I own several retail businesses and now would like to get into real estate business . I am a regular listener of BP podcasts on Stitcher. But when I listen to all established guests on BP podcast it seems like they do not like the headache of owning and renting properties. But I can only start buy owning and renting couple of units this year. Should hold it back? Is owning and renting is not a good strategy to start with? Also NJ law favors tenants more than landlords. I am some what skeptical but I need to start somewhere. Please advise.
I think this all depends on what your end game is. What do you want out of real estate? @Tanuja Nihir Shah
@Tanuja Nihir Shah owning and renting out properties is a great step towards building your wealth. That does not mean that it's easy. What are you looking to gain from owning rentals? NJ does in fact favor tenants, but you can look at other markets in the country that are more landlord-friendly. That's what I did.
Tanuja -- you're 100% right. There are no landlords in NJ because the laws are skewed toward the tenant, and everyone says its just too much to manage properties. So, nobody does and nobody makes any money. :)
I think this comes down to personality. If you want to own real estate but don't want to manage tenants/properties, then build in fees to your pro forma analysis for a property manager -- assume 10% to 12% of monthly rent.
I was on the podcast and I don't find owning the properties a headache at all. It's all in setting up the right strategy and getting the right tenants.
I rehab the house completely before putting someone in it. That means I have very little to do for many years on the house. Then I screen the hell out of the tenants and only place people that can pay and won't be aggravating. There's no guarantee, but: most people who have jobs, no criminal record, good credit scores, and are reasonably nice people rarely turn into nightmare tenants.
I think @Joe P. above was being facetious :) (at least I hope, even though NJ is a stronger tenant state) because there are a lot of rental properties in NJ. Just because a state may be more tenant-friendly doesn't mean there's not plenty of money to be made. In an ideal situation, you'd never know one way or the other if the state is or is not tenant-friendly because you'd never be evicting people or finding yourself in court fighting with a tenant. I am in a LL friendly state but it's never mattered one way or the other for me. I've had dozens of tenants by now and I've never had to go to court with any of them. So I could have just as easily been in NJ.
@Joe P. that’s quite a statement that there are no landlords in NJ! I know people in NJ with portfolio of 300+ properties. @Tanuja Nihir Shah I unfortunately wasn't aggressive and outsourced portfolio building to my friend in VA and thus I have properties which appreciated much less than the ones in NJ and is harder to manage them now that I am trying to do them remotely. What does all this mean? If you have means, look for properties close by and build up more properties quickly so you can afford to have team to manage the maintenance requests and repairs that come one day or the other! I would say if you have means, go for more units from get go (buy apartment complex, self storage, etc.) and bypass the headache for almost same effort in acquiring and less in managing! You can also go invest in syndications of operators you like in above asset classes and may be build resume to be syndicator yourself one day!
Let me know if you want to connect as I am also in NJ!
@Dan Barli I have 2 friends in Clifton both left their full-time employment with all their properties in your town. There is no need for you to go too far!
As you see the feedback varies depending on who you talk to! So in order for you to filter through all of it, you have to educate yourself on varies ways to invest in real estate and take the following steps:
1) decide how much time can you spent on real estate and would like to spend on it. RE is a business so decide whether you want it to be active (more time => higher reward) or passive (much less time => lower reward).
2) once q1 above answered, find a niche with the type of investing that suits you. Do the research, see what interests you the most and take action.
3) surround yourself with like-minded investors, join REI clubs. you're welcome to come to our club. more details under my profile.
I rent 2 SFHs In NJ. Been doing this for over a year. So far so good. Looking to buy my next one. Don’t let NJ tenant friendly state scare you. Look around you. There are Multifamily properties and apartment complexes. There is wealth to be built.
@Tanuja Nihir Shah welcome if you want a list of investment properties in Jersey im your girl
@Tanuja Nihir Shah in my opinion Real Estate is a great way to build wealth, and one of the best investments there is. I understand that you don't want the headaches involved in real estate investing, but have you considered using a property management company? A solid PM can decrease the headaches of ownership and make sure that you don't have to deal with day to day tenant related issues