Real Estate Investing Update and Experience
Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes
Real Estate Investing Update and Experience
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MD/DC · Member since 2024 · 1k+ posts · 1k+ votes
10moHi appreciate you sharing your experience. People seem to think RE is easy and will result in huge profits quickly with minimal effort or cash required which I don’t think is the norm. In my experience there is great value in having a high paying full time job and adding RE by starting slow, staying local so you can manage your farm and having patience for the long game.
32 Replies
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes10mo
Hi appreciate you sharing your experience. People seem to think RE is easy and will result in huge profits quickly with minimal effort or cash required which I don’t think is the norm. In my experience there is great value in having a high paying full time job and adding RE by starting slow, staying local so you can manage your farm and having patience for the long game.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Jules Aton:
Hi appreciate you sharing your experience. People seem to think RE is easy and will result in huge profits quickly with minimal effort or cash required which I don’t think is the norm. In my experience there is great value in having a high paying full time job and adding RE by starting slow, staying local so you can manage your farm and having patience for the long game.
Thanks for your reply to my post. I agree that RE hasn't been an easy way to get rich. You really need to put in the work if you want to see this profit. First investment definitely should be on yourself before adding RE on the side. Being local to your investment helps to make sure you know what is happening. I definitely thought I would be patient with the process, but after seeing how the numbers played out over time, it didn't really make sense. In hindsight, I would've just stuck with my initial private lending opportunity and saved my personal funds for something better, but am grateful for the learning experience.
- 10moStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
@Arron Paulino Congrats on your ability to exit the struggling portfolio. I credit you for being open to sharing your experience and challenges you faced. Your posts are some of the best learning material for new investors.
Sustained real estate performance requires strong underlying fundamentals. You are now better positioned to recognize real estate that has those critical characteristics.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Stuart Udis:
@Arron Paulino Congrats on your ability to exit the struggling portfolio. I credit you for being open to sharing your experience and challenges you faced. Your posts are some of the best learning material for new investors.
Sustained real estate performance requires strong underlying fundamentals. You are now better positioned to recognize real estate that has those critical characteristics.
Thanks. It was a journey full of learning about how real estate investing works. I'm just sharing my journey and how it all played out to give others an opportunity to think about what can happen from someone who has been through it.
I agree that I am now in a position to see what works and doesn't work to make better financial investment decisions in my real estate investing journey.
- Rental Property Investor · Member since 2018 · 826 posts · 810 votes10mo
I'd start by figuring out how to manage your own expectations. How much effort are you willing to put into this venture will ultimately influence the yield you are trying to achieve. Yields are a function of risk, effort and barriers to entry. You can't get higher yields without any of the above.
Are you trying to find a balance of effort or are you willing to put in a lot of effort? How much risk do you want to take on? 12-15% IRR are really solid, so if you expect more than you have to manage your expectations or adjust your risk and effort.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Allan C.:
I'd start by figuring out how to manage your own expectations. How much effort are you willing to put into this venture will ultimately influence the yield you are trying to achieve. Yields are a function of risk, effort and barriers to entry. You can't get higher yields without any of the above.
Are you trying to find a balance of effort or are you willing to put in a lot of effort? How much risk do you want to take on? 12-15% IRR are really solid, so if you expect more than you have to manage your expectations or adjust your risk and effort.
I appreciate your input. I may have come into my investing hastily, trying to make a profit quickly, and burned myself out. Definitely went in focused more on money rather than building a system to generate a reliable, steady income.
Some balance would be nice without needing to put in a lot of strenuous effort was what I was looking for. At the beginning, I put in more than I should've without being informed of what could have been prevented. That does sound like a decent return on investment that I can live to accept.
- 10moJohn MorganPro MemberRental Property Investor · Grand Prairie, TX · Member since 2018 · 2k+ posts · 2k+ votes
It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years. Cap ex and random maintenance seems to suck away all the profits. But after 5 or 6 years, these "base hits" seem to produce pretty good with rent increases as appreciation and inflation keeps going up. And I like how the mailbox $ is tax free. I'm still bullish on real estate but have 50% of my portfolio in the stock market to diversify a little. I just don't like the lack of control I have in the stock market, buts it's been out performing my RE by far over the last 10 years. lol
- MD/DC · Member since 2024 · 1k+ posts · 1k+ votes10mo
Quote from @Account Closed:
Quote from @John Morgan:
It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years. Cap ex and random maintenance seems to suck away all the profits. But after 5 or 6 years, these "base hits" seem to produce pretty good with rent increases as appreciation and inflation keeps going up. And I like how the mailbox $ is tax free. I'm still bullish on real estate but have 50% of my portfolio in the stock market to diversify a little. I just don't like the lack of control I have in the stock market, buts it's been out performing my RE by far over the last 10 years. lol
Quote: "It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years"
I'm sorry to hear that. I use creative financing to buy and cash flow from the start. There is a easy way to do so.What is the easy, creative financing technique you use to buy and cash flow immediately?
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @John Morgan:
It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years. Cap ex and random maintenance seems to suck away all the profits. But after 5 or 6 years, these "base hits" seem to produce pretty good with rent increases as appreciation and inflation keeps going up. And I like how the mailbox $ is tax free. I'm still bullish on real estate but have 50% of my portfolio in the stock market to diversify a little. I just don't like the lack of control I have in the stock market, buts it's been out performing my RE by far over the last 10 years. lol
Thanks for also sharing your investing experience. That, too, was my initial game plan going into real estate investing to build a portfolio and have the money come in. The numbers made sense on paper, but without proper tenants and the neighborhood not helping out, it was time to rethink my strategy. Bullish was my strategy at first too, but now I am planning to recoup my initial funds to try again with a better mindset.
- 10moDan H.Pro MemberInvestor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
Quote from @Arron Paulino:
Quote from @John Morgan:
It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years. Cap ex and random maintenance seems to suck away all the profits. But after 5 or 6 years, these "base hits" seem to produce pretty good with rent increases as appreciation and inflation keeps going up. And I like how the mailbox $ is tax free. I'm still bullish on real estate but have 50% of my portfolio in the stock market to diversify a little. I just don't like the lack of control I have in the stock market, buts it's been out performing my RE by far over the last 10 years. lol
Thanks for also sharing your investing experience. That, too, was my initial game plan going into real estate investing to build a portfolio and have the money come in. The numbers made sense on paper, but without proper tenants and the neighborhood not helping out, it was time to rethink my strategy. Bullish was my strategy at first too, but now I am planning to recoup my initial funds to try again with a better mindset.
Let me guess…
You did not invest in south San Francisco RE.
best wishes going forward
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Dan H.:
Quote from @Arron Paulino:
Quote from @John Morgan:
It's been tough for me the last few years. I'm still buying 2 SFR each year to add to my portfolio. Mine usually don't produce much at all the first 2 or 3 years. Cap ex and random maintenance seems to suck away all the profits. But after 5 or 6 years, these "base hits" seem to produce pretty good with rent increases as appreciation and inflation keeps going up. And I like how the mailbox $ is tax free. I'm still bullish on real estate but have 50% of my portfolio in the stock market to diversify a little. I just don't like the lack of control I have in the stock market, buts it's been out performing my RE by far over the last 10 years. lol
Thanks for also sharing your investing experience. That, too, was my initial game plan going into real estate investing to build a portfolio and have the money come in. The numbers made sense on paper, but without proper tenants and the neighborhood not helping out, it was time to rethink my strategy. Bullish was my strategy at first too, but now I am planning to recoup my initial funds to try again with a better mindset.
Let me guess…
You did not invest in south San Francisco RE.
best wishes going forward
Nope.
- 10moStuart UdisPro MemberAttorney · Philadelphia · Member since 2018 · 2k+ posts · 3k+ votes
@Account Closed You can manipulate cash flow with creative financing. Doesn’t mean it’s a good real estate purchase. Example:
The owner of a C/D located SFH goes to market for $100k because that's the appraisal that was returned when the owner completed a BRRRR. There's no buyer market at that price in the neighborhood and the owner believes the true arms length sale number is $85,000. I come along and offer $110,000 with 100% seller financed I/O for 3 year term at 6%. That properly probably cash flows but I'm under water.
I see a ton of investors using creative financing to obtain ownership but they are setting themself for failure. It’s sadly disguised for many early in ownership who get distracted by cash flow.
- 10moDon KonipolBusiness MemberInvestor · The Woodlands TX / Avon, CT · Member since 2009 · 6k+ posts · 10k+ votes40 some odd years ago I owned 43 SFR and decided to liquidate - and reinvest differently. Here’s the moves I made on chronological order
Quote from @Arron Paulino:
I have finally sold off my rental portfolio, and it has been a learning experience. It was a lot of ups and downs trying to generate a monthly profit with equity, but my journey brought me to breakeven, making it hard to generate a net return. Looking to adventure into better opportunities going forward. Looking to hear from other investors who have had a similar experience and figure out ways to get back into different opportunities that rerouted them to a better real estate investing journey. Before buying rental properties, I did try private lending and it was more passive for me without needing to get into the details of the investment and settle for a monthly return or net profit at the end of the project, which is the route I may return to. I may even use my own LLC to do this on the side, such as flipping properties.
1984 - liquidated SFR and began purchasing commercial property - concentrating on automotive repair facilities and single tenant industrial/retail
2000 - began liquidating SOME commercial property and concentrated on building a mortgage note portfolio of primarily commercial property notes.
2011 - took a detour and purchased 5 high rise condos in Phoenix at 35% of their previous sale price.
2023 - sold Phoenix condos and commercial properties and invested (investing) in equity REITs while still holding 60% of my “portfolio” in mortgage notes- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Don Konipol:
40 some odd years ago I owned 43 SFR and decided to liquidate - and reinvest differently. Here’s the moves I made on chronological orderQuote from @Arron Paulino:
I have finally sold off my rental portfolio, and it has been a learning experience. It was a lot of ups and downs trying to generate a monthly profit with equity, but my journey brought me to breakeven, making it hard to generate a net return. Looking to adventure into better opportunities going forward. Looking to hear from other investors who have had a similar experience and figure out ways to get back into different opportunities that rerouted them to a better real estate investing journey. Before buying rental properties, I did try private lending and it was more passive for me without needing to get into the details of the investment and settle for a monthly return or net profit at the end of the project, which is the route I may return to. I may even use my own LLC to do this on the side, such as flipping properties.
1984 - liquidated SFR and began purchasing commercial property - concentrating on automotive repair facilities and single tenant industrial/retail
2000 - began liquidating SOME commercial property and concentrated on building a mortgage note portfolio of primarily commercial property notes.
2011 - took a detour and purchased 5 high rise condos in Phoenix at 35% of their previous sale price.
2023 - sold Phoenix condos and commercial properties and invested (investing) in equity REITs while still holding 60% of my “portfolio” in mortgage notesThanks for sharing your investing experience. I think I'm on step one of your journey and looking to pivot to something else more worthwhile. How did that all work out for you?
- Cincinnati, OH · Member since 2020 · 4k+ posts · 3k+ votes10mo
@Arron Paulino, I would be curious to know when you got started and what type of properties you bought.
As you learned, and likely many others, real estate will have its booms and busts, but if you are investing to get rich quick, well... you can only do that with a lot of risk. (Not implying that was your intent, but there are many on these forums that were sold the financial freedom lifestyle by real estate influencers).
I am glad to hear you broke even on your investments. Many can't say that. To me, if you want to be truly passive, index funds are about the only way to go. If you want to get rich tomorrow, gambling is the only way to go. Real estate requires a lot of hands on work and a lot of capital at risk to learn with.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Evan Polaski:
@Arron Paulino, I would be curious to know when you got started and what type of properties you bought.
As you learned, and likely many others, real estate will have its booms and busts, but if you are investing to get rich quick, well... you can only do that with a lot of risk. (Not implying that was your intent, but there are many on these forums that were sold the financial freedom lifestyle by real estate influencers).
I am glad to hear you broke even on your investments. Many can't say that. To me, if you want to be truly passive, index funds are about the only way to go. If you want to get rich tomorrow, gambling is the only way to go. Real estate requires a lot of hands on work and a lot of capital at risk to learn with.
My journey started during COVID as something I was interested in doing and looking for something to dive into during the lockdown. Fast forward to now, I probably would have told myself to just stick with private lending and not pursue rental properties, as it required more funds and legwork to actually see a return in my opinion. Patience in seeing your money grow is huge now that I think about it and it really was a learning lesson.
- 10moNicholas L.Pro MemberFlipper/Rehabber · Pittsburgh · Member since 2018 · 6k+ posts · 5k+ votes
thanks for sharing your journey so others can learn - i appreciate the transparency. it looks like you owned primarily, or entirely, in Memphis - is that right? were you able to make a slight profit after you sold?
the market was and is tough. did you feel that your portfolio just wasn't on a trajectory that as @Evan Polaski points out, needs to be long term?
i have had ups and downs as well, but was not lookoing for, am not looking for, and was never sold or promised monthly "cash flow," since that is basically not really a thing in leveraged LTRs in the first few years of ownership. my first property will be fully paid off in 2030, and at that point i believe i will really start to pick up momentum.
anyway, it's great you're still here and i'm happy to brainstorm with you and others about what's next.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Nicholas L.:
thanks for sharing your journey so others can learn - i appreciate the transparency. it looks like you owned primarily, or entirely, in Memphis - is that right? were you able to make a slight profit after you sold?
the market was and is tough. did you feel that your portfolio just wasn't on a trajectory that as @Evan Polaski points out, needs to be long term?
i have had ups and downs as well, but was not lookoing for, am not looking for, and was never sold or promised monthly "cash flow," since that is basically not really a thing in leveraged LTRs in the first few years of ownership. my first property will be fully paid off in 2030, and at that point i believe i will really start to pick up momentum.
anyway, it's great you're still here and i'm happy to brainstorm with you and others about what's next.
Yes, these were out-of-state rentals that I thought would be a good idea at first. Like I stated, breaking even/losing much starting capital just to get out was my end goal. It wasn't a pretty outcome getting out and left me thinking, what was I thinking diving into rental properties?
Looking back, I probably had one or two properties that would've paid off in the long term, but the portfolio as a whole wouldn't have lasted much longer.
I agree it really is a waiting game, but after seeing one capex after another issue, it was time to call it quits and pursue something else.
I'll take you up on the brainstorming effort to see what else is possible.
- 10moAshish AcharyaBusiness MemberCPA, CFP®, PFS · FL · Member since 2017 · 5k+ posts · 3k+ votes
Hey, thanks for sharing this! I’m sure a lot of investors can definitely relate. It sounds like you’ve learned a lot through the process, which is really what investing and taking risks in business is all about, right? Honestly, breaking even in this market is still a win. It can be tough out there, and real estate often requires sticking with it for years before you really see the appreciation and benefits.
I'm not sure what your tax strategy was before, but before jumping in again, I'd definitely make sure everything is planned out from a tax perspective. That way, your next opportunity makes sense not just financially, but also from a tax standpoint based on your current income and future goals. As someone mentioned above, a lot of rentals are managed with specific tax goals (like offsetting high W-2 income) in mind. With rentals, you have opportunities like depreciation, deductible expenses, and passive loss offsets that could help reduce your taxes while building equity. Selling your rentals likely triggered some depreciation recapture and capital gains and if you do shift toward private lending or flips through your LLC, you have some solid opportunities to reinvest in a more tax-efficient way.
Private lending income is taxed as ordinary income, so using an LLC, especially one taxed as an S-Corp if income grows, can help manage how that income flows and what expenses you can deduct.
If you dive back into flips, keep in mind those are treated as dealer activity, meaning profits are considered ordinary income, not capital gains, but there are smart ways to structure it if that’s your main focus.
If you have a clear tax plan going in, you'll start off on right path in realigning your investing strategy. Best of luck with your next chapter, and happy to connect anytime!
INVESTOR FRIENDLY CPA®5241 Reviews- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Ashish Acharya:
Hey, thanks for sharing this! I’m sure a lot of investors can definitely relate. It sounds like you’ve learned a lot through the process, which is really what investing and taking risks in business is all about, right? Honestly, breaking even in this market is still a win. It can be tough out there, and real estate often requires sticking with it for years before you really see the appreciation and benefits.
I'm not sure what your tax strategy was before, but before jumping in again, I'd definitely make sure everything is planned out from a tax perspective. That way, your next opportunity makes sense not just financially, but also from a tax standpoint based on your current income and future goals. As someone mentioned above, a lot of rentals are managed with specific tax goals (like offsetting high W-2 income) in mind. With rentals, you have opportunities like depreciation, deductible expenses, and passive loss offsets that could help reduce your taxes while building equity. Selling your rentals likely triggered some depreciation recapture and capital gains and if you do shift toward private lending or flips through your LLC, you have some solid opportunities to reinvest in a more tax-efficient way.
Private lending income is taxed as ordinary income, so using an LLC, especially one taxed as an S-Corp if income grows, can help manage how that income flows and what expenses you can deduct.
If you dive back into flips, keep in mind those are treated as dealer activity, meaning profits are considered ordinary income, not capital gains, but there are smart ways to structure it if that’s your main focus.
If you have a clear tax plan going in, you'll start off on right path in realigning your investing strategy. Best of luck with your next chapter, and happy to connect anytime!
As I am learning, especially from these replies, is that real estate investing requires a lot of sticking with it to see it potentially pay off.
I have created an LLC to prep for this, and still learning the ins and outs of this to try out another opportunity.
I may need to pick your brain on this further as this may be the way I am thinking of going forward.
- Investor · Fort Washington, MD · Member since 2014 · 1k+ posts · 1k+ votes10mo
Maybe it's been answered somewhere but not sure what you were expecting. Did you feel you would jump in, and instantly be knocking down 10k a month? In these days and times, depending on the asset class and location, breaking even is a win. Plenty of people here subscribe having tons of negative cashflow, waiting for the big payoff down the line. If you have a nice size portfolio that is breaking even, if managed correctly, that will eventually turn into cashflow. Also, say you hold them a decade or more; the right location can send your return through the roof making you very wealthy.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Mark Cruse:
Maybe it's been answered somewhere but not sure what you were expecting. Did you feel you would jump in, and instantly be knocking down 10k a month? In these days and times, depending on the asset class and location, breaking even is a win. Plenty of people here subscribe having tons of negative cashflow, waiting for the big payoff down the line. If you have a nice size portfolio that is breaking even, if managed correctly, that will eventually turn into cashflow. Also, say you hold them a decade or more; the right location can send your return through the roof making you very wealthy.
Thanks for your reply, Mark. I initially came into investing looking to do just that: invest. Ideally, it would've generated a monthly return on the side of my day job, but after some time, it didn't really pan out how I thought. Not sure if I would do it again, as I did. Rather, I would have stuck to just one or two that actually had strong, healthy, sustainable numbers for the long term, rather than going for a large portfolio. Truly a learning lesson, and I hope others can learn from my experience too.
- Real Estate Agent · Member since 2019 · 569 posts · 257 votes10mo
Unless you're trying to depreciate a huge tax build, rentals overall high very low operating margin if everything goes right. This why I mostly do flips for forced appreciation or new construction all together to reduce Capex.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Ricardo Hidalgo:
Unless you're trying to depreciate a huge tax build, rentals overall high very low operating margin if everything goes right. This why I mostly do flips for forced appreciation or new construction all together to reduce Capex.
I appreciate you sharing. I am thinking of just doing a flip or two a year instead of rentals just for side income in the right locations. How has that been going for you?
- Real Estate Agent · Member since 2019 · 569 posts · 257 votes10mo
Quote from @Arron Paulino:
Quote from @Ricardo Hidalgo:
Unless you're trying to depreciate a huge tax build, rentals overall high very low operating margin if everything goes right. This why I mostly do flips for forced appreciation or new construction all together to reduce Capex.
I appreciate you sharing. I am thinking of just doing a flip or two a year instead of rentals just for side income in the right locations. How has that been going for you?
I have switched to new construction only in this economy. Just made a post about it in BP Profile.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Al Bazzy:
Hey Arron! Turnkey properties can be a really good option if you’re looking for steady cash flow without getting too hands-on. Our homes are in solid neighborhoods, and we make sure tenants have good rental histories, so the cash flow is reliable from the start. A lot of our out-of-state investors end up coming back to buy multiple properties because the returns are strong and predictable. Turnkeys are also a great way to grow or diversify a portfolio without worrying about rehabs or day-to-day management. For anyone wanting real results and a smoother way into investing, they’ve been a solid, dependable option.
Happy to give you more info or show you some of our properties if you’re interested.Thanks for sharing. I was thinking of going the turnkey route in the middle of when I first was accumulating these rental properties, but held off due to wanting to see the project from start to finish.
- Member since 2025 · 5 posts · 1 vote10mo
It would be interesting to hear your experience in more detail.
- Rental Property Investor · South San Francisco, CA · Member since 2019 · 262 posts · 95 votes10mo
Quote from @Mark Rock:
It would be interesting to hear your experience in more detail.
Feel free to check my post history. My journey is all there.
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