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Updated 7 months ago on . Most recent reply
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How do I know what kind of investing is right for me?
Hello, I am 23 and have a job with a real estate company. It is a small team and I have been here for about 8 months now. All my coworkers are much older and very wealthy through real estate, all different ways. Flipping, commercial, turnkey, multifamily, etc. I inherited a house last year with no mortgage on it and I really want to get into real estate investing, when I talk to them about it, they always say figure out which kind I want to get into first and then they'll offer me all the advice and help they can. I am just not sure what I want. I want cash flow, low to no long term maintanence (set it and forget it type), and the less risk the better. I feel like renting out multifamily is what I may be looking for with this, if done right can give me cash flow, I can hire a property manager at some point and I am friends with a lot of home improvement companies, and I could either use some money I have saved up to put a down payment or home equity loan for some % I am comfortable with and pay both off as fast as I can and repeat. Although, I don't know a lot on the other options and I may enjoy another one more or be a better option for me. How can I learn more about which option I should get into?
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Some comments in no particular order:
- residential RE is not passive even with the use of a property manager. Look at syndications or NNN for more passive options. Notes also unless something goes wrong.
- why has RE been a great wealth builder. Sure it has potential for cash flow, appreciation including forced appreciation, tax benefits, mortgage pay down but in most markets it is the leverage that accounts for the significant return. Unless you plan to sell your home soon, cash out refi it. If a RE value increases at the rate of inflation, you have no gain from appreciation in inflation adjusted dollars without leverage. But if you have it financed at 80% LTV you have achieved 4x return of the inflation rate. Leverage is why RE has historically obtained outstanding returns.
- RE has risk. Most investing has risk and typically higher return equates to higher risk. It is really about evaluating risk/return scenarios. This implies that this zero risk, high return you seek likely does not exist in RE.
- you are the only one that can determine the correct path for you but with your contacts and desire to scale, value adds should be evaluated. Note value adds are work and have risk but as I indicated I do not believe what you seek exists in RE investing. RE investing has risks. Most RE options are not passive.
Good luck