All Forum Posts by: Terra Padgett

As the blunt but knowledgeable @Thomas S used to say, "There's no such thing as a retired landlord!"

I self-managed all for 17 years, then 1031 consolidated half and left the seller's PM in place. 

I could not believe the stupidity of their repair decisions and high costs. The 10% PM fee talked about all the time is complete bs even before including fill or renewal fees. Then it's 16% minimum. 

I fired them from doing several tasks (like laundry room collection- $75 to collect $30 x3) dealing with garbage disposals or maintaining the 70s style 4ft flourescent lights in kitchens. 

I was getting $150 balast repair bills and they were driving to stores for cover replacements at $40/hr.  (Instead of upgrading to the $25 LED fixtures I had in storage) 

They summoned licensed pros for every small one-off thing, including swapping light fixtures, wall heaters and changing toilet flappers. 

So continue doing it myself to not go Bk or sell?  I tapped out in '22. The market was good and I was sick of being the only one who could manage expenses effectively,   I do not regret reducing my RE 90%. 

I think it really depends on what people mean when they say passive.  I would agree that landlording is not a completely hands off, set it and forget it type of activity.  However, I don't know if that is what everyone means when they say passive.

I try to evaluate it from a time vs money relationship.  My current W2 is active, that's my baseline.  Anything that can earn me money with a disproportionate (lower) time investment is more passive than my W2.  From there, it's about finding ways to increase that income and decrease the time investment.  My life and my earnings are getting more and more passive.  It's more of a continuum and journey.

People pay me to stay at my places and I don't have a daily list of tasks/activities I have to show up and complete for that to happen.  If most of the "work" can be done from my couch on a phone, that's pretty passive to me.

I get that some people choose to do much of the work themselves (PM, handyman, etc), and that will make it less passive.  But, to me, it's still far more passive than a 40+ hr/wk W2.

@Terra Padgett, passive is really in the eye of the beholder, unless you are talking IRS definition; then, it is defined as passive.

As you will see here, some people simply want the "freedom" of not being bound to their corporate job and a desk.  But when anyone gets to the scale of owning enough rentals to actually make a living, I think they learn that they simply traded one job for another, often harder, job.

As far as syndications go, they are only somewhat more passive than owning rentals, and I think it really depends on your mentality and attitude toward them. Just like all real estate, they are not a silver bullet to grow your wealth. You are clearly giving up a lot of control to a group that will ultimately make decisions that may not align with yours. Unfortunately, syndications are a lot like Airbnbs: they are all called the same thing, but the experience you have will vary widely. And most of the return is going to be driven by market conditions, regardless of how good or bad an operator is. But the same can be said about buying a SFR.

Things no single person/company can control: rents, interest rates, supply and demand. You/the company can make bets and predictions that may turn out alright in the end, but they could go the other way on you too. And as we are seeing, the cost of a miss in a syndication is just a lot bigger than the cost of a miss in a SFR. So given a syndication is needed because the GP, presumably, cannot fill out the capital stack for a $20mm-$100mm deal on their own, when that miss happens, it often needs to be born by the LPs, either by selling for a loss, or capital call. A single family, if the buyer uses all their money to acquire, will result in the same thing, but only the buyer has to bear that burden.

 the liquidation is for cash-flow out of state property. I put more effort into just hyper-active flipping business in local market. By nature I like real estate when it's more hyper-active. I only need one good flip project per year to create six digit income.

everything real estate is hyper-active investment, but the return is not worth it just to catch one hundred  two hundred cash flow, hence I move to even more double-hyper active investment which is rehabbing and flipping house. I'm liquidating right now.

I had gap in between tenants at a long distance mid term rental a few months ago. A buddy of mine and I went and spent the weekend at the property. He was talking about wanting to get into real estate...his exact words were, "I just want some passive income." In the exact moment he was saying that, I was snaking the shower drain. Agreed...not passive. It can get more hands off over time though. 

@Terra Padgett - Agreed! To truly make an asset perform to the desired cash on cash return, it requires solid oversight. What I will say is you can create systems in place to make it semi-passive, but you will have to provide oversight in one capacity or another.

What I will say is there are certain structures in real estate that allow mostly passive investments and that is syndications. Syndications require work up front in regards to vetting the syndicator, the deal, and the market, but once the aquisiton is complete, you simply sit back and collect the returns. I've invested in a few syndications as a LP and it was the closest thing to mailbox money I experienced in real estate.