A (11:52)

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B (13:18)

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A (14:22)

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A (14:37)

Welcome Back to the BiggerPockets podcast. I'm Dave Meyer, going through how to set good quality financial goals that will help you formulate a great investing strategy heading into 2026 and honestly for the rest of your investing career. Before the break, we talked about just needing to know how much you want and I recommend thinking about that in terms of equity. There's a couple of steps to that. As a reminder, figure out the after tax income that you want, adjust it for inflation divided by the cap rate you think you can get, and that's going to get you that equity number that you want. We're going to be using $2 million as an example. Now the question then becomes how long? And this one is a little bit more of an art than a science because most people will just say asap, right? You want to be retired in three years or five years or seven years. And for some people that might be realistic. If you were just trying to replace your income without any additional lifestyle enhancements, I would say that the average there is eight to 12 years. You could probably replace your income assuming that you have enough capital to buy your first property today. So I think a lot of people are in that situation. So eight to 12 years could be a good time frame. That's for doing pretty plain vanilla kinds of deals. If you're willing to be a little more active, maybe take on a little bit more risk, which we're going to talk about in a little bit. You can speed up that timeline. But for most people, I think we're going to be talking about something around 8, 10, 15 years and they might feel like a long time. But I have been doing this for 15 years and I promise you it is really not that bad and it is so worth it. Taking 15 years to achieve financial freedom is amazing. I am sorry that people on the Internet lie and say that they do this in three to five years. Maybe some of them do. But I promise you, the average person, it takes 10 to 15 years. Unless you want to take on a lot of risk or you're pouring 60 hours a week into this business, 10 to 15 years, totally doable. You can probably do it in eight to seven if you're going to be even a little bit active in your portfolio. So just think about that for yourself, where you're starting out and where you want to get to. I'm going to just assume for the purposes of our example that we're going to start with, let's call it $75,000 in savings that we can invest today and that we want to retire within 15 years. Now, I understand that some people want to do it faster, and that is definitely possible. And this is the time to dictate that if you want to go faster, you need one of a few things to happen. One, you need to be starting with a lot of money. I know that sounds really silly, but it's true. Like, if you have a million dollars, you're probably going to be able to do it pretty fast, right? Like, that's a lot of money to start with. The second thing you could do is try and increase your income. I did this by deciding to go to a state school and go back to college for a master's degree and try and increase my income to accelerate my financial freedom through real estate by making more in my day job. Some people might want to do that. The third option is to do it through real estate. And I know this is a very common question on here, but it's not required. But if you think that you could go and flip houses and make a ton of money, that might be something to consider. If you think you can wholesale in addition to your job, or you can wholesale and make more money than you do today. Also a decent option. If you think that you would be a great real estate agent and would be able to make more money than your current job, that's another way that you can do it too. And then the fourth option is to do value add real estate investing. And so that would be, I think, for the majority of people listening to this podcast, probably doing something like the BRRR method, because that's going to allow you to invest in relatively safe rental properties, but also build equity at the same time. And so just think about which, if any, of those things you want to do. If you don't want to do renovations, you don't want to change your job, you and you're kind of just, you know, want to coast, that's totally fine. But it's going to take you probably 10 to 15 years. If you want to shorten that to, let's call it seven to 10 years, think about which of those things you can realistically do, can you get more income or are you willing to put in the time and effort into doing things like the BRRRR method to grow your equity faster? For the purposes of our example, I'm going to say that we have $75,000 to invest today and that we're going to shoot for, let's call it a 12 year time horizon. So that's what we got. That is step one of our long term goal. That's all it takes. I'm blabbing about and explaining this. And we did this in like 15 minutes, right? So you can do this in your own time. Take 10, 15, 20 minutes and figure this out. We know now that our goal as a real estate investor, the thing we need to be focusing on when we set our tactics, when we pick what deals to do, what markets to invest in, our goal is to have $2 million in equity in 12 years. That's the goal that you need to set. And if you have this, I promise you everything is going to get so much easier. It sounds so simple and it is, but everything will get easier if you start to think about your portfolio in this way. Now, before we move on to the one year goal, which we're going to do in a minute, just do a gut check and make sure that this sounds reasonable. Like if you like, if you want to do the math, you could do that because I would recommend that. But if your goal is like, I need $5 million in five years and I'm starting with 50 grand, I'm sorry, that's just not going to work. If you're a rental property investor, you can expect your money to compound at somewhere between 10 and 25% depending on how involved you want to be. If you're just buying regular deals, 10% is probably, 12% is probably where you're going to be. If you're going to do the bur, you could probably do 20, 25, maybe 30%. And so think about that and see if you're within that realm of possibility. If your goal is way bigger and you're going to need to compound at 50 or 60 or 70%, honestly you can do that, but you're going to have to flip houses. It's the only way you can earn those kinds of returns in real estate. And that comes with risk and a lot of time that doesn't make it wrong, but that's how you're going to have to do that. So think to yourself, is it worth it to me to do flipping and take on more Risk and commit more time or should I just back out my goal a couple of years and take on less risky, less time intensive kinds of strategies? That's totally up to you. But just think about that before we move on to our one year goal. So that's step one of your financial goal and then we're going to move on to our one year goal because obviously having that sort of 12 year vision isn't good enough. You need to start now, backing into what you have to achieve this year to make sure that you're on track for year two, for year three, for year four and so on. Right? So the place that you need to start for your one year goal is by doing something what I would call a resource audit. And this sounds fancy in corporate, but it's not. It's just a question of how much time do you have to commit to real estate in the coming year and how much money, right? This everything comes down to these two questions, right? Our first year goal was what amount do you want in what time frame? Our one year goal is going to come down to those same sort of variables that we're dealing with now. We already answered the question for our example, which is $75,000. But for all of you out there, I really, really encourage you, if you haven't done this yet, think about what are your investable assets right now, right? Investable assets are not your total net worth. It's how much money you can responsibly put into real estate today. So let's just use an example and say you have $50,000 saved up. You shouldn't invest all of that. You can't invest all of that because, you know, budgeting experts say you need three to six months of emergency funds to weather a storm. You know, we're going into a difficult economic period, I believe, and so you probably want six months of emergency funds. And if you have kids, that might be even longer. That's up to you. But you need to set aside some money. And so it's not just the number in your bank account, that's not your investable assets. What you need to figure out is how much money you can responsibly put into real estate. So figure that out for yourself. But for our example here today, we're going to use $75,000 as an example. Now time is another really important variable here because again, if I wanted to grow as quickly as possible, I would flip houses. That is the best way to earn a lot of money quickly in real estate. But I don't have that time. And I, in the example that we're going to use is going to say we don't have that time. We though are willing to put in, let's call it 10 hours per week for real estate. To me, 10 hours a week. You're going to be able to do a lot in real estate investing. You're going to be able to find great deals, you're going to be able to do value add, you're going to be able to self manage, you're going to be able to do a lot of things that you might want to do to maximize the early years of your investing or whatever, the next years of your investing. If you put in 10 hours a week. And so figure that out honestly for yourself though, if you don't have 10 hours a week, be honest about that. Because if you buy a deal that requires 10 hours a week of a commitment and you only have five, you're not going to operate that deal well. And this is exactly why you have to go through this process. Because I see so many investors going out there and just buying whatever deal they buy a short term rental and they don't have a lot of time to furnish it and then it just winds up being kind of a crappy short term rental and it doesn't perform. And then what's the point of doing that in the first place? So be honest with yourself about how much time you're going to be able to commit because that's how we're going to pick what deals that you should be doing in the next couple of years. So for me, if I'm trying to take a medium aggressive approach, which is what I recommend to most people, is like you don't need to be really passive and really conservative. You don't need to be super aggressive. But if you want to do things like a brrrr or cosmetic rehabs on rental properties, those are fantastic ways to pursue financial independence. If you have 10 hours a week, you're going to be able to do that. So think about this for yourself once you have an answer to that. I think sort of paths kind of start to diverge here because what your answers are going to really depend on what you're going to do in 2026. So I'm going to draw up actually a little quadrant here about the two different variables that we're talking about. So on one axis, if you're listening on the podcast, I'm drawing a quadrant. On the horizontal axis, I'm drawing time. And on the vertical axis, money and where you fall in, which quadrant, which box you fall in is going to really dictate what you should be doing in your first year. So if you're low on time but you have lots of money, so you're in this first quadrant here. What I would invest in here is I would think about rental properties, right? Because you don't have a lot of time, you're not going to be able to flip. So I would think about rental properties, low leverage because you have money and so you're not going to need to put 5 or 10% down. So I'd say put 25% down and then if you have time, I do cosmetic rehabs because you're not going to have time to do a big rehab because again you're falling into this low time bucket. That's what I would look for. If you're just asking me and you fall into this bucket, you have money to invest, not a lot of time. Buy rental properties, put 25% down, do a cosmetic rehab, don't think that hard about it. This is going to work. Next quadrant that you go into is a lot of time and a lot of money. This is obviously a good place to be in. But what I would do is heavy into burrs if I had both time and money. That makes a lot of sense to me because that's going to grow my equity as quickly as possible. But if I did a heavy burr, a heavy value at brrrr, that is going to take up a lot of time. But if you have time and money, I would go heavy into these burrs. The next one is high on time and low on money. The things that I would look to do are things like potentially wholesaling. I don't have a lot of experience in that. But if you wanted to, this is a good way to make money. I would try and partner on flips and see if you can use sweat equity or. I know this is going to be controversial, make more money. I know that sounds silly, but if you don't have a lot of money but you have a lot of time, go make more money. Whether that's doing a side hustle, investing in your education so you can increase your income, becoming an agent on the side, I don't know. But if you can make more money with that extra time that you have, that's probably going to be the best way to help your investors career at this point. So think about that. Then we go into the last bucket which is low money and low time. This is a tough place to be right if you don't have time and you don't have money, real estate investing is going to be very difficult for you. And I just want to be clear about that. I know there are tons of people on the Internet who like to say you can get into this industry with no time, no money. I'm sorry, but that is not true. Or it is very, very rare. And I don't want to discourage you if you fall into this bucket because you can get from where you are today to becoming a real estate investor. But making a real estate investment is probably not the next step in your journey. What you need to focus on is one either freeing up time so that you can do those other things I just talked about or earning more money, spending time, saving money. You can still educate yourself as an investor. You can save money and then invest maybe in a year or two. Your goal is to get your foot in the door. And so if you're in that fourth quadrant, figure out a way. Your year one goal is find a way to get your foot in the door. And when we get to our three year goal, in a little bit you're going to be able to have a little bit more exciting goal. Don't worry about that. But year one is going to be just getting your foot in the door. If you're in these other quadrants, the way I would think about it is try and figure out one, how many deals you can realistically do and at what point. So if you're in quadrant one, you're doing these rental properties with low leverage, putting 25% down for cosmetic jobs, I would say maybe you could do one of those. Right? Is a realistic goal. One deal at I'm going to target a 15% annualized return. I do deals like that all the time. If I don't have a lot of time right now and I find a decent deal. 15% annualized return, that's fantastic. The stock market averages 8 to 9%. It's having a good year this year, but 8 to 9%. If I can make 15% on a low effort deal, I'm pretty happy about that. That's just an example. That would be one, one goal. I would say if you're going to do burrs, I would say maybe try and do two deals and try and get maybe a 40% annualized return because you're going to be able to hopefully do a brrrr. Maybe you do two of them. They take six months each, maybe they take nine months each. So let's just say you get into two Deals at an annualized rate, you might not realize all but just say an annualized rate of 40%. Or if I'm wholesaling and you know I'm in this third quadrant, remember that one is with low money but high time. I would try and figure out how much more money you can make. How much can you save? Would be my year one goal, not necessarily how many deals I can do. But if I'm in quadrant three and I have 20 grand, my goal would be something like $50,000 to invest next year. I know that doesn't sound as exciting as going out and buying a deal, but I promise you, if you save 50 grand next year, you're going to be able to do a great deal and it's going to accelerate your career probably faster than it is than trying to like get a little piece of a random deal or doing a really risky flip. That's my honest advice. That's what I would do if I were in that situation. Now going back to our example of having $75,000 to invest and 10 hours a week, I'm going for the brrrr. That's what I would personally try and do. And so my goal, my one year goal would be two burrs and then on my first br, I think I'll only be able to sell that first one or refinance that first one in the year. Maybe I'll do my start my second one within one year. But realistically at 10 hours a week, I can only do one at a time. So I'm going to think about that's probably a nine month project and I'm going to say I want to earn at least 40% on that deal. I want a 40% annualized return on that first deal. That's huge. 40% is awesome. That actually would come out to for $75,000. That's a $30,000 return, right? So already in year one we've gone from $75,000 in equity that we need. We're trying to get to 2 million and we've already gone up to 105,000. That may not sound like a lot, but if you're able to do that, I promise you you are going to be able to hit your goal and I will do the math for that when we come back from this quick break. Stick with us. Tired of traditional lenders holding you back? Host Financial is here to change the game. They've ditched the DTI restrictions and they zero in on what really matters, your property's income potential. So no more chasing papers for tax returns or personal income statements. Think about it. A lender that values your property's worth over your paycheck? That's the Host Financial difference. Approved in 47 states. They are ready to help you make your next big move. Curious if you qualify? Just head over to host financial.com and find out. Stop letting outdated lending practices hold you back. That's HostFinancial.com where your property's potential meets unlimited financing. Want to earn passive income every month without the hassle of property management? If you're an accredited or high net worth investor, PBR Capital Management offers a proven solution. Since 2007, PPR has helped nearly 2,000 investors earn over $100 million in consistent, predictable passive returns. 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B (32:45)

When I need to make a decision on my multifamily portfolio, I reach for WD Suite from Walker and Dunlop. Now I can see market rents, tenant financial health, neighborhood insights and automated valuations all in one platform. I use it to track performance against nearby properties, spot risk before it hits, and assess my next investment with real time data. It's how I stay one step ahead with clear insights I can trust. WD Suite helps me move faster, smarter and with more confidence. It's built for listeners like you, and it's absolutely free. If you're looking to level up your investment game, WDSuite is for you. Try it@WALKERdunlop.com Walter Bigger pockets. You've spent years making decisions that shaped your career, your family, your future. When it comes to investing, those choices matter just as much. That's why there's Lightstone Direct, a $12 billion institutional real estate firm now giving you direct access to the same elite opportunities once reserved for institutions. No middlemen. And with Lightstone Co investing at least 20% in every deal, you have a true partner by your side. You've earned this seat at the table. Visit lightstonedirect.com bp today to learn more.

A (33:47)

Foreign.

A (33:54)

Welcome back to the Bigger Pockets podcast. Now that we've done our long term goal and our year one goal, let's just extrapolate this out because you can basically do the strategies that I just said well into the future. And I know, like I said, you're going from 75,000 to 105,000 your first year. I hope that sounds like a lot because it is. That's an amazing return. If you're making a 40% return, you should be super happy. But I just want to extrapolate this out a little bit because there's this kind of magical thing in math called the rule of 72. And this says that if you take the number 72 and you divide it by your rate of return that you're earning, that's how many years it will take your money to double. If you take the number 72, you're earning, on average, an annualized return of 10%. It's going to take you 7.2 years to double your money. Now, if you're doing the brrrr cosmetic rehabs, which is what I think the majority of our audience should be doing, I think hitting 24% annualized returns is very practical. It's not going to take so much time. You're going to still need to be able to put in some work, find great deals. But if you can get. Let's just round it to a 30% annualized return, that's going to take work, right? You're going to need to do cosmetic rehabs, you're going to need to do brrrrs to earn 30%. You can't just go buy a regular rental property and 30%. But I'm just going to show you. Like, this is what I would do if I was starting with $75,000. I would just try and target this 30% annualized return every single year. Because I'm starting in year zero with 75,000. Right? Then in year three, we'd have 150k. In year six, we'd had 300k. In year nine, we'd have 600k. See how this thing starts to compound. And then in year 12, we'd have 1.2 million. And then in year 15, we'd have 2.4 million. So this is actually a really good example, right. I kind of set our goal arbitrarily earlier. I was kind of just coming up with this example as we go. And what I came up with is I said I wanted $2 million in 12 years. Well, now I'm looking at this and I'm thinking that's probably a little unrealistic. In 12 years, even if I earned a 30% return, which is good, I would be at just $1.2 million in equity. That's still a great place to be. But it looks like my time horizon is going to be closer to 14 to 15 years. That's still awesome, right? I'm talking about being able to replace my income and earn $120,000 in after tax income. That's just 10 grand to spend every single month in 14 to 15 years. I'm just starting with 75 grand, which takes time to build up, but it's not like you're starting with a millionaire's amount of money. And I'm only putting in 10 hours per week into these deals. If you want to accelerate this, you can find ways to make more money and put more investable assets, save more. Remember this, what I'm doing right here, 14 to 15 years assumes I put no new money into my investments. I'm taking the 75k and I'm just extrapolating that. But for most people you're going to be able to save money every month, put more money back in. That's going to help you get to 12 to 15 years. But that's what I want you to do at the end of this exercise is to be able to say, yeah, I gut checked this and I think that this is reasonable for me. I would say now at the end of this exercise, my long term goal is $2 million. I'm actually going to say still in 12 years because I said 14 to 15 years would take it with no new money into it. But I think I'm going to be able to add some new money into it. So I actually do think 12 years is realistic. That is my long term goal. My one year goal is going to be I'm going to round to 100k in equity. And my three year goal, remember I think that I want my money to double in three years. My three year goal is going to be $300,000. That's my example. This is what I want all of you to get to know these three numbers for yourself. Because once you do, you can already start to figure out what deals you should be doing, right? If these are my goals, I know that I can't just go buy on market MLS deals. I am not going to be flipping. I probably don't want to do short term rentals because although they can offer more cash flow, my goal is building equity. I know that my goal is building equity and so that allows me to hone in on projects where I can do a brrrr or a cosmetic rehab. See how this is already helping me set my strategy? Just by knowing these numbers, there's so Many great ways to make money in real estate, but I know my goals, so I know I'm going to do brrrrs and cosmetic rehabs and I'm gonna look for a market where I can do that for my 75k because I have enough money to get into a deal. And so I'm specifically going to look for markets where I can put in $75,000. For me, that's probably going to be somewhere in the Midwest or Southeast. You know, if I put 25% down, I'm probably going to target a deal that is like $250,000 with a $50,000 rehab. Like that is something you can go out and achieve today. So I have basically backed into my buy box for next year. I know that if I want to hit my goal, I'm going to look in the Midwest for a brrrr cosmetic deal that is in the 200 to $250,000 range with the $50,000 cosmetic rehab. That's amazing. So many people spend so much time trying to figure out what their buy box is. All these different strategies. You know, I'm coming up with this example in real time just using these numbers that I'm making up. I already was able to figure out my buy box just by backing into where I want to be 20 years from now. And this is why I say that knowing these financial goals is the number one key thing that investors need to do that most of them miss. Spend 30 minutes right now figuring out what these numbers are for yourself and I promise you, your plan for the rest of 2025 and 2026 and the rest of your investing career is going to become so much easier. Now, I think in this podcast episode I have given you enough to be able to do this. But if you like this concept and you really want to get a crystal clear vision of where you want to go in your investing career, I'm going to be a little bit of a pusher and recommend my book, Start With Strategy. Literally the whole book is kind of about this idea that if you set your long term goals well, you can back into the right strategy. So if you want to go deep on this, you can check out my book on biggerpockets. It's called Start With Strategy. It's also on Amazon, but hopefully this has been enough for you to just do this by yourself. The book is just for people who want to go a little bit deeper. That's what we got for you guys today. If you have questions about this, please let me know. Or if you want to hear more content about this kind of stuff. We always talk about tactics and strategy, but I think this stuff is so important, which is why I wanted to do this episode today. If you want more content like this, please let us know in the comments or hit me up on Instagram or I'm Hedata Deli thank you all so much for listening to this episode of the BiggerPockets podcast. I'm Dave Meyer. I'll see you next time. 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. If you'd like to learn more about 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. Biggerpockets LLC disclaims all liability for direct, indirect, consequential or other damages arising from a reliance on information presented in this podcast.