All Forum Posts by: Annie R.

@Annie R.

Just my opinion, but I believe the answer is because of cashflow... It is not, and should not be the only form of investment if your using real estate as a passive investment vehicle.

My simple vanguard index funds and etfs yielded higher returns then my rental property however that money is tied up in my brokerage account. It's not the same as having cashflow coming in that I can use on hand every month. Additionally, at the end of the loan I'll have a property that I will have options with. There are also the tax differences when discussing investing in the stock market vs real estate.

@Annie R. Joe is right

I was going to say something very similar

Look at it this way...would your company pay the same salary you get to me? The only difference is I won't actually show up nor do any of the work... the other option for you, and it can be difficult, is to be the equity partner for the diy'er. I'm a gc, built a ground up duplex. I provided none of the cash, bit all of the work. Returns are great for both of us. It just has to be someone you REALLY trust.

@Annie R. - many people have been trained to believe that diversification is good.  The flip side to that coin is worth consideration. Diversification is for those who are not fully informed.  They use diversification to control for lack of knowledge arbitrage.  Andrew Carnegie, the world's first billionaire said "put all your eggs in one basket.  Then watch it like a hawk."  Warren Buffet often quotes that.  We are putting nearly 100% of our wealth into Florida multifamily for this reason.  I picked up and moved to Florida to be able to invest locally and watch the properties like a hawk.  Most are not willing to go through the pain of uprooting their life to take such a drastic approach.  Regarding syndication, you might check out the multifamily forum.

@Annie R. I’m not exactly a DIYer nor am I just a passive investor. I guess I’m somewhat in the middle. Yes, I do own my own rental investment property but I have a team in place that does the repairs for me. They get the property ready and I build these costs into my numbers. I might not get those grand slam results but I do get good solid returns.

Currently I am doing the tenant placement and the management of my buildings once they’re rent ready. With my returns I could place them with a property manager and be more hands off and still get decent returns if I wanted to.

My tenants not only have my telephone number but also have the telephone number of my handyman in case they need repairs. This makes for quick turnaround times if something goes wrong.

My W-2 job allows me some income to qualify for financing with. My goal is to continue to lower my D/I ratio so I can keep qualifying for more properties. I have a fairly low paying job so a big key for me is to make sure the income in the properties I buy more than covers the loan so it doesn’t create headaches for me with my bank.

@Annie R.

One of my coworkers bought a turnkey SFR in Mississippi several years ago. Every month he gets a check for about $250 and no headaches. He might just be lucky because I've also read posts with negative reviews of turnkey properties. He's never even been to Mississippi, that's pretty hands free!

As far as comparing RE to the stock market, last year I was up 45%, this year to date, I’m down almost 5%. I’ve had days where my stock portfolio drops over $100k in a day, that doesn’t happen in RE. It’s all about diversification. Also, I can always sleep in one of my houses, stock certificates don’t even make a warm blanket.

@Annie R. I’m surprised leverage hasn’t come up yet as a topic. Sure, you can buy stocks/options on margin, but you don’t get margin calls in RE when bad news happens overnight. That is true for W2 or DIY.

Plus, the tax advantages in RE are now-not when you reach a magical age that may be decades away, so the present value of money comes in to play.

I look at the financial landscape of the US, I only see higher taxes coming, and I don’t want to defer taxes until then 🙂. Great forum topic.

Hot air? Like how Facebook was after IPO? ;) Zero effort index funds go 10x every 30 years - you can go back the entire century to track that. As for single stocks, I don’t invest randomly, and I have the capacity to dump more money when the stock declines. I have definitely lost money, but the gains will make the losses look negligible. Will my gains in real estate make the losses look negligible? Remains to be seen. 

Eventually you will need to understand your own risk tolerance and make the investment decisions yourself. There is no shortage of RE Cramers, so be careful ;)