So many real estate investing influencers constantly talk about buying dozens, even hundreds of rental units to live your dream life and become a millionaire. But, as someone who’s been consistently investing, doesn’t own dozens of properties, and has made millions from real estate, I thought I’d do the math.
But there’s a better way to do it. Instead of saving up a down payment every two years (hard enough in this economy), I’ll show you the way I “recycled” my down payments to turn one rental property into an entire real estate portfolio.
Dave Meyer:
You want financial freedom, but the real estate influencers posting on social media all own dozens or even hundreds of units. Is that really what it takes to live on passive real estate income? No, you don’t need to scale a giant portfolio. You don’t even need 20 properties. If you can just buy one property every two years, you will be completely set financially and that doesn’t even mean you have to save up an entire down payment every two years. Today, I am going to explain how you can buy a property every other year and to prove it, I built a financial model demonstrating how much you need to save, when to buy your next property, and how to recycle your capital over and over. I’m going to show you an example with real math of how you can grow a two and a half million dollar portfolio with over $200,000 in annual cash flow by just buying one deal every two years.
That is the power of investing in the US housing market. So forget the massive scale. Forget the bigger is better mentality. If you want to embrace a sustainable low risk path to building wealth, this approach is for you.
What’s up everyone? I’m Dave Meyer, Chief Investment Officer at BiggerPockets and real estate investor myself for 16 years now. Today on the show, we are cutting through all that noise out there and I’m just going to say the point of this episode upfront. You do not need to own dozens of properties or hundreds of properties to achieve financial freedom. You only need to buy one property every two years and that is easier than you think or than it might sound. And in today’s episode, I’m going to give you a framework that I personally use myself and I’ve seen thousands of others use to successfully build long-term wealth in a sustainable, manageable way. The reason I use it and like it so much is because it is first and foremost, it’s just achievable for most people regardless of where you start. If you’re starting at 25 years old or 55 years old, it works.
If you’re starting with 50K in income or 250K in income, it works. That’s the thing I just love about it most. Second, it is sustainable. It is not so much work or so much effort that you have to quit your job or you have to give up other parts of your life. This is an approach that works for people who are busy. Third, it doesn’t rely on market timing or perfect investing conditions. Fourth, it ensures that you capture all the benefits of real estate both in the short and long term. And fifth, it is just reliable. This is a reliable proven way to get you to financial freedom. It’s an approach that works with really any kind of investment, whether you’re investing in stocks or bonds, or in our case, we’re talking about real estate. And the number I have come out to for what the best pace is to try and shoot for every two years.
Buy a rental property, whether it’s a single family, a duplex, or triplex, every two years. I like this number because it is feasible. Almost anyone can do this and I will explain to you exactly how you can do it. It is sustainable. Again, it works on almost anyone’s schedule and it is reliable. It can get you to financial freedom in 10 to 15 years and I will show you the math in just a minute to prove that to you. So that’s what we’re talking about here. That’s the goal that you should be aiming for is trying to buy a property every two years. Now, I don’t want everyone to think that this has to be exactly 24 months. If you want to do it every year, great. If it sometimes takes you three to four years between deals, that’ll happen. That’s totally fine. I actually personally waited four years between my first and second deal.
But the goal here, the mentality that you need to have is to keep buying and keep buying ideally on regular intervals. If you keep buying on regular intervals, that’s the key to attaching yourself to that long-term average performance of the housing market and the rental market. But now we got to talk about how you actually go out and do this. What are the steps that you need to take to make this happen? Because it’s natural and it is true that for most people who are just getting into real estate or maybe done one or two deals, just getting that next deal, one more deal can be intimidating, let alone buying every two years. So let’s talk about how you can pull this off. This is probably obvious, but the major barrier for most people is going to be capital, money to go out and buy these things.
Real estate is a very capital intensive industry. And honestly, that’s a legitimate barrier. We’re going to talk about how you can get around that. I have two great strategies that I’m going to show you, but if you’re worried about the other stuff like managing the properties, I promise you, you can do that. It’s really just not that hard. I think people really exaggerate how difficult it is to be a property manager. We’re not going to get into that today. We have other stuff to talk about, but trust me, you can do the property management part that should not be a barrier. We have other episodes of the podcast that you can listen to about being a great property manager. Today we’re going to talk instead about these two strategies, these two levers you can pull to make this buying a property every two years possible.
Now the first is probably a little bit more obvious. That’s just saving money. You set aside X dollars a month from your W2 income toward the next down payment. If you can save enough money to buy every two years just from your lifestyle and income, that’s amazing. It is huge and it is going to help. As an investor, you’re going to need to put usually 25% down unless you’re doing an owner occupied like a house hack, which I highly recommend because if you do those, if you do a house hack where you live in one unit, rent out the second, rent out, you can actually buy up to four units at a time. So you can live in one unit, rent out three. You can put as little as 3.5% down. So that is a great way to do this. That’s going to lessen the amount you need to save up between deals.
That means you can maybe go faster or it’s just not going to be as hard to save up and buy a property every two years. So that is one pretty critical decision to think about. Are you up for a house hacking? I hope so. I’ve done it. It’s a great way to get into the game and to scale up and it really makes everything easier. Just think about it this way. If you want to buy, let’s call it a $400,000 duplex. Investors are going to need something like $110,000 saved up. That is a lot of cash. You’re putting 25% down, that’s a hundred grand and you need five grand for closing costs, cash reserve, something like 110. House hackers need 15 to 20 grand if you’re putting 3.5% down. So there’s a huge difference in scalability and it’s an important one if you’re just going to save up money for those deals because again, it’s going to be a lot harder to save 110 grand every two years than it is to save 20 grand.
So hopefully this makes sense to you why this works financially, but I’m sure you probably have questions about how this works for you. How do you actually go out and buy all these deals as you’re probably figuring out just how to save up for one property? How do you do it every two years? Well, I am going to explain that to you, but first we have to take a quick break.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer today talking about how a simple formula of buying on rental property every two years can help you achieve financial freedom in les time than you think. Before the break, we talked about why every two years and why dollar cost averaging this idea of buying assets at a regular interval over a long period of time is such an effective strategy. But there is that second way to access capital, which is really just recycling the money that you’ve put in, plus taking advantage of the effort that you put in as a real estate investor by forcing appreciation, by doing renovations, by doing value add projects. This is a key way that pretty much every single investor I know uses to keep buying at a regular interval. Here’s kind of how it works. So you save up for that first property, right?
Yo maybe do a house hack or maybe you can save up $100,000 for that $400,000 house. I should mention, you don’t need to buy a $400,000 house. You could buy a $250,000 duplex somewhere in the Midwest. You can partner with someone, but you find a way to get that first one. Then what you do is often called the Burr strategy. And I’ll just talk about it step by step. You buy the property, then you got to renovate it. The object here, the goal here is to do a project, a renovation to increase the value of the property and this should hopefully make sense. You want to increase the value of that property buy more than it costs you to do that renovation. If you spend 50 grand on that renovation, you want it to increase the value of that property by a hundred grand or 150 grand ideally.
So that’s a key thing here. You need to look for properties that have that opportunity. You can’t go out and buy a perfectly polished thing in the nicest neighborhood. You’re not going to be able to add value to that. That’s already at its highest and best value. You got to go out and buy something a little rundown. You got to find something you can add a unit to. You could find something you could do a gut rehab. There are lots of ways to do it, but what you got to do is force the value of that property up through your own effort and renovation. Once you do that, you have built equity and you can take the capital out of that deal using different financing options. You can do it through a refinance. You could do it through a home equity line of credit. But let’s just talk about how this works in the Burr strategy using a refinance.
Refinance is just another word for getting a new mortgage. You’re paying off the old mortgage with the new mortgage and you’re going to pull out some equity. Here’s a simple example. Let’s just assume that you go out and buy a $300,000 duplex. You’re doing full investor thing. You’re putting 25% down, which comes out to 75K. Now, I know not in every market, you’re not going to be able to go out and buy this personally. One of the reasons I like to buy and invest in the Midwest and the Southeast is you absolutely can find duplexes that need renovations at this price point. You can actually find them cheaper than that. I buy properties that are cheaper than that. So it’s absolutely possible. I invest out of state. So I just want to call out that you absolutely can do this regardless of where you live if you just build the right systems.
So you go out there, buy a property $300,000, down payment is 25%. So you’re putting in $75,000. That means that your mortgage is $225,000. But then you do need to actually do the renovation. So I’m going to assume, and I’m trying to make this example simple here, but I’m going to assume that the renovation that you’re going to do on this $300,000 property is $50,000. That is a good size rehab for a property that costs that much. And just for simplicity’s sake, I am including the soft costs in that cost of the renovation. So I am saying that this is $50,000, which we are going to borrow. We’re going to use, let’s call it a hard money or private loan to get this. And I’m including the interest costs in that $50,000. So let’s just say for simplicity here, labor and materials are 40,000, our soft cost.
How much it takes to borrow that 40,000 is another $10,000. So we’re all in for 50 grand of cost on this renovation. That in this hypothetical scenario brings the value of the property up to $450,000. That is not made up. I have done projects that do this. I see people who do these kinds of projects. You can put 50 grand in and get the ARV up to the ARV means after repair value. That’s what the property’s worth after you’ve done the renovation. You can put in 50 and raise the value of it by 150. You got to find a good deal. You got to do it right, but that is absolutely possible. And once you’ve done that, this is the real key to being able to buy every two years to scale your portfolio. Because now you’ve invested $75,000, but you actually have $175,000 in equity.
Your property is worth 450 now, but your remaining loan, that mortgage that you took out is 225. So now you have equity that is worth $175,000 because now instead of a property worth 300, it’s worth 450. You still have that mortgage of 225. That’s a liability that you have to pay back. You have $50,000 that you have to pay back to the hard money lender. That’s another liability. But once you’ve paid those back, you have $175,000 in equity. You put in 75 of that. So you’ve made $100,000 in profit so far. And this is where you do the refinance. And basically what you do is you go out and take out a new mortgage. So you’re going to go to a new bank. You can go to the same bank and say,” I want to do a cash out refinance. “This is not magic. This is something people do literally every single day.
I’ve done dozens of them in my career. They’re very, very common. So what you do is say,” I want to cash out refinance. “What they’re going to say is, ” Okay, great. You’re an investor. You’re basically, it’s like buying the property again. You got to put 25% down. Now you got to put 25% down of that new value, which is $450,000. So your new down payment rather than being $75,000 is going to be $112,500. And that means you had 175 in equity, you’re going to have to use 112.5 of that for your new down payment, which leaves you $62,500 that you can refinance out of this deal. Now think about that for a second. Remember how much we put into this deal in the first place, $75,000. I’m saying that if you do this right, you can pull out $62,500. Now, some people talk about a perfect BER that would be pulling out 75,000, but you don’t need a perfect BER.
As just this example shows, you are going to be able to pull out about 80% of what you put into it on a very good BER and you should be able to do a very good BER. Now on top of that, you have to assume if you’re buying a good deal, you’re also getting cashflow from this deal. Even if it just cash flows $500 a month, which is a reasonable amount that’s not crazy, it’s absolutely achievable. That means you’re making $6,000 a year in cashflow. And if you’re waiting and buying every two years like I’m recommending, that’s another $12,000 that you’re going to be able to put to your next deal. So between your refi and two years of just collecting cash flow, you’re back at $75,000 that you can invest into your next deal and you own a cash flowing rental. Now using this example in extrapolating, you are going to need to put in a little bit of extra money because you’re going to need closing costs.
You’re going to need cash reserves. That’s probably another $10,000. Maybe appreciation takes your acquisition cost from 300,000 to 305 to 310 or something like that, but you could probably put in 10 to $20,000 in new capital every two years, or just use the $74,000 this first property has made you. Now, hopefully you can see how powerful this is. You save up for that first deal, which is a big deal. It is hard to do to figure out how to do that. But once you do it, the momentum starts to build. The snowball starts to roll downhill and you can recycle this capital as many times as you want. And this is a proven way for you to be able to buy deals every two years, even if you’re not house hacking. Now, if you put those two things together, that is probably the most powerful, fastest way to achieve this.
But as you can see, even if you don’t want to do owner occupied, if you want to invest out of state like I do, you can use this approach to recycle your capital and build that portfolio. Now this is obviously just the example of one property, but what does this look like over the long term? If you keep doing this just once every two years, does it really amount to that much? Yes. The answer is absolutely yes and I’ll show you how much it amounts to right after this quick break.
Welcome back to the BiggerPockets Podcast. I’m Dave Meyer. Today we’re talking about how all you got to do is buy one property every two years and you can become financially free. Before the break, I walked you through an example, something that would work in the Midwest or the Southeast using a $300,000 property. But even if you invest somewhere else, you want to do house hacking, the same principles apply. You could recycle your capital and you can buy every two years. Now in that example, you could pull out 62,000, you could get annual cash flow of about six grand, but let’s talk about the big picture. What does this actually amount to if you did this for 30 years? And I’m going to show you a model that I created. Basically what I do is take that one deal that I gave you an example and I buy that deal almost exactly the same every two years for 30 years.
And I decided not to get bogged down in a super complicated spreadsheet. I hit all of those lines for you if you’re watching this on YouTube. So here’s how the model works over 30 years. So you put in $75,000. That is the hardest part. It is the hardest part by far. And then the assumptions that I make is that for every new deal that you do, you need to bring $20,000 of new capital. You’re going to recycle all the rest. So every two years you need to save up an additional 20,000 or you need to go out and find a partner who can contribute $20,000, which of course is a lot of money but is not unreasonable. In this world, if you want to get into this, you need to be able to save 20 grand every two years, or you need to be able to partner with people who can help you.
Both approaches I’ve used, both approaches completely common, completely workable. So again, you get that first deal, then you’re putting $20,000 in every two years and you’re forcing $50,000 of appreciation in every deal you do. Totally reasonable. I’m not even asking you to do 100,000 in appreciation, right? If you do this every two years and refinance that $50,000 at the end of just 10 years, your total equity of your portfolio will be worth over a half a million dollars, 575,000. And I just want to call out that in those 10 years, all you contributed was 155,000. So you have more than tripled the equity that you have put into that deal. And at 10 years, your cashflow is about $40,000 per year. That’s pretty good, right? Over $3,000 a month in tax advantaged cashflow. But as I said at the beginning, real estate deals get better over time.
Your cash flow goes up over time. The amortization, basically loan paydown, people paying off your mortgage for you gets better. So by year 15, your portfolio value rather than being 576 is now 904,000. Instead of making about $3,000 a month in rent, you’re now making over $5,000 a month in tax advantaged cash flow and it gets better from there. By 30 years, if you start today 30 years from now, your portfolio will be worth nearly $2.5 million and your cashflow tax advantage cash flow is going to be nearly $220,000 per year. That is incredible. During that time period, the capital you’ve contributed is $355,000. It’s nothing to sneeze at. That’s a lot of money, but 2.5 million, which is what your portfolio is worth, is a heck of a lot more, right? And it’s generating $218,000 for you every single year. That’s it. This is just buying every two years, recycling your capital.
I’m not talking about going out and starting some fund or syndications, not recommending you buy massive apartment buildings. In this example, I’m not even telling you you have to go out and house hack. You could just go buy affordable small multifamily properties and achieve these kinds of numbers. This is how it’s done. This is how financial freedom is done. It’s reliable. It’s relatively low risk, although all investments do have risk and it is proven. This approach works for anyone who has a stable W2 income or any kind of income and wants to invest in real estate on the side to eventually replace it. It’s for anyone who wants simplicity, right? Not a second job. We’re going out there and flipping houses or managing a large portfolio. This is achievable for people in their spare time. It’s relatively simple and it’s obviously more complicated than doing nothing or investing in the S&P 500, but it’s a lot better financially in my opinion over the long run.
This is also a great strategy for people who are risk conscious, who don’t want to take huge swings and want to take a very risk adjusted approach to getting good returns in the real estate market and frankly for people who want to sleep well at night. This is good for people who start in their 20s or their 30s or their 40s or 50s. It really works for everyone, actually not for everyone. I will say there are a couple people it doesn’t work for. I’ll just call that out. If you’re trying to replace your income in two or three years, not going to work, obviously. In this model after three years, your cashflow is only 6,500 bucks a year, right? That’s obviously not going to work for you. You are going to need a more agressive path. If you just want out of your job, you want to go into real estate, you’re going to need to probably flip houses or wholesale or something to get your income up in two or three years.
This won’t work. If you want to build a big real estate business, if you want to own thousands of units, all the power to you, go for it. You’re going to need to be more aggressive than this. You’ll probably need to go out and raise a lot of private capital and buy bigger units. That’s a perfectly good path as well. The third avenue for people this isn’t great for is if you happen to just have a lot of cash and you want to deploy it quickly, you could probably just do this, but I would say instead of buying every two years, buy every six months or buy every year or whatever. But for everyone else, for the people who just want to achieve financial freedom 10, 15, 20 years from now, this works for almost everyone. I just want to say that this works regardless of market timing.
If you’re worried about a market crash, dollar cost averaging actually helps because you buy at different points in the cycle. Sometimes you’re going to buy when prices are low. Sometimes when you’re going to buy when prices are a little bit higher, but over the long run, you are attaching the performance of your portfolio to the long-term performance of the United States housing market, the United States rental market, pretty powerful markets. So if you can do that, the timing matters so much less. That’s the point of dollar cost averaging. Maybe you’re worried you can’t find good deals. Deals are kind of hard to find right now, but the beauty of this approach is that you’re giving yourself two years to go out and find new deals. So you should be able to do that absolutely if you’re committing yourself to this. If you’re worried about interest rates being too high, it’s kind of the same idea as the market timing.
We don’t know. Interest rates might be up in three years. They might be up in 10 years. I actually think there’s a good chance they will be up. And so the reason I love dollar cost to averaging is because it’s kind of the humble approach. You’re admitting you don’t know. You don’t know if interest rates are going to be up next year or in two years or three years, but you’re going to buy anyway. You’re going to buy when they’re six, they’re going to buy when they’re four. When you’re going to buy when you’re two, you’re going to buy when they’re eight. And the average, that’s what you want. You just need to be average. I know that sounds crazy because every guru out there says you have to be amazing. You don’t. You just need to hitch yourself to the average performance of the real estate market that is good enough.
So that’s personally how I think about real estate. It’s the model that I have used. Now as I’ve gotten more successful and over time, I do buy more frequently. I sell more frequently, but I did this approach for 10 years or more. This is the approach that has worked for me. It’s the approach I use in the stock market. This just makes sense to me. And I’m like the market timing guy. I spend all day looking at analytics and data and what’s going on in the market and I still choose to admit that no one really knows what’s going to go on. And the best thing to do is to try and just hit yourself to this powerful housing market that we have here in the United States. During 2020, 2021, 2022, when things were going crazy, sometimes I admit, I was kind of questioning myself.
I thought maybe I should be more aggressive. I should be doing what all these gurus and people on social media are doing. And I’ll say right now in 2026 sitting here, I feel pretty validated with my approach because there are a lot of people they’re not talking about on social media, but I can tell you right now there are a lot of people in real estate who are in trouble who bought too much, who scaled too fast when they thought they knew the answers about what was going to happen in the market in the next couple of years, but they didn’t because no one does. Absolutely no one does. But the people who have been struggling and are struggling right now are the ones who scaled really fast. Now some of them have been hugely successful, don’t get me wrong, but I just mean of the people who are struggling, it’s not people who have been doing dollar cost averaging.
I can tell you that. Maybe they have one deal go bad, right?That happens, of course. But I don’t really know a lot of people who have taken this disciplined long-term approach and are struggling because it worked in 2010, it worked in 2015, it worked in 2020, it worked in 2025, and it’s going to work in 2030 and 2035 as well. All different markets, it still works. The people who can weather uncertain economic periods are the ones that just keep showing up one deal at a time. That’s what I do and that’s my advice for the majority of you out there hoping to achieve financial freedom through real estate. That’s our episode for today for the BiggerPockets Podcast. I’m Dave Meyer, and I’ll see you next time.
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