← BiggerPockets Real Estate Podcast
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Do you want to know why most of the real estate investing advice you hear on the Internet will actually lose you money? I've analyzed thousands of real estate deals. I've bought dozens of properties. Now I'm going to share with you 10 pieces of advice that might sound good on TikTok but are actually holding you back. More importantly, I'm going to share with you why people keep repeating them even though they're wrong. Some of this advice, it actually comes from people who haven't bought a deal in years, but they keep posting because fear and negativity get clicks. I closed the deal last month. And so in this, this video I'm going to break down each piece of bad advice, showing you the actual data and sharing what you should be doing with your portfolio instead. Let's start with the worst one. And this one might surprise you because some of the so called experts constantly repeat this. The number one worst piece of advice that I hear about real estate right now is that it takes too long to reach financial freedom with real estate. Or you may even hear this said as real estate is dead or you can't make real estate work anymore. And I just got to get out front of this and say that this is absolute nonsense. I have done the math. I've actually built financial models. You can go and download them for free on biggerpockets.com resources, go check them out. I have a financial freedom calculator there. And what it shows is that if you save 20% of your disposable income and you invest that consistently in real estate for 8 to 12 years, you can completely replace your income. And that is not doing anything fancy. You can get it out of five years if you're super aggressive with it. But even just buying on market regular stuff right now, that gets a modest cash on cash return. If you do that consistently for 10 to 12 years, you can achieve financial freedom through real estate. So I don't want to hear that it's impossible to achieve financial freedom through real estate. That is complete nonsense. I think what people are really saying here is that real estate is not a get rich quick scheme. And that is true. I 100% agree with that. Because if you are trying to achieve financial freedom in two years or three years or four years, it might not work. It probably won't work through real estate. But that is normal. Real estate investing is a long game and financial freedom is a long game. If you think that you can build enduring wealth, sustainable wealth in two or three years, you can't like even People who made a ton of money in bitcoin that has gone back down. Right. Real estate is slow for a reason. Because it is deliberate, because it is predictable, because it is consistent. That is why real estate is such a great way to achieve financial freedom. Even if it does does take you that seven, eight to 12 years, depending on how aggressive you want to be. So don't tell me that you can't achieve financial freedom through real estate, because you can. I've done it. I've seen plenty of other people do it. And even in this market, it still works. So that's the number one worst advice. The second piece of advice that I absolutely hate is that you cannot scale with residential real estate. You hear this all the time. I'm even going to call out Grant Cardone. He talks about this all the time, how it's a waste of time to invest in residential real estate or that your primary residence isn't an investment and that you have to get to multifamily. That's the only way to scale. And maybe if you're trying to be a billionaire, that could be true. But I think for most people who listen to this podcast, and certainly for me, what I'm trying to do is live a comfortable life with a relatively small portfolio. To me, the ultimate flex is to reach your financial freedom number with as few units as possible. Let's just, you know, speculate here. Think about this. If you bought 10 single family homes, let's make this easy. And you paid them off over the next 10, 15 years, right? Average single family rent in the United States right now is about 2500 bucks, right? So you buy 10 of those, you're getting $250,000 in tax advantaged cash flow. When you think about the tax advantages, that's more than having a $300,000 salary. So don't tell me you can't scale with residential real estate. That's a small example. That is an achievable goal for people who are aggressive about this. It really comes down to your own goal. It really frustrates me when people say there's only one way to grow. You have to get into multifamily. You have to get into senior, you have to get into self storage. Are those good strategies? Yeah, for certain people they are. But that is not the only way to scale in real estate. A lot of my friends who are highly successful, make tons of money, make millions of dollars a year, have done it entirely on residential real estate. The people who are telling you that you can't scale with residential real estate, probably want you to buy something. So I am here to tell you that is bad advice. If you want to just stick with, with boring old residential real estate because it is safer and is more predictable and it still offers great returns, you can and absolutely should do that. All right, so that's bad advice number two. Moving on to number three. This is one I hear a lot, especially over the last couple of years. The piece of advice I hate is negative cash flow is worth it for the right house. Now, I know this is a big debate in real estate. What's more important, cash flow or appreciation? I do not buy properties that do not cash flow. Negative cash flow is the one thing that can force you to sell your property before you want to. That's maybe the worst case scenario that you have as a real estate investor, because even the people who bought in 2007, if they held on and they had cash flow, they were still making money from 2007 to 2015 until their property price rebounded, they were still getting tax benefits, they were still getting cash flow flow. And because they had cash flow, they could pay their bills, they could pay their mortgage. They were never under any immediate stress. And then they got to enjoy those massive gains in property values and appreciation that we got from 2013 to 2023, depending on where you live. I am not saying that cash flow is going to make you wealthy overnight. What I am saying is that is a requirement to make sure that you are not taking on more risk than is necessary. If you go out and buy something just because it's going to appreciate, maybe you will appreciate, maybe it doesn't, but that's a way that you can absolutely get burned. And I hear people pointing to this saying, oh, this market in California or in Texas or in Florida, it's appreciated on average 7%, 8% per year over the last five years. Yeah, that was a unique time. I don't think we're getting to that appreciation, and even if we do, it's still speculation. But personally, I think appreciation is going to be muted for the next couple of years. And that doesn't mean you shouldn't buy real estate, but it does mean you need cash flow to hold on to buy great assets during this time when appreciate is slow. And then when appreciation picks up, which honestly no one knows when it's going to happen. Is it next year, is it three years, is it five years? You're in the game when that appreciation pop happens. And, and that's how you really build wealth. But you need cash flow to get there. Do not speculate unless you're already wealthy. So that's number three. Negative cash flow is not worth it for the right house unless you're super rich.
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Most deals don't fall apart because of the numbers. They fall apart because of the financing. You find a property that cash flows, the deal makes sense. But then the lender looks at your personal income, your tax returns, your debt to income ratio and suddenly the deal doesn't qualify. That's the disconnect, because as investors, we're not buying based on our W2, we're buying based on the asset. That's why Host Financial offers DSCR loans designed for real estate investors where qualification is based primarily on the property's income, not your personal finances. So no W2s, no tax returns and no DTI requirements. And with loan to value options up to 80 or even 85% on eligible deals, you can keep more capital available as you grow. If you're buying rentals, refinancing or scaling your portfolio, go to hostfinancial.com that's h o s t financial.com and see what you qualify for. The fourth piece of bad advice is people saying that you need to get to 50 doors to achieve financial freedom. Or honestly, really this is people saying you need to get to any specific number of doors to reach your goals. Because door count is just a terrible metric I already talked about scaling with residential real estate. You can build a great portfolio with 5 units, 10 units, 20 units. Personally I am reconstructing my portfolio right now because I would love to get to like 15 to 22 mostly paid off units because that could more than fund my lifestyle. I don't need more than that right now. Could I go out today and buy hundreds of units? Literally I could. I have that financial capability to go out and buy hundreds of units, but I'm not going to do that because that would be optimizing for the wrong metric. If you say I want to go out and buy 100 units, fine. But why you want 100 units that give you 100 bucks a month in cash flow? That's 10,000 bucks a month. You want to manage 100 units for 10,000 bucks a month? I could go out and buy four single family homes for cash and get the same amount of cash flow, maybe even better. Do you know how much less work that is? Do you know how much less maintenance cost that is? Do you know much less headache it is having 4 paid off units then 100 units that only get you 100 bucks a month in cash flow. Most people don't say, hey, I want to be a real estate investor because I have a dream of owning 100 units. They say, I want time with my family, I want to work less, I want more flexibility in my life. And if you are optimizing for door count, there is a very good chance you are not actually optimizing for the things that you want. You are just doing it for vanity. It's just ego. I'm sorry, like just saying, yeah, you want 100 units or you have 100 units, people do that for ego. Be better than that. Think about what you actually want. What are the reasons you got into real estate and optimize for that. And honestly, nine times out of 10, you'll probably find out that getting a smaller portfolio with more efficient units, more efficient use of your capital and time, that's going to go further for you than door count. All right, number five, terrible advice that people are giving out right now is to wait for the housing market to crash. If you know anything about me, if you follow me on social media, you see that I spend a lot of my time trying to dispel this crash narrative. I want to just say right here, right now that crashes in the real estate market are extremely rare. I have spent, I don't even know, thousands of hours looking into this. And I will tell you that there has been exactly one housing market crash since the Great Depression. That was in 2007 and 2008. And it is totally understandable that people who lived through that expect that or think that a crash could happen again. And I am not saying that a crash will not happen again. I would never say that. I am an analyst. My whole purpose is to think in probabilities. And there is a chance that the housing market would crash. There are scenarios that I could see happening where the housing market crashes. But is that a likely scenario right now? No, it is not a likely scenario right now. If you can get into the housing market and just ride normal appreciation, the normal trajectory of the housing market, that's great. Sometimes you will buy a little high, other times you will buy a little low. But if you keep buying at regular intervals, by definition, you are going to, over time achieve that average. And that average is good enough. Now, I understand the impulse to say, I'm just only going to buy when it's low. But no one knows when it's low. Literally, since I've been a real estate investor 16 years, every single year, a very famous, a very prominent, a very reputable person has said the housing market's going to crash in 2014. Really popular influencers. Robert Kiyosaki, right. Was saying that the housing market was going to crash. I have seen a other influencers say this every single year for the last 15 years. No one knows if it's going to happen or when it's going to happen. And if you think about all the people who said in 2015, oh, prices have been going up for four or five years, there's going to be a crash. Think about, you just missed the biggest bull market in the history of the housing market. How much wealth did you lose because of that? If you're just sitting around waiting, you think you're going to be spending every day analyzing the housing market and say, you know what? I figured out when the bottom is. Unlike every other housing market analyst who's spending all of their time on this, I, as a casual observer of real estate who have never bought a home, never bought a real estate property, I know when the bottom is. No, you don't. I don't even know. So the cost of waiting often exceeds the cost of getting in and maybe buying a little high, even if your Property goes down 1 to 2% per year. This is the same thing with stocks, right? If you talk to any financial planner, they say, don't try to time the market, just get in the market as as possible. The same thing is true in real estate. I am not saying you should go out and buy anything. There is a lot of stuff on the market that is overpriced right now. But if you have a genuine understanding of market value, if you can do the things that we talk about on this channel all the time, like buying below current market comps, doing value add, investing, getting cash flow, you can absolutely still make money right now. Even if the market goes down next year, that's a paper loss. You can absolutely still make this work. Waiting has costs and you're better off getting in and learning and allowing your investment to compound over time. That's how you really make money in real estate. The number six piece of terrible advice is you should go out and use other people's money. The best way to get into real estate is to figure out a way to get your own first deal. Now, if you need to partner on that, that's a different story. If you can go out and raise some money from friends and family, you can raise a little bit of money. That's the kind of other people's money that I do think makes sense. That can really help in the beginning. But I would much rather all of you go out and save money for a couple of years and put 3.5% down and house hack. Then go out and try and raise money from sophisticated investors from other people who are doing deals. It's just not going to work. Like, I know that people say that this is going to work, but it's not. Everyone I know who raises money for deals does it primarily from people that they actually know. In the beginning, it is friends and family. And over time, as you become a reliable investor with a track record, then you can expand out and raise money from other people. But getting into real estate by raising money from other investors that you do not know is not realistic. I'm sorry, Maybe it happens one out of 100 times, but this is bad advice. Better advice, get your financial house in order to earn more money than you spend, put that money away. And even if that takes you a year, I would rather you take a year of getting your financial house in order and going out and buying a property than spending all of your time naively trying to raise money from people you don't know who are probably never going to give you a dime. So go out and get experience first. Become a great investor. Do that with your own money. Do that with friends and family money. And if you can, do that with raising other people's money will be possible. But you can't shortcut, you can't skip the line. You have to build up that credibility before anyone else is going to fund your deals. All right, let's move on to number seven. Oh, man, I hate this advice. I. God, this is maybe the worst advice that has popped up over the last couple of years, and I feel vindicated by this. The advice is date the rate, marry the house. I know you all have heard this one. So many people have been saying this for years. And as soon as this started popping up in 2023, as soon as interest rates started going up and people were saying, yeah, rates are going to go down and you can refi. I. You know, I have to say I have been right about this. I've been saying for three straight years, this is awful advice because rates might not go down. Yeah, they've come down a little bit. They're not at 8%, but they're at 6 and a half percent. I promise you, every single person who is out there saying, date the rate, marry the house was promising you that we'd have 5% mortgages right now or 4% mortgages right now. And that hasn't happened. And even if it did happen, it's still bad advice. Going out and buying a house or a property, an investment property, assuming that the rate is going to go down is just. It's speculation. It's the same thing that we talked about earlier with negative cash flow. Why would you do that to yourself? Right? You're better off being patient and disciplined than going out and doing that. If you are analyzing deals based on the numbers you have today and they eventually get better, great, Cool. But the whole key here is that you have to analyze them based on what you know. What are rents today, what are expenses today, what are rates today? If they get better, great. But you don't know that's going to happen. So the only thing you can do as an investor, the best thing you can do to be a good investor, is to assume that rates aren't going to change and be very disciplined in your underwriting making that assumption that rates are staying what they are and that the rate you get today is the one that you're going to stick with. That is how you build long term wealth, right? That's how you don't take on extra risk that you don't have to take and instead build a rock solid portfolio that can withstand any market conditions. If you want a short term rental, here's something worth knowing. Not all landlord policies are built for your type of property. And with holiday bookings, chilly weather and higher guest turnover, having the right coverage is more important than ever. Steadily offers insurance designed specifically for short term rentals, covering property damage, liability, lost rental income and even unexpected issues like bed bugs. Steadily works exclusively with real estate investors so they understand the details that make short term rentals unique and they build coverage to match it. A quick review of your rates and coverage every year can help you protect your property and your cash flow. Get a quote in minutes@biggerpockets.com landlordinsurance steadily rental property insurance for the modern investor.
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You've upgraded how to buy properties, but did your insurance get the memo? When investors start scaling, insurance can't be an afterthought. Most policies were designed for a single property, not multiple rentals. LLC ownership, short term stays or properties mid rehab. That's where blind spots can creep in. NREG works exclusively with real estate investors. They understand portfolios, how risk compounds as you grow, and why insurance should protect your upside, not just the checkbox. One uncovered claim can undo years of progress before your next acquisition. Review your insurance Talk to NREG and get investor specific coverage from specialists who actually understand real estate@nreg.com bppod that's N-R-E-I g.com bppod people love to call real
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estate passive income, which is interesting because most of the investors I know are very 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 turning away pet owners might feel safe, but it could be costing you more than you think. Today's travelers are bringing pets and they're willing to pay for the right property. The challenge is knowing which pets are a good fit and which aren't. That's where pet screening comes in. It gives you a clear, standardized way to evaluate pets before they ever show up so you can feel confident in your decisions. Even if you have a no pet policy, you are still required to accommodate service animals. And having the right process in place matters. No more blanket policies, just better information and fewer surprises. Ready to make smarter pet decisions? Head to petscreening.com and sign up for a demo. All right, that was number seven. Let's move on to number eight. Terrible advice. Get into real estate for passive income. This is a hot topic that I hear a lot, but people say I own rental properties. It's passive income. There is some truth to it. Real estate is probably more passive than a W2 job. But is it truly passive income? No. Real estate takes work. I actually think that real estate investing itself, calling this business that I am in, that you're trying to get into, that you're in. Real estate investing is a little bit of a misnomer. It is entrepreneurship. You are starting a small business and how involved you need to be in that business is variable. There's a spectrum, right? Some on one end, you could be in it a lot. You're flipping houses, that's a lot of work. You're wholesaling, that's a lot of work. You're self managing 10 plus rentals. That's a lot of work. Still worth it. 100% still worth it. And over time you can probably get more passive. But for most people getting into real estate, you're gonna have to hustle in the beginning. And then as you get 5, 10, 15 years into your investing career, you can be a lot more passive. Not Saying it takes 40 hours a week. For me it didn't Even in the most busy parts of my real estate investing career, 10, 15 hours a week at most, that's when I was self managing properties. I still did this when I was in grad school and working a full time job at the same time. You absolutely can do this. It is not a full time job unless you want to be a flipper or wholesaler or develop. But it does take work. So you need to decide if you want to be in this industry. Are you willing to put in that effort for me? I can tell you from experience, me, my personality, my goals, 100% worth it. Absolutely worth every single minute of it. But you have to make that decision for yourself because it's not truly passive. Let's move on to terrible advice number nine, which is X strategy is dead. And by X I mean any time someone says a strategy is dead, they're wrong. Right? I hear a lot of people say short term rentals are dead. I hear people say that the BRRRR is dead. I hear people say that rental properties is dead. This is just not true. If maybe you're looking for just absolute easy returns, you don't have to think, you don't have to do anything. Yeah, maybe it's dead. Can you just go out and do a perfect burr without putting in a lot of effort right now? No. Does that mean BRRR is a bad strategy? Absolutely not. I personally have been pretty critical of short term rental investing over the last couple of years. I've been saying the last three or four years that I think it's oversaturated, that returns are going to go down and that only the best operators are going to do well. And that is the key difference in what I am saying. And I think what you hear a lot out there, short term rentals aren't dead. You just need to be very good at it to make money. And you know what? That is normal for every single business. If you think you can go out and open a mediocre restaurant and you're going to kill it. Why are you an entrepreneur? You have to try and be good at the things that you're doing. So anytime you hear someone say short term rentals are dead, they're wrong. What they mean is you need to be good at short term rentals to make Money. And it's true. If you're not committed to being good at that strategy, don't do it. It's not going to make you money. If you're not committed to be good at burr or good at flipping, maybe it is dead to you. But every single real estate investing strategy makes money. I see people making money on flips right now. I see people making money burrs. I know people making tons of money on short term rentals right now because they're good at it. So these blanket statements that any strategy or approach to real estate investing are dead. It's just bad advice. All right, number 10 bad advice that I hear, it's our last one today and it is quit your job and go all in on real estate. A lot of my friends, full time real estate investors, that's great. But the idea that you need to quit your job and that is a prerequisite for being successful in real estate is just complete nonsense. I have taken a completely different approach to real estate and I know a lot of people have. I have worked a W2 job because that provides me stability, it gives me health care, it gives me an income that exceeds my living expenses so I can save money and put it into my real estate portfolio. It allows me to be patient in real estate because if I don't do a deal this month, if I don't do a deal next month, if I don't do a deal this year, I'm fine. It doesn't matter to me because I have an income. It allows me to be opportunistic. I don't have to take on excessive risk because I'm not that thirsty. If you have a job that you like or have a job that allows you some level of disposable income that is such an advantage in real estate, you are going to be more lendable. It is so much easier to get a mortgage if you have a W2 job instead of flipping houses. That's just true. You're going to be more lendable. It allows you to take more risks. At the same time, it allows you to be more patient. There are so many advantages to this. So I'm not saying you shouldn't quit and go all in, but I am saying that it is not a prerequisite and everyone should be thinking about this for themselves. And so don't get caught up in this bad advice that you have to quit your job to get into real estate. All right, Those are the 10 worst pieces of advice that I hear right now. And just as a recap Number one Takes too long to reach financial freedom with real estate. No. Number two can't scale with residential real estate. I've seen literally hundreds if not thousands of examples that are contrary to this. Don't listen to this. Number three Negative cash flow is worth it for the right house. Disagree. Do not speculate. It's not worth it. Number four you need to get 50 doors to achieve financial freedom. Absolutely nonsense. Optimizing for door count is optimizing for the wrong thing. Don't scale for scaling sake. Number five is waiting for the crash. No one knows when it's going to happen and there is an opportunity cost for waiting. Do not forget that. Number six Go out and raise money from private investors. Where are these people? I don't know. If you can raise money from friends and family, go do it. But do not waste your time thinking that you are going to go walk up to a sophisticated investor and pry money away from them before you have experience. Not going to happen. Number seven Date the rate. Marry the house. Hopefully everyone has seen that this is bad advice. Do not underwrite your deals with anything other than the rate that a lender has quoted you in the last couple of weeks. Number eight do real estate for passive income. Real estate is not passive. It does take work. More passive than a full time job. It's faster than working for 45 years for a shaky retirement, I promise you that. But you're going to have to put some work into it and it's well worth it. Number 9X strategy is dead. Don't listen to anyone who says short term rentals strategies are dead or brrr is dead. They probably are trying to get you to buy some course on the strategy that they've just pivoted to two months ago. Number 10 bad advice. You got to quit your job and go all in. If that's you and you want to do it, go for it. Best of luck to you. It works for a lot of people, but it is absolutely not a prerequisite for being successful in real estate. So Those are the 10 pieces of advice I hate. What do you hate? What is the worst real estate investing advice you're hearing right now? Drop them in the comments. I would love to know. Thanks so much for watching this video. I'm Dave Meyer. I'll see you next time. Thank you all for listening to the Bigger Pockets 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 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.