Why Real Estate?
Rental Property Investor · Brooklyn, NY · Member since 2014 · 722 posts · 1k+ votes
Why invest in real estate?
After all, there are lots of things to invest in -- stocks, bonds, precious metals, collectibles. What makes real estate so attractive to you? Is it because it's tangible -- you can ride by and look at your investment? Is it because that's what you heard rich people invest in? Because it's "passive"?
If you're already a successful real estate investor, why did you come this route?
If you're hoping to enter this field, why? Why not all the other ways you could make money or invest your extra savings?
What are your hopes and dreams about owning investment property?
What other form of investing lets you contribute 5% of an asset's value, but let's you keep 100% of the increase in equity? Even after you graduate to 20% down/investment property financing, $100k buys you a $500k asset, if it improves 3%, you just made 15% on your cash in appreciation alone. If it's a decent property operating at a 7% cap you could probably take another $5-8k a year in cashflow which push returns on investment into the low 20% range....and that's on a pretty marginal property.
Next year I'm selling off the rest of my personally-held stocks, the only thing left in that market will be my employer funded 401k. At that point I should have everything working for me in real estate.
My hopes and dreams? To own a nice portfolio and keep the Debt/Equity around 1:1.
Real estate is for me simply because it's my passion. No matter about all the other factors, complications, difficulties, changes in the law structure, fluctuations with the market, and all other nuances, it's what I'm passionate about. I've been in love since the age of 18, seeing new development homes, watching HGTV, recently (like today) finishing my bachelor's in Real Estate and Economic Development and moving on to study at my master's level, so I can teach other's in the undergraduate programs what RE Investing REALLY is (as the tenure professors have no idea what they are discussing). Bottom line, It's what I love and I love learning about itand though I have yet to complete a flip, conduct a wholesale deal, or sell a note, I know that I'm going to be AMAZING at what I do within the industry of real estate, because I love it (and I'm becoming very knowledgeable about the subject).
I hope all have enjoyed reading my why! Have a great day on purpose!
Stephanie Dobbs
I guess for me, someone who is interested in real estate investing, would be to be able to control my worth. A normal 9-5 job/career tells you what you are worth and takes 40 hrs or more of time, that could be spent on raising your family. With real estate investing, I can be in control of my own worth, not someone else's bottom line. I'm not saying there's anything wrong with a 9-5 job. however, for me, all I know is struggle. Real estate is my way out of poverty. Yes, it requires knowledge and hardwork. I know that I may fail from time to time. I even risk losing everything. I would rather risk it all and control my worth and spend 20-40 yrs in a career, which a rolex to show for my hardwork.
Hi Terry I read your profile, you want what my husband and I wanted 8 years ago, let me tell you something, what you want takes time, you need to be patient and you need to be smart with your money. I don't know your situation right now but I can tell you the steps we took to get to where we are now: (Keep in mind we have been "live in flippers" for 7 years)
1) pay off all your credit cards, loans, pay off your car ect...
(If you have a house don't worry about paying that off yet, I'll give you an idea of what you can do about that in a bit)
2) once all your debt is paid off, start saving money, you save money by only buying what you need NOT WHAT YOU WANT, so you NEED hygienic supplies, food, clothes (but only once every 2, 3 months making a budget on that of maybe $100 to $150 per person in the house hold) you need gas, utilities, rent or mortgage ect.. you DON'T NEED for example if you have cable with HBO do you really need Netflix and do you really need to go to the movies every weekend, do you need to have all the movie packages that the cable company offers?? Do you need to go to the bars when you can just buy a six pack and drink at home, do you really need to get your nails and hair done at a solon when you can do it yourself, do you need to pay so many phone bills does everyone including your 3 yr old need phones? Ect..So really look at what you have now and ask yourself is this a necessity do I need this or did I just want it?? Once you get rid of all the thing that are not a necessity than you continue to step 3
3) once you take care of step 2 you will see that you are now saving money and you just keep saving all the money that you have left over from pay all your necessities for that month. You start to make that savings grow little by little. It takes time to build a strong foundation to wealth.
4) there you now have $10k saved a few months later you have $20k saved.
5) do you have a house now? If you do does it have equity? If no what can you do to the house to make it have equity, can you updated it or fix the roof what ever it is do it with the money you have saved (I recommend having a real estate agent look at your house and tell you how to increase its value by remodeling it or what ever needs to be done to it). So know you know what has to be done use the money you saved and begin to work on your house.
So let's say you have a house and it does have equity, what now, we'll how much equity, if you SELL it will the equity plus what you have saved be enough for you to use as a down payment to another house but a SMALLER one that might need a bit of rehab or maybe it gives you enough to pay a smaller house that needs rehab in cash. So what I'm trying to say is if you have equity and enough saved you down size you DON'T upgrade, ones you find and buy your smaller house slowly fix the house and wait 2 years, but what are you doing meanwhile well you keep saving money to be ready for your next move.
Your next move will be after 2 years you sell your remodeled house hopefully making at least $20k on it, so now you have made your money bigger, you now have started a little snow ball, you continue to save and continue to flip, and this will give you the snow ball effect.
If you don't have a house yet than purchase one by using your saved money to get a small outdated house that you can instantly get equity once you step foot in it. Wait a couple of years and start with step 5.
My husband and I followed these steps but our first flip was actually a house we built. Since 2007 we have been working at it, our $100k has grown over $340k and have been mortgage free since 2008, we are proud to say every transaction since 2008 have been cash purchases and have not lost on a deal as of yet, I believe it's because we take it one step at a time and have built a strong foundation, we started from the bottom with only our dreams to push us to where we are now and still growing.
4 things to remember Terry
Location, location, location and you need a lot of patience.
I hope this helps or maybe you already knew, so I hope it helps anyone that would like an idea as to how to get started without using or as little loans as possiable and to eventually be mortgage and loan free.
If you want anymore info contact me I will try my best to give you a good answer. ;)
Hey @Jonathan Twombly. Aside from those who would just choose real estate because they would love it regardless of the upside, it has to be considered in the context of other investment and wealth creating options.
Real estate hands down offers the best opportunity for the average person to build wealth.
Could I build wealth faster in the stock market? Yeah, if I were smart enough. Is it likely to happen? No.
Could I build wealth faster by creating the next Facebook, or Candy Crush? Yes. Is it likely to happen. Definitely no.
Could I build wealth faster and bigger by creating the next Dunkin Donuts or Walmart? Yes. Is it likely to happen? Again, a definite no.
As @Ben Leybovich said, "it is the only path that made sense to ME." (Emphasis mine.)
To all of us who have other options but are not likely to be the next Bill Gates or Sam Walton, there is still something that we can do that will yield out-sized returns and create significant wealth. And that something is real estate investing in all it's forms. All you have to do is do it.
One word: Leverage.
Interested in obtaining a 2nd income
Real estate is a necessary commodity for everyone. Everyone has to live somewhere. But, I agree you should always create other streams of income or business.
Why real estate.... its fun, enjoyable, profitable, and ever changing (it doesn't get boring)!
I guess for me, someone who is interested in real estate investing, would be to be able to control my worth. A normal 9-5 job/career tells you what you are worth and takes 40 hrs or more of time, that could be spent on raising your family. With real estate investing, I can be in control of my own worth, not someone else's bottom line. I'm not saying there's anything wrong with a 9-5 job. however, for me, all I know is struggle. Real estate is my way out of poverty. Yes, it requires knowledge and hardwork. I know that I may fail from time to time. I even risk losing everything. I would rather risk it all and control my worth and spend 20-40 yrs in a career, which a rolex to show for my hardwork.
Hi Terry I read your profile, you want what my husband and I wanted 8 years ago, let me tell you something, what you want takes time, you need to be patient and you need to be smart with your money. I don't know your situation right now but I can tell you the steps we took to get to where we are now: (Keep in mind we have been "live in flippers" for 7 years)
1) pay off all your credit cards, loans, pay off your car ect...
(If you have a house don't worry about paying that off yet, I'll give you an idea of what you can do about that in a bit)
2) once all your debt is paid off, start saving money, you save money by only buying what you need NOT WHAT YOU WANT, so you NEED hygienic supplies, food, clothes (but only once every 2, 3 months making a budget on that of maybe $100 to $150 per person in the house hold) you need gas, utilities, rent or mortgage ect.. you DON'T NEED for example if you have cable with HBO do you really need Netflix and do you really need to go to the movies every weekend, do you need to have all the movie packages that the cable company offers?? Do you need to go to the bars when you can just buy a six pack and drink at home, do you really need to get your nails and hair done at a solon when you can do it yourself, do you need to pay so many phone bills does everyone including your 3 yr old need phones? Ect..So really look at what you have now and ask yourself is this a necessity do I need this or did I just want it?? Once you get rid of all the thing that are not a necessity than you continue to step 3
3) once you take care of step 2 you will see that you are now saving money and you just keep saving all the money that you have left over from pay all your necessities for that month. You start to make that savings grow little by little. It takes time to build a strong foundation to wealth.
4) there you now have $10k saved a few months later you have $20k saved.
5) do you have a house now? If you do does it have equity? If no what can you do to the house to make it have equity, can you updated it or fix the roof what ever it is do it with the money you have saved (I recommend having a real estate agent look at your house and tell you how to increase its value by remodeling it or what ever needs to be done to it). So know you know what has to be done use the money you saved and begin to work on your house.
So let's say you have a house and it does have equity, what now, we'll how much equity, if you SELL it will the equity plus what you have saved be enough for you to use as a down payment to another house but a SMALLER one that might need a bit of rehab or maybe it gives you enough to pay a smaller house that needs rehab in cash. So what I'm trying to say is if you have equity and enough saved you down size you DON'T upgrade, ones you find and buy your smaller house slowly fix the house and wait 2 years, but what are you doing meanwhile well you keep saving money to be ready for your next move.
Your next move will be after 2 years you sell your remodeled house hopefully making at least $20k on it, so now you have made your money bigger, you now have started a little snow ball, you continue to save and continue to flip, and this will give you the snow ball effect.
If you don't have a house yet than purchase one by using your saved money to get a small outdated house that you can instantly get equity once you step foot in it. Wait a couple of years and start with step 5.
My husband and I followed these steps but our first flip was actually a house we built. Since 2007 we have been working at it, our $100k has grown over $340k and have been mortgage free since 2008, we are proud to say every transaction since 2008 have been cash purchases and have not lost on a deal as of yet, I believe it's because we take it one step at a time and have built a strong foundation, we started from the bottom with only our dreams to push us to where we are now and still growing.
4 things to remember Terry
Location, location, location and you need a lot of patience.
I hope this helps or maybe you already knew, so I hope it helps anyone that would like an idea as to how to get started without using or as little loans as possiable and to eventually be mortgage and loan free.
If you want anymore info contact me I will try my best to give you a good answer. ;)
Sad thing is, when I was laid off my first job, I had $15,000 saved that I was going to use to start my real estate business. My wife panicked, went into my account, took the money I saved, then started paying off every single bill she had. Forgot about me and about cutting back. Then, took the remaining amount that was left & spent it on a trip to Disney world, because we wanted to kids to experience Disney. I spent 8 long years saving that money. I've now taken a job, that I've taken a paycut to get, so trying to save that money again, is going to take 2x as long. so, my patience is thin. So, I understand, paying off bills and cutting back is the right thing to do. It's going to take 6 yrs to payoff my car. I don't have 6 yrs to save. I know Real Estate takes time, I understand that. But having to start saving again, when I had saved the money previously, until my wife panicked, instead of listening to me...
Well you need some money to attract more money, if you really want it you will find a way.
Keep reading the forms don't be afraid to ask, you might find another way. Good luck :)
Well you need some money to attract more money, if you really want it you will find a way.
Keep reading the forms don't be afraid to ask, you might find another way. Good luck :)
Thanks for the advise. I will find another way.
Hey @Jonathan Twombly. Aside from those who would just choose real estate because they would love it regardless of the upside, it has to be considered in the context of other investment and wealth creating options.
Real estate hands down offers the best opportunity for the average person to build wealth.
Could I build wealth faster in the stock market? Yeah, if I were smart enough. Is it likely to happen? No.
Could I build wealth faster by creating the next Facebook, or Candy Crush? Yes. Is it likely to happen. Definitely no.
Could I build wealth faster and bigger by creating the next Dunkin Donuts or Walmart? Yes. Is it likely to happen? Again, a definite no.
As @Ben Leybovich said, "it is the only path that made sense to ME." (Emphasis mine.)
To all of us who have other options but are not likely to be the next Bill Gates or Sam Walton, there is still something that we can do that will yield out-sized returns and create significant wealth. And that something is real estate investing in all it's forms. All you have to do is do it.
These are all really compelling reasons, and great insights. Thanks so much for sharing your thoughts with us!
I guess for me, someone who is interested in real estate investing, would be to be able to control my worth. A normal 9-5 job/career tells you what you are worth and takes 40 hrs or more of time, that could be spent on raising your family. With real estate investing, I can be in control of my own worth, not someone else's bottom line. I'm not saying there's anything wrong with a 9-5 job. however, for me, all I know is struggle. Real estate is my way out of poverty. Yes, it requires knowledge and hardwork. I know that I may fail from time to time. I even risk losing everything. I would rather risk it all and control my worth and spend 20-40 yrs in a career, which a rolex to show for my hardwork.
You hit on something really important here, Terry. Real estate is not rocket science. You don't have to reinvent the wheel to make your fortune here. No one needs to invent a new way to succeed in real estate. You follow the old ways, but you work hard and you do things consistently, day after day. Start from wherever you are, and keep plugging away over time, and you will get there. Real estate proves that 90% of success is just showing up. Most people will never bother to get started, to take a risk. But for those who do, and who keep at it, and who pick themselves up again after they fail, they will succeed.
Real estate is for me simply because it's my passion. No matter about all the other factors, complications, difficulties, changes in the law structure, fluctuations with the market, and all other nuances, it's what I'm passionate about. I've been in love since the age of 18, seeing new development homes, watching HGTV, recently (like today) finishing my bachelor's in Real Estate and Economic Development and moving on to study at my master's level, so I can teach other's in the undergraduate programs what RE Investing REALLY is (as the tenure professors have no idea what they are discussing). Bottom line, It's what I love and I love learning about itand though I have yet to complete a flip, conduct a wholesale deal, or sell a note, I know that I'm going to be AMAZING at what I do within the industry of real estate, because I love it (and I'm becoming very knowledgeable about the subject).
I hope all have enjoyed reading my why! Have a great day on purpose!
Stephanie Dobbs
Congratulations on your graduation! Great news!
I know what you mean about passion. I've loved buildings since I was a kid. I always loved reading the real estate section of the paper on Sundays. I love all those real estate shows on TV. When I was a lawyer, I could not stand watching lawyer shows. (I still don't watch them.) But I can't get enough of real estate shows, even though I do real estate all day long, every day!