How to Build Your 2026 Real Estate Investing Plan

0:00We're closing out the year with one of our most popular episodes because what better time to plan your financial freedom than right after the holidays. This is the Real Estate Rookie Podcast, and I'm Ashley Care.

0:16As you unwind from Christmas and start thinking about what you want 2026 to look like, this rerun with Dave Meyer is exactly what you need. Most investors go into the new year saying they want to build wealth, but they don't have a clear plan, timeline, or number. They just stay stuck. In this episode, Dave walks you through how to define your financial goals, calculate your freedom number, choose the right strategy, and reverse engineer your real estate game plan. Before January hits, take an hour to map out what your future could look like. Financial independence isn't a dream, it's a math equation.

0:51Let's get into the episode. Hey, everyone. Welcome to the BiggerPockets podcast. I'm Dave Meyer. Thank you all so much for being here. I want to ask you all a question to start this episode, and I want you to be honest. How many of you actually have a specific financial goal? I'm not just talking about, oh, I want to be financial free. I'm talking specifically like I want$10 ,000 a month in cash flow by 2035. How many of you have that level of goal? I think if we're all being honest with each other, it's like basically none of us, maybe 2 % of you have actually gone out and done this. And that's okay.

1:33It took me probably eight years of investing in real estate and being really into personal finance before I figured out that it really mattered whether or not I had a financial goal. And that might be okay at the beginning of your investing career, to be perfectly honest. But if you want to build a portfolio of low risk, high upside investments over a sustained period of time, you need to have a plan. you need to have a strategy. And in order to have that, you need to have good goals. And so today, what we're going to do is talk about goal setting and how to do it the right way. I'm going to break this down into three really actionable parts, and you all should just follow along.

2:12I'm actually going to break out the whiteboard and show you some really simple tools, like actual things that you could do either as you're listening or later today when you go home. Go and actually do this so that you have these financial goals, especially as we head into a new year, you can have these specific goals and build a plan backwards from those goals. The three parts we're going to go over are first, the long-term goal. And this is the most important. We're going to spend most of our time here figuring out why you're doing this in the first place. Where do you want to be 10 years from now, 15 years, 20 years?

2:45I know everyone has this vague notion of being wealthier or having more time. That's not good enough. What you need is a specific goal, and I'm going to help you get that today. The second part is defining a one-year goal, because once you've figured out the long-term vision, then you need to sort of back into more achievable, more actionable things that you could do in the next year. And then part three is a three-year vision. So we're going to do long-term big picture, then one year, then three years. And as you'll see, even though very few people have actually done this, it's really not hard.

3:19by the end of this podcast episode, you're going to have these three numbers. And I promise you, it will help you a ton as you formulate your strategy as an investor. So let's get into it. First up, we're going to be talking about our long-term financial goals. And there's basically two different questions that I want you all to answer by the end of this section here. Number one, how much money do you want? And number two, this is the one that people miss, is when do you want it by? The key to doing this the right way is finding something that is tough. Like you wanna be a little bit uncomfortable.

3:55You don't wanna be, oh, for sure, I'm going to be able to hit that number, but you wanna feel like if I execute my plan well, if I am diligent, if I work hard, I'm gonna be able to hit that number. That's sort of the magic balance that you're looking for here. So these are the first concepts. The first question is how much do you wanna have? And the second question that we want to answer here is how long, right? Those were the two things I said. So let's start with how much. There's different ways that people can answer this. You could answer this through net worth. You can answer it through cash flow, through your portfolio.

4:27For me, the way that I think about it is the after-tax money that I need to support my lifestyle. So I recommend that people think about it this way, after-tax income. because all of us are going to be taxed differently. Real estate has a lot of tax advantages. So if you're using real estate for a lot of your income, you might not need to earn as much as you would in a normal job because you're going to have those tax advantages, which is why I prefer this after-tax income thaw. Now, for those of you who don't have a budget or don't really understand what your spending is right now, that's probably a good place to start.

5:07I would recommend you have a budget or go onto your banking app. Like it doesn't need to be super complicated. Most people, if you have online banking, go and look at your online banking and figure out what your average spend is per month, right? And this is a great place to start when you're figuring out what you want your income to be. And I want to be clear that you can't just make this number up like you could, but I don't recommend it. It would be easy to just say, again, I want$30 ,000 a month in after-tax income. That's a ton of money. And maybe you do aspire to that. And if you've thought about this hard and come up to that number, that is okay.

5:45But there is risk in overshooting here. Because if you say$30 ,000 and all you need is$20 ,000, that means you might work in a job or build your portfolio longer than you actually need to. We want to find the balance of getting what we want out of our lifestyle and making the most time for ourselves. And so if you're working unnecessarily to achieve an income that you don't actually need, that kind of goes against the purpose, right? And so I really recommend just starting rooted in what you're actually doing today. Now, I expect for some people who are listening and watching the podcast right now, they might be okay with their current income.

6:25You know, if you are established, you like your lifestyle, that's really all you have to do is figure out your budget and average spend if you're comfortable staying at this level. If you are not and you want to expand your lifestyle in some way, I would just say try and be specific about that. So if your budget right now is$5 ,000 a month, I wouldn't just randomly say$10 ,000. I would just spend 20 minutes thinking about the things that you would want that you don't have now and how much more that costs. It's really not that hard. I actually have as part of my book, Start With Strategy, there's a Excel file that goes through this and actually helps you calculate these numbers.

7:05So you can do that or you could just do it on a piece of paper. Honestly, it's not that hard. So I'm going to assume that our budget and what we want is$7 ,500 per month. But there is one more advanced move that we need to do, right? Like we want$7 ,500 a month in today's dollars. And I know this is going to get a little bit nerdy, but this is, I think, truly the number one mistake people make in setting their financial goals is not accounting for inflation. This is a big picture stat, but the value of your dollar on average gets cut in half every 30 years. Just think about that for a second. So if you are near my age, I'm 38 years old, I probably will be retired at 68, hopefully.

7:49In 30 years, if I was making$10 ,000 a month, it would be the equivalent of having$5 ,000 a month today. Now, this is a big problem that a lot of people face in retirement, and I don't want all of you to face that problem. So I want you to adjust upward your goal to account for inflation. For us, in our example here that we're following along with, our goal is going to be$10 ,000 per month. We're going to adjust up for inflation from 7 ,500 because we want to make sure that our spending power stays at that$7 ,500 level well into the future. And in the future, you're likely to need at least$10 ,000 to be able to do that.

8:29I'm not doing this in a very precise way. I'm doing$10 ,000 because that's a nice round number. But adjust upward your goal to account for inflation. that's the main thing here. So that's step one in figuring out how much you need is what actually you need to fund your lifestyle. Step two is going to come where we figure out what our equity goal is in our real estate. So we need a real estate equity goal because even though the way that you are going to replace your income long-term is through cashflow, I personally believe that it's easier to think about this by thinking about how much equity you actually need.

9:07Now, I'm not one of those people who doesn't think cash flow is important. I only buy deals that cash flow, but I am not focused on cash flow early in my career because what I believe and what I know based on all of the analysis I do is that the best way to have cash flow later in your investing career is to have a lot of equity. Once you have equity, once you have money, cash flow is super easy. So I'm going to extrapolate our goal out from we had$10 ,000 a month, but for this calculation, we need to do annual. So what I'm going to do is say that we want$120 ,000 per year in cash flow. And then the next thing I need to look at is what cash on cash return do I realistically believe that I can get 20 years from now?

9:51And I know that's hard to project, but it's got to be somewhere between five and 8%. I'll tell you that. That's the number you should be picking. I like 6%. I think we'll be able to do better than 5%. 8 % is a little bit higher. This is not deals that you've held on to for a long time saying you can go out and buy off the MLS. You can buy an apartment building and get this number. This is equivalent to what anyone who's familiar with commercial real estate would call a cap rate. And so I believe 20 years from now, I'm still going to be able to buy six caps and that's a 6 % cash on cash return.

10:23So all I'm going to do is divide my annual goal of 120 ,000 by 6 % cash on cash return. And what I know from that is that I will need$2 million in equity to be sure, pretty much 100 % sure that I could get the cash flow I need at the end of the day. So for me, this becomes my goal as a real estate investor. I'm sitting here in 2025 thinking, how do I get$2 million in equity by the time I want to retire? This is obviously just one example. If you said you wanted, I don't know,$150 ,000 a year in income, but you're a little bit more conservative and you think that you could only get a 5 % cash on cash return, then you're going to need$3 million, for example, in equity.

11:14Or if you only need$100 ,000 and you're more confident that you're going to be able to get an 8 % cash on cash return, what does that come out to be? That's$1.25 million. So whatever these numbers are for you, this is the financial goal I want you all to come up with. How much equity does your portfolio need to be worth? And I'm not saying the value of your properties. That is not what I'm saying. It's the equity you actually own in those properties. That's what you need to be calculating. So if it's$2 million,$3 million,$1 million, doesn't matter. Figure this out for yourself. Okay, so now we have answered question number one.

11:53Remember, we started by saying, how much do you need and how long? We now know how much. We're going to use$2 million as our example. And we're going to get to how long now, which is what we call your time horizon. And this is super important thing that not a lot of people think about. but your time horizon is really going to dictate your investing strategy. I'm going to explain that more right after this quick break. For decades, real estate has been a cornerstone of the world's largest portfolios, but it's also historically been sort of complex, time-consuming, and expensive. But imagine if real estate investing was suddenly easy, all the benefits of owning real, tangible assets without the complexity and expense.

12:34That's the power of the Fundrise flagship fund. Now you can invest in a$1.1 billion portfolio of real estate, starting with as little as$10. The portfolio features 4 ,700 single-family rental homes spread across the booming sunbelt. They also have 3.3 million square feet of highly sought-after industrial facilities, thanks to the e-commerce wave. The flagship fund is one of the largest of its kind. It's well-diversified, and it's managed by a team of professionals. And it's now available to you. Visit fundrise.com slash bpmarket to explore the fund's full portfolio, check out historical returns, and start investing in just minutes.

13:08Carefully consider the investment objectives, risks, charges, and expenses of the Fundrise flagship fund before investing. This and other information can be found in the fund's prospectus at Fundrise.com slash flagship. This is a paid advertisement. Most investors spend more time chasing deals than reviewing their insurance. But a quick coverage check can be fast, easy, and one of the smartest ways to protect and even improve your property's cash flow. As the months get colder, frozen pipes, icy walkways, and seasonal wear and tear can increase the likelihood of claims. And traditional insurance companies aren't always built to handle these claims quickly or smoothly.

13:42That's why more real estate investors are turning too steadily. They focus exclusively on landlords, whether it's a single family rental, a BRRRR builder's risk policy, or midterm holiday guests. You get fast quotes, flexible coverage, and protection for property damage, liability, and even loss of rental income. Now is the perfect time to review your rates and coverage, get a quote in minutes at biggerpockets.com slash landlord insurance. Steadily, landlord insurance designed for the modern investor. Starting something new is terrifying. When you launch a business, the what ifs hit hard. What if no one buys?

14:16That's why Shopify matters. Shopify powers millions of businesses and 10 % of all e-commerce in the US. You get ready to use templates, built-in AI tools to write product descriptions, email and social campaigns to help you find customers. Plus, 24-7 support if you get stuck. It's time to turn those what ifs into with Shopify today. Sign up for your$1 per month trial today at shopify.com slash rookie. Go to shopify.com slash rookie. That's shopify.com slash rookie. Welcome back to the BiggerPockets podcast. I'm Dave Meyer going through how to set good quality financial goals that will help you formulate a great investing strategy heading into 2026.

14:57and honestly, for the rest of your investing career. Before the break, we talked about just needing to know how much you want, and I recommend thinking about that in terms of equity. There's a couple of steps to that. As a reminder, figure out the after-tax income that you want, adjust it for inflation, divide it by the cap rate you think you can get, and that's going to get you that equity number that you want. We're gonna be using$2 million as an example. Now, the question then becomes how long? And this one is a little bit more of an art than a science because most people will just say ASAP, right?

15:32You want to be retired in three years or five years or seven years. And for some people, that might be realistic. If you were just trying to replace your income without any additional lifestyle enhancements, I would say that the average there is eight to 12 years. You could probably replace your income, assuming that you have enough capital to buy your first property today. So I think a lot of people are in that situation. So 8 to 12 years could be a good time frame. That's for doing pretty plain vanilla kinds of deals. If you're willing to be a little more active, maybe take on a little bit more risk, which we're going to talk about in a little bit, you can speed up that timeline.

16:12But for most people, I think we're going to be talking about something around 8, 10, 15 years. And that might feel like a long time, but I have been doing this for 15 years. and I promise you it is really not that bad and it is so worth it. Taking 15 years to achieve financial freedom is amazing. I am sorry that people on the internet lie and say that they do this in three to five years. Maybe some of them do, but I promise you the average person that takes 10 to 15 years, unless you wanna take on a lot of risk or you're pouring 60 hours a week into this business, 10 to 15 years, totally doable.

16:47You could probably do it in eight to seven if you're gonna be even a little bit active in your portfolio. So just think about that for yourself, where you're starting out and where you want to get to. I'm going to just assume for the purposes of our example that we're going to start with, let's call it$75 ,000 in savings that we can invest today and that we want to retire within 15 years. Now, I understand that some people want to do it faster and that is definitely possible. And this is the time to dictate that. If you want to go faster, you need one of a few things to happen. One, you need to be starting with a lot of money.

17:22I know that sounds really silly, but it's true. If you have a million dollars, you're probably going to be able to do it pretty fast. That's a lot of money to start with. The second thing you could do is try and increase your income. I did this by deciding to go to a state school and go back to college for a master's degree and try and increase my income to accelerate my financial freedom through real estate by making more in my day job. Some people might want to do that. The third option is to do it through real estate. And I know this is a very common question on here, but it's not required.

17:54But if you think that you could go and flip houses and make a ton of money, that might be something to consider. If you think you can wholesale in addition to your job, or you can wholesale and make more money than you do today, also a decent option. If you think that you would be a great real estate agent and would be able to make more money than your current job. That's another way that you can do it to some people. And then the fourth option is to do value add real estate investing. And so that would be, I think for the majority of people listening to this podcast, probably doing something like the BRRRR method, because that's going to allow you to invest in relatively safe rental properties, but also build equity at the same time.

18:35And so just think about which, if any of those things you want to do. If you don't want to do renovations, you don't want to change your job, and you're kind of just, you know, want to coast, that's totally fine, but it's going to take you probably 10 to 15 years. If you want to shorten that to let's call it seven to 10 years, think about which of those things you can realistically do. Can you get more income or are you willing to put in the time and effort into doing things like the BRRRR method to grow your equity faster? For the purposes of our example, I'm going to say that we have$75 ,000 to invest today.

19:07and that we're going to shoot for, let's call it a 12-year time horizon. So that's what we got. That is step one of our long-term goal. That's all it takes. I'm blabbing about and explaining this, and we did this in like 15 minutes, right? So you can do this in your own time. Take 10, 15, 20 minutes and figure this out. We know now that our goal as a real estate investor, the thing we need to be focusing on when we set our tactics, when we pick what deals to do, what markets to invest in, Our goal is to have$2 million in equity in 12 years. That's the goal that you need to set. And if you have this, I promise you, everything is going to get so much easier.

19:46It sounds so simple and it is, but everything will get easier if you start to think about your portfolio in this way. Now, before we move on to the one year goal, which we're going to do in a minute, just do a gut check and make sure that this sounds reasonable. Like if you like if you want to do the math, you could do that because I would recommend that. But if your goal is like, I need$5 million in five years and I'm starting with 50 grand, I'm sorry, that's just not going to work. If you're a rental property investor, you can expect your money to compound at somewhere between 10 % and 25%, depending on how involved you want to be.

20:19If you're just buying regular deals, 10 % is probably, 12 % is probably where you're going to be. If you're going to do the BRRRR, you could probably do 20, 25, maybe 30%. And so think about that and see if you're within that realm of possibility. If your goal is way bigger and you're going to need to compound at 50 or 60 or 70 percent, honestly, you can do that, but you're going to have to flip houses. It's the only way you can earn those kinds of returns in real estate. And that comes with risk and a lot of time. That doesn't make it wrong, but that's how you're going to have to do that. So think to yourself, is it worth it to me to do flipping and take on more risk and commit more time?

20:56Or should I just back out my goal a couple of years and take on less risky, less time intensive kinds of strategies? That's totally up to you. But just think about that before we move on to our one year goal. So that's step one of your financial goal. And then we're going to move on to our one year goal, because obviously having that sort of 12 year vision isn't good enough. You need to start now backing into what you have to achieve this year to make sure that You're on track for year two, for year three, for year four, and so on, right? So the place that you need to start for your one-year goal is by doing something what I would call a resource audit.

21:35And this sounds fancy and corporate, but it's not. It's just a question of how much time do you have to commit to real estate in the coming year and how much money, right? Everything comes down to these two questions, right? Our first year goal was what amount do you want? In what timeframe? our one-year goal is going to come down to those same sort of variables that we're dealing with. Now, we already answered the question for our example, which is$75 ,000. But for all of you out there, I really, really encourage you, if you haven't done this yet, think about what are your investable assets right now, right?

22:12Investable assets are not your total net worth. It's how much money you can responsibly put into real estate today. So let's just use an example and say, you have$50 ,000 saved up. You shouldn't invest all of that. You can't invest all of that because budgeting experts say you need three to six months of emergency funds to weather a storm. We're going into a difficult economic period, I believe. And so you probably want six months of emergency funds. And if you have kids, that might be even longer. That's up to you. But you need to set aside some money. And so it's not just the number in your bank account.

22:47That's not your investable assets. What you need to figure out is how much money you can responsibly put into real estate. So figure that out for yourself. But for our example here today, we're going to use $75 ,000 as an example. Now, time is another really important variable here because again, if I wanted to grow as quickly as possible, I would flip houses. That is the best way to earn a lot of money quickly in real estate, but I don't have that time. And I, in the example that we're going to use is going to say, we don't have that time. We though are willing to put in, let's call it 10 hours per week for real estate.

23:29To me, 10 hours a week, you're going to be able to do a lot in real estate investing. You're going to be able to find great deals. You're going to be able to do value add. You're going to be able to self-manage. You're going to be able to do a lot of things that you might want to do to maximize the early years of your investing or whatever, the next years of your investing, if you put in 10 hours a week. And so figure that out honestly for yourself, though. If you don't have 10 hours a week, be honest about that. Because if you buy a deal that requires 10 hours a week of a commitment and you only have five, you're not going to operate that deal well.

24:02And this is exactly why you have to go through this process, because I see so many investors going out there and just buying whatever deal. They buy a short-term rental and they don't have a lot of time to furnish it. And then it just winds up being kind of a crappy short-term rental and it doesn't perform. And then what's the point of doing that in the first place? So be honest with yourself about how much time you're going to be able to commit, because that's how we're going to pick what deals that you should be doing in the next couple of years. So for me, if I'm trying to take a medium aggressive approach, which is what I recommend to most people is like, you don't need to be really passive and really conservative.