All Forum Posts by: G. Brian Davis

Sounds great @Tyler Baker, sending you a connection request now. Always happy to talk real estate!

Hi Morayo, absolutely! Let's connect by direct message. 

Hi @Zane K., glad to hear you're getting into real estate!

It's really hard for new investors to buy good rental properties and oversee them well even when you live nearby and know the area well. It gets infinitely harder when you invest out of state as a novice investor.

I got rid of all my rental properties when I moved away from my hometown. It was just too much work for not enough money.

Today I invest passively in group investments (real estate syndications) and notes. I go in on these with an entire investment club of other sharp investors, and we vet the deals together and invest with $5K instead of the typical $50-100K. I earn much higher returns than I ever did as a rental investor, with almost no work required on my part.

But I would certainly never discourage anyone from investing in rentals if they are truly passionate about building a side hustle business. Just go in knowing that that's what it will be. 

Hi @Mike Jaquith, glad to hear you're exploring real estate investments!

What you're seeing is a lesson I didn't learn until after I'd lost a lot of money: It's really, really hard to find properties that cash flow well. It takes a ton of work to score good deals on properties. Professional investors do this by sending thousands of mailers to distressed property owners, or building local "We Buy Houses for Cash" websites that rank well locally in search results. 

It's one of the many reasons I no longer buy rental properties. Instead I invest passively in group investments (real estate syndications) or notes. Passive real estate investing comes with its own challenges of course, most notably finding quality syndicators and the high minimum investment (typically $50-100K if you invest by yourself). Today I simply go in on these with other investors as part of a passive real estate investment club, where each person invests $5K at a time and we vet new deals together each month. I earn much higher returns than I ever did as a rental investor, and don't have to lift a finger after the initial vetting discussion.

That said, some investors really do enjoy building a side hustle business around real estate. If you choose to buy rentals, just go in knowing that it'll be a side business, and not particularly passive.

Hi @Josh Rodriguez, congrats on getting into real estate investing!

I started my career in real estate doing BRRRR deals. They're a lot harder than the average person thinks. There are a lot of "micro-skills" required: finding a great deal, forecasting returns accurately, financing it, hiring and managing contractors (difficult!), permits, inspections, permanent financing, managing tenants, managing property managers, and so on. That all gets infinitely harder when you invest long-distance.

Personally, I invest in real estate passively today. That mostly means syndications but it also sometimes means notes and funds. I like to spread relatively small amounts ($5K/month) across many property types, many states, many syndicators. You can do that by going in on deals with other investors, either friends and family or through an investment club. We typically aim for 15-25% annualized returns for instance, as a mix of cash flow and appreciation.

In short, I'd take a step back and ask yourself if you're just looking for the investment benefits of real estate (cash flow, appreciation, tax benefits), or whether you want to build a side business around real estate investing. There's nothing wrong with the latter, you get full control, but it takes a lot more expertise and a lot more time and labor.

Just my two cents. Best of luck!

To me, the question isn't "stocks or real estate," because a diverse, recession-resilient portfolio includes both. The question is "Do I want to actively own properties or passively invest in real estate?"

Passive investments include syndications, notes, funds, and real estate crowdfunding investments. For my crowdfunding investments (most of which are short-term), I aim for 6.5-10% returns. For notes, I aim for 10-12% interest. For syndications, I aim for 15-30% (a mix of cash flow and appreciation).

I invest small amounts in each every month through an investment club, and don't have to do any work beyond the initial vetting. If you're curious, I wrote about this for BiggerPockets recently: https://www.biggerpockets.com/blog/gaining-financial-freedom...   

Hey @George Drexel, I spent many years as a mortgage loan officer. The rule in the industry is that you must live in the property as your primary residence for at least the first year.

After that, you can move out and hold the property as a rental. But the other posters in this thread are correct, if you apply for an owner-occupied loan and never move in, you're committing fraud.

Best of luck!

Hi @Tyler Henkel, you have a few options.

If you go the software route, that's a strength of our own (free) software at SparkRental, or another strong option is Stessa.

Alternatively, you can hire a freelance bookkeeper through a platform like Upwork or Fiverr. For our business, we have a bookkeeper help out a little each month.

I would also recommend having a CPA actually prepare your tax return, as an extra set of eyes. The last thing you want is to misreport your taxes and incur the wrath of the IRS.

Best of luck, and keep us posted!

Hey Cain, glad to hear you're getting into real estate investing!

At the risk of bursting bubbles, most primary residences don't cash flow well as rental properties. The general rule of thumb, called the 50% Rule, is that non-mortgage expenses will cost you around 50% of the rent. These include irregular but inevitable expenses, such as vacancy rate, repairs, maintenance, accounting, insurance, property taxes, and property management.

Run the numbers through a cash flow calculator before deciding to keep the property as a rental.

Personally, I sold off all my rentals. It was just too much work and not enough money. Nowadays I invest small amounts every month in passive real estate syndications, by going in with other investors through an investment club. No stress or labor, and we each just get a K1 at the end of the year for taxes.

Keep us posted on what you decide!

Hi @Lamar Athill, glad to hear you're getting into real estate investing!

I started my career with rentals. One thing I wish I'd known before buying any properties was how to accurately calculate cash flow. It's not "the rent minus the mortgage." In fact, the rule of thumb in the industry is called the 50% Rule: that 50% of the rent will go toward non-mortgage expenses (vacancy rate, repairs, maintenance, insurance, property taxes, management, accounting, etc.).

I also didn't realize how many different skills were required, from financing to managing contractors to permits to city inspections to managing tenants or property managers. And many others.

Personally, I no longer invest in rental properties. I found it too much work and not enough return. Nowadays I invest relatively small amounts in real estate syndications (passive group investments). I recently wrote about this for BiggerPockets: https://www.biggerpockets.com/blog/dollar-cost-average-real-....

Feel free to hit me up with a message any time!

Brian