Should i continue in real estate investment?

Question

My income now is divided as per the following: 30% of my income generated from daily work (9 to 5) as typical white-collar, and 70% of my income is from real estate rental, i am afraid that real estate will collapse enormously. Should I diversify and generate other side business (side hustle) or stocks? the problems that the yield of stocks or side hustle is less than 7%, but the real estate investment could generate to be between 12 and 20%.

Another problem I don't have experience with side hustle or stocks, I have better experience in real estate, at the same time, all economists advocate strongly to diversify the assets.

What is your recommendation to solve this dilemma?

Another problem I don't have experience with side hustle or stocks, I have better experience in real estate, at the same time, all economists advocate strongly to diversify the assets.

What is your recommendation to solve this dilemma?

Joe Villeneuve · Answer

Consult the nearest crystal ball or tarot cards. Maybe do some research and find out if there's a fortune teller near you.

I'm not trying to be mean, but I have a question for you.  You listed your fears involving REI, Stocks, Side businesses, etc...  Why did you leave out the fact that your current 30% income might be at risk too...if you lose your job, or if the company you work for goes under...that is when the economic collapse that "all of the economists" (that was the funny part) have predicted is sure to come very soon.

Now it might just be me, but haven't we been told about the total collapse happening for at least the last 15 years?  I wonder how many of the experts just used a recorded message when giving their economic assessment?  I wonder how many will say, "I told you so" when the collapse actually happens.

Fear is the greatest obstacle to success.  Fear is based on risk...perceived or real, and can only be combated by risk controls.  The greatest risk control is education/knowledge.  My suggestion to you is not whether or not you should invest in RE, Stocks, a new Biz or gold, gas or silver.  My suggestion is to stop listening to the "experts" and take charge of your own decision making by learning the whys instead of the why nots.

Oh, and when the smoke clears, my vote is nor REI.

Corby Goade · Answer

Did you make it through the last downturn as an investor? Generally, rents don't recede at the same rate as values, so if you have tenants in place, the only real factor that would affect you in a downturn is your ability to leverage.

Every investment comes with risk- the people who aren't willing to take those risks sit at their desks or at the assembly line until they are 65 and start collecting SS. If you aren't up for taking the risks in the long term, that is the reward.

Mike Jordan · Answer

My father is a real estate investor, he told me in some period the real estate loses around 40% of it is value, for many reasons, macroeconomics reason, less demand, more supply.etc

He did not invest in other sectors like the manufacturing or food sector heavily. around 95% of his income generated by real estate.

Mike Jordan · Answer

Thank you, i have around 6-month food storage, I do not use this "food storage" unless there is excellent real estate investment opportunity.

Mike Jordan · Answer

Thank you, i do not have debt, there is someone sadly in my town who lost around 100 pounds, because he has big debt in real estate investment and the real estate lost 40% of it is value, because less demand on the market , he is depressed nowadays.

Shiloh Lundahl · Answer

@Mike Jordan What is your real estate niche? What is your skill set that opens doors in case your job were to vanish or become obsolete?

Your ability to adjust to provide what the market wants is what helps you survive market changes. Having multiple exit strategies and spending time improving your skill set makes you more valuable and can help you weather economic downturns. Also, having food storage and an emergency fund enough to cover 6-12 months can provide you enough time to regroup from many unexpected life changes.

Joe Villeneuve · Answer

I don't think many do...which is why risk is such a high obstacle to overcome.

The 3 Elements of Risk are:

1 - "What" is at risk

2 - "Who" is at risk

3 - Who is "the risk"

Money is always the answer to the first one.

The way to find the answers to 2 and 3 is always the same.  Just follow the direction the money is moving...it always point away from 2 and at 3.

What's the best way to reduce risk?  Reduce or eliminate the amount of money you have at risk.  When I say money, I'm referring to YOUR money.  Money lent to you isn't your money...it's the lender's money.  Cash you put into a deal IS your money.  So, either reduce the cash you put into a deal, or recover it ASAP, and you have reduced your risk.

Mike Jordan · Answer

no i dont :)

Joe Villeneuve · Answer

Yes they do.  They just do it continuously.  They never leave their money, or their potential profit, in one place...or in the same place.  Mutual Fund salesmen call it "diversification", business owners call it "new products or services".

Joe Villeneuve · Answer

Risk controls.

Do you understand the three elements of risk, and thus the best way to reduce and even (dare I say) eliminate risk from your REI?

Should i continue in real estate investment?

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