Rental properties seem worse than traditional investments
As an excited newbie, I have very little experience in real estate investing so at a meeting with my financial planner I asked about house hacking as a busy professional and he stated it would be a bad idea. This took me down from cloud 9 real estate guru excitement. It made me really face the fact that maybe a fiduciary fee-only financial planner with 30 years of experience has some wisdom. So I thought a lot, listened to tons of BP podcasts, read forum posts, analyzed several deals, and thought of worst case and best case scenarios. It seems that for someone who doesn't want to work an additional job that real estate investing is a bad idea and here is why...
I think that in order to be a successful real estate investor you have to take it on as at least a part-time job putting in 10-20 hours a week to maintain an informational advantage and run the day to day of the business. It is absolutely a business and is not hands off like other investments hence the higher returns. We cannot predict life or the market and when you factor in time invested and the risk of the entire cash flow of a property being wiped out overnight with the wrong tenant or just a bad year for the property, it makes it much less attractive. Some would say stocks are risky as well but if you look at things like index funds over 20 to 30 years; a 7-10% annual return for sitting on your couch certainly has me second guessing how much I would like to pour into real estate investing.
In conclusion it seems that real esate investing is a great way to become financially free if you want to quit your day job with a lot of leg work (aka a second career), or a great idea for someone who is business savy already and has the capital to start an additional business. For a busy medical professional like myself, I am certainly having second thoughts about going "all in." The gurus and those who are successful certainly have done it but there are many more that have failed, or over the long run have not beat traditional hands off investments and spent a significant amount of time doing so. If anyone has studies on the success rates of the average buy and hold investor I am curious.
PS: I still plan on trying to find a househack as a short term means to reduce my living expenses. I am interested in real estate investing as a means to portfolio diversification. It's all about the deal! Thoughts and comments are appreciated!