By Dr. James M. Dahle, WCI Founder
I've never been a big fan of “hype.” I'm kind of a boring, low-key person that way, but I believe that, as a general rule, good investing is boring investing. My thrills in life come from exploring the world, climbing, scuba diving, and other fun activities—not my portfolio. As a general rule, when investing is exciting and thrilling, you're at high risk to lose money. Those who want to make it seem exciting are usually selling something.
When an investor first comes into contact with the real estate investing world, they are often surprised by the amount of hype they run into. Sometimes it seems more like the annual meeting for a multi-level marketing company than anything else. There is blasting music, testimonials from the successful, and lots of encouragement that YOU can do it! Some people love that environment, but it can be a turnoff to others. I think it is worth looking past it rather than abandoning real estate just because of the hypey, rah-rah, cheerleader nature of its advocates.
However, there are three important lessons to learn from the hype, and they go a long way to explaining why it exists.
#1 Real Estate Investing Is Hard Work
Ask yourself, “Why do people need to be motivated to do real estate investing?” Well, reason No. 1 is that real estate investing is hard work. Talk to any experienced direct real estate investor, and they'll give you all kinds of ways in which they've hustled. Nobody needs to be given a motivational talk to go sit on a beach in Cancun. Or to sit on the couch and watch Netflix with a beer and a bowl of popcorn. Real estate investing is not like that. Think about all of the things you need to do to be a successful real estate investor:
- Learn how it all works/educate yourself. Books, courses, conferences, blogs, forums, internet searches, buying lunch for experienced investors, etc.
- Find a suitable property. Experienced investors will tell you they may look at 100 properties to buy one. That takes time.
- Buy the property. Most of us have bought a home at some point; was that fun for you?
- Fix up the property. It's a rare property that is move-in ready AND a good deal.
- Find, screen, sign, and orient new tenants. Remember the property itself doesn't provide rent; there must also be a tenant.
- Manage the property and the tenant—repairs, maintenance, paying expenses, collecting rent, and evicting tenants. Good systems help but don't completely eliminate the work here.
- Take care of the paperwork. Doing your own taxes is pretty easy . . . unless you're a real estate investor.
- Sell or exchange the property. What's that saying about the two greatest days of a boat owner's life? It also applies to investment properties.
The point is clear: direct real estate investing is like a second job. It doesn't take very many properties before it becomes a full-time job. Naturally, all of the work above can be hired out. There's a return-lowering cost to that, but the more you hire out, the less hard work it becomes. However, so long as you are the sole owner, you're still going to have to supervise those doing the work. You can avoid most of the work completely by investing passively, but there will still be some work of selecting and monitoring the investments or at least sub-asset class and the manager. Naturally, there is also a cost to being a passive investor, not the least of which is dealing with multiple state tax returns and paying significant fees to those doing the work for you.
More information here:
A Beginner’s Guide to Investing in Real Estate
How to Succeed in Private Real Estate Investing
#2 Real Estate Investing Is Risky
Another reason that there is so much hype around real estate investing is to induce you to take on significant risk. Although some return comes from the tax benefits and paying down the mortgage, the two main sources of return from real estate investing are the income (technically Net Operating Income) from the property and the appreciation of the property. The two largest risks of real estate investing are that something happens to those two sources of return:
Income Goes Down or Even Negative
There can be vacancies, tenants can stop paying, expenses can increase, repairs can be needed, property taxes can go up, and more. All of this reduces that Net Operating Income. You're running a business here, and you need to be good at it.
Appreciation Disappears or Property Depreciates
Properties do fall in value from time to time, especially when considered on “real” after-inflation terms, and sometimes they fail to appreciate for very long periods of time. Remember, most of the indices of real estate values are not adjusted for the fact that people are exchanging older homes for new homes. The actual rate of appreciation of older homes (i.e. the one you now own as a real estate investor) is not nearly as impressive. Consider a cherry-picked example: Detroit. The rate of appreciation in Detroit since 2000 is 0.23% per year. The average inflation since that time has been 2.43%. After inflation, the average home bought in Detroit since 2000 has fallen in price by a cumulative 31%+. And that doesn't account for the fact that many of those were new homes built after 2000. Imagine if I had also cherry-picked the time period (2006-2007 anyone?) in addition to the location. I sold the property I bought in 2006 nine years later for a significant loss, and that's not even including the negative cash flow. And it wasn't even in Detroit.
Leverage
There are additional risks in real estate. One of the most common risks real estate investors take (and are certainly encouraged to take in those hypey books, conferences, and courses) is leverage risk.
“Other People's Money!”
“Get as much cheap leverage as you can!”
“Borrow, borrow, borrow!”
“Find 0% down deals!”
Leverage certainly boosts returns. The problem with leverage, of course, is that it works both ways. Imagine if you only put down 20% on a property and then it falls in value by 31% over the next couple of decades. Your entire initial investment is wiped out, and you wasted a whole lot of time and effort with that property. Another nasty part of leverage is that, at least when investing directly, you're usually signing personally for any debt associated with it. That means you can lose more than your entire investment. A -100% return is bad enough. A -300% return is particularly painful.
Illiquidity
Real estate is also usually a very illiquid investment with high transaction costs, even if you're investing passively and even if you're investing on the more liquid debt side than the less liquid equity side. You SHOULD be paid more for taking on that illiquidity. If a boring old REIT index fund can provide 9% returns with daily liquidity and zero hassle, why would you ever buy a property yourself or enter an illiquid private syndication for that same return?
Investing is mostly about risk control. If your source of real estate investing information is not diving deep into the risks of real estate investing and how to carefully control them and make sure you're compensated for the ones you must take, keep looking.
More information here:
16 Different Ways to Invest in Real Estate
#3 Beware the Shovel Sellers
I have spent most of my life in the western United States, including Alaska. Part of our history out here includes numerous gold rushes and the interesting characters they attracted. Historians will tell you that, as a general rule, those who got rich in a gold rush were not the gold diggers. Those who got rich sold the shovels (and the food, housing, booze, and supplies) to the gold seekers.
In the real estate world, there are a lot of people selling shovels. They have a serious conflict of interest in getting you to be super-excited about real estate investing, to learn more about real estate investing, and to give it a try yourself. The shovels they sell are also frequently gold-plated. I've been amazed to see people who balk at paying a few thousand dollars for a real financial plan who think nothing of paying a real estate “coach” six figures to learn their secrets. Real estate courses and conferences are routinely the highest priced I've seen. If you question or negotiate the price, you are accused of “having a scarcity mentality.” If the courses or conferences are free, you need to ask yourself why anyone would go to the work of putting on a conference without an upfront cost. You'll quickly realize that, at that event, YOU are the product, or that the real sale will take place AT the conference, not before the conference. Just as those on Wall Street are notorious for transferring wealth from your pocket to their pockets, there are plenty on Main Street who would like to do the same. Consider the following shovel sellers:
- Authors
- Course creators/directors
- Conference creators/directors
- Coaches
- Advisors
- Realtors
- Real estate attorneys
- Accountants
- Appraisers
- Lenders
- Property managers
- General contractors
- Handymen
- Snow removal services
- Lawn care services
All of those people have a conflict of interest in getting you excited about being a landlord and real estate investing in general. They want to sell you the shovels to go dig for gold. Be careful not to buy too many gold-plated ones and realize they always make money (and sometimes much more than you do) whether you do or not.
Remember these three reasons when you encounter the real estate hype machine. If you can see through the hype, put in the work, manage the risks, and watch your costs, you can still make an excellent return investing in real estate. Just don't expect a risk-less, effort-less, rapid path to limitless wealth.
In an effort to help you to be successful at real estate investing, we are in the finishing stages of a new WCI online course called “No Hype Real Estate Investing.” It'll be coming out soon.
WCI’s No Hype Real Estate Investing is the best real estate course on the planet and the best way to get started in this exciting (and profitable) asset class. Taught by Dr. Jim Dahle and more than a dozen other experts, this course is packed with more than 27 hours of content, and it gives potential investors the foundation they need to learn about all the different methods of real estate investing. If you’re interested in real estate investing, you can’t afford to miss the No Hype Real Estate Investing course!
What do you think? Why do you think there is so much hype around real estate investing? What should the individual investor do about it? Is some of the hype good or helpful? Why or why not? Comment below!
Could you talk about equity sharing where a cash rich investor and a cash poor but good income home seeker buy a single family house as co-owners? It eliminates many tenant problems as the tenant is a co-owner. I’ve done this a couple time with nurses I’ve known who have high income, stable jobs and are of good character. It’s worked out well w/ no issues. In one case, the nurse married the real-estate agent we used and later bought me out. We both made out especially well in that deal.
Thanks
Spoken like a non-real estate investor. “Just rent to a good tenant! Then everyone will win!”
Dave Ramsey is fond of saying the only ship that doesn’t sail is a partnership. I’m inclined to agree with the general sentiment of that statement. I’m personally not really interested in getting into any more 50/50 or less partnerships with anyone.
But people do this sort of thing in real estate all the time when they think the need for the other partner is greater than the risks/cost of working with another. The general set up, however, is for one person to do all the work and the other to provide all the cash and then split profits 50/50. But neither of them is living in it. I guess my question is if the cash rich investor has all that money, why would she give up any equity to the person who put nothing into the property but lives in it? Does that person have to pay the mortgage or something? How do you make those two things even? Seems tricky. Worked for you, but I don’t think that set up is very common at all.
I tend to also agree that real estate is overhyped. Despite the fact that I am a very active investor with my wife in small cash flowing multifamily homes in our local Buffalo, NY market. It has come to be advertised as too much of a get rich quick vehicle and while it is definitely a wealth accelerator, it requires time and hard work and patience!
In the words of Flavor Flav, “Dont… don’t don’t don’t don’t…. don’t believe the hype.”
Looking forward to the hype-free real estate course!
-PoF
I have to respectfully disagree about the “hype” of real estate investing. I would call it “hype” to people that feel like they can get rich quick, and have no fundamentals of prudent investing. Real estate investing (done right) is a guaranteed road to wealth. The problem is that people think it’s like the stock market. It’s not a sprint – it’s a marathon. Just because you have bad tenants, some expensive repairs one year doesn’t mean it’s going to be like that every year. Rents are pretty stable, and property value always goes up with inflation, especially starter homes for young familie. I would say this is a much safer investment than the stock market. I did the typical investing in mutual funds, index funds, etc for 20 years before I started RE investing. I’m kicking myself that I didn’t start RE investing sooner. I put very little money in the corrupt stock market. I have 10 cash flowing properties in affordable areas where people need housing, not fancy luxury vacation homes. So when times are good – people will pay higher rent. When times are rough, people will pay lesser rent. Either way – they still need a roof over their heads.
Stock market – totally unpredictable and no control. You may think you have wealth one year, then it goes away. That’s not safe, imho.
It’s hard work.
Learn how it all works/educate yourself. Books, courses, conferences, blogs, forums, internet searches, buying lunch for experienced investors, etc.
Find a suitable property. Experienced investors will tell you they may look at 100 properties to buy one. That takes time.
Buy the property. Most of us have bought a home at some point; was that fun for you?
Fix up the property. It’s a rare property that is move-in ready AND a good deal.
Find, screen, sign, and orient new tenants. Remember the property itself doesn’t provide rent; there must also be a tenant.
Manage the property and the tenant—repairs, maintenance, paying expenses, collecting rent, and evicting tenants. Good systems help but don’t completely eliminate the work here.
Take care of the paperwork. Doing your own taxes is pretty easy . . . unless you’re a real estate investor.
Sell or exchange the property. What’s that saying about the two greatest days of a boat owner’s life? It also applies to investment properties.
How did you manage to not make good money in the stock market over the last 20 years? A simple 2 or 3 fund diversified portfolio with consistent contributions made a killing, even with the recent minor downturn.
I ran the numbers in portfoliovisualizer.com to see what would have happened to a stock market investor over the last 20 years. Contributing 7k each month (which most physicians should be able to do) with reinvested dividends, a 3 fund portfolio (60/20/20) ends up with $4 million, and an even simpler S&P500 portfolio ends up with $5 million; and all this is after the recent 20% decline. After only 20 years you can retire like a baller and never have to work again.
If you didn’t do well during this time period, you were doing something wrong.
But what if you were invested in that “corrupt stock market” instead?
Ha! 😀
-PoF
You are partially right and partially incorrect. The ideal situation is $5 mil after 20 years with $7000 each month. In the real world, very few can achieve that either due to not staying on the course or killed by the high fees/taxes. Besides, it is very rare to see someone to keep contributing $7000 each month for 20 years esp during the lost decade of 2000-2010.
Ok then; contribute a little less than 7k a month. As long as you stay the course, contribute regularly, and don’t do anything boneheaded like sell all your stocks at the bottom of a crash, you still end up with a lot of money at the end. From what I recall, doctors weren’t exactly hurting for jobs during 2000 to 2010.
Real estate is perfectly fine too, but it’s a lot more work than an index fund. And if you want to manage rentals to build wealth, there’s no need to waste 12+ years of the best years of your life in school to get there. One of the most successful real estate investors I know has no education beyond high school.
While there have been times we haven’t contributed $7K and times we have contributed much more, we’ve been investing monthly for 18 years now. Should be 20 in 2 more years. So I wouldn’t call it “very rare.” Seems normal to me.
Unfortunately, most docs are doing something wrong. They’re either not saving enough (most common), paying too much for advice/management, or worst of all, jumping in and out of individual stocks playing hedge fund manager and finding out they suck at doing so.
I have to agree with you on this one. It is hard work and can be quite stressful, but the payoff has the potential to be huge. I also own 10 rentals (9 duplexes and 1 fourplex) and rent to families. They are all bought in B class neighborhoods, with decent schools. Over the last 7 years, turnover has been minimal and I have raised rents appropriately. Some have done better than others. I have 3 that have doubled their values. They all cash flow and are managed by property management companies. I am in 3 markets (to diversify and reduce risk. ). It is definitely hard work and you have to do your due diligence before buying (Location, job availability etc).
Weird that you would call the stock market a “get rich quick scheme” or “sprint”. That’s not the way I view buying fractional shares of the most profitable companies in the history of the world at all. Over time, the companies make money, you get your share, and the companies become more valuable, and thus your shares are worth more. No gambling. Not quick. Not a sprint.
Doing real estate investing right is similar, of course. It’s a long term pathway to wealth.
As far as “everyone needs a roof over their heads”, that’s true. But that roof may be their parent’s basement, thus leaving your rental empty in bad times. No guarantee that rental housing will stay occupied at a rent that will allow you to make a profit.
There’s also no guarantee that the stock market will make you rich. If you were in your late 60’s in 2008, you got poor quick. If you try timing the market (which a lot of people do), you can lose a lot of money. Whereas if you bought rental property in 2008 in moderate B class areas, your net worth may have suffered, but tenants were still paying rent. If they didn’t, then tenants from a higher class “came down” to your properties and paid rent. If you invested in a landlord friendly area, you don’t have to wait years to evict tenants, and just find new ones! Point is – the property is still yours!
There are a lot of regulations that supposedly keep public companies honest, but comparatively there is definitely more control on which rental property you pick. Both real estate and stock market are roads to wealth, so there is no “hype” about real estate investing. It’s real and it’s totally awesome when done correctly. Done prudently and ethically, I would argue it is a much better and safer road to wealth than the stock market.
But the point is not to choose one or the other. Either are equally sufficient.
Agree with your first sentence. Not your second. Absolutely your third, but it does set up a straw man argument. If you compare intelligent stock market investing (buy and hold low cost, broadly diversified index funds for decades) with intelligent real estate investing, one quickly sees they are both excellent methods to invest, each with advantages and disadvantages. I’m always surprised to see anyone reach any other conclusion than to use both of them in some mixture. Me, I’m 60/20/20. Others that love real estate may end up 20/80, but being 0/100? That seems like a bad decision to me.
The “hype” with real estate investing is seen in books, courses, blogs, youtube channels etc. Saying it isn’t there is ignoring reality. I’m not saying real estate invesmtent is bad. If you concluded that from reading the post, you missed the point. Is it better and safer? Depends on your values.
“If you were in your late 60’s in 2008, you got poor quick.”
Someone in their late 60s should have a substantial percentage of their allocation in bonds. A high quality diversified bond index fund sailed right through 2008 with no problem. Even better if you rebalanced into stocks like you ideally should have.
I am very interested in learning and exploring real estate syndications / private real estate fund but constantly getting red flag reflexes from the litany of “wealth and prosperity” events hosted by these private funds.
Sifting through the marketing to avoid participating in an investment that’s “so dumb only a doctor would by it” seems like more than half the battle. My question for folks who’ve had success in this arena would be how’d ya do it? Mor specifically, how’d ya make the call while blocking out the marketing noise. Seems like it could be fertile ground for an interesting blog post / pod cast / comments section discussion!
Thanks for all that you do!
My technique? Start at minimum investing amounts and watch. For years. You’ll figure out what you like and what you don’t. You’ll do well on some, less well on others, terrible on one or two. You learn as you go and become more comfortable as you go. I track my returns for both traditional investments and private real estate investments. I’m doing well with both, but nothing worthy of “hype” with either.
It’s as hard as you want to make it. You’re making it sound impossible. You obviously haven’t tried this. Or if you did, you obviously had a bad experience. Sorry to hear that.
I don’t manage a single property – that’s what good property managers are for. And – it’s all remote. I’m in CA, none of my properties are in CA. Yes, no one cares about my property as much as me, and it is hard finding a good PM, but if you’re around the right people, and do your due diligence, it’s about as passive as you can get. Yes, I do all of the bookkeeping. Why wouldn’t I? I like to know exactly where my money is going. You obviously are not a real estate investor, because all of the work that you talk about are for ACTIVE investors, flippers, etc. There is such thing as investing passively. I don’t invest in REIT’s because that’s too passive, and they can easily take my money and run. I buy single family homes sold by builders that sell specifically to investors, and have PM in place. That’s called a turnkey investment. When I retire and have more time on my hands, I may do more active stuff like Air BnB, short term rentals, multifamily, etc.
Everyone finds their niche on the real estate spectrum. Yours seems to be turnkey investments. We have a partner that offers these to white coat investors interested in that niche on the spectrum between active and passive.
https://www.whitecoatinvestor.com/real-estate-investment-companies/
For me, I prefer to be much more passive than you, using mostly private funds and private/public REITs.
I have found that great sums of money can be made on real estate investments, but in general you have to BRRRR or hold for at least 5 years before doing a 1031 exchange into another investment. That is the best way to grow your net worth.
Yes, time is an important component to successful real estate investing.
If your own advice is to be believed, then your forthcoming no-hype real estate investing course will attempt to sell us something and/or make us the product…
Ha!Ha!Ha!
The difference is we make most of our money by selling you the course. Thousands of white coat investors have taken our courses, even if they’re a small fraction of our readers.
At any rate, we’re unabashedly a for-profit business. If you don’t like what we’re selling, don’t buy our products. You can still enjoy the free blog, podcast, newsletter, videos etc.
This is a great post and really highlights some of the faults with people expecting to walk into the real estate market and make a killing without any work.
That being said, there are several benefits to real estate that cant be underestimated.
1) By devoting time and effort into understanding real estate, a specific market, and management. You are learning another skill that can last a lifetime. Making mistakes while possibly costly, may end up leading to better and better investments.
2) By having a business, that you then take a loss on – as a sole prop LLC, you can reduce your taxable income by the amount of the loss. That model is very easy with real estate holdings given the expenses associated with each property/management. Please consult a tax professional, but having a “loss” on your taxes is significant value that often goes underestimated with real estate.
3) Diversification. Yes you can have a well balanced portfolio, but you can also have real estate holdings fairly easily.
4) Technology does make real estate significantly more turnkey. My wife and I are both FT ED physicians, and we’ve got 8 long term properties, and 2 short terms that we entirely self manage for less than 1 hour a week (at best). To be fair, the STR’s requires significant leg work up front, but has also recouped the entire principle in 1-2 years.
5) I would venture to say that while certainly hyped, countless people have made small fourtunes off real estate and the ability to leverage a small amount of cash (if you put 50k in on a 200k house, it appreciates by 10 percent your 50k made 20k in appreciation, while also generating 5-7% rental income annually) – and dollar cost average houses over a long enough period of time allows it to have similar benefits to most equities we invest in.
With the housing market correcting in the near future (and currently), I would hesitate to tell people to avoid real estate entirely when there may be many a deal to be had.
Jim, I’m sure you hear this all the time, but your blog, book, and guidance has completely changed my life and the way I look at the world. My family and I cant thank you enough for the work you do daily (you actually emailed me directly when I was a resident a decade ago).
I would also hesitate to tell people that! I don’t think I did in this article, did I?
I’ve been wanting to get into private real estate investment for a few years now. I’d like to own a local rental property here in Phoenix area… but my main hesitation is that I don’t know where to look to find a property that is profitable. I’ve peaked around on Zillow from time to time, but where else should I look? All the properties seem overpriced for their expected rent return.
It’s really hard to do this well without diving into it pretty hard. Why not start with finding a realtor that specializes in investment property, tell them what you’re looking for and not to call you until they have something that matches that? Then when they call, move quickly and buy it with little hassle for them and pay their full commission without complaint. By the 2nd or 3rd property, they’ll call you every time they have something for you.
Agree that real estate is work, but I wouldn’t call hard work. I do maybe a few hours a month on it. It’s easy to learn and if you do it right the risk isn’t as high as non real rate estate investors make it out to be. It can definitely be stressful but those stressful properties are not that common of you buy right. And returns are far superior than the stock market even if you’re just an average real estate investor. In addition, while there is the chance of catastrophic problem this is extremely unlikely with a little education. Learning this stuff is much easier than non real estate investors make it out to be as well . If you can learn medicine I think you can learn something that numerous people with high school educations are successful at (and I don’t mean that negatively for these people). There’s a reason the LARGE majority of millionaires do it through real estate.
There are a lot of good points in this post. As a real estate investor myself, it’s absolutely a lot of work. And there is certainly downside risk. I’ve sold a property for a loss as well. And as my portfolio has grown, it’s at times strained the balance in my work and home life.
But I think it’s important to understand one of the main reasons for the hype: financial freedom. There are few investments out there that have the potential to spit out a consistent return in cash every month. This cash can directly replace living expenses and buy financial freedom significantly faster than stock market investing.
This is the dream that attracts so many to real estate. Understanding this is the key to understanding why so many are attracted to this asset class, despite the very real risks and headaches that can come with being a landlord.
I dunno, pretty much all of my investments spit out a consistent return in cash every month/quarter. That’s not something I think is unique about real estate at all. In fact, it’s a little harder with real estate. If you need a little more one month from stock index funds, you simply sell a few shares. You can’t sell a few shares of a property to boost your spending money, it’s all or none.
What’s unique is the percentage of your return that comes in as income. Whereas a stock and a property may both have a 9% return, the property is much more likely to be 6% income and 3% increase in value and the stock is much more likely to be 2% income and 7% increase in value.
I still have some money in the stock market. I did invest in the stock market for about 20 years, although it was much less money because I was making less. If I invested that same money in real estate instead of the stock market starting in the 90’s, my net worth would be multiple times more. I can say this because I’m in California, where the prices started relatively high in the 90’s, but continued to increase into the stratosphere with only a small break in 2008.
So – I’m not saying don’t invest in the stock market. But the attitude here is generally that the stock market is better than real estate. I completely disagree. The stock market has risk, it is volatile, it is a soft asset, and doesn’t really mean much until you sell the stock. With real estate, it is a hard asset, people always need a place to live, and after a fiasco like 2008, it is unlikely this will happen again because banks don’t want to take the risk, there is unlimited money supply out there, there are more millenials than baby boomers, baby boomers are living longer – that calculates to more people needing a roof over their heads.
To get into real estate investing, it’s not as simple as looking on Zillow or the MLS. You have to get educated in real estate investment groups. It’s a completely different education that is not widely available, because it takes a certain mindset to do it correctly. It is not a matter of going to a place like Fidelity or Schwab, opening an account and putting money in, crossing your fingers. It takes educating yourself in a way that is completely different from your formal medical training.
And I am in agreement with others who are talking about how much time it takes. I spend a few hours a week (if that) on my 10 properties. Some weeks take more time than others.
The point is to have multiple sources of income. Stock market is neither sufficient nor necessary. There’s a whole world out there of putting your money to work!
You say real estate “takes educating yourself in a way that is completely different”. Can you be more specific? What did you do to educate yourself?
I went to RE meetups, talk with other investors, listen to (LOTS of) podcasts while commuting, going to talks, going on property tours. There’s plenty of books on RE investing, but they’re only loose guides because everyone’s goals are unique. It’s not like school where there’s a “right” and “wrong” way to do things. That’s where it can get tricky – you don’t know who’s steering you in the right direction or not. They may not be the expert you need.
It’s all about relationship building, trust, word-of-mouth, having a goal, and stay focused. It can be a little frustrating in the beginning esp for doctors, because there’s no gold standard, just a lot of new concepts.
RE investing involves managing your money in a way that is not taught in any formal class. You have to seek out the education, in addition to talking with people, finding a mentor, asking yourself what your goals are, etc.
It is difficult to say if stock or real estate is good investment. It all depends on if you like real estate work. If you enjoy it, it is worth your time and money.
Let us face it. The vast majority of retail real estate investors do not know how to calculate the real return adjusted for the time and money spent. It is much more difficult to tell your entire real estate business makes you more money than just put your money in the index for a long time horizon (let us say 20-30 years).
A lot of folks like to stay busy just for the sake of being busy. But whether productive or not in the long term, they do not care.
Yep. Investing ain’t sexy. My ex was a landlord, and it was a headache. This one renter’s grandmother died 3 times. Each time it allowed her time to be very late on rent because she just chose to be. Oh what does grandma who is 6000 miles away have to do with your rent? Nada. 3 times. … When I owned, I unloaded during the downturn, to what I deem as the Fartbachers. They overpaid by $30,000 (even in a down market, because I sold them on the wider hallway compared to other units), and then they spent another 60,000 renovating (new heat pump, new wood flooring … ) They probably brag about themselves for selling for my purchase price. The way I see it the Fartbachers ended up losing a lot of money because of assessments, being unsavvy, wasteful, and the incease in price meant their HOA and taxes went up considerably etc. It was hilarious for me because the flooring could have been re-finished instead of replaced, and other things. I mean, if you buy with cash, don’t be a Fartbacher.