Thinking of Quiting

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8 Reply

Gino BarbaroPro Member

Rental Property Investor · St Augustine, FL · Member since 2014 · 2k+ posts · 1k+ votes

2y

@Mohsin Mazhar

I had the same sentiments when I first started. It wasn't the real estate. It was me. I was buying th wrong deals, in the wrong markets, with no exit strategy. I mad so many mistakes, that I was about to quit. I then met my current partner, and we started investing together.

Honestly, having a partner has been a huge help for me. There are days when you do want to quit, or have a situation that you can't seem to resolve. Having someone that is in it with you helps!

Buying SFH to rent can be challenging. It sounds like your assets are older, and I was buying similar assets. Old roofs, old boilers, driveways, huge cap ex expenses that need to get taken care of.

Read the Psychology of Money by Morgan House. Great book that talks about investing in a different light, not giving you strategies but looking at it from the reader's relationship with money and how their psychology plays into their preferred methods of investing

Gino

10 Reply

Chris SeveneyBusiness Member

Moderator

Investor · VA · Member since 2015 · 21k+ posts · 19k+ votes

2y

Quote from @Mohsin Mazhar:

Hi everyone,

Looking for some advise.

I am thinking of selling my 2 rental properties and quit real estate investing (at least in current format). Due to stress of ownership.

I have 2 properties managed by a property manager. The PM is genuinely a good guy, responsive, good at resolving tenant issues. Provides good support, doesn't usually bother me unless it comes to expenses large expenses or rent adjustment.

The reason I am thinking of getting out of being a real estate investor is due to the stress and constant little expenses that are adding up. Recently there was a major plumbing problem at 1 of the single family homes and the tenants were not able to use the bathroom. Unfortunately the issue was so sever that it required for the tenants to move our for the repairs to be completed. I as the owner needed to approve for this to happen so the PM reached out to me for approval. I was genuinely stress out by this. Feeling bad for the renters who are unable to use the bathroom, fearing possible litigation (even if there is no reason to be sued, just an irrational fear)

The other issue is recurrent expenses although I have allocated 20% of rental income for both properties for repairs and maintenance. I have easily spent over that for both properties. Plumbers are crazy expensive, increasing city taxes, thinking if another issue is going to come up and I wont be getting the full rent to cover the mortgage. Using my personal finance to pay for repairs and numerous other small things that in isolation are not a big deal but they just keep adding up and create anxiety for me.

I am thinking being a real estate investor (for single family homes) is not right for me. I am debating if I should sell my 2 houses and just move the move into syndications or stock market. I am looking at my vanguard account and my portfolio is up 30% YTD with zero stress. RE for me is not my primary source of income I have regular job that pays well.

What are your guys thoughts. Is this something you have experienced as well, how did you deal with it? Does it get better or worse? How do you deal with the stress of ownership.

Life is too short and real estate investing is not worth it for a lot of people, as it is stressful and can be very expensive. You either need to be in it for the long run or get out IMHO. Now thats not to say you need to get out of real estate, you can invest passively in syndications as an example or become a private lender. There are other ways to invest in real estate.

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6 Reply

Basit SiddiqiBusiness Member

Accountant · New York, NY · Member since 2015 · 8k+ posts · 3k+ votes

2y

Change your mindset of sell the investments.

If you just brought the properties, it is normal that your expenses will be higher as you have to stabilize the properties.
Once the property is stabilized, you will hopefully see that your expeses are below the budget.

However, you only have one life and no investment should be worth a great deal of stress.
If you find yourself continuing to stress, I would suggest selling the properties.

Best of luck

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6 Reply

Michael SmytheBusiness Member

Real Estate Agent · Metro Detroit · Member since 2023 · 4k+ posts · 3k+ votes

2y

@Mohsin Mazhar why didn't your rental insurance cover the hotel expense?

What you are experiencing is what just about every rental owner goes through!

Try to think about where you might be in 3-5 years when rents are a bit higher and your properties have appreciated.

If you can't see this vision, then sell.

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4 Reply

Dave FosterBusiness Member

Qualified Intermediary for 1031 Exchanges · St. Petersburg, FL · Member since 2013 · 9k+ posts · 9k+ votes

2y

@Mohsin Mazhar If you decided to sell and purchase another property, a 1031 exchange would give you a larger ROI potential and save you from the initial tax hit. A 1031 lets you use the tax to your advantage instead of paying it.

If you decide you're done with investing and the stresses of owning real estate entirely, you might want to look into doing a 1031 and investing in some syndications or DST's (Delaware Statutory Trusts). There aren't many syndications that allow 1031 exchange money to be used. The DST is a form of syndication that allows you to be passive. But still preserve the tax deferral of the 1031 exchange. This would defer the taxes you would have to pay back and still provide a stream of income including income from the deferred taxes.

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Andrew SyriosPro Member

Moderator

Residential Real Estate Investor · Kansas City, MO · Member since 2014 · 10k+ posts · 5k+ votes

2y

I won't tell you what to do but I will say that with real estate, headaches and substantial problems like the plumbing problem you mentioned come along from time to time. It sounds like you got hit with them early on which can definitely taint the experience of investing in real estate. But over the long haul, these things are relatively rare.

Further, if these are properties you just rehabbed and rented for the first time, those tend to have more maintenance issues up front. That's because a lot of things that "work" when tested can't handle the load of people living there and using them consistently and so they fail quickly. Over time, those maintenance issues tend to diminish. So it may be worth hanging on for a bit longer to see if things start to calm down.

They could also be problem properties. I don't if the construction or area is bad (or maybe the manager isn't up to it), but it might be worth selling and trying again with a higher quality property. Just some things to consider.

Matthew Paul

Severna Park, MD · Member since 2013 · 7k+ posts · 7k+ votes

2y

All the same things can and will go wrong in your own home . Can it be stressful ? Sure . And yes plumbers , electricians , handymen can be expensive , you have 2 options pay someone , or repair it yourself .

Dont know what condition the houses were or are in , but generally speaking , older homes that are "deals" cost more in repairs .

I cant tell you what to do , but investing in rentals over the long term has been great for me , some times there are more repairs , sometimes less , but thats just the nature of the business

Mike Dymski

Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes

2y

If your "why" is not bigger than your "how", it makes sense to sell and find a "how" that works better for you. REI is supposed to make life better, not worse.

8 Reply

John M.

Investor · Fairfax, VA · Member since 2015 · 1k+ posts · 797 votes

2y

Sell your properties and pay the tax. Put funds into a mortgage note syndication and earn 12% with no headaches.

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

2y

It could be the properties. Maybe you need to sell those properties and buy nicer properties. If you decide to keep those two, I would suggest buying better properties going forward to hopefully help stabilize your portfolio.
The first property I ever purchased years ago I sold last year due to its age and location. Some properties are not worth keeping, even though person can become emotionally attached to them.

Joe S.Pro Member

Investor · San Antonio · Member since 2020 · 3k+ posts · 3k+ votes

2y

Quote from @John M.:

Sell your properties and pay the tax. Put funds into a mortgage note syndication and earn 12% with no headaches.

Is this what you’ve done personally?

Calvin Thomas

Developer · New York City, NY · Member since 2015 · 812 posts · 718 votes

2y

Welcome to the club. I've been at this game for decades, and it's usually the same story, just different actors. Listen, despite what people see on TV, real estate investing is tough. Plumbing is the #1 cost we have to deal with. It's one of the reasons why I have two plumbers on payroll. The mistake you made was single-family homes. The second mistake is that you must beef up that emergency fund for your investments. For example, one of our mid-multi-family homes needs new siding. 30k for the work, and we have to wait a few weeks while the tenants continue to complain. So sad, but sometimes, so is life.

You need to roll with the punches and don't give up. Listen to @Dave Foster and 1031 those two buildings into a multi-family building. Once stabilized, you will appreciate the flexibility of the multi-family building. You'll be fine, don't give up. Consider these learning experiences.

Luka Milicevic

Real Estate Agent · Nashville, TN · Member since 2015 · 2k+ posts · 2k+ votes

2y

@Mohsin Mazhar

What you're saying very much resonates.

I am not at the point of quitting but I very much understand where you're coming from.

When I started in my 20s and I was able to drink brake fluid and nails for breakfast, I was listening to 3 podcasts a day and analyzing deals from sunrise to sundown. I remember hearing about targeting lists with "tired landlords". I was always thinking that would never happen to me, I'm going to do this forever and never get tired!!!!

Then you have tenants not paying rent, evictions, renovations, HVACs going out, water leaks, etc...and then you think....oh now I get it.

Real estate has been by far my best investment when it comes to ROI. Much higher than my paper portfolio, but it has not come without work and headaches.

My plan is to actually end up with fewer properties but less debt and more paper assets because I very much am slowly but surely becoming a "tired landlord"

5 Reply

Theresa HarrisPro Member

Member since 2019 · 15k+ posts · 11k+ votes

2y

Everyone is different and every rental is different. If you are finding it too stressful, then sell the properties and find another way to invest your money that works better for you. There is nothing wrong with that. If the houses have appreciated a lot, you may want to stagger when you sell them so they are in different tax years and time it so they sell quickly (ie don't list in the middle of winter).

The market also changes. Buying a house 5 years ago when rates were lower is quite a bit different than buying one now with higher rates. You can put your money elsewhere and get a better return.

Doug Smith

Lender · Tampa, FL · Member since 2013 · 2k+ posts · 2k+ votes

2y

Before I read the other responses, I'll throw in my 2 cents. Don't listen to anyone else...you do what is right for you and your family. Personally, my mortgage company provides me a ton of stress and my wife and I do ground up spec construction and flips, but I can't imagine adding rentals to that. We chose not to own rentals. Not because they are not lucrative in the long run, but we didn't feel we had the bandwidth for it. My wife has a formal degree in design where whe loves creating floor plans and building/renovating homes. Some people paint, we decided to make art out of homes. We just don't want to hold them and deal with what comes with it...but it's great for others. I'm sure the guys on Deadliest Catch find crabbing in the North Sea lucrative, but I know I couldn't do it. You do what's right for you. Holding property is not for everyone. Tenants and Toilets are stressful. I have many friends that play the stock market and are very successful. I have other friends that love real estate development. Others have built rental empires. You do what makes you happy. "You do you, Boo"

Don KonipolBusiness Member

Investor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes

2y

90% of the population (I made up that number) shouldn’t own their own business, shouldn’t be active investors, and shouldn’t have bottom line responsibility; it’s just not in their DNA. The other 10% HAVE to be entrepreneurial, it’s in their DNA.
Sell the houses ; invest in ways more beneficial to YOU.

Btw, what kind of stress would you feel if your Vanguard investments were down 30% this year? Just curious as to the source of your stress.

Investing passively in real estate requires a different or additional analysis. Most times not only do you need to analysis the property(s) you’re investing in, you also need to evaluate the sponsor/manager. This is even true of public REITs.

The interesting thing about “active” real estate investing is it actually gets easier the larger your holdings, and the LESS leverage you use. Larger holding are able to afford and attract more competent, more interested, and more attuned management. Apts complexes consisting of 100s or units can afford on site property manager, assistant managers, maintenance staff, volume discounts, etc. Less leverage means that the greater cash flow can more easily cover unexpected expenses without di[ping into capital reserves or personal cash, hence less stress.

You might also want to consider triple net properties lease to credit tenants.

Private Mortgage Financing Partners, LLC

https://www.biggerpockets.com/member-blogs/7993/48729-are-your-rental-properties-weighing-you-down

Natalie Bender

Houston, TX · Member since 2021 · 51 posts · 28 votes

2y

There are a lot of great responses here, and I think the most important ones are the ones pushing you to do what is right for you and your family.

I am an active real estate investor and own 3 properties. When you are in the grind the expenses and stress can add.

As mentioned prior, a DST may be a good fit. A DST (Delaware Statutory Trust) is 1031 exchange compliant and allows investors to exit active real estate. Look at this blog post, I think it will resonate with you. Shoot me an email if you would like to talk more.

0 Reply

Account Closed

Rental Property Investor · Brooke Park Drive · Member since 2018 · 1k+ posts · 2k+ votes

2y

Some investments start weak and grow more stable/stronger over time "j-curve". If you can see good returns if you take the long game you can keep them. If years of stress ahead is overwhelming you just sell them.

Nelisa Lee

Rental Property Investor · Jacksonville, FL · Member since 2024 · 50 posts · 43 votes

2y

I'm sorry to hear that your rentals have caused so much added stress. The highs and lows of real estate can be intense especially in the beginning! I've learned that the more experience I have, the less extreme those highs and lows feel. My solution to everything was volume. If one deal doesn't work out, another deal makes up for it. But, my husband and I both quit our jobs to go into investing full-time and the stress at the idea of going back to our previous jobs was enough to allow me to work through the stresses of real estate investing. Now, I'm immune to a lot of the bad things that come with investing because I've been fortunate enough to reap the benefits of the positives and I know to expect them.

I also love that most real estate problems can be solved with money. So, if you have the money, then there is no problem. But, that's the way my mindset has had to shift.

My question would be why did you purchase those rentals in the first place?

4 Reply

Brady GrubbPro Member

Rental Property Investor · MD · Member since 2022 · 10 posts · 2 votes

2y

REI definitely isn't for anyone and it can be a shock to someone who is not business oriented. There are times where I wonder if it is worth it. Following that I usually take a look at the numbers (sometimes just appreciation & loan paydown), get excited again, and am ready to buy another property. It's a fun roller coaster, stay in it - you'll be glad you did.

Steve K.

Realtor · Boulder, CO · Member since 2016 · 3k+ posts · 5k+ votes

2y

It sounds like your properties may be in one of those markets where the chain of title shows properties changing hands every 2 years because the rents just aren’t high enough to keep up with maintenance, repairs and capital expenses. We also had that issue with several properties that had a lot of cash flow in the spreadsheet but not as much in reality, and have optimized our portfolio now to focus only on locations with high rent and value appreciation. You might consider doing something similar, as it’s a much easier and more remunerative career in good locations. Or maybe real estate just isn’t for you! That’s fine too.

4 Reply

Becca F.

Rental Property Investor · San Francisco Bay Area · Member since 2022 · 1k+ posts · 1k+ votes

2y

If you recently bought those properties, it may take a couple of years for them to stabilize. This is what I'm going through with one of mine that I bought in spring 2023, 8 repairs in 12 months now (seller did the renovation not me). I'm willing to hold onto this house for another year or two to see if it improves.

I can empathize with the stress you're feeling. I'm not quitting real estate but I'm deciding not to scale anymore at this point. For me the stress was finding a good deal in 2022 to 2023 since my other properties were acquired pre-2013. I was spending hours analyzing deals with a W2 job and all the money I spent on appraisals and inspections on offers I made became too much. My stress level is greatly reduced now and I'm ok with having a few solid properties with a good amount of equity and putting money into public markets (index funds, stocks, MLPs and BDCs).

As far syndications, I talked to two syndicators. I didn't pursue that direction because putting in $100,000 into something I really don't know how to vet thoroughly was risky to me even though the passive nature of it sounded good. If you do a search on BP, there were a few people who posted about how their syndicator stopped making payments to them and another one where the GP went silent. Do lots of research on the syndication if you go this route.

We can all give you different advice but only you can decide what's right for you. If you decide that real estate isn't for you, that's ok.