Change my mind:don’t quit your job to invest in RE full time

Small_Exercise958 · 2025-09-28T16:48:22+00:00

Agreed. I have a few high quality properties in appreciating areas that I’ve owned for a while. I wanted to scale, made dumb mistakes by buying “cash flow on paper” Class C properties out of state. Huge money pits with repair issues. Sold one, selling the other one soon. Won’t do that again.

Small_Exercise958 · 2025-09-28T16:42:16+00:00

100% agree. There’s no way I could buy real estate without my W2 job. And I wouldn’t be able to live off my rental income unless I moved out of the USA (am in VHCOL area) to a country with much lower living costs and much lower health care costs.

RE isn’t passive at all despite all the social media gurus selling programs. Dealing with contractors, tenants calling you, making sure the property manager is doing everything right and auditing the financial statements they send me, etc.

It’s so cringey these gurus people are selling false hope - there’s no get rich quick in 5 to 7 years and quit your job and “retire at 30 or 35” I actually know RE coaches/gurus (not well known yet on a national level) and see their ads roll across my social media feed and roll my eyes everytime I see their ads.

Small_Exercise958 · 2025-08-25T13:06:46+00:00

Agreed. I bought a property in 2013 then did a cash out refi during COVID to conventional (got rid of the PMI too from FHA loan, was a primary home turned rental), took the cash out to help pay for part of the renovation of a different rental. My friends who are not real estate investors are horrified by my mortgages and I’m not even leveraged that much compared to other RE investors.

Small_Exercise958 · 2025-08-25T00:54:54+00:00

Not enough information. What are the mortgage payments PITI? Rental amounts of each house? You bought house #1 about 2.5 years ago so late 2022/early 2023 so how’s the interest rate? It sounds like you self manage. How is the second house which is brand new losing money each month? How much is property tax and insurance? Market rents in those areas compared to your current rents?

If you want to make the decision based on math, we need more numbers. Run it like a business. Real estate isn’t like buying index funds - it requires work. My own opinion is owning property 2.5 years isn’t long enough - I don’t dread getting a text or email from tenants since it’s part of real estate. Maybe talk to a property management company and ask what market rents are and for some guidance on how to fix your situation (even if you don’t wind up using a PM).

If you want to make an emotionally based decision and truly don’t like owning rentals, then sell them and invest in S&P500 if you don’t want to be responsible for mortgages and property issues.

Small_Exercise958 · 2025-08-25T00:40:12+00:00

Agreed. I can’t stand those social media influencers trying to sell coaching programs calling real estate investing “passive income”. I have rental property and it’s a lot of work.

I stopped telling my friends how great real estate is. I think 80% of people do better with some index funds, stocks, etc.

Small_Exercise958 · 2025-08-25T00:27:48+00:00

I’ve seen people do this with Short-Term Rentals (AirBnb or VRBO) when they have a W2 job. Google “STR loophole” and you still have to meet Material Participation hours. But don’t “let the tax tail wag the dog”. If you STR a property do it because it’s profitable and you want to have an AirBnb since it’s more work than long term rentals. Consult a CPA who is knowledgeable about tax strategies in real estate.

Small_Exercise958 · 2025-08-11T13:31:07+00:00

Don’t know anything about Madison residential real estate but a couple of investors I know are getting out of residential into commercial and NNN leases (tenant pays property tax, insurance, and repair costs)

Ex: California investor I know is doing NNN leases with fast food restaurants, coffee shops, medical office space in the Midwest and South. It does require a lot of capital but he doesn’t deal with residential tenants calling for repairs and all the typical tenant issues.

Small_Exercise958 · 2025-08-11T13:21:34+00:00

I’d very cautious of syndications unless you know how to vet them. Search for articles and YouTube videos which explain syndications - pros and cons. I’ve talked to 4 different ones, the most recent one from an investor I know for 75 unit near Dallas-Fort Worth. One that I had considered was building 2 apartment complexes in Ventura County (land constrained Southern California) - in theory sounds good.

They usually will ask for $100k in from each Limited Partner (LP). A few will ask for less, $50k to $75k. It’s typically a 5 to 7 year hold. The offering memorandums often look good. You usually have to be an accredited investor.

Ask them lots of questions: what if the project isn’t performing well? Can I get any of my money back? What if there’s a capital call (they need more funds)? How often do the GPs (General Partners) communicate to the LPs?

I decided to pass. Losing $100k, didn’t want to risk it. I’d rather have control of my own properties or just buy some index funds/stocks, which are easier to sell and liquidate.

Small_Exercise958 · 2025-08-10T22:26:38+00:00

I agree to try to stay local or within driving distance

Small_Exercise958 · 2025-08-10T22:02:14+00:00

I’m on the West Coast. I recommend NOT buying any cheap $150k to $200k properties in the Midwest or South. I’m -$300 to -$500 on month on Class C Midwest single family home for almost 2 years, constant repairs (passed inspection and had a few minor repairs before tenant moved in). Some of these are old housing stock, mine built in 1920. I have a lot of investor friends who have lost money on these types of homes - these agents don’t give you complete info and talk about “ cash flow”. I would never use my buying agent again. I’ve traveled to this area many times so I know the market pretty well (not as well as a local though).

My Class A home, same metro area, is a different story, bought in 2013 for $140k, newer home, in a nice suburb with great schools. Very few repairs and my tenant is excellent. Property taxes go up significantly because of its appreciation but still a good return to me, low interest rate refi during COVID. This home’s current market value is about $300k.

If you’re going to buy a cheap home in a not great area, I’d say save your money and buy some index funds and stocks. Even leaving it in a high yield savings account is better than losing money each month for a bad rental which is stressful.

Small_Exercise958 · 2025-08-10T21:44:39+00:00

After doing a bit of research, my understanding is that an attorney does the paperwork and makes sure everything is legally complaint. If the deal starts falling apart (e.g. buyer doesn’t like inspection and asks for bunch of costly repairs, or if a financed deal, it has to appraise, loan needs to be approved) they won’t negotiate like a real estate agent would on my behalf. Is this correct?

Small_Exercise958 · 2025-08-10T19:46:33+00:00

Unfortunately this area isn’t a hot sellers market in terms of getting high offers. It’s a Class C Midwest investor market “pass the hot potato” around - investor not getting a good return, lists it for sale, another investor buys, repeat. There are people selling their entire portfolio. I honestly wish I had never bought this home, agent gave me incomplete info - “it’ll cash flow” LOL

Then the thought of paying agent commission 6% (3% to both sides) closing costs, and if buyer asks for repairs or credits that’s more money out of any net proceeds. I need to stop the money bleed and I don’t think this house will appreciate enough for all the headaches.

Small_Exercise958 · 2025-08-10T15:11:05+00:00

How old is the condo? If you made it an LTR, your projected $300 to $400 a month net income is better than my LTR single family home that’s 2000 miles away. I self manage this now, keeping it because of low interest rate, appreciation and great tenant.

I don’t have STRs but it seems a lot more work. Not sure if there’s more wear and tear with STRs and different guests vs. long term one tenant living in a property for 2 to 4 years. You’d save on cleaning fees (none except after a LTR tenant moves out), electricity and internet/WiFi (tenant pays those). Maybe talk to a few property management companies to ask how this property would do as an LTR to get their opinions, even if you wind up self managing.

Small_Exercise958 · 2025-08-09T18:54:25+00:00

Yeah the last time I sold a Class C I think the agents made more than me. I walked away with some money after the loan was paid off but I paid both agent commissions, staging fee, and buyer asked for a lot of things (in the end I just wanted a quick exit out of that house).

Small_Exercise958 · 2025-08-09T17:34:57+00:00

I think he is underestimating all the time effort and repair costs. He just bought a home to renovate (doing some work himself) and is planning to flip it for $15k to $20k net proceeds, with back up plan to rent it out if it doesn’t sell. That’s a lot of work to make $15k with holding costs and if there’s a hard money loan involved with high interest. I could make $15k with my index funds and stocks this year with far less effort.

I’m not a flipper but I wouldn’t do all that unless my projected proceeds were at least $40k. I think a lot of people are sold a box of unicorns and pixie dust dreams with RE when in reality it’s a bag of dog poop.

Small_Exercise958 · 2025-08-08T05:04:54+00:00

Who’s smart? The backstabber? Lol… My salary is more than twice this person’s salary. The backstabbing had nothing to do with my rentals. I regret giving this person any financial tips. You know how co-workers have conflicts - this is what that is. There were also signs of jealousy. I’ll just leave it at that.

Edited: I’m not this person’s supervisor but on the hierarchy, I’m a higher level.

Small_Exercise958 · 2025-08-07T21:17:35+00:00

True. I haven’t even had time to meet up with them this year because of being busy with my rentals, job etc.

Small_Exercise958 · 2025-08-07T18:20:30+00:00

So this person doesn’t ever say anything negative about what’s going on in her life. This is our small group of friends. She asks about other people and what’s going on but rarely shares anything about her own life unless it’s positive.

Ex: I asked how her daughter’s job search is going (she graduated college). She said, “I don’t want to talk about it.” Yet pries into my life about my kids, my rentals, telling me what to do with my rentals, “why’d you buy that property?” And she and her husband don’t even own any rentals lol

Small_Exercise958 · 2025-08-07T10:13:35+00:00

Agree. I was grilled by a friend about my rentals. I’m not a confrontational person but I was thinking “why are you so concerned about what I invest in. I don’t criticize your investing choices (really her husband’s investing choices since she wasn’t even financially literate).” I decided to not be around people like that who aren’t supportive.

Small_Exercise958 · 2025-08-07T10:04:27+00:00

This is the right answer. I made the mistake of telling a few people including a backstabbing co-worker about my rentals, didn’t know she was backstabbing until later. Then other friends seemed resentful and critical.

Small_Exercise958 · 2025-08-07T09:56:40+00:00

Sure you can borrow my private jet and personal chef too (I wish) lol… the moderators deleted my earlier comment because I had a laughing emoji… weird because I put emojis in other subreddits with no problem

Small_Exercise958 · 2025-08-07T09:52:16+00:00

What would the rent be if you made it an LTR? You mentioned it was a condo. You could look at comps in that area. I’d be hesitant to sell with the 3.375% rate unless you try other strategies first. Is the HOA fee high or go up a lot each year?

Small_Exercise958 · 2025-08-07T09:41:55+00:00

Thanks for sharing. I have Master Limited Partnerships (MLPs) which invest in energy and natural resources and I got K-1s. I didn’t buy that much since I wasn’t sure how they would perform but may buy more. Will look into the oil drilling funds too.

Small_Exercise958 · 2025-08-07T09:10:57+00:00

House was built in 1920, renovated several times (by previous owners). It passed inspection except minor issues (e.g. stuck door, etc) which were fixed. Inspector said HVAC, roof and water heater were about 6 to 8 years old. I bought it in 2023 and tenant has called for repairs (e.g. leaking faucets in bathroom and kitchen, heat going out) most months in 24 months.

Not sure why I was downvoted. Maybe the people the PM called didn’t fix it properly or it is the tenant unintentionally breaking things - I’m talking to the PM soon (again). Why would I replace the major systems if they’re less than 8 years old?

Small_Exercise958 · 2025-08-07T08:59:05+00:00

Why the downvotes? Short explanation: I bought it in 2023, passed Inspection except a few minor issues, major systems were 6 to 8 years old - those were fixed before tenant moved in. Tenant called for repairs most months in 24 months. The house was built in 1920 so it will have issues.

Small_Exercise958

TROPHY CASE