Can Real Estate Be A Side Hustle?

Question

Answer

Real estate produces both a capital gain and income along the way. Plus numerous tax advantages. Your competitive advantage is your constantly replenishing source of capital. Most people, especially the people here, have little to no capital. 10 hours a week is more than enough time starting out and even gets you enough hours for the QBI deduction. The biggest market you face is you're not located in an investor friendly market. Cast your nets north and inland and see if you can find a unit to get your feet wet on.

Answer

I would argue many start off investing as a side hustle. Plus on the buy side, Sellers care about price and terms. Your experience is secondary. I would argue that real estate is less risky because you have more control. You can make improvements, leverage, sell, do LTR, MTR, or STR, etc. With stocks, you are relying on companies doing everything, whether you like it or not. One thing you have to factor in is loan buy down. For example your cash flow may be $100/month, but every payment drops your loan amount by $500, then you are getting $600 a month in cash flow and equity. Real Estate is a long term play. In ten years, you will be 1/3 of the way finished with your loan and the tenants have been paying it the entire time. You are effectively getting a free loan because someone else is paying it.You could a mix of both stocks and real estate. Diversity in investments isn't a bad way to set yourself up.

Answer

If time is a concern, but you have financial resources and a need for competitive advantage, maybe think about outsourcing some help with certain functions as needed. If this is truly a side-hustle, you'll want to protect your time.

Answer

You should be investing in syndications. You are "accredited" and can get 20%+ annually easily and with sales can likely get to over 30%. Find good apartment syndicators to invest with.

Answer

You can have people whose full time job is finding and sourcing deals bring them to you so you can focus on your family and and career while building your portfolio!Once you know the buying criteria and markets you are looking for start connecting with realtors and wholesalers in those markets to bring the deals to you. Most things that take your time in real estate can be outsourced depending on your management style.

Answer

Total returns on RE for me have been 30% and higher for most of 20 years now. The key is that you consider all 4 vectors of return.1. Cash flow - money left over after debt service and maintenance costs every month2. Principal pay down - principal portion of monthly mortgage payment is real money. You dont get access to it until you do a cash out refi or sell but many people ignore this when calculating return.3. Appreciation - your SFH appreciates on market value not equity, if you pay $75k on a $300k house and it appreciates at 5% a year, you make $15k the first year not $3500. This is often undercounted our ignore but is real money you have access to at cash out refi or sale4. Depreciation and other tax benefits - this reduces your annual tax exposure by at least 1/27th of the house market value (again, not based on equity, based on market value of improvements less land cost).In addition to all of these, cash out refi that gives you access to quity is tax free, it is a loan not income so the tax exposure is $0. The real returns from RE investing in income properties is many times the most optimistic market returns over time.

Answer

Almost all of us have jobs, families, and busy lives and have IRR targets much higher than the S&P. Active real estate investing is too much work to not achieve outpaced returns.

Answer

Hi Andrew, I agree with some of the other posters that investing in a syndication or fund could be a good fit given your situation. Even if there is a crash, and people downsize, those people will have a need for self-storage, as evidenced by storage occupancy rates during past recessions. And during inflationary times rental rates increase. Pick solid operators and solid asset classes. We syndicate self-storage projects. These syndication can provide an 8%+ cash-on-cash return - providing you monthly cash flow - and a 15-20% IRR over the length of the project. We're also able to evaluate our rates, and keep pace with inflation, on a monthly and quarterly basis because of shorter term leases. Feel free to reach out

Answer

Thanks everyone, really appreciate the help/advice! I’m reading up on syndications now as that seems like it might fit my investment profile/time constraints.

Answer

Thanks @Alecia Loveless! That’s really inspiring. Where do you invest if you don’t mind me asking?