Stocks vs Real Estate

[Arta Montero]

I see a lot of you in here have success stories but keep wondering if real estate is truly as luxurious as it seems. I have two rentals only but had major issues with either tenant or property Managment and the pain never ends. Can’t see any joy behind this.

I am trying to get out of contract with property management and that in itself is a pain after I spend $7000 for move in for minor things and tenant being there for only two months not to mention countless hours while under property management.

I would say that stocks have been great to me and have to do nothing. I wonder what I am missing. I thought property management is bad but never thought would be this bad and not sure I want to manage so this makes me think that real estate is a messy business.

Hopefully you guys can give me some hope. I am in a messy property management contract and honestly feel trapped.

[William Harvey]

Arta, I have a few rental properties and can totally agree that at times it is the most infuriating thing ever. I don't think that comparing properties managed by yourself personally to investing in stocks is an "apples to apples" comparison. Obviously with stocks you invest and then have no responsibilities in regards to the operations of that company. 

I would compare stocks to passively investing in real estate deals. And I think when looking at that comparison, there is no competition at all (assuming you're educated and don't deploy money with a bad sponsor). As I mentioned, I started having all of the headaches associated with managing my rentals and I shifted my focus to passively investing and it has been night and day. A deal I did in 2019 which was a $25k investment in an 84 unit apartment acquisition delivered some solid distributions throughout the year and then I was issued a K-1 with a "loss" of -$24k. So the deal paid me throughout the year, and then I was able to lower my taxable income around $24k (since I'm considered full time real estate per the IRS). And now, the sponsor is looking to refi and return capital to the investors. If that is the case, I'll get all or most of my money out of the deal yet retain my position in it. To my knowledge there is nothing on Wall Street that comes close to this. 

I would suggest looking into the passive side of things if you hate the headaches that come from the active side of real estate investing. There are lots of different asset classes (multifamily, self-storage, retail, office, industrial, mobile home, etc...) and you can figure out what interests you. Hope this helps!