When Should You Start Investing in Real Estate?

When Should You Start Investing in Real Estate?

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[levioneill]

Pretty spot on advice. I've got two doubles and an air bnb and they cost me quite a bit of money from time to time. Started investing in real estate about 5 years after doing the basics. Prepare for head aches in real estate but enjoy the money.

[desiv]

Yeah, we live in a vacation town/neighborhood. A lot of vacation rentals. And a bunch of those get sold every few years. People frequently buy these properties thinking "This is great, I can rent it out enough to cover my mortgage!!!" And then a few years later, they are selling. They don't realize how much the expenses are and they overestimate how often they will actually be able to rent it...
That's not all of them. There are successful vacation rentals around, but those people have done their research.
I think too many people, especially the last 10 years or so, just think these places rent themselves out year round and are money machines... They are an investment; they require work/money; they won't rent year round (not around here...). But managed properly, they can do pretty well...

[JacqueCRISCOsd]

I did it early. But the property came to me off market. I wasn’t even looking.

What I thought would be a $30k renovation, was $90k. And the property is still a home run…
But if I couldn’t find that $60k I would have been screwed…. Now it’s rented, and I’m chillin.

I generally agree with the advice. Build up a base, you’ll need cash to burn. But when a good deal smacks you in the face, it may be worth the risk.

[InvestingBookSummaries]

Leverage is the best worst thing about real estate. The same thing that charges up returns is the same thing that bankrupts people. Be flush with cash when it gets ugly.

[chrisaustralianfinance]

100% agree. I see alot of people in Austealia not Maxing super accounts (tax advantaged) and without a dime in the stockmarket rushing into real estate for the golden ticket.

Our market has pretty much been appreciating the last 30 years but we're very much at the point where 25% of loans are lending more than 6 times the income of the individual. All capital cities outer suburb houses are at least 5 times the national average income and qp times the median minimum. Look at Melbourne or Sydney and it doubles. Building up the base of stock and a little bit of bonds will give cash flow for when the market eventually slumps and I think alot of people particularly in the Australian market are way too exposed with not enough income to support real estate.

On top of this not pushing your positive cash flow assets like stock leaves them at the whim or their employment. Dangerous position to be in.

[borisgurevich]

Exactly. Lots of time and money with an uncertain pay off.

[hockeyfreak]

Didn't know naked was pronounced "neck-ed"... LOL

[bryan__m]

The advice is great as always but I'm hitting "play again" to watch Bo cracking up so hard at Brian's acronym.

[kona]

I've got the mentioned 3 buckets plus a rental duplex that will be paid off in about 8 years just in time for retirement. :)

[nicholasmartinez]

If there is ever a time when the stock market is hitting all time highs at the same time housing is stagnant or goes down - I will be selling taxable account funds to buy some real estate. It may never happen but I’m patient.

[AaBbCcDdEeF]

Bo should stop doing impressions of his clients 😂

[Dud-iniu]

Being a successful REI is not about having deep enough pockets, it is about having an abundance of financial literacy and understanding of both traditional and creative REI. Corporate buyers like Redfin and Zillow are proof that it doesn't matter how much money you have if you don't know what you are doing. Those two corporate buyers purchased over $1 billion in real estate in 2020 and they both lost money. The key to success in real estate is to be an expert in the field not waiting for a time when you have enough money.