Podcast Summary

Podcast: BiggerPockets Real Estate Podcast
Episode: Buy Now vs. Wait and the Best First Rental for Beginners
Host: Dave Meyer
Guest: James Dainard
Date: September 17, 2025

Episode Theme & Purpose

This episode tackles several foundational questions for aspiring real estate investors—whether to buy a rental property now or wait, how to choose the right level of rehab for a first investment, expectations for financing, and fundamentals of analyzing a potential flip. Through candid, example-filled discussion, Dave and James offer practical advice, personal anecdotes, and myth-busting to help beginners set realistic goals and build a wise investing path.

Key Discussion Points & Insights

1. Buy Now or Wait? (00:00–08:53)

Situation

• Listener James from Seattle asks: Should he buy a house hack with the ~$25,000 he’ll have by next year, which means using an FHA loan and paying PMI, or keep renting longer to save for a conventional loan and a bigger down payment?

Core Advice

• Dave and James stress that the real calculation is about monthly cash outflow, opportunity cost, and personal goals, not just about PMI and loan type.

Highlights:

• Start with the Math: Compare current rent vs. projected housing payment (including PMI).
  • “How much better is your savings rate in a given month if you house hack?” (04:04, Dave)
• Don’t Get Bogged Down in PMI: The cost may be worth it if your cash flow improves and you gain ownership.
  • “Don’t get trapped on cost, because cost is just a cost of the deal, right? If it gets you into a better financial situation in two years, who cares if you're paying PMI?” (04:34, James)
• Goal-Setting Trumps ‘One-Size-Fits-All’ Strategy: Personal circumstances and discomfort tolerance matter more than outside opinions.
  • “Write down what your goals are in one, three and five years... It needs to match up with your lifestyle.” (07:35, James)

Decision Example

• If rent is $2,000/month, but house hacking with PMI drops it to $1,000/month, that’s $12k annual savings and equity building—often worth jumping in now.
• If the difference is negligible, waiting might be better.

2. How Much Rehab is Too Much for a Beginner? (08:53–14:40)

Listener Question

• Graham asks if, with under $200,000, as a first-timer, he should buy move-in ready, cosmetic, or significantly distressed property.

Core Advice

• Cosmetic Rehab is Best for Most Beginners: Target manageable projects to learn by doing, without being overwhelmed.

  • “Start with cosmetic because the significant rehab...There’s going to be mistakes that are going to slow down the time, which means loss of income.” (10:23, James)

• Value-Add Without Heavy Complexity:

  • “Even just doing simple stuff like a bathroom reno or painting or resurfacing a driveway...it was a manageable amount of learning that I could take on at an appropriate pace.” (12:01, Dave)

• Major Fixers = Education Through Pain: Avoid bite-off-more-than-you-can-chew disasters.

  • “Yeah, stay away from moving walls. That’s where costs compound.” (14:09, James)

Property Type Tip

• In the current market, two-to-four unit properties have less competition (great for house hacking beginners).

3. Unrealistic Expectations in Real Estate & "Gurus" (19:55–27:17)

Listener’s Rant

• Charlene, a real estate professional, is frustrated by would-be investors expecting zero-money-down deals and 100% financing, often after attending a guru seminar.

The Reality Check

• Experience and Value Come First:
  • “What is unrealistic is… you don't have any experience and you don't want to put in the work to start building the experience, to just expect to go get all this money.” (19:55, James)
• No Overnight Success:
  • “You can start with no money and no experience, but you have to take off a bite sized chunk. You can't have it all when you have nothing to contribute.” (21:18, Dave)
• Set Realistic, Achievable Goals:
  • “If you say, oh, I’m gonna make $100k next year as a wholesaler and you have no experience, it’s just not gonna happen, you’re gonna get discouraged and then quit. Instead, say, ‘My goal is just to get a piece of one deal.’” (25:01, Dave)
• Social Media FOMO:
  • Social media and online gurus often sell dreams, but don't equip you for the necessary work and setbacks.

How to Break In

• Partner with experienced investors, earn a small stake on a deal, or work for/with a successful local investor.
• “There’s nothing wrong with forfeiting your assignment fee and investing it in a deal with the flipper—get experience and build relationships.” (23:54, James)

4. How Do You Analyze a Flip? (32:10–39:30)

Listener Question

• Liam asks beyond ARV, rehab, and profit, what metrics or methods does James use to analyze flips?

James’s Flip Analysis Framework

• Focus on Annualized Return vs. Raw Profit:

  • “One of the best pivots I ever made was about five years ago I switched to annualized return… it told me whether it was a good deal or not.” (32:10, James)
  • Compare your return in the context of how long your money is tied up—velocity matters.
  • James’s target: 35% cash-on-cash return in 6 months.
    • “We want to buy at a 35% cash on cash return in six months.” (33:49, James)

• Risk Management Is Crucial:

  • Build a strong team: contractor, agent, etc.—don’t rely on outsider numbers.
  • Use data: 3–5 comparable sales to estimate value; days-on-market for liquidity/holding cost risk.
  • Get multiple estimates for all costs.
  • “If I don't have those data points, I have to assume the worst.” (35:07, James)

Learning to Flip

• If you’re new, consider partnering/investing with an experienced operator to see how the process works before doing one solo.
  • “You don’t need to buy your first deal on your own… watch the process and get clarity.” (35:07, James)
• Get “reps” even before doing your own: analyze deals, write out scopes of work, estimate costs, etc.
  • “I can run the numbers on a rental in 10 minutes. Flipping, I’m still working to feel confident—that just takes practice and experience.” (37:25, Dave)

Notable Quotes & Memorable Moments

• "If it gets you into a better financial situation in two years, who cares if you're paying PMI?"
  (04:34, James Dainard)

• "Start with cosmetic because the significant rehab...There’s going to be mistakes that are going to slow down the time, which means loss of income."
  (10:23, James Dainard)

• "You can start with no money and no experience, but you have to take off a bite sized chunk."
  (21:18, Dave Meyer)

• "One of the best pivots I ever made was about five years ago I switched to annualized return… it told me whether it was a good deal or not."
  (32:10, James Dainard)

• "You have to fail to succeed. Right. And you're going to run into problems for sure... don't just prep it and go, take numerous swings on that deal so you educate yourself."
  (39:15, James Dainard)

Timestamps for Important Segments

| Segment Topic | Timestamp | |-------------------------------------------------|------------| | Buy Now or Wait – Deciding Factors | 00:00–08:53| | Rehab for First-Timers – How Much is Too Much | 08:53–14:40| | Unrealistic Expectations & "Gurus" in RE | 19:55–27:17| | Flip Analysis: Metrics, Teams, Velocity | 32:10–39:30|

Tone & Takeaways

The conversation is candid, practical, and occasionally wry—often busting myths and online “guru” hype with real risks and realistic timelines. Both speakers stress learning by doing (but with manageable stakes), leveraging teams, and the value of incremental progress.

Core refrain: Take the first step that fits your personal goals, don’t be paralyzed by fear of costs or complexity, and always strive to learn through action—just not at the expense of your financial future.