All Forum Posts by: Jim Truman

@John Bradley I can imagine dedicating around 100k to real estate. Ultimately, my goal with real estate as opposed to my other investments, is to create another income stream in retirement by paying of the property and receiving the monthly income.

I guess my fundamental question is, are investments through something like fundrise basically the equivalent of purchasing real estate in a group? I think you call this syndicates. Meaning, with fundrise, aren't I basically joining a partnership with other investors to invest in specific properties? We share the cash flow, profits, and losses? Our expenses are basically paying fundrise to find, purchase, refurbish, and manage the property (and pay the executives).  

If I understand this correctly, it is different from a REIT where I just buy stock in a company that invests in real estate.

I live in the DC area so any property I purchase will be out of state and require management. So what's the difference between buying a house and paying a management company vs investing in a portfolio of properties with a group of other investors through fundrise?

-I give up some control

-I might not have tax benefits

-I don't have the possibility of leverage. But I imagine Fundrise does purchase on leverage?

Originally posted by @Account Closed:

All these platforms will go down hard in a little downturn.

 Deleted...duplicate. 

Originally posted by @Account Closed:

All these platforms will go down hard in a downturn.

 Can you explain this? If property values or rents go down won't this hurt individually owned property too?

Greetings,

I am exploring the possibility of getting started in real estate investing. My wife and I really don't have an interest in real estate but looking at the numbers, it seems like something we should pursue. 

During my research I've come across companies such as Fundrise. I'm wondering if this is a good way to receive some of the benefits of real estate investing, without the hassle of owning an actual property? I researched a bit on the forums but I'm not finding a really great comparison. What are the downsides of investing in real estate through a company like fundrise vs buying my own SFH?

From what I can tell so far, some possibilities are below, but I might not be correct....

-I don't get the tax advantages of owning a property.

-I don't have the advantage of leverage. 

Other than these what am I missing? It seems like I get shared ownership in a diverse portfolio of multiple properties. The rent/cash flow is returned to us as dividends. When the property is sold, any profits are returned to us as increased share values.

For someone who doesn't really want to deal with the full scope of owning properties, but sees real estate as a good investment, is something like fundrise somewhat comparable to actually owning property?

Thanks.

@Josh Thames thanks Josh. You are right about commutes. And it's even further than long commutes within MD. I work with guys who drive in from Pennsylvania and Delaware. Speaking of Delaware, with the property tax benefits there I wonder if it's worth looking there? I would definitely prefer something local. The only reason I'm considering out of state is because homes are so much cheaper. In order to not repeat my 2008 experience I want a property with such low costs that I can easily absorb any problems with it. Do you think the MD market will appreciate much? At least around DC it seems like we have to be near the top of a bubble. Maybe I'll start a separate MD conversation with you so I don't derail this thread. I don't know your financial situation so MD real estate may not be too expensive for you but if you had the choice would you prefer an expensive MD condo that you can keep your eyes on an manage yourself but maybe makes you a little nervous about paying the mortgage and expenses if it's vacant? Or a cheap condo in a growing market that you can easily cover the expenses if needed and the numbers still work even with a PM? Thanks, Josh

@Josh Thames Are you looking for condos in our area or are you looking out of state? I would much prefer one here locally where I can keep my eye on it and manage it myself. But I'm attracted to the dirt cheap prices in other markets and also the possibility of increasing demand in areas like Augusta with NSA Georgia and the tech hub that's growing there.

I'm sure I can find a relatively cheap unit somewhere in the DMV but I don't think it'll be in a hot area.  

Thanks all for the tips. I'm definitely not rushing into this. I'm going to continue to research the best investments for us (market vs real estate) and if we do choose to purchase some real estate, we'll study long and hard the best location and property for us. 

This may be silly, but when comparing a SFH to a condo, is it reasonable to consider the HOA fees equivalent to some of the money you'd have to expend on a SFH for maintenance? For example, if the HOA maintains the outside of the building, replacing the roof, cleaning the gutters, maintaining the porches, etc, doesn't this offset some of what I'd have to pay to maintain a SFH? I understand the HOA can be significantly raised to cover a large expense but I suppose a large expense related to a SFH can also arise that throws off my budget. @Dave Demarinis maybe this is what you were explaining in your post.

Let's assume I can find a condo that hits all the numbers and provides some cash flow. This money will be set aside for future CAPEX. It's in an area that should appreciate. I guess what I'm asking is, is there any reason not to do this? What's the worst that can happen?

@David H. Certainly current cash flow and long term appreciation will be the best option. And you're right a small SFH can probably be found with better numbers than a condo. I'm just intimidated by the idea of maintaining a home, yard, etc vs a condo.

@Michael S. Thanks. I was thinking Augusta due to all the tech development there. But I travelled to Huntsville on a business trip this week and was pleasantly surprised by the restaurants, breweries and development in the city.

@David H. I don't know. That's why I'm bringing this up here. Even without any cash flow after expenses, isn't it still a good investment if someone else pays for an appreciating asset that I own? Once I pay off the mortgage it'll have significant cash flow. The other option is I pay cash for the condo but it probably makes more sense to have a mortgage.