If I Had to Start Over in Real Estate in 2026, I’d Do This Now

Summary

BiggerPockets Real Estate Podcast
Episode: If I Had to Start Over in Real Estate in 2026, I’d Do This Now
Date: March 13, 2026
Host: Dave Meyer
Guests: Henry (Co-host), Tim Yoo (Investor)

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Episode Overview

This episode explores what experienced investors would do if they had to start over in real estate investing in 2026—without existing rentals, cash, or assets, just the knowledge they've accumulated. Dave Meyer, co-host Henry, and guest Tim Yoo discuss how their current strategies have evolved through successes and failures, and offer a modern roadmap for building a portfolio from scratch. They reflect on why starting slow, learning foundational skills, and matching strategies to personal goals matter now more than ever.

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Key Discussion Points & Insights

Learning from Experience: A Real-World Reset

• All three have unique experience spans: Dave and Henry from earlier eras, Tim as a recent, rapid-growth investor.
• Emphasis on learning from past mistakes and scaling lessons for a new market (01:10–02:04).

“You’ll be better off just listening to a couple of lessons from grizzled old investors.” — Dave (00:43)

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Tim Yoo’s Journey: From Military to Full-Time Real Estate

• Started investing in 2022 while active-duty military.
• Initial strategy was single-family rentals nationwide—quickly realized it wasn’t sustainable for his goals.
• Shifted to flipping, wholesaling, and finally commercial properties for better cash flow and less management intensity (02:33–04:59).

“I started to realize that I didn’t really like the single-family model... So we focused on more commercial based assets and then more active income.” — Tim (03:14)

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Cash Flow Realities and Strategic Shifts

• Single-family cash flow rarely replaced W2 income—instead, it built equity and appreciation over time.
• To “retire” from his job, Tim moved towards commercial real estate (strip malls, particularly with triple-net leases), which offers:
  • Higher, more predictable cash flow
  • Longer lease terms
  • Fewer tenants, less management headache (04:59–09:11)

“Buying one commercial asset will make you X amount of money per month. And having one or two of those can actually replace your income relatively quickly.” — Tim (07:17)

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Management Trade-Offs in Commercial vs. Residential

• Commercial still requires management—sometimes more so than residential, but tenant selection and lease structure can provide stability (07:46–09:43).
• Critical point: The importance of underwriting tenants and understanding longer lease dynamics.

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“If I Had to Start Over”: Concrete Advice

• Tim would not change his single-family start, as it built foundational skills.
  • He’d go slower, avoid rushing into deals.
  • Warns against “door count” vanity metrics—focus instead on quality and personal fit (14:09–15:44).

“It’s not really a race... I was saying yes to deals just to make them happen, especially with creative finance. I was making bad deals into okay deals.” — Tim (14:34)

• The hosts agree that learning how to underwrite, select tenants, and manage assets on a small scale is vital before moving to large commercial (15:44–23:58).
• Importance of maintaining a W2 or other income while getting reps in single-family or small multifamily (29:27–30:40).

“If you are going to skip over single and small multifamily... you need to have a superpower or a partner who has experience in that.” — Henry (22:45)

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Lessons from Bad Deals & Personal Growth

• Real estate careers often start with urgency or “FOMO”—which leads to under-analyzed, risky deals.
• Tim’s major mistakes:
  • Flipping a house on a main road (bad resale value)
  • Full gut rehabs on very old properties
• Lesson: Don’t fudge the numbers. Underwrite conservatively (32:58–34:28).

“When you’re penciling deals, don’t fudge the numbers... I do everything I can to not buy a deal. If it still looks okay, I’ll buy it.” — Dave (34:22)

• Having a W2, side hustle, or flipping/wholesaling for active income is key. It cushions against mistakes and provides capital to hold through unprofitable periods (33:40–36:46).

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Target Numbers & Strategic Commercial Buying

• Tim is now targeting one commercial strip mall deal per year, aiming for $3,000–$5,000/month net cash flow after expenses, ideally with a triple-net lease setup (37:13–40:19).
• Will use owner financing or traditional commercial loans with private investor raises for down payments.
• Valuation ballpark: Looking for $3–5 million assets with a target cap rate of 10%, though market conditions may not always allow this.

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Notable Quotes & Memorable Moments

• On starting slow:
  “Take your time. Just like what Tim said. You don’t have to chase every asset and don’t just look at do the numbers pencil. The numbers are the most important part, but there are other factors.” — Henry (18:05)

• Short-Term Rental Warnings:
  “My friend bought a million dollar house in Disney... she makes less money than one of my long term rentals.” — Tim (19:29)

• On the myth of passive income:
  “Now it’s not a side hustle, right? Now it’s I gotta do it to feed my family. And so it makes making good decisions harder.” — Henry (30:40)

• On pivoting after mistakes:
  “You don’t have to bat a thousand. You’re gonna screw up. Experienced investors make mistakes every day. But how do you pivot?” — Henry (35:41)

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Timestamps for Key Segments

• [00:43] — Value of learning from experienced investors
• [02:33–04:59] — Tim Yoo’s early career and move toward commercial
• [07:17] — Why commercial cash flow can replace your job income
• [14:09–15:44] — Tim’s advice: start with single family for foundational skills
• [18:05] — Don’t rush; consider lifestyle fit and asset management
• [19:29] — Short-term rental cautionary tale
• [30:40] — The challenge of going “full time” real estate
• [32:58–34:28] — Lessons from flops, and why underwrite conservatively
• [36:10] — The security of a W2 or active income
• [37:13–40:19] — Specific goals for commercial strip mall investing

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Actionable Takeaways / Blueprint for 2026

1. Start slow with single family or small multifamily to learn basics.
2. Don’t chase door count—chase deals that fit your goals and risk profile.
3. Underwrite deals conservatively; don’t fudge numbers to force a purchase.
4. Keep your W2 or another stream of active income as a safety net.
5. Pivot to commercial only when you have a solid foundation and/or experienced partners.
6. For commercial, aim for quality tenants, longer leases, and manageable asset sizes (consider triple-net strip malls).
7. Don’t rush to quit your job; being bankable is a huge advantage for financing.
8. Tailor your investing to your desired lifestyle—not the loudest advice you hear online.

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Final Thought

“There’s no right way to real estate investing, but your thought process is the one I encourage everyone listening to adopt, which is: what works for me, what do I need right now? The world is your oyster. The beauty of real estate is that you get to choose your own adventure.” — Dave (40:35)

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This episode offers an honest, actionable look at the realities of starting over in real estate—emphasizing patience, foundational learning, and structuring your portfolio for long-term success rather than quick wins or vanity metrics.

Transcript

[A]

If we had to start over in real estate investing in 2026, here's how we would do it. No rentals, no giant piles of cash. Only the knowledge we've gained from years of investing success and a couple of failures along the way. These are the properties we buy right now and the blueprint you can follow, too.

[B]

Hey, everyone.

[A]

I'm Dave Meyer, Chief investment Officer at Biggerpockets. Henry, what's up, man?

[B]

What's up, Dave? I am excited to talk about this because I think more people need to think through how to invest starting from scratch based on a lot of the experiences that we have, because I tell you, I've learned a lot.

[A]

Yeah, learn from our mistakes and successes. They're not all mistakes, but, man, I didn't start by listening to a podcast or reading a book. I just jumped right in. And the amount of time dumb stuff I did that I could have avoided had I just listened to experienced investors. Man, I don't want to tally up what I've lost in terms of money, but just trust me, you'll be better off just listening to a couple of lessons from grizzled old investors.

[B]

Amen, brother.

[A]

Today you don't have just me and Henry. We have a great guest joining us today. It's investor Tim Yu. Tim has been on the show before. You can hear his full investor story in episode 1090 from March 2025. And not to spoil it, but if you listen to that show, you'll hear that in only five years in real estate, Tim has built up a sizable portfolio. He's tried almost everything in just the last couple of years, flipping, wholesaling, rental properties. So we thought it'd be a good person to toss around today's topic because Henry and I can talk about our original days, but that was a totally different era. So now we have people who started in three different areas of real estate investing bringing you advice about how to start or scale. This isn't just your first deal. How to, like, build a portfolio from scrat scratch. Hopefully this is going to help you see the paths that work for us and avoid some mistakes we made along the way. Henry, you ready?

[B]

Yeah. Heavy on the avoiding mistakes part.

[A]

All right, you can see where this conversation's heading, but let's bring on Tim and get right into it. Tim, welcome back to the Bigger Pockets podcast. Thanks for being here.

[C]

Hey, man, it's always good to see you guys, so I appreciate the invite.

[A]

Yeah, we did a great show with Tim about a year ago. It's episode 1090. If you want to go check it out? But Tim, for those people who haven't listened to it yet, yet, maybe give us a brief background of who you are and your real estate journey so far.

[C]

Yeah, so I started investing in 2022. That's when I bought my first property ever. I started doing this working full time in the military, active duty military. And over the last four years we've done different strategies. Wholesaling, flipping, buy and hold rental portfolios and then moving into the commercial space nowadays. And I'm actually in the transition of getting out of the military now, so it's been a crazy four or five years, man.

[A]

Congrats, man. And the plans to go into real estate, I assume now that you're transitioning out of the military?

[C]

Yeah, I got the taste of it during the last four years. So it's pretty exciting to go full send now, you know.

[A]

That's awesome. So maybe just fill us in. Tim, what is your portfolio look like today?

[C]

Yeah, so when we first Talked, we had 12 properties, single families in the portfolio, but we actually sold quite a bit of them. So we sold six of them in the last year or so. Not because of the market or whatever the case may be. But, you know, as time progressed, I started to realize that I didn't really like the single family model. Okay. And it was a lot of headaches for me personally just dealing with all the single families across the country. So we focused on more commercial based assets and then more active income. So we still do the wholesaling and the flipping side of the house, and then we want to shovel the money into commercial assets, which is a little bit better fit for us. So after selling those properties, we have six properties in Kentucky right now, and then we still have those Iowa deals going on. So we have six houses out there, so we're trying to sell those off as well. So. So we're just free of all the Midwest stuff going on.

[A]

Oh, interesting. Okay, so you've done 12 single family homes, you've done wholesaling, you've done flipping. Now you're moving into commercial. You've. So you've done a little bit of everything at this point.

[C]

Yeah, I love trying things at least one time. The flipping side of the house, it's difficult on its own too, especially with like the market changing all the time. But for me personally, buying the single families that I was buying and only making like 3, $400 a month on them each, it's not really a sustainable model for me to like quit my job. And that's Kind of how we ended up here today was like, okay, if I can sell these properties off, buy one or two commercial deals that, that make pretty good money and can appreciate quickly and then still have that active income to supplement that W2, I would feel comfortable like leaving. So that's kind of how we've shifted like the mindset over the last like year or two. Shrinking that footprint of properties that we have so we can focus on like one or two good assets in the

[B]

single family rental space. You're right. The cash flow is typically for, you know, between 100 and $500 a door in a single family space. And that's not life changing money. What you learn as an investor is it's the equity, the debt pay down and the appreciation that truly help you build wealth. And so typically most single family investors learn that they have to produce some other kind of income in order to replace their job income. Or else you got to get a whole lot of one to $300 rental property doors in order to replace that actual income. So was the goal from the beginning to always build up a portfolio big enough for you to leave your job or was it just a supplement retirement?

[C]

When I first started, I knew that it was a long term plan with real estate. Like, I knew that it wasn't like a get rich quick type of thing. My goal was to buy five houses and retire off my pension like in the military and you know, 30 years pay off the rest. And that plan is awesome. And I think that it's a really, really awesome strategy for people that are slowly accumulating wealth and there's nothing wrong with that. So for me, I just knew that once I started buying properties and getting into investing that I really wanted to do this full time. Just because, you know, being your own boss and you know, running your own business is awesome and it's super rewarding in its own way. So I guess it really depends on the goals of the individual person. But for me, yes, I always wanted to use this vehicle to quit my job.

[B]

Yeah, I totally get that. I think it doesn't matter what your strategy is. You have to figure out a strategy that's going to produce the cash that you need to produce in order to make some sort sort of job change or job shift. Yes, I retired air quotes from my corporate job, but I flip houses now to create income, which in itself is another job. Right. And it sounds like what you're doing is instead of flipping houses or some other real estate strategy that requires active income, you're looking at more commercial, because you can get higher cash flow returns in commercial and then that allows you to be able to live off of your rental portfolio. But at the end of the day, the goal has to be like, how do you create income from your real estate business? And then you can use that income to offset your lifestyle.

[C]

Yep, spot on. Buying one commercial asset will make you X amount of money per month. And having one or two of those can actually replace your income relatively quickly. And for me, having all those single families, you know, I was still doing all that craziness managing those properties and then still showing up to my job every day, and I was like, this is just not worth it for me personally. So that's why we made the shift in like late 2024 of like selling off those properties. Yeah, spot on, man.

[B]

For your commercial assets, are you planning to manage those on your own or are you having professional property management? Because I have owned a commercial asset before. I've owned both a commercial strip center and a mobile home park, and both of them are still management intensive. I would almost argue that my commercial asset is more management intensive just because of the types of tenants and the types of things you get to do with the leases. And yes, they can be more lucrative, but it's not necessarily any more hands off than managing a single family rental property.

[C]

No, that's a really good point, man. So, so we thought about that too. Number one would be we would rather GP and manage that bigger asset because of the return. But also number two, the asset class that we're looking for is more of strip malls.

[A]

Oh, interesting.

[C]

Yeah. So my business partner right now, he actually owns three strip malls throughout Virginia. His asset classes are relatively passive in terms of what type of tenants they are.

[A]

A triple net.

[C]

Yeah, so he has tons of triple nets. He's got the US Post office in one of his units.

[A]

Oh, that's a dream.

[C]

And they have like, they have a 30 year lease. So, you know, it just really depends on, you know, what type of tenants you do put into those strip malls. But for us, like, we're okay with managing those type of assets because we're only dealing with a small few versus just dozens of different tenants across the country.

[B]

Well, just like regular real estate, our job as landlords is to be very good at tenant selection. And that doesn't change with commercial real estate. You're just looking at the tenants a little different. But one of the saving graces as well is the leases tend to be a whole lot longer when you find these good tenants. So you can underwrite people into your building in 10, 15 year leases, which is a whole lot different than just a one year lease in a residential space.

[A]

But the turnover costs are big.

[B]

Turnover costs are very expensive.

[A]

Yeah, that's the problem when you bet wrong. Yes, there's pros and cons for sure.

[B]

It's interesting. I like hearing different perspectives and different people's approaches to real estate. It's one of the reasons why I love real estate as an asset class is because you really do get to choose your own adventure based on the life that you're trying to create for yourself. It sounds like a lot of the things you're experiencing in your life are pushing you towards a certain investment strategy. If you don't like a certain aspect of an investment strategy, you can choose something different that allows you to create the kind of life that you're looking for. So I'd love to get more into learning about what you would do if you had to start over today, since you've done so many different strategies. And we will learn what you would do when we come back from the break.

[A]

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[B]

on the BiggerPockets podcast with Tim Yoo and we're learning about what he would do if he had to start over in real estate. Tim, you've done a lot of different things when it comes to real estate investing. So if you had to start completely over, would you pick the same strategy as when you started out or would you pick maybe a new strategy based on the experience that you have? Commercial real estate is lucrative, but the barrier to entry can be a whole lot higher than just buying a single family home. So I'm curious to know how you would start over and why you would make that choice.

[C]

Okay, so if I were to start over today, I probably wouldn't change anything just because yes, I'm going into the commercial space now, but I think Single family rentals truly built me a foundation, like, understanding how to underwrite basic properties, how to make offers, how to structure deals. You know, everything in the commercial side is still that stuff, but everything is just bigger, right? You add more zeros. You have a couple more things to look at when you're underwriting and structuring deals. But what I would say is, like, I probably wouldn't have gone as fast as I did if I restarted, just because it's not really a race, right? And I think. I think a lot of people, like, just watch videos online or they listen to podcasts like I did, and I was like, I need to go buy a ton of assets as fast as possible so I can quit my job. And that wasn't the recipe to me quitting my job. It actually gave me so much more stress than I thought it was going to be. But I wouldn't change the actual strategy. I would still buy single families. And, you know, like, I'm in the military, so the VA loan is, like, absolutely insane. Like, there's so many awesome vehicles to buy. Single family properties or multifamily, whatever. I would just take my time. It's okay to say no to a ton of deals. Like, I feel like, yeah, I was saying yes to deals just to make them happen, you know, especially with creative finance. Like, I was making bad deals into, like, okay deals. But when you, like, rewind the clock and you really look back, you know, it's not really worth it to, like, chase those deals till oblivion. Right?

[A]

This is why I hate door count. This is why I hate the idea of counting how many doors you own. Because it incentivizes the wrong behavior, right? Like, you learned it faster than I did. Damn. So good for you. But especially when you see your first one go, well, you're like, oh, I'm just going to do a million of these. But, like, you were probably super disciplined with the first one, right?

[C]

Yeah, I mean, the first one was a primary residence, but, I mean, obviously that was my first one. So I was, like, asking my realtor, like, 6,000 questions. And then I flipped my first house. That didn't really go well, but when I started to buy, like, actual buy and holds, you should see the checklist I was going through, like, trying to make these numbers work. And then as I started to, like, do riskier things with creative and all that stuff, I started making deals, like, out of nothing. I think that's when it got really dangerous for me because I was like, oh, well, I can buy this, you know, on terms or like, I can buy it on owner finance and property tax insurances. That goes up every year. And, like, the numbers change. And some of my properties that were making 5, $600 a month only were making $200 a month because of all the rates. Right. And all that stuff. So for me, like, the $200 a month and having a bad tenant was

[B]

killing me first and foremost. Tim, thank you so much for the honesty and the transparency.

[A]

Yes.

[B]

Like, that is rare when people come on podcasts and say, hey, I did this. It didn't work out that well. But here's the things I'm doing to pivot. And a lot of what you're saying are realizations that investors come across and not all of them know how to recover from them. I also fell victim to the growing for growing sake. There were several doors that I bought probably between 2023 and 2025 that just don't perform well. They weren't the best deals. They weren't terrible deals. But interest rates were bad and expenses started to rise. Rents didn't go up like you expect rents to go up. And now you're sitting on this property and it's eating away at the cash flow from your good properties. Right. That's just a realization of real estate. Now, the good part about real estate is if you have enough cash reserves and you hang on long enough. Yeah. In 10 years, I'll look like a genius for buy properties. But you got to get yourself to that point.

[C]

Yeah.

[B]

And there's a lot of stress and sleepless nights that can come with, you know, having to hang on to something that's not performing well.

[A]

Yeah.

[B]

But when I look at that deal now, I've learned things. I learned it was too far away. I've learned it was too old of an asset to buy. Yes, the numbers work, but the assets old. And the maintenance is kicking my tail. And so now I'm realizing that it's a better decision to buy a better quality asset at a good deal price point, rather than chasing a asset that may be older, that's an okay deal. Because I now know my end goal is to own properties for the long haul that I can pass to my children. And if you buy a crap asset, even though the numbers work, at some point you're probably going to look to sell that asset because it's old. Unless you're going to completely remodel it from top to bottom. So what I'm trying to get across to people here is take your time. Just like what Tim said Like, you don't have to chase every asset and don't just look at. Do the numbers pencil. Yes, the numbers are the most important part, but there are other factors. How is it going to impact your lifestyle? Is it further away from your other properties? Is it going to be harder for you to manage? What's the age of the asset? Is it something that you want to keep forever? Are you only keeping it for a few years? Like, you have to think about your lifestyle and how that property may impact your lifestyle, whether or not the numbers work. And that's just something that's hard to teach a new person when you're starting out. So it's good to hear an investor talk about those things.

[C]

Yeah, I talk to a lot of my friends who are in the military that are looking to get started investing and they're all trying to start short term rentals. And you know, one of my friends bought a million dollar house in Disney, which is a really bad spot.

[B]

Sounds scary.

[C]

Yeah. And she makes less money than one of my long term rentals she likes. Barely breaks even, you know, managing that short term rental because it's so competitive there. Right. And there's so many rules there with Airbnb in that location specifically. But people are chasing what they think that they can make and they're rushing into these deals without really thinking about does it fit their lifestyle. Like, she moves every two years just like I did in the military. So she's managing all this stuff virtually. And I'm not trying to like spread fear. I'm just saying, like, you know, take your time.

[A]

It's spreading reality. Yeah, it is. Like, I was talking to a guy last night. I had someone over working on my house. I was just chatting with him. He was talking about, yeah, he got convinced in 2022 to go out and buy a short term rental. He had to long term rental, he's still losing 600 bucks a month. And he's like, now I'm going to sell it. I don't want to be in real estate anymore. It's what we talk about all the time. Like, he had the right intent. He rushed into it. I think he would admit that he was saying this. He didn't really think about it that much. And then you're doing the one sort of cardinal sin as a real estate investor, which is just like not setting yourself up to stay in it the long run. That's the only thing you need to do with the first deal. And if you're rushing into it, that is the biggest risk that 100% the biggest risk and much bigger risk than waiting six months to learn a little bit more or three months to find a better deal. Like, I know it's exciting and you just want to do it, but the number one thing is to stay in the game, not to get the deal as quickly as possible.

[B]

Absolutely. And you said that you would start the same way again by doing a single family home because it allows you to learn the skills necessary that you would apply to a larger, more risky, more dollar sign value asset. Right. And you're absolutely right. Learning how to underwrite single family is a great baseline for learning how to underwrite other deals. Learning how to select tenants properly, learning how to manage tenants properly, learning how to operate your business are all lessons that you're going to learn and we're all going to trip and fall and screw up. But when you do it on a single family home, first you protect yourself because you're probably not going to go bankrupt if you make mistakes on one single family home.

[A]

Yeah.

[B]

If you are, then you probably shouldn't have bought that single family home to start with. You probably weren't in a good enough financial position to buy it. But most of the starting a single family allows you to learn, grow a baseline so that now you can go and pursue larger assets and take on more risks. Especially for someone like you who's considering raising capital and syndicating a deal because now you're playing with somebody else's money. And I would be much more comfortable lending money in a syndication to somebody who's been there and done that, who's gotten their reps in. Right. Versus somebody who's just starting out on a commercial asset. They've never done a deal before. It's also going to help you be able to raise money. Money. But, but using other people's money is a massive responsibility.

[A]

Yes.

[B]

And so getting your reps in on single family is huge. And again, can you go directly into multifamily? Sure. I mean, you can even go directly into commercial. But I would say if, if that's something you're going to do, you need to have a superpower like Tim has. Right. Like you need to have like a partner who has experience in that, who's going to do the deals with you if you're just going to skip over the single and small multifamily to start out with. Totally. But if you experience it's so risky to just jump off and do that because you can go bankrupt if you do a bad large scale commercial real estate deal. That can hurt you substantially.

[C]

Yeah. And you're losing everybody else's money too. I would not do commercial honestly if I didn't have my partner.

[B]

Yeah.

[C]

I still think it's scary like, you know, just looking at the numbers and stuff. So yeah, I, I 100 agree. Just building that credibility too.

[A]

It's big numbers and just complexity. You're giving up the. I think the best part of residential real estate, or real estate in General, is this 30 year fixed rate debt, which is incredible. Like you're giving that up. You know, it's a lot to think about. You can make a ton of money, but it is, it is something serious. So, Tim, love the fact that you would do your first deal over again. I think if it was up to me, I would do my first deal all over again. But that's not available anymore. But I'd love to get some specifics from you, like what about your first deal did you really like so our audience audience can learn from what you've done, whether or not they're looking for their first deal or just trying to scale like the way that you have over the last couple of years. Let's get to that. But first we got to take a quick break. We'll be right back. For decades, real estate has been a cornerstone of the world's largest portfolios. But it's also historically been sort of complex, time consuming and expensive. But imagine if real estate investing was suddenly easy. All the benefits of owning real, tangible assets without the complexity and expense. That's the power of the Fundrise Flagship fund. Now you can invest in a $1.1 billion portfolio of real estate, starting with as little as 10 bucks. The portfolio features 4,700 single family rental homes spread across the booming Sunbelt. They also have 3.3 million square feet of highly sought after industrial facilities. Thanks to the E commerce wave, the Flagship fund is one of the largest of its kind. It's well diversified and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com bpmarket to explore the fund's full portfolio, check out historical returns and start investing in just minutes. Carefully consider the investment objectives, risks, charges and expenses of the Fundrise Flagship fund before investing. This and other information can be found in the Fund's [e-mail] Flagship this is a paid advertisement. People love to call real estate passive income, which is interesting because most of the investors I know are very busy, busy, busy finding deals, busy managing teams, busy worrying they picked the wrong market. Rent to Retirement flips that model. They help investors buy turnkey new construction homes, often 10% below market value, in top rental markets across the country. Their local teams handle the build, the property management and the details so you don't have to. In some cases, Investors even receive 50 to 75% of their down payment back at closing, and there are interest rates as low as 3.75%. They've been trusted partners with Biggerpockets for over a decade, and if you want to learn more, visit biggerpockets.com retirement here's the truth about passive investing. If the strategy isn't right on day one, the returns won't save it. Multifamily real estate offers structural advantages many investors are overlooking, including depreciation that can help offset taxable income while cash flow continues. BAM Capital builds its investment. With that reality in mind, they are focused on solid operators, tax efficiency and long term performance. For investors who want real estate exposure without being landlords and who care about consistency over hype, this is a smarter way to allocate capital. Learn [e-mail] Bam New Year, clean slate

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[A]

Welcome back to the Bigger Pockets podcast. We're here with investor Tim Yu talking about what he would do over again if he was starting again from scratch. Tim always started in 2022, but he's done a little bit of everything, which makes him a great candidate to talk about in current market conditions. What would you do? Tim, you said before the break that you would basically just do what you did over again. But tell us a little bit about the deal. What about this deal, other than the fact that it was just a single family, like, made it such a good, meaningful deal for you?

[C]

Yeah, so my first buy and hold was actually a duplex, so I guess residential, multifamily, but okay. It was a little bit of luck, too. So, like, looking at the numbers, it was on market, so it wasn't anything crazy. It was listed by an agent. We just went to go see it, we made an offer on it, and we went conventional. So this property makes me like 800amonth. And the reason why the guy sold it to us so cheaply is because he actually got married and was moving 40 minutes away and he lived in one of the units, so he just house hacked it. So for us, it was more of like a luck thing as well. The tenants are having great. I've had the same tenants since I bought it four years ago, and I keep them in every year. I talk to them every Christmas, and I'm like, hey, do you just want to, like, stay in the property? And they're like, yeah, absolutely.

[A]

Great. Awesome.

[C]

You know, we're not trying to raise rents or anything like that because they've been great. And you guys know raising rents can lose a tenant. And then now I'm paying a mortgage for two months trying to fill it. But I wanted to say this too specifically was, you know, I bought this on conventional financing because I had a job and I was bankable at the time, so.

[A]

Nice.

[C]

Don't rush to quit your job necessarily, because I'm going to go through a lot of pain quitting my job right now. I'm losing the salary, I'm losing all the bank loans that I could qualify for. So there's pros to still having your job as well?

[A]

Absolutely. I mean, I think this is an amazing choice. I know everyone Gets into this for financial freedom. But first deal. If you could hang on and just stay in your job, do it. I rarely give like blanket advice, but just do that. It is just so much better. You're going to be bankable, you're going to have less risk. You know, if you have a job with health care, that's going to matter a lot. There's so many things that you need to be learning about real estate. They're not so hard that you can't do them while you're working a full time job. And for me, I would rather do that when I'm not worrying about am I getting this extra 200 bucks a month because I need that to pay something like if I can live off my salary. That puts you in the position to go out and buy a good deal the first time around.

[B]

I think people fall in love with the idea of not having to go to work for somebody and that makes people want to, to grow and scale quickly because that's the idea that I fell in love with. And then once you get to the point where you're full time, real estate's a little different because now it's not a side hustle right now it's I gotta do it to feed my family. And so it makes making good decisions harder. It's a different ball game. I enjoy real estate wholeheartedly, but if I didn't have to quit my job when I did, I would have kept it longer. I just, it didn't make sense for me to keep my job any longer. But I waited as long as humanly possible before I left that job. Or I would probably still be working it, or I would have at least worked it a whole lot longer than I did now. I respect the idea that like, hey, buying a duplex, starting out, great decision, and it sounded like it was a pretty decent deal. But is there maybe a particular good decision that you made that you feel like I would make this decision again if I were starting out? Or maybe is there a particular lesson you learned or something that kind of, yeah, kind of hit you the wrong way that you're like, I would absolutely never ever do this again.

[C]

I would probably say if you're curious about a strategy, go try it. Right? You're never going to learn more than just actually doing the type of deal like I think every deal you do, you learn so much either good or bad. The reason why I rather wholesale is because I don't like the actual idea of flipping because I got my butt handed to me on a few Flips when, you know, I bought a house on a main road. I didn't know at the time that when you buy houses on super busy roads, the property value drops. And then like, I couldn't sell the house at the price that I thought it was going to sell. That was one issue that I learned. Yeah. And then another one was I don't do full guts anymore because I tried a full gut on a 120-year-old house in Kentucky. Everyone in Kentucky knows me about that deal. It's because it like ruined my life. It was so hard to deal with. So as you start trying different things, you start to learn what you like to do, what you don't like to do. If I were to flip houses strictly cosmetic.

[B]

Yeah.

[C]

I don't know how you do it, Henry. I know you do new devs and all that stuff, but. But me doing that renovation, like, almost killed me. I know what I don't like, so. And then the biggest lesson I learned is if you're buying real estate, you're buying flips. When you do buy a bad deal, because this does happen, you're never going to hit a thousand for a thousand. You're always going to have a bad deal or two. Is that the active income that you have either from your W2 or a flipping business or whatever the case may be that's going to save your butt down the road? So don't rush to quit your job if you have properties. Because some of the bad deals that I bought, my W2 salary saved me. Right. I can eat mortgage payments because I had a job.

[A]

So it sounds like if you were starting over, you would do deal number one the same, but maybe deal two through 12 you would do a little bit differently.

[C]

I would say the flipping I could probably live without now, but it was a great skill. Right. I know how to renovate properties now, but yeah, not my cup of tea, honestly.

[A]

So what would you have done differently, Tim? Would you just gone do more wholesaling because, like, it sounds like you made some active income or would you just have gone straight to commercial sooner?

[B]

Sounds like you needed to learn how to underwrite a little better on them single families you were buying.

[C]

I would agree with you on that. Is underwriting way more conservatively is probably the recipe to success?

[B]

No, it's absolutely the recipe to success.

[C]

When you're like penciling deals. Don't like, fudge the numbers to like, oh my God.

[A]

You know what I mean? I do everything I can to not buy a deal. I think that's like Just the general approach is like, how can I make this look so bad? And if it still looks okay, I'm like, okay, fine, I'll buy the deal.

[C]

That's the right mentality.

[A]

Honestly, I just think that's the way to approach this. Like, why take on risk if you don't have to?

[C]

Yeah, I agree. I was a young man, just, I was deal hungry, right? I just wanted to stack deals on my belt and be happy that I had all these doors.

[A]

I don't blame you, man. Everyone does it. Like, it's just a common thing that everyone does. And we just appreciate you being honest about it. That was kind of the whole idea behind this episode is like, like, share the real things that you would do differently if you were starting over.

[B]

I think the real value people are going to get from this is that, like, you did deals that weren't profitable, but you're still here talking about investing, pivoting strategies and doing something that's going to allow you to live the kind of life that you want to live. Like, that's the best part about real estate. And so, yes, I want to be real with people and say, you can screw up, you're going to screw up, you're going to. Yeah, I have a deal right now that I am trying to sell that I am, am going to lose money on, but it is one of several deals that I made money on.

[A]

You don't have to bat a thousand,

[B]

you're gonna screw up. Experienced investors make mistakes every day. But how do you pivot? What were the things that saved you and allowed you to continue to be here today? So what would you say is maybe one thing that helped you? You said your W2, having that income steady was one thing that saved you. Was there something else that like, like really helped you continue to maintain and not just give it all up like the guy Dave talked to yesterday?

[C]

Yeah, that story alone was crazy. But I would say, like, obviously my W2 and then I did active income stuff with real estate, right. So I did flip houses and I do wholesale and those quick cash conversion cycles coming into the business, it gave me a lot of space to make riskier decisions in the buy and hold sector. I don't recommend going as hard as I did, but having that cushion in the background always was always kind of a safety blanket for me. So definitely upping your active income either through working a higher paying job or doing something to make active income in real estate.

[B]

Yeah.

[C]

Is super awesome. And obviously with active income, you can buy properties for, like, tax depreciation Right. I think that's like the cycle of life.

[B]

All right, Tim, you're now moving more into commercial. Can you maybe give us some specifics around, like how much cash are you looking to generate on a monthly basis that's going to allow you to not have to work a day job versus kind of where you were in the single family space?

[C]

The asset classes that we're looking for is obviously the commercial strip mall area. And we're looking at the Sunbelt location. So down south, super favorable market and all that stuff. And we're looking for outside of metro cities. But what we're looking for is if we can get an asset class that can generate three to $5,000 a month in net cash flow. That's after debt service and all that stuff. That is very possible. So with the passive income of the properties that we have already, and then the active side won't really stop having that property that fits that. That buy box is ideal.

[B]

Yep.

[C]

Which kind of sums up everything that we talked about is we're not rushing to go buy a deal right now. We're taking our time and we're doing our due diligence on that.

[B]

So 3 to 5k net income a month after all expenses. About what kind of purchase price point does that put you around for a commercial asset?

[C]

For people's reference, I would probably say if obviously we're trying to buy at a 10 cap. So the purchase price would be ideally like 3 million or under. But obviously sellers nowadays are not going to sell out of 10 cap. But that's the price range that we're looking for is probably the 3 to 5 million range.

[B]

So a 3 to 5 million purchase price is their expected renovation. Like, is this value add similar to single family if you want to get to those cash flow numbers, or are you able to just buy something that's already producing that kind of net income for that price point?

[C]

So most of these strip malls don't really require any renovations because the tenants themselves most of the time will be on triple net leases. So most of the time we do a triple net lease, like you can negotiate that the actual business owner that comes in can actually renovate the unit themselves. So it becomes more of like a mailbox money type thing. Once you have the right tenant in

[B]

place and then for financing these assets, I know most people use some sort of commercial loan for local banks. Are you looking to raise capital for the entire purchase or are you going to raise capital just for maybe what your down payment would be for that property? And Then get local financing from a regional bank.

[C]

There's two ways that we're going to look at it. So one way is, since that strip malls are commercial, a lot of the owners actually are open to owner financing. We obviously prefer doing an owner financing deal and then raising the capital privately to do like the down payment and whatever holding costs and reserves are. If we do go the more traditional commercial banking route, we would do the 75% loan to value of the property and then we'd still raise that down payment privately. So that's our idea of how we're going to structure it.

[B]

And real quick, before we get out of here, what kind of time horizon are you giving yourself to build up this cash flow? And this is just. Are you looking to buy one asset that produces three to five thousand dollars a month? Are you looking to buy two assets that do that? Like, what's the time horizon? How many of these properties are you looking to purchase?

[C]

Yeah, our goal is just to buy one this year. That's the beauty of commercial as well, is you don't need to buy a ton of deals every single year. You know, one deal a year, one deal every two years can change everything for you. So our goal is to close one this year. We're actively looking in marketing right now, so we'll see where that goes.

[B]

I love it.

[A]

Awesome. Good for you, man.

[B]

This man has learned from the past mistakes. This is. This is wisdom you're speaking.

[A]

Yeah, we all get there eventually. It's just a matter of how quickly, how many times you got to touch the fire before you learn.

[B]

Yeah.

[A]

Well, congrats on your success, Tim. And you know, I just love that you have thought about this and are building a portfolio that is. Is designed for the life that you and your wife want. That's what it's all about. There's no right way to real estate investing, but your thought process is the one that I encourage everyone listening to. Adopt, which is like what works for me. What do I need right now? No right answers. Cash flow, appreciation, markets, strategies. The world is your oyster. That's the beauty of real estate. But you got to have some discipline to figure out what works for you and really appreciate how you're doing that for yourself. Tim.

[C]

Yeah, I appreciate hanging out with you guys today. Saw you guys in Vegas, so hopefully I'll see you guys sooner.

[B]

Thanks.

[A]

Awesome. Thanks again, Tim. And thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you all 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.