How Much One “Ordinary” Rental Property Has Made Me in the Last 6 Years

Real estate investors often talk about cash flow, or the profits from flipping a house, but rarely the total impact that buying a rental property and holding it for multiple years can have on your net worth. If you’ve never done the math, it’s significant. In many cases, a single property can create several hundred thousand dollars in wealth. And to prove it, Dave and Henry have each handpicked a real estate deal from their own portfolios. They’ll walk you through how they found these properties, how they funded them, and some of the biggest challenges they ran into along the way. But then, they’ll reveal exactly what happened once the dust settled and compounding started to do its thing. These weren’t home-run deals or rare investing opportunities. They were very “normal” rental properties in the hands of patient investors. If you do exactly what they did—buy a quality asset in a good neighborhood and play the long game—you, too, could create life-changing wealth through real estate investing. In This Episode We Cover The true, net worth-building power of buy-and-hold investing How much Henry has made on his eight-unit property in the last six years How much Dave’s Denver property has made him over the last decade The total impact of cash flow, appreciation, tax benefits, and loan paydown on your net worth The complete life cycle of an investment property (acquisition to exit) And So Much More! Check out more resources from this show on ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠BiggerPockets.com⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ and ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠ ⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠⁠h⁠⁠t⁠t⁠ps://www⁠.biggerpockets.com/blog/real-estate-1310. 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?

  Real estate investors love to talk about things like cash flow or appreciation, but they rarely talk about the total impact that a single property has on your net worth. You may generate a little bit of cash flow from real estate investments in year one, but the real power comes from buying a great asset, holding it and letting it run its course. And when you actually do the math on a property you've owned for five, 10 or 20 years, the results are eye opening. Every one ordinary rental property can create hundreds of thousands of dollars in wealth. Today, Dave and I are breaking down a couple of properties from our own portfolios to prove that point. These are actual deals that we own and manage, and we're going to share all the real numbers. Are there bumps in the road?

• 0:44Henry Washington?

  Of course, as you're about to hear, you can overpay for a property. Renovations can go over budget, but real estate is far more forgiving than you think. If you buy a good asset, play the long game and stay patient.

• 1:03Dave Meyer?

  Hey, everyone. Welcome to the BiggerPockets Podcast. I'm Dave Meyer, joined by my friend and co-host, Henry Washington. Henry, what's up, man?

• 1:12Henry Washington?

  What's going on, buddy? Good to be here.

• 1:14Dave Meyer?

  Yeah, it's gonna be a good show. We're doing something a little bit different today, and I'm excited to talk about it because we often discuss acquisitions, buying new properties. We debate the benefits of cash flow versus appreciation, but we don't always talk about what might be the most important thing in real estate, which is sort of the cumulative benefit of real estate and how a single property contributes to your portfolio, to your net worth, to your financial freedom mission over time. So that's actually what we're going to be doing today. Henry and I have each wrote down some information about a single deal that each of us has done in the past.

• 1:56Dave Meyer?

  And we're going to talk about the ways that a single deal evolves and changes and grows over time. And I think this is going to help everyone, not just help manage their individual properties and the things they already own, but going back to the acquisition phase, help people pick which deals they should be buying today to maximize that benefit and advantage over time.

• 2:19Henry Washington?

  Yeah, this is super fun because when you study real estate, like online, social media, books, podcasts, all of it, it's all talking about what it's like to purchase property, what it's like to disposition property, and there's like tips and tricks for operations. But you never really hear like the details of how an individual property is performing over time in someone's portfolio. It's like this missing link of real estate study.

• 2:52Dave Meyer?

  Yeah, like people are like, oh, I bought it for X and then I sold it for Y, but they never tell you like what happened in between. And although sometimes those equity numbers are real and they are impressive, it's not the only benefit. Or in between buying it for a hundred and selling it for 300, you put 400 into it and you didn't actually make any money. So we're going to go into it, and I picked what I think has been sort of an average deal for me over time. Like it did well. It's not the best deal I've ever done. It's not the worst deal I've ever done, but sort of just representative of a deal that I think works for people. But let's do yours first. Tell us about what deal you're bringing.

• 3:29Henry Washington?

  So I bring this property up because it had a lot of hiccups, but I've held on through them and I'm glad I have. It's, it's, it's an amazing property. So this is an eight unit property that I bought. I closed on it, I believe, January 2nd or 3rd of 2020. So this was literally as the pandemic was becoming a thing.

• 3:51Dave Meyer?

  Right before toilet paper weekend.

• 3:53Henry Washington?

  Yes.

• 3:54Dave Meyer?

  Freaking out.

• 3:55Henry Washington?

  Yeah, when people were wearing like grocery bags over their heads tucked into their clothes, going to the grocery store, like when no one knew what was happening, when it was really, really scary still. What a crazy time to close on a property. And my biggest project to date, so I paid $500,000 for this eight unit property. It's across the street from the University of Arkansas. So it is a fantastic location, but it needed quite a bit of work. And I made the classic newish investor mistake of underestimating what the rehab was going to take. So given normal times, I underestimated that rehab.

• 4:36Henry Washington?

  But if you remember what happened during that time was it started to get really hard to find anybody that wanted to go outside and do any work, and the cost of materials and labor went through the roof. So I think I budgeted somewhere around $100,000 for the renovation of this property, and we probably ended up spending closer to $250,000.

• 4:56Dave Meyer?

  Whoa.

• 4:57Henry Washington?

  Yeah.

• 4:58Dave Meyer?

  And you bought it for five?

• 4:59Henry Washington?

  500,000, yes.

• 5:01Dave Meyer?

  Well, that's a good buy. Eight units.

• 5:03Henry Washington?

  Great buy.

• 5:04Dave Meyer?

  500,000. Yeah, I mean, 60 something thousand dollars a unit. That's, I imagine even in your area, that's pretty darn cheap.

• 5:12Henry Washington?

  Phenomenal buy, especially for the location. And so performance wise upfront, I mean, this property ate my lunch because, because we blew through that $100,000 pretty quick.

• 5:25Dave Meyer?

  How'd you finance that? Like, how did you, I mean, if you're budgeting for 100K, how'd you get the other 150?

• 5:32Henry Washington?

  We did a commercial loan from a local bank. It was a commercial construction loan. So they gave me 90% of purchase and $100,000 for renovation. So they gave me 100% of the renovation costs. I had to put down 10%, so I had to put down $50,000. And then we actually got the seller to carry that back on a note for a couple of years. So we paid him 10% interest on that seller carryback of the down payment for two years while I was renovating. So I didn't have to come out of pocket any money to buy this property.

• 6:05Dave Meyer?

  But wait, when it went from 100 to 250, where'd you get the extra 150?

• 6:10Henry Washington?

  Yeah, great question. So about 50 grand of that came out of my pocket, maybe a little more.

• 6:16Dave Meyer?

  Yeah.

• 6:16Henry Washington?

  And then the remaining, we were able to tap into the equity because the equity bump that we got during the pandemic years was good enough for us to tap into some of that equity and pull out the rest that we needed. And so the bank essentially gave us a little more on our line of credit to finish up the renovation.

• 6:35Dave Meyer?

  Still not looking good for you right now.

• 6:36Henry Washington?

  No.

• 6:37Dave Meyer?

  If you're following along, if you're betting on this one.

• 6:40Henry Washington?

  It's not great at this point.

• 6:41Dave Meyer?

  Your polymarket odds are very bad.

• 6:43Henry Washington?

  We're carrying the note during all this time, right? We're renovating, there's nobody living there because we had to essentially put everyone out. Everybody either left and the one or two people that stayed were problem tenants who weren't really paying anyway. And so we had a completely vacant property that we were renovating. I was carrying the note on it. It was, it was, uh, those were dark days.

• 7:09Henry Washington?

  Those were dark, dark days. And so when I bought the property, rents were at about between $300 and $500 a unit. That's how not great these units were. These people were just slumlording it on this property. And we were able to start getting renovated units leased at between $1,000 and $1,200.

• 7:30Dave Meyer?

  Wow.

• 7:30Henry Washington?

  So.

• 7:31Dave Meyer?

  How big are they? Two bedroom?

• 7:33Henry Washington?

  800 square feet, two bedroom, one bath.

• 7:35Dave Meyer?

  I mean, I imagine you get that from a college student all day.

• 7:38Henry Washington?

  All day long, we were able to get these rented. We also added laundry to each unit, which helped boost the rent and helped boost desirability. And so, once we got that first unit online and saw how quickly we got it rented, we knew we were going to be okay, but it was a long ride to get there. And I want to point that out for people because real estate is truly a long game. Like when you hear me talk about this property, it sounds great. Yeah, I bought it, I paid $500,000, owner finance on the down payment. I didn't have to put any money out of pocket. And then we renovated it and we're renting the units for $1,000 to $1,200 a unit. Right? That sounds amazing, but.

• 8:16Dave Meyer?

  I mean, you went into the red for a while.

• 8:19Henry Washington?

  For several months during the renovation.

• 8:21Dave Meyer?

  And even then, your cash flow is still good, but you probably couldn't have sold it for a profit, even though the equity was probably pretty good, just with transaction costs and paying off your debt. Like, it just takes time. Like, you have to let the thing run its course.

• 8:36Henry Washington?

  It takes time. And, and I think the, the thing that people don't talk about with real estate is that, yes, I was able to carry that property, but what carried that property? Money from flips and cash flow from my other cash flowing rental properties, right? Like, cash flow is great, but it's not, you can't always rely on it, right? Like, if I was relying to live off of my cash flow, I might not have been able to sustain holding this property through the downtime we had of having to take everybody out. And the renovation, not only was my budget more than doubled, but my timeline went longer because of the, the state of the country at the time. And there was nothing, there was literally nothing I can do about that. It was, there was very few people that were working at that time.

• 9:21Henry Washington?

  And so that's why we say like, you have to have some other sort of income stream. Just because you bought a great deal, doesn't mean you're going to be able to hold on to it. My other assets in my portfolio are what kept me afloat with this property. And I'm glad that it did because we talk about real estate being the long game. So now we've got eight renovated units. They are renting very well. And we did an appraisal recently as I, as I was refinancing this property. This property appraised for $1.4 million.

• 9:50Dave Meyer?

  Woo, wow.

• 9:52Henry Washington?

  So not only, not only is it cash flowing great now, but it's got a crap ton of equity in it because of the. Location that we bought it in because of the appreciation in this market in general. And that's the paper appraisal. My agent said that I should be able to sell this for 1.5 to 1.7 all day. So.

• 10:12Dave Meyer?

  And how much debt is on it?

• 10:14Henry Washington?

  Seven hundred and twenty thousand dollars.

• 10:17Dave Meyer?

  Okay, so you're walking with hate after sales expenses. Yeah, it's amazing.

• 10:23Henry Washington?

  And the cash flow is decent. My note on this property, principal and interest run me somewhere around sixty two hundred dollars a month. And we're bringing in over 10 in net cash flow. And you know, obviously it'll depend. So there's four units that we did a lighter renovation on and four units that we did a complete gut overhaul on. So the complete gut ones, they get 12, 13, 14, depending on what we can get for it at that time. And the ones with the lighter renovation get anywhere between nine to 11. So we're above 10 grand in gross rents paying about sixty two hundred. You know, you take some expenses. It's not a crap ton of cash flow, but it's still positive cash flow and crazy appreciation.

• 11:04Dave Meyer?

  Yeah. So what are you going to do with it now?

• 11:07Henry Washington?

  I'm going to keep this one forever.

• 11:09Dave Meyer?

  Yeah.

• 11:09Henry Washington?

  I love the location. I'd love to be able to give it to my kids. There's going to have to be some other maintenance items. I'll have to do big ticket. That parking lot in the back will have to be redone at some point. It's an asphalt parking lot and it's wearing down. So I'd like to come back with something a little more durable, maybe do some concrete back there. It's going to be quite a big capital expense on that property. Some of the HVACs are getting older that will have to replace soon. But in terms of location and appreciation and rent growth, like you couldn't be in a better location.

• 11:43Dave Meyer?

  So rents are still growing. Like you think the cash flow will get better over time?

• 11:46Henry Washington?

  The cash flow will get better over time, especially as I start to pay this unit off. This, this, this is one I plan on, on keeping in the fold for a long time.

• 11:56Dave Meyer?

  So, I mean, yeah, the strategy, which I like is like you have a great assets and it's appreciated. Maybe it's not a great cash cow, but if it's in a great location, it rents well. That's like a prime property to pay off over time, whether you do it quickly or just wait 15 years. Like that's just one to hold on to.

• 12:14Henry Washington?

  Yeah, absolutely. The longer I hold it, the more valuable the land and the asset is going to get just because what's around it. The University of Arkansas has grown since I bought this property. So it's like they're inching the campus closer to me. So it's, I'll take it.

• 12:30Dave Meyer?

  Even better.

• 12:31Henry Washington?

  Right.

• 12:32Dave Meyer?

  This isn't some crazy thing. You just bought a good asset at a really good price, renovated it, made it more desirable for your tenants, increased the occupancy and the rents, and that's it. Like that's, that's just the, the formula, but it just takes time. Like it doesn't work in the first year or the second year. It sounds like you weren't trying to pull off a perfect burr and refinance a hundred percent of your money in like nine months. Like it was just like a patient approach. You found a great asset. You figured out what was going to work with this particular property and didn't try and force anything out of it that wasn't going to be realistic.

• 13:10Henry Washington?

  Yeah, I think part of the key here is I didn't use short-term financing in the terms of like hard money, right? So my interest rate was very reasonable.

• 13:19Dave Meyer?

  Yeah.

• 13:19Henry Washington?

  And the construction period, so I had a 12-month construction period where I'm paying interest only. Like that allowed me to keep my holding costs lower than if having to pay principal and interest during a time when it was very hard for me to get this thing up and running due to underestimating the rehab and then the, the situation that was happening in, in the country with the, with the pandemic at the time. So yes, this is a very run-of-the-mill real estate deal. Buy a dilapidated asset, add value to it and rent it out. But I don't think people often understand that sometimes that doesn't go smoothly. If you don't want to lose the money you have in the asset, you've got to be able to hold.

• 14:02Henry Washington?

  And had I not had other cash flowing assets and had a stream of income through flipping, plus I had my day job for part of this. All of those things allowed me to sustain and carry that property through it bringing in absolutely no income.

• 14:19Dave Meyer?

  All right. Well, this is a great example that everyone can repeat. You don't have to go out and buy a commercial property, but like what Henry did, buying an undervalued asset, fixing it up, renting it out, getting appreciation, using it to finance other deals. This is the benefits of holding on to real estate for a long time. And we got to take a quick break, but after the break, I'll share with you an example I have, very different approach, very different property, but that still showcases how the long game usually wins in real estate. Stick with us. We'll be right back.

• 14:50Henry 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.

• 15:33Henry 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 one hundred thousand dollars against your income, even on your first rental. Add in cash back up to 13% of the home price, which exceeds sixty thousand dollars 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.

• 16:14Dave Meyer?

  Summer bookings sound great until someone slips by the pool, gets hurt on your dock, or damages your property during a long holiday weekend. A lot of short-term rental investors don't realize their standard policy may leave gaps when it comes to short-term rental activity. That's why investors use steadily. They offer landlord insurance built for real estate investors, including short-term rentals. And if you're a BiggerPockets Pro member, you'll also get 5% off your landlord insurance premiums. Visit biggerpockets.com/landlordinsurance to learn more.

• 16:46Henry Washington?

  Quick word about a new pro perk you'll want to know about. Aven. If you're a homeowner, there's a good chance you're sitting on equity that you're not using. The problem is tapping into that usually means a cash out refi, a traditional second mortgage, or weeks of paperwork just to get approved. Aven built something different. It's a credit card, but it's backed by your home equity. So you get a lot of the rate benefits of a HELOC with the flexibility of a card you can use anywhere. Rates are typically well below a standard credit card. Approval is fast and mostly online, and you can use it for anything. A renovation, paying down high interest debt, or just have more breathing room in your budget. And if you're a BiggerPockets Pro member, there's an extra reason to check it out.

• 17:26Henry Washington?

  Get approved for the Aven card and you'll get a $400 statement credit 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, NMLS number 2042345. Cards issued per 20 license from Visa USA, Inc. by Coastal Community Bank. NMLS number 462289. Member FDIC. Equal housing lender. Subject to approval. Terms apply. Visit aven.com for details.

• 17:50Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up require compatibility and availability varies. 18 plus.

• 18:19Henry Washington?

  All right, we are back on the BiggerPockets podcast and Dave and I are talking about properties that we currently own and giving you essentially some behind the scenes on what it's been like for us to own and operate these properties and what it has done for our portfolios having owned and operating these properties. So I'm very interested to hear what kind of property you brought for us, Dave.

• 18:43Dave Meyer?

  I have like the total opposite end of the spectrum, just a single family home that I lived in for a couple of years. So it's not a traditional house hack or what most people think of as a house hack, where I was renting out one unit and living in the other. My girlfriend at the time, wife now, and I lived in this home for three years.

• 19:03Henry Washington?

  Did you call it a house hack because you charged her rent?

• 19:05Dave Meyer?

  I did a little bit.

• 19:11Dave Meyer?

  I covered the vast majority, or the majority of it, but a little bit, yeah.

• 19:17Henry Washington?

  Well played, sir.

• 19:18Dave Meyer?

  So I, I bought this house, single family home back in 2016 when I was living in Denver. It was actually right after I started working at BiggerPockets. I, I got this under contract. I think maybe within a month of working at BiggerPockets, because I remember sneaking out of the office to go cold call someone because I wanted to get this house.

• 19:36Henry Washington?

  Oh, this is your one cold call that you've ever made?

• 19:40Dave Meyer?

  My one direct to seller deal I have ever done. But let me just tell you about why I, I went out of my comfort zone and did this. I got really into the idea of like path of progress and figuring out what neighborhoods were going to be popular in Denver. Because it was growing a lot, but it was very neighborhood by neighborhood. And the city announced that they were going to be building a brand new light rail that went from downtown Denver at this train station that they were pouring millions of dollars into out to the airport. That was like always this big pain point and it was going to go through this neighborhood that was like kind of up and coming. And they were deciding between two different projects. The one route might go north, one route goes south.

• 20:20Dave Meyer?

  And so my agent and I went, or he first went to the city planning meeting and figured out that regardless of which one they chose, there was like this one sweet spot that they were going to get this park and a train station and the city was going to be investing in it. And I was like, I gotta buy right there. And so I actually had been in this house like six months earlier and thought it was too expensive at 425. And knowing what I knew now, I was like, all right, I gotta, I'm going to call that guy back. And so I called him back and was like, I was in your house. He didn't sell it because it was too expensive at 475. And we finally negotiated for it. And I remember to this day, the exact price that was $462,000 is what we agreed on.

• 21:04Dave Meyer?

  So more than I thought it was worth. But I was like, this is crazy because that is the exact price, 462 was the exact same price I had paid six years earlier for a four unit in Denver. And now I was paying that for a single family home and I was like, this is crazy, but I really believe in it. And so I wound out buying this and I'll, I'll tell you how much it's worth and what it's done for that. But was able to finance it just using money I had saved up and refiing a deal I had bought like two and a half years earlier. Had done some value add to that and had raised the rents a lot. So I was able to refi that to go out and buy this.

• 21:45Henry Washington?

  462 for a single family even back then. Wow. Wow.

• 21:50Dave Meyer?

  This is a lot.

• 21:51Henry Washington?

  That's a lot. So I assume you did just like a conventional loan on this one?

• 21:56Dave Meyer?

  I did, yeah. Owner occupied loan. I actually wound up putting 20% down on this. Like I had saved up like enough for 5%, but I did a refi and was able to, to put the full 20% down. So I got good financing because I really didn't want to pay PMI. And I think my loan then was five and a half. I refinanced it during COVID, but it wasn't like crazy low rates back then. So even that, I think my mortgage payment was something around like 18, 1900 bucks to live there. Which to be honest, to rent a two bedroom in Denver, which is what we were good, was going to cost 15, 1600 easily. So like the payment wasn't that crazy.

• 22:36Henry Washington?

  And how long would you say it took before you started to realize that your research about what was coming to this area was actually there and giving you the boost you had hoped for?

• 22:50Dave Meyer?

  Oh dude, it took a while for the value to get there, but within three months of buying this property, I knew I had hit a home run. But the house that I bought like was in decent shape, like there wasn't a lot of value add. The value add I did was living in a very uncomfortable situation for three years. Because then they just did construction for three years. They eminent domain the houses across the street.

• 23:13Henry Washington?

  Yeah.

• 23:14Dave Meyer?

  Sort of tweakers moved in across the street. They were like constantly living in there. There was a triple gang shooting two houses away. Jane and I, they built the train and I didn't know this at the time.

• 23:27Dave Meyer?

  Sometimes ignorance is bliss, but the trade, when they launch a new train, they have to blow their horn every time they cross a street for two years before it can be quoted a, a quiet zone. So 24 hours a day for two years, two blocks away from us, trains were just blowing their horns. So we were just living in this, for like, it was a nice house, but like, that's kind of value add to me. It was like, I knew once this was over, it would be worth 700,000.

• 23:56Henry Washington?

  Once you moved out, what were you able to rent this for? And do you still own it?

• 24:01Dave Meyer?

  Still own it. So like when I moved out in 2019 alone, got 3,000 a month in rent. Rents in Denver like went up and now they've kind of come down. And so I'm getting about, I think I'm getting 3250 right now a month. And my payment, because I refinanced it, has actually gone down, even though taxes and insurance have gone up. So I'm paying about, I think it's just under 2,000 bucks a month on my payment for that. And you know, that gives me 1,400 bucks cushion. I do pay a property manager. But it produces, you know, 10, 15 grand a year in cash flow.

• 24:37Henry Washington?

  That's pretty cool. Now, I know Denver has a lot of older inventory in some parts of town. And that can cause you problems maintenance wise over time. Like how old is this property?

• 24:48Dave Meyer?

  Oh my God. I, I think it was 1892.

• 24:55Dave Meyer?

  I think it was, but it had been renovated. There had been some work done on it. So it's actually been pretty low maintenance costs for, man, I moved out of it six years ago. I've been renting it out and knock on wood, no major capital expenses.

• 25:09Henry Washington?

  Yeah.

• 25:10Dave Meyer?

  Is it like a cash cow that I'll hold on to forever? Probably not. I will probably sell it. Like I'm moving towards selling it, maybe even in the next couple of months, uh, which I can get into. But I, I think, you know, it's worked for me in so many ways from tax benefits to appreciation for cash flow and holding it over the next couple of months. It really has kind of checked every box.

• 25:31Henry Washington?

  Absolutely. I think you should get into, because my next question for you was going to be, what's the plan? Are we keeping this or are you gonna, are you gonna sell it? And if you're going to sell it, what are you going to do with the proceeds?

• 25:40Dave Meyer?

  Yeah. So this is the way I, I've been thinking about it is that, you know, I still owe like 230 on the loan. I've just been paying it off. So if I went to sell it, which I think I could sell it on the low end for 720. That's pretty conservative because you know, after I bought here, I wound up buying another house down the road. Cause I really just liked the neighborhood and saw it was happening. And, but I sold that other one. It was almost an identical comp. I sold it for 810, but that was in 2022. And Denver market has definitely come down. So I'm just conservatively saying 720, it's probably somewhere maybe closer to 750, hopefully. So, I mean, that's a lot of equity, you know, that's like 300 grand in equity.

• 26:23Dave Meyer?

  And yeah, it's making cash flow like 10, 15K, but that's not a good cash on cash return. And I would consider holding on to it or paying it down if I thought there was any juice left, but there just isn't. Like the neighborhood has done what it's going to do, which has been fantastic. There's not really room for value add. Like I can't, the layout is kind of weird. I can't add another unit, you know, like there's just no way to really get more out of it. And so I think I'm going to sell it because the cash flow is not amazing. It's run its course. I've done the long game on it. But I think a lot of times with these kinds of plays, seven to 10 years, you kind of peak out. And like the, the performance peaks.

• 27:06Dave Meyer?

  And so I will likely 1031 into something else. That is sort of what I'm thinking right now, but I'm still getting some quotes on what it's going to cost me to get it sales ready. And like kind of make the final decisions, but that's where I'm leaning right now.

• 27:22Henry Washington?

  Yeah. I mean, that makes sense and that's absolutely true, right? If you feel like you're just going to get, you know, your normal modest appreciation bumps from this point forward. Then it's just either you hold it because that fits your investment strategy. Or you find something else where you feel like you can get a better cash on cash return with that money. I don't think there's a wrong decision with a property like this, right? And I, and I think, you know, I, I don't want people to listen to this to think that like you have to sell your properties after the seven year period, right? Dave's doing what he feels like best fits his investment strategy going forward. And that strategy fits the lifestyle that he wants. You need to do the same thing for you.

• 28:06Henry Washington?

  So like for me and my property, I just, I, I can't add a ton of value to it either. It's just going to appreciate because of the location, but that asset paid off would be a great one to leave to my kids. And that fits my investment strategy better.

• 28:20Dave Meyer?

  Exactly.

• 28:21Henry Washington?

  The, the goal is to like get in, force value, ride the appreciation. And then make the determination on, is it better to sell or keep based on what you want to do with your portfolio? It's what's the right call for your investment strategy?

• 28:39Dave Meyer?

  All right. So you've heard each of our deals, but we have more analysis and to discuss on today's episode, right after this quick break. You know, when I first started sharing my real estate journeys online, I didn't have a website. I had a spreadsheet, an Instagram account, and no idea how they'd ever connect. I remember thinking a real website was going to cost me thousands of dollars and take a developer weeks to build. So I kept putting it off. Then I found Hostinger. I typed in what I wanted, a site to show off my deals, share my story and capture leads. And their AI builder had a working version live in minutes. No code, no designer, no developer needed. And it didn't stop

• 29:19Dave Meyer?

  at launch. Once my site was live, Hostinger's AI agent helped me figure out what to try next, acting like a built-in team of specialists for SEO, website copy, email marketing, and more. Domain, website, email, marketing, one Hostinger account covers it all. So you're not stitching together five subscriptions or wondering if they even talk to each other. Plans start at just $3 a month, so you can begin at your own pace and build from there. Hostinger builds your vision step by step. Create your website today. Go to hostinger.com/realestate and use code REALESTATE for 10% off now.

• 29:58Henry Washington?

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• 30:42Henry Washington?

  and reliability. 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.

• 30:58Dave 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. You can partner with a vetted local co-host who can create your

• 31:43Dave Meyer?

  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

• 32:24Dave Meyer?

  of its 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.

• 33:06Speaker 02

  This episode is brought to you by Google Chrome. You think you know a browser, but Gemini and Chrome, that's new. It can help you with practically anything on the web, like restoring a vintage motorcycle from a 50-page restoration block, or finally break down that long article you've had open for weeks. Gemini and Chrome is here for it. Ready to make anything online make sense? There's no place like Chrome. Check responses set up required compatibility and availability varies 18+. Welcome back to the BiggerPockets Podcast. Henry and I are sharing stories about the long-term performance of two deals that we picked out. Let's jump back in.

• 33:44Henry Washington?

  I think as investors, we have to be very educated on the types of loans that are out there for us to finance these deals and pick the ones that make the most sense for the asset you're buying. Because like I said, if I would have bought my property with a higher-interest loan, hard money, something that was a whole lot more holding costs, I probably wouldn't own that asset today. I don't know that I would have been able to sustain through the delays and the underestimating of the renovations. And if you used a different type of loan product, it may be a different story that we're telling now. So like, if you can buy a property that's

• 34:27Henry Washington?

  a good asset in the path of progress, and it takes a little longer to get to your profitability that you're looking for, you don't want to put yourself in a position where you're limited on your ability to hold on to that property. Because that's how you lose in real estate. You don't just lose by buying a bad deal. You can buy a great deal with the wrong financing, and then you're stuck in a position where you either can't refinance, can't carry the note, and so you have to sell the property. And if you're forced out too early, I mean, that's when you take losses, and that's when you don't build the wealth. The wealth comes through equity and appreciation. The wealth doesn't come through cash flow. Cash flow is a measure, and it's a

• 35:12Henry Washington?

  good measure, and you want to shoot for it. But that's not what builds the wealth. And you don't get to the wealth building if you're forced to sell because you used the wrong type of loan, or because you didn't have cash reserves. Real estate is about your ability to hold on to your assets for the long haul. The more you can do that, the more wealth you'll build.

• 35:31Dave Meyer?

  That's absolutely right. I think what you said before is spot on, where you said it's sort of an educated guess, right? Because I think a lot of people might listen to my story in particular and say, that's speculation, or yours even, because you were buying it at, what, $3, $500 rents, and you had to tell yourself a story that I can get $1,000 plus in rent for this, right? That's not speculation. It's a business plan, right? Like, I think that's sort of the key here, is I do hear people say like, oh, I'm thinking about buying in this neighborhood because it's just an up-and-coming area, and like, I just think the prices are going to go up.

• 36:09Dave Meyer?

  Maybe. But I think like, you need a business plan to like, really back that up. And I get, I acknowledge that what I did on that deal might come close to speculation, but like, I had a plan, and I knew that at the very least, I was basically net neutral on my own living expenses. You know, I limited the risk. I had, to Henry's point, owner-occupant financing, you know, very advantaged financing, right? You know, like, that's, that made that possible. Would I have bought that as a flip or a burr? Probably not. You know, like, the whole plan, the business plan was to live in it through the inconvenience and through the transitionary period. And that's why it worked. Just going out and saying like, I'm going to buy on the street because like,

• 36:54Dave Meyer?

  everything goes up. That is speculation. Holding on for a long time is the goal, but you have to still have a business and an idea of how you're going to take it from where it is today to where you want it to be in six, 10, 15 years. Otherwise, you're just guessing and waiting. And it's not like you have to do that much, but like, you know, implement a plan and wait is really what we're saying, not just go buy anything and wait. So I like these stories because it's so funny, like, in retrospect, everything looks like it was easy and genius. But like, the whole point, I think of both of these stories is like, mine didn't look great for the first three years. I overpaid, or people would have said I overpaid. You know, Henry's didn't look good in the right

• 37:37Dave Meyer?

  way, but we were both following a plan. Like, we both had a business plan, and the plan was never, how do I get out of this in, you know, nine months? For rentals that you are trying to acquire, like, the plan can take shape over two years, over three years, over five years, over seven years. It not only doesn't have to be quick, but often, as these stories show, it works better for it not to be quick. Being slow can be a deliberate strategy. It is not necessarily some consolation prize that you're taking.

• 38:09Henry Washington?

  Very, very true. And I mean, and don't forget, like, it could and very well may for other investors who are getting started now, it may take even longer than the time horizon that Dave and I are talking about. Because we did, we did get a 2021, 2022 bump in equity that none of us were expecting. So like, buy the best asset you can, try to add as much value as you can, and then make sure you're in a position to be able to sustain that property if and when it doesn't perform like you want it to.

• 38:41Dave Meyer?

  You're right that it might take longer, but I want to caveat that with two things. First and foremost, no one knows when these bumps are coming, but they come. And they've come throughout history, and they'll come again. No one knows. So that's kind of the whole point of holding on. No one knew it was going to be 2020 to 2022. That's when it happened, and the people who held on to things were rewarded for that. The second thing, though, is that better assets are on sale. Like, there, it is easier now to buy something that you want to hold on to than it was in 2021 or 2022, at least in my experience. And so I think that's why you just, like, we always talk about, you take what the market's giving you, and that means the bump

• 39:23Dave Meyer?

  might not be next year. It probably won't, right? It's probably not coming for the next couple of years. But that's why you buy good assets now. I bought mine in 2016. It took four years. I bought other assets in 2010, took 12 years, whatever. You know, it's like, it's just like, but you find things that work in the short term that are good, and then the upside comes, and that's what turns them great. That's what we talk about all the time on the show, and it absolutely can happen and can work right now. All right. Well, this was fun. I liked going through the show. Let us know if you like these shows. Like, we could do more of these, just Henry and I, or we can bring on other investors to share examples of great, or bad, stories that if going into these

• 40:05Dave Meyer?

  kinds of things and showing sort of the life cycle of a deal is useful for us, let us know. Drop it in the comments. Let us know on Instagram. We would really appreciate it because I've enjoyed, I learned from you about your deal. I think it's just a super helpful format.

• 40:19Henry Washington?

  Yeah, if you enjoy talks like this, we'd love to be able to do more. So let us know if it's helpful to you.

• 40:25Dave Meyer?

  All right. That's our show for today. Thank you all so much for watching this episode of the BiggerPockets Podcast. He's Henry. I'm Dave. We'll see you next time.

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