Conflicted Need advice

[Robert Willard]

I have been lurking here for several years.  I have been wanting to create an additional revenue stream for my wife and I.  I believe it would get us a step closer to financial freedom.  I would love to be able to travel while I am young enough to enjoy it.  We have a good size 401k largely from a ESOP buyout.  We also have additional money in a subsequent KSOP investment with the new owner.  The issue with both is liquidity.  The other issue is the 401k is reliant on the stock market which has not been good the past 18 months.  This has me wanting to diversify so we are not so dependent on the market.    

Obviously, I do not want to make a bad investment.  We could sit and do nothing.  Ride the roller coaster that is the stock market and end up with a nice retirement in 7-12 years.  Still, there is something in me that does not want to be complacent.  I do not like that we are almost 100% reliant on the market.  Retiring earlier is very attractive.

I feel like everyone here at one time had similar concerns.  Buying the first investment property is always a leap of faith.  How do you weigh taking on such a large liability that puts your family's well-being at risk?   

To make matters worse is the real estate market is still hot.  Prices have receded but are still on the high end.  It is not a buyers market.  

I am interested to see what people think.  Should we take the leap?  Is it a bad time to buy?  I really do not think the housing market is going to drop, unless you see unemployment take a steep drop.  Inventory is low and will likely stay low for the next 6 months+

[Kevin Sobilo]

@Robert Willard, first off if you are relying on a 401k as a primary resource for retirement you should NOT be 100% reliant on the stock market within your 401k. Every 401k I have ever seen has safer NON-stock choices such as bond funds. As you get closer to retirement age the mix of stocks versus the safer options should change so that you are less exposed to those ups and downs. You don't want a substantial downturn right before you want to retire to throw a monkey wrench in your plans!

With regard to real estate, there is NEVER a bad time to buy! A deal is a deal whenever you find it! Most investors are not speculating on market appreciation although some do in expensive markets. Most are looking at cash-flow generated from rents and paying down a mortgage building equity. Market appreciation is almost a bonus. In addition an investor seeks and takes advantage of tax breaks such as depreciation and tax deferment through 1031 exchanges.

It doesn't sound like you're vested enough in real estate investing to feel comfortable making it happen all on your own right now. Maybe go to local investor meet-ups, talk to a real estate agent who specializes in investing (and who likely is one themselves) and also think about what kind of investment might suit your goals.

Also consider what role you want to have in real estate investing? Will you actively manage or hire a PM? Will you do maintenance yourself or hire it out? Will you do your own bookkeeping or hire it out? What kind of investing would suit you? Long term rentals, AirBnB, flips, wholesaling, etc. Lots of options.