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

Summary

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BiggerPockets Real Estate Podcast

Episode: How Much One “Ordinary” Rental Property Has Made Me in the Last 6 Years
Date: July 29, 2026
Hosts: Dave Meyer & Henry Washington

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Episode Overview

In this episode, Dave and Henry dig into the true long-term impact of owning just one "ordinary" rental property. Rather than focusing purely on cash flow or appreciation in abstract terms, they candidly walk through real properties from their portfolios—sharing numbers, lessons, setbacks, and how patience and persistence led to significant wealth-building, even when the investments had rocky starts.

The episode aims to give listeners a realistic perspective on the lasting benefits of real estate, emphasizing the cumulative, often overlooked, gains that come with owning and holding for the long haul.

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Key Discussion Points & Insights

1. The Missing Link: Long-Term Property Performance

• [02:32–05:24]
  • Henry emphasizes how most conversations in real estate focus on acquisitions or dispositions, rarely on what actually happens during the years in between.
  • Dave explains the goal: to give listeners details on how a single property can contribute to portfolio growth and financial freedom over time, not just on paper but in real life.

2. Henry’s Eight-Unit Pandemic Purchase: Lessons From the Trenches

• [06:02–16:51]
• The Deal: Eight-unit property in a prime location (across from University of Arkansas), bought for $500k in January 2020—right before the pandemic upended the market.
• The Hurdles:
  • Severely underestimated rehab ($100k budget mushroomed to ~$250k) due to labor/material shortages and delays.
  • Required creative financing: local bank loan (90% purchase, $100k for rehab), with seller carrying back the down payment on a note (10% interest/2 years).
  • The property was vacant during renovations; cash flow from other assets/flips kept Henry afloat.

Notable Quotes:

• “It’s, it’s, it’s an amazing property… but this property ate my lunch because we blew through that $100,000 pretty quick.” – Henry Washington [07:45]
• “Those were dark days. Those were dark, dark days.” – Henry Washington [09:16]

Turnaround & Numbers:

• Pre-reno rents: $300–$500/unit.
• Post-reno rents: $1,000–$1,200/unit (two bed/one bath, ~800 sqft).
• Appraised at $1.4M after renovations (~$1.5–$1.7M market value).
• Current debt: $720k; gross rents: $10k+ per month; mortgage: $6,200/month; still positive cash flow.
• Holding Strategy:
  • Henry plans to keep the property forever, citing increasing university demand, rent growth, and long-term appreciation.
  • Expected future capital expenses (e.g., asphalt parking lot, HVACs) acknowledged.
  • Emphasizes patience: “Real estate is truly a long game.” [10:12]

Lessons Learned:

• The real power comes from staying in the game, even through adversity.
• Having multiple income streams and reserves is key to weather unexpected costs/timelines.
• “The wealth comes through equity and appreciation. The wealth doesn’t come through cash flow. Cash flow is a measure… But that’s not what builds the wealth.” – Henry Washington [29:36]

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3. Dave’s Single Family "Live-In" Investment: Betting on Path of Progress

• [17:51–26:30]
• The Deal:
  • Single family home purchased in Denver in 2016 for $462k after identifying a "path of progress" opportunity—a new light rail was planned to run through the area.
  • Not a traditional “house hack”: Dave and his then-girlfriend (now wife) lived in the home for three years.
  • Used a conventional, owner-occupant loan (20% down), partly funded by refinancing another property.

Research & Value Add:

• Dave attended city planning meetings, picked location for expected upside as city was investing in transit and nearby park.
• The main “value add” was simply enduring several years of major construction and neighborhood transition—including noisy trains, distressed neighbors, even nearby gang activity.

Notable Quotes:

• “The value add I did was living in a very uncomfortable situation for three years because they just did construction for three years… Once this was over, it would be worth 700,000.” – Dave Meyer [22:20]
• “Sometimes ignorance is bliss.” – Dave Meyer, reflecting on unintended hassles endured for future appreciation [22:56]

Financial Performance:

• Bought for $462k; current value: estimated $720–$750k (conservatively).
• Current debt: ~$230k.
• Rented at $3,000/mo initially, now $3,250/mo; monthly payment (after refi): <$2,000.
• Generates $10k–$15k/yr in cash flow despite substantial equity.
• Exit Strategy:
  • Dave is considering selling and doing a 1031 exchange, as the property’s upside appears tapped out; would redeploy equity for better cash-on-cash returns elsewhere.

Lessons Learned:

• “It’s worked for me in so many ways… tax benefits, appreciation, cash flow… It’s kind of checked every box.” – Dave Meyer [24:17]
• Reinforces that long-term holding allows “ordinary” deals to become great wealth builders—provided there’s a coherent business plan behind them.

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4. Key Takeaways & Analysis

• Financing Makes or Breaks Success

  • Having flexible, long-term, or lower-interest financing allows you to weather downturns and delays (Henry’s reasonable construction loan was crucial).
  • “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.” – Henry Washington [28:14]

• Speculation vs. Business Plan

  • Both hosts stress the difference between educated investing (with a business plan based on value add or market research) and pure market speculation.
  • “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 6, 10, 15 years. Otherwise you’re just guessing and waiting.” – Dave Meyer [31:19]

• It’s a Waiting Game

  • Real estate returns are heavily weighted toward those who can hold—not flip—assets for years, since no one can predict exactly when “the bump” or major appreciation will come.
  • “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.” – Dave Meyer [33:03]

• Don’t Confuse Cash Flow With Wealth-Building

  • Cash flow keeps you solvent, but “wealth comes through equity and appreciation.”

• Customize Your Hold/Sell Strategies

  • Henry prefers to hold his property as a legacy asset for his kids; Dave, finding better opportunities, plans to exchange out.
  • Evaluate based on your strategy and goals—not a one-size-fits-all approach.

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Notable Quotes & Moments

• “This isn’t some crazy thing… you just bought a good asset at a really good price, renovated it, made it more desirable, increased occupancy and the rents and that’s it… but it just takes time.” – Dave Meyer [15:04]
• “If you don’t want to lose the money you have in the asset, you’ve got to be able to hold.” – Henry Washington [15:52]
• “Being slow can be a deliberate strategy.” – Dave Meyer [32:15]
• “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.” – Henry Washington [28:40]
• “I don’t want people… to think that you have to sell your properties after the seven year period. Dave’s doing what he feels like best fits his investment strategy going forward and… you need to do the same thing for you.” – Henry Washington [26:34]

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Important Segment Timestamps

• Henry’s Eight-Unit Story Start: [06:02]
• Creative Financing Details: [08:05–08:42]
• How Rent Increased After Renovation: [09:07–10:08]
• Appreciation & Current Valuation: [12:23–12:47]
• Maintenance & Holding Strategy: [13:40–14:29]
• Dave’s Denver SFR Story Start: [17:51]
• Strategic Neighborhood Pick: [18:47–20:54]
• Refinance & Financing Details: [21:03]
• Unexpected “Value Add” via Tolerating Construction: [21:58–23:03]
• Current Cash Flow and Exit Plan: [24:17–24:48]
• Discussion: When To Hold, When To Sell: [26:30–27:46]
• General Analysis: Financing, Speculation vs. Plan, Time Horizons: [28:07–34:41]

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Closing Thoughts

This episode is a compelling, transparent look beyond acquisition hype—revealing how one “average” rental can, over six-plus years, become a major pillar of your net worth. The honesty about challenges, financing, and strategic patience offers practical education for both aspiring and experienced investors.

If you enjoy detailed breakdowns of real-life deals, Dave and Henry invite feedback for future episodes in this format.

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Transcript

[Dave Meyer]

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[Henry 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 5, 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? 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.

[Dave 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?

[Henry Washington]

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

[Dave Meyer]

Yeah, it's going to 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. 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.

[Henry 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.

[Dave 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 real time.

[Henry Washington]

Right.

[Dave Meyer]

And although sometimes those equity numbers are real and they are impressive, that's not the only benefit. Or in between buying it for 100 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.

[Henry 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

[Dave Meyer]

was becoming a thing, right before toilet paper weekend.

[Henry Washington]

Yes.

[Dave Meyer]

Freaking out. Yeah.

[Henry Washington]

When people were wearing like grocery bags over their heads, tucked into their clothes, going to grocery store, like when no one knew what was happening, when it was really, really scary. Still, what a crazy time to, 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. 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 a hundred thousand dollars for the renovation of this property and we probably ended up spending closer to $250,000.

[Dave Meyer]

Yeah.

[Henry Washington]

Bought it for 500,000. Yes.

[Dave Meyer]

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

[Henry Washington]

Great buy.

[Dave 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.

[Henry 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.

[Dave Meyer]

How do you finance that? Like how did you, you know, I mean, if you're budgeting for 100k get the other 150.

[Henry Washington]

We did a commercial loan from a local bank, 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.

[Dave Meyer]

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

[Henry Washington]

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

[Dave Meyer]

Still not looking good for you right now. If you're following along. If you're betting on this one, it's not great. At this point, your poly market odds are very bad.

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

[Dave Meyer]

So how big are they?

[Henry Washington]

Two bedroom, 800 square feet, two bedroom, one bath.

[Dave Meyer]

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

[Henry Washington]

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 I mean, you

[Dave Meyer]

went into the red for a while,

[Henry Washington]

for several months during the renovation, and

[Dave Meyer]

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.

[Henry Washington]

It takes time. And I think the thing that people don't talk about with real estate is that, yes, I was able to carry that property, but. 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, 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's literally nothing I can do about that. There was very few people that were working at that time. 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 onto 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.

[Dave Meyer]

Wow.

[Henry 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.

[Dave Meyer]

And how much debt is on it?

[Henry Washington]

$720,000.

[Dave Meyer]

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

[Henry Washington]

And the cash flow is decent. My note on this property principal and interest run me somewhere around 60, $200 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 9 to 11. So we're above 10 grand in gross rents, paying about 6200. 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.

[Dave Meyer]

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

[Henry Washington]

I'm going to keep this one forever. Yeah, 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 H Vacs are getting older that we'll have to replace soon. But in terms of location and appreciation and rent growth, like you couldn't be in a better location.

[Dave Meyer]

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

[Henry Washington]

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

[Dave Meyer]

So, I mean, yeah, the strategy, which I like is like, you have a great assets that 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.

[Henry 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.

[Dave Meyer]

So it's. I'll take it even better.

[Henry Washington]

Right.

[Dave 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, increase the occupancy and the rents and that's it. Like, that's. Yeah, 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 100% 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.

[Henry 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.

[Dave Meyer]

Yeah.

[Henry 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 situation that was happening in the, 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. 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.

[Dave Meyer]

All right, well, this is a great example that everyone can repeat. You don't have to go out buy 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.

[Henry 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.

[Dave 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.

[Henry Washington]

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

[Dave Meyer]

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

[Henry Washington]

Well played, sir.

[Dave Meyer]

So 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 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 go.

[Henry Washington]

This is one cold call that you ever made.

[Dave Meyer]

One my one direct to seller deal I have ever done. But let me just tell you about why 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 in at this train station that they're 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 go south. 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 got to 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 knew, knowing what I knew now, I was like, all right, I got to. 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. 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 6 years earlier for a 4 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 refining 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 462

[Henry Washington]

for a single family. Even back then. Wow. Wow.

[Dave Meyer]

There's a lot.

[Henry Washington]

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

[Dave 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, was going to cost 15, 1600 dollars easily. So like the payment wasn't that crazy.

[Henry 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?

[Dave 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 domained the houses across the street? Yeah, 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 first they built the train and I didn't know this at the time, 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 quiet zone. So 24 hours a day for two years, two blocks away from us, trains were just blowing their horn. We were just living in this for like this 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.

[Henry Washington]

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

[Dave Meyer]

Still own it. So like when I moved out in 2019 alone got 3,000amonth in rent, rents in Denver have like went up and now they've kind of come down. And so I'm getting about 6, I think I'm getting 3,250 right now a month. And my payment because I refinanced it is 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 1400 bucks cushion. I do pay a property manager, but it produces, you know, 10, 15 grand a year in cash flow.

[Henry 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?

[Dave Meyer]

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

[Henry Washington]

Yeah.

[Dave 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, 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 months. It really is kind of checked every box.

[Henry 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? Are you going to, are you going to sell it? And if you're going to sell it, what are you going to do with the proceeds?

[Dave Meyer]

Yeah, so this is the way 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 because 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. 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 onto 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 peek out and like the performance peaks. 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.

[Henry 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 think, you know, 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. So like for me and my property, I just, 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. So exactly 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.

[Dave 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. Welcome back to the Bigger Pockets podcast. Henry and I are sharing stories about the long term performance of two deals that we picked out. Let's jump back in.

[Henry 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, 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, a different story that we're telling now. So, like, if you can buy a property that's 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 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 use 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.

[Dave 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, three, $500 rents and you had to tell yourself a story that I can get a thousand 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 maybe, but I think like you need, 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 advantage financing. Right. You know, like that's that made that possible. Would I have bought that as a, 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 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 6, 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 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 is not necessarily some consolation prize that you're taking.

[Henry 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.

[Dave Meyer]

Yep.

[Henry Washington]

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.

[Dave 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. And the people who held onto 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 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 share examples of great or bad stories that if going into these 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.

[Henry 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.

[Dave Meyer]

All right, that's our show for today. Thank you all so much for watching this episode of the Bigger Pockets podcast. He's Henry. I'm Dave. We'll see you next time.