10 Things We Wish We Knew Before Buying a Rental Property

Summary

BiggerPockets Real Estate Podcast

Episode: 10 Things We Wish We Knew Before Buying a Rental Property
Date: March 6, 2026
Hosts: Dave Meyer & Henry Washington

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Episode Overview

In this episode, Dave Meyer and Henry Washington break down the 10 biggest lessons they wish they’d known before buying their first rental property. The conversation is candid, practical, and aimed at helping new and aspiring investors overcome their fears, avoid analysis paralysis, and make smarter decisions. Drawing from decades of experience, the hosts share personal anecdotes, hard-won insights, and actionable advice to help listeners navigate the early stages of real estate investing effectively.

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Key Discussion Points & Insights

1. Let Your Goals Determine Your Strategy

• Many investors start by picking a tactic (flipping, rentals, short-term) without considering their bigger life or financial goals.
• “Goals should dictate your strategy, not your strategy dictating your goals.” (Co-host/Guest Expert, 01:13)
• The type of returns, the amount of work, and the timeline for results should reflect your personal circumstances and ultimate objectives.
• Memorable Quote:
  • “For me at least, real estate is a means to an end. And if you don't know what the end is, how are you going to figure out what the means are?” (Henry Washington, 02:53)
• Advice: Physically write down goals and keep them visible as a “North Star,” to combat decision fatigue and stay aligned during tough choices. (04:08)

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2. You Are an Entrepreneur, Not Just an Investor

• Buying rentals isn't passive—it's starting and operating a small business.
• “You are starting a business. This is entrepreneurship. And you have to treat it as such.” (Henry Washington, 04:58)
• Managing tenants, maintenance, bookkeeping, and strategic planning become your new normal.
• Control is a double-edged sword: you can shape your business, but you’re responsible for its outcomes.

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3. You’re Unlikely to Go Broke on a Single Family Home

• Fear of financial ruin holds back many potential investors, but single family homes are lower risk if you buy in demand areas and manage prudently.
• “If you follow basic real estate principles...you protect yourself pretty heavily...The likelihood of you going completely bankrupt...is probably pretty low.” (Co-host/Guest Expert, 07:41)
• The real risk in real estate investing is not acting at all and missing out on appreciation and learning.

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4. No One Will Ever Care as Much as You Do

• Whether it’s agents, property managers or contractors—others may do quality work, but ultimately, the buck stops with you.
• “It doesn't matter what you pay them, how much you talk to them, how well you treat them. It's your business and no one is ever going to care [as much].” (Henry Washington, 15:44)
• That’s not a reason to avoid help, but you must stay involved and take responsibility for oversight and decisions.

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5. Understand the Construction Process Before Jumping In

• Most new investors focus on deal finding and tenanting, underestimating renovation and construction complexity.
• “A lot of new investors end up losing money on deals not because they bought the worst deal, [but because] they didn’t budget properly on their renovation.” (Co-host/Guest Expert, 18:43)
• Learning how to scope work, estimate costs, and sequence repairs is key—both for protecting your investment and for not missing out on good deals due to fear of renovations.

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6. Door Count Doesn’t Matter—Efficiency Does

• “It is not a measure of success to buy assets. A measure of success is buying performing assets.” (Henry Washington, 22:53)
• ROI, efficiency, and alignment with your life goals matter far more than accumulating a large “door count.”
• The hosts encourage listeners to celebrate smart, efficient investing over scale for its own sake.

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7. Treat Rentals Like the Businesses They Are

• Rentals aren’t “set and forget.” Think about your tenants as customers and your property as a product to be marketed and improved.
• “Vacancies kill rentals...If you add the right amenities...you get your properties rented faster. And saving in vacancy is literally putting more cash flow in your pocket.” (Co-host/Guest Expert, 25:54)
• Professional operations, good systems for tracking income and maintenance, and thoughtful property improvements set successful landlords apart.

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8. Financial Freedom Takes a Decade—And It Goes Fast

• The compound benefits of real estate (equity gains, rent increases, debt paydown) accrue rapidly over time.
• “The deals that have the most equity, the most cash flow...are all the deals I bought in my first couple years...I bought them in the longest period of time.” (Co-host/Guest Expert, 34:37)
• Simple consistency and patience win—don’t chase fast wins or get discouraged by slow starts.

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9. Your Goals Will Change—And That’s OK

• Life and circumstances evolve; your real estate strategy can adapt in tandem.
• “My goal was to grow my portfolio. I wanted 200 doors...Now I want to be somewhere around 50. Paid off assets.” (Co-host/Guest Expert, 38:41)
• Don’t be afraid to reassess and pivot as your needs and market conditions shift.

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10. When in Doubt, Buy the Best Asset You Can Afford

• Quality, location, and potential always outweigh theoretic high returns from low-quality or fringe assets.
• “If you control a high quality asset, you're going to be okay in this business...I would rather buy an amazing asset that breaks even than a questionable asset that gets a 10% cash on cash return.” (Henry Washington, 41:20)
• Properties that are well located and desirable consistently hold value and outperform in the long run, even if they seem expensive upfront.

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Notable Quotes & Memorable Moments

• “Sticky notes in your shower?” “Oh, yeah, it’s awesome. That’s my best ideas!” (04:20–04:30)
• “If my goal personally was to go out and just get to 100 doors, I could do that...But my goal is time, freedom.” (Henry Washington, 24:16)
• “My better assets aren’t the ones I paid the least for. I’ve often ended up selling those.” (Co-host/Guest Expert, 42:51)
• “I have literally never regretted buying a house in a great location. Even if I, quote, unquote, overpaid for it.” (Henry Washington, 44:24)
• “You're betting on yourself instead of someone else.” (Henry Washington, 07:29)

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Timestamps for Key Segments

• [01:13] — Goal-driven strategy
• [04:58] — You’re an entrepreneur, not just an investor
• [07:41] — You’re not likely to go broke on a single family home
• [15:44] — No one will ever care as much as you do
• [18:43] — Understand the construction process
• [21:51] — Door count vs. efficiency
• [25:36] — Treat rental properties like a business
• [33:45] — The 10-year path to financial freedom
• [37:26] — Your goals will change
• [41:20] — When in doubt, buy the best asset you can afford

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Final Thoughts

This episode is a masterclass in cutting through the hype, comparison traps, and paralyzing fears many new investors face. Both hosts encourage listeners to focus on personal alignment, smart fundamentals, quality over quantity, and long-term vision. These 10 lessons are crucial guardrails for anyone hoping to achieve real, lasting financial freedom in real estate.

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For more insights, guides, and episodes, visit BiggerPockets.com.

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Transcript

[Dave Meyer]

The biggest risk in real estate isn't

[Henry Washington]

buying the wrong property. It's never buying at all the perfect rental property.

[Dave Meyer]

It does not exist. And waiting to find it is costing

[Henry Washington]

you thousands of dollars per month.

[Dave Meyer]

Most beginners spend months or even years

[Henry Washington]

stuck in analysis paralysis. They're waiting for the perfect deal, the

[Dave Meyer]

perfect time, or the perfect market. Meanwhile, they're missing out on years of

[Henry Washington]

appreciation and cash flow.

[Dave Meyer]

But right now, we're going to tell

[Henry Washington]

you the 10 things we wish people had told us before we bought our first rental properties. So you can stop overthinking and start building wealth. If you're watching this video, you're probably anxious about pulling the trigger. You're worried about making a mistake, buying the wrong house or losing money.

[Dave Meyer]

I've bought dozens of rental properties.

[Henry Washington]

I've been investing for 16 years.

[Dave Meyer]

And it took me a long time

[Henry Washington]

to learn the principles to grow a successful business.

[Dave Meyer]

But you don't have to wait. Here are 10 things about rental property investing we wish we knew before we got started. Welcome to Biggerpockets.

[Henry Washington]

I'm Dave Meyer. He's Henry Washington. So, Henry, start us off. What is the number one thing you wish you knew before you bought your first rental?

[Co-host/Guest Expert]

The number one thing I wish I knew was that goals should dictate your strategy, not your strategy dictating your goals.

[Henry Washington]

Yes, yes, thank you.

[Co-host/Guest Expert]

I hear all the time from investors, I want to be a house flipper or I want to be a landlord or I want to operate short term rentals, but. Yeah, but why? All of those things are exit strategies. They're ways to monetize your real estate deal. But the way that that money comes in may not actually fit your goals. And so getting started, I know it sounds cliche, but having your goals clearly lined out in your head should help you pick the strategy or the exit strategy that you use. Because your goals should be a function of how much money you want to make and, and in what timeframe you want to make that money in. And not every strategy is going to fit a particular set of goals. So if you're somebody who's saying, I don't need cash flow now, I need to supplement retirement, I need cash flow later, well, you're probably looking at some strategy that involves you buying established good assets in parts of a community where there's going to be appreciation. You may not get the best dealer cash flow now, but in 10 to 15 years, 20 years, those things could be close to paid off and you'll have great assets. But if you're somebody who's like, I need large sums of money in short periods of time. You may need to look at flipping a house, right? And then you look at where in the country can you do that strategy? I think people do this backwards all the time. They say I want to buy cash flowing assets in a cash flowing market, but I don't have any money and they need money sooner than later. Well, then you probably don't need to go buy houses in Cleveland. You probably need to look at flipping house, maybe where you live.

[Henry Washington]

For me at least, real estate is a means to an end. And if you don't know what the end is, how are you going to figure out what the means are? There are probably some people out there who invest in real estate because they just love real estate. I like real estate, but what I love is the stuff that real estate gets me. The financial freedom, the time freedom, that kind of stuff. That's my actual goal. My goal is not to own 10 houses. My goal is to have more flexibility, to have more time with my family, to do the things that I love. And so I choose real estate investing strategies that support that. That's why I don't flip houses, because it would be the opposite of what I want because it's too time intensive for me given where I am in my life.

[Co-host/Guest Expert]

Absolutely, you're right. If you're looking for freedom, the strategy you may pick can be very labor intensive, even though it might hit your financial goals. So you need to think about your lifestyle as a part of your goals as well. Or else you'll just build yourself a job where you're working more hours in your real estate business than you are in your day job. Anyway.

[Henry Washington]

100 everyone wants to jump in and I get that sentiment. You should be excited about this. It's fun and it's empowering. But take a minute, take an hour and just think about exactly where you want to be. And I promise you, every decision you make for the rest of your investing career will be easier if you just think about this upfront.

[Co-host/Guest Expert]

If you take your goals once you have them, take them, write them down and stick them where you can see them often. Like, I have sticky notes with my goals on it. They were all over my shower when I first got started. But what happens is an investor.

[Henry Washington]

Sticky notes in your shower.

[Co-host/Guest Expert]

Oh yeah, it's awesome.

[Henry Washington]

That work.

[Co-host/Guest Expert]

That's my best ideas. I can't lose a good idea because I'm taking a shower. I got to write it down.

[Henry Washington]

Your wife must hate you.

[Co-host/Guest Expert]

But seriously, stick them everywhere. Because one thing that happens as an entrepreneur or as a busy person in general, is you get decision fatigue. And then you sit here spending so much time thinking through something, and it's really easy to just look at your goals and say, okay, is the decision I'm trying to make aligning me to my goals? If the answer is yes, then it helps you make that decision. If the answer is no, you can literally forget about it. So it's. It's like your North Star treatment. It as such, put it where you can see it. Use it to guide your decisions. Dave, what you got for number two?

[Henry Washington]

Number two is you are an entrepreneur, not an investor. I know this is. This is going to make people mad, but I know people are going to get mad. Real estate investing is not pure investing. It's not opening up Robinhood and buying stock or cryptocurrency. You are starting a business. This is entrepreneurship. And you have to treat it as such. You have to work.

[Co-host/Guest Expert]

And.

[Henry Washington]

And that is just an inevitability of real estate investing. Maybe one day you do what I do now, which is mostly passive investing. It's still work. I still spend time on my business every single week. It's not a lot of time, but it is still time. It is not actually passive. And I think for people who are starting out, this idea that you're an investor and you're just investing just means putting money in someone else's business. That's not what you're doing. You're putting money in your own business. And even though we call it real estate investing, I think it really helps to think of yourself as a small business person, as an entrepreneur, and that puts you in the right mindset to

[Dave Meyer]

do what it takes.

[Henry Washington]

This isn't passive. You have to go out and do the stuff to make yourself successful.

[Co-host/Guest Expert]

Investing in real estate involves you having a customer, an end client. And you have to provide them a customer service. You have to provide them the product or service you're promising to provide them. And then you also have to do what most business people do in businesses outside of real estate, which is strategically plan your business. And that's not something that you think about when you're first getting started, which

[Henry Washington]

is true about your goals. Like, if I go out and buy Tesla stock, I don't have a goal for my stock. You know, like, you are playing money. Yeah, exactly. This is a good goal. But yeah, like, this is the reality of it, but it's also the opportunity. And the cool part about it, you are not passive. People knock on Real estate, they're like, it's not passive. Well, that also means you have an opportunity to turn into anything you want it to be. You can create and craft a business that supports your lifestyle, that highlights the things that you're good at, that. That avoids the thing you don't like doing. That's what's so cool about it, is that you get to design the business that gets you the lifestyle that you want.

[Co-host/Guest Expert]

And the not passive part, the active part, is actually what helps you mitigate the risk when you're working in stocks and crypto, that you don't control the decisions these companies make once you buy the stock. But in real estate, you control a lot of the levers. You get to choose what to buy, where to buy, how to buy it, how much to spend, who gets to live in it, what kind of finishes you put in it. You control the risk levers, but that control comes at a cost, at a

[Henry Washington]

cost of time you are investing and betting on yourself instead of someone else.

[Co-host/Guest Expert]

Absolutely.

[Henry Washington]

All right, so that's number two of the ten things we wish we knew before we bought our first rental properties. Henry, what's number three?

[Co-host/Guest Expert]

Number three is you're not going to go broke on a single family home. Look, real estate is scary, right? You're buying an asset. Most people's largest expense of their life is buying their home, right? And now you're doing this like, as a sport, right? Like it's a business for you, right? Now you're doing something that people wait their whole lives to be able to do. They save up all this cash. Like, I get how scary and overwhelming it can be. And also, yes, you're borrowing money. You're leveraging to buy this asset. That's also scary because if you screw up now you're in debt, right? So it's this scary thought of, like, I don't want to put myself in financial ruin. Right? That's the. At the end of the day, that's what people are really scared of when they're first getting started. But that's what I love about being able to buy single family homes. Now I get it. Single family homes are very expensive in certain markets and not as expensive in other markets. But if you follow basic real estate principles, which is buy at a discount, buy in an area that people have a desire to live in, buy a property that's in demand, you protect yourself pretty heavily. And can you make a bad decision that's going to cost you some money? Sure. Can you make a bad decision on picking a contractor? That's going to hurt your business. Sure. But the likelihood of you going completely bankrupt when you're starting out with a three bed, two bath, single family home in a great neighborhood is probably pretty low. I'm not saying go buy a bad deal, and I'm not saying just go buy anything. What I am saying is to check yourself when you're feeling that fear of like, man, should I do this? You get to control some of these levers. So if you're scared, start small. Start with a smaller single family home in a neighborhood where, you know, people like to live in a place where, you know that the market is appreciating with a mortgage that you can afford. Right. And plan for the worst case scenario. If I buy this asset and I don't rent it for what I want, can I sell it or can I rent it and can I cover the overage if it doesn't work out? And if the answer to those questions are yes, you're, you're, you're going to be fine.

[Henry Washington]

I think a lot of people, maybe around our age, grew up through 2008, feels like housing and real estate is super volatile and risky, but actually, when you look at it, the risk of going to zero is extremely small. Not going to get into it because you're going to make fun of me, but I actually calculated the risk of it. It's very.

[Co-host/Guest Expert]

You did?

[Henry Washington]

I did. It's in my book.

[Co-host/Guest Expert]

But,

[Henry Washington]

but it's way lower than stocks or anything else. And I think that's. I find that comforting. Yeah. Could you lose a little money if you sell it and buy at an inopportune time? Of course there's risk in real estate investing, but especially with single family home, the demand is extremely high. The risk that you're going to lose it all is extremely low. And I personally find that comforting because as we talked about, this is entrepreneurship. The risk of going to zero in other businesses is very high. You start a restaurant, you start a store, the failure rate is super high. Real estate's actually pretty forgiving, you know, and it doesn't feel that way because it's capital intensive, but when you actually look at it, it's pretty forgiving.

[Co-host/Guest Expert]

I was talking to an investor when they were first getting started and they were like, I'm so scared. I don't know if I should buy this duplex. Yada, yada, yada. And I was like, I mean, it's a duplex in northwest Arkansas, like in five years. You look like a genius. Yeah, just buy the duplex. Yeah, like, and in real estate, you don't really lose until you sell at an inopportune time. So your goal is to figure out, can I afford to hold this if it gets bad? And if you can, you will look brilliant in five to 10 years. Just by the asset.

[Henry Washington]

Yep, 100%.

[Co-host/Guest Expert]

Okay, Dave, what's number four?

[Henry Washington]

Number four is no one will ever care as much as you do.

[Co-host/Guest Expert]

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[Dave Meyer]

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[Co-host/Guest Expert]

All right, we're back on the BiggerPockets podcast and we're talking about things we wish we knew before before we got started investing. Dave says no one's going to care as much as you.

[Henry Washington]

That's right. This is actually one of the best pieces of advice I got before I got into real estate investing, but I didn't apply it to real estate investing. I've started a bunch of businesses. I've been pretty entrepreneurial my whole life and I had started a tech company and I was meeting with this advisor and I was basically just complaining about how a business partner of mine and a vendor I was working with and they just weren't putting in the hustle that I was putting in. And he was like, you're the founder of the business. No one is ever going to care as much as you. It doesn't matter what you pay them, how much you talk to them, how well you treat them. It's your business and no one is ever going to care. And since then I've sort of developed this like mental model of like every degree of separation you get from you, people just care less and less and you have to hold on tighter and tighter. So if you have a team, a great agent, property manager, they're going to care, but they still don't care as much as you. And then if they sub something out to someone else, they're not going to care that much. And if they sub it out, they're not going to care that much. And ultimately I think the lesson is the buck stops with you. Like that is ultimately what you have to accept if you're going to get into this business is that you can hire people, they might be well intentioned, but they have other things going on in their life and it's up to you to keep the business on track. And if you're not willing to do that, it's probably not the right business for you.

[Co-host/Guest Expert]

I learned a very similar lesson from my property manager. And, and I basically said the same thing to him, is like, I don't want to turn over my properties to property management because you're not going to care about my properties as much as I am. And he said the same thing. He was like, you're right, I am not going to care, but I am well positioned to be more efficient than you in operating these. And so I found trust in knowing that this guy is going to operate my properties as efficiently as possible because that's what he takes pride in. And no, he's not going to care about as much as I am. But the efficiency is what was important there. So find people who you want to work with who have a common goal with you and if that common goal suits your business needs, then you can trust in that because you're right, they're not going to care as much as you do.

[Henry Washington]

Yeah, I think property management is kind of like the perfect Example, I've fired property managers, and most of them started great, and I don't think they were bad business people. Their business just, like, went in a different direction than mine, and they were prioritizing different things. And it was my responsibility to say, you know what? This. This relationship is no longer mutually beneficial, and we got to part ways. And it's like, I don't hold it against them. It's just. It's my job as the entrepreneur to say, like, you know, I'm doing what's best for my business. You're clearly doing what's best for your business, and you just have to think about it that way. It's not nefarious. People aren't, like, trying to screw you over most of the time. They're just trying to do what's best for them. And no two people, no two businesses are ever going to be perfectly aligned along the same path.

[Co-host/Guest Expert]

Agreed.

[Henry Washington]

All right, Henry, what is the fifth thing you wish you knew before you bought your first rental?

[Co-host/Guest Expert]

This one is, I wish I understood the construction process a little better before getting into my first deal. When you study real estate investing, listening to podcasts, reading books, you hear about, you gotta know how to find deals. You hear about, you gotta know how to find the money for those deals. You hear about, you gotta know how to select the right tenants. Like, you hear about all the things in the process. You hear very little about construction or understanding the construction process of the background. And I remember after closing on a series of duplexes, we were evaluating contractors, and one of the contractors showed up to look at the job, and he was like, I don't want this job. Like, this was a big waste of my time. He's kind of fussy with me about it. And he basically said, you should just do scopes of work and send those out so that we can see what's going on, the size of the prize, because. And he told me, he's like, some jobs are going to be too big for some people, some jobs are going to be too small for some people, but if you. If you approach it this way, you're not going to waste my time or waste other people's time. And A, I had no idea to think like that. And B, I really didn't understand how big the job was I was asking him to do. And a lot of new investors end up losing money on deals not because they bought the worst deal. It's because they didn't budget properly on their renovation. They end up overspending, and you get in a Tough situation. So understanding more about construction, how to do scopes of work, what an actual rehab is going to cost you, like, spending the time to learn those things, I think would be a value to you prior to doing a first deal.

[Henry Washington]

I think probably my biggest regret as a real estate investor is my weakness in understanding construction. It took me, I think. I mean, I've said it on the podcast. I think in 2024, I made a goal, 14 years into real estate investing, to learn construction better. And I've done rehabs on pretty much every project I've ever bought, but I'm just not that good at it. I don't understand it that well. And I actually think in my experience, it's not as much losing money on deals. It's avoiding deals that I could have made money on because I was like, this is too big of a project for me, and I didn't want to take on really big rehabs. And so in 2024, I was like, my goal next couple years is to get better at this. And I've been lucky, you know, working and doing some flips. At first, I did passively and started to learn it. Then I invested and started getting in on the planning process a little bit more. And I did that in sequential steps before actually doing my own.

[Dave Meyer]

And I found it super helpful.

[Henry Washington]

It's honestly not that hard. There's just moving pieces, and I think just understanding what I would call the order of operations was what I needed to understand. It's like, when do you do each thing? What's like a. Basically a checklist in your mind of things that you need to do. And once you do that, it's not that hard. Value add just is the most reliable way to make money in real estate these days. So getting comfortable with some level of construction, it doesn't need to be structural, big lifts, but getting comfortable with it and just ripping the band aid off is something I wish I did way, way earlier in my career.

[Co-host/Guest Expert]

All right, number six. Dave, what you got for us?

[Henry Washington]

Door count doesn't matter. I know people get mad about that. Efficiency does. I think that is the most important thing. I joined BiggerPockets in 2016 as an employee, and everyone was just talking about how many doors you have.

[Co-host/Guest Expert]

It's your badge of honor.

[Henry Washington]

I know. It's like you go into any meetup, people are asking how many doors you have. I think it's not only just like an ego thing for people. I think it's actually counterproductive and hurts people's effectiveness as real estate Investors because first and foremost, depending on what your goals are as we started this conversation and having a lot of doors might not be your goal. At this point in my, my career my goal is to have fewer and fewer doors and to have more and more passive income. Whether that means investing passively, doing lending or just owning a couple of paid off properties. Like those are the things that I prioritize, not scaling more and more. But the reason I really this drives me nuts is because someone may come up to you and have 50 doors and they're 50 terrible doors. Like it is not a measure of

[Dave Meyer]

success to buy assets.

[Henry Washington]

It's a measure of success is buying performing assets. So I would rather brag to people about what my return on equity is like. To me, your efficiency as an investor is a much more important metric to hold yourself accountable to. How good are you at this? That's what ROI or return on equity measures door count is like you can just go out and buy stuff and

[Co-host/Guest Expert]

it matters what kind of assets you buy. It matters what your strategy is. Because you could buy an asset tomorrow that doesn't produce a great return, but the goal for that asset could be to provide you the kind of return you're looking for in 10 to 15 years. This isn't a short term game and it's not the same for everybody. So measuring somebody's success based on the amount of doors that they own literally means nothing. It's, it's, it's. And I like what you said about measuring the efficiency, the return on equity. Like that's a big, that is a good measure of. Are you getting the return on the money that you put into the business? Because you and I talked about this on an, on an episode recently. Like you can go pay cash for a house and it cash flows. That doesn't mean that it was a good deal. It doesn't mean that you're getting a great cash on cash return or a great return on equity. Just paying cash means nothing. It's about what are you getting in exchange for the money you had to put into the deal.

[Henry Washington]

You have to think really carefully about what you're holding yourself accountable to. And if my goal personally was to go out and just get to 50 or 100 or 200 doors, I could go do that. I'll go buy bad multi families and I'll get to my goal. But my goal is time, freedom. And so I hold myself accountable to that instead of the number of doors.

[Co-host/Guest Expert]

And honestly, don't you envy somebody who has like five to 10 paid off properties and is living a great life. More so than the guy who owns 3,000 units and is stressed out 100%.

[Henry Washington]

I was looking at this the other day. I own. I have a triplex I've owned for 10 or 12 years now. That one property, I think makes me 4,500 bucks a month in cash flow. Yeah, it's not even paid off. When that's paid off, it's going to be eight grand a month. I need three of them. What else do you need? So I just think it's silly. You should be. Holding yourself accountable is like, are you working towards your goals and figure out what your goal is and make a metric that matters to you, not this metric that other people think are important. All right. We've done six of our 10 things that we wish we knew before we

[Dave Meyer]

bought our first rental property.

[Henry Washington]

What's seven?

[Co-host/Guest Expert]

Number seven is to treat your properties, especially your rental properties, like a business. And what I mean by that is, when I was getting started, I wanted to find good deals, buy good deals, rent those good deals out. Right. But I didn't think about.

[Henry Washington]

You didn't want to operate them or

[Co-host/Guest Expert]

you don't think about it operating it? Yeah, it's more about, like, rental properties are a business. Like, flipping a house is a business. Like, if you tell somebody that they're going to flip a house, they're thinking about what finishes to put in it. They're thinking about that end customer and how they can add value to it in a way that that end customer will want. But for some reason, with rental properties, people just don't think about that. They think, I want to get a property, I'll just clean it and we'll throw it out there and somebody will come and live in it. And in some markets, maybe that's true, but I think I had to learn, like, you need to think about your rental properties in the same way that you think about a flipping business. Who are the people that are going to come and live there? What kind of amenities do they want? How can I add value to this in a way that those people are going to want? Vacancies kill rentals. And if your property looks just like everybody else's property, it doesn't stand out. There's no guarantee somebody's going to want to rent yours over somebody else's. But if you add the right amenities, if you think through who your end customer is, and if you position your property in a way that stands out, you get your properties rented faster. And saving in vacancy is literally putting More cash flow in your pocket. So think about your rental properties and marketing your rental properties just like you would think about your flips.

[Henry Washington]

I don't know if you get this question, but, you know, speak at meetups and stuff, people always ask this question, like, I have this property. It's sitting on the market vacant. You have any advice? Yeah, have a better product. Like, your product's not good enough. Like, it's just not competitive. Like, you have to think about it in the same way that, you know, if a coffee shop's competing against another coffee shop, like, what's the value proposition? What's the difference between your coffee shop. Are you competing on value? Are you competing on quality? Are you competing on convenience? Like, think about it in a way, if you were a tenant, everyone listening to this probably at one point in life has rented a property. What were the things that were going through your head when you were deciding which one to rent? I want to buy the cheapest place I can afford. I really want to be close to the store. I need two bathrooms. Like, what are you. How are you going to differentiate yourself? And that shouldn't be. After you buy a property, by the way, this is something you absolutely need to think about. It's probably the first thing I think,

[Co-host/Guest Expert]

underwrite it into your deal to pay for the things that you need to do appropriately, 100%.

[Henry Washington]

Like, how many times have you walk into a rental, it's a two. Two. And you walk in and you're like, the layout doesn't work. Like, people are going to walk into this and be like, I don't like it. It doesn't make sense for my life. You got to avoid those deals. You have to put yourself in the shoes of your customer and your customer's attention.

[Co-host/Guest Expert]

And then as a bonus to this one, in terms of operating your rental business, like a business is having some sort of system to help you track tenants and track collecting rents. Because when I got my first rental property, I don't. They could have paid me in a sack of pennies. Like, I was like, somebody wants to pay me to live here, Give it to me.

[Henry Washington]

I did that for 10 years.

[Co-host/Guest Expert]

Give it to me.

[Henry Washington]

I would lose checks and I'd have to be like, can you, can you?

[Co-host/Guest Expert]

I did that, too. Little old lady was like, are you. Do you know what you're doing? Oh, man, I'm figuring it out, lady. But once I used the property management system and it just collected everything for me, it saved me driving around town and taking things to the bank. And it doesn't seem like a big deal now because you're just so excited to have somebody pay you. But I promise you, the sooner you do that, the easier your life gets.

[Henry Washington]

Well, I think those things go together because treating your tenants like a customer is not just about you, it's about their experience as a tenant. And if you're more organized, I think that's what ultimately got me to be more professional is like not because I couldn't handle. It's like I'm not doing a good job for my tenants if I'm losing their checks. Right. Or if you forget about a maintenance request or, you know, you don't follow up on a lease renewal proactively that you should have just had software ping

[Co-host/Guest Expert]

you about because you don't want your tenants to hit you with the UNO reverse card and be like, I gave you the check.

[Henry Washington]

Yeah, did you? I have no idea. Idea. So yeah, totally agree.

[Co-host/Guest Expert]

All right, we're going to get into number eight on our list of things we wish we knew before we started real estate investing right after the break.

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[Dave Meyer]

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[Dave Meyer]

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[Henry Washington]

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[Dave Meyer]

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[Co-host/Guest Expert]

all right, we're back talking about things we wish we knew before we started investing in real estate. Dave, what's number eight?

[Henry Washington]

Number eight is that the 10 years it takes for the average person to achieve financial freedom. It goes really fast.

[Co-host/Guest Expert]

Boy, does it.

[Henry Washington]

And it's kind of fun, right? I mean I, I started doing this 16 years ago now and I didn't really know what my goal was when I was first starting. But like all of a sudden I'm 15 years into this. I've made a lot of friends, I've had a good time. I'VE built a portfolio and I honestly have been more financially successful than I ever dreamed that I would have been when I started. And I think the reason is because I just took it a deal at a time I kind of knew like sort of what I wanted to do. But I just, you know, worked hard every day and kept going after it and did other stuff and had fun and enjoyed my life and didn't get too crazy about any particular deal or anyone, you know, losing 500 bucks. And it went fast and it's been fun.

[Co-host/Guest Expert]

Yes, the time does seem to go quicker. But what I like about this strategy and what I think people who haven't started yet need to hear about this particular thing I wish I knew before is when I look back at my portfolio, the deals that have the most equity, the deals that have the most cash flow, the deals that give me the most flexibility in terms of being able to leverage and do more real estate are all the deals I bought in my first couple of years. Yeah. And that's not because I just bought the best deals in my first couple of years. It's that I bought them in the longest period of time. Right. Real estate compounds, over years, your value goes up, your equity goes up, your debt gets paid down by your tenants. And the longer you hold the asset, the more typically financially beneficial it gets to be. And you start to see some of that after about five years in the space. Because when you're buying a property after five years in and you're looking at the performance of your property that you bought in year one or year two, you're like, man, how do I do more of that?

[Henry Washington]

Yeah, exactly.

[Co-host/Guest Expert]

Well, you're actually doing.

[Henry Washington]

You wait.

[Co-host/Guest Expert]

Yeah, yeah. You just need to wait.

[Henry Washington]

Yeah, 100%.

[Co-host/Guest Expert]

And so what I'm saying, and what I hope people hear from this lesson is that you just need to get started, you need to buy smart, use the fundamentals, and you'll look back in five years and think, man, I'm so much closer to that financial freedom than I thought I was when I'm looking at the performance of these assets. Because real estate truly is a long term game. 10 years sounds like a long time, but I promise you it goes fast and there is a lot of upside along, along the way.

[Henry Washington]

Well, this might be different for you than for me, so I'm curious your opinion, but for me it's like, oh, you, I've been doing this for 16 years, but I work full time and like the energy I've had to put into real estate comes in Bursts, you know, I'll buy a new deal, takes a couple months to stabilize something and then it's like pretty chill for a while. And so like that's why it's always gone quickly for me because I'm not grinding on real estate every day. You know, I work at bigger pockets. But I'm curious how you feel about that.

[Co-host/Guest Expert]

That, I mean, I am full time in the business, right. And I look at my business in kind of two separate windows. As a flipper. There's one thing and that is much more active and on a day to day basis. But my rental properties I don't think much about. My property manager handles most everything. And then I get to, you know, look at my P. L at the end of the year and be like, oh, look at, I have a lot of equity over there. And so, you know, I think about it in separate veins. So if you're a buy and hold investor, the power is in the hold.

[Henry Washington]

Yeah, I mean if I think about the total amount of time I've spent on my portfolio, like it's not like eight hours a day for 15. I don't know what it would be, but it would probably be more like a year of work or two years of work. Minutes a day. Yeah, exactly. It's like minutes a day. If you. I will calculate that.

[Co-host/Guest Expert]

He's not lying.

[Henry Washington]

All right, Henry, what's number nine?

[Co-host/Guest Expert]

Number nine is your goals will change over time. And that's okay.

[Henry Washington]

That is mine changed by a minute.

[Co-host/Guest Expert]

My very first goal when I got into real estate was to buy one house a year for the next five years. And after I did my first deal, I ended up doing like four more in the same year. And that's because I didn't know what I was actually capable of because I hadn't done a deal. I didn't know that you could find financing and people would lend you money even though you didn't have a ton of experience. Like I had all these, these thoughts in my head about what was possible and then that theory got blown out of the water after my first deal. And so my goals changed and they should change because your lifestyle is going to change, your family dynamics going to change, what you want out of life may change. Right. Like everyone's different. And so I think we should all be evaluating our goals on at least a semi annual basis. Because sometimes things change that we don't have control over that forces what we need to be able to do. And so it's okay to change your goals. It's like right Now I, My goal was to grow my portfolio. I wanted 200 doors. Right. And we talked about how door count doesn't matter now. I want to be somewhere around 50. Paid off assets.

[Henry Washington]

Yeah.

[Co-host/Guest Expert]

And I don't care because my life changed. The things that I want out of life changed. I had kids. Like, it's, it's okay to pivot. And the cool part about real estate is there is a strategy that fits almost any lifestyle goal that you want.

[Henry Washington]

My goal when I first started, I hadn't heard of bigger pockets. I was 22 years old, was literally to pay rent and have some money to go out with my friends. Like, that's it. I was like, could I get 200 bucks a month? Because I was waiting tables. I was like, that would be awesome. I hadn't really thought that much more about it. And I, you know, this was 2010. Real estate was kind of cheap and

[Co-host/Guest Expert]

so you're saying you wanted to buy a house for drinking money?

[Henry Washington]

Literally. Yes, yes. Like, I'm not going to pretend it was that different. I wanted to ski pass. I wanted to go drink some beers with my friend. And I don't want to be worried about rent every month, which was, I was, you know, I was straight out of college. So of course your goals are going to change. But I think, I think where people sometimes struggle is we started the show by saying, you know, think 10 years out.

[Co-host/Guest Expert]

Yeah.

[Henry Washington]

Which is it? Which is true. You should. But it can change. It's just a reevaluation. You need to iterate on your goals. And it's kind of the fun part of real estate too, is like to keep dreaming, to keep being inspired and thinking about the things that this business can get you because that's what keeps you motivated. And it's cool because, you know, I think you've seen this for me. Like, I've totally shifted the way I do real estate in the last couple of years based on how my goals have changed.

[Co-host/Guest Expert]

And I also think people set goals based on things that they think they're gonna like. But if you've never actually done it and you don't know if you're gonna like it, like, I remember one of my goals was to buy like an over 100 unit apartment building. I don't want that ass. I do not want that in my portfolio now that I've operated other properties. And it's not that I think large scale multifamily is a bad thing.

[Henry Washington]

Some people are great at it.

[Co-host/Guest Expert]

I did. And it's a, it can be a Great asset class. I just don't enjoy it as an asset class. And that doesn't make it bad or wrong. It's just, that's not what I want in my goals anymore.

[Henry Washington]

Totally. People always, you know, talk about raising money like I don't want anything. I don't. Yeah. I would be so anxious. 0%. Once someone gave me their money, I'd be like, take it back, back.

[Co-host/Guest Expert]

Right.

[Henry Washington]

You know, I'm just, and I don't need to at that point in my career. And that's like what has changed. Like if someone had said, I'll give you money to go buy rental properties to me 10 years ago, I'll be like, give me every damn dollar you have.

[Sponsor Voice 1]

Right.

[Henry Washington]

But just it's. Life changes. Right. And, and that's the cool part about it. And the market changes too. Like you have to adjust to what's, what's possible, not just what you want.

[Co-host/Guest Expert]

All right, well, we got through nine things that we wish we knew before we started investing in real estate. Eight, take us away with number 10.

[Henry Washington]

Number 10 is something I really wish I knew it was. When in doubt, buy the best asset that you can afford. I just think as a buy and hold investor, who's someone in this for the long run, there are a lot of things that can confuse you. What strategy to go after, what tactics. Short term rentals, long term rentals, midterm, whatever you're going to do. At the end of the day, if you control a high quality asset, you're going to be okay in this business. Don't buy something in a fringe neighborhood speculating that it's going to turn around. When in doubt, if you want to take the safe path to real estate, if you're in this for the long term, I would rather buy an amazing asset that breaks even than a questionable asset that gets a 10% cash on cash return. I don't know if you agree with that, but for me, because I'm thinking 10, 15 years down the line, the best assets going to win the marathon. Not this, maybe not the sprint, but the marathon it's going to win.

[Co-host/Guest Expert]

Similarly, a lot of people look at real estate and think, I want to pick a market where houses are cheap.

[Henry Washington]

Exactly.

[Co-host/Guest Expert]

Or a neighborhood where houses are cheap. And even though they may be able to afford a more expensive asset, they go and buy the 30, $40,000 house that needs a hundred thousand dollar rehab. And if you're new, there's so much that can happen in that rehab and there is so much that can happen with who you're going to rent that property to and are you going to be able to get the return that you're looking for? Like, my better assets aren't the ones I paid the least for. I, I've often ended up selling those for sure.

[Henry Washington]

Exactly. And I, I should clarify. The asset doesn't need to be in the best shape today. I just mean like the, the highest and best use of this property. It's in a great location. If I fix this up, it's going to be a beautiful place that has demand from renters, it has demand from homeowners, it's in a great neighborhood, it's close to a park, it's near a job center that people want to be like those things. They say it in real estate.

[Dave Meyer]

True.

[Henry Washington]

The things you can't change, how much you pay for it and the location of the property. You also don't normally change the total layout or structure of the house. You might, but I don't. So like, as a buy and hold investor, I'm thinking like, I can make something great out of this house.

[Co-host/Guest Expert]

House, yeah.

[Henry Washington]

Over the long run, it's buying that and figuring out the way to operate it, to me is so much easier than trying to figure out how to make money off a place that has a bad layout or has bad architecture or is in a neighborhood that doesn't have a lot of demand. That to me is way harder.

[Co-host/Guest Expert]

I think you're right. And I think the key to this rule is the first part of the sentence, which is when in doubt. So in other words, if, yeah, if

[Henry Washington]

you're good at it, no.

[Co-host/Guest Expert]

And you're uncomfortable, buying a better quality asset that you can afford is going to be a safer play. Yes, there are cheap houses, and yes, people make a ton of money buying cheap houses, but there are lots of intricacies and risks involved with that. And if you're new and you're unsure, then I totally agree with you. Buying a safer asset that maybe costs you a little more but is better positioned to be successful in the long run is a much safer play.

[Henry Washington]

I have literally never regretted buying a house in a great location. Even if I, I quote, unquote, overpaid for it. It has always been the best returns on every single deal. I, I think it's, it's not just location, but it's quality of the house, housing stock kind of thing. But I think that it just matters so much if you're in it for the long run.

[Co-host/Guest Expert]

I'm selling a house right now that I overpaid for in a great neighborhood and I'm gonna overpay make 70 grand.

[Henry Washington]

Someone's gonna overpay you 70 grand to take it off your hats.

[Co-host/Guest Expert]

Yes.

[Henry Washington]

All right, so Those are our 10 things that we wish we knew before we bought our first rental property. Hopefully this is helpful for you. And if you're watching this on YouTube, let us know in the comments. What's one thing that you wish you knew before you started investing in real estate? I'm Dave Meyer. He's Henry Washington. Thank you so much for listening to this episode of the Biggerpockets Podcast. We'll see you next time.

[Dave Meyer]

Thank you all for listening to the Biggerpockets Real Estate Podcast. Make sure you get all our new episodes by subscribing on YouTube, Apple, Spotify, or any other podcast platform. Our new episodes come out Monday, Wednesday and Friday. I'm the host and executive producer of the show, Dave Meyer. The show is produced by Ian K, Copywriting is by Calico, content and editing is by Exodus Media.

[Henry Washington]

If you'd like to learn more about

[Dave Meyer]

real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. the content of this podcast is for informational purposes only. All host and participant opinions are their own. Investment in any asset, real estate included, involves risk, so use your best judgment and consult with qualified advisors before investing. You should only risk capital you can afford to lose, and remember, past performance is not indicative of future results. Biggerpock LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.