Are you Only a Real Estate Investor?

19 Replies

Good afternoon BP!

So I attended this free financial seminar last night at my local church and the speaker mentioned on many accounts that he invest in RE.  He also says he dabbles in other ventures such as stocks, gold and silver and IRAs.

I was wondering if many other investors thought this way as well, investing in other assets other than real estate.  I was thinking what he does doesn't sound like a terrible idea but at the same time I figured that being invested in so much could turn sour.

Insight please.

I think it depends.  I am "all in" with real estate, but I understand it very well and have a passion for it.  I have tried to get into stocks and stuff but I still don't "get it" enough to be making informed decisions.  

RE is my interest, but I plan to diversify in the future..

Put all your eggs in a basket and watch the basket.

I invest in RE, the stock market and the Thrift Savings Plan. Also, I consistently search for alternative business opportunities.

Riches are in the niches. Doesn't mean you shouldn't have a reserve account that's hedged against real estate (if you can), but focus is key in my judgement. Those I've seen try to become a jack of all trades and a master of none usually don't do very well.

@Brandon Proctor  

IMO it all depends on your personal goals.  If you are experienced with the stock market and other investments besides real estate and feel you can make a large return then why not diversify.  On the other hand if the money you are using to diversify is limiting your most profitable investment opportunities (real estate) what is the point of diversifying.  

I believe long term investing in the stock market is not safe anymore.   With all the program traders and day traders disrupting the market, the Warren Buffet investment strategy (investing in the company itself) is safe.  I myself would rather focus the majority of my liquid capital and energy on what I know and enjoy.  REAL ESTATE INVESTING!  

I do remember him being a little against having all your eggs in on basket which I don't completly agree with. 

He has been pretty successful so I guess I see his reasoning. 

I don't know much about anything. I just have a feeling it wouldn't be a bad thing to invest some in gold.

I don't see any reason to invest in anything other than real estate. I simply can't get the numbers to come close - short and long term.

One thing I like about real estate is that I make money I can spend today and I make even more money as time goes on. Rents go up. Principal gets paid down. House prices go up (historically speaking obviously - and over the long run).

I think it also depends on your model. But, for me, I can get into a 135k house for 5 to 6k. In 20 or 25 years, that house is likely going to be worth 270k, will be paid off, and will be making me about 1,500 a month in cash flow. And during those 20 to 25 years, that house may be paying me 2k to 3k a year in rental profits that also happen to be tax free. 

And thats not expecting some miracle or some crazy price appreciation thing that typically only occurs on the coasts. Thats just bread a butter house deals here in the midwest in decent areas.

Now show me how I can do that with any other investment of 5k to 6k and maybe I'll consider it. Until then, why in the world would I ever do anything else? Diversify? 

There are two worst case scenarios for a buy and hold investor.
1) Values go down. If that happens, it typically means something really bad has happened in the economy. When that happens, more people become renters so the homes still cash flow. 

2) Renters disappear because they can all buy houses. That did happen during the boom period recently. If it happens, that typically means the price of homes shoots up because everybody is buying. So worst case is that I sell and make a ton of money on the houses but not as much as the buy and hold.....

Those are the downsides to real estate if you buy right. Either rents go up and prices go down. Or prices go up and you sell because there aren't enough renters. Either way, you shouldn't lose your shirt provided you have that cash flow as your base.

And I'm sure that there are some other doomsday scenarios (i.e. interest rates of 10% might really ding me given I have over 20 5 yr balloon loans).  But I'll take those risks over the stock market risk or any other investment - any day of the week.

Like any other business on the planet, there's going to be risks. But I'm an absolute believer that the risks in real estate for buy and hold investors doing it the right way (cash flow instead of appreciation) are as safe as any other investment around..

I look at Investing as trying to learn different languages.  

If you try and learn French, Russian, Mandarin, and Farsi(SP?) at the same time you will struggle to learn any.  Rather learn one until you are proficient, not a complete master but proficient, then move on to the next.

Originally posted by @Mark Cruse :

I invest in RE, the stock market and the Thrift Savings Plan. Also, I consistently search for alternative business opportunities.

Similarly my retirement(401K) is in the stock market.

For most Real Estate is really more of a business than an investment.  It could be a very small business - one low maintenance rental or it could be someone's sole source of income.

I think it really depend on what stage you are at financially on what makes sense in terms of diversification.  Personally I plan to have most of my after-tax investments in Real Estate since one of the appeals of Real Estate is the tax treatment.  However for retirement, I will continue to be mostly in the stock market.  If I get into something like notes that isn't tax advantaged, I would probably shift to use a tax-protected account, but also balance out with some after-tax ETFs so I am not too far one way or the other.

I am the same as @Brie Schmidt I have tried stocks and it is not my thing. On the other hand I LOVE real estate. Since we are required reserves we also invest in TSP. We put about 20% of my husband base salary toward this. This allows us to "build" other investment blocks while still working to our goal of an "real estate empire".

My husband and I invest in the stock market and real estate. We invest in dividend stocks and let the money from the dividends reinvest back into the stock. It's pretty passive for us. We don't watch it on a daily basis or anything like that. It's a long term hold and we probably won't touch it until we are well into retirement. 

We also have two buy and holds and plan to add more to our portfolio. I think we both feel better being a bit diversified, although the larger percentage of our investments will be in real estate. 

Warren Buffett doesn't diversify

It's my evening you should be a real estate entrepreneur versus A real estate investor

Real estate entrepreneur works in the field of solving problems with real estate oriented businesses

Looking for opportunities to solve problems and create a real estate creative solution can take some time to learn but thinking outside the box for solutions is the number one skill set for the real estate entrepreneur

Being a buy-and-hold real estate investor with 20% down conventional financing I think is serious limitations

My only diversification would be in my work retirement accounts.   I am a state of iowa public employee so I have IPERS which if it doesn't tank, pays out 70% of my three highest earning years once I retire.  

Other then that my main focus is real estate.   I just really don't understand the stock market well enough to make informed decisions.  

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Kudos,

Mary

If you do not know what you are doing you must diversify. 

If you are an expert in real estate your risk goes down and your returns go up. Why would you invest elsewhere?

Originally posted by @Ricardo S. :

Warren Buffett doesn't diversify

It is one company, but it covers so many sectors it is hard to say he has all his eggs in one basket.

His advice for those who don't have the time or interest to research stocks is basically use an S&P 500 index fund for the long-term.

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