Quote from @Sarah Ali:
Quote from @Dan H.:
I do not view you as too old, but I question your timing. RE performed outstanding from 2011 to 2021. Appreciation was great, cash flow was great, few areas had cracked down on STRs, etc.
interest rates have more than doubled since the end of 2021. Prices have not fallen due to low inventory due to how many owners have loans far below current rates. Low supply leads to rising prices. So we have all time high in RE prices and interest rates near highest in many years. Combined this leads to high cost of leveraged purchases.
In virtually all large city markets it is currently cheaper to rent than to own. This implies in those markets the average residential investment purchase is cash flow negative.
In addition, active residential RE is not passive even if using a PM. It requires more effort/work to be successful than most non experienced investors realize.
Normally this may be where I suggest passive RE options such as a limited partner in a syndication, but in the last couple of years many syndications are struggling.. So similar to golden era of active RE having possibly passed due to higher interest rates, I fear it may also be true for syndications (I am in one syndication that I fear an equity loss which would be my first time if this comes to pass).
Note RE has been an outstanding investment in recent times, but it will not always be the best investment option. In the case of the OP, they would be entering a tough RE market with virtually no knowledge including no understanding of the effort required and the risks.
I recommend people enter RE at this time only if it is a passion and they are extremely motivated and hard working. These people can succeed even in a tough RE market. There will be many people who entered RE in 2023 that fail in large part because they did not have a good understanding of the underwriting, thought RE investing was more passive than it is, expected interest rates to drop in the short term, and/or over leveraged.
RE investing was easy a couple years ago. The cash flow was far better due to lower interest rates and the RE appreciation was outstanding. It is different today.
By the way I have not purchased since Dec 2021 (purchased $4m that month) because we do mostly BRRRR (and no flips) and my underwriting shows after refinancing that I would be large negative cash flow.
Good luck
I know, I missed the bus... If RE is no longer a good option, do you have any other suggestions?
Wait! Let's not throw the baby out with the bathwater! You can and should invest in real estate The last few years, the wind was really at your back. You could make some mistakes and come out okay with buyers willing to pay over asking price. But, please don't feel you missed out and can't ever do it.
Yes, mortgages bring some risk. Learn to understand the risk and how to minimize it. IMHO, Not having any investments is risky. The plan that the govt would take care of me in my old age would terrify me.
Sign up for a class on Personal Finance or Personal Investing at a local Jr College. Learn about stocks and bonds and real estate from someone that is not out to sell you anything and not going to steer you in a particular out come. Understand how they work together.
Since, you are not working full time ( ?), I'd look for a side gig working for other real estate investors. You mentioned understanding systems etc. Can you help someone set up systems to run there business from a distance ? Work with spread sheets ? Data mining? Finding off market leads? Also, look for realtors, property managers, co hosts... There is always a need for a responsible person who can work a few hours to meet a contractor, sit around and wait for an appliance delivery etc. It won't come anywhere near your salary but you can net work and make a couple bucks while networking.
Yes, you have a lot to learn but you can learn it. Once you have learned more, it won't be so scary.
