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Thats a hard question for me to answer since I do my own. I feel like anyone really good isn't going to be working with lower net worth people. Maybe someone else will have a better outlook and some suggestions.Originally Posted by Erni
If you're looking for real estate, that I can point you in a direction.
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Just out of curiosity what kind of annual percentage gains is he averaging for you?
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That's one of the reasons I like Joshua Sheets from the Radical Personal Finance podcast. He often talks about how financial planners naturally target people with high net worth, when the people that he wanted to help (and have just as much use for a financial planner) are those who are just starting to build net worth.
Ill have to check him out.
For a lot of people, having their life savings in a 401k in the market = no big deal. Even though when it tanks, you could literally wake up and be worth half as much.
Trying to talk to them about having the same life savings into a real estate investment and they freak out. Even though the property is insured and the odds it will be worthless when you wake up one day is very low. The return can also be better.
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Every time I think that real estate sounds like a good idea, I meet someone who is renting properties and they are miserable and wish they never got involved. My neighbor has several properties and he seems like he's barely treading water on them . . . and the mental drain of dealing with idiots, people who trash the properties, contractors who screw him, etc really wears on him. I dunno . . . but I've met far more people who are landlords and hate it than the ones who are thriving with it.
We have talked a few times about considering buying property wherever the kids end up going to college. Rent it to them and then hold onto it for a bit after. We'll see.
I feel having a larger unit property makes things easier. BUT, having some trusted people to work on it is a must.
Also, most people barely fix stuff to save money, while really costing them money in the long run. Toilet repairs can add up to be more expensive than just putting a new one in that has a better flush rating and uses less water. Stuff like that adds up.
Trying to time when a hot water heater is going to finally die, instead of fixing it on their own schedule before it happens. When they go, its in the middle of the night, in an upstairs unit, while leaking into the closet underneath it for a few months causing damage to the hvac unit in the other unit.
Spend the money up front to fix the things that can cause an emergency call that costs emergency rates and emergency headaches.
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A while ago I was trying to think of the worst possible scenario with real estate, and I think I determined that meth use condemning the property, or an act of war or riot (something not covered by insurance) would be the worst. However, I recently heard an interview with a lady on RPF where her and her husband over leveraged themselves on real estate and personally guarantying loans in 2007. When the market crashed in '08 people were giving properties back to them that weren't worth near what was owed. They declared bankruptcy and were divorced by 2009.
Ramsker, no matter what topic you are interested in, you can find horror stories about it. Just keep the context of the conversation in mind and who you're talking with. It's the same thing as watching Youtube videos of bad cops or exploding Glocks. Yes that stuff happens, and when it does everyone talks about it and makes a big deal, but no one is watching YouTube videos of the thousands of times police are professional, Glocks aren't exploding, and rental properties providing hundreds of dollars of cash flow each month for years and years with no problems. I'm often on the fence about rental properties myself, but then I remember how many rentals my dad has (3 currently) that I don't hear about for years at a time. My dad isn't some property investing wizard or anything special, but he's had at least 5 rentals (that I know of) that have mostly not had any issues at all. Not to mention that there are a lot of ways to be involved in "real estate" that don't involve tenants at all.
Last edited by Irving; 02-22-2017 at 00:36.
Agreed. We lucked into a great property manager that handled all the little stuff (lock-outs, clogged toilets, boarding up the door when the police kicked it down, etc) with no issue. When someone would move out (or be evicted) we'd come in and rehab the unit and make sure it was ready for the next tenant. We had the mind set to always improve the property when we could rather than be slum lords (new gutters, new windows each time someone moved, new boiler, new paint in common area, etc). We only held the property for a year and didn't get to experience the full benefit of improving the property (we planned to hold for five years at the start), but even with all the extra money we spent making improvements in anticipation of reduced costs in the future, we were still able to cash flow every month and make money on the property.
Just to touch on over leveraging, look at the worst historical vacancy rate, make sure you can pay the property's bills and your personal bills if it gets worse than that. Im actually very extreme when it comes to estimating worse case scenarios and if i will be okay or not if it happens. If your property will make you an extra $50k/year at full occupancy, and you live at that or beyond your means, your screwed when you only get $25k / year.
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I only brought that up to point out that one can screw up any sort of investing/business/financial strategy. Just do as much research as you can handle before jumping in with both feet. Your Money Or Your Life, right?
"There are no finger prints under water."
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