David Green is a born professor educator! His brilliant analogies have helped me understand so many realestate investment strategies that were difficult to wrap my head around. Genius!
You asked for comments and feedback, this series of detailed Q&A has been some of the best content for a newbie like me. Some of the questions are exactly what I would have asked. Other questions from more experienced investors get me thinking about things I hadn't considered. Keep it coming!
Great! We are so happy to hear it!! This Q&A format will continue to happen, so keep looking for it. If you are also interested in more newbie content check out our show Real Estate Rookie on TH-cam or anywhere you listen to podcasts. They do a weekly segment called The Rookie Reply where they answer newbie questions from listeners as well.
PLEASE KEEP MAKING SHOWS LIKE THIS. I prefer this format to the podcast/discussion format. Listening to you on your own describe important questions in real estate investing helps me plan my future. Thank you so much!
I don't mean to be argumentative but thought I'd share my thoughts.. All I would ever hear on BiggerPockets for years was to focus on cash flow and betting on appreciation/inflation/etc was a gamble and something that was a big no-no. Now you guys are saying the opposite? Sure, over 30 years, real estate will work out as an investment, no one ever argues that, and a deal today will most likely be a good investment in the long term. That is the only part that makes sense to me. Another thing to note, I'd bet there is way less upside when it comes to appreciation at this point, at least in the short to mid-term, considering the huge appreciation we have seen these past few years. I do understand I don't have a crystal ball either but thought I'd comment.
I think he is a bit biased, because not so many people have all the right conditions or experience to find a good deal. He did say, if you find a good deal then of course go ahead and offer more on that deal. He is actually investing more on areas that have more appreciation hence there will be people that will be renting out from him because they won't be able to compete with his buying power. So in a way he wants to offer confidence for people to buy while at the same time increasing the competition in areas with high appreciation. So you either force a single family to live 1 hour away from their jobs or you stop buying massively and contributing to the issue? Lol it is coming full circle if you think about it. So in conclussion, whenever you buy, as long as you can afford it you will be fine. In my opinion, buying now paying overprice for something that will take longer to catch up to the amount it overpriced to is risky as well, you can always refinance your rates but the cost of the loan will remain the same. Besides, at the moment they are selling old houses that need re-piping, re-roofing and upgrades for HVAC as if they were brand new...so on top of over paying you will spend 40K more on making it livable....so when the correction happens will your property even be able to catch up? Because if you have a 220K that needed 40K in repairs, you are actually looking at 260K to sell it without closing costs. So the cost of repairs plus the cost of the house, and if the market corrects at 5% appreciation per year and you wait 5 years, then you will either get back the money of the repairs or you have to keep the property until it's paid off so it cash flows, but you won't be able to sell for a profit because the closing costs will dip your gains.
I do see them changing tune quite often. I wholeheartedly trust their advice though. The rookie podcast makes me angry in this sense. The podcast starts off well, then they ask numbers. Rookie proceeds to tell them they make $100 per door before accounting for vacancy, taxes, etc etc. Then they congratulate them for making a horrible deal 🤦🏻♂️. That podcast gets to me…
Hey David. Just did a 1031, you don't have to debt on the new property, but you do have to buy the full sale price of the old property. In other words, if the property sells for 500k and has a mortgage of $300, you have to buy a new property at 500k but you could bring in 300k cash to make the difference.
Absolutely love this format. Please keep it up. It would be helpful to hear advice on scaling, particularly as it applies to financing (DTI, loan type, etc) and how to balance debt load vs risk.
David yes man!! You are doing an excellent job with how you running this podcast/ TH-cam this way…. The questions your answering are what most investors want to hear… This podcast is truly a master class! … we love it Man! Keep going
Great content. I will ad as a short term rental owner which all are out of state do not be worried about taking time off from work to deal with issues. Everything is managed by me and only me and I’m a W2. Phone calls fix it all. Good email communication and follow through as well has the proper logistics in place as far as housekeepers, lawn/handyman. Don’t waste your time with paying a management company unless you have at least 5 properties and if your not working a W2 it should be no problem to handle yourself…IMO. Also if your looking for truly passive to get away from tenants and toilets, look at commercial such as triple net. With $300k you can leverage to 1.2-1.5 million and get yourself started but cap rate are in the 4-6% and get a little riskier as they move up.
Great episode. Really fantastic advice you gave for not leaving a job too fast. Ask me how I know. Good stuff David. Guests had well thought out questions as well.
Even if you break even, there is someone paying off your asset! We bought in Prescott and one house is breaking even but it has gone up $150,000 in 4 years but the principal has been going down every month. We just bought a second one and it may break even but we may use it as a short-term rental. We are waiting to see if we can permanently work from home and if so, that changes everything - we sell our CA home and move into one of the AZ homes and use the CA money to buy another somewhere else. I don’t want to be just in 1 market because to me, that’s not being diversified.
@David Greene: Love your books, love the podcasts and love this Q&A! You have probably already talked about this for BiggerPockets… but a RE “spectrum analyzer” would be pretty sweet! Beginning investors that can’t decide on a strategy or market to get started can adjust the analyzer by sliding the inputs for passive/active, risk tolerance, personal cash/cashflow position, etc. Phase 1: Real Estate Strategy Suggestions (short-term, appreciation, cashflow, JV, lending, passive LP) Phase 2: Target Market Suggestions (San Francisco, Seattle, Orlando, Indianapolis, Detroit) Also, see you on the BiggerPockets podcast in a few years!
Two things 1) amazing lighting upgrade! and 2) how do I get in your database? I live on the peninsula and dance in the east bay weekly in Richmond. Would love to come to a meet up. This episode was great for me as I’ve been grappling with the cash flow vs equity growth. Here’s another “vs” question: my main strategy is to diversity as protection against my relative newness. How about: concentrate investments in one area for economy of scale VS. diversify geographically for regional diversification?
I am a newbie just bought my first property and I am absorbing everything. I really liked the advice you gave the first responder in terms of not jumping ship too soon. Keep up the great work and thank you so much!
I just got "SOLD" and "BRRRR" in the mail. It would have been cooler if I could have got them signed somewhere, but I'll take what I can get. Knowledge is Power. Keep of the good works.
The river rock analogy was a good one. By the way The process in which the rough rock became smooth from water constantly flowing over n around it is called erosion. It's basically a process in which one material is wearing away at another material due to a constant & consistent movement against it, which usually happens over a long period of time. However the time/speed of the erosion(wearing away of the material) process depends on the hardness(of the material to be worn away) and the speed(of the material flowing or running against the harder material). So I guess the meaning ur putting to the situation is for us to get out there and do the repetitions of work/practice and allow that process(which would be the water) erode(wear away) our rough/unfinished skills and we to overtime just like the rock in the river with water flowing passed it will develop a nicer smoother finish to our skills. ;) it's quite philosophical lol in this analogy ur not building skills directly but rather u r acquiring thenm via honing ur technique thru practice overtime by shedding or wearing away the rough/unfinished qualities such as nervousness, low self confidence, low self esteem, poor body language, lack of eye contact, etc..
Thank you. Regarding your advice and insight on buying now bs waiting, from the 13 min mark to the 23rd, was perfect. I have been trying to share the same with my loved ones but you did it so much better. I have already shared it will all of them. Thank you so much!
Answered so many of the questions that I have had as an early-stage investor. Thank you for this breakdown! Wish I had found this podcast earlier in life, but thankful to have been introduced now. Thank you so much again!
Yep, I agree. For all those younger people out there, invest now. Time is your best asset and being young, if it all goes wrong, you have tons of time to learn and recover.
Thank you David The show was great, great answers David you are awesome I'm looking on a house in Ruskin Florida to buy I'm a Newbie on bigger pockets and this will be my first investment property.
The real reason for not using your retirement funds (e.g., 401K loan) as a down payment is because that money is effectively double taxed. First, when you pay the loan back to your 401K account, you are using post taxed funds. Secondly, that same money gets taxed a second time when you withdraw it during retirement. Obviously, you cannot avoid the taxes when you are withdrawing but a 5% HELOC would be better than degrading your nest egg by 22% or whatever your tax bracket is.
My agent was telling me to wait 3 years ago, when I made an offer he was wow this is expensive man! Now look, it is up 40%. If it corrects, even 10-20% It doesnt matter! Home ownership is the only proven way of building wealth long term! Nothing can beat it! Even 5 years ago they were saying real estate was going to correct, never did. Always look at it long term
Would buying land wise right now . For example , buy land now and wait a year later to built house .??? Lumber cost currently is high , but I am hoping it will lower.
David, this was sooo helpful! Especially learning overarching principles and strategy questions, like cash flow vs appreciation, given how much money you have access to, and financial stability, etc. I’d love a show or response comparing different types of more passive real estate investing opportunities. One problem I had listening was that the TH-cam video wouldn’t let me rewind, except in very large increments. That was very frustrating because, several times, I just wanted to rewind 30 seconds or 1 minute, and the player forced me to rewind maybe 5-10 minutes each time. I think this has something to do with how your video was uploaded?
Hey David. I'm in need of some consultation. I closed on a multifamily with a 1031 exchange in April and am trying to do a cash out refi now in December. Will I be raising a Red Flag with the IRS?
A lot of investors did very well with Airbnb in my coastal Florida market, until the motel lobbies and local government got together and made it illegal. If you’re considering Airbnb make sure it will cash flow monthly, in case they change the rules.
its not a job when you have your airbnb business with systems in place as any business would so its debatable on whether its active or passive. I have 8 units that are leased abtraige short term rental and manage less then 4 hours a week
I'm curious. A few years ago I remember Robert Kyosocki saying the worst investment property you could buy was a vacation rental, now I see gurus on youtube pushing them? I wonder if these same multi millionaires pushing investing are actively selling properties at the same time?
Betting on appreciation in a market that may be close to peaking is really stupid. Do the work to find real value add properties that will cash flow. If it doesn't fit into your buy box, don"t buy it.
That's what I am saying, it's like being bullish all that goes up, nust come down, I don't think appreciation will be able to catch up after the dip. If it goes up 40% it will go down 40%. They may try to slow it down, but that doesn't mean it won't happen. If a market correction is not done, how are all these investors will be able to make gains? Only by renting...so what's actually happening here?
David Green is a born professor educator! His brilliant analogies have helped me understand so many realestate investment strategies that were difficult to wrap my head around.
Genius!
You asked for comments and feedback, this series of detailed Q&A has been some of the best content for a newbie like me. Some of the questions are exactly what I would have asked. Other questions from more experienced investors get me thinking about things I hadn't considered. Keep it coming!
Great! We are so happy to hear it!! This Q&A format will continue to happen, so keep looking for it. If you are also interested in more newbie content check out our show Real Estate Rookie on TH-cam or anywhere you listen to podcasts. They do a weekly segment called The Rookie Reply where they answer newbie questions from listeners as well.
Same
PLEASE KEEP MAKING SHOWS LIKE THIS. I prefer this format to the podcast/discussion format. Listening to you on your own describe important questions in real estate investing helps me plan my future. Thank you so much!
I don't mean to be argumentative but thought I'd share my thoughts.. All I would ever hear on BiggerPockets for years was to focus on cash flow and betting on appreciation/inflation/etc was a gamble and something that was a big no-no. Now you guys are saying the opposite?
Sure, over 30 years, real estate will work out as an investment, no one ever argues that, and a deal today will most likely be a good investment in the long term. That is the only part that makes sense to me.
Another thing to note, I'd bet there is way less upside when it comes to appreciation at this point, at least in the short to mid-term, considering the huge appreciation we have seen these past few years. I do understand I don't have a crystal ball either but thought I'd comment.
I think he is a bit biased, because not so many people have all the right conditions or experience to find a good deal. He did say, if you find a good deal then of course go ahead and offer more on that deal. He is actually investing more on areas that have more appreciation hence there will be people that will be renting out from him because they won't be able to compete with his buying power. So in a way he wants to offer confidence for people to buy while at the same time increasing the competition in areas with high appreciation. So you either force a single family to live 1 hour away from their jobs or you stop buying massively and contributing to the issue? Lol it is coming full circle if you think about it. So in conclussion, whenever you buy, as long as you can afford it you will be fine. In my opinion, buying now paying overprice for something that will take longer to catch up to the amount it overpriced to is risky as well, you can always refinance your rates but the cost of the loan will remain the same. Besides, at the moment they are selling old houses that need re-piping, re-roofing and upgrades for HVAC as if they were brand new...so on top of over paying you will spend 40K more on making it livable....so when the correction happens will your property even be able to catch up? Because if you have a 220K that needed 40K in repairs, you are actually looking at 260K to sell it without closing costs. So the cost of repairs plus the cost of the house, and if the market corrects at 5% appreciation per year and you wait 5 years, then you will either get back the money of the repairs or you have to keep the property until it's paid off so it cash flows, but you won't be able to sell for a profit because the closing costs will dip your gains.
I do see them changing tune quite often. I wholeheartedly trust their advice though.
The rookie podcast makes me angry in this sense. The podcast starts off well, then they ask numbers. Rookie proceeds to tell them they make $100 per door before accounting for vacancy, taxes, etc etc. Then they congratulate them for making a horrible deal 🤦🏻♂️. That podcast gets to me…
Yeah Ive heard them say appreciation is just the icing on the cake but maybe that was more Brandons philosophy
This is great David! These are questions that I had myself. Thanks for answering these questions! Please continue this Q&A format
Hey David. Just did a 1031, you don't have to debt on the new property, but you do have to buy the full sale price of the old property. In other words, if the property sells for 500k and has a mortgage of $300, you have to buy a new property at 500k but you could bring in 300k cash to make the difference.
Absolutely love this format. Please keep it up. It would be helpful to hear advice on scaling, particularly as it applies to financing (DTI, loan type, etc) and how to balance debt load vs risk.
Same I like this format.
David yes man!! You are doing an excellent job with how you running this podcast/ TH-cam this way…. The questions your answering are what most investors want to hear… This podcast is truly a master class! … we love it Man! Keep going
Great content. I will ad as a short term rental owner which all are out of state do not be worried about taking time off from work to deal with issues. Everything is managed by me and only me and I’m a W2. Phone calls fix it all. Good email communication and follow through as well has the proper logistics in place as far as housekeepers, lawn/handyman. Don’t waste your time with paying a management company unless you have at least 5 properties and if your not working a W2 it should be no problem to handle yourself…IMO. Also if your looking for truly passive to get away from tenants and toilets, look at commercial such as triple net. With $300k you can leverage to 1.2-1.5 million and get yourself started but cap rate are in the 4-6% and get a little riskier as they move up.
Love the content, David. Tons of value. Please keep them coming!
Yes… this show is very informative…
Pls continue the show…Thanks David
Thank you for this episode. So incredibly valuable. 🙌
Great episode. Really fantastic advice you gave for not leaving a job too fast. Ask me how I know. Good stuff David. Guests had well thought out questions as well.
Even if you break even, there is someone paying off your asset! We bought in Prescott and one house is breaking even but it has gone up $150,000 in 4 years but the principal has been going down every month. We just bought a second one and it may break even but we may use it as a short-term rental. We are waiting to see if we can permanently work from home and if so, that changes everything - we sell our CA home and move into one of the AZ homes and use the CA money to buy another somewhere else. I don’t want to be just in 1 market because to me, that’s not being diversified.
@David Greene: Love your books, love the podcasts and love this Q&A!
You have probably already talked about this for BiggerPockets… but a RE “spectrum analyzer” would be pretty sweet! Beginning investors that can’t decide on a strategy or market to get started can adjust the analyzer by sliding the inputs for passive/active, risk tolerance, personal cash/cashflow position, etc. Phase 1: Real Estate Strategy Suggestions (short-term, appreciation, cashflow, JV, lending, passive LP) Phase 2: Target Market Suggestions (San Francisco, Seattle, Orlando, Indianapolis, Detroit)
Also, see you on the BiggerPockets podcast in a few years!
David you are the best at breaking down everything. If i pass my million mark its because of you and your information. Thank you
Two things 1) amazing lighting upgrade! and 2) how do I get in your database? I live on the peninsula and dance in the east bay weekly in Richmond. Would love to come to a meet up.
This episode was great for me as I’ve been grappling with the cash flow vs equity growth.
Here’s another “vs” question: my main strategy is to diversity as protection against my relative newness. How about: concentrate investments in one area for economy of scale VS. diversify geographically for regional diversification?
I am a newbie just bought my first property and I am absorbing everything. I really liked the advice you gave the first responder in terms of not jumping ship too soon. Keep up the great work and thank you so much!
I like this better than the regular podcasts you guys do. I got so much info from this episode! Great job 👍🏾.
This was excellent information, straight to the point and no fluff!
I just got "SOLD" and "BRRRR" in the mail. It would have been cooler if I could have got them signed somewhere, but I'll take what I can get. Knowledge is Power. Keep of the good works.
My wife and I bought our rental out of state because it was about 1/3 the cost of the median home price of where we live.
The analogies and relatability of info and the way it is delivered are perfect for the layman
Thank you
Big fan of this new set up. Love hearing more about how to get started type of questions
Great information and advice. Please keep them coming! Thank you!!
The river rock analogy was a good one. By the way The process in which the rough rock became smooth from water constantly flowing over n around it is called erosion. It's basically a process in which one material is wearing away at another material due to a constant & consistent movement against it, which usually happens over a long period of time. However the time/speed of the erosion(wearing away of the material) process depends on the hardness(of the material to be worn away) and the speed(of the material flowing or running against the harder material). So I guess the meaning ur putting to the situation is for us to get out there and do the repetitions of work/practice and allow that process(which would be the water) erode(wear away) our rough/unfinished skills and we to overtime just like the rock in the river with water flowing passed it will develop a nicer smoother finish to our skills. ;) it's quite philosophical lol in this analogy ur not building skills directly but rather u r acquiring thenm via honing ur technique thru practice overtime by shedding or wearing away the rough/unfinished qualities such as nervousness, low self confidence, low self esteem, poor body language, lack of eye contact, etc..
I love the format of these episodes! Keep it up i love all the questions people have and I learn a ton
Thank you. Regarding your advice and insight on buying now bs waiting, from the 13 min mark to the 23rd, was perfect. I have been trying to share the same with my loved ones but you did it so much better. I have already shared it will all of them. Thank you so much!
Super helpful Q&A. Definitely helps me with some clarity in our current situation.
Love this show format! Thank you David for sharing your knowledge.
Please do more of these. I would like to know more about how to navigate relationships in a partnership in real estate.
Answered so many of the questions that I have had as an early-stage investor. Thank you for this breakdown! Wish I had found this podcast earlier in life, but thankful to have been introduced now. Thank you so much again!
Yep, I agree. For all those younger people out there, invest now. Time is your best asset and being young, if it all goes wrong, you have tons of time to learn and recover.
Gold!
Great job. I don't get to watch often, but this was a really good episode
Great analysis and answers, David! Very insightful.
Thank you David The show was great, great answers David you are awesome I'm looking on a house in Ruskin Florida to buy I'm a Newbie on bigger pockets and this will be my first investment property.
These podcasts never get old. 10/10
Hi David this has too be one of the best most informative episodes amazing job thank you so much you the best!
Please please continue to make more videos on this topic as the market changes
Very good and valuable information. I really needed to hear it from this perspective. 🙏
Awesome, keep up the good work, I have learned so much, I’ve been listening for a year now, thank you guys for what you do.
Love this content because these are questions we all have!
The real reason for not using your retirement funds (e.g., 401K loan) as a down payment is because that money is effectively double taxed. First, when you pay the loan back to your 401K account, you are using post taxed funds. Secondly, that same money gets taxed a second time when you withdraw it during retirement. Obviously, you cannot avoid the taxes when you are withdrawing but a 5% HELOC would be better than degrading your nest egg by 22% or whatever your tax bracket is.
My agent was telling me to wait 3 years ago, when I made an offer he was wow this is expensive man! Now look, it is up 40%. If it corrects, even 10-20% It doesnt matter! Home ownership is the only proven way of building wealth long term! Nothing can beat it! Even 5 years ago they were saying real estate was going to correct, never did. Always look at it long term
Awesome format, David.
Excellent show, thank you DG and BP
Great video brother! The river rock was a solid analogy.
Would buying land wise right now . For example , buy land now and wait a year later to built house .??? Lumber cost currently is high , but I am hoping it will lower.
Love how is answering questions. I wish I can give him many times like 👍
Great advice 👍👍👍
Great episode! Thank you!
How can you determine which areas will appreciate more than others?
David, this was sooo helpful! Especially learning overarching principles and strategy questions, like cash flow vs appreciation, given how much money you have access to, and financial stability, etc.
I’d love a show or response comparing different types of more passive real estate investing opportunities.
One problem I had listening was that the TH-cam video wouldn’t let me rewind, except in very large increments.
That was very frustrating because, several times, I just wanted to rewind 30 seconds or 1 minute, and the player forced me to rewind maybe 5-10 minutes each time.
I think this has something to do with how your video was uploaded?
Thanks for the input! I'll make a note of this for future content!
Hey David. I'm in need of some consultation. I closed on a multifamily with a 1031 exchange in April and am trying to do a cash out refi now in December. Will I be raising a Red Flag with the IRS?
What does equity mean ?
appreciate your help
Good video here and guys we all know the real reason if you still have questions about real estate if can’t be that much
Love the Q&A’s
Top i love the info. Love from Antwerp belgum
“Mean David Green”…. This guy is the real deal
Great video!
A lot of investors did very well with Airbnb in my coastal Florida market, until the motel lobbies and local government got together and made it illegal. If you’re considering Airbnb make sure it will cash flow monthly, in case they change the rules.
This is really good information. It is helpful for my wife and I in make the correct investment. Thank you
I love these shows, David.
Risk is the likelihood of not achieving your goals.
I don’t get the cash flow or appreciation. Doesn’t appreciation increase cash flow??
Here's a blog from BiggerPockets that may help out: www.biggerpockets.com/blog/2014-06-21-investing-cash-flow-appreciation-whats-difference
Really enjoying this I wish you guys would talk about the tax right offs thank you
Thanks for the input! I made a content note about that. Hopefully this blog will help out: www.biggerpockets.com/blog/real-estate-taxes-deductions
its not a job when you have your airbnb business with systems in place as any business would so its debatable on whether its active or passive. I have 8 units that are leased abtraige short term rental and manage less then 4 hours a week
How about $200 monthly cash flow with %3 appreciation?
I'm curious. A few years ago I remember Robert Kyosocki saying the worst investment property you could buy was a vacation rental, now I see gurus on youtube pushing them? I wonder if these same multi millionaires pushing investing are actively selling properties at the same time?
Betting on appreciation in a market that may be close to peaking is really stupid. Do the work to find real value add properties that will cash flow. If it doesn't fit into your buy box, don"t buy it.
That's what I am saying, it's like being bullish all that goes up, nust come down, I don't think appreciation will be able to catch up after the dip. If it goes up 40% it will go down 40%. They may try to slow it down, but that doesn't mean it won't happen. If a market correction is not done, how are all these investors will be able to make gains? Only by renting...so what's actually happening here?
He gave good reasons why the market shouldn’t crash, obviously he doesn’t know and obviously YOU don’t know the future.
What are the factors do you consider when determining which market is appreciating market going forward?
I luv just you on the show- clearly you are the highest IQ guy on this channel :), I believe your answers and advice far best.
So in conclussion, the best time to buy a house is when you can afford to buy a house.
Lol the beard is away
Zeek, take out your nose ring. That's my advice. Sorry, but really. Best of luck and have fun.
👏🏾👌🏾