Zog
Formerly Northstar. The Block, The Shot, The Stop
- Joined
- Sep 20, 2008
- Messages
- 11,829
- Reaction score
- 7,227
- Points
- 113
I've been looking into this a lot lately. I'm tired of renting and just throwing away $12000 a year towards someone else's mortgage.
I can tell you one of the biggest attractions of real estate opposed to the stock market is the insane leverage factor. You can margin trade with stocks but it's a lot of risk and if you get margin called at a shit time there's not much you can do. You invest 100,000 into the stock market and you've got 100,000 in assets.
For a rental property it's the long game. Let's say you put down $30,000 on a $300,000 house. You probably aren't going to want to rent at a loss so let's just use bob's experience and say you're making 150/month in profits on that house after MI, taxes, mortgage, repairs. That's 1800 per year for 30 years is 54,000. Now it's extremely likely you will be able to steadily increase rent over those 30 years while the mortgage payments stay fixed but honestly that isn't even the fucking point
You put down $30,000. People paid off your mortgage for you by renting your place. You made a profit on top of that. And now you own the entire house. And guess what, that house isn't worth $300K at the end of that period... didn't even take into account appreciation of the home.
That's the attraction. You don't get that from the stock market.
Now look I oversimplified the shit out of this but I'm just trying to illustrate where the allure is over the stock market. No one is going to pay to rent your stocks while you still maintain ownership.
Now imagine reinvesting the Monthly profits into more rental properties... there's a reason the market is pretty competitive right now.
You won't rake in the cash flows in the short term, but in the long game you're building a nice chunk of equity on another dudes dime
Reasons people don't do it is the vast majority of Americans don't have even close to 10K in savings and really aren't very financially literate.
Yeah, my bigger concerns are how much you have to put into a property in repairs and whatnot. Even if I made $0 ever month I wouldn't care too much as long as I'm not seeing negative cash flow in a year.
Seems like multi family would cash flow more, but the building are typically older. Maybe not necessarily a bad thing, but I would expect high maintenance costs in general. Single family seem like they'd cash flow less but would have less repair costs and probably have tenants that would treat the place a bit better. But as far as roof repairs go, you have a roof per door in SFH, and one roof per multiple doors in MF.
Also if you have to sell a property earlier than anticipated for whatever reason, realtor fees will add up quickly.
Biggerpockets.com is all you need to learn. Read up, ask questions, and jump in if you're serious. Cleveland is a hot area right now, but certainly more affordable and easier to get started in than Columbus (where I'm at).
I have looked at Bigger Pockets a bit. Seems like there is almost too much information there to sift through. I actually have a phone interview for a job in Columbus on Thursday. I'm in Cincinnati now but will be done with my job here at the end of March. So is Columbus not necessarily a great place to get started with REI then?