When’s the Right Time to Start Investing? (Age, Money, Lifestyle)

Summary

Summary of BiggerPockets Real Estate Podcast Episode: "When’s the Right Time to Start Investing? (Age, Money, Lifestyle)"

Release Date: May 21, 2025

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Introduction

In this insightful episode of the BiggerPockets Real Estate Podcast, host Dave Meyer engages in a comprehensive discussion with seasoned investors Henry Washington and Jonathan Green. The episode delves into the critical question: When is the right time to start investing in real estate? Covering aspects such as age, financial readiness, lifestyle considerations, and market timing, the conversation offers valuable guidance for both novice and experienced investors.

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1. Age and Timing to Start Investing

The conversation kicks off with the prevalent notion, amplified by social media influencers, that one must begin real estate investing at a young age—sometimes as early as middle school.

• Jonathan Green emphasizes the importance of mentorship and personal confidence over sheer age:

  "I think it's really about when you feel confident and how you get to that confidence level. A lot of that is who you surround yourself with, not just what you watch." — [02:24]

Jonathan reflects on his own upbringing, noting the advantage of having a family background in real estate, which provided him with early exposure and support.

Conversely, Henry Washington shares his perspective on starting later, highlighting that maturity and financial stability often outweigh the benefits of starting young.

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2. Financial Readiness and Stability

The discussion transitions to the significance of financial preparedness in real estate investing. Both guests stress that investing should not jeopardize one's financial health.

• Jonathan Green cautions against investing without a solid financial foundation:

  "If you don't have an emergency fund for your own life, you definitely shouldn't be trying to invest in not having an emergency fund for your real estate." — [27:44]

• Dave Meyer adds that having a negative net worth is manageable if one maintains a positive savings rate:

  "If you have a hundred grand in student debt... if you can earn 8 or 9% on rental property... pay off minimum amount." — [26:42]

They discuss strategies like comparing the returns on investments to the interest rates on debts, advocating for paying off high-interest debts before committing to new investments.

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3. Risk Capacity vs. Risk Tolerance

A key distinction is made between risk tolerance (comfort with taking risks) and risk capacity (financial ability to endure potential losses).

• Dave Meyer explains:

  "There's a difference between risk tolerance and what I think Jonathan's talking about, which is what I would call risk capacity... you do need to put those other things in place before you start just investing." — [06:40]

• Jonathan Green reinforces that having significant responsibilities or assets at stake necessitates cautious investment approaches.

This section underscores the need for investors to assess their financial stability and readiness to handle potential setbacks without compromising their overall financial health.

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4. Building Experience and Knowledge (“Getting Reps In”)

Both guests highlight the importance of gaining hands-on experience and building knowledge before making significant investment decisions.

• Jonathan Green recommends viewing a minimum number of properties to build confidence:

  "If you're buying single family, I think you should see at least 20... to feel more comfortable with knowing what's in a basement or understanding what's in an attic." — [13:00]

• Dave Meyer concurs, suggesting that active participation and continuous learning are vital to recognizing good deals and avoiding common pitfalls.

They advocate for practical experience, mentorship, and leveraging resources like real estate agents who understand investor needs to enhance one's investment acumen.

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5. Lifestyle and Personal Commitments

Investing in real estate isn't solely a financial decision; it intertwines with an individual's lifestyle and personal commitments.

• Jonathan Green shares how starting a family influenced his investment strategies, leading him to adopt a more balanced approach:

  "I wanted to be with my kids... Choosing lifestyle is about your family, how you want to live and all of that." — [20:51]

• Dave Meyer suggests evaluating the time one can realistically commit to real estate activities:

  "If you want to scale down, you do that enough to get your first deal... I would say five to ten hours a week is a good idea." — [24:29]

They discuss balancing investment activities with personal life, highlighting the necessity of aligning real estate endeavors with one’s overall life goals and time availability.

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6. Market Timing and Economic Cycles

The episode delves into the often-debated topic of market timing in real estate.

• Jonathan Green argues against overemphasizing market timing, suggesting that exceptional deals can be found irrespective of market conditions:

  "When somebody says... 'what crystal ball do you have that I don't have?'” — [35:50]

• Dave Meyer emphasizes evaluating current opportunities against other asset classes rather than attempting to predict market movements:

  "What matters is what you could do with your money now versus other asset classes." — [37:45]

They highlight historical resilience of real estate, noting that while markets fluctuate, strategic investing and value-add opportunities can mitigate risks and capitalize on long-term appreciation.

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Insights and Conclusions

The overarching theme is that the "right time" to invest in real estate is a confluence of personal financial readiness, maturity, experience, and lifestyle alignment rather than a specific age or ideal market conditions. The guests advocate for:

• Thorough Preparation: Ensuring financial stability and understanding one’s risk capacity.
• Continuous Learning: Gaining hands-on experience and building knowledge.
• Strategic Planning: Aligning investment activities with personal life and long-term goals.
• Flexibility: Being adaptable to market conditions and personal circumstances.

By integrating these elements, prospective investors can make informed and confident decisions about when to embark on their real estate investment journey.

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Notable Quotes

• Dave Meyer:
  "If it goes well, it's great, but it cannot go well... are you prepared for that?" — [04:50]

• Jonathan Green:
  "The more experience you get... I need like 15k for stuff behind the walls." — [14:47]
  "If you're struggling to pay your own bills and you're struggling to make ends meet, you probably shouldn't go borrow money to buy property." — [28:00]

• Jonathan Green:
  "The best two times to buy a property are yesterday and today." — [40:07]

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Conclusion

This episode provides a holistic view of determining the optimal time to delve into real estate investing. Through the experiences and insights of Henry Washington and Jonathan Green, listeners gain a nuanced understanding that transcends simplistic age-based advice. Instead, the focus is on comprehensive readiness—financial, experiential, and personal—to navigate the complexities of real estate investment successfully. Dave Meyer effectively encapsulates the essence of the discussion, empowering listeners to assess their own situations and make informed investment decisions aligned with their unique circumstances.

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Transcript

[Dave Meyer]

When is the right time to start investing in real estate? Are you too young? Are you too old? Do you have enough money? Did you already miss the market timing and all the good deals are gone? I totally get it. Investing in a rental property is a huge decision for your financial future, but also for your lifestyle. You want to make sure you're in the right place, not just from a financial perspective, but for all those other factors in your life as well. Today we're talking about this with two other expert investors.

[Henry Washington]

What's up, everyone?

[Dave Meyer]

I'm Dave Meyer, head of real estate investing at Biggerpockets, and I've been buying.

[Henry Washington]

Rental properties for more than 15 years.

[Dave Meyer]

Today on the show, we're talking about when to invest in real estate. We're going to get into. When is the best age to start? When you have enough money in the.

[Henry Washington]

Bank to take down your first property.

[Dave Meyer]

How your lifestyle at different points might affect whether you want to start investing and if there are times in the economic cycle that are better to dive in and whether or not there's times that you should probably hold out. So for this conversation, I've brought in two great investors who have wrestled with all of these questions themselves. We've got Henry Washington here.

[Jonathan Green]

Hey, what's up, buddy? Glad to be here. Thank you.

[Dave Meyer]

And we also have Jonathan Green, who's been on the show several times. He's an agent and investor based in New Jersey. He's been one of the most prolific posters in BiggerPockets Forum's history. And. And he also hosts his own podcast, Zen and the Art of Real Estate Investing. Jonathan, thanks for joining us.

[Jonathan Green]

Thanks, Dave. Henry, good to be with you guys.

[Dave Meyer]

Let's start our conversation about when to invest, talking about age and, like, what the right time to invest is, because it seems like every social media influencer is, like, 18 years old now, and everyone's talking about how you have to do it immediately out of, like, middle school property pros. Yeah, exactly. So, Jonathan, you sort of, like, grew up in real estate, right? I remember that about your story. So do you recommend to people starting as soon as they can?

[Jonathan Green]

I think it depends what type of mentorship you have. You know, I was fortunate because my dad literally would not stop talking about real estate from the time I was a baby on, like, it was just real estate money. Real estate money. Dirty joke. Real estate money. Real estate money. So that was for.

Wait, was I your dad? Maybe.

I mean, this show is going off the rails, but, I mean, like, you know, you can't fault people for not investing at 18 if they don't have the right background, because then I think they will look for that, you know, TikTok influencer instead. So I think it's really about when you feel confident and how you get to that confidence level. And a lot of that is who you surround yourself with, not just what you watch, because what you watch is one thing, but then what makes you take action is another.

[Dave Meyer]

Yeah, that's. That's very good advice. And you are lucky. I think very few people have that. But be able to get all that inspiration and advice about real estate while hearing dirty jokes. I mean, it just sounds like the absolute ideal child.

[Jonathan Green]

I mean, Henry is. Henry is a great dad.

[Dave Meyer]

Well, Henry, you, you know, despite raising Jonathan, you started a little bit later in your life. Right. But not that late.

[Jonathan Green]

Yeah, 37, I believe.

[Dave Meyer]

Do you think when you started was ideal or do you think there is a better time?

[Jonathan Green]

When I started was ideal for me. Because I think investing, you need to have a certain level of maturity, right? Because, I mean, it's a big. It's a big deal. And I think you can start young, but I think the question is less about age and more about financial stability or financial readiness. I don't think you're anybody. I don't think any college student, unless their parents are giving them money, is financially stable. But some are more ready than others to invest because some may have some amount of savings. Some may be from a family who's going to help them, you know, buy that first property. Right. Everybody's financial position and situation is different. Do I wish I would have bought a duplex and house hacked as a college student?

Heck, yeah, of course.

But was I in a position to do that when I was in college? I probably wasn't. If you can start young, you should. But I think you have to look long and hard about what does can and ready mean for you. Like, you've already got to go to school, which is hard enough. You don't want to put yourself into a position where you're defaulting on a property because you, you know, it didn't go like you thought. You're not renting out the unit, you're not getting the rent. You thought your tenants are destroying your place and you're trying to cover this expensive mortgage and go to school like it can. It's. If it goes well, it's great, but it cannot go well. And are you prepared for that?

[Dave Meyer]

That's a really good way of putting it. I think. Of course, everyone's going to say yeah, just invest as early as possible because the benefit of compounding is real. But also the younger you invest, the odds of you messing up I think are actually a bit higher.

[Jonathan Green]

Yeah, I was stupid. I should not have.

[Dave Meyer]

I should never.

[Jonathan Green]

Have owned a property at that time. So.

Yeah, but I think Henry made a good point about maturity because even if you're financially ready, if you're immature, you're not going to do well with the money. So it's not just about what you know about real estate, it's what you know about money. And if you're self aware of what you're going to do with your money.

[Dave Meyer]

Do you think that maturity then requires, Jonathan, some amount of financial literacy and education before actually pulling the trigger?

[Jonathan Green]

For sure. I mean, you know, we always talk about real estate, but money is really the sidecar to what moves it. We need the money to get there. So if you look at kind of more like what we were saying in the beginning, what, what you, we see on social media and more fire movement, it's like trying to get people to go quicker. But you want to build a foundation. If you don't have a foundation, you're just a house of cards. And that's why so many people crumble and give up. I find that the people who have become successful over time were ready. Like Henry said, it doesn't matter if they were 20, 30, they built enough runways so that they knew, hey, I can do this and if it doesn't go well, I'm going to be okay. I think that's what's really important, like, because there's inherent some risk in all real estate. You know, we're lucky to live in America where most things are going to appreciate, but you can make bad buys. But as long as, you know, if this doesn't go well, I'm not going to collapse my life and go bankrupt and ruin my finances for seven years. I think that's hugely important.

[Dave Meyer]

I'm so glad you said that because a lot of people I feel, get caught up in this idea of risk tolerance and they're like, oh, I'm comfortable gambling, I'm comfortable taking risk.

[Jonathan Green]

I'm in until they get punched in the mouth.

[Dave Meyer]

There's a difference between risk tolerance and what I think Jonathan's talking about, which is what I would call risk capacity, which is like, are you in a position to be able to weather the storm that's appropriate to your risk. And for a lot of people, you know, that means having maybe a stable job. That's something I cared about before I started making an investment or having an emergency fund or, you know, if you have a significant other who has a stable job and healthcare and benefits, like those are the types of things that allow you to take risk to go out there. I think about my own self, my own risk capacity. I started when I was, I guess, 23 and like, I just, I had risk capacity because I had nothing to lose. I had nothing, I had nothing, you know, and so like, I do think there's something to that, that like my time was worth nothing. Like it was either playing video games or like go out and invest in real estate because, like, I wasn't giving anything up, you know, by doing it. And so I think there is some element of that, like when you are really young, that you have less to wager in a way where you can just kind of hustle. But I think for, you know, if you're starting, you know, a little bit later, if you have a family or significant other, you really do need to put those other things in place before you start just investing.

[Jonathan Green]

You read my mind because I was going to go to that same place. But I think being more mature or, and having something to lose or something to mess up should force you to be more cautious. And I remember when I started investing, with my limited knowledge of investing, I still made sure that what I was buying, like if I had to get out of it, I could get out of it and even make money. I wasn't going to buy something that I felt like I couldn't just get myself out of that situation because I had too much at stake and it forced me to research to the point where I felt comfortable enough and had I not had something to lose, I probably would have just jumped off the cliff and bought something. And, you know, who knows, right?

Yeah, yeah, I think, I think a lot of people, especially now with technology being so prevalent, they're suffering from not getting enough reps. So they don't really have the confidence. So when they get the fomo, they just transact. But like, you know, like someone that says, oh, I looked at 10 properties this week and I asked, well, how many did you actually look at? And they say zero. It's like you just don't have the experience to be buying. I, I of course was over fortunate. Walked hundreds and hundreds of properties before I was even 18. That's lucky for me. I don't think people can accumulate that number of looks, but you need to get a lot of looks so you can really feel more comfortable with knowing what's in a basement or understanding what's in an attic. We're saying like risk tolerance and risk adjustment, but it really comes from how much you know and who you're working with. If you work with a baby agent and you don't know a lot, you know, how protected are you? You know, you go in because look, real estate agents are great. I am one. We all know a million of them. But your regular real estate agent isn't savvy with investors, so they don't really understand what a new house hacker is doing. But the ones that do can really help work together and teach along the way. And I think, you know, both of those are important to going and picking the right time. Like you guys were saying, hey, so.

[Dave Meyer]

I know people say real estate investing is passive, but let's get real. Chasing rents, drowning in receipts and getting buried in spreadsheets feels anything but passive.

[Henry Washington]

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[Dave Meyer]

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[Henry Washington]

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[Dave Meyer]

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[Jonathan Green]

I still get scared when I put.

[Dave Meyer]

A property every time, right? Like every time, why did I do that? Like, I'm so excited that day and then the next morning I'm like, what did I do?

[Jonathan Green]

Yes, yes. I literally had a deal earlier in the year where I made the offer and the lady said yes. And I went.

But you're experienced. So the thing though, the thing with the brand new person who doesn't have the reps, when they get that oh man. Feeling like they should get it because they start going through every scenario. Did I bid too much? We know we didn't bid too much. We know the values. But a new person immediately. That's why so many deals fail for new investors and then create havoc in the relationship with realtors because they really do. They get the oh moment, but they have no idea if maybe there are a hundred thousand too high. They don't, they just don't know because they're not advised and don't have the confidence.

I remember the first off market offer I made on a property and boy, I'm glad they said no.

[Dave Meyer]

Yeah, you offered too high.

[Jonathan Green]

Way too much. Way too much. My inexperience, it was way too far out of town. I offered way too much and my inexperience just, it could have really bit me in the butt. Had they, well, had they said yes, I'm sure nobody would have gave me money for that deal because they'd have been like, no, we're not fine. We're not financing that. There's a checks and balance. Inexperience will show itself. Right. Like so, yeah, it truly does matter.

[Dave Meyer]

I mean, I wonder what the right amount of reps is like, what is the right balance if you had to come up with that? Because I think what we're, what we're realizing here is that it's not about age, it's about coming up with the right balance of risk tolerance, you know, financial literacy and reps like Jonathan, do you have a rule of thumb or estimate for the audience of what they should expect?

[Jonathan Green]

If you're buying single family, you know, I think you should see at least 20. Like I would be no less than 20. Just because, you know, if you're in a basement area, that's where all the problems are. The foundation, walking the outside, you know, and people who are too new that they don't even want to get an agent. Just go to open house on the dumps in the area. If you're looking to flip, you know, you, there's no one's preventing you. Sure you're going to get on a lot of realtors list, but that's why I think a lot of investors should have their license. Not so they can transact and do their, like represent themselves because like you don't want as a lawyer to represent yourself, but just so you can go see every dump that comes on the market. It's so important to just be able, you know, Henry, you have a great agent. You can call them and say, hey, you know, let me see this. But a lot of people don't. So I think you got to use open houses, you know, because you can just. You could get like six on a weekend. That's six reps already. You're.

[Dave Meyer]

You're.

[Jonathan Green]

You're ahead of, like, half the market.

[Dave Meyer]

I was actually doing that this weekend. I was just going for reps to learn my new market. Yeah, I find something, because I just found something that was great, but I was not intending even to do that. I was just. I went from stuff that was 500 grand. I went to stuff that was 1.5 million that was stabilized, stuff that was in the worst possible shape. Some were edu development opportunities. Just go see them and you'll get a sense of what makes sense to you. And I think you get a feel for value. And I don't know how else to describe that, because comps are important, but when you do it enough, you can feel what the value is and if you're getting a good deal or not.

[Jonathan Green]

Yeah, I would say I probably didn't feel comfortable walking a house on my own and estimating a rehab probably for six months into me looking at houses. And that's still like a loose level of comfortability.

[Dave Meyer]

I still can't do that, but I don't do. I don't really flip. So I'm not like a rehab person.

[Jonathan Green]

I can. But I still always think I'm missing something. So I think the more experience you get, like, you know, people like Henry, like, we're putting in, like, you know, there's overage. I know that I need like 15k for stuff behind the walls and stuff that's going to come and new people don't. And one thing we were talking about before that I think is important, like, just having enough money, but it's also having enough knowledge to know, like, wait, I need reserves. There's so many people who are like, I can afford 200, so I'm going to spend 200. And then you're like, but wait, wait, you have to do repairs or you're buying a multifamily and you have tenants, you have to do upkeep. Like, reserves are the things. So when people say, oh, you know, I have a hundred to burn, you don't have a hundred minus 15. Keep that for reserves and make sure that you're safe, because that's what boxes people out. Like Henry said in the beginning, you're just. When you push yourself to the limit, you're just making it impossible for you to succeed.

[Dave Meyer]

Well, we've talked a lot about when the right time to invest is about risk capacity. Now we've hit a little bit on financial literacy, getting your reps in. But I also want to talk about lifestyle because this is sort of a really important part of being a real estate investor is like how it fits into your greater life and your family and your other aspirations and hobbies. We're going to get to that right after this quick break. We'll be right back.

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[Dave Meyer]

Welcome back to the BiggerPockets podcast. I'm here with Henry Washington and Jonathan Green talking about when is the right time to invest. We've covered a lot of topics, but I want to move on to the idea of lifestyle because I personally think about this a lot and like how I want to scale my investing and when I choose to do deals because I'm not full time doing this is a lot based on my lifestyle. Like what else is going on with me personally and my career, bigger pockets, other aspirations and hobbies I have. Jonathan, you grew up with this. Like have you had to fit real estate into your life or has it just always been sort of part of your life so that's not as much of a consideration for you?

[Jonathan Green]

It was, but because my dad was an attorney and I started as an attorney, I never thought of myself as real estate investor. I just was someone who was being smart with money. Like a lot of old schoolers that I've talked to, it was just I've always wanted to have multiple streams of income. That's why I invested in stocks. I just like to have things that produce. But I think as I got older I realized wait a minute, if I want to do a flip, I'm signing up for a second job. You know, do I have the time when I'm working 100 hours for the government to sign up for another job. The answer is no. So I flip much slowly. And I've never been a high volume flipper because I never was really full time in just investing. And I think that's again, what's important for people to say. You're saying, I mean, what time does it take if you want to be an investor? You have another job and then you. Do you have a family, you know, is your family going to be mad? Do you want to be spending Saturday and Sunday unclogging toilets? I don't. I wanted to be with my kids. So I think it's really, you know, choosing lifestyle is about your family, how you want to live and all of that.

Well, you're supposed to get your kids to unclog the toilets.

I mean, when they're five, you got to bribe them with like a big. That's. I got bribed. My dad was. You bribed me with a video game. If you come pick up the rent, you know, we'll get a video game. I'm like, okay, sold.

[Dave Meyer]

Yeah, absolutely.

[Jonathan Green]

And he always came through. So, I mean. But that is a good way to teach along the way.

[Dave Meyer]

Yeah. That's interesting. Henry, did you have kids when you first started?

[Jonathan Green]

No. No, I did not.

[Dave Meyer]

Okay, so do you think that made it a little easier?

[Jonathan Green]

Yeah, it was, it was easier before I got started, only because there was, you know, less considerations I would need to make. I was married when I got started, but my wife's been all in, you know, since day one. And so it was, it was much easier. I think what really changed when I had kids was my wife's level of involvement. You know, we. She used to go with me to look at houses and make offers. And now there's probably some family thing that she has to do with the kids if I'm doing that. And so that's changed. Like, you do have to adapt your lifestyle to what you're doing. You know, I went all in from day one. Like, I really took on the identity of a real estate investor from beginning. I put a lot of weight on becoming a successful real estate investor because I didn't, I didn't want to have a plan B. Like, I just wanted to figure out how this worked. And I had a flexible enough lifestyle. I learned how to fit in the work that I needed to do. I think a lot of new investors get scared because they think, okay, well, how am I going to find the time to do this? Which is what I thought too. But once I actually started to market for deals off Market, answer the calls, go on the appointments. And I was even managing my own properties. I quickly realized like what activities actually took chunks of time and then where I could fit those activities in during my day and the rest of the things I realized I could probably just have a spreadsheet or some sort of processor system system to take care of. So yeah, you're probably going to be underwater at first, but then you'll realize, I quickly realize I'm like, okay, this doesn't take a ton of time. I spend most of my time either analyzing the deals when they come in, going to the appointments and making the offers and then selecting tenants. Like those are the time consuming activities. So I would figure out when I could do those things. I would either do them at my lunch break during my day job, right after work, like on my way home from work is when I would go on appointments. That way when I got home I could just be with my wife and if I couldn't fit it into those time frames, then I probably wouldn't see that house or do that thing. Like that was the time boundaries I had to make.

[Dave Meyer]

Yeah, that makes a lot of sense. And I think that's the whole key, right? You can really invest with almost any amount of time. When you're first getting started, you probably need a little bit more time. But you could just adjust your strategy and what you're trying to do based on your own time commitment. In the past my rule has been like 20 hours a month for real estate. And that's all I want to commit because I've been mostly a passive investor. I'm interested in trying to do some more active things. So I'm like consciously changing that. But I do really think about that all the time that like, here's my priorities in life, like I, you know, my relationships with friends, family, my wife, you know, I have hobbies that I want to have a full time job. So like what amount of time can I give to this and sort of crafting the strategy? It's probably five to ten hours a week. I would say like when you're first getting started is like a good rule of thumb. And if you can't do that, it's maybe not the right time for you to at least get started. And if you want to scale down, you do that enough to get your first deal, I think then that's possible. But you do need, I think five to ten hours a week is a good idea.

[Jonathan Green]

Yeah, I agree. I mean it's really about how you prioritize the things and realizing that you can't outsource your top priorities. There's a lot of things you can outsource over time, but in the beginning, you can't outsource someone to learn for you or get reps for you, or rely on everybody to do everything for you because that, that just makes you a bad investment. You're, you're a passive participant in an active asset, which is a disaster.

Can I ask a quick question, please? Because oftentimes when I hear, you know, when is a good time to invest, people are typically asking me because they're trying to figure out, like, when they should invest from, like a financial readiness position. Some people feel like they need to pay down all of their debt before they invest. Some people, like, they need to have a certain credit score before they invest. Like, I have an opinion about paying down debt and credit and things. But like, what, what do you guys think in terms of like, financial readiness?

The problem is, I think if you're not, by the numbers, financially ready, you're likely to get into a rabbit hole of, you know, buy with no money down, which of course is possible, you know, or getting into sub 2. Both are great options, but also not that realistic for someone who doesn't have a experience. So you could spend a lot of time doing that. You know, I think it's important to have your credit as high as possible. But that's why you go to a lender early on in the process when you're looking and say, how do I look? You know, what is my student loan debt? Like, what's my DTI like? You know, how's everything looking? And then get an overview to see, well, if I have to put 40% down because things don't look good, that's just not going to work for me now. And if you, if you overthink it before you even talk to a lender to know where you qualify, right. You may be spending all this time when you're, you know, a year and a half from being ready.

[Dave Meyer]

I actually, I wrote about this in one of my books. I can't even remember. But I think it's start with strategy about this exact idea, Henry, because I think a lot of people say, you know, I have a negative net worth. You know, I have more debt than assets. And honestly, I think that's where most people start. I don't think that's necessarily about, that's where I started. Like, I had student loans when I first, first started and I actually, I didn't pay off my student loans till like, eight years into my investing career, I think, because, like, I paid mine.

[Jonathan Green]

Off like, six months ago.

[Dave Meyer]

Oh, yeah, I remember that. Yes. Right.

[Jonathan Green]

Yes.

[Dave Meyer]

Because, like, I was earning more money in interest in my investments than it would to pay off. So that. That is one calculation you could do. It's like if you have a hundred, let's just say 100 grand in student debt, like, if you're going to put that towards your, you know, 4 or 5% student loan, that's fine. But if you can earn 8 or 9% on rental property on that, invest and earn the 8 or 9% and then, you know, pay off the minimum amount. So that's one thing. The other part of it, though, is like, negative net worth is fine. Negative savings rate is not fine. I think, like, if you're in a point where you are spending more than you are earning, you have building blocks of financial literacy and responsibility to work on.

[Jonathan Green]

Yeah.

[Dave Meyer]

And I understand that people get into that period sometimes to no fault of their own. Sometimes you make a mistake, who knows? But if you're in that situation, you're not in a good place to invest. I don't believe. I think you need to fix that first, because otherwise you're just compounding your risk and it's just not worth it.

[Jonathan Green]

If you don't have an emergency fund for your own life, you definitely shouldn't be trying to invest in not having an emergency fund for your real estate.

[Dave Meyer]

Right, Exactly. Yeah.

[Jonathan Green]

Because they'll both call due at the same time, you know, that's just like Murphy's Law, you know. Right.

[Dave Meyer]

Yeah. And like, I don't know, sometimes when I first bought a property, I put aside some money for maintenance and, you know, maybe something breaks, you just get bad luck. And then you have to tip into your personal finances. You got to bring a little bit more money to the table. And I'm not saying, like huge amounts, but like, if you didn't have that and your. Your personal finances are sort of, you know, walking a tightrope here, paper thin. It's just too much risk. It's not worth it. It.

[Jonathan Green]

If you're in a position, this is what I tell. Because what I find is people use this as an excuse because they're scared to start. Yeah. Most people know that they're ready and they're making excuses. But I would say, look, if you are struggling to pay your own bills and you're struggling to make ends meet, you probably shouldn't go borrow money to buy property. But if you've got an emergency fund You've got some money in savings and you've got a semi decent credit score even if you've got other debt that you're working on. I would just do that calculation Dave talked to like high interest debt. Yeah. Work on paying that off first. If you got something at, you know, 15 to 30% interest, pay that sucker off before you go investing. But if you've got, you know, normal debt, single digit debt, then I would look at what's my typical cash on cash return for a real estate investment. And if that cash on cash return for the investment is higher than the debt you have, have go invest and use that money to pay off your debt. Arbitrage that debt, baby.

Exactly. That's potentially the way out when you don't have a lot of money to get something that earns more slowly. But we've been talking a lot about compound interest on the compound effect. The negative part of that works real well against you when you do it. If you don't do that first fix because you don't have 7,500 for the plumbing issue. Now it's a $15,000 issue. Oh wait, now your H Vac broke. You can't get out of it. So just as we, you know, say real estate can be great for compounding forward, it can go backward real, real quick. So can your finances.

I often tell the story of the best credit repair hack I ever heard because when I first got started, a lot of people don't know this. I didn't have great credit and I worked with a credit repair company to try to help me get my credit back. And they were like, you know what you could do to get your score where it needs to be? You could pay off some of this crap. Crap.

[Dave Meyer]

What a hack.

[Jonathan Green]

What a hack. Worked like a charm. That's the first thing I had to do is I had to pay off this outstanding debt that I, funny enough, the outstanding debt that I had to pay was a debt that an old landlord had put on me.

[Dave Meyer]

Oh really? It was a full circle moment. Well, this has been a great conversation to sort of the lifestyle side of it. And Henry, thank you for raising that, that question about financial preparedness. So we, we've really covered it all, but there's one more topic we cannot get away from. We're talking about when to invest. And everyone wants to talk about timing the market. Is it a good time to invest? We're going to hit that right after this quick break.

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[Dave Meyer]

Welcome back to the breakerpockets podcast. Here with Jonathan Green and Henry Washington Thomas talking about when is the ideal time to invest. We've talked about all of the financial and lifestyle elements. Now let's talk about sort of the timing of the market and if there's a good time. If, does that even exist in real estate?

[Jonathan Green]

This if you've stuck around till the end, boy, are you in for a treat because the data deli himself, the man who looks at real estate numbers for a living, is going to tell us exactly see when we should jump in this market because he has it timed perfectly.

[Dave Meyer]

June 24th, mark it on your calendar.

[Jonathan Green]

February 31st.

[Dave Meyer]

Oh my God. No, I, I, please don't take that seriously. Anyone particular number? I never know. But no, I actually, I made a social media post about this yesterday because I was just thinking about all the objections, either friends or family or people I've heard about buying real estate since I started 15 years ago. And it was like in 2010, it was like, oh my God, the market is literally crashing. And it was, and it was still a good time to buy. In 2013, people were like, oh, it's, it's bottomed out. Or like prices have been down for four or five years. Like, is now a good time to buy? Then as soon as prices started going up, people were already calling for another crash. Then in 2018, interest rates were going up and people were calling for another crash. Then we had Covid, then we had this rate hike cycle. And it just feels like to a certain subset of people it's never the right time. And then to be fair, on the other side, there are people who are like overly confident and say that it's always a great time to buy real estate. And so Jonathan, let's start with you. Like, how do you, how do you think about market timing?

[Jonathan Green]

Well, I, I don't, I think you should always be looking, but I don't think that means that the deals are there. You know, you have to. Again, that goes back to us talking about reps. To me, I'm always looking and I'm looking at different assets and I'm trying to figure out What I like. And I never stop looking because I love real estate. But I think it goes into. Yeah. When somebody says to me, oh, you know, I'm concerned, the rates, you know, the rates are high. I'm like, oh, okay, well, when do you think they're going to come down? What crystal ball do you have that I don't have? Because you may think they're going to come down in six months and they may not come down. And historically, rates are fine. So it's just like, you know, like, where are we in the cycle? And of course, then you have seller finance where you can adjust, you can play terms versus price. And there's so many different things in real estate. So I think that most people, as Henry was saying before, just use it because they're stuck and they're scared to do it. Because if you're just going on, you know, we've had lots of people, they're like, oh, well, you know, the lender said it's going to be 6.5 and I'm only going to do it, but 6.25 and you're like, like, you know how much it's going to cost you a month over 30 years? It's like $11.

Relax. Right.

But, but that's an excuse mechanism for not having enough confidence and not understanding what, what's a good deal? And this doesn't really matter if it's a great deal. You know, I never, I don't. I just call my lender when I'm ready. What's the rate? Great, let's go.

Awesome.

[Dave Meyer]

Yeah.

[Jonathan Green]

Because I know it's in, you know, it's not like I'm going to be surprised and it's six points higher. It's just the deal's good. I like the asset and I'm an asset hunter.

[Dave Meyer]

So, yeah, I think that makes a lot of sense. The whole game of being an investor is just resource allocation. Like, it's not. I think the whole thing is like, compared to what? Right. People are like, I'm not going to invest in real estate. Okay, fine. What are you going to do with your money? Is it a better option or a worse option? Like that. That's. It sounds overly simplistic, but that's it. Right. Is it better to keep your money in cash? Sometimes it is like, you know, sometimes it's not. But. But I totally agree with the sentiment of always be looking.

[Jonathan Green]

Yeah, man. Two best times to buy a property are yesterday and today. Right. Like, historically, can you look back and say, yeah, that was a bad Time to buy property. Yeah, like, you know, 2000 and early 2008, like late 2007. Sure. Some people are like, yeah, probably shouldn't have bought then, but like you, no one could time that. And for people like us who are deal hunters, right, Like, I'm buying typically at a bigger discount than a traditional market crash would indicate. Like, if the market drops 20 to 30%, I typically buy at between 40 and 60 cents on the dollar, which means even if the market comes down 20%, I should still be right side up. Right. Because we're looking for deals, you know, in this particular sense. We're not talking about the normal family going to buy their home to live in. And even if, if it's that if you're normal family buying your home to live in, you're just stay there a little longer, the market will rebound. Right. Like, yeah, it's not that big of a deal.

[Dave Meyer]

Yeah, I, I totally agree with you. I mean, it's kind of. Some of the considerations that I've been thinking about in my own portfolio recently is like, yeah, right now I'm probably going to make more conservative investments than I would have, you know, a couple years ago. I'm not going to take as big swings because you can't count on that. Just, just, you know, it was like 3% appreciation a month, but when it's not that. But like, I still think real estate is just a better place to put my money than in cash right now. I, I've been very open on this podcast. I have some fear about stock valuations right now. And so I think, you know, real estate is a good place to put your money. And honestly, something that drives me kind of nuts is people comparing returns between now and a previous period. It is totally irrelevant. It couldn't matter less. What matters is what you could do with your money now versus other asset classes. Like, that's the only calculation that matters. And to me, real estate is still an important, a very, the primarily important part of that for my portfolio. I put money elsewhere. But like, it is still, to me, the thing that makes sense.

[Jonathan Green]

Yeah, I mean, just, just, it's just a value add aspect. You know, you can't value out a stock. You have no input on a stock. You know, you can't fix it up and you can't just, just let a stock sit there and it will just improve in value.

Because I bet some people wish they could right now, right?

I mean, like, what if the CEO does something crazy and then it goes down or somebody just says something in the news and a stock goes down, you know, it's not even real real estate. Nothing happens. It just goes up. Generally. If, if you just do nothing, it's going to go up generally in America, unless you just bought super high. But I mean, even if you just buy land, land's going to increase in value or it's going to have alternative uses. It's, you know, buy real estate and wait. But even if you don't want to wait that long, if you look at the cycle since just, since the pandemic when people were like, oh, I don't know, it's a crazy time, it was crazy. I have people who are up 2, 3, 4, $500,000 on their value because they bought in the beginning of 2020 and other people sat. Bought later. They're still up, but they're up less. I mean, you just have to keep your eye on the, on the market all the time and look at stuff.

And you just also have to zoom out, right? Because let's, let's think about it. In the history of America in people, normal people being able to buy real estate, people have bought real estate and made money in every single real estate market at every point in the cycle. Now people have also lost money doing all those things. But if we study the ways to success and we, we are cautious, it's always a good time to invest. Because of what you said, Jonathan, if, if you hold on to it long enough, you'll look like a frick, fricking genius to somebody.

Always.

[Dave Meyer]

Well, thank you guys so much. That's a good way to, to get out of this episode. Thank you, Henry, for closing us out here. Well, Jonathan, Henry, thank you. This was a lot of fun and a great conversation. I think hopefully this is really useful to our audience. I, I know it is. It is daunting. Like I, I was scared when I first started.

[Jonathan Green]

You should be scared. You're supposed to be scared.

[Dave Meyer]

Yeah, that's part of it. But it's also risk. With risk comes reward. And so that's the idea. Yeah, exactly. Well, thank you both for being here. We really appreciate it and thank everyone who's listening right now for being a part of the Bigger Pockets community. We appreciate all of you and we'll see you for the next episode of the Bigger Pockets podcast in just a couple of days. Days.

[Henry Washington]

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.

[Rent to Retirement]

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.