Can you make too much money in Real Estate?

Question

First, I love my real estate cash flows and the opportunity they have provided for my family...but I am curious how you all feel about this. The local and federal government is tightening their grip on Real Estate across the country. There are probably local groups in your city or state huddling together to figure out how to reduce the amount of money that can be made via real estate. They all have their stories about their bad landlord or their greedy landlord and their intentions, although misguided, are thought to be good by them. I work in marketing for a 10,000 unit developer and also own a portfolio of real estate so I am exposed to renters of all kinds. My question is, can too much money be made in real estate? Does this mean that the properties aren't getting maintained well enough? Does it mean that the investors are not reinvesting their profits into more real estate for the needed demand? Does it mean that renewals are priced too high? Or, does it just mean that real estate isn't transparent enough? I know the company I work for has investors across the country that invest with them and one of them is a pension fund for over 200,000 teachers. So our success/profits are aligned with the teachers' pensions. I love the fact that and it feels as though the reciprocal nature of real estate profits are not educated or discussed enough. What are your thoughts?

Mike Dymski · Answer

Add value and solve people's problems and we will have no worries about profits (regardless of the business).

The populist movement is only going to continue to grow (as automation grows)...we need to stay nimble and adjust as things change.

Nathan Claire · Answer

I think real estate in general has been known for a long time as one of the more lucrative fields to get involved with. No matter whether you're an agent, a lender, a flipper, or a landlord. How well everyone understands what goes on in each field of real estate is tough to say, but there will always be people who complain and want to "tighten things up." The federal government along with local municipalities are always going to want to see a fair run game. However, like you mentioned with the "greedy landlord," issue always pop up since this is a people to people business at the end of the day. There is always gonna be someone pointing the finger at someone else and ofter times these reoccurring issues  can cause some enforcement to be advocated for and in turn put into place (such as the wholesaling laws in IL). As long as you're doing your best job and following proper ethics in your respective field, you should be fine and also have to realize that you can't control the actions people take and the way others run their show. Real estate is one of the most misunderstood practices in America just because of all the moving parts involved. Many individuals of power want to voice their opinions and push measures to make things "better" yet they aren't involved enough in the business to understand what happens day to day and how these measures effect the big picture.

Scott Mac · Answer

(Can too much money be made in Real Estate?) NO!

(The company I work for has investors across the country... So our success/profits are aligned with the(m)). Investors profit with Principals on the deal...that's how it works, but if your "Teachers Union" investors are simply owning stock market shares in the company on the stock exchange they are "Playing the Market" up and downs and are not sharing in the profits of the company.

(It feels as though the reciprocal nature of real estate profits are not educated or discussed enough.) It's discussed with potential investors when they are offered an opportunity to invest in a particular deal. Outside of that, detailed discussions about it are prohibited by the SEC in many instances.

If you are thinking about changing the minds of the people who pander to the SJW's for votes on issues like this, realize as an Advertising Man that those SJW's are "Sold" on this line of thinking for a grander purpose (political control by the sellers), and not the granular (stated) issue of Landlord's making too much money (that's only fuel for the advertising to get them to hopefully Vote for the political party the Advertisers want them to vote for). The SJW's are just puppets whose thoughts are carefully molded by by the advertisers (both the radical and the armchair variety SJW).

Don't miss seeing the forest for the trees in this Media hyped "SJW Landlords are bad" thing (they want people to focus on the carefully selected trees they are Advertising).

Just my 2 cents.

Timothy Hero · Answer

If you have the right management team in place and treat tenants with care, I believe you can always grow more to achieve more -- as long as you do so with care.

Scott Mac · Answer

The local party affiliates (who have either been sold on the "Trees" or think they are falling in line with the grander party desires will put these barriers in place locally (and ruin their community in the long run), but this is at odds with the actual desires of the "Sellers" because solving the carefully chosen "Gin-ed up problem" leaves them without any problem to solve (which is their selling point to get national votes).

The SJW's are a disparate group. Each group is pandered to with different a psudo gin-ed up problem (advertised to), and given their supposed savior national candidate to (hopefully) vote for in a primary, and then the actual primary votes do not really matter and the "Seller" chooses the predetermined runner for the National Election (hoping that because the SJW's "Felt" support for their interim media propped up (false) savior, they will Vote for the "Sellers" chosen National Candidate.

In a nutshell, it seems one way to stop those local's who align themselves with the "Seller" from implementing these laws, is not educating the locals (they are missing the point of this and actually solving the made up problem), might be to somehow appeal to the National part of it.

But this would be contrary to the Nationals financial and power well beings. (Although in some smaller communities (where the lawmakers are part timers at this) educating them one-on-one might curb it--but as they are transitory in these positions, it would have to be an ongoing effort to fight the carefully gin-ed up National party advertising they are susceptible to).

In the past it looks as if payoffs to the Nationals and their family members could sway them. Water front mansions, no show highly paid board member positions in America and places like Ukraine. But those are SWAMP issues that seem to be being delt with, and beyond the ability of most people to make happen--besides probably being illegal.

Other than getting the National part of this to either Quiet Down on it 100% or reverse themselves on it, I doubt the local parts will stop implementing it.

Just my 2 cents.

Joseph Koury · Answer

@Scott Mac - thank you for the insightful response - good stuff. Agree with the answer of "no!". The investors share in the profits in the form of preferred returns and equity splits.  I am with you on the discussion that profits and returns can't be discussed due to SEC and the SJW's are also molded by other motives. I can, from my experience, confidently say that there are far too many renters/people don't understand the real benefits/costs of real estate investing. The title of this post was an, admittedly shameful hook, but just curious if there are ways to be more transparent or organized in education and information. Maybe to not get the SJW's, but get the people on the fence to understand and keep the majority. It's tough to watch misguided government-induced regulations unnecessarily drive up costs and ultimately rents.

Can you make too much money in Real Estate?

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