Posted over 3 years ago

05.30.14 Do I treat Real Estate Investing as a Hobby or as a Business?

Small 1401499691 2013 Diy Wooden Miniature Furniture Doll Font B House B Font With Garden Mini Vila Doll

Cruising back through Mike Butler's Landlording on Autopilot wondering if I'd create a new tenant training binder, when I came across this:

Do you treat Real Estate Investing as a Hobby or as a Business?

For hobby:



Involved in repairs and maintenance

Buy weird things to save money

Show vacant units

Travel to get partial payments of rent

Lose desire to get to next level because believe it will get worse

For business:

Business owner's attitude

Use systems

Never knock on doors for rent

Never get calls at home or on cell

Tenants don't know the owner

Never go to court

Never cut grass

We haven't cut grass in a long time and have systems/processes, and we have yet to need to go to court, but we are still very hands on and are indeed feeling maxed out. I was reading a post about screening tenants without needing to talk to them and got a bad taste in my mouth, and love how this business gives us plenty of things to talk and laugh about, so I think I'm comfortable being closer to the hobby end of the spectrum and not going after millions...

Comments (5)

  1. Tiny 1448397276 avatar rios9000

    The more you can systematize and go with a business approach, the better, at least IMO. My father used to meet tenants at the Wendy's across the street instead of his home to make it more of a business relationship instead of a personal one (which is always to be avoided with tenants). Wendy's was basically his office for a few years.

  2. Tiny 1448324013 avatar charmed wi

    I have a passion for my real estate business and *want* to be hands on. I do give my tenants my cell phone number. I want my tenants to feel comfortable calling me if there is an issue. I feel that customer service is an important aspect of a business.

  3. Tiny 1399586579 avatar alewilliamson

    I like this discussion. It is possible to make more money doing less transactions to grow and focus on optimizing what you've got.

  4. Tiny 1448398278 avatar fischem

    Great perspective, Roy. I think we are too small to see the outsourcing that makes this adventure look and feel more like business than hobby. Congrats to you for getting close to critical mass. We aren't growing for a variety of reasons right now, but being stuck in ma & pa start-up mode isn't all terrible. And having a hobby that makes money instead of sinks it is fun too. :)

  5. Tiny 1448579709 avatar nattydread

    MIchele: I came to real-estate from 25 years of running businesses and have regarded this venture as another business from day one. That said, in business there is a difference between being at the helm of an established business and giving birth to a startup. Having been through the startup process a few times, I see this real estate venture the same way: In the beginning you wear more hats and do things out of necessity that you know you will not be doing long term. As your business grows and matures, you put more systems in-place and delegate more duties and responsibilities to others. In our real estate business, I believe we are 1-2 buildings way from having sufficient size and a stable enough revenue stream to engage in-house maintenance and property management personnel.