Hi all!
Apologies in advance for a very long post. It was more to help me to pull my thoughts together in one place but figured I'd include it to give additional color and information. That said, if it is anything like work emails, after a paragraph, no one reads them. So here is the TLDR version:
TLDR: I'm a relatively high income W-2 earner with a young family. I've never invested in real estate, but have researched off an on for 20+ years and truly believe it should be part of a diversified investment portfolio. Cashflow is not my primary concern but I like the economics/flexibility of a STR due to the ability to use it for family vacations, potential tax benefits, and having property(ies) close to family without burdening them. Biggest questions and feedback I would love from the community is:
- Do STR(s) sound like worthwhile investments for me? Or should I ignore the potential complications of STRs and look at other strategies (LTRs, syndicates, etc...)
- Are STRs one of the better tax strategies too offset W-2 within REI?
- Is self managing while working a corporate "9-5" with a busy home life realistic?
About me: I am a middle aged (still weird saying that) married with 3+ children scattered through elementary and middle school. I've grown up reading, listening, and researching different real estate strategies. I read Rich Dad, Poor Dad in high school and have always been excited about investing in real estate. 20 years later, I still have yet to purchase a property for REI purposes. Not for lack of want, but always made excuses due to time and situation. Despite living the "Rich Dad" life, we manage to save in excess of 30% (between 529s, 401Ks, IRAs, ESPPs, and company stock) for the past ~10 years with my wife as a stay at home mom (the tougher job).
I work for a great company and generally find fulfillment with my "9-5" but I still have the real estate itch that I have yet to scratch. While there are certainly financial incentives for it, I view less as an immediate financial investment and hopefully more as a family, educational, long term diversification and retirement strategy. My wife and I come from very different backgrounds with my parents being entrepreneurs who have started and own their own businesses and operate a few LTRs while hers worked for the same company for his entire career, retired before 60, and live a very comfortable life.
I find myself at the center of both, benefitting from a thus far successful career, but also valuing the ability to be financially independent through my own means. My ultimate financial goal would be to achieve financial independence by 50 (10+ years away), pay my children's college tuition, while still working a fulfilling career. Secondarily, supporting charities and other organizations with time and expertise vs. just money.
Short term REI goal: Purchase a STR along the Gulf Shores / Orange Beach area
- Close to ageing relatives that will provide more opportunities to visit for direct and extended family
- Utilize for family vacations over the coming years
- Provide tax benefits to help offset W-2 income
- Diversify portfolio that is heavy weighted towards mutual funds and company stock
Long term REI goals:
- Own 3-5 STR properties that can be utilized for different family vacations
- Own MTRs/LTRs as opportunities arise
- Provide supplemental income that my spouse could manage in the event of my death or disability (or less negatively, a career change)
- Teach family (spouse and children) the benefits of real estate investing
- Achieve financial independence with the goals to travel, enjoy activities, and devoting more time to "giving back"
Questions I have:
- With my stage in life, is it realistic to self-manage a STR properly? After reading Avery Carl's excellent STR book, it sounds like it is with a good bit of automation, but I always try to be conscious of when I'm home from work, be present with my family.
- Outside of non-normal circumstances, what is the average amount of time estimated per week managing an STR (30 minutes according to the book, is that realistic)? Between job flexibility, sitting around waiting at dance, swim, soccer practices, etc... there is plenty of "dead" time throughout the week to be more productive.
- My assumption is that if done properly, self-managing can better screen tenants than a PM, correct?
- If I've read all the posts correctly, self-managing has improved tax benefits for a W-2 earner compared to using a PM?
- Ideally, I'd like to find a property that can cash flow positive without a PM, but if it gets to be too much. Hire a PM and still be ~neutral. Has anyone taken this approach? Or best to start with a PM, then look to takeover
- Are there any CPA's here (ideally connected to a financial planner) that help with tax strategies? I've used CPAs in the past, but typically amounts to what I can do in TurboTax.
- Does donating or allowing family to use the property qualify it as a write off or a deduction to revenue?
Order of next steps:
1. Find a CPA or tax strategist to help model how an STR will impact my 2023 tax outlook.
2. Connect with a local real estate agent in the Orange Beach / Gulf Shores market that specializes in STRs
3. Find a property and take the plunge!
Thanks for anyone that made it this far and looking forward to learning, conversing, and growing with you all!
-Ryan
