What to do next in real estate investing?

Question

My name is Paxson Hightower. I have been on BiggerPockets for almost two years now, but I have never posted anything. I live in Cedar City, Utah, and my wife and I started house hacking over a year ago. I feel like I have definitely learned a lot about real estate so far, but I know that I still have a ton to learn.

One of the main things I have learned is that I do not like being a landlord. Cedar City has a university, so our basement apartment has students in it. Our first set of renters was not the best experience, and I learned the value of making sure that you have good quality renters! Our current renters are a lot better, and they keep the apartment a lot cleaner.

Another thing that I learned about myself is that I do not like the stress of knowing that I have to take care of anything that goes wrong. And this is mainly because the house we bought was built in 1936. We of course had an inspection, and everything seems to be good, but it just makes me worry about how something big could go wrong.

My reason for this post is to ask for suggestions. I know that real estate is one of the best (probably is the best) avenues to investing money, but as I mentioned above, I do not like landlording and the stresses that come along with owning real estate. So what can I do? I know that I can get a property manager and that would reduce the stress of landlording, but then I feel like I would stress about the actual real estate and something breaking or going wrong. As well, I do set aside money for CapEx each month, and I do have an emergency fund, but I still worry.

So what suggestions do you have for me? Do I need to get over the stress and just move forward? Should I just find ways to passively invest? If so, what are the best ways to passively invest in real estate?

Thank you all for your help, and I look forward to being more involved in BP.

One of the main things I have learned is that I do not like being a landlord. Cedar City has a university, so our basement apartment has students in it. Our first set of renters was not the best experience, and I learned the value of making sure that you have good quality renters! Our current renters are a lot better, and they keep the apartment a lot cleaner.

Another thing that I learned about myself is that I do not like the stress of knowing that I have to take care of anything that goes wrong. And this is mainly because the house we bought was built in 1936. We of course had an inspection, and everything seems to be good, but it just makes me worry about how something big could go wrong.

My reason for this post is to ask for suggestions. I know that real estate is one of the best (probably is the best) avenues to investing money, but as I mentioned above, I do not like landlording and the stresses that come along with owning real estate. So what can I do? I know that I can get a property manager and that would reduce the stress of landlording, but then I feel like I would stress about the actual real estate and something breaking or going wrong. As well, I do set aside money for CapEx each month, and I do have an emergency fund, but I still worry.

So what suggestions do you have for me? Do I need to get over the stress and just move forward? Should I just find ways to passively invest? If so, what are the best ways to passively invest in real estate?

Thank you all for your help, and I look forward to being more involved in BP.

Mike Taravella · Answer

Hello @Paxson B Hightower

Congrats on doing your first deal and learning what you do and don't like about being a real estate investor.

Sounds like you want to become a more passive investor which you can do:

• Apartment syndication

invest money to a syndicator who has already presented you a property and has outlined the business plan and will pay you depending on the arrangement based on how the execution of the business plan is goingHere is a list of ways to find apartment syndications:

https://www.biggerpockets.com/forums/50/topics/645...
• invest money to a syndicator who has already presented you a property and has outlined the business plan and will pay you depending on the arrangement based on how the execution of the business plan is going
• Here is a list of ways to find apartment syndications:

https://www.biggerpockets.com/forums/50/topics/645...
• https://www.biggerpockets.com/forums/50/topics/645...
• Private money

Be the bank for deals, flips, etc but may require some back and forth if things go south and you collect the money from interest earned.
• Be the bank for deals, flips, etc but may require some back and forth if things go south and you collect the money from interest earned.

• invest money to a syndicator who has already presented you a property and has outlined the business plan and will pay you depending on the arrangement based on how the execution of the business plan is going
• Here is a list of ways to find apartment syndications:

https://www.biggerpockets.com/forums/50/topics/645...
• https://www.biggerpockets.com/forums/50/topics/645...

• https://www.biggerpockets.com/forums/50/topics/645...

• Be the bank for deals, flips, etc but may require some back and forth if things go south and you collect the money from interest earned.

Another way you could invest is through notes which is the equivalent of buying the paper of real estate.

If you have any questions feel free to reach out anytime or connect.

Michael Ablan · Answer

@Paxson B Hightower - Glad to see you make your first post!

There's no reason to do something that brings a ton of stress and anxiety to your life.  I would of course recommend trying to get to the root of it and conquering it, but if it's not something you forsee yourself doing in the near future then doing  syndication/private money lending might be your best fit.

Do you know anyone actively doing real estate and being successful with it?    Maybe you could help fund their deals

William Hochstedler · Answer

Hi Paxson,

You've crossed the biggest hurdle of getting into this game by actually purchasing your home.  Many folks don't even get that far.  Now you have the visceral experience of signing your name on the bottom line and being responsible for this large asset.

You also had your first experience with an undesirable tenant.  These are all learning experiences that we grow from.  You now know that ruthless tenant screening will help you in the long run.

Your next job is to network.  Find professionals who can take care of all of the stuff that you dislike or makes you nervous.  For example, you need a good handyman.  Definitely hook up with @Shaun Hunt and see if you can share resources.

Your experiences are both educational and a bit of self-discovery about where your risk level is.  These are important things to learn.  i say stick with it because the single biggest barrier is behind you: getting started.

Congrats!

Ryan Mertens · Answer

The longer you do it the easier it gets. Is it stressful? of course!! Does the stress out weigh the wealth you're building? It does for me, thats why I do it.

Some people will never be home owners, they just don;t have the capacity. Some people just can't handle investing or property management, same reasons.

It's a question you have to answer for yourself.

Add up your NOI and your paydown from what your tenants contribute. Divide that by the hours you spend on the property and the hours you worry about it. Is it financially worth it for you?

Almost every job has stress, it's up to you to determine your tollerance and threshold.

Shaun Hunt · Answer

Hey Paxson, let's get together and talk RE.  I started about seven years ago, here in Cedar and I have all kinds of stories.

Here is just one of them that cost cost $65,000

https://www.stgeorgeutah.com/news/archive/2014/04/...

We are still in it for the long haul, even after fires, drug busts, shots fired, dogs, cats, arrests, abandonment, lies and several other things.

Ian Ippolito · Answer

Yes, when you invest in a syndication (or the online version of it which is crowdfunding) you can get all the same tax advantages such as depreciation, and also experience both price appreciation via your equity and cash flow. It definitely solves your issue of not having to be actively involved at all in the investment. However, you said that you don't have much money to invest, so that will probably be a showstopper for you. The advantage of directly owning is not only having complete control, but also the ability to create sweat equity when you are cash poor.

Really your best choice is probably to hire a property manager. But you  said that you don't want to because you would be too stressed out. If that's truly the case, then maybe consider the fact that real estate may not be for you.

Paxson B Hightower · Answer

I appreciate everyone's responses. So I am pretty sure that I know what you mean by Syndication. But the way I understand it is that there will be investors, and they invest their money with a real estate investor. And then the investors will get some form of return (such as a percentage of the profits, or predetermined rate of return on their investment, etc). So all of you that suggested syndication, were you suggesting that I be the investor, and I just invest my money with other people? Or were you saying that I should be the real estate investor that uses other peoples money?

To give some further information about myself, I am still in school, so I do not have a large sum of money to invest with other people. So that isn't really a possibility right now, but possibly in the future. Also I have a question with syndication. If I am the investor that gives money to real estate investors, do you get all the advantages that real estate offers, such as tax advantages, appreciation, equity, and cashflow? I am wondering if you get all of these, especially tax advantages, as an investor, or do you only get some of those advantages?

Thank you everyone for your encouragement. Things have gotten better, and I know that great things can happen with real estate. I am determined to keep investing and learning from my experiences.

Luke Miller · Answer

Jeez, @Paxson B Hightower reading your post is like looking in the mirror. House hacking an old house and being constantly afraid of what's going to break next in your tenants unit. I've had heaters go out in the dead of winter, floods during heavy rain, bed bugs, fires, squatters and a few more.

What i've learned is that I want my investments professionally managed, at a distance, and I want to have professional maintenance taking care of my asset.

So, I sold off my small stuff and I moved into a syndication. I love the idea of large deals because management is professional (unlike most smaller managers), the tenant base is removed from me (i'm not a landlord, i'm a business owner), maintenance is handled well because there is much more income to support quality work.

Additionally, I never buy properties that old again. Best part of syndications is that you can still take advantage of the tax benefits as well so you're still utilizing the best parts of REI, but no fixing toilets.

David Espinosa · Answer

You could always buy a property then owner finance it out. You can get large down payments and steady cashflow and they are responsible for property. If they dont pay rinse and repeat.

What to do next in real estate investing?

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