May 17, 2021
I want to invest in real estate but I want to keep my day job. How can I manage it all? Today I have answers for you.
Passive income is (or should be) our goal. If you are starting with a big pile of money and/or good credit, you can skip flipping and go straight to rentals. Make money in your sleep and enjoy the tax advantages that come from owning income properties. But how do you go about it? What do you buy? What should the numbers look like? How do you manage them? When and how do you hire management? Get answers to these and all your questions.
Kim Kesterke, author of “The W2 Landlord” course joins me for a discussion of the ins and outs of owning single family rentals.
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News and Resources:
- https://www.marketwatch.com/story/5-things-to-know-about-investing-in-single-family-rental-homes-2018-05-29
- Targeted to women, but good advice for all. https://womenwhomoney.com/investing-single-family-rentals/
- Written for physicians, but pretty thorough for anyone. https://financialresidency.com/how-to-evaluate-a-single-family-house-for-a-buy-and-hold-rental-investment/
- One of the best set of arguments in favor of single family over multi-family investments I’ve seen. Plus - he’s a fan of John Shaub, as I am. https://www.coachcarson.com/why-single-family-houses-are-your-best-investments/
- This author makes the argument but confuses cap rate with return on cash, which are very different. A 5% cap rate might still yield double digit returns on cash. https://www.rentfaxpro.com/why-i-invest-in-single-family-homes-over-multifamily/
- This article makes a good cast for remote rental investing and does a nice job of explaining the benefits of leverage. https://learn.roofstock.com/blog/single-family-rental
- A few of the “pros” for single family here represent an attempt to manufacture logical support for something they are selling - namely turn-key rentals. That doesn’t make them wrong - but perhaps overstated. https://learn.roofstock.com/blog/single-family-vs-multi-family-rental-investments
- Good explanation of the concept of tenant “stickiness”. https://investorjunkie.com/real-estate/single-family-rental-homes/
- This is a balanced pros and cons comparison of single-family and multi-family investments written by someone who is NOT selling one or the other. https://passiveincomemd.com/is-it-better-to-invest-in-single-family-rentals-or-apartment-buildings/
Mindset Moment:
No one can do everything all the time every day. I find that my life has been the sum of several phases. Some of them are major phases - like this whole real estate thing. Some of them are minor. For example, after the pandemic started, we started buying deli meats and all the trimmings needed to make sandwiches for lunch at home - since that’s where I was. I really got into the art of making a great sandwich - for a couple of months. It was healthier probably than what I had been eating and I enjoyed it but I stopped. I don’t know why and I’ve given zero thought to it other than this moment of reflection. Why? Because it’s not important.
You’re going through a phase in your life right now too. Probably several. One or two big ones and several minor ones. Perhaps you started the year in a “let’s get organized” phase and, well, it’s essentially over. Still need to get organized? Ok? Relax and try again. Don’t waste energy beating yourself up for what is not a natural ability. Just keep plugging away.
Do you have a lot of plates spinning and every day seems like a battle just to keep them all going? Ok. Relax. Re-evaluate whether any of those activities could just cease without damaging you, your credibility, your income, or your relationships. If not, just keep plugging away.
You’ll get through this phase. And perhaps this one is preparing you in some way, perhaps in combination with other past experiences for what is next. Embrace the phases. Enjoy the journey.
Questions from Listeners:
- Santonio, Oklahoma City, OK, “I’m in the military and want to own rental houses, but I move around a lot. I don’t want to end up with houses scattered all across the country do I? That would seem like a management nightmare.”
- Peter, Colorado Springs, CO, “Would you explain the difference between cap rate and cash on cash return?”
Motivational Quote:
“When you invest, you are buying a day that you don’t have to work.”
Aya Laraya