Real Estate Professional · Atlanta GA · Member since 2015 · 615 posts · 225 votes
If you had to guess, what is the success rate in real estate investing? Success being defined by someone being able to live above average lifestyle strictly based upon their earnings in real estate.
Good real estate investing should be boring. You're not constantly dealing with problem tenants, talking about high COC returns, doing stupidly risky and time consuming flips, etc.
Buy in a good area, make sure it cash flows, put solid tenants in there, then sit and wait for 10+ years.
Sadly I think people overcomplicate or over glamorize real estate investing. Any time I see those or hear those folks, I assume they'll be one of the ones who fail.
I learned this lesson after chasing high COC returns in Akron OH. I got burnt, but I learned and pivoted at a young age. Now I buy locally in good areas, and I've seen my net worth go from 200k -> 1mil in a few years by the time I hit 30, w/ a portfolio of 8 solid cash flowing units. I just wish I listened to the successful real estate investors sooner, and didn't chase solely cash flow right out of the gate.
I think we would need to define someone that actually got into REI. I'd like to see the success rate for someone that did at least 1 deal. Plus we have to define "success".
I think we would need to define someone that actually got into REI. I'd like to see the success rate for someone that did at least 1 deal. Plus we have to define "success".
The definition has already been discussed in this thread but I'll make it even more simple. It's just when your passive income exceeds your expenses that you decide is acceptable because it meets your basic needs or goals, whatever they may be.
Anyone who bought and held a house 50 years ago is smiling. But then again, the hundreds of cycles in between then have brought a lot of tears.
The average rate of home inflation in the past 50 years has been 4.26% according to the US Bureau of Labor Statistics. So you may not be smiling once you factor in average home CAP expenses and maintenance with a house in the 50-100 year range assuming it's still standing. You may have multiple cash outs for renovations and repairs. The neighborhood may have went to **** in that time as well and you yourself may be dead. Not everything is guaranteed to be rosy just because you held.
That is true but there is a bigger picture than taking an average. Having an average means that there is a binomial distribution of really really bad investments and really really good ones on both ends and then some average so and so ~4.26% in the middle. For example, in the Eastside part of Washington where I live the average appreciation is between 8%-10%. If you are on this forum then you are probably also on the right side. You also have to take into account tax depreciation, write-offs, rental income, leverage, and risk hedging - it doesn't stop and end at that 4.26%.
The middle is the median, not the average. There's the median, average and the mean.
I'd have to disagree, all the depreciation and write-offs do is help lower your taxable income. Nobody factors that into their CAP or returns because it's kinda a wash as far as I see it.
Something I realized over 15 years of owning is the increased taxes and maintenance eat up any rental income increases over the years. I know this is location and neighborhood specific but my own personal examples show any rent increase is eaten up by the increase in home value which creates higher property taxes and increase in HOA fees and maintenance.