Rental Property Investor · Corvallis, OR · Member since 2018 · 840 posts · 1k+ votes
Hey BP peers! When does this RE stuff actually become passive income? It’s been a trying month for sure. I work that full time job, manage 29 doors, and flip for profit and debt reduction.
But, on April 12th I get a call that on April 8th my tenant committed suicide. luckily, not in the unit. That Bubbly little 5 foot woman decided life wasn’t worth it any longer and pre mediated this action by jumping out in front of a logging truck. I then dealt with trying to remove her guest peacefully and a mom and sister who fought over her belongings, meanwhile trying to contact the attorney handling her affairs.
So, when does this finally become passive income ? I say this sarcastically as I know it’s always going to be hard work. 3 flips back to back so far in 2019 and 8 unit turnovers for upcoming college students is quite exhausting.
Maybe it’s time to hire a PM but I have zero vacancy the way I run things and cannot let go. Flat exhausted and wondering if anyone else feels the same out there in the BP world? Thank you
@Todd Powell I encourage you to get an assistant, not a property manager.
I did what a lot of people on BP are against and I went through a guru program and I had a real estate coach for a year. One thing he told me every week was get an assistant, get an assistant, get an assistant. After 6 months of hearing that, I finally got an assistant and I was able to focus on my therapy practice and leverage my time. For every hour I worked in my practice, I could pay my assistant to work 7 hours. And she could take care of the things I didn't want to take care of.
I am now on my second assistant and my business has scaled incredibly. We would not be near where we are now without my assistant and my net worth would be dramatically lower because I wouldn't be able to handle the purchases, leasing, and managing of my properties (around 80 doors) and still run my therapy practice. My assistant takes care of a lot of things with my multiple businesses and personal life. She is AWESOME!
@Kyler Cook not looking for compliments, and definitely not confused, just a very stressful month! I started flipping on a small scale back in 2001, but finally realized building wealth is great but cash flow was what I was missing to get out of the rat race. I don't mind my first mortgage debt, but my massive HELOC debt is why I flip. I get that handled, I can see the rainbow finally. I started buying and holding as I drank the "passive" income Kool aid. I do not need a pat on the back, but curious how people ever really achieve passive income. I must be a control freak, as I do not think anyone I find as PM or assistant will have my hussle and experience. Maybe that is my real issue! I do not do the rehab work myself mind you, but merely find the deals and manage from afar with a good number of qualified people. But, lately I have been realizing that my full time job and all these other factors have been overwhelming. Yes, I have created it, but its out of a passion to be financially free.
This suicide stress is probably why this month was so over bearing.
I am not looking for a pat on the back, but that night maybe just a little sympathy. Lol. Just tired
@Lauren B. I thank you for your input. I think my biggest take away from you and many thoughtful BP members is that I do need an assistant many times. The struggle would be how to find one as I feel as I would have to teach and wonder if it would really work? But, I am thinking this all over. Thanks again !
I own and manage 85+ SFR's and 25 multi doors. I use a good software program (Buildium), a part time assistant and a full time handyman. I screen my tenants thoroughly and have an easy time handling these rentals without headaches. My belief is simple. Great properties plus great screening equal great tenants. Great tenants make life easy and real estate as passive as possible. Not quite a dividend check passive, but close. With a way better ROI.
@Todd Powell I encourage you to get an assistant, not a property manager.
I did what a lot of people on BP are against and I went through a guru program and I had a real estate coach for a year. One thing he told me every week was get an assistant, get an assistant, get an assistant. After 6 months of hearing that, I finally got an assistant and I was able to focus on my therapy practice and leverage my time. For every hour I worked in my practice, I could pay my assistant to work 7 hours. And she could take care of the things I didn't want to take care of.
I am now on my second assistant and my business has scaled incredibly. We would not be near where we are now without my assistant and my net worth would be dramatically lower because I wouldn't be able to handle the purchases, leasing, and managing of my properties (around 80 doors) and still run my therapy practice. My assistant takes care of a lot of things with my multiple businesses and personal life. She is AWESOME!
I didn’t pay for a expensive guru program but this is exactly what I did. It seems a natural progression. I also flip have 36 units and have a FT job. There is no way I could do this without an assistant. In fact, I find things get easier as I scale. But again, like Todd I had a crazy unusual crazy week. I thought about making a post about it.
quit flipping. High transaction costs and 40% tax rate. No thanks!
I keep hearing this on BP, but flipping returns even after taxes are much higher than rentals. The only thing that should deliver a higher return is ground up development.
I understand how busy you are OP. I am similar. I have 2 other businesses + flipping + rentals + 1 large ground up development. Aka 5 jobs.
If I were to flip it would be a C,D areas fix it up and get the hell out ,the future is risky I would not want that to add to my risk formula .Then the churn is back on looking for the next target quick before the clock expires from the 1031 limits .
Owning rentals in A ,B areas that will go up in value i.e passive income, future looks bright .Less stress with rentals fixed up right ,right location .
@Todd Powell I have a buddy that was working 80 hours a week a few years ago. Making great money. He took a turn and gave up the sales job and now does customer service over the telephone from home. He says to me "I was doing well with money in the sales job, but at the end of the day if I died back then, friends would have talked about me saying' He seemed like a really nice guy. He worked a lot though and I didn't really know him'"
Take a step back for a minute. What's it all for? Yes you are the most motivated for your work to be done well... But you can motivate someone else to do it at your 90% capacity and let go of the reins.
You want to retire by 55 you said? Meaning swimming in 100's in the bathtub right? What if you give up some $ for time now and truly retire at 60? but all the while acually ENJOY life for the next 20 years. It's time to build the next level of your real estate business- learn how to hire good employees. Your friends and family will thank you later
quit flipping. High transaction costs and 40% tax rate. No thanks!
I keep hearing this on BP, but flipping returns even after taxes are much higher than rentals. The only thing that should deliver a higher return is ground up development.
I understand how busy you are OP. I am similar. I have 2 other businesses + flipping + rentals + 1 large ground up development. Aka 5 jobs.
If I were to flip it would be a C,D areas fix it up and get the hell out ,the future is risky I would not want that to add to my risk formula .Then the churn is back on looking for the next target quick before the clock expires from the 1031 limits .
Owning rentals in A ,B areas that will go up in value i.e passive income, future looks bright .Less stress with rentals fixed up right ,right location .
Thank you for this post. It is nice to see a post where the real life stress of being a real estate investor is being discussed. Real estate isn't all cash flow and early retirement. It's a lot of work and takes a special person to be able to juggle everything. I have had some pretty rough weeks/months myself. Back when I had a property manager we were in a particularly tricky situation and he said "let's just see if we can get out of this alive." I have since fired that property manager since they were more work to manage than my tenants, but the sentiment is still there. Whenever I am in a particularly stressful landlord situation I think to myself "let's just see if I can get out of this alive!"
@Todd Powell I have a PM and they’ve managed my properties better then I ever could! I also spend virtually no time on them. This is a marathon and it sounds like you are sprinting. You need to start replacing yourself and fast otherwise you are headed for burnout real quick.
@Ron Gallagher I posted as I was curious how others felt. I realized there is a wide variety of experience with BP members, but I have worked so tirelessly and I want to live off of passive income. Some criticize me for the flips, but the truth is I have made a lot of money doing over 30 of them and it nets me cash for other deals, rehab, and paying down my HELOC which I have used for down payments and fix ups. Just been the most tiring month I can ever recall.
I have a end game, but tired and wondering if anyone else felt the same. @Kyler Cook thought I was confused or fishing for compliments. Neither, as I have built a high net worth and do not need affirmation but wondering how people juggle it all. This thread taught me an assistant maybe the best action point.
@Jay Hinrichs I quit watching the BP podcasts. First, they generally regurgitate the same information so less than 10% is applicable to me. Second, I like David but he's not as entertaining as Josh was.
BP Business Podcast will be right up my alley if they produce the same level of value as the standard podcast does for a new(er) investor.
The podcast went from awesome to barely listenable when Josh left, unfortunately. It used to be raw and entertaining.
@Nathan Gesner and @Account Closed I like the podcasts much better now. But that’s because I’d take analogies over sarcasm any day. And Frankly, I think David has more personal experience with real estate than Josh.
@Chris Steven I would hire a good assistant over a property manager. When you have a property manager you are one of many and their incentives are not necessarily the same as your incentives. But you can chose the incentives that you create for your assistant and you’re not one of many with your assistant so I think you get better care and services for your properties and tenants with a good assistant. If I had a property manager charging me 10% to manage all my properties, then I would probably pay around 6k a month in PM fees, as of right now I pay my assistant about 3k a month and not only does she manage my properties but she manages a lot of my other businesses and she manages the sub contractors on my rehabs. So hands down a good assistant is far better than a good property manager any day in my opinion.
One thing I need to clarify though, about 40 of properties in Arizona are lease options though so their management is a lot lower than a regular rental, so take that into consideration. And I have 7 units in Indianapolis that I use a property manager to take care of because it is a small portfolio and the PM specializes in section 8 tenants which I have in some of my properties and I’m not interested in paying someone to learn all about that just to manage a few properties if I’m not looking to expand there right now.
@Nathan Gesner and @Account Closed I like the podcasts much better now. But that’s because I’d take analogies over sarcasm any day. And Frankly, I think David has more personal experience with real estate than Josh.
Got ya. I didn't like Josh for his RE experience. In fact, he rarely talked about it. I listed for the guests knowledge and Josh and Brandon were what made it less dry.