All Forum Posts by: Michael L.

I have been trying to think through this mental exercise a fair bit lately. My interest was rekindled when I read another BP's post earlier today on evaluating your investments, and asking yourself whether you have an investment or a part-time job. Don't get me wrong, I love my rentals, but without a PM it does at times feel like more than just passive investing.

So which is better for long term wealth building: notes or rentals? I had believed that it would be through rentals, and that is what I have been pursuing. But rentals do have their downsides - big capex, bad tenants, and local market factors can all affect returns in an unexpected way. On the flip side, appreciation can be a nice added benefit which will at least hedge inflation in most markets.

At this point I think they are both great options, just different. I'm not sure which is better for long term wealth building, but like anything else, it probably depends to some extent on the investor and the market (and a little bit on luck). 

I may dabble a bit into notes in the future to see how I like that niche.

What do the other BP's out there have to say?

What is your mission/goal? Flipping is great for fast big returns, but a buy and hold portfolio is great for long term wealth building. A lot depends on what you are looking for!

Hey Bruce,

Glad to hear you are taking the plunge! That sounds like a really high HOA for a studio condo, and my guess is that it would represent a huge proportion of the rent you would be able to take in and it will not be worth it. Run the numbers; be sure to account for vacancy, maintenance, and all other expenses. If it cash flows over and above the PITI payment, it may be worth it. My guess is that it might not be the best place to start though. T

here are good calculators on this website to help with your calculations; if you want a copy of my spreadsheet that I use, feel free to PM me.

Good luck!

Hi Claudia,

Welcome! I'm from your neck of the woods as well. I listened to that podcast about a month ago as well, and have been doing a lot of research on this. Note investing definitely takes a little bit more savvy than traditional investing, but if you are willing to put in the time and educate yourself on it, the returns can be great. There is of course a ton of useful information on note investing by many of the posters above. Best of luck!

Hi there, young physician here. I am a newer investor and while it does take some time extra time to be involved in REI, for my investment strategy it has not been too bad. I am buy & hold, long term only.

I do not use property management currently, because I find a paradox with using them. First off, their financial interests are not properly aligned. Secondly, the only task I would want help with is filling vacancies; yet this is the one I least trust them to do. I'd rather know (and personally screen) the people living in my most valuable assets.

For the day-to-day management, I find it almost a total non-factor for my time. I rent higher end homes to nice tenants, and if something goes out, they email me and I can take care of the matter in minutes by forwarding it to my handyman or other contractor. Rents are collected online and automatically transferred to my account.

This has allowed me to invest locally while running a practice. Not sure how long I will do this, but for now it's working out well. PM me if you'd like to chat more.

Oh and one more important thing here - there is no free lunch. The trade off that I pay for with these nice rentals is smaller margins. Don't get me wrong, the returns are very good and stable, and I am happy with them, but nothing like some of the stories you hear about on BP.

Unfortunately, too many "assumptions" need to be made to even try to make a calculation.

I don't invest for appreciation because that is speculation.

Investing in cashflowing properties in stable/growing areas is the safest strategy IMHO.

I use Tenant Background Search (www.tenantbackgroundsearch.com) and have had really good experiences with it. Last I checked, their prices were the lowest around and it couldn't be easier to use.

One other benefit is that there is no "site visit" required. Because an email is sent to the tenant to verify their identity, they do not have to verify that you are a landlord - just sign up and submit an application.

Agreed - it's a great tool but not always the most up to date. They have at times in the past gone a couple of months before updating my credit card information (which will obviously affect the score). But I still use it, and love it!  Can't argue with the price.

I recently closed on a townhouse with an HOA, and while I feel that the monthly fee is quite reasonable for the services provided, I was definitely NOT very happy with the $2000 new ownership fee (although they claim this is in the "capital improvements" budget). Even worse though was how rude the company was when I tried to get information from them as a prospective tenant; I immediately filed a complaint with the supervisors.

The financials should be public. I took a look at mine and found that about 25% of my monthly fee is going towards some type of administration. Mostly wasted money, but nothing I can't live with. At the end of the day I just had to factor in the costs and decide whether or not it was still a good deal.

 I deliberated over the flat / non-flat decision for a long time. In reality, I'm doing a hybrid because I did the kitchen and bathrooms in satin. This way it will be my own sort of experiment.

I spoke to other investors in the area who rent similar properties and use flat, and then just go around and do touch-ups every time the tenants move out as it's usually not that bad. So I decided to try the flat, since it touches up much better.

We'll see though... maybe I can report back to BP in a year or two with my results there :)

And thank you @Brandon Turner for the original article!