Start small and expect to adjust frequently. Buying a single-family and going through the steps of renovating, then advertising and renting it out will be a good learning curve - from the ground up. This prepares you for what comes later when you scale. For example you would not even know what makes a good PM - or what you should be able to expect, if you have never done it. You can easily manage 20 or 30 units on the side before you need help, it's really not that hard.
The only true hands off real estate investments are REITs or syndications...even long term buy and holds require a lot of managing the managers. I've had to constantly monitor my property managers, turnover times, expenses, etc. There is no real profitable enterprise that I am aware of that requires no work.
@Chenu Gupta You have time on your side. I am not sure that anyone that bought any property 50 years ago and still has it today is regretting that decision. Now, how do you want to manage that same property over the next 50 years? It sounds like you are looking for a hands off approach so a company like REI Nation that has a large client base and larger portfolio of investment homes with those clients could be a great match for you.
Thanks for your reply. Sorry, I should have been clearer earlier. When I said “hands-off” I didn’t mean zero involvement. What I meant is that I don’t want to deal with tenants, maintenance, finding renters, and similar day-to-day responsibilities. That is why I was asking for a recommendation for a property manager.
I understand that I will still need to work with the property manager, and I am fine with that level of involvement.
As for REITs (like VNQ), I find them tax-inefficient because they’re required to distribute at least 90% of their taxable income. That does not align with my goal of minimizing tax costs.
Regarding your question: “Now, how do you want to manage that same property over the next 50 years?”
I don’t mean to literally hold the same property for 50+ years. I understand I may want to sell and buy new properties over time. Let me explain my thinking, so I can get better guidance:
If I were to sell a property and buy a new one every 2 years, the transaction costs would quickly add up. It will eat-up the profit.
On the other hand, if I hold the same property for 50 years, it might become a maintenance burden due to aging infrastructure. It may also become less desirable over time if it no longer meets modern expectations. Additionally, after 27.5 years (when depreciation runs out) and with mortgage interest possibly near zero, most of the cash flow becomes taxable. So I believe there needs to be a balance.
I also think (though I might be wrong) that if a property has fewer maintenance issues, it reduces overhead costs and may improve tenant satisfaction. I’m just not sure how best to communicate such goal when acquiring the property.
Looking forward to additional replies and help. Thanks.
@Chenu Gupta, I sent you a connection request and message. We should have a quick call. I was exaggerating on that post about the 50 years and was just highlighting that you want to be working with a company with a strong reputation. You are right that after 27.5 years you lose you tax depreciation benefits but there are other ways to offset real estate gain or roll it with a 1031.
Hey Chenu — I’m also thinking long-term and hands-off, so I totally get where you’re coming from. I’d say look for properties in solid B-class areas with decent schools and low turnover. Something that’s either newer or recently rehabbed so you’re not dealing with big repairs later.
For property managers, I’ve learned it’s super important to interview a few. Ask how they handle maintenance, how often they check on the property, and if they own rentals themselves — that’s usually a good sign.
I've heard of REI Nation too — they seem pretty turnkey, but I've also heard the returns can be on the lower side since you're paying for convenience. Might be worth comparing them with a local team in a good cash-flow market to see what feels right.
Curious — are you thinking single-family homes or small multis?
Start small and expect to adjust frequently. Buying a single-family and going through the steps of renovating, then advertising and renting it out will be a good learning curve - from the ground up. This prepares you for what comes later when you scale. For example you would not even know what makes a good PM - or what you should be able to expect, if you have never done it. You can easily manage 20 or 30 units on the side before you need help, it's really not that hard.
