Beginner's Luck - What do you think?

Question

Hi everyone,

I am a recent college graduate from Rutgers Business School and am new to real estate investing. In posting this, I hope to gain some insight into some of the difficulties and challenges experience real estate investors face on a day-to-day basis. Several family members and peers of mine recommended that I check out the forums on biggerpockets to get a better idea of the thought process of some successful and knowledgeable investors. Any thoughts or comments would be greatly appreciate, as I hope start off on the right footing in realm of real estate investing.

1) What does buy and hold investing mean to you?

2) Do you have any regrets about getting into real estate investing?

3) Do you recommend hiring a property manager once I begin to invest in more properties? If so, what are some of the things that they take care of for you?

4) What are some of the biggest challenges/headaches that you face as a property investor?

Thank you!!

Scott Krone · Answer

@Neil Dhawan

1.  For us, we view buy and holds as both a retail business as well as a real estate investment.  The reason we say that is our product, converting non performing assets into self storage facilities, is fundamentally a retail business.  The process we used to accomplish that is specifically a real estate investment that produces passive income (cash flow) and significant appreciation (value of the real estate increasing due to the cash flow).

2.  I wish I had learned the value of the internet sooner for our business model.  In addition, the importance of systems in order to scale the business more effectively.

3.  Absolutely, we hire a company that manages $7.0b of assets to manage our properties.  We do what we do best, and hire them to do what they do best.

4.  Challenge - real estate is a fluid business, and not a liquid business.  It is not like the stock market where you can go online and trade it immediately.  I see patience as the biggest challenge.  Everyone wants instant success.  Instant success more times than not is luck.  True success is when it is repeatable.  That requires patience.

Here is to your success (more than just $'s).

Anthony Bertolino · Answer

Hey Neil,

I am also new to the community. If you haven't already, I highly suggest reading through the Beginners Guide - it's awesome!

Leaving my post here so I can follow along and ingest whatever input people provide.

Cheers!

Dan H. · Answer

We do buy n hold duplex to quad investing.  I enjoy it and it has made us a lot of money.  My biggest regrets are about purchases I did not make.  Basically my regrets are that I passed on opportunities  that would have made me even more via my REI.  I guess I am greedy :=).

I recommend everyone start by being their own PM for a couple of reasons: 1) beginning investors usually need all the profits they can obtain from their REI 2) The amount of things you can learn by being you own PM is very valuable.

Having expressed that I recommend everyone start by being their own PM, without help there is an upper cap on units, etc.  In addition, the PM aspect is sometimes the least favorite aspect or REI.  Therefore as the unit count increases the need for a PM or hired help increases.

We have 19 units: 17 LTR and 2 STR.  The 2 STR we use a PM and could not do it without a PM.  Our PM has many units in the area.  They have cleaning crews.  They have laundry services.  They are prepared to take the 2AM phone calls from either our STR tenants being too noisy or from our tenants complaining of other tenants (noisy, drunk, etc.).   4 of the LTR is managed by my brother so it is a bit like have a PM.  1 OOS unit has a PM there.  12 units we manage directly.  Twelve is very close to the maximum number I would recommend trying to manage without help.  We have considered hiring help rather than hiring out the PM duties.

Our biggest headache is tenant conflict.  In the summer we had to deal with homophobic neighbors.  The police had to be called twice.  We let our tenant out of their lease.

Our STR has some good horror stories but mostly they are dealt with by the PM company.  We had STR tenants turn the little yard into a mud wrestling pit with bikini clad girls wrestling.  We changed the little yard to make this unlikely to occur again.  We had a STR tenant get decked by a neighbor.  The STR tenant threw first punch but he was verbally provoked.  I should indicate our STR is a block from the beach in a fun/party area (Mission Beach: a block North of Belmont Park).  So not every STR will get these types of stories.  Also this has been an STR since 2009 so lots of years to obtain horror stories.

Good luck

Alexander Felice · Answer

1. I do B&H and for me, I plan to keep properties until I can find a better returns on equity, or until the depreciation schedule is over.

2. RE has been my favorite work by far. Fun, easy, and always a bigger challenge to tackle.

3. I hired a PM once I got my 2nd unit and I'll never go back. The job has become completely passive for me. This year I moved across the country and left all the units to the PM and have since bought more. I don't touch the business, I only work with him for longer term strategies and look forward to watching rent monies pile up. Self managing is short sighted imo

4. No real headaches, it certainly comes with some stress, but I like that part of it. I think the biggest people most people have is they mis-evaluate risk by factoring their emotional fears in decision making. Most people do this in tons of different aspects of their life not just RE, but it is certainly a hinderance.

Beginner's Luck - What do you think?

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