TBT: Start with Strategy (with Dave Meyer)

 

Hello my friends. Welcome back to Passive Real Estate Investing where we dive into the world of real estate investing among other related topics. To help you with your real estate investing journey, today we’re doing something a little different. We’re going to take a trip down memory lane and showcase an important episode from the past on what we call our throwback Thursday episode. Now, whether you’ve been with us since the beginning, which goes back to 2015, or you’re tuning in for the first time, this episode is a must listen, we are revisiting one of our more popular episodes from the past, and believe me, what we discussed back then, whether it’s six months ago or six years ago, is just as relevant today. So sit back, relax, and let’s rewind the clock for this great episode. Enjoy. 

Well, today we are going to talk a little bit about real estate strategy and my guest is a great guy who wrote a book just recently called Start With Strategy. It’s all about real estate investing, creating your vision, mapping out what your strategy or strategies are when it comes to investing in the asset class of real estate. And it’s a great book. He gets pretty granular in some of the stuff, which is the stuff I like. So you’re very crystal clear on what it is you’re trying to achieve, how you’re gonna achieve it, the vehicles and the asset class, and the sub-asset class that you’re gonna use in order to get there. And then how involved you want to be, like you want to be active, passive, semi-passive.

I mean, these are all considerations that you need to have. So we’ll talk about, you know, the in real estate investing journey, the strategies, how to choose a market, picking a neighborhood, the importance of your strategy, assessing your risk tolerance. You know, what makes a best market, what makes a best neighborhood? And, and really there’s no one answer to that. It’s somewhat subjective. It really just depends on what is your vision and what is your strategy and how those play into that. And, you know, we’ll talk a little bit about, you know, personal wealth and how to build that and the habits that you should have if you’re a real estate investor, especially if you’re starting out. So join me today with my guest, Dave Meyer, and let’s explore strategy as it relates to real estate investing.

Well, it is my honor to have Dave Meyer on the show. Dave has spent his career working in technology and in the technology industry where he started investing in real estate. He has been a rental property investor from Colorado since 2010, and he invests passively nationwide. And it’s pretty interesting ’cause we were just talking before, we were recording here today. He lives abroad and I’ll let him tell you where he lives. It’s pretty interesting. In 2016, he took the opportunity to combine his professional passions for real estate and technology. Joined Bigger Pockets where he now serves as the vice president of data and analytics. Sounds like my type of guy.

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Throwback Thursday Episode (The episode originally took place in the year 2024)

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Dave, welcome to the show.

Marco, thanks so much for joining me. I appreciate you having me on. Yeah,

No, it’s great to have you on. You have a cool book coming out here very soon. In fact, by the time this airs, if not today, it’s already available to to purchase. We’re definitely gonna talk about that today. But before we get started, let’s talk a little bit about you. Tell us a little bit about yourself in interestingly where you live.

<Laugh>. Yeah, well thank you for that nice introduction and bio. I started investing in real estate back in 20 20 10, right out of college. I was waiting tables and sort of unsure of what I wanted to do with my life, but a friend of mine started doing it and he made it seem kind of easy and seemed kind of fun. And so I was able to get in my first deal with a bunch of partners. Back then it was a fortuitous time to start trying to buy real estate and it worked really well. And so over the next couple of years I started to grow my portfolio and I just really liked it a lot. And even though I was working in technology, doing a lot of analytics, that kind of stuff I was always kind of pulled to real estate investing. And so when I found out about BiggerPockets and found out they were hiring for a job that I could qualify for, I applied, got that job and have been working there for about eight years. So it’s been a long time, but about four years ago, my wife, her company got bought by a Dutch company and we got the opportunity to move to Amsterdam. And so four years ago we moved abroad and have been living abroad, but still investing in real estate in the us for the last four years.

So what’s that like living in Amsterdam?

It’s lovely. It sounds like you’ve, you’ve been here briefly Marco, but it’s a great city. Super easy to get around, nice people. And lucky for us most everyone speaks English ’cause we do not speak Dutch

<Laugh>. That’s good stuff. So Dave, it sounds like you’ve been interested in personal finance and even financial freedom for a while. Where, where did you get a start in your interest of financial freedom and what brought you down the path of investing in real estate?

My initial interest in financial independence and really stability I think came from just experiences growing up. My parents both smart, hardworking people and did well for the first part of my life. And then they got divorced, which was really challenging on our family financially. Shortly after that. My dad lost his job for quite a while. And so our family just went through a lot of stress and I think it had just a big impact on me, the fact that like we were doing fine as a family and then all of a sudden it was really quite bad for a while. And so mm-hmm <affirmative> it always made me want financial stability and I saw firsthand from my dad who was, you know, recently promoted, then laid off a couple months later, you know, how hard it can be and how random it can be working for other people. And so I sort of have had an entrepreneurial inclination mm-Hmm. <Affirmative> for a while and also wanted to find ways to create income where I wasn’t beholden to what else is going on in the world or what someone else thinks of me.

Right. Well, congratulations on your success and sorry to hear about, you know, the situation that kinda led you that way. But, you know, it sounds, sounds like it’s the silver lining.

Oh, for sure. Yeah.

Cool. Well, you, you got a new book out, it’s called Start With Strategy. That’s the, the headline and it’s, I thumbed through it here over the last week. I didn’t finish reading it, but it’s very well written. It’s it’s got a lot of great content stuff that I talk about on the show all the time. Why did you write this specific book? ’cause It’s your second book. Why did you write this book and who exactly is this for?

I think this book is for anyone who is just starting out to trying to figure out how to scale their portfolio. And I wrote it because I, you know, you and I, Marco both probably believe in real estate wholeheartedly, but there are just so many different ways that you can invest in real estate, whether you’re flipping or short-term rentals or long-term rentals. You can do partnerships, you can do syndications. The list is really broad, but unlike the stock market, there’s not really a lot of guidance in real estate for like what strategies, what tactics work for what type of investor. And so I wanted to write a book that would help people individualize their real estate portfolio based on their own specific values, their goals, and what they’re trying to accomplish from real estate investing in the first place.

Real estate is an amazing vehicle. It’s probably one of the best asset classes to help anyone, the average person, someone who’s even not accredited, achieve financial freedom. You know, we both know that it’s the most historically proven asset class, decade after decade after decade. It helps people preserve their wealth and create millionaires. You know, how, in your mind, how does real estate allow a person to accomplish this? I mean, a lot of people know the answer at a very high level, but how does real estate allow people to achieve financial freedom? Well, at the same time, preserving their quality of life.

I think real estate is really unique in this ability to provide financial benefit across a couple of different ways. In the book, I call them profit drivers, people call ’em different things, but I think it’s very unique to find an asset class that appreciates, like real estate does that also offers cashflow. You can also earn money from leverage or from amortization. So you get the benefits of bank financing or, or taking out a loan. And there’s also great tax benefits. And so you sort of look at this and no one else, no other asset class I know of really offers that same suite of options. And even within those options, what’s really cool is that you can sort of customize it. Like, you know, if you’re early in your career, maybe you prioritize appreciation and building big chunks of equity. Most people, as they progress through their investing career, focus more towards cashflow so that they can replace their traditional job with cashflow.

And you know, you hear these things, I’m sure you hear this all the time, Marco, people debate what’s more important, cashflow or appreciation or tax benefits. But really what’s cool about it is there’s no right answer. You could just choose for yourself based on your own circumstances. Mm-Hmm. <affirmative>. And that’s why real estate, you know, we call it investing, but in my mind it’s really more entrepreneurship. Like you’re starting a small business, it’s not a super complicated business, but it, you are, you know, starting a business and that comes with a lot of benefits that traditional like investing in equities or in bonds does not come with,

I think you mentioned in the book that real estate investing is different from other endeavors. How, how are you differentiating that and what are you comparing it to? Because for me, real estate investing is not 100% truly passive. You’re always involved to some degree. You choose that degree based on how involved you want to be, whether you’re managing or or letting a property manager manage it, whether you’re taking a very passive approach versus, you know, buying, fixing and flipping or buying, fixing and holding. Are you taking the bur method? I mean, there’s so many variables and levers to play with, but people often compare real estate investing to other asset classes and compare the level of involvement. And to a lesser degree, they compare the potential returns that you get from real estate investing with other, so-called passive investments. So in your mind, how do you differentiate real estate investing to different endeavors?

To me, I, I think the optionality for, for real estate is, is much better. Like, look, you can’t, you can’t go out an app and buy real estate like you can on Robinhood and go buy equities or cryptocurrency or anything like that. And with equities and, and stocks and that sort of thing. Generally speaking, for most people, literally the best strategy is to buy stuff and never look at it. There’s actually a negative, there’s all this studies that the more you look at your account, the worse your portfolio does for buying stock, which is really funny. That does not apply to real estate. You cannot just buy something and then never look at it again. That is gonna go very poorly for you. Yeah. Except if you’re perhaps totally on one end of that passive spectrum. But the reality is, like you said, Marco, there’s a spectrum, you know, on one end there is highly involved real estate.

Like for example, if you’re personally flipping a house, that’s basically a full-time job, right? That’s gonna take you a ton of time. On the other end of the spectrum is probably investing as a limited partner in a syndication or in a fund because then, you know, you still have to commit some time you need to find an operator that you trust, you need to, you know, look through financial documents. But mm-hmm, <affirmative>, it’s pretty passive at that point beyond your initial due diligence. And then there’s everything in between. And so I think that’s one of the key decisions investors need to make. It’s not just, you know, do you think rentals are cool or flips are cool, but like, how much time and mental energy are you willing to commit to your portfolio? Because how you answer that question will really dictate what strategies and tactics are best for you as an investor.

So you talk about strategies and the book is called Start with Strategy. It, it makes a very clear point. Let’s kind of break this down. What are the various real estate investing strategies for those that really don’t know what they are, are?

So I think in a lot of people in real estate call strategies, what I call in the book called deal types. So that would be like rental properties, short-term rentals, flipping homes, commercial properties, or I also talk about development and lending, which are, I guess a little less popular among some investors, but also good deal types. But I, one of the points I try and make when I talk to investors and within the book is that strategy goes beyond just like what type of deal you want. It also goes into these other deal elements that I would consider things like how you finance it. That’s a strategic decision that you need to make. Mm-Hmm. <Affirmative> who you own it with is a strategic decision what type of asset class it is. So even if you’re buying a rental property, are you buying a single family? Are you buying a townhouse? Are you buying a four unit or something bigger? So I think strategy is really sort of broader than just how you’re planning to operate your business or what kind of deal you wanna do. I think it, you need to look at it holistically to make sure that every decision you make about your deals are sort of aligned with your long-term vision and your overall portfolio balance that you’re trying to achieve.

And you talk about that, you talk about vision, you’re setting your goals, understanding the type of involvement that you want. You break this down into kind of like, it’s not exactly a grid, but you have a a sheet, if you will, with all these different boxes and you kind of break down the type of investor that you are and that you want to be. Can you talk about that for just a minute? Because I think it’s good to conceptualize where you start to create your strategy.

Absolutely. I find you, you probably see this as well, Marco, but I find that a lot of investors rush to acquisition. It is the fun part, like, don’t get me wrong, but acquisition should probably be the second thing in my mind. I think most investors really need to start with what I call vision. But it’s basically just goal setting and trying to identify what you’re trying to accomplish as an investor. And if you’re familiar, if you’ve ever had a financial planner or met with financial planner, this is the first question they’re gonna ask you, right? Like, when do you wanna retire? What do you envision your retirement looking like? How much risk are you willing to take on? But in real estate, for some reason, we never ask those questions. And I encourage people to ask themselves those questions because that will tell you what to acquire.

Like what deals to go do if you just jump into your first deal that you find it might work out. A lot of times it does, but sometimes you might find, hey, I bought a property that’s no longer aligned with my long-term vision. So I think that’s a really important first step. It’s just to like take a beat and say, here’s what I want, and then work backwards into what I consider the second and third step. So the second step, sort of taking that vision that you have and then then aligning it to the types of deals that make sense for you. For me, I, my vision, you know, I have lots of different goals, but part of it is living abroad and investing relatively passively. So I don’t do flips. I’m not considering a flip. I’m not considering development. I don’t even do large renovation projects and, you know, mm-hmm, <affirmative>, that’s just a decision I’ve made.

Some people think those are great, but I need to only focus because there are so many different great ways to invest in real estate. I need to ignore all the ones that don’t make sense for me, because that’s a waste of time. And just focus on the ones that are aligned with my vision, which personally for me, just as an example, commercial properties, rental properties, and I, I have one short term rental though I’m not like actively trying to scale that. So that’s the second step. And the third step is more tactical. It’s what I call portfolio management, which does, again, include buying more things, but it’s also managing your existing assets. I found that a lot of times people just want to buy more and more and more and are not thinking as much as perhaps they should about how to better utilize their existing portfolio.

Should you invest more money into a rehab? Should you sell a property, refinance it, pull some cash out. Those types of questions I think are also very strategic in determining how you’re gonna scale. And so ultimately the book walks you through these three steps, your vision, your deal design, your portfolio management, and culminates in what I call a, a prep. It’s a personalized real estate portfolio. It’s basically a business plan. So it just tells you, you know, who you are, what you should be trying to accomplish, and then gives you actionable next steps on like what you should be doing in the next year or so to fulfill your vision.

Would you say one aspect of your strategy is more important than another? Is, is there one that is the, the key focus that kind of helps make or break your success long term?

That’s a great question. I think the vision is, is really important and probably the most overlooked because it sort of keeps you motivated, at least for me. Like being crystal clear about what I’m trying to do allows me to make decisions much more easily, you know, I’m sure mm-hmm. <Affirmative>, you know, I see different opportunities pretty frequently and some of ’em are really exciting. But it allows me to sort of stay grounded and focused. Mm-Hmm. <affirmative>. But I think the other piece that is super important is just kind of a broad concept of resource allocation and just constantly like adapting this mindset of like, how am I using my money? How am I using my time? And like, is there a better way for me to be doing that both within your portfolio and outside your portfolio? You know, like, are you balancing your time and money in a way that makes sense and is like sort of what you’re trying to accomplish? Yeah. And that’s not like just one thing. It’s kind of a mindset that you have to start adapting over the course of your investing career.

Kind of begs the question of do strategies change? How often might they change? And really how often should you review it and update it?

For me, the the vision part doesn’t change all that much. Okay. It changes a little bit. You know, my financial goals might change, or like my plan for earning, you know, my job might change a little bit, whatever, but that I look at maybe once a year, usually this time of year, in the beginning of the year I’ll revisit it, make sure everything’s aligned. And same with sort of the types of deals I look at, because there’s only so much like recalibration you should do. It’s, you kind of have to write, find the right balance between constantly recalibrating and also like going out and executing what you say you’re gonna do. But for the portfolio management piece, which is really you know, I get into it more in the book, but it’s really just like studying your portfolio, knowing what’s going on within it. Mm-Hmm. <Affirmative> doing some market research, so you understand like what’s happening in the market, the macro economy, what’s happening in the markets you invest in, what other opportunities may exist for you? That I do at least quarterly in a, in a more formal way, but I think it’s kind of, most people who do real estate are thinking about it quite a lot. I don’t know if, if that rings true for you.

I do a, an annual review and then sometimes I’ll consider how do I rebalance my, my portfolios not just real estate, but everything. Should I be taking money off the table here and reinvesting it in another asset type or asset class? So I do that once a year. I, it’s not like I’m glued to, you know, the market information or to a screen and I’m constantly reevaluating things. But, but yeah, I mean, annually I think is the minimum and investors should, you know, reevaluate what they’re investing in, what they’re looking at, where they’re putting their capital, et cetera, but you know, each to their own. You mentioned risk tolerance earlier on. How important is that for a person to consider? Because with real estate, it’s a very forgiving asset class, I find. And so you don’t need a very sensitive or high risk tolerance. So how important is evaluating your own personal risk tolerance to real estate investing?

That’s a great point, and I’m glad you said it. ’cause Real estate, if you have enough time, is a very forgiving asset class. Totally agree. Yeah. So I think I recommend to people, if you’re considering risk, you’re worried about, you know, the loss of principle or underperformance to really think mostly about time in your time horizon. If you’re investing for two or three years and you’re trying to make a quick buck, real estate might not be the right thing for you. Mm-Hmm. <affirmative>, there is risk if you’re gonna hold an asset for a year or two, for sure. But if I, I actually did this whole study as part of the book. If you hold an average rental property for seven years in nominal terms, you, you have an almost zero chance of losing money. And even in if, if you hold it for 11 years in real, which is inflation adjustment terms mm-hmm.

<Affirmative>, you have a near zero chance of losing money compared that to the stock market. It takes 20 years to get to that near zero chance of losing money. And so the data does support what you’re saying here, Marco, about it being a low risk asset. But every investment has some risk and it really comes back to time. So provided that you’re investing for a long enough time horizon for real estate, which I would say is a minimum of five years, then that opens up a ton of different options to you. Like again, you can be investing in rental properties or commercial assets and, you know, some of those have more risk than others. You know, certain types of commercial assets are inherently more risky. Development, for example, is riskier than buying a, you know, a stabilized asset. But I think most of those are relatively safe.

But I think part of figuring out what, what you wanna do as an investor is how much risk you wanna take on because it informs which types of deals, but also how much leverage you wanna take on in a particular deal, you know, who you’re partnering with it, it really helps you narrow down, again, the scope of all these options just to ones that make sense for you. Because while most investments in real estate are relatively, you know, offer good risk adjusted returns, there’s still a spectrum. And you sort of need to figure out where you fall on that spectrum.

Yeah, yeah, for sure. So we’re all fans of passive real estate investing. It happens to be the name of my show. Passive Real Estate Investing. Yes. And you know, we all love the idea of passive investments that generate income and create wealth over time. So I’m gonna ask you, ’cause I’m curious, what is, do you, first of all, do you have a favorite strategy? I mean, you talk about different strategies you must have mapped out yours. What is your favorite strategy, and then I guess within the asset class of real estate, do you have a favorite subclass within real estate?

That’s a great question. So I personally try to balance my portfolio between two types of real estate. One is more active. So that’s how I got started buying rental properties. I don’t manage any of those. You know, I live in Europe, so I’d still say in terms of rental properties, I’m on the more passive side of that. I have full service property managers who run my rental properties and the one short-term rental that I own. Okay. Those, to me are sort of like the safe, you know, I’m getting my cash flow. Those are, I have control over them. On the other side of the spectrum, I, for the last few years have invested almost exclusively in multifamily syndications. And I think that although right now going through a little bit of a, a tumultuous time, I think that multifamily has long, good long-term fundamentals.

And as long as you’re investing with good operators, that it’s a really good asset class. I also like this option because as I said earlier, I don’t personally take on like, big renovation projects, but it’s a great way to make money in real estate. And so I wanna hitch my horse to someone who, you know, a wagon where someone is capable of doing that. So that, and then just recently I’ve invested in some lending funds, which is actually a, a good way to earn some cashflow right now. ’cause, You know, interest rates are high, tends to benefit lenders. And so I think it’s a good passive option right now.

Very cool. Okay. Good stuff. Yeah. My favorite, just to throw it out there, I love real estate obviously, but within the real estate family, I like to stick to one to four unit properties. Like I, I clearly like residential, I don’t lean commercial, I don’t lean industrial or office or anything like that. I just love residential properties in the one to four space because it’s got favorable financing terms. It’s the best financing when you can get conventional financing. And even with non QM loans, they make a whole heck of a lot of sense. When you could lock in a fixed rate for 30 years and, you know, inflation’s working in, in your favor to devalue that loan. You know, there’s just a lot of benefits to being in the residential space, one to four unit, and everybody needs a place to live. You know, whether you buy a rent, everybody needs a place to live. And with the housing shortage, I’ve got the wind in my sails. So you and I both know that, you know, it’s a great, great place to be right now and has been for a while. And, and the data supports that it’ll probably be, you know, in our favor for at least the next eight to 10 years. So agreed. Yeah. So, you know, I I just feel that I have everything stacked in my favor by being in the small unit residential space right now.

Totally. I mean, that’s where I got started. That’s where I’m looking to buy right now. I think it’s a very good asset class. If you, you know in the book I talk about this spectrum of risk and reward, and I think given the risk level, small multifamily residential rental properties probably have an outsized risk adjusted return compared to a lot of other real estate asset classes. You know, none of them are, you know, like we were talking about, not all particularly risky, but I do think it, it is sort of a sweet spot for ordinary investors is small multifamily, like you were saying.

Yeah, for sure. Shifting gears here, when I invest in real estate and some of the things that we teach investors and talk about is taking a top-down approach when it comes to real estate investing. Start with the market, not the property. Go big picture. Look at the, you know, the fundamentals in choosing a market and then work your way down to neighborhoods and then ultimately the property, and then of course, the management team and the, the rest of your team, which you’ll have, you know, besides you through the whole process. But when it comes to picking a market, I find that to be very important. In fact, personally I think picking the neighborhood is, is the most important part of the whole process. But in picking a market being important, how do you decide on what the best markets are to invest in? I ask different people this question, I get slightly different answers, and I always find it very interesting as to what they are, how are they’re underwriting their markets. So I want to ask you this question.

Great question. And, and totally agreed on the importance of, of finding and identifying markets. And even what you said about neighborhoods is, is definitely more important. If you look at data information on a metro like an MSA level, there’s so many different little pockets of performance that doesn’t really tell you what you need to know. For me, I, i, again, I I agree with your idea of a top down. I think the most important things are market fundamentals in a, in a macro sense. So I, I start first by looking at non-real estate factors. So population growth which is of course important, but I think the more important metric is something known as household formation. Which if you’re in real estate, you might be aware of, but it’s basically how many a household is basically people, how many independent groups are living together.

And so like if two roommates are living together and they decide to both get an apartment on their own, that is a new household being formed. And so that is actually a better indicator, in my opinion, of demand for both rentals and housing than population growth. So I think household formation is super important. I also really like to see well diversified economies, strong labor growth strong wage growth, excuse me, a good labor market. And I do have recently really like to find markets where rent is affordable to people. I think we’ve seen a lot of markets get too expensive and people are either leaving or it limits the upside of future rent growth if the markets are too unaffordable. And so that’s something I personally look for. People have different opinions on that, that’s not like an objective fact. So that’s sort of what I look at economically.

And then I really just start to look at housing market dynamics to try and understand where sort of the best value is in an individual market. So we’re you know, there’s investment either by other businesses, by other investors, by homeowners, by the government and trying to find what areas that haven’t yet sort of reached their highest and best use are going to that might in the, in the near future. And do that one by looking at data and housing market data, but also by physically going to these places and looking at ’em.

So you may have mentioned this, but out of all of that, what would you say is the most important and the least important factor in determining a market?

I probably wouldn’t invest in anywhere that doesn’t have at least stable population. I wouldn’t wanna invest in somewhere that has a declining population. That’s for me. So I think that is, that is pretty important, least important. <Laugh>, I guess I would say I don’t know.

I hope I didn’t stump you, Dave <laugh>.

No, I would say like maybe something that’s like that overly focusing on the diversification of the economy. Like I do think it’s important that it’s diversified, but I wouldn’t get too hung up on that. I think, you know, as long as there’s strong job growth in a good industry, you’re fine. Like if you have a business, a company or talent that’s really reliant on finance or tech, like, that’s probably gonna be okay.

Yeah. Yeah. Interesting. Yeah. Okay. That makes a lot of sense. So, you know, similar question about neighborhoods. Like what do you look at when it comes to neighborhoods? How do you underwrite them? And then what is your favorite? I mean, I classify neighborhoods the same as you do like A, B, C, and then, you know, d you that I just lovingly call war zones.

Like uninhabitable stuff.

Yeah, pretty much. Pretty much. So so what do you look for? How do you underwrite the neighborhood and what do you, what do you choose?

Yeah, so I, I think, you know, unless you’re a big institutional investor, like looking for what people would call an a neighborhood limits your upside. So an a neighborhood usually has the best asset classes and commands the highest rent. Yeah. For me, and I think for most investors, looking for something that’s either a, B or C class neighborhood is usually the best. ’cause It offers the best combination of like, current livability. It’s not a disaster, but there is some upside. And usually the trade-off with either a, B, or C class neighborhood is that either it’s a, you know, A-B-I-A-B would I, is what I would either say is a good asset in like a second tier na area geographically or not so good asset in a, in a very good geographic area. And so you sort of have to just make those trade-offs for yourself.

But I think like if you’re talking about data wise, I like to look at things like the rent to price ratio to figure out how much value I’m getting for every dollar I’m investing in terms of cash flow. And I also just look at trends of appreciation, where people are moving and where demand is to, to make sure that, you know, if I invest in this area, that there’s going, you know, likely demand is going to outpace supply in these areas. So that is sort of like perhaps a more advanced thing to look at is not just the demand, but like how much construction is going in, how much units are being developed in that area. Because if you’re looking for appreciation that’s sort of the key calculus is that demand is going to at least keep pace, if not outpace supply over the long run. So there’s a lot of ways to look at that, but that’s sort of how, what it boils down to.

I’m curious to know, Dave, you’re a data guy. Have you noticed or have you seen data on the appreciation potential? In other words, the upside gains that are found in a grade neighborhoods when you’re earlier in a market cycle compared to a B class neighborhood? I, anecdotally speaking, have found that a class properties in A class neighborhoods tend to appreciate more and faster when you’re in the early stages or the first half of a local real estate market cycle. As you get into later stages where property values have gone up significantly for a number of years, it tends to taper off. And then there’s a spillover effect where you see that appreciation fall down into the B class neighborhoods. And again, I, I don’t have data to back this, but I just, I’ve seen this over the years, the last 20 years anecdotally.

I don’t have data that supports that either, but it totally makes sense to me. I I would imagine that too. Like, you know, if mark, if a economy starts to turn around people who have the means, we’ll probably try to buy in the prime neighborhoods and that will push up Mm-Hmm. Demand in those neighborhoods and eventually, you know, prices will get to the point where demand is lessened and it will spill out. So I, I think it makes total sense.

Yeah. Interesting. You know, I love looking at data like that and reading books and looking at charts and seeing the trends and comparing neighborhood growth in different cycle stage stages of, of, of a real estate cycle and whatnot. I mean, I kind of geek out on that kind of stuff, but, you know, I don’t find a lot of it out there. I mean, there is data and, you know, CoreLogic and other people put this stuff out there, but it’s just kind of hard to find, at least at a granular level. So I thought I’d ask you, maybe you saw it.

It’s a great idea. I think that, that one of the just universal problems with data in real estate is that no one can agree on what’s an a, a neighborhood, a b neighborhood, a c neighborhood, and a d neighborhood. It’s like inherently subjective. And so we’d have, you’d have to come up with some way of standardizing that. Yeah. Which might, everyone might not agree on, but I mean, if a company like CoreLogic or someone just like came up with a definition, it’d probably be pretty good and it would teach us a lot. So please do that if you listen to this.

I, I actually did that early on. You know, we’re at, I don’t know how many episodes, I’ve almost getting close to 500 episodes on my show. Wow. but in my first 10 episodes I actually defined and broke down the different neighborhood grades and you know, how you differentiate one to another. So I should go back <laugh> and pull that out and republish it, just you know, just to educate everybody on the difference between A, B, C, and D.

Yeah, absolutely. Yeah. And there are, there are plenty of different options, but I think, yeah, if you have a good one, I’m all ears.

Yeah, for sure. So let’s start winding things down here. You know, just another few questions. How, in your opinion do you best build your personal wealth? I mean, you could, you could just off the cuff say, well just invest in real estate and hold for the long term. But if you were to kind of put more color and flesh on that, what would you say?

I think that people underestimate, at least in the real estate industry, the benefit of having a good job? You know, I think it’s really helpful. We talk a lot about passive, you know, a lot in our industry. People wanna quit their jobs. And you know, that’s an admirable goal. But if you’re looking to build your portfolio as big as possible, as quickly as possible, one of the best ways to do that is to focus on your career. And not everyone has that option, but if you have the option to try and increase your salary somehow, or bring in more money today, that’s gonna give you more time, more money to invest in your portfolio, it’ll give you more time for that money to compound. And that’s really beneficial. I mean, that’s investing 1 0 1 is try and invest as much as possible as early as possible and let it compound. And so I know it’s tempting and desirable to to quit your job and, and to retire, but the longer you, it’s a trade off. Like the longer you delay that, the higher potential your portfolio has.

Yeah. Interesting. So for new investors, what habit do you think new investors should have and work on the most in order to succeed?

I think, you know, I, I put some of this in the book, but I think the, the habit of resource optimization or reallocation is, is really good just coming in this asking yourself this question regularly. Like, am I using my time? Am I using the skills I have? Am I using the capital I have at my disposable to the best possible use? And that could be within your portfolio, it could be in the rest of your life. But that question I think will really help guide you to the best types of deals and to building a, a portfolio that is really well suited for your long-term goals.

Interesting. Okay. Alright. And then last question, Dave. So you’ve been investing for what, 13 years? Probably something like that. Yeah. You started 2010. Yeah. So if you can go back and start over, start your investing journey over, what do you wish you had known back then, <laugh> that you know now?

I, I mean, I wish I knew what how much appreciation would’ve happened over the last 13 years. ’cause It was still the great recession dip back then. But I think scaling and, and partnerships is probably one of the biggest things. You know, I did everything myself for a really long time and I was probably not as aggressive as I could have been both in, in building my portfolio and like enjoying myself <laugh>. Like I was just, you know, doing a lot of maintenance myself. And I could have just maybe made a little less cashflow each month and had a little more time to do other things, whether it’s acquiring other properties or just enjoying myself. And so I think that is, it’s kind of trite ’cause I think a lot of investors go through that experience where you try and do everything yourself and it’s just not a good solution, <laugh>. And so I think if I could have told myself that 13 years ago, that would’ve been really beneficial.

Yeah. I would have to agree with you Dave. I, I learned a little too late in life that I really should optimize my time and learn to eliminate the unnecessary stuff and delegate anything and everything I can, you just get so much further faster, but totally. Yeah. Life lessons, right?

Yeah, absolutely.

Anyway, your book is out.

At least you learned at some point, you know, <laugh>.

Yeah, absolutely. Better to learn late than not at all. So, well, your book is out. Start with strategy great title. Tell our listeners how they can follow you and get more information and find the book.

You can find the book at biggerpockets.com/strategy book. And all the information is there. You can also, it comes with a bunch of different information, a couple of tools that help you plan some of your own personal strategy. There’s also a planner that you can buy to sort of build out this business plan. So you can find that all at biggerpockets.com/strategybook. If you wanna connect with me. The best place to do that is on Instagram where I’m at, thedatadeli.

The Data Deli. Cool. Good stuff. Alright, well I’ll put that in the show notes. Dave, it’s, it’s been great having you on the show. I love your material and your content. I think you do a great job and I love that you’re a data guy, so that helps.

Thanks so much, Marco. I appreciate you having me.

Cool. Alright, thanks Dave.

I hope you enjoyed today’s show. I think there was a lot of ground that we covered, but there were so much more we could have covered. You know, this is just one of those topics that can go on for hours and I personally truly enjoy talking about real estate investing strategy and the tactics around it. Anyway, as always, I’ve mentioned before, you know, download our free report on our website, the Ultimate Guide to Passive Real Estate Investing. It is you know, a perennial document. The principles never change, so it’s something that I think you would all benefit from. That’s just on our website. Get your free strategy session with one of our investment counselors. Just contact us whether through the website or by phone. And talk to one of my investment counselors. We can answer your questions and help you either scale your existing portfolio or just get started.

You know, turnkey is not just about real estate, it’s not just about the property. Turnkey is also about the experience and everything that goes along with it. And that’s, you know what we provide. We just want you to have a turnkey real estate investing experience that comes with turnkey investment properties.

I hope you enjoyed this week’s throwback Thursday episode. If you haven’t already, remember to subscribe so you don’t miss out on a single episode. If you have a question about real estate investing or finance, simply go to passiverealestateinvesting.com and click the Ask Marco button. . I read all of them, I reply to many of them, and sometimes I cover them on the show, and I’m gonna try and do more of that. So, I am going to encourage you to go to passiverealestateinvesting.com and submit your question for Ask Marco.  Lastly, help us share the show with other like-minded people that you know who can benefit from it as well. Just visit us on your platform. Most of you are on iTunes and leave us a rating and review. I would greatly appreciate it. I read them all and I will thank you in advance. And that is it for today. Thanks for listening. I will see you on our next episode.

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