I invest in real estate. I have currently purchased 8 units that I rent out.
This is something I wanted to do for a long time, but never made it happen.
You hear a lot of horror stories about being a landlord and that’s not a part of real estate investing that I was really interested in doing. Dealing with tenant issues was going to be a hurdle.
Of course you can pay for a property manager, but there are plenty of horror stories about those as well, not to mention the extra cost.
Additionally, I really don’t enjoy shopping for houses/duplexes/fourplexes. Some people really enjoy that, but I kind of hate it.
So, you might be asking yourself why I even wanted to do it. Well, it’s something I wanted to do ever since reading Rich Dad Poor Dad. While I don’t like the one side of it, I really like analyzing and working the financial side of it.
There are a lot of reasons to own real estate. There are great tax advantages. Appreciation can be amazing. You can get monthly cash flow. And, your tenants will pay for it.
Most wealthy people own a fair amount of real estate, and they are another way to diversify your portfolio.
It gives you the power of leverage. You can buy an asset by only putting a percentage down. If you buy a $500k house with a $100k down payment and the value of that house goes up 10%, your investment has actually gone up 50%. You make 10% on the whole $500k, so $50k. The actual investment you have made is $100k so $50k is a 50% increase on your money. Not bad.
So, fortunately for me, I have a wife who enjoys the actual real estate shopping part of it and is great at handling the tenant side of it. She fills in the holes that I wasn’t interested in doing.
We manage all of our properties right now. This probably wont continue for long. As our property count has grown so have the issues. So, while she may be good at it managing them, and it saves us a fair amount of money, life is just better when you aren’t getting calls from tenants complaining about plumbing issues.
I do think that managing them for the time we have has definitely been worth it though. It really helps you understand the business.
Every month our tenants pay down the mortgages on the properties and we are left with extra cash flow. The properties are appreciating nicely and we’re definitely glad we’ve invested in them.
