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it is not that real estate is full of lucrative profits that make people very wealthy .
Agreed, my point was simply that it’s still the most practical way to get a 2nd income or build wealth, even if you don’t succeed at real estate investing.
1 regular 9 to 5 job to save for retirement, while having a spouse and kids, simply isn’t going to cut it for most folks. They have to start investing in other things to build up that nest egg.
it is not that real estate is full of lucrative profits that make people very wealthy .
those who get very wealthy from real estate like my partner generally have a real estate business . it is not something they dabble in . they don't just buy a rental ,cross their fingers and hope it goes up along with rents . it is a full blown business with deals and situations most will never be privy to . other investing like stocks are generally passive investing.
passive investing is where we have our money work for us while we work for our money doing other things .
I like to think we make deals happen... most of the property I bought never hit the market or if on the MLS it had problems that eliminated most potential buyers.
The commercial stuff is mostly projects I was part of the development process... the Public Storage required a zoning change which was thought impossible but we controlled land the city wanted for a park... so we had leverage...
The best create their opportunities... one aspect I really love about Real Estate is the negotiations... crafting the offer and knowing your price point to be viable.
those who get very wealthy from real estate like my partner generally have a real estate business . it is not something they dabble in . they don't just buy a rental ,cross their fingers and hope it goes up along with rents . it is a full blown business with deals and situations most will never be privy to . other investing like stocks are generally passive investing.
And that's really the crux of it.
American culture extols business, and personal involvement in business. Making money as passive participant in another's business is regarded dimly; it is culturally suspect. Well, most people - the ones with regular jobs, as employees - would be sorely strained to say open a restaurant, or a landscaping business, in addition to their regular jobs. But it is regarded as being entirely accessible and reasonable to do what amounts to opening a real-estate business, in the sense of becoming a landlord.
Contrast that with buying stock index funds (or even following a newsletter); this is widely regarded as being risky, and perhaps even a bit parasitic, because one profits not from personal sweat-equity, but from the management-decisions of others; or, more cynically, in managers exploiting the labor of other workers.
Quote:
Originally Posted by Rocko20
Agreed, my point was simply that it’s still the most practical way to get a 2nd income or build wealth, even if you don’t succeed at real estate investing.
1 regular 9 to 5 job to save for retirement, while having a spouse and kids, simply isn’t going to cut it for most folks. They have to start investing in other things to build up that nest egg.
There is no argument, that merely saving money - say, in a bank account - saved from one's 9-to-5 job, is woefully inadequate for building any sort of affluence, let alone wealth. The argument is about cultural veneration for one or another approach to investing, where we take the saved-money, and do something productive with it. Where some of us would argue, is that real-estate investing is emphatically NOT "the most practical way" for most people, because most people lack the skill or the perspicacity. Such lacking is not a problem in broadbased equity investing, but it is a problem in real-estate. That's the whole argument.
I just lost my interest in being a landlord. Yeah I made money but the PITA wasn't worth it. I'll gladly accept less profit in an investment that doesn't eat my time. If nothing else, maybe T-bills, CDs, or that ilk. Try to stay ahead of inflation. Better than dealing with lame tenants.
One of my landlord buddies just has the knack for it; I don't. (He's rich.) Another buddy and his brother have owned a couple apartment buildings in W. Hollywood for couple decades, making enough for professional property management, both brothers are rich.
I just lost my willingness to deal with tenants, and was not making enough profit to hire professional management.
Nothing wrong with that... it does take a certain temperament and keeping your eye on the prize which can get really complicated with long distance management.
My shift has been out of residential because of the SF Bay Area political climate and specifically Oakland where each election has the potential up turn the tables...
Triple Net has been my safe haven for about 20 years and the developments have performed very well... not to say that there were not cash calls in 2009-10 that were very substantial...
If you have the fundamentals right and time... it is a good position.
Many had given up on Oakland... wise people said I was a fool for investing in property no one wants... me, not knowing any better said people still need to live somewhere... I grew up here and geographically Oakland has the ideal location and climate...
Agreed, my point was simply that it’s still the most practical way to get a 2nd income or build wealth, even if you don’t succeed at real estate investing.
1 regular 9 to 5 job to save for retirement, while having a spouse and kids, simply isn’t going to cut it for most folks. They have to start investing in other things to build up that nest egg.
It can be impossible unless both spouses are on the same page...
This is why I see a lot of single investors starting out...
One of my friends sold everything... he married and his wife laid down the law and said things to tenants you simply cannot say...
One tenant called to say she got up and noticed water on the kitchen floor... it was 1:30 in the morning and he said he would be right over... his wife grab the phone and said do you know what time it is... NEVER call my number again!!!
Then she told her husband whatever it is will have to wait... you are not a plumber.
He arrived and found the water heater leaking... turned off the supply to the heater and started mopping up with his wet/dry vac... and set up fans with windows open.
He thanked the tenant profusely for calling and apologized for his wife... by 10 am the heater had been replaced and he gave his tenant a gift certificate for dinner out for the inconvenience...
Being a Housing Provider is a very highly regulated business here... tenants have many rights and as the business owner the onus is on you to know all of them...
Yes, but most of us will never become as wealthy as you mentioned no matter what we are doing. The goal is to get enough money to retire on and live comfortably.
You can certainly work your whole life and probably put money aside for retirement over the life of your career.
Real estate even if not on a large scale as you speak can still add to that or even accelerate it by a whole lot.
My acquaintances could have continued working their jobs and did nothing in real estate and worked for another 20 to 30 years and retired with their nest egg. They chose to work with real estate while still working their jobs and within 5 years were all able to be financially free and quit their jobs. They have the cash flow they would have had if not more now instead of waiting 20 to 30 years and are able to enjoy it at a younger age.
No one I know except one person is privy to special real estate deals. All of them started with a single rental and worked up from there. As time goes on you start to make connections and start to get access to things most of us aren't even aware of. I know a few younger people who now own multiple apartment complexes, but they started out with just a single house as a rental.
Imho it's no different that putting in the extra time to get an advanced degree to reap the rewards of a better paying job.
I have met many millionaire RE investors through biggerpockets and reached the $1M in equity mark myself. None of us had special access to exclusive deals, just short sales, foreclosures and regular sales all listed on the MLS. Of course it does take work and you have to do your due diligence.
Quote:
Originally Posted by mathjak107
my market investments blew the doors off our conventional real estate investing , which is based on collecting rent and appreciation here in queens .
but the special situation stuff blew away the equity investing . but that was not a typical real estate investment , this was a business and it ventured in to the pool the pro's play in .
I just found a couple random listing and checked the numbers,
It's easy to see why one would have that view. $900 monthly fees, ouch! Very little sweat equity opportunity in those little units, you don't get as good of financing, pro tenant laws, co-op board bureaucracy, pretty low rent relative to value, and so on. I would take the market any day over those deals, even if I could buy those at a 10% discount.
The co-op maintenance fees may include a building mortgage . If the building has no mortgage than the equity the building holds would require you to take bigger personal mortgage and the maintainance would be less .
The fees in many co-ops are a bargain .they include taxes ,heat ,maintaince and in some electric . In some cases it includes a portion of your mortgage held by the buildings bank.
I have been dealing with co-op apartments since 1987 . We lived in two of them at times.
When we depreciate our rentals our cost basis is actually what we paid plus the portion of equity outstanding in the building mortgage .
This was done with good reason. In order to convert to co-op you need a lot of insiders to buy .
Many insiders were older or were renters because they did not make a lot of money .
By dividing up the apartments price and leaving a portion of the apartment value with the buildings bank it lessened the amount of skin the tenants bank had at risk so it was easier to get a mortgage.
The tenants bank was more comfortable having less at risk.
Our first co-op in kew garden hills queens we bought as an insider for 23k back in the 1980's . Outsiders paid 47k . We sold it for over 100k a few years later. Today I think they are around 300k.
My ex is living in a co-op we bought in 1987 in kew gardens . We paid 75k back then . Today she lives there for 575 a month in maintance . If she was renting it rents for 2k a month
Last edited by mathjak107; 10-21-2018 at 02:29 PM..
Several of my Bay Area friends moved to New York and built lives... they are New Yorkers.
One is very accomplished and many might know his name... he wanted to buy a Co-Op and was denied... it was a cash purchase and for his residence.
It was a process that didn't come to fruition... one of the residents, a friend of his said it was the entertainment tie and being a single that did him in... not money, credit, criminal check, etc... he is very dedicated and brilliant.
Just sounded strange to me to my other New York friend who is on his Co-Op board said it is no joke...
some manahattan co-ops can be tough to get approved . but in all the years we have been dealing with co-ops we have never had a board issue . all our kids owned co-ops as their first venture in to owning.
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