Is investing in real estate less time-consuming than stocks?

Discussion in 'Economics' started by helpme_please, Dec 2, 2017.

  1. Calling bullshit on this. You can’t legally execute a new lease without a finalized eviction.
    #21     Dec 3, 2017
    ironchef and Handle123 like this.
  2. Handle123


    And many states this practice is illegal and you can be sued for what is left for remaining of the lease. In other words they have to find something else and you be paying for it, pain and suffering. You can't provide the stooges a key as it is against the law on fake lease and they would tell police you put them up to it to lower their jail time and increase yours.

    I started very young at real estate as an Uncle showed me the ropes where the money was and how to get rid of troubled tenants, offer to pay tenants $500 if they leave it intact, I never had tenants not pay on time as lease said rent was $800 but if you paid by the first you receive a $200 discount. Leases always said tenant not allowed to fix anything and if plumbing problem the expense was theirs by licensed plumber. I went different route, all homes bought at discounts in lower middle and higher low income areas and I only rented to HUD tenants, they destroy anything and government pays plus they pay most of the rent. Every three years I would make some type of improvements so tenants knew they not just an address. You learn much about first twenty houses on fixing everything, you stop buying one's of anything and buy 50s, at some point you have to hire maintenance staff and become a broker. At the end I was buying 4-6 houses a year, it becomes a business like anything else. You put 15% down and tenants pay other 85% and you get capital appreciation, had to think this be like your huge nest egg when you retire. When you start early, buying $20k houses then are now worth $120k in 30 years. Doesn't sound like much, but when you buy a ton of them, really adds up. Never tell tenants you are the owners, I always said I managed units, less of people asking for unrealistic upgrades.
    #22     Dec 3, 2017
    ironchef, Sprout and Clubber Lang like this.
  3. toc


    May be some viability in this strategy but it is also taking "leverage" to very high levels. RE tanks or economy goes into slowdown and you are talking several months of vacant properties.

    Also in real estate ownership one does not know the "invisible expenses" that are incurred while running the ops. Worst invisible expense is the "mental stress" (bad tenants, bad property needing repairs, property management issues like corrupt condo management etc.) which creates inefficiencies in other areas of life like main profession, family life etc.

    Would prefer REITs invested via tax free accounts.
    #23     Dec 3, 2017
  4. wrbtrader


    Investing in real estate is a big area. There's more areas in real estate than just owning an apartment building that requires dealing with tenants and managers....rental properties.

    Some go the route of real estate investment groups, real estate traders (lots of TV shows about this) and there's many other areas of investing in real estate.

    Most of the people I know that's involved in investing in real estate...they sort'uv got involved not intentional (e.g., land, property).

    #24     Dec 3, 2017
  5. Red states? No. Weather, wealth, and work, red states have none. They get tornadoes and hail and hurricanes. Fire losses are more expensive to insure because the building materials are worth relatively less when they're built into a building. Heat and humidity bring mold and pests. Employment is more itinerant and if you're tenants' pay stops, so you does rent (states like TX and ND have high paying energy jobs that prop up income stats, but these are boom/bust jobs).
    HUD tenants? No way!

    Find a hipster on a fixie and follow him to your next real estate investment.

    Buy the big blue metros. Higher rents means better tenants. Higher per sq ft values means lower maintenance costs and smaller insurance claims. If you shell out for location, your revenue is based on property values, while you maintenance and costs are based on building and lot size. The only thing you give up here is diversification, but insurance mitigates the worst of that.

    Real estate is amazing. The cost of a property manager is a drop in the bucket (I insure a ton of property owners, and the ones using property manages more than cover the commission on increased rent). You get both income and appreciation. Had I been renting it out from when I bought my first property, it would have outpaced my investing account (which outpaced IRA and 401(k) mutual fund accounts handily). Also, you get tomorrow's value at yesterday's prices in mortgages (never mind the awesome deduction).

    I'm probably bias though, because I bought my first in 2009 in Denver. Had I bought even a year ago, though, 10% would still be rent less expenses here, with appreciation above that.
    #25     Dec 3, 2017
    vanzandt and sle like this.
  6. newwurldmn


    I suspect that a lot fewer people are earning on real estate than they claim to be.
    #26     Dec 3, 2017
    truetype likes this.
  7. sle


    I have gone through these a little while ago. There are pros and cons, obviously. If you own physical real estate, on one hand you are not marked to market, but on the other hand you are completely illiquid. You get nice tax advantages but your transaction costs are from 8 to 10 percent, which is a pretty high bogey to beat. Also, you end up putting a fair amount of money into a single asset with it's own idiosyncratic issues that you might not know in advance - real estate taxes might go up, house might have hidden termite damage, there might be a flood or a hurricane etc.

    I think that real correlation of real estate prices with the stock market is also high, as evidenced by the forced sales during the market down-turns. It's harder to observe since real estate more or less ceases to trade when the times turn bad. RE is very resilient in specific areas, but the rental yields very low. My apartment, for example, at the current valuation would fetch a yield of 2.1%.

    That's true about REITs too - the only difference that your yields are more or less static and instead you will see appreciation in the asset itself.

    Yes, that's for sure. Unfortunately, it sounds like some of these are going away now, no?
    #27     Dec 3, 2017
  8. DTB2


    Call BS all you want. I KNOW what I do from time to time.
    #28     Dec 3, 2017
  9. DTB2


    Was this between your stints as a trucker and master trader?

    Another wannabe story.
    #29     Dec 3, 2017
  10. comagnum


    Anyone dumb enough to break the laws and remove tenants illegally with thuggery are guaranteed to lose their ass in court & could end up in jail, at least in the U.S.A..

    I once had a drug binging land lord in foreclosure threaten to have his Armenian friends forcefully remove tenants with baseball bats while they were sleeping which was recorded on multiple phone calls - dumb move! All the tenants were working professionals paid up & on a lease. We all had attorneys. The land lord was thrown in jail for terrorist threatening & was forced to pay $10,000 to each tenant which he did.
    Last edited: Dec 3, 2017
    #30     Dec 3, 2017