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

17:59Brandon Turner:And so now I'm realizing that it's a better decision to buy a better quality asset at a good deal price point rather than chasing a asset that may be older. That's an OK deal, because I now know my end goal is to own properties for the long haul that I can pass to my children. And if you buy a crap asset, even though the numbers work, at some point, you're probably going to look to sell that asset because it's old unless you're going to completely remodel it from top to bottom. So what I'm trying to get across to people here is take your time, just like what Tim said. Like you don't have to chase every asset and don't just look at do the numbers pencil.

18:40Brandon Turner:Yes, the numbers are the most important part, but there are other factors. How is it going to impact your lifestyle? Is it further away from your other properties? Is it going to be harder for you to manage? What's the age of the asset? Is it something that you want to keep forever? Are you only keeping it for a few years? Like you have to think about your lifestyle and how that property may impact your lifestyle, whether or not the numbers work. And that's just something that's hard to teach a new person when you're starting out. So it's good to hear an investor talk about those things.

19:09David Greene:Yeah, I talked to a lot of my friends who are in the military that are looking to get and start in investing, and they're all trying to start short-term rentals. And one of my friends bought a million dollar house in Disney, which is a really bad spot. That sounds scary. Yeah. And she makes less money than one of my long-term rentals. She barely breaks even managing that short-term rental because it's so competitive there. And there's so many rules there with Airbnb and that location specifically. But people are chasing what they think that they can make. and they're rushing into these deals without really thinking about, does it fit their lifestyle?

19:47David Greene:Like she moves every two years, just like I did in the military. So she's managing all this stuff virtually. And I'm not trying to like spread fear. I'm just saying like, you know, take your time. It's spreading reality. Yeah, it is. Like I was talking to a guy last night. I had someone over working on my house and I was just chatting with him. He was talking about, yeah, he got convinced in 2022 to go out and buy a short-term rental. He had to long-term rental. still losing 600 bucks a month. And he's like, now I'm going to sell it. I don't want to be in real estate anymore. It's what we talk about all the time.

20:17Like he had the right intent. He rushed into it. I think he would admit that he was saying this. He didn't really think about it that much. And then you're doing the one sort of cardinal sin as a real estate investor, which is just like not setting yourself up to stay in it the long run. That's the only thing you need to do with the first deal. And if you're rushing into it, that is the biggest risk that a hundred percent, the biggest risk and much bigger risk than waiting six months to learn a little bit more, three months to find a better deal. I know it's exciting and you just want to do it, but the number one thing is to stay in the game, not to get the deal as quickly as possible.

20:53Brandon Turner:Absolutely. And you said that you would start the same way again by doing a single family home because it allows you to learn the skills necessary that you would apply to a larger, more risky, more dollar sign value asset, right? And you're absolutely right. Learning how to underwrite single family is a great baseline for learning how to underwrite other deals. Learning how to select tenants properly, learning how to manage tenants properly, learning how to operate your business are all lessons that you're going to learn and we're all going to trip and fall and screw up. But when you do it on a single family home first, you protect yourself because you're probably not going to go bankrupt if you make mistakes on one single family home.

21:39Brandon Turner:If you are, then you probably shouldn't have bought that single family home to start with. You're probably wearing a good enough financial position to buy it. But starting a single family allows you to learn, grow a baseline so that now you can go and pursue larger assets and take on more risks, especially for someone like you who's considering raising capital and syndicating a deal because now you're playing with somebody else's money. And I would be much more comfortable lending money in a syndication to somebody who's been there and done that, who's gotten their reps in versus somebody who's just starting out on a commercial asset they've never done a deal before.

22:19Brandon Turner:It's also going to help you be able to raise money. But using other people's money is a massive responsibility. And so getting your reps in on single family is huge. And again, can you go directly into multifamily? Sure. I mean, you can even go directly into commercial, but I would say if that's something you're going to do, you need to have a superpower like Tim has, right? Like you need to have like a partner who has experience in that, who's going to do the deals with you if you're just going to skip over the single and small multifamily to start out with. But if you have no experience, it's so risky to just jump off and do that because you can go bankrupt if you do a bad, large scale commercial real estate deal.

23:03Brandon Turner:That can hurt you substantially.

23:05David Greene:Yeah. And you're losing everybody else's money too. I would not do commercial, honestly, if I didn't have my partner. I still think it's scary. Just looking at the numbers and stuff. So yeah, I 100 % agree just building that credibility to. It's big numbers and just complexity. You're giving up the, I think the best part of residential real estate or real estate in general is just 30 year fixed rate debt, which is incredible. Like you're giving that up. You know, it's a lot to think about. You can make a ton of money, but it is, it is something serious. So Tim love the fact that you would do your first deal over again.

23:41I think if it was up to me, I would do my first deal all over again, but that's not available anymore, but I'd love to get some specifics from you. Like what about your first deal? did you really like? So our audience can learn from what you've done, whether or not they're looking for their first deal or just trying to scale like the way that you have over the last couple of years. Let's get to that. But first, we got to take a quick break. We'll be right back. What if your CRM actually did the hard work for you? I know, crazy. ReSimply lets you pull seller lists, skip trace them at no cost, and contact your leads by call or text without bouncing between apps.

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28:11Welcome back to the BiggerPockets podcast. We're here with investor Tim Yu talking about what he would do over again if he was starting again from scratch. Tim only started in 2022, but he's done a little bit of everything, which makes him a great candidate to talk about in current market conditions, what would you do? Tim, you said before the break that you would basically just do what you did over again, but tell us a little bit about the deal. What about this deal, other than the fact that it was just a single family, like made it such a good, meaningful deal for you?

28:41David Greene:Yeah. So my first buying hole was actually a duplex. So I guess residential multifamily, but it was a little bit of luck too. So like looking at the numbers, it was on market. So It wasn't anything crazy. It was listed by an agent. We just went to go see it. We made an offer on it and we went conventional. So this property makes me like$800 a month. And the reason why the guy sold it to us so cheaply is because he actually got married and was moving 40 minutes away and he lived in one of the units. So he just house hacked it. So for us, it was more of like a luck thing as well. The tenants are having great.

29:18David Greene:I've had the same tenants since I bought it four years ago and I keep them in every year. I talk to them every Christmas and I'm like, hey, do you just want to stay in the property? And they're like, yeah, absolutely. Great. Awesome. We're not trying to raise rents or anything like that because they've been great. And you guys know raising rents can lose a tenant. And then now I'm paying a mortgage for two months trying to fill it. But I wanted to say this too specifically was I bought this on conventional financing because I had a job and I was bankable at the time. So don't rush to quit your job necessarily because I'm gonna go through a lot of pain quitting my job right now.

29:53David Greene:I'm losing the salary, I'm losing all the bank loans that I could qualify for. So there's pros to still having your job as well. Absolutely. I mean, I think this is an amazing choice. I know everyone gets into this for financial freedom, but first deal, if you can hang on and just stay in your job, do it. I rarely give like blanket advice, but just do that. It is just so much better. You're going to be bankable. You're going to have less risk. If you have a job with healthcare, that's going to matter a lot. There's so many things that you need to be learning about real estate. They're not so hard that you can't do them while you're working a full-time job.

30:28And for me, I would rather do that when I'm not worrying about, am I getting this extra 200 bucks a month? Because I need that to pay something. Like if I can live off my salary, that puts you in the position to go out and buy a good deal the first time around.

30:40Brandon Turner:I think people fall in love with the idea of not having to go to work for somebody. And that makes people want to grow and scale quickly because that's the idea that I fell in love with. And then once you get to the point where you're full time, real estate's a little different because now it's not a side hustle. right now. I got to do it to feed my family. And so it makes making good decisions harder. It's a different ballgame. I enjoy real estate wholeheartedly. But if I didn't have to quit my job when I did, I would have kept it longer. It didn't make sense for me to keep my job any longer.

31:23Brandon Turner:But I waited as long as humanly possible before I left that job, or I would probably still be working it or I would have at least worked it a whole lot longer than I did. Now, I respect the idea that like, hey, buying a duplex, starting out, great decision. And it sounded like it was a pretty decent deal. But is there maybe a particular good decision that you made that you feel like I would make this decision again if I were starting out? Or maybe is there a particular lesson you learned or something that kind of hit you the wrong way that you're like, I would absolutely never, ever do this again.

31:59David Greene:I would probably say if you're curious about a strategy, go try it, right? You're never going to learn more than just actually doing the type of deal. Like I think every deal you do, you learn so much, either good or bad. The reason why I rather wholesale is because I don't like the actual idea of flipping because I got my butt handed to me on a few flips when, you know, I bought a house on a main road. I didn't know at the time that when you buy houses on super busy roads, the property value drops. And then like, I couldn't sell the house at the price that I thought it was going to sell. That was one issue that I learned.

32:36David Greene:And then another one was I don't do full guts anymore. Cause I tried a full gut on a 120 year old house in Kentucky. Like everyone in Kentucky knows me about that deal. It's because it like ruined my life. It was so hard to deal with. So as you start trying different things, you start to learn what you like to do, what you don't like to do. If I were to flip houses, strictly cosmetic. I don't know how you do it, Henry. I know you do new devs and all that stuff, but me doing that renovation, like almost killed me. I know what I don't like. So, and then the biggest lesson I learned is if you're buying real estate, you're buying flips, when you do buy a bad deal, because this does happen, you're never going to hit a thousand for a thousand.

33:20David Greene:You're always going to have a bad deal or two. Is that the active income that you have either from your W-2 or a flipping business or whatever the case may be, that's going to save your butt down the road. So don't rush to quit your job if you have properties, because some of the bad deals that I bought, my W-2 salary saved me, right? I can eat mortgage payments because I had a job. So it sounds like if you were starting over, you would do deal number one the same, but maybe deal two through 12, you would do a little bit differently. I would say the flipping, I could probably live without now, but it was a great skill, right?

33:55David Greene:I know how to renovate properties now, but yeah, not my cup of tea, honestly. So what would you have done differently, Tim? Would you just gone do more wholesaling? Cause like, it sounds like you made some active income or would you just have gone straight to commercial sooner?

34:08Brandon Turner:Sounds like you needed to learn how to underwrite a little better on them single families you were buying i would agree with

34:13David Greene:you on that is underwriting way more conservatively uh it's probably yes the recipe to success no it's absolutely the recipe to success when you're like penciling deals don't like fudge the numbers to like oh my god no i do everything i can to not buy a deal i think that's like just the general approach is like, how can I make this look so bad? And if it still looks okay, I'm like, okay, fine. I'll buy the deal. That's the right mentality. Honestly. I just think that's the way to approach this. Like why take on risk if you don't have to? Yeah, I agree. I was a young man. Just I was deal hungry, right?

34:50David Greene:I just wanted to stack deals on my belt and be happy that I had all these doors. I don't blame you, man. Everyone does it. Like it's just a common thing that everyone does. And we just appreciate you being honest about it. That was kind of the whole idea behind this episode is like, share the real things that you would do differently if you

35:07Brandon Turner:were starting over. I think the real value people are going to get from this is that like you did deals that weren't profitable, but you're still here talking about investing, pivoting strategies, and doing something that's going to allow you to live the kind of life that you want to live. That's the best part about real estate. And so yes, I want to be real with people and say, you can screw up. You're gonna screw up. You're gonna. I have a deal right now that I am trying to sell that I am going to lose money on, but it is one of several deals that I made money on. You don't have to bat a thousand.

35:42Brandon Turner:You're gonna screw up. Experienced investors make mistakes every day. But how do you pivot? What were the things that saved you and allowed you to continue to be here today. So what would you say is maybe one thing that helped you? You said your W-2, having that income steady was one thing that saved you. Was there something else that like really helped you continue to maintain and not just give it all up like the guy Dave talked to yesterday?

36:10David Greene:Yeah, that story alone was crazy. But I would say like obviously my W-2 and then I did active income stuff with real estate, right? So I did flip houses and I do wholesale and those quick cash conversion cycles coming into the business, it gave me a lot of space to make riskier decisions in the buy and hold sector. I don't recommend going as hard as I did, but having that cushion in the background always was always kind of a safety blanket for me. So definitely upping your active income, either through working a higher paying job or doing something to make active income in real estate is super awesome.

36:48David Greene:And obviously with active income, you can buy properties for like tax depreciation. Right. I think that's like the cycle of life.

36:55Brandon Turner:All right, Tim, you're now moving more into commercial. Can you maybe give us some specifics around like how much cash are you looking to generate on a monthly basis that's going to allow you to not have to work a day job versus kind of where you were in the single family space?

37:14David Greene:The asset class that we're looking for is obviously the commercial strip mall area, and we're looking at the Sunbelt location. So down south, super favorable market and all that stuff, and we're looking for outside of metro cities. But what we're looking for is if we can get an asset class that can generate$3 ,000 to$5 ,000 a month in net cash flow that's after debt service and all that stuff, that is very possible. So with the passive income of the properties that we have already, and then the active side won't really stop, having that property that fits that buy box is ideal, which kind of sums up everything that we talked about is we're not rushing to go buy a deal right now.

37:52David Greene:We're taking our time and we're doing our due diligence on that.

37:55Brandon Turner:So three to 5K net income a month after all expenses, about what kind of purchase price point does that put you around for a commercial asset for people's reference?

38:06David Greene:I would probably say if obviously we're trying to buy at a 10 cap, so the purchase price would be ideally like 3 million or under. But obviously sellers nowadays are not going to sell at a 10 cap, but that's the price range they're looking for is probably the 3 to 5 million range.

38:23Brandon Turner:So a three to five million purchase price, is there expected renovation? Like is this value add similar to single family if you want to get to those cash flow numbers? Or are you able to just buy something that's already producing that kind of net income for that price point?

38:37David Greene:So most of these strip malls don't really require any renovations because the tenants themselves most of the time will be on triple net leases. So most of the time we do a triple net lease, like you can negotiate that the actual business owner that comes in can actually renovate the unit themselves. So it becomes more of like a mailbox money type thing once you have the right tenant in place.

38:59Brandon Turner:And then for financing these assets, I know most people use some sort of commercial loan for local banks. Are you looking to raise capital for the entire purchase or are you going to raise capital just for maybe what your down payment would be for that property and then get local financing from a regional bank?

39:18David Greene:There's two ways that we're going to look at it. So one way is since that strip malls are commercial, a lot of the owners actually are open to owner financing. We obviously prefer doing an owner financing deal and then raising the capital privately to do like the down payment and whatever holding costs and reserves are. If we do go the more traditional commercial banking route, we would do the 75 % loan to value of the property, and then we'd still raise that down payment privately. So that's our idea of how we're going to structure it.

39:48Brandon Turner:And real quick, before we get out of here, what kind of time horizon are you giving yourself to build up this cash flow? And this is just, are you looking to buy one asset that produces$3 ,000 to$5 ,000 a month? Are you looking to buy two assets that do that? What's the time horizon? How many of these properties are you looking to purchase. Yeah.

40:03David Greene:Our goal is just to buy one this year. That's the beauty of commercial as well, is you don't need to buy a ton of deals every single year. You know, one deal a year, one deal every two years can change everything for you. So our goal is to close one this year. We're actively looking at marketing right now. So we'll see where that goes. I love it. Awesome. Good for you, man.

40:22Brandon Turner:This man has learned from the past mistakes. This is, this is wisdom. Faster than me. Yeah. We all get there eventually. It's just a matter of how quickly. How many times you got to touch the fire before you learn? Well, congrats on your success, Tim. And I just love that you have thought about this and are building a portfolio that is designed for the life that you and your wife want. That's what it's all about. There's no right way to real estate investing, but your thought process is the one that I encourage everyone listening to adopt, which is like, what works for me? What do I need right now?

40:55No right answers, cashflow, appreciation, markets, strategies. The world is your oyster. That's the beauty of real estate, but you got to have some discipline to figure out what works for you. And I really appreciate how you're doing that for yourself, Tim.

41:08David Greene:Yeah, I appreciate hanging out with you guys today. Saw you guys in Vegas. So hopefully I'll see you guys sooner. Awesome. Thanks again, Tim. And thank you all so much for listening to this episode of the BiggerPockets podcast. We'll see you all next time.

41:19Tim Yu: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 Kay. Copywriting is by Calico Content. And editing is by Exodus Media. If you'd like to learn more about real estate investing or to sign up for our free newsletter, please visit www.biggerpockets.com. The content of this podcast is for informational purposes only. All host and participant opinions are their own.

41:51Investment 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.

42:30Tim Yu:in app or at order.sweetgreen.com, available at participating locations only.