When is enough enough? How many homes does one need!?

184 Replies

@David Smit I see that example as 20,500 families who now have a safe warm comfortable place to stay that mIght otherwise have no where eIse to go maybe they couldn’t qualify for homeownership maybe it is out if their own desire but it is a service ,a needed service . As a religious fella,I think of the richest man in the Bible ,Solomon .he had amassed extreme wealth over all people of that tIme .. he had thousands and thousands of oxen goats camels . Huge plots of land His wisdom was also said to be nearly limitless . He was blessed with abundance ..blessed with not only possessions but with an awesome mind to manage them . When we are blessed with rIches and the ability to do manage it and multiply it we should take hold of that and make good use of our talents and gifts ! Think how many more people you can help if you had incredible wealth think how many more families that might not have a place to lay their head , get safe comfortable shelter .how much more could we donate to worthy causes to benefit humanity because you used our gifts and talents . Remember it is the “ *** LOVE***of money “ that is the root of all evil ... not the “ money “itself ! Wealth can be used for good and there’s nothing inherintly wrong with being wealthy
@David Smit . I wouldn’t call it greed. I think it’s more of having a clear goal. Most people who you hear throughout the podcasts and blog aren’t even Financially free or independent till they reach about what? 40-50 property’s. Than at that point they don’t have to work ever again.. now to set it up where you don’t have to worry about money again, that’s a who didn’t story maybe 200-300 property’s and you can give the world the middle finger. Now to have a legacy and pass down for generations something you achieved in lIfe and wealth that can change the world for the good... to me that sounds like a pretty solid goal. So I think enough is when you feel like you can use your ideas to make a dent in the world not just your bank account. Also @GrantCardone talks about In one of his video on YouTube that a million isn’t even enough to buy you a good lawyer, you need at least 10 million to live free. So quick math 500 property at 1000$ is only 6 million a year if all property are 100% paid off and that doesn’t include any expenses. So who is greedy? Seems like sky is the limit

I browsed through a lot of this thread, but did OP say it in the opening post....

He figured out he was a socialist

@David Smit One of your underlying assumptions is the reason for real estate investing is money. I am not motivated by money, it is a fun and personally rewarding hobby. I live of 1/2 my military income and invest the rest in real estate and while my real estate should outpace my military salry by next year, I plan to keep serving. I love numbers so lets round the 20,500 doors up to 21,000 for simplicity sake. That could be either 7 SFRs in every county in America (a drop in the bucket), 5,250 4plexes which is 1.75 in each county, 21 100unit MFR which is not even being one in each state. I would challenge you to question why you feel this way. Is it because of media? Political environment? Thought processes you inherited from your family? While many on BP would recommend Rich Dad Poor Dad, I found Hillbilly Elegy the most productive in challenging me to analyze why I think and perceive things they way I did. I have to determine if what I believe/percieve is based on family rules, local cultural thought process, media influence, perceived truth or real truth. I grew up without running water at times. My dad hitchhiked to work 30 miles each way for months on end. In reflection some of this was due to his inherited financial perspective. I don't blame or think less of him. It is what he had inherited as financial knowledge. If I have been given the knowledge and wisdom and faul to act shame on me. As for not enough deals for everyone on BP that is for the market they are looking. That is like complaining there is not enough clearance items to go around to everyone who wants it. They need to look elsewhere or change the area of real estate they are investing in. Lastly, I do not have a door count or income level. It is a fun hobby and even in retirement I plan to give 80%+ away each year.
Originally posted by @David Smit :

No no, I understand that there’s only so many who want to be a landlord, the “20,500 families” is just to point out the magnitude of this one outfit in the marketplace. Most of us will read articles on the decline of the middle class and we cringe to read of it, yet this is a good example of somthing that makes matters worse in that regard. Many of us like the concept of “support small business”. But how many people are on these forums mentioning how few deals there are and how they can’t get the numbers to work? If the Blackrocks of the world are buying 82k properties in a matter of five years or so, we all know they’re overpaying for these homes merely because they can and because they drive intense effieciencies in management. That pushes all of us out of the market to an extent, and that hurts the middle class in a real way. Same holds for those with 500 plus units; they buy sight unseen, often tie up a contract just to lay claim to it while they do further research. I know I can do the same, but that doesnt make it a tasteful practice. 

I just feel such numbers and inevitable practices bring little good to society. 

 There's that "expert" "we all know" again...and that expert is wrong again.  The Blackrocks are most likely not overpaying, or they wouldn't be in business very long.

Also, how exactly does this "make matters worse" with regard to the "decline of the middle class"?

...and, just because many here complain that they "can't get the numbers to work", means it can't be done.  These investors are here because the answers to how to make it work, are found here by those that are making it work.

Lastly, are you saying that if a REI "ties up a contract just to lay claim to it...", and after researching it, doesn't buy it, that somehow hurts the middle class? How?...and what's wrong with that?

I dont understand the criticism of someone else's success or the underlying jealousy.  Just compete and succeed on your level and dont worry about what others are doing.

As long as you are moving forward with your goals you are succeeding and their successes are irrelevant.

@Mary Jay   Great point! It's either in you or it isn't, you either love it or you don't.  Poor and broke are 2 very different mindsets, poor is a state of mind, broke is a temporary position. @David Smit I love your empathy for the poor, they are a part of our society that has been destroyed systematically since the 1960's. We are now on generation #5 and it's in them so deep something drastic has to change or it will continue until the end of time. When I was a lender my favorite part was working with first time home buyers.  In some cases first generation home owners. I learned a great deal from them and it made me want to work harder for them to be successful. I learned in some cases their families weren't supportive at all. The entire time, telling them it will never happen, discouraging them for even trying to get out of poverty and wanting a better life. I learned they don't have any guidance and in most cases I went to their homeowners insurance appointments with them to translate what the agent was telling them. Every time it my pleasure to do it. Since you clearly have a desire to help I would challenge you to throw away the idea of socialism and trying to divide the pie equally because that hasn't really worked but instead start in your community. Purchase the Dave Ramsey Financial Peace Package and teach it free in a local community center. They will need that foundation to begin, in some cases they don't even have a checking account. I know it's not changing the world overnight but I can promise you it will be more effective and more rewarding. When you've watched someone fight their way out of poverty and overcome all the obstacles associated with it, you'll understand what I'm talking about it. It's a feeling I can't even describe for all the parties involved.   

@David Smit , Interest rates are rising and will continue to do so, at least in the near-term. They have nothing to do with the national debt. As many have stated elsewhere in this post, regardless of what anybody else is doing, search for your why. Comparing what you are doing to an institutional company is pointless, unless you want to be like that company. And on the subject of companies you are referring to, I suspect that their investing has probably slowed a little & the majority of their inventory was acquired at lower prices. I also suspect that they are doing what David Green suggests, investing in markets that allow better earnings.
@David Smit if 20500 families were given the opportunity to own 4 rental units, 8% would be going to foreclosure. That’s a lot of vacant units, a lot of banks effected, a lot of jobs lost, and so on. Some people have a hard enough time managing 1 property, nevermind 82000. So kudos to invitation homes. They are creating tens of thousands of opportunities for people, not just the renters. I see this at work a lot, often people complain about wages, work isn’t fair, and so on.. my family works their tail off to keep the business afloat. We are one of the few US manufacturing companies left in the curtain Industry. But we are often the targets when there are people working 10x harder for half the money overseas. We could do the same, but we choose not to. For our employees.

Haha, I love how this has warped into “he’s a socialist!”. Long threads always seem to degenerate into something socially/politically polarizing. State of the union I guess.

I don’t think owning 80,000 units makes someone greedy, but I think once you get to that point I would hope you’re practices as a landlord are more on the generous side.

For example, I remember reading a post about what someone should do when this elderly couple signed a lease but then the husband died before they moved in. The question was whether or not to give the deposit back to the surviving widow now that she no longer could afford the rental.

While I understand those who said the deposit is there to protect your (the landlord’s) financial interests, I would hope a financially secure landlord with 100+ doors to be more giving with how they run their business. Someone with 4 doors may not be able to absorb that loss, but someone with an “empire” should be able to.

Hi David, thanks for the question. It's good to have a discussion about the role of profit and it's affect on our community or country.

You say "The world would be a better place (I’d argue) if so many weren’t trying to commoditize or hoard everything. Honestly, that’s 20,500 families who could otherwise gain substantial financial stability through owning four rental properties each."

This is where I fundamentally have to disagree. It's important to understand that economics is not a zero-sum game. When entrepreneurs and capitalists create value, they enrich themselves and the economy in which they participate.

Example: "Builder Bob" builds an apartment building of 10 apartments in Portland which is desperate for more housing. Bob spends $600k in land, material and labor. After the building is built the apartments are filled and Bob sells the property to Biggerpockets investor "Capitalist Claire" for $1M. Encouraged by his success, Bob takes his capital and profit and starts on a 20-unit building!

There are a couple of things to note. For one, Bob created $400k in profit out of thin air. Thin air consists of a bank loan, risk taking and a brain power and effort on Bob's part. That profit wasn't taken from anyone, it simply came into being due to Bob's willingness to take action. At the core of both Bob's and Claire's motivation was the potential for profit. Without the lure of profit, the project would not happen and the world would be poorer. This is the basis of capitalism. Rather than being evil and selfish as a socialist might characterize it, it is the driving force that has created incredible prosperity and a standard of living many times greater than our ancestors could imagine.

Bob will move on to making more homes because another investor, Claire, was happy to purchase the building. In that way, Clair indirectly adds to the housing supply and improves the quality of life in the city of Portland. After all, there are ten more families that have homes in a city with too many homeless. Regardless of the scale of the various players in the market (builders, investors, lenders, workers), each adds value and satisfies some part of the demand.

Twenty years later, Bob has build 1000 apartments. Clair now owns hundreds. The result is more homes for people who need them. If the "leaders" of Portland had half a brain, they would pin a medal on Bob's chest and give an award to Clair. Perhaps I'm exaggerating to make a point, but it is an important one. It is capitalists that provide our homes, food, clothing and everything we need for a good life, not government.

In stark response to your ascertain, I say, the world is a better place with more people willing to take a risk to invest in housing because there is unmet demand for housing. By investing in real estate we add capital to the system leading to more housing. By doing what we do, we indirectly add to the supply and lower the cost to tenants. 

Is it better if one company owns 80,000 properties or 20,000 investors own 4 each? With housing shortages in many cities in the west, let's go for one company owning 80,000 properties PLUS 20,000 investors owning 4 each. The one doesn't take away from the other, that is the beauty of capitalism.

Originally posted by @Clifford Paul :

Shouldn't the question be "how much money does one need"?

It's a trick question to be sure. One person's life and goals is not the same as another's. 

For example I'm a car guy. I love car's and I'm sorry but a 10 year old Prius doesn't do it for me. I'll drop 100k on a car in a heartbeat if it's what I want. As a car guy we get it, not everyone likes car's and they only see them as a means to get to point A to B. There's nothing wrong with that either. We car guys are miss understood for sure. Even on BP you are looked down on for driving a car worth more than 5k. Some how this isn't being smart with your money and you could be buying more door's. Once you made it... You don't need more door's!

I made 10k in the last 24 hours. Bought 2 flops on Friday and my agent sold them today for 5k profit each. If people can't find a way to make it in this life why should I pay for their failure? I have a freaking GED and work 2 jobs for 20 years and made smart investments to get here. No house I ever bought keep anyone from buying or becoming successful. 

My local Corvette club members donated over a million dollars last year to local  charities and it will be more this year. We donate anonymously so no one even knows what we do. We're fine with that.  

I personally don't need more door's I'm crushing it with less. I don't need more money because I made it through hard work and more hard work. Large companies buying thousands of houses is not going to hold anyone back. The lack of action and work ethic is the only thing holding people from success.

our   aheroshome.org is open for  donations from your Vette club... but I am like you  we have to enjoy the ride and stop and smell the roses if that means a car you like  trips you want to take  or sitting at home doing nothing I guess its all personal choice..  Plus when you buy things it keeps money moving and helping people down the line someone built that nice car.. or whatever it is you bought.. 

But I know both sides of it.. I know folks who are quite wealthy and still drive their beat up pickups  LOL

@David Smit

As you have seen, the belief that enough is never enough is a sacred cow of the BOP community. You touch the cow, you're automatically a socialist. Sorry, David, consider this the memo.

For what it's worth, I certainly don't think you're a socialist.

Everyone has different goals and ambitions. Personally, I feel my best number is 16 houses to own. Not too few, not too many. I can mange them myself and provide good customer service. You have to decide what works best for you.

@David Smit as others have said, it's not real estate specific. it's almost like you're asking 'but why capitalism?' Asking the question 'why is everyone taking all the houses' doesn't gain you anything, because what other people do with their time and money is outside of your control. 

Somewhat of a side point: 

Consider areas that still remain largely untouched by investors. They are affordable but extremely dilapidated and no one wants to live there. Due to competition investors update properties, creating better living conditions whether their goal is for profit or not.  

@David Smit You’re living in a fantasy world if you think if any one person owns less units then it means others will own a couple. Life simply doesn’t work that way. There’s enough for everybody, but not everybody is ambitious and hard working. I could literally give away a property to some people and they’d say no thanks.

I think I touched the cow @Jim K. ! I prefer to think for myself which makes me hard to classify in our political caste system. I need to toe the line and fit in!! 

@Anthony Wick I don’t think that at all, just pointing out the magnitude of that outfit. It would make the market less competitive if they werent buying homes en masse however. What are they paying for these places to build their inventory so quickly? That being the point. It’d be unfortunate if that model became mainstream as it would price a lot of mom and pops out of much of the market. 

For now I suspect you’re right that there’s enough for everybody, but I think people underestimate the ability of the financial world to disrupt markets. 82k units cost them 10 billion, there’s hundreds of billions behind that yet potentially. Will be interesting to see how it all pans out... I’m actually surprised they’ve gotten that far logistically speaking but apparently it’s working for them. 

There is a mentality of greed, @David Smit that I believe exists and I tire easily of hearing of the exploits of the Donald Trumps in the world. There is NO social consciousness there and the "socialist" part of me thinks that when, whether through your own efforts or dumb luck and good fortune you are blessed with much, then you should be giving back. It's the how you give back and to whom that I and probably 95% of others would have different views on. Personally, I think that for most of us in the investing world, the road to the first 10-20 doors will be marked with a great deal of blood, sweat and tears. Those doors will be EARNED. There is nothing about the work done though that couldn't be done by anyone else IF they wanted it and IF they applied themselves. The information is out there. Right here, in fact, on this very forum. I would be proud to say I had worked hard enough and long enough to own 10,000 or even 210,000 doors, especially if it meant that I could honestly say that the tenants of those doors were getting a good quality living space for a reasonable price. There wouldn't be any greed involved. That volume of investment done right would enable a tremendous ability to give back in so many ways that a "mere" 100 or 500 doors would not.

When all the money rests in too few hands, its a bad thing for everyone in my opinion. What is too few though is a hard one to answer. It's more the caliber of the individuals possessing the money than the amount of money possessed. I used to think that Bill Gates was too rich. He kept getting wealthier and his business kept getting even more of the market share. Seemed like everyone had to use Microsoft. And he never contributed to any charities to speak of. That "socialist" part of me was irritated. Then he got closer to retiring and being able to fulfill his dream, married Melinda and together they created the Bill and Melinda Gates Foundation. His vision was not just to give incredible amounts of money to charity, but to raise the standard of education worldwide and in doing so enable so many to do things for themselves. He had had a dedicated and focused plan all along! Since then he has convinced the very richest of the rich to give away their fortunes. He has become an ambassador of spreading the wealth. Have you read the news recently about Warren Buffet? He was one of the first ones that Bill Gates got to join him on that bandwagon and he has given away tens of BILLIONS of his fortune already. And there are literally dozens more that have pledged to do the same.

Each and every one of the people giving away fortunes had at one time or another, I'm sure been one of those with "too many doors". I am thankful that there is great wealth that still can be created, be it through investing in real estate or otherwise, and for those, apparently like yourself, that have a little "socialist" in them and a concern for making it just a little easier and better for others. I am praying that you become one of those with WAY too many doors, and that you find a way to use the wealth. Rock on!! 

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