All Forum Posts by: Brett S.

you'll find biggerpockets is biased to real estate and bogleheads is biased against real estate. Neither should surprise you. 

Im not a big lover of the stock market. That said I'm a numbers guy and ran the analysis multiple times. In terms of total return I see them equally good for my retirement with stocks better if you hold them in tax advantaged accounts.   However you need to have the fortitude not to sell when they are low.   Real estate forces you not to panic due to slow selling time and is more consistent. 

For me personally I max all tax advantaged space (401k, backdoor Roth IRA x2, megabackdoor Roth IRA, hsa).

The rest goes into real estate.  I've ended up about 50/50 in my net worth thus far. 

hate to be the voice of bad news here but I had a similar problem and the quotes (more than one) that I got were $15k to $20k just to replace the main (not anything else inside the house).

Luckily the inspector caught it and I was able to back out of the deal. 

I think the quote you got is pretty close to reality. 

it's all about team. My realtor does everything you note above. Actual day to day property management ("fix my toilet") is handled with an email to me from the tenant and an email to the plumber from me. 

 I've got enough houses to generate $20k gross per month, I work 60+ per week and I live overseas without a property manager. 

When I started in this business I was working 55 hours and going to night school for 20+ hours for my Mba. Also had no property manager. 

You never know what you can or can't do until you try. 

I'd be real careful getting excited and buying a mother place until you have a couple years behind you on that place.  Your cash flow should be negative to begin with (jsut taxes mortgage and insurance should eat 100% of rents) and any major repair will deplete your reserves in a hurry. On a single income it's just too much risk in my opinion. 

The deals will still be there when your finances are more secure.  Pay this one down and refi to a lower payment before you start looking for the next one. 

Good luck!

I wouldn't touch it for the same reason I would never invest in old money metro Detroit (grosses pointe). Still plenty of $1m+ (including the occasional $10m) but the demographics are terrible.  New money lives elsewhere. 

quite frankly I think you have your work cut out for you; people who want a hands off real estate investment buy reits and those that want hands on do it themselves.  And when most people finally get big enoguh they need a pm sevice, they have the economy of scale to engage service people directly as a primary client and get good service and cheap prices themselves. 

I think your target market is going to be out of towners and people wanting to retire from the biz but don't want to sell (which won't be many). Certainly you can take on headache properties from some but as a business owner / grower those are actually a "bad customer" to pick up.

For me property managers are simply too expensive for the service they provide. 

You also have competition: My realtor takes first months rent (and really on 25% of it because the rest goes to others) to get a tenant and provides all the showings, tenant screening, lease drafting, and marketing, and handles all the minor stuff that needs to happen (cleaning minor repairs, utilities, key changes, etc) between tenants.  When there is a problem, I get an email from the tenant and my realtor directs me to a contractor that she uses, the contract does the work and I send them a check via online bill pay.  

In other words my realtor provides all the services of a pm for one months rent (which I thinking s a fair price) while pm wants that and 10%. 

Back when I first came up in this business a pm only charged 10% (first months rent they didn't take). That was also an ok deal, but I prefer first months rent because sometimes tenants stay longer than a year. 

I actually broke out laughing when a pm recently told me he'd charge me both fees. 

Whichever pm starts marketing their service with rates dependent on effort vs rental amount and charges an all inclusive fee instead of a fee on top of the handyman fee will be the next big winner in this business. 

Personally I only invest in Detroit (suburbs). It's made me wealthy. I don't go near downtown but I know many that do, both commercial and sf and are successful. What's important is to be in the actual downtown, not one block farther. 

Also, there's a place called gross pointe which borders the east side of Detroit; cross 1 street and you go from burned out husks and grey concrete to green boulevards and $2m houses. 

In summary, Investing from afar is a bad idea in my opinion. 

It's as safe as anywhere else in the country if you know where not to get out of your car at night.  If you're in the wrong place at the wrong time you might as well be in the São Paulo slums, Caracas, or pretty much anywhere in Africa. 

But if you want safety, move to Asia. The USA is way more dangerous than pretty much all of Asia. 

I'd do it - I buy class A 9% - 11% properties with low debt all day long (well all career long anyway). I've thrived for 15 years and many haven't (though as jay says certainly there are two approaches to life). 

I'm planning on being able to retire from my day job (which I enjoy unlike many here and it pays well so I'm not in a rush) in he next 5-10 years so my glide path gets me completely out of debt by then. Nothing wrong with it at all. Note - if you're a educated / finance savvy investor, I recommend throwing cash on cash return out of your vocabulary. It is a function of how you finance an investment, not the investment itself, which should be your focus.   You can find utterly stinking piles of crap which have great cash on cash returns that look good but are bad investments. 

If you have multiple financing avenues, Find the best investment then find the best way to finance it.  One has little to Do with the other unless you have limited resources. 

I had the same situation and suggest you just ignore them.  In fact, you'll find the more wealthy you get, the more you'll stop talking about it, except in places like this and other forums with wealthy people (ie flyertalk, bogleheads).

That said, you can always do what I did and trade up to Class A properties; now they call me a "Landed Noble"