All Forum Posts by: Joseph Snyder

When you’re single, the math is pretty easy. You can live in a duplex or fourplex. Keep your costs low and build equity. Even if you don’t house hack, renting a small one-bedroom or studio can be an obvious win because your living expenses stay low and you can throw more money into investments.

Once you have a family, kids, and a couple of pets, it’s not as simple. Most of the rentals that really save you money aren’t in areas you’d want to live with your family.

Here’s the situation I keep thinking about.

The kind of home most people would want for their family is in a safe neighborhood with good schools and a nice community. That could easily cost over $4,000 a month with a small down payment. Inflation is making it harder for people to save that down payment in the first place. You could rent something smaller or in a less “perfect” spot for around $2,400 and save about $1,600 a month. As a renter, you’re also not paying for big repairs or maintenance, which means even more savings. If it’s a condo or townhouse, you might get a gym or pool included. That could save money there too.

The question is: in today’s economy, is saving $1,600+ each month enough reason to hold off on buying your own place? Or does inflation wipe out the advantage so fast that you’re better off buying now?

And if we do see a market correction, would that change your answer?

Quote from @Eric Fernwood:

Hello @Joseph Snyder,

When it is a good time to sell depends on your financial goals. If your goal is financial independence, the decision process is relatively straightforward. I created the following decision tree which I hope you find useful.

In summary, there is no fixed date when you should sell. What you should do depends on the property's performance and your goals. If your goal is lifelong financial independence, then rents increasing faster than inflation is essential. Let the property’s performance and your goals make the sell/refinance/1031 decision.

This is great and really easy to follow. How do you usually calculate if rents have outpaced inflation? I know you just compare rent growth over time to the inflation rate for the same period, but I would love to hear how you approach it. Also, you might not need to sell at all. If you can add value with a few small changes under $10k in renovations, like adding a bedroom or doing minor upgrades such as light fixtures, paint, furniture, or converting to mid-term or short-term rental, you could see rents jump by several hundred dollars. That increase could bring you right back in line with inflation, even if it means spending a little more up front. I am definitely using this in my listing consultations. Nice work.

Thanks for sharing! You’re balancing cash flow and appreciation to build long-term wealth. I’ve always been more of a “if the cash flow looks good, I’m in” type. $600 a month minimum has been my buy signal.

I stick to Class C properties trending toward Class B, mostly small multifamily. Lately I’ve been focused on building more Section 8 cash flow. My best stretch was 10 by-the-room rentals for travel nurses at $1,000–$1,400 each, plus my long-term rentals. Cash flow far outpaced my cost of living and life was pretty dang fun.

For me, the balancing act is portfolio-based. I want enough cash-flowing deals to comfortably carry an appreciation play - maybe even a small hotel. 

I wanted to get everyone’s thoughts on rental arbitrage.

It can be a quick way to get into the short-term rental game without tying up capital in a purchase. With mortgage rates as high as they are right now, rents in many markets are still lower than a new mortgage payment. In some cases, that makes arbitrage a smarter short-term play.

The trade-off is that you are not building long-term wealth through equity. Think about McDonald’s. It’s not just a fast-food company. It’s a massive real estate company. Even in times of low net income, equity and appreciation still build wealth over time.

Some operators do find ways to sell their arbitrage portfolios like a business, creating a payout at the end. You might also be able to lock in a longer lease, like 5 years or more, which gives more stability and cost control.

Another thing to consider is what happens at the end of the lease. If you’ve furnished the property, you’ll have to remove everything you bought. That can be a major logistical and financial challenge.

I learned this the hard way. I ran a short-term rental in a property I didn’t own, and everything was fine until the city changed the rules on who could operate STRs. Overnight, the model no longer worked.

So I’m curious…
Do you think rental arbitrage is worth it in today’s market? Or is it better to stick with properties you own and control?

Follow me and let’s go down the rabbit hole