Watch This BEFORE You Turn Your House Into a Rental Property

Where’d all the cash flow go? More than ever, rental property owners are waking up to find less and less mailbox money coming in every month. This is doubly true for those who used low down payments to house hack and turned their properties into full-on rentals. So, what do you do if you have a rental property giving you low, no, or negative cash flow? Should you sell it and swap it for another investment or ride it out, betting on future appreciation gains? We’re giving our thoughts in this Seeing Greene!
As always, David and Rob are here to answer your pressing real estate investing questions. But resident yacht tycoon James Dainard also brings his twenty years of investing experience to the show to help this week’s rookie real estate investors. First, our very own Noah Bacon asks what he should do with a negative cash-flowing house hack that has six figures in tax-free equity. Then, we ask a question everyone wants an answer to, “WTF is wrong with investors these days?” If you want to turn your house into a rental property, stick around because two more investors ask whether it’s worth it AND when you can start writing off those lucrative real estate tax deductions.
Want to ask David a question? If so, submit your question here (www.biggerpockets.com/david?u...) 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 jump on a live Q&A and get your question answered on the spot!
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Show notes at: link.chtbl.com/BPRE
00:00 Intro
01:38 My Rental is Losing Money!
10:35 STOP Looking for CASH FLOW
15:24 WTF is Wrong With Investors?
22:19 Why Do High-Priced Homes Appreciate Faster?
26:45 Primary Won't Make a Good Rental?
30:03 When Can I Start Expensing Rental Costs?
32:55 Ask Us Your Question!

[@andrews319]

I love that Rob just called his CPA on the phone and we got to hear a CPA’s professional opinion and thought process on the situation. Pretty cool. High value content for sure. 🔥🔥

[@ProjectRE]

Thanks for tapping in! Rob is the best!

[@DanielDoesRentals]

It is hard to find a market where you can get good appreciation and good cash flow. You need to decide what your goals are, and if you want to hold homes and live off of cash flow forever or just a few years and then sell for a large lump sum (or 1031). If you want to hold rentals for long term, you need to buy in a cheaper market and look for good cash flow. Equity does not matter that much in these cases, however when you have built some equity, cash out refi the place and buy another. If you want to sell and get good appreciation buy in a higher priced market, but expect less or even no cash flow.

[@r0c1ndave]

That last one hit the spot for me. Doing the same thing. We listed as soon as we closed on our next primary residence and had tenants signing within 5 days for our MTR! 🎉🎉

[@ProjectRE]

Lets goooooo! love to hear it

[@PeaceandQuiet4]

RE cash flow vs appreciation is the same as stock dividend vs growth. Some like one vs the other, and some prefer getting both. Getting both, however, generally mean your appreciate/growth and cash flow/dividend won't be as high as if you chose one or the other.

[@andratoma9834]

Food has doubled and tripled in NYC

[@mattbontrager]

Always happy to help man!

[@michaeledge2421]

I don't think the point at 10:53 is accurate. I'm in a similar house hacking situation and you should only be able to take the homeowner exemption on the portion that you live in. If you're renting out 4/5 rooms and living in one, it means only 20% of the capital gains would be avoided. I just don't want anyone to get slapped with a big unforeseen tax hit or an audit.

[@raulvilla942]

Great content today as always and the value is really appreciated. Raul el Realtor de Chicago.

[@Slowcarfastbeans]

HOA and property tax increases in the last two years are untenable and will eventually end up eroding the buffer for emergencies. Unless you double down, the only safe move is to cap out while property values are still high.

[@DarkhanYessilbay]

Watching from Kazakhstan

[@ProjectRE]

Thanks for tapping in! Tell a friend to tell a friend haha

[@aminahlambertis8316]

Great show today and always! Thank you BP❤

[@ProjectRE]

Thanks for watching!

[@oweng9523]

This was a great show thank you

[@ProjectRE]

Thanks for watching Owen!

[@Adam-gg7ps]

The video I have been waiting for...

[@chrissprague4025]

What do you think AGI will effect the job market and real estate investing?

I love you podcast I would like to submit a question , how I can get there.

[@marylouisone]

Actually it’s beyond free , it’s priceless , my real estate IQ has increased immensely ever since I started listening to your podcast regularly

[@ProjectRE]

Thanks for tapping in! We love that you take so much value from it. Will we see you at BPCON this year?

[@jennifer-harbaugh]

Property taxes DOUBLED from 2022. Any problem solving strategies for that situation?

[@HappyPenguin75034]

Higher rent

[@Invest4Cash-Flow]

Hey beloved people that’s not true my cash return is 43% and I’m only renting

[@chrissprague4025]

What are your guys thoughts on how 3d printed houses and AGI will effect real estate investing?

[@Cashflowsavage]

2 out of five years of ownership tax free

[@Moises.Cisneros295]

Hey question… why don’t y’all make a BP app? There is an app for everything in this world it seems like but there is not one for investors or at least I have not come across any!

[@MrJosh066717]

Good idea

[@delontamcclain4571]

I'm a house hacker who is currently looking for another property. How can I find more information on tax exemptions as a house hacker in D.C. ?

[@legacyopp9318]

500 in profit. Property taxes go up. Now 350 in profit. Insurance goes up every 6 months and rents are going down not up.

[@HappyPenguin75034]

Rents are up in sfh. Stop crying

[@forrestgreen2348]

@@HappyPenguin75034 who are you? Not enough

[@natianatayaba4279]

As an owner, do I receive a 1099MISC or 1099NEC from Property Manager?

[@Odelle8]

@joseph chaviet if you can pay down your fha down to 20% ltv, you may just have enough to break even or cashflow by getting rid of your PMI.
Also, I’m assuming your fha interest rate from 2 years ago is better than what you can get today on your new home. If so put more down on the new property to offset the negative cashflow on your first mortgage.
You mentioned your saving power is pretty good, I’d assume this would be easy advice for you.

[@dimitrivancamp1013]

Why don't you sell on a wraparound mortgage

[@jamesj3395]

Good luck finding a “cash flow” property with a 10% C.O.C.R. in 2024 with the traditional investing model at 6.5-7% mortgage rates that isn’t in the ghetto or a high risk disaster area. Which also means the true return after expenses, evictions, turnover costs, etc. is way below a 10% return. Finding a cash flow property in 2024 that isn’t long term trash is nearly impossible.

[@TravelwithRichardandJudy]

The whole purpose of real estate investing is cash flow. All equity build does is increase your property taxes until u are dead and your heirs get the benefit of equity build.

[@ShameenYakubu]

There are way more ways to use equity… not sure why people say this as if equity is untappable

[@efrainguzman751]

Just took out a 40% mortgage against my 100% paid off home…..ended up with 60k borrowed at 7%….any advice for investing in the western Nebraska/Wyoming/Colorado areas? For an older dude it’s freaked awesome to nourish my mind with your CZcams vids at 0430 while I maintain a strong relationship with my kettle bells…thanks again for any advice! Get prepared, Stay prepared!

[@HappyPenguin75034]

Find homes before you go into debt and 7% cash out is dumb. Really dumb.

[@-Jason-L]

​@HappyPenguin75034 not if he can get cash flow, or appreciation

[@HappyPenguin75034]

@@-Jason-L he won’t - he didn’t even find a home before cash out

[@sidshri6080]

Wow Rob! CPA on speed dial 🫡

[@BUY_YOUTUB_VIEWS_g0g97]

Future CZcams legend!