily on cash flow, I still think if you're going to hold a property, it needs to be cash flow positive. It's just not the most important thing. You don't need to prioritize getting a 10% cash on cash return. If you get a 2% cash on cash return and build a lot of equity, to me, that's better earlier in your career. So you need to find an agent who's going to be able to connect you with those kinds of

• 37:15Dave Meyer?

  deals that fit your strategy. Now, every investor needs deal flow, but frankly, with this approach, you don't need crazy deal flow. You don't do direct to seller marketing. You don't need to look at off-market deals. You need to find a deal every two years and then, starting in year six, you need to find a deal every year for the next four or five years. Right? That's pretty reasonable. So just find an agent who's going to be able to do that. We can connect you on BiggerPockets for free, biggerpockets.com/agent if you want to be able to do that. The third thing is to be able to spot and close on deals where you can add value in a modest way. Right? Like I said, building equity is really important to this strategy.

• 37:57Dave Meyer?

  So you can't just go out and find deals that are perfect the way they are. You need to be able to add value. You don't need to flip houses. You don't need to break down walls. You don't need to do any of that, but find ways that you can build equity in your properties. For most people, that's just going to be doing cosmetic rehabs. Can you fix a bathroom? Can you update a kitchen? Can you add a third bedroom to a two-bedroom unit so you can increase your rent? Can you find a place that in a couple of years that you can add a dadu or an extra unit onto it? These are all upsides for the deals that you're buying today that are going to really help you over the lifetime of your hold on this property and is going to, again, help you build that equity you can turn into cash flow in the future.

• 38:42Dave Meyer?

  So find those ways that you can add value. That's number three. Number four is to get traditional financing. You know, if you're going to go into real estate, this might be a little bit harder, but I recommend that people get fixed-rate debt in almost every circumstance. A lot of people get ahead of themselves and start thinking about like, "Oh, my God, I can only get 10 mortgages." Like, how am I going to manage that when I get more than 10 mortgages? You may not need more than 10 mortgages. You may be able to buy five duplexes and retire. You may be able to buy three triplexes and retire. So don't get ahead of yourself. Focus on leveraging one of the best assets to any real estate investor, which is long-term

• 39:25Dave Meyer?

  Fixed rate residential debt. It is an incredible asset to anyone, but especially to a late starter. If you want to find great deals and lock them up long term so you can retire, get fixed rate residential debt. So that is another part of the system that I highly recommend is finding a great lender who you're going to be able to do this repeatedly with. And that shouldn't be that hard. If you have a job and you have decent credit and you are buying at this kind of interval, that should not be a problem to you, but you need to build out that system. Last is you got to manage your deals well. People always say you make money in real estate when you buy. There's some truth to that. I think you make money in real estate when you operate well because of property.

• 40:08Dave Meyer?

  When you buy, that's when you get the potential to make money. But if you don't do it well, you are not going to be able to reap the rewards of that potential. And so think really hard about the best way to manage your property. If you live close to your properties and you have the time to it, self-manage, you're going to make more money. You save a lot of money not paying a property manager. Having your hands on the property every single day is going to give you just a better pulse on what's going on is going to allow you to, you know, just maximize the efficacy of every single deal that you buy. But if you're not going to do a good job of it, if you don't have time for it, if you live out of state, it's totally fine to get a third party property manager. I have third party property managers, but I was just saying, all things being equal,

• 40:51Dave Meyer?

  if you want to make more cash flow upfront, you might want to self-manage. So that's it. Build a system like this. Find a market that works for you. Get a great agent. Find ways to add value. Use traditional boring financing and find a great property manager. Like if you follow the strategy that I've been talking about, about maximizing your income, investing for equity, then transitioning to cash flow. The rest is honestly really easy. I'm not talking about buying really complicated deals or doing anything unusual. All I'm saying is go out, find a great agent, find a great lender and buy deals every couple of years as quickly as you can. And you could retire in 10 to 12 or 15 years. That is unbelievable. That's it. I know this might sound

• 41:34Dave Meyer?

  Incredibly simple, but that's honestly what it is. This is exactly the approach I've used to achieve financial freedom through real estate. I've seen tons of other people do this and it still works if you're 40. It works if you're 35, it works if you're 50. It works at almost any age. If you're willing to give eight, 10, 15 years, depending on how involved you are, somewhere between eight and 15 years, you absolutely can retire. And I know that might sound like a lot, maybe 12 years sounds like a lot to you, but I assure you, working for another 25 or 30 years is a lot harder. And I've done it. I've been investing for 15 years, almost exactly now. And I gotta tell you, it's been fun. I've actually enjoyed it. It is not that hard. And yeah, I got started pretty young.

• 42:18Dave Meyer?

  That is true, but I also worked full time during that time. I put myself through grad school during that time. I managed, self-managed all my properties. I dealt with all the other stuff that comes up in everyone's life. And I just want to show that, you know, even though I got started early, there were some advantage to that for sure, but there are disadvantages to that as well. I was pretty immature. I had very little money to start with and I couldn't scale as quickly as I wanted to. So remember that even if you're starting a little bit later, there are absolutely advantages. There are resources that you can bring to bear that younger people or people who started earlier may not have. Think hard about that. Think hard about the resources and the skills that you can bring to your portfolio.

• 43:01Dave Meyer?

  And I promise you, if you want to achieve this, if you're willing to be responsible for the outcome, you absolutely can do this. That's what I got for you guys today. That is our late starter's guide to investing in real estate. Hopefully this has been helpful to you. If you have any questions about this, please let me know. You can always find me on BiggerPockets or on Instagram where I'm at the day to deli. Thanks again for listening. We'll see you for another episode of the BiggerPockets podcast in just a couple of days. We'll see you then.

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