Why Real Estate? No...really, WHY!?

Question

Hello all,

I'm still fairly new to real estate investing and real estate in general however, it is ALREADY down right fascinating! Now, we are all very familiar with the common "goals" of real estate but, there has to be more! I mean real estate investing IS a game of numbers. That, in and of itself, creates endless possibilities. What if I told you that my "why" wasn't to retire extremely early or reach financial freedom? While those milestones are the very, very tasty icing on the cake, I'm far more interested in the challenges real estate presents. The desire to create a plan and then see that plan succeed. I mean, in my own opinion, nothing is better than being a part of something bigger than yourself. This is my why. Is it dangerous or profitable to treat real estate as a game of chess? Can anyone relate?

Steve Vaughan · Answer

Great posts about RE as the best investment vehicle and reasons why.

My why became more of a benevolent and altruistic one as time went on.  It is hard for one to grant mercy when one is barely getting by.  I'm no all do-gooder, but being able to assist the worthy in need with quality housing or waive penalties and be flexible for the people that deserve it is a bonus.

Improving communities and helping the people in them is another benefit of RE if you choose to do that. Can't or is difficult to do that with paper securities and such. Cheers!

Michael Boyer · Answer

Neat post.

Yes, there has to be a bit more than numbers as you mention for many.

There are alternatives for your investment dollars. You can look at quite a set of numbers-- 6, 7, even 8 figures--if you just pay yourself first and utilize index funds (especially tax free/deferred).

But real estate let's you profit from your own hand, interact with others (especially self managing), and even get some exercise (snow shoveling in winter or painting in summer).

Next big idea: BP Landlord Cross Fit challenge (on the clock to paint a room, sweep a porch, vinyl plank a room).

And you get real money every month: like Jay P. Decima says "the green folding kind". The kind they take at the store.

Even a YUGE portfolio of dividend stock or bonds can't throw off that much cash these days (without selling the underlying assets). Meanwhile as you collect rent checks, you house others. This is  a very important societal function as others mention.

Best of luck!

Account Closed · Answer

Hey @Isaiah Turner -

I like this post!  Real estate is a big game and if you learn to do it right, the game is stacked in your favor.  Economic structural systems, tax laws, inflation, etc....all work to your benefit.

Most experienced investors become addicted to "the game" and will always do it even where there is no financial need to keep playing (I fully am).

Real estate investing has developed so many positive character attributes: vision, persistence, team-building & leadership to name just a few, that are far more valuable than the money.

I started out right there in HOUSTON and its an amazing investor's market.  You've got more local investor resources than almost anywhere else so make sure to take advantage of them.

Hope this is an incredible year for you!!!

Rob Lane · Answer

Great post.  The rehab of making something ugly into something beautiful is my favorite part of the job.  I hate the paperwork side.  I left the rat race 3 years ago because of what investing at a young age has provided me.  After doing nothing but real estate for the last 3 years I have never been happier, in better shape than I have ever been, and got my sense of humor back after leaving my life sucking job as a sales manager for 20 years.  As a very poor kid growing up I am very blessed and thankful to real estate for what it has done for me and my family and employees!

JD Martin · Answer

I'm with @Steve Vaughan and @Jerry W. . I do this primarily to make money. But I also enjoy taking an old piece of crap and making it nice. I used to do it with cars; now I do it with houses. As Jerry mentioned, I too have to always beware that I don't overimprove my rentals, because I love fixing up old houses. That I can help rejuvenate a neighborhood, provide good, clean rental housing for affordable prices, and make some difference in people's lives is just a bonus. Our company is becoming well-known for providing some of the best rental homes in our area, and we get a lot of referrals and inquiries from people when we don't even have any vacancies.

You can do this for profit and still make the world a better place than you found it. These people are going to rent some home, and it will either be mine or it will be one of the umpteen slumlords around, some of whom we are helping to chase by upping the ante, and others who are improving their own properties for the sheer sake of remaining competitive. You can have a race to the top or a race to the bottom, whichever you prefer. I prefer the race to the top.

Jerry W. · Answer

@Isaiah Turner, my investing started as a side gig to add a little money to the pot for retirement.  The day jobofr me and my partner was by far the primary focus.  Fast forward over 20 years later and when my partner retired he got a check for his half of the business for about 15X his yearly salary when we started the company.  We never took any money out for ourselves so in large part it was delayed gratification.  After I took over the company solo the possibility of what it could become grew inside of me.  Yes it became a bit of a game for me.  In the three years since I took it over it has even grown to be more.  I really enjoy the game more and my day job a bit less.  My main profession as a whole has more health problems, depression, alcoholism, etc than the general population.  In the last 6 months I have come to see real estate investing as a means to retire from my day job and continue in real estate.  Now if I put 60 hours a week into real estate I may find less joy than it is now.  If I were to take 2 weeks off of my day job I might like it a lot better too.

I do take joy in buying a derelict property and fixing it up and making it nice.  I have to watch that I do not over rehab properties as I really enjoy the transformation.  I take pride in driving by one of my nicer properties and say that is one of mine.  (Some of them I do not mention hehe)  I enjoy helping a seller out of a bad spot and providing a solution.  The most recent Seller I had, knew my mom and told her that she had been rescued by an angel in a cowboy hat.  While I about choked when I heard that it clearly made my mom feel good.  Sometime in the next 1 to 6 years I will be leaving the high stress part of my job and go into semi or full retirement and it will only happen then instead of age 69 because of real estate.

Mark Updegraff · Answer

@Isaiah Turner - it is a game of chess, screw up and you loose :D  If you're looking to start building wealth, buy and hold is the way to go.

Use conservative rent estimates and run a conservative pro forma with plenty of reserves for capital improvement, vacancy, repair, and property management.  If the numbers look good, make a move.  If they don't and there seems to be none in sight, start scoping out new markets.  Not all markets are created equally.  Go to one where there is a substantial amount of activity, good levels of employment, and prices that make sense.  The closer to home the better.

Dave Foster · Answer

Who knew @Steve Vaughan was such a softie!!  Well said Steve.  Because you are the CEO of your real estate business - whatever that business looks like, you get to make the choices, dictate the priorities, extend grace, enforce standards and help and teach others to succeed - from partners to family to tenants.  It's hard to do that from a cubicle.

Adam Christopher Zaleski · Answer

I like it because it's kind of a hybrid business for me that requires very little of my time. I have two single family homes that I self manage from another state. I probably average about 20 hours/year for each property. I could make more money with a real hands on business. However, I'm the competitive type of person that would work 70-80 hours/week to make it work and I don't want to do that to myself.

In reference to my time, there was one exception. Both rentals were originally my primary residence and they both needed work in the beginning. I did spend a lot of time in the first 3-6 months rehabbing each property while I lived in it. However, because I was at home doing the work, I could still spend time with my family and friends. I consider that to be much different than spending more time at the office. However, that is just my opinion.

Roselyn Richards · Answer

Yes Sir! Right here!! I relate!

Why Real Estate? No...really, WHY!?

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