What to do when family says no to real estate + Should I rent out my home or sell?

Question

Hi, Biggerpockets. I'm SUPER new to real estate... Never went to school for this industry. I'm currently on Chapter 4 of the "Ultimate Beginner's Guide" from BiggerPockets. I don't have any family or friends who are in the real estate business but I always wanted to get into real estate. Like many others, I was just scared to lose money and never knew where to start, since I really have no connections.

I have 3 questions and hoping to get advice from you guys

1) What do you guys do when family and friends keep telling you, not to "waste my time" in real estate? That it will be a bad decision
2) Would you rent out your home or sell it?

So, I currently own a 3 bedroom townhome with a lake view that I purchased for 375K in Longwood, FL 32750. My current mortgage is 1,495 + 315 for HOA, $1,810 a month.. My current job that I have been working for has been laying people off after 20 years, so that's why I decided that I needed a change in career and looking to see if real estate would work for me.

If I rent or sell my parents said I can live with them to save money, but was looking for advice on what you guys would do..

3) If you think renting out my property would be a great option, do I need to hire a property manager if I'm 15 minutes away from my home or get a realtor to help me place my home for rent on the market?

Steve Vaughan · Answer

Yeah, people are only comfortable with what they know.  My family grew up like poor dad and had the same safe career their whole lives.   Big surprise,  they thought I was nuts going f/t RE 22 years ago.

My in-laws were more entrepreneurial and embraced it and cheered me and their daughter on. They ask about it and seek my bad advice on taxes and investments to this day.

It's not you so try not to sweat it.  Just don't vomit all your RE motivation to them. Even after 2 decades investing successfully, I don't talk about it to my family unless they ask.

If you want assistance renting out your house, I'd get a professional PM co vs a realtor.  I'd also insist they spread out their fill fee over the tenancy.  Get them invested in their tenant choice.  Good luck @Tommy Sanchez !

Scott E. · Answer

1) What do you guys do when family and friends keep telling you, not to "waste my time" in real estate? That it will be a bad decision - You need some new friends! I would maybe understand them being critical if you were telling them you wanted to quit your career to become a rock star, but they are saying you would be wasting your time if you got into real estate? They clearly just don't understand. There are tons of ways to make money in real estate (whether you become an agent, a title rep, a loan officer, a contractor, an investor, a developer, etc). Don't let friends or family bring you down.

2) Would you rent out your home or sell it? Just need to look at return on equity. So for example, let's say you rented it and figured you would make $500 per month after all expenses are paid. Or let's say you sold it and you would walk away with $200,000 after commissions, closing costs, etc. In that situation, most would agree that it makes more sense to sell and put that $200k into a deal that makes you more money every month.

3) If you think renting out my property would be a great option, do I need to hire a property manager if I'm 15 minutes away from my home or get a realtor to help me place my home for rent on the market? - With you being new at this, it'll make your life a lot easier if you have a realtor help you get the place rented. A property manager is not necessary. You can self manage a single unit like this easy. But getting the unit filled is a little overwhelming your first time. A realtor will help with showings, screening tenants, contracts, etc. And they'll take 1 fee up front, they won't take a cut of every rent check like a property manager would.

DaVina Williams · Answer

First hey neighbor! I’m not far.

1. If real estate is what you want to do, commit to it and don’t take the opinion of anyone who doesn’t have an educated position.

2. I would rent out my home. It allows you to earn money 2x (monthly rental income & equity because you retained ownership).

3. You don’t “need” a property manager but I would hire one. I think they are a wise investment and allow you to use your time more effectively. Just make sure you interview a few and understand their range of services and cost.

Daniel McDonald · Answer

EVERYONE will doubt you in real estate until you prove them wrong. Everything is just noise. Everyone thought I was crazy for buying the two duplexes I did and now they all tell me how smart I am. Don't let others' fear control your destiny.

If your house rents and you can cash flow after reserves then I would keep it. My guess is you probably have a good interest rate and with how hard it is to get offers accepted these days I would try to work with it as much as possible.

No, absolutely do not waste your money on a PM with one property when you are that close. I promise it's less work than you think. Once you start to scale then reconsider. A realtor could be helpful to get it rented just create clear guidelines with them and stick to it.

Marcus R. · Answer

1) When Family and friends keep telling you something is a bad idea...dig into it.  Don't believe them but don't dismiss them either.

Learned that from Tony Robbins.  Take the biggest detractor you know and bring them your best ideas.  Use their negativity to your advantage.  They should have a few good points for you to consider and plan for.  Now that you built those negative scenarios into your business plan you're in a better position.

2) Rent it out for a year but stay within the 2/5 years cap gains window.  You can always sell in the future.  See for yourself if this is something you enjoy.

3) Self manage

Devin Dougherty · Answer

Let them waste their time telling you those things, and continue to chase it and prove them wrong!

Understand your market and personal goals. If you want cash flow (assuming your property does cash flow), then rent it out. If you would rather have the cash from a sale to get into something else, take that route.

Only hire a property manager if you feel you need to, or want to be more hands off of your investments.

Sandra Morrison · Answer

@Tommy Sanchez

You can look into midterm rental or annual rental.

Join the local REIA (real estate investors association) and you will find experience, education and mentors to help you. You don’t necessarily need a PM or realtor but you do need to be educated or mentored in tenant screening.

Tommy Sanchez · Answer

Wow!!! THANK all of you for all the POSITIVE feedback advice, and knowledge you're bringing my way. Truly appreciate it🙌 Since this is my first time, I will get myself a realtor to help me with making the property into rental. Then continue my readings/study in the real estate field to see which route I should take.

Chris Webb · Answer

I can help with the first 2 questions: I do not talk to my family about investing. I have once told my brother about how to do it, but other than that I have not talked to them about investing. Generally, they do not have an understanding of the business side of real estate. They hear "debt" and get scared. An office mate once said to me "Chris, aren't you worried about the debt?" and I replied "not really, i am not paying it." I have owned businesses in other areas and every debt I took on was paid by customers, not me. In real estate the customer is a renter, cost must be less than income and you are fine. People cannot understand this because the see the fringe events - roofs, hot water heaters, etc.

One last thought. I have the education of hindsight and academic study. Those who make choices against the norm are usually on an island. An island is not meant to be heavily occupied. Find a group of investors close to you and lean on them for the real estate aspect of your life. Fill your island with others who understand what you are going through.

Good luck

Tatum Littleton · Answer

Hi Tommy! Glad to hear you're starting your investment journey and asking the right questions. As you can see there are so many different opinions and plenty of people with tidbits of advice. I would encourage you to take in all that you can and sort it out for what works for your goal. Look at your goals and "why" for investing and saving, and to answer your first question... that's probably all you can tell your family and they may or may not be on board. You can't let trying to convince them, stop you, as long as you have a solid goal and what your working for that's great!

As far as renting or selling? There isn't a perfect right answer, it depends on what kind of portfolio you want to build. In my opinion, you've done the hardest part, getting the property, I'd keep it and rent it out. As it's already been said in the thread before, you can always sell it at some point and put that money elsewhere.

Should you hire a PM or a realtor? Again, there isn't a right answer, it depends on your financials and what kind of work you are willing to do or not do. I would not get a PM since you are so close, and can easily take care of anything that you may need to. I understand the worry of something major happening and you have to deal with it but you were comfortable with that when you bought the property in the first place... so I'd consider that. I may get an agent since they would probably be well-versed in the market and know more contacts and methods of advertising the property, but I think you could do it yourself. Again, it's about what you are willing and able to do.

I hope this helps you take another step in your journey! Good luck!

What to do when family says no to real estate + Should I rent out my home or sell?

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