Single family homes are usually the entry and exit point for most real estate investors. I exited after the housing recovery and am glad I did. After doing rehabs, I was stuck with property that I ended up renting instead of taking a loss. Management of SFRs is no picnic. It was not passive income, I had to put a lot of time into it because tenants are idiots. If you are a renter, you have little financial sense and an entitlement attitude. I ended up paying to distance myself from all of that. REITs only for me now.

Honestly, with a single day green slip I can make more income than I did in a month as a landlord on multiple properties. Yes it’s taxed and yes it takes up at least as much time but I’d rather do a day in DTW in snow and ice than handle tenants and their complete disrespect for property and inability to pay on time. Time is our most valuable commodity. Having managers and professionals deal with property issues took more out of my profits than any tax.

To each his own, but I’m much happier for it. As for the rehabs, the powder is dry for the next opportunity. If the housing market tanks there are always opportunities but now that the HGTV crowd is woke things have become interesting at best at auctions and on line. DYODD is the best advice out there. I’ve seen a few people screw up good investments because they buy first and research second.

Just some perspective. I think real estate can be a great investment but as an income it is neither stable nor passive. YMMV

i think the key to owning income properties is having a good property manager. I love mine and she does a ton of applicant screening to not get deadbeat renters.

Direct investment in real estate, especially single family residential (SFR) is not passive. If the numbers don't make sense with third party management, then the investment is probably not a good one. Self management is a good place to start, especially when wanting to build some "sweat equity" in the beginning. It takes a lot of time to find the right properties, but when you do the returns are great. SFR has gotten crowded and I haven't bought a rental home in a decade.

There are plenty of other examples outside of rental houses that scale much better than SFR. I just put that first on the list, because that is where most people start out. My best property is on a NNN lease backed up by a pseudo governmental entity. For those who aren't familiar NNN is net of insurance, taxes and common area maintenance or CAM. These expenses are estimated monthly and reconciled at the end of the year. Landlord responsibilities are typically "four walls and a roof". The tenant is typically responsible for the HVAC, plumbing, electrical, etc. once moved in. These type of income properties are much more passive than houses. The tenants (when vetted properly) are financially responsible, maintain the property and require little hand holding. Commercial tenants are nice, because they like to move in and be left alone. They generally don't have the emotionally needy, entitled mentality that some home and apartment renters have.

Most investors who start out in SFR get frustrated and quit over the first few tenant issues or hit a brick wall at the 10 loan limit. If you are taking the fix and flip approach it is an active business that probably pays less per hour than flying airplanes. I'd much rather fly a few trips than renovate a house. For rental properties, it is difficult to scale beyond several houses when heavily involved in the management and maintenance or the property. Growing your investments into a semi-passive income stream requires building a team of professionals along with a portfolio of properties. When analyzing new acquisitions, the first step is defining what the property management will look like, then building the financial analysis from there. It helps differentiate between making an investment and buying a job.

EXACTLY. This is a model that scales well. Now that you have the management figured out, you can spend your time finding investments that fit the model and add more properties as you find them. The best approach is starting with the management, then finding an investment that fits. Novices often buy a property first, then figure out the management.

You forgot:

5- move to a state that doesn't tax (steal) as much
6- quit voting for politicians that raise taxes
7- start a business, maybe pick up rental property for the deductions
8- max out tax-advantaged investment accounts

The vast majority of the things the government does it shouldn't be doing. It really only exists to protect our individual rights, not provide services. When it tries to provide services it fails miserably, including roads.


For the few things it must do, should be funded by user fees.



https://3.bp.blogspot.com/--7yVDxFdf...nn_diagram.jpg

Thanks for all that. I sit reserve regularly and plenty of time to learn about something new, and see if it meet my goals. Thanks, it's a nice list to start learning from.

I use a private highway quite a bit, it's only 40 cents a mile. Yikes.

I use toll roads (private highways) in DFW. They are efficient in getting built. But they do not charge me 40 cents a mile. They are less.

I made way more money than I did in 2017, and my taxes went way down!

My taxes went way down for four reasons:

-My wife make twice as much as I do
-We make good money (so I don't care what my marginal tax is)
-We didn't get hit with the AMT (Called the Awful Mean Tax for a reason)
-I’m a pilot (lost union expenses, uniform cleaning, and per diem differential are nothing compared to the AMT)

I’m obviously really annoyed with this GOP tax reform as it given me more money to waste on boats and horses.