How to Invest with $20K and “Luxury” House Hacking


Don’t know how to invest in real estate? If you’ve got $20K (or less) sitting around, there’s a good chance that you could start TODAY. With home prices still sky-high and most Americans under the impression that buying is out of the picture, David Greene comes in to save the day with the “sneaky rental tactic” that can help you start building a real estate portfolio for less than it costs to buy a car!

Welcome back to the long-awaited return of Seeing Greene. We’ve taken some of the BEST questions from BiggerPockets listeners just like you and rapid-fired them at David to get his take. In this show, a military couple is looking to start investing but doesn’t know where to begin. A wholesaler wants to buy rentals with a partner but doesn’t know how they should form an LLC. A high-earner debates whether aluxury house hackis worth the extra money. Finally, an active-duty family debates selling their homes, and a deputy sheriff wants to know where best to put her leftover cash from a home sale.

Want to ask David a question? If so, submit your question here so David can answer it on the next episode of Seeing Greene. Hop on the BiggerPockets forums and ask other investors their take, or follow David on Instagram to see when he’s going live so you can hop on a live Q&A and get your question answered on the spot!

This is the BiggerPockets Podcast, show 816. This is a play where you’re trying to grow equity. You’re trying to turn that $20,000 of cash into $100,000 of equity. And in the future, that $100,000 of equity can be reinvested into more properties as your snowball grows. Now it’s time to put some solid fundamentals and a little bit of elbow grease into that $20,000 that you have and start building some equity in the future so you can make big moves later.
What’s going on everyone? Is David Greene, back with another episode of Seeing Greene. If this is your first time listening to one of these, I think you’re going to love it. In the Seeing Greene episodes, I take questions from you, the BiggerPockets community, and answer them for everyone to see the type of stuff you would never get answered unless you were a fly on the wall in my office listening to the consultations that I do with David Greene team, or [inaudible 00:00:50] brokerage clients or at one of my events. But you’re in luck. You don’t have to actually get out of bed or even put on a pair of pants. You can listen right now to all of the questions people are asking and hear my answers from the comfort of your own home, car or commute.
Today’s show, we cover what to do when you’re feeling overwhelmed just trying to get started. I’m sure a lot of you can relate to that. If you’re starting to partner, what do you need to know and what should you be aware of. And is it ever okay to move into a luxury property? That and more on today’s episode of Seeing Greene. Before we jump into the questions, today’s quick tip, when you’re struggling, you need to lean on your community and BiggerPockets is the best place to do just that. If you’re looking for an extra personal touch or you like to be around people in person, consider checking out BP Con this year in Orlando. You can learn more about tickets and times at And remember, I will be there along with my team and other BiggerPockets personalities, like my co-host, Rob Abasolo.
And remember, if you want to have one of your questions answered on this show, I’d sure like to have you, head over to where you can submit your question there or share it with a friend if you’re shy. Also, remember that if you’re listening to this on YouTube, please leave a comment as you’re listening, let us know what you think. We read those all the time. All right, let’s get into our first question.

Hi there, my name is Jacob Klavitz. I live in Suffolk, Virginia. My wife and I have recently gotten ourselves out of some debt. We’re in the military, so it’s not like we make the most money in the world, but we find ourselves with about $20,000 in savings, and we are just kind of overwhelmed on where to start investing that to really make it work for ourselves. I think real estate’s a great spot for us, but the question that we just kind of have is where should we start? What should we start looking for and how should we go about using this money in the most efficient way to build something for ourselves?

First off, Jacob and Jacob’s wife, congratulations on getting yourself out of debt. That is a much bigger accomplishment than a lot of people realize that it is. In the world that we live in now, we tend to focus our congratulations on growing a portfolio, acquiring a property, adding cashflow. It’s always something that we are gaining, but getting rid of debt is just as important. So not owing people money, putting yourself in a position where your finances are stronger will actually kind of be like shedding weights, so that as you run this race of real estate investing, you’re able to run faster. I love that you focused on that. I also love the habits that are built to get yourself out of debt and playing good old-fashioned defense.
In fact, I talk about that in my upcoming book, Pillars of Wealth. I’ve got an advanced copy right here, if you’re watching it on YouTube, you can see it. How to make, save and invest your money to achieve financial freedom. And I talk exactly about this, like it’s getting out of debt, putting yourself in a position of financial strength and then using that position of financial strength to safely scale a portfolio, which I recommend people do like a financial fortress. It’s not about how fast you can get big or how much you can acquire, it’s about how safely you can acquire it. So on that note, let me give you some advice that comes out of the concepts that are in Pillars of Wealth. First off, you’ve got 20 grand. Let’s look at how this could be invested in a way that is synergistically beneficial to both of you. So if you’re going to spend $20,000, how do you make it go as far as it can?
Well, first off, you’re going to want to use leverage. The more leverage that you can borrow from someone else, like a bank, the more you can make that 20 grand go. The lowest down payment you can get away with in the world of real estate is generally an FHA or a conventional loan, that’s three and a half to 5% down, which means we’re going to be having a conversation about you buying a primary residence to live in and not paying rent to someone else. Now, if you already live in the property that you own, that’s okay. You could either sell it or you could keep it and make it a rental, depending if it cash flows, but I’d like to see you guys buy another primary residence.
Now, house hacking is where I’m going with this, especially to get started, you want to buy an area that’s going to grow over time. You want to buy something that hopefully you can add value to. So either adding some square footage, developing a basement, developing an ADU, doing something to make the property worth more. And you want to do it in a way that you can move out of this house next year and make it cashflow. You see where I’m going at here? We call this the sneaky rental tactic. How can you buy a property that can function as a rental property for you in the future, but you didn’t have to put 20 to 25% down onto buy like an investment property? This is not illegal, this is not any kind of fraud. It is absolutely 100% copacetic to buy a property to live in and then move out of it later and make it a rental property. The sneaky rental tactic is what we call it, and I think this is a great way for you to get started.
Now, to recap on this, I want to see you do this with a property that will cashflow when you move out, which means that property needs more than one unit. That means you’re probably going to have to add some value to it, which means part of the property is going to have to be developed or created to function as additional rental units. And I want to see you do it in the best area that you can get into so that over the long term the rents and the value appreciate over time. This is a play where you’re trying to grow equity. You’re trying to turn that $20,000 of cash into $100,000 of equity, and in the future, that $100,000 of equity can be reinvested into more properties as your snowball grows.
Congratulations to you for getting off to the great start that you did and getting out of debt. Now it’s time to put some solid fundamentals and a little bit of elbow grease into that $20,000 that you have and start building some equity in the future so you can make big moves later.
All right, our next question comes from Omar in Chicago. Omar says that he has done a handful of wholesale deals in the Chicago metro area to accumulate funds to start doing BRRRs. I’ve recently started taking action and have successfully completed several wholesale deals to accumulate funds for buying rental properties. I recently connected with an old friend and we are now actively searching for deals together. My question is regarding the establishment of a limited liability company, also known as an LLC. Should we form a single LLC as 50/50 partners or should we each create separate LLCs to form a joint company entity?
All right, first off, since you’re asking questions about partnerships, I highly recommend you and everybody listening to this, goes and listens to episode 801 of the BiggerPockets podcast, where I talk with Ashley and Tony about partnerships, they even wrote a book on partnerships. So you didn’t ask about that, but I think if this is something that you and our listeners are interested in, you should definitely go check out that episode, but not yet. You got to finish Seeing Greene first before you go see Ashley and Tony. Seeing Greene.
All right. There’s different ways that you can set this up. You’re going to need to talk to your CPA about this and your friend’s CPA because they’re going to have much better advice for me. And the reason is it depends how your specific taxes are set up. LLCs are known as pass through corporations, which means the money that they make passes through them and to you. Which means that, here’s the way I understand it at least in my mind and remember, I’m not giving tax advice because I’m not a CPA. Money flows into this LLC and I tend to look at money like water flowing into this bucket of an LLC.
Write-offs come out of the LLC, so that could be dinners, that could be trips, that could be expenses that are associated with the business, but you often would do them in life anyways. So you and your business partner go to dinner or you travel to a different area to look at these properties, or you attend an event or you seek legal advice that you’re going to do anyways, but now you get to write it off against that business income. So some of the water right off the bat is sucked out of that bucket. What’s left passes to you and you’re only taxed on that. So if you’re able to take expenses that you already had, remember this is not additional expenses, we’re not talking about buying a car you don’t need or going out to eat for dinners that are not necessary because it’s a write-off, that’s a terrible idea.
We’re talking about things that you were already spending money on and you’re able to legally write them off of this business. Maybe you buy a vehicle or some of the registration for your vehicle or the mileage that you’re putting on, it can be deducted out of the LLC. Now, the rest of the money that didn’t get taken out of the write-off passes through to you. That’s what you’re taxed on. But if you have some depreciation going on in your own world, other properties that you’ve bought and you’re a real estate professional, so rep status, now you can shelter the income that came to you from the LLC by some of that depreciation, and that’s the name of the game When you’re a full-time real estate professional. The bad news is you always got to be buying properties, you can’t stop. But the good news is if you’re doing that and you can use bonus depreciation, you can significantly lower your tax bill.
I say all this to say whether it runs through an LLC and then flows to you or it flows directly to your LLC is a question for your CPA because I don’t know how they have your tax situation structured. There may even be a way where money goes into an LLC that you own 50/50 with them, then passes out of the LLC you own with them, into your LLC or into your own name. That’s what I would check with the CPA, is like what’s the most efficient way to set this up? Now my concerns are not just about taxes, which I think is what you’re asking as far as how you want to establish the business, I’d be more concerned with the relationship. So let’s say that you guys are buying properties and you’re putting them in this LLC that you own 50/50 and then while you’re using the company’s resources, you find a deal that you go put into your own name or a different LLC than your partner. How are they going to feel about that?
If they thought that you guys were doing this together, but then you had a deal come to you from an outside source, maybe it wasn’t through the funnel that you guys built. It was a friend of yours or a person you met before. In your mind you think that’s okay. In their mind they think that deal should have went into the thing you own 50/50. It can cause a strain in the relationship. Then they might go do the same thing. Well, fine, if you’re going to do that, I’m going to do it too. And the next thing you know, you’re each running your own separate businesses, but kind of co-mingling company resources to do it and the relationship starts to deteriorate. So I’d like to see you have an upfront conversation with your partner about what you’re going to do when deals come your way that you don’t think that they should be a part of the company, or if all the deals are going to be a part of the company. And if they are, what if one of you works harder or is more successful than the other one?
What are you going to do if at some point you realize that you’re responsible for 80% of the success of the company, but you’re sharing the profits 50/50? So as long as you get all this stuff worked out, you’re okay, but you got bigger fish to fry than just how the income is going to be taxed and the title is going to be held. Make sure you go check out episode 801 for some more advice on this topic.

Speaker 3:
Hey David, thanks for taking my question. Dude, you’re amazing. Hey, what do you think about luxury hacking? For context, we are basically financially free. I would say after taxes and everything, maybe 100, 120 every year from just being an agent. So I usually buy another hack or another rental. What do you think about luxury hacking? Because we’re house hackers, we’re used to it, covering everything or close to everything. So now with a three-month-old, we’re thinking about luxury hacking in an amazing area, amazing schools and everything, and then paying an extra two to three grand per month for that, even with whatever the other unit gives us. We’re not used to it, so what do you think about it? I can cover it no problem, but I don’t know if I’m being too emotional to live in a more luxurious place because we don’t live in a bad place at all. It would just be better for schools later on when she turns like three, four or five, whatever. So what’s your take? Thanks, man. See you.

Hey, BrandCo, thank you. Love this question. These are the exact kind of questions that you should be asking and the exact kind of questions that the BP community wants to hear. At what point can I get rid of my FI guilt? Is it ever okay to spend money on something? Do I need to be making my own soap, churning my own butter, stitching my own clothes? Or is it okay to spend two to $3,000 a month to go buy a property that I really like? You called it luxury hacking, but what you’re really describing here is house hacking on a house that doesn’t cover 100% of the income. I can’t tell you if it’s okay or not, though I am leaning towards telling you yes, it’s fine because you said you can cover it, no problem. I’m going to give you a different way to look at it.
All right. Most people that learn about house hacking, that learn about real estate investing, you sort of get taught in the most simplistic way possible, like the same way you teach a little kid to ride a tricycle or if you’re my age, a big wheel. Those were all the rage. It’s different than riding a bike, but the fundamentals are similar, but we don’t give a five-year-old a bike so that they can fall off of it. We give them a trike or something with training wheels, so it’s easier. Then when they learn how to ride a bicycle, there’s a transition, but I thought it was supposed to be this way. It is when you’re five, but we’re now transitioning into some more nuanced and slightly more complicated wealth building principles. So let’s just understand the way that you have been taught to look at real estate is overly simple and it tends to focus on nothing but what I call natural cashflow.
Natural cashflow is if you just grab a property and rent it out, what is the income? What are the expenses? Is there a difference and is that difference positive or negative? That’s as simple as most people get when they’re learning how to build wealth. But now that we’re transitioning from checkers into chess, I’m going to give you a slightly more nuanced way of looking at money that should make a big difference as you’re building your wealth. Wealth is a form of energy that is stored. You go pour energy into work. You are compensated for that work from the energy that you put out. The amount of time, the amount of skill, the amount of value that you brought, all effects how much energy comes your way. And then we store that energy in a dollar and when we store the energy in a dollar, we call it savings.
When we store the energy in stocks, we call it a stock portfolio. When we store the energy in real estate, we call it equity. But it’s all a form of energy storage and again, this comes out of the book Pillars of Wealth: How to Make, Save and Invest Your Money to Achieve Financial Freedom, which everyone can get a much deeper understanding of this at And I highly, highly, highly recommend you do because it will change the way that you look at building wealth and make it make much more sense. When you’re only looking at cashflow, you miss all the other ways that the places you store your money in can cause growth. So when you put your energy into a property and you measure the cashflow that it puts out, that’s a form of your energy growing, but it’s not the only way that it grows.
You could move into a property that saves you two to $3,000 a month so that you have no living expenses at all, but what if the property isn’t going up in value? It’s not bad, that’s saving you 24 to $36,000 of energy every single year not having a mortgage payment. But you’re saying, “Hey, I want to live in this area over here and it’s going to cost me 24 to $36,000 of energy to live this luxury,” as you’re referring it to. But what if the property appreciates by more than 24 to $36,000 a year? You mentioned it’s in a much better school district. It’s in a much better area. I’m assuming this means it’s harder to get into those places, which means that you have got constricted supply, which is always a great thing. When demand remains constant or improves and supply is constricted, value will go up.
In this case, that means equity will go up, which means your energy is growing at a disproportionate rate that’s positive for you. Do you see where I’m going with this whole thing? And we haven’t even gotten into the fact that rents tend to increase over time more in the better areas. So you’re going to be coming out of pocket, let’s say 2,500 bucks a month. Let’s split it right down the middle. Well, next year it may be 2,300 bucks a month you’re coming out of pocket because the rent went up by $200. Next year it might be 2,200, then 2,050, then 1,850. You see where I’m going? Every single year that you own this property, the amount of money that you have to pay to live in it is going to be decreasing, which builds wealth in your favor. At the same time, all things being equal, it should be appreciating at a much higher rate than the properties that are in areas with less demand, so to speak, not as good as school districts, maybe supply isn’t as constricted, there’s not as much demand to live there.
When you understand the way that energy flows within wealth building, you will start to recognize that buying the property that you spend money every month to get into, could very well lead to you making significantly more wealth than buying the cheaper property. Now, where you have to be careful of this is when you’re not making enough money through your job, through your savings or through your investing strategy, that you cover the two to three grand a month that’s coming out. This is a terrible idea for your first property when you don’t have a lot of cash. When people are getting started and they don’t have a lot of energy and savings, I would never tell them to go buy the property where they’re going to be spending $2,500 a month of their own money. I would tell them to buy the areas where they can keep their savings high and their expenses low.
But you’ve already got several properties. It looks here in my notes like you’ve got 10 tenants over four properties, which are a mix of long and midterm rentals. You’ve got a solid portfolio. In my idea of portfolio architecture, which is mentioned in the book Pillars, I talk about building a very strong base of low risk and low reward assets. Once you have those, you can step it up, which would be like your midterm rentals. Now you’ve got some medium risk and medium reward assets. Now you get into elevated risk, which is what we’re talking about right now, but there’s also elevated rewards. You see what I’m getting at? You don’t have to choose between equity or cashflow between big wins or boring plays. You can get enough boring plays that you stack up that cover you in case something goes wrong with the big win, and then you can chase the big wins, which are going to be what build big wealth for you in your future.
So don’t feel bad as long as you’re financially secure with putting your family in a house that you like living in, especially when you can still house hack and only be spending 2,500 bucks instead of 5,000 or $6,000 a month, which is what all your neighbors are going to have to be paying. Great move. Congratulations on you for what you’re doing and congratulations on being the poster boy of what a real estate investor should look like. You build wealth through real estate so that you can have a better life. Thanks for the question and let me know in the YouTube comments if you’d like me to address anything else.
All right, thank you everyone for submitting your questions. We literally could not have the show without the awesome questions that you all submit, so thank you for doing it. If you’re listening to this and you’d like to submit your question, I’d sure like to see it. Please head over to where you can upload your video or leave your written question there and hopefully you can be featured on an episode of Seeing Greene and help a lot of people while getting the advice that you’re looking for.
Also, make sure that you like, comment and subscribe to the channel. If you’re watching this on YouTube, you’ll see the ever present fidgeting that I do in the chair when I’m trying to talk and think at the same time. And if you’re not listening to this on YouTube, if you’re listening to it on Apple Podcasts or Spotify or Stitcher or anywhere else, please go give us a five star review so the other people can find this channel and we can make it even better. All right, let’s get into some of the YouTube comments from episode 777 and 789 and see what you all are saying.
Louis Vargas 7644 says, “I’m a new investor starting off in Connecticut with my first three family. One day I’ll be on your show to share my story. I appreciate all the gems.” Thank you Louis, and for everybody who’s listening to this who doesn’t know what a three family is, that means you don’t live on the East Coast because on the East Coast, that is literally how they refer to a triplex. A four family is a fourplex and a two family is, as you guessed it, a duplex. A little bit of real estate trivia there for you.
From what to sell on Amazon. “I am not going into real estate, at least not anytime soon, but I watch your YouTube videos on a regular basis because I absolutely love how you give your viewers realistic expectations in terms of the amount of work, dedication and perseverance it takes to be successful at anything. I think oftentimes many people wonder if content creators actually practice what they preach and you are not afraid to tell us the truth about just how hard and competitive it is in real estate and even how long it takes for success. For me, that is the proof that you make your money doing the business and not just by selling a course full of pipe dreams for people looking for an easy route. In fact, you don’t even really make content for people that are not willing to do the necessary work that is unavoidable. I really respect you and thank you for that.” Well, I wish I knew your real name, what to sell on Amazon, but thank you. That’s probably the biggest compliment you can possibly get.
For those of you listening, there is absolutely a difference between people that try to hype you up and sell you on the dream because they want you to spend your money on their course, versus the people that are making money through the dream, which you usually don’t portray it like a dream. It’s hard work just like everything else is hard work, and we at BiggerPockets are going to shoot straight with you and let you know. But that doesn’t mean you shouldn’t do it because all the best things in life come after some hard work.
From Pope of Cholos. That’s a pretty funny name. “Still the cleanest shirt in the dirty laundry. David, 2023 words to live by, great quick tip.” Yes, that is real estate. It’s not as good as it was but it’s still better than everything else. The cleanest shirt in the pile of dirty laundry.
From 2004 CBR, I believe that’s a motorcycle. I’m going to have to run it with my production staff, but I think a CBR is a Honda. What do you think, judges? Judges confirm I was right. I don’t know how many CC’s this is. So Honda or 2004 CBR, let me know in the comments if you’re rocking a 600cc CBR or a 1,000, we all have to know.
Now your comment was, “Another great show. Thanks for all the great guidance. I would like to correct you on your Cali comment. I’m born and raised in California and definitely call it Cali as do many others. Again, that might be my upbringing in the East Bay and listening to West Coast hip hop music since it’s the ’90s, it’s all about perspective.” Okay, this is a good comment, I see why my producer chose it. I just got to say, I don’t know if I believe you, rap is the only place you hear anyone talk about Cali and it’s always rappers that are not from Cali. Notorious B.I.G. is going going back back to Cali Cali, but I don’t hear a whole lot of other people say it unless it’s someone like Tupac who is making music that will be listened to by people that are not in fact in California.
So I’m not sure. In fact, let’s make this a poll. Audience as you’re listening to this, if you live in California, first off, you need to know who I am and we need to be connecting because I’m here too, but second off, let me know in the comments, do you call it Cali living in California or is this something that people outside of California tend to say about Cali? To me, the litmus test, if someone’s from California, they definitely say hella and they probably don’t say Cali, but I could be wrong. I’ll be the first person to admit I don’t know at all. So let me know, do you say hella and do you say Cali if you’re from California, let’s take this to the masses.
All right, we are going to be getting back into the show in a second here. Before we do, I’ve got a quick Apple review from the Seeing Greene episode 789, that one of you awesome people left us. This is labeled, giving non-real estate advice to team. “David, you are the man. There is no better thing to do for that youngster than to tell him that he needs to work hard and be an example to his siblings. Life is not about how many doors you have or how much money you want, it’s about being a good example for others to follow. And all that family needs to have someone to model after with their parents being gone. You and Rob and BiggerPockets have made our lives change and made going to work fun because we get to listen to your podcast. May God continue to bless you too and BiggerPockets.” From Tom via the Apple Podcast review section. T.
Om, I really appreciate it and I remember this episode. We had a young man who I believe his parents had passed away not too long ago. He was living with a family member, possibly grandparents, had two younger siblings that was asking me, “Hey, I need to make money, my family needs me. What can I do to make money in real estate?” I believe he was doing some day trading or maybe some crypto trading. And his heart was in a beautiful place, as he was taking on the responsibility of leading his younger siblings, which is exactly what I love to see, but his head wasn’t quite there. His head was still thinking, how do I make quick money in real estate? And guys, if there’s one way to make sure you lose money in real estate, it’s to try to make quick money in real estate.
It can happen, but this asset class is not designed to make quick money. It is designed to literally build wealth slow. If you look at the way amortization schedules work, where higher degrees of payments go towards principal and not interest over time, how this is a highly inflation sensitive asset class, which means over time the values go up and the rents go up, and you look at the fact that we can get fixed rate mortgages spread over 30 years so that your expenses don’t go up. It starts to make sense that the literal architecture of real estate is designed to be something that makes more sense as you build wealth slowly.
So if you’re getting sucked into some program that you think you can make quick money in real estate, not going to tell you it’s a guaranteed scam, but I would be extra, extra cautious because that’s not how the people that I know that built their wealth in real estate made it. That’s how the people that I know that lost their money in real estate did it. So thank you Tom for recognizing that and to the young man, I can’t recall your name, who is trying to do this for your siblings. If you’re listening to this, my heart is with you, my thoughts are with you, my will is with you. I would love to see you make it. Focus 100% on being the best person you can be, bringing the most value that you possibly can to the workplace. Show up every day in work like it’s the last day of tryouts and you don’t want to get cut and you will be successful.
All right, our next question comes from Whitney in Eastern Europe. Let’s see what Whitney Shea has to say.

Hey David, my name is Whitney and I’m hoping that you can help me. We are an active duty military family. My husband’s been in the Marine Corps for 27 years. We’re still sort of going strong but maybe going down towards the retirement path within the next few years. We kind of became accidental landlords because we were upside down in our homes when we had to change duty stations. So it’s turned out to be a blessing in disguise because we do have a home in South Carolina and we also have a home in Florida and they are both paid off. They’re both rented out. And so we are again very grateful to have that cashflow. At the same time, currently we are living, we’re stationed in Eastern Europe and we are going to be heading back to the States in a few months, to Arizona.
So with all of that said, all that background, we also have a child heading off to college. And so lots of little details, but we’re really kind of at a crossroads where we’re kind of listening to other people say, “Oh, you should sell your houses because of the way the market is.” We’re sort of more the buy and hold people, thinking that way. So we’d love to just get your position, your perspective, your thought process on best next steps for this Marine Corps family. Thanks so much.

All right, thank you for that, Whitney. Man, I love problems like this because no matter which direction we take it, you’re in a positive place. So you’ve got properties paid off in South Carolina and Florida and you’re beginning to build a home in Tucson, Arizona, which is relatively affordable for Arizona. You’re in a really strong place. I don’t know that I agree with people that say sell you off your homes because there’s a market crash coming. I hate saying this because you never know, tomorrow there could be a market crash and then everyone’s coming for me with pitchforks to the swamp, trying to get Greene like Shrek. Wasn’t there a thing in Shrek where they were all chasing him down to the swamp and he’s, “Get out of my swamp.” I’d hate to have you guys coming after me that way.
I’ll just share. I’ll show my work. I’ll tell you how I came to the conclusion. I don’t think we are likely to see a crash in real estate. I actually think if we do see an economic crash, real estate could go down. I think it would go down much less compared to everything else. In fact, I think if we see asset classes getting hit, real estate would probably be the last one to go. And that’s not because a homer for real estate. It’s because I think that the supply demand fundamentals of real estate right now are incredibly strong and we’ve seen this with the resilience in the market. Interest rates for mortgages keep going up and up and up. We’ve seen the commercial space start to get hammered. There’s a lot of people, and this is, I don’t know a nice way to say it, a lot of operators that did a good job.
They increased the NOI on their properties, they managed it as well as they could, but cap rates expanded faster than the market could keep up with because they just increased interest rates so quick and so suddenly, and a lot of those operators are going to lose money on their assets or lose their assets, see what I did there, altogether. It’s a problem. And yet the residential space, in spite of all of this, has been so resilient. The property values have not plummeted. In some places they’ve dipped a little bit, like you mentioned Arizona. That Phoenix market, the Vegas market, they’ve come down some, but that’s because they were going up so fast. It’s relatively really strong compared to everything else. I think the stock market would be much more likely to take a hit other than real estate. So I would not listen to the people saying to sell your homes, especially because they’re paid off.
Your homes are paid off, it does not matter if they drop in value a ton. And remember, if you go sell them, you probably have to buy something else and people always forget this. If you sell high, you got to buy high. If you sell low, you got to buy low. It’s very difficult to get the best of both worlds unless you’re selling out of one market and into another, in which case you should probably read Long Distance Real Estate Investing, where I detail the strategies and systems you need to do that well. But even then it’s usually roughly the same. You can’t win by selling high and then buying low, it’s incredibly difficult to pull that off. So when your friends are telling you to sell, I would say, well, where are you going to go put the money? You’re going to have a bunch of taxes, a bunch of commissions, a bunch of closing costs, a bunch of headaches, a bunch of make ready costs to get the most for the house.
Then if you do have a successful sale, where are you going to put the money? You’re going to probably have to put it right back into real estate, now maybe you have to do a 1031 exchange. You’re just complicating your life to not really get that big of a gain. So I don’t know that there’s anything wrong, Whitney, with just hanging tight. You’re in a really good position. When I’m playing poker, which happens about once every four years, I have no idea how I do so well in poker. In fact, I’m going to tell you my strategy so if anyone ever plays with me, now they’ll know how to beat me. But what I typically do is I try to win a couple hands early and get a big stack of chips and then I just fold every single hand that is a killer. And I probably shouldn’t be admitting this online, but that is what I do and I tend to end up at the winner’s table almost every single time that I play.
You’re in that position right now. You’ve got a big stack of chips. There is no reason to make a move. You do not need to rush into anything. Don’t let the pressure of the people at the meetups or I have this many doors and you don’t have this many doors or I’m up to this many units, all the things that people get into don’t matter. That’s their race and they might not even be running their race. They might just be trying to get significance and attention from people at these meetups because they’re insecure. Your race is all about your family. You’re in a great position. You’ve got a lot of equity built up in these properties. You don’t need to move it. If you’re going to do something, let’s just make some small safe bets.
When I’m playing poker and I got a huge chip, I’m only going to play the best hands and I’m not going to overextend myself. I’ll play the hands that are great and if the cards come out and my hand becomes not so great, I just fold. I took a small loss. Or if I win, it’s only going to be on a monster hand unless everybody else just folded. I really think that strategy works for you and your family here. Build your house in Tucson. You probably are building a house you like. The next property you get into, maybe build another one, but whatever it is, make sure it has more than one unit. Try to get into something with at least three units, so you have several units that you can rent out in the same property, which significantly decreases your risk and just slowly grows your cashflow. Base hits are all you need. Even just taking a walk to get on base is fine when you’ve got a big lead like you do.
Don’t go making any big risks. Don’t go making any big moves. Don’t try to throw the long bomb here, if we’re using a football analogy, and risk and interception, just keep running the ball in a boring way. Keep making boring moves and over the next 10 to 15 years you’ve accumulated real estate hopefully in the best areas you can get, you guys will be doing great and you’ll never have financial worries and that is a big win.
All right, our next question comes from Amanda Lane in Florida. Amanda says, “I’m 30, I’ve been a deputy sheriff for 10 years and I bought a house when I was 21, no kids, and now I’m selling a house. I’ll net $200,000 from it conservatively, which is like winning the lottery to me. I’m moving back to Chattanooga, Tennessee and have a few duplex options in mind. I want to do this as smart as I can for obvious reasons.” Amanda, your life so far sounds suspiciously like a country song. You’re working as a deputy sheriff, no kids, sold your house in Florida. You’re moving back to your hometown in Chattanooga, Tennessee. You got a couple options in mind. Let’s move on here.
“I feel like I have a reasonable grasp on the first basic steps or what I think I should do with a substantial sum of cash. But myself 20 years from now might wish I could go back to this very moment and do it smarter. So pretending that we’re back in time now, like I’m living 20 years in the future, looking backwards, how can I either route my plan better or who can I connect with that can explain answers to questions I don’t have?” Well, if you had given me some of those questions, I’d be answering them now. You can always DM me and we could try to set up a consultation or something for you. But I don’t know that there’s a whole lot of people that you can go to and say, “Here’s what I think you should do.”
You really do need a person who’s done this before, which is why I understand you’re reaching out to me because I have, that understands not just your risk tolerance and not just your options, but your skills. People forget that. There are certain parts of real estate that I would be good at and other parts I’m not good at, and vice versa for other people. You really want to build a strategy around the skills that you’re bringing to the game. Now, because I don’t have enough details to answer your question like I’d like to, let me give you some practical advice that I think will work for everyone listening. If you’re in a good position, you’ve got $200,000 saved up, don’t make a move in a market like this that’s not terrible, but it’s definitely not the market we’ve had in the last decade where they were just printing money like candy out of a Pez dispenser, and it was very likely that real estate was going to keep going up, which it did. Be more careful.
There’s nothing wrong with staying debt-free right now, even if your wealth isn’t explosively growing, you don’t need huge wins in a market like this. What you want to avoid is big losses. Consider house hacking. Again, I love the strategy of house hacking every year. You get into the best neighborhoods, you put the least amount of money down, you get the better interest rates. You don’t rush and go too fast to where mistakes get made. You can add value to the property slowly while you live there. You can do this by renting out the rooms, adding units, finishing off square footage that wasn’t developed. There’s so many options that you have and you can do it for 5% down. I love this. Really, if you just did that, Amanda, you just bought a new house to house hack, you moved into it, in 10 years that first house you bought will go up a lot, especially if you’re buying in Chattanooga, which is one of the markets I think we’re likely to see significant appreciation in over the next decade.
And then the house that you bought the second year is going to have nine years of appreciation. The house you bought the third, seven years. Those first five are going to do really well 10 years from now. Now, if you’re going 20 years in the future, imagine if you just bought one house a year, that’s it, at 5% down, no huge risk. 20 years from now you’ve got 20 homes, you’ve got an accumulation of 20 years of rent increases, of value increasing, of you saving money continually because you never had to pay mortgages. You’re in a position that you may never have to worry about money again. Don’t race forward competing with other people. Don’t think you have to go buy seven properties and develop these lots and do something huge. If you’re bored with your life and you’re not super skilled with real estate, don’t feel the pressure to get out over your skis and do more than you need to.
You’re one of those people, like the last question we took, in a really solid financial position. Use that to your advantage. When you’re running out of chips in poker, you got to go all in whenever you get a halfway decent hand. There’s some people in life who are in a really rough position. They hate their job, they owe a lot of child support, they’re having a hard time making ends meet. Those people probably need to go start a business, become an entrepreneur, work 80-hour weeks. They got to do something drastic to get out of the situation they’re in, but that’s not you. So enjoy what you’ve earned, enjoy some of the fruits of your labor, make smart sound financial decisions, continue to play defense, continue to avoid lifestyle creep. Put your money into properties that over the long term are going to appreciate and will not cause you headaches and run your own race.
Now, let’s say that you do want to make some bigger moves in the real estate space and that’s why you’re reaching out, because you want to be more involved. My advice in that case is to find a person that has done a significant number of deals. That could be flips, that could be commercial multifamily properties they bought, but definitely someone that has some experience under their belt. And maybe bring some of that money that you made into a deal that you do with them. Not only does that decrease your risk of losing the money in the deal because they’re experienced, but it increases the likelihood that they’re going to teach you something that might catch on and get you excited and you could follow that path and pursue that end with your own real estate investing career. I’d much rather see you do that than get hooked up with some other really excited newbie who hasn’t done anything and then just close your eyes and hope for the best.
And that was our last question. What do you guys think? Was this a good show? Do you like hearing this advice? Do you like staying up to date with information going on the market because it’s changing so fast? Was there something that you wish that I would’ve said or I would’ve been asked that never got brought up? Well, good news, if I didn’t answer the questions you had, you can always ask them yourself, Feel free to share that URL with somebody else if you are shy, but they are not. And then also, remember we read the YouTube comments. So go in there, leave me a comment, tell me what you thought about the show. We just may read it on a future episode, but even if we don’t, we’ll definitely see it and incorporate the information into the show.
I love you guys. You can follow me at David Greene 24 on all social media, or you can go to and see what I have going on. I help people like you every single day trying to grow their wealth and responsibly manage the finances that have come under their control. I’d love to see you guys continue to do better every day more than you were the day before. And I love the perspective of what’s this going to look like in 20, 30 years, instead of what’s this going to look like tomorrow? If you’ve got a minute, check out another BiggerPockets video and if not, I will see you on the next episode of Seeing Greene.


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