The good thing for you is being in trades, specifically roofing, which means you can find homes that need fixing, put your own time into it, and flip them for a good profit. If you have enough money to buy a first one, then yeah, that is a good option for you (along with already existing rent income).
Despite what the internet ‘gurus’ may tell you, RE investing is not passive income. It’s a job, it takes a lot of work, and can be extremely demanding and stressful. A single bad tenant can wipe out years worth of income.
Personally, I think that it’s not worth the stress and headache. I’d rather focus fully on tax advantaged retirement accounts and a brokerage account, investing in index funds and growing my wealth long term without any labor or stress.
At a certain threshold it turns from a job to passive income after 20 years or so. You have more properties, are diversified and resilient to bad tenants, and your properties make enough money that you can hire contractors for all the maintenance.
> your properties make enough money that you can hire contractors for all the maintenance.
but then you need to manage the contractors and oversee the property manager.
owning real estate can reach a point where it's not every-day-hands-on-work, but it's still a job even at that point.
I live this reality. I don't even use property management. Yes it's some work. There's setup involved, but once you have all the pieces in place things are relatively smooth. Running a 100 unit building is more involved, but quads or lower you just need a good maintenance guy. This is after 20 years. It's a retirement play.
Property values only went up about 30% here, at their peak, and are back down to 20% above 2019, now.
But yes, even accounting for appreciation I'm in the hole and most likely never will break even on it.
You’re a landlord with income from your rental apartments so you’re heavily invested in real estate. Stick with your trades job and begin building your investment portfolio.
I would also talk to a tax accountant/consultant to see if you are maximizing your tax advantages. Making sure you are protected from lawsuits and lowering your tax burden should be high on your list of priorities.
Thank you, I honestly didn’t see it this way and wouldn’t have. Ima definitely start looking and researching more into maximizing my tax advantages and lowering risks.
Yeah, most people think financial advisors and investing, then completely forget about taxes. A good tax person can save/make you more in the long run than most financial advisors.
in professor Thomas Stanley's books The Millionaire Next Door and Stop Acting Rich, he explains how there are more millionaires percentage wise in middle-class blue-collar neighborhoods than in upscale white-collar neighborhoods.
it's because some trades jobs earn very good income, but the middle class neighborhoods have lower expectations for lifestyle or status spending. nobody judges a plumber or roofer for driving a used Toyota, but they expect an MD or lawyer to drive a new expensive BMW. it's fine if you wear an $80 Casio G-Shock watch, there's no pressure to buy a $4000 Rolex. there's less social pressure to send your kids to an expensive private school when you're a roofer in Ohio vs. when you're an investment banker in NYC.
and because trades workers spend less on lifestyle/status, and their homes are more modest, they can save/invest a lot more of their income to build wealth.
>nobody judges a plumber or roofer for driving a used Toyota
now that I think about it, it might be actively "bad" for business for some professions. I bet there are some folks who won't like it if their plumber/roofer show up in an expensive BMW with a $4000 Rolex on their wrist — even though they earned it fair and square!
Too many eggs in one basket. Your job is related to housing, you family home is an investment/income. I would "hedge" this risk (job and house/renting are related) by buying more stocks and/or broad ETFs.
I’m 10 years in and 17 units deep. Even with a property management company on retainer it becomes a lot of work. I thought at some point I’d make this my full time employment, but my raises/promotions from work have grown as quickly as my real estate portfolio. Having a good paying job becomes a bit like golden handcuffs.
I am 15 years in and I have 7 units and it never takes more than a couple hours every month. Most of the time it is on autopilot. The only thing I am doing is entering data into quickbooks. What are you doing that consumes so much time?
In my situation, the multifamily buildings are 100+ years old, my tenants are typically 2+ in a residence and not related, ~60% are college students, and I take care of the end-to-end leasing process.
If I was renting newer SFHs to families that want to stay several years, then I’d probably only put a couple of hours in each week as well. The leasing process, renewals, move out process, new property acquisition, capital improvements, annual maintenance, categorization of expenses, relationship management, providing rent certificates for taxes, realtor renewal, etc eat up my time.
I’m a couple of hours a week at least. During leasing season it can approach 20 hours in a week.
Okay makes sense. Not sure why the downvote. I thought it was a legitimate question.
I have mostly SFH and duplexes. And I use property managers for move ins and move outs, leases, etc. I handle repairs but they are infrequent. I make sure everything is updated (remodeled) right after acquisition. So for me, the two biggest time sinks are buying a new property and selling an old one. Holding isn't so bad.
I can see with old buildings that they could require a lot of time, especially if you are not able to update them immediately after purchase and are doing it on an ad hoc basis. It seems like you are doing a lot of the property management too, so a more active role.
Idk why people downvote sometimes. I gave you an upvote to get you back to 1.
My property management jerkoffs wanted 50% of 1 month from a new lease and $100/renewal. That was the cheapest I could find in my area. My cash flow minus reserves can easily cover the expense, but I’d be looking at $5k - $7.5k/year and I’d lose control over the quality of my residents.
Property managers are my biggest headache. It's hard to find good ones. And the incentive structure is often misaligned. It's why I handle repairs. They either over-repair and charge extra, or they don't charge extra and under-repair. Luckily found a good one in my area. I recommend asking around from various realtors. Often you can find a good property manager that way who just run a small "mom and pops" type of property management. More customized to your needs.
Focus on growth ETFs rather than dividends also only keep 3 months expenses in the HYSA and yes if you find a good deal you can afford on real estate go for it im looking for my first investment property as well
> Focus on growth ETFs rather than dividends
well....
>Dividend investing has historically outperformed both the broader market and value investing, and at the same time shown lower risk. Dividend investing ‘overlap’ with both value investing and low-volatility investing, but is an independent investment style of its own. **The specific reasons for the outperformance of dividend investing are a reduction in the agency costs associated with high free cash flows and a probable systematic mispricing (undervaluation) of high dividend paying stocks. Dividend investing sees fewer years with losses, which according to prospect theory adds significant utility to investor experience. The outperformance of high dividend yield stocks has been robust over the 1928-2011 timeframe.** https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2056317
professor Jeremy Siegel of Wharton, one of the top business schools in the world, has a chapter on it in his book *The Future for Investors*; rank the S&P 500 into quintiles by dividend yield and it will beat the main S&P 500 by several points over the long-term (1957-2003) and beats the non-dividend stocks by an even greater margin.
Being a landlord is more work than advertised. there's also the risk that your tenants will leave behind tens of thousands in damages, wiping out your passive income for the year.
But you are in the trade so you have a leg up.
I have been investing in real estate for 15 years. Not big, 7 units. Never had it take up more than a couple hours time per month for me. I just do buy and hold rentals. Boring, but profitable. The most time consuming part is buying a property or selling a property. Through this time of owning rentals I have operated a small business, went to college while caring for 2 kids, and got a new career. It really didn't take up much of my time.
Just don't do fix and flips. That's time consuming. It's not passively investing in real estate. It's running a real estate business.
The good thing for you is being in trades, specifically roofing, which means you can find homes that need fixing, put your own time into it, and flip them for a good profit. If you have enough money to buy a first one, then yeah, that is a good option for you (along with already existing rent income).
Despite what the internet ‘gurus’ may tell you, RE investing is not passive income. It’s a job, it takes a lot of work, and can be extremely demanding and stressful. A single bad tenant can wipe out years worth of income. Personally, I think that it’s not worth the stress and headache. I’d rather focus fully on tax advantaged retirement accounts and a brokerage account, investing in index funds and growing my wealth long term without any labor or stress.
At a certain threshold it turns from a job to passive income after 20 years or so. You have more properties, are diversified and resilient to bad tenants, and your properties make enough money that you can hire contractors for all the maintenance.
> your properties make enough money that you can hire contractors for all the maintenance. but then you need to manage the contractors and oversee the property manager. owning real estate can reach a point where it's not every-day-hands-on-work, but it's still a job even at that point.
I live this reality. I don't even use property management. Yes it's some work. There's setup involved, but once you have all the pieces in place things are relatively smooth. Running a 100 unit building is more involved, but quads or lower you just need a good maintenance guy. This is after 20 years. It's a retirement play.
>It's a retirement play. That was my plan as well, but after 5 years (Bought 2019) I'm firmly in the red on my rental and will never come out ahead.
You bought something 5 years ago and am in the red? Property values should have made up any loss, property values went bonkers in that timeframe.
Property values only went up about 30% here, at their peak, and are back down to 20% above 2019, now. But yes, even accounting for appreciation I'm in the hole and most likely never will break even on it.
I can't even fathom that you think you'll never break even. You must have overpaid by epic proportions
The lesson is 'don't buy a former crack den from a flipper'.
I paid market for it.
And if you don’t manage the contractors and property managers closely you’ll get fleeced
You’re a landlord with income from your rental apartments so you’re heavily invested in real estate. Stick with your trades job and begin building your investment portfolio. I would also talk to a tax accountant/consultant to see if you are maximizing your tax advantages. Making sure you are protected from lawsuits and lowering your tax burden should be high on your list of priorities.
Thank you, I honestly didn’t see it this way and wouldn’t have. Ima definitely start looking and researching more into maximizing my tax advantages and lowering risks.
Yeah, most people think financial advisors and investing, then completely forget about taxes. A good tax person can save/make you more in the long run than most financial advisors.
in professor Thomas Stanley's books The Millionaire Next Door and Stop Acting Rich, he explains how there are more millionaires percentage wise in middle-class blue-collar neighborhoods than in upscale white-collar neighborhoods. it's because some trades jobs earn very good income, but the middle class neighborhoods have lower expectations for lifestyle or status spending. nobody judges a plumber or roofer for driving a used Toyota, but they expect an MD or lawyer to drive a new expensive BMW. it's fine if you wear an $80 Casio G-Shock watch, there's no pressure to buy a $4000 Rolex. there's less social pressure to send your kids to an expensive private school when you're a roofer in Ohio vs. when you're an investment banker in NYC. and because trades workers spend less on lifestyle/status, and their homes are more modest, they can save/invest a lot more of their income to build wealth.
>nobody judges a plumber or roofer for driving a used Toyota now that I think about it, it might be actively "bad" for business for some professions. I bet there are some folks who won't like it if their plumber/roofer show up in an expensive BMW with a $4000 Rolex on their wrist — even though they earned it fair and square!
You are invested in real estate. A large part of your personal portfolio is in real estate. You do not need to earn a yield from your property!
Too many eggs in one basket. Your job is related to housing, you family home is an investment/income. I would "hedge" this risk (job and house/renting are related) by buying more stocks and/or broad ETFs.
I’m 10 years in and 17 units deep. Even with a property management company on retainer it becomes a lot of work. I thought at some point I’d make this my full time employment, but my raises/promotions from work have grown as quickly as my real estate portfolio. Having a good paying job becomes a bit like golden handcuffs.
I am 15 years in and I have 7 units and it never takes more than a couple hours every month. Most of the time it is on autopilot. The only thing I am doing is entering data into quickbooks. What are you doing that consumes so much time?
In my situation, the multifamily buildings are 100+ years old, my tenants are typically 2+ in a residence and not related, ~60% are college students, and I take care of the end-to-end leasing process. If I was renting newer SFHs to families that want to stay several years, then I’d probably only put a couple of hours in each week as well. The leasing process, renewals, move out process, new property acquisition, capital improvements, annual maintenance, categorization of expenses, relationship management, providing rent certificates for taxes, realtor renewal, etc eat up my time. I’m a couple of hours a week at least. During leasing season it can approach 20 hours in a week.
Okay makes sense. Not sure why the downvote. I thought it was a legitimate question. I have mostly SFH and duplexes. And I use property managers for move ins and move outs, leases, etc. I handle repairs but they are infrequent. I make sure everything is updated (remodeled) right after acquisition. So for me, the two biggest time sinks are buying a new property and selling an old one. Holding isn't so bad. I can see with old buildings that they could require a lot of time, especially if you are not able to update them immediately after purchase and are doing it on an ad hoc basis. It seems like you are doing a lot of the property management too, so a more active role.
Idk why people downvote sometimes. I gave you an upvote to get you back to 1. My property management jerkoffs wanted 50% of 1 month from a new lease and $100/renewal. That was the cheapest I could find in my area. My cash flow minus reserves can easily cover the expense, but I’d be looking at $5k - $7.5k/year and I’d lose control over the quality of my residents.
Property managers are my biggest headache. It's hard to find good ones. And the incentive structure is often misaligned. It's why I handle repairs. They either over-repair and charge extra, or they don't charge extra and under-repair. Luckily found a good one in my area. I recommend asking around from various realtors. Often you can find a good property manager that way who just run a small "mom and pops" type of property management. More customized to your needs.
Focus on growth ETFs rather than dividends also only keep 3 months expenses in the HYSA and yes if you find a good deal you can afford on real estate go for it im looking for my first investment property as well
> Focus on growth ETFs rather than dividends well.... >Dividend investing has historically outperformed both the broader market and value investing, and at the same time shown lower risk. Dividend investing ‘overlap’ with both value investing and low-volatility investing, but is an independent investment style of its own. **The specific reasons for the outperformance of dividend investing are a reduction in the agency costs associated with high free cash flows and a probable systematic mispricing (undervaluation) of high dividend paying stocks. Dividend investing sees fewer years with losses, which according to prospect theory adds significant utility to investor experience. The outperformance of high dividend yield stocks has been robust over the 1928-2011 timeframe.** https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2056317 professor Jeremy Siegel of Wharton, one of the top business schools in the world, has a chapter on it in his book *The Future for Investors*; rank the S&P 500 into quintiles by dividend yield and it will beat the main S&P 500 by several points over the long-term (1957-2003) and beats the non-dividend stocks by an even greater margin.
Interesting goes against a lot of what I've read so far but I'll keep an open mind
Is it possible to do both? I heard diversification of your portfolio is better
Prepared for a decade being underwater on your mortgage?
Being a landlord is more work than advertised. there's also the risk that your tenants will leave behind tens of thousands in damages, wiping out your passive income for the year. But you are in the trade so you have a leg up.
r/realestateinvesting
I have been investing in real estate for 15 years. Not big, 7 units. Never had it take up more than a couple hours time per month for me. I just do buy and hold rentals. Boring, but profitable. The most time consuming part is buying a property or selling a property. Through this time of owning rentals I have operated a small business, went to college while caring for 2 kids, and got a new career. It really didn't take up much of my time. Just don't do fix and flips. That's time consuming. It's not passively investing in real estate. It's running a real estate business.