I am new to this Real Estate Business I would like to know what are the benefit of being a Real Estate Investor
Here’s one. My wife and I are going to see the new movie 300 this afternoon. If I had a "JOB’ I wouldn’t be able to do that without using some sick time or vacation. So freedom is the biggest benefit it brings me.
FREEEEEEDDDDDOOOOOOOOMMMMMM
William Wallace :beer
Jared mentioned freedom. There’s also early retirement, tax deductions, building wealth to name a few.
My dad had 10K in 1963, made a down payment on a small commercial property, assumed a 15K mortgage, with 15 years more to go. Around 1979, when he was in his late fifities, the mortgage was paid off, and he retired from the rent.
Today, in his 80’s, he still owns it. Each month, a handful of rent checks, close to $7,000/month pays for a nice retirement. Two years ago, when he was seriously ill, he had a major operation, then went to rehab, and we helped out. The work consists of making one to two trips to his bank each month, two blocks from his house, to deposit the rent checks. About 20 minutes work a month if one trip, or 40 minutes work if I had to deposit late rent checks Commercial tenants pays the heat and the taxes, does the maintenance, shovel snow, fix toilets etc., and stays years and years
He mentioned once just buying one right property can make a nice retirement. He owned a small business, does not have a pension, and the social security only comes to a few hundred a month. Compare that to making thousands a month on the rent.
Through the years, he thought real estate was risky, and was afraid to invest more into it. Being frugal, he was investing most of the rent checks into tax free muncipals since 1979, and sitting on another fortune.
If my dad didn’t do real estate, he’ll be on food stamps, section 8 housing, bugging me every month for money, instead of sitting pretty.
So I say “financial independence” is one big benefit of investing in Real Estate.
First, there is a difference between investing in real estate and being a real estate investor. If you invest in real estate, you tend to do it as a “side” venture, similar to above. A property here or there, on occasion is about it.
If you are a real estate investor, you have chosen to operate a real estate investment business. Now, that may be either full-time (as in “that’s all you do”) or it may be part-time (as in, “I’ve still got a real job”), but you do it consistently with a goal of earning real spendable cash at it, whether that be renting or reselling.
Second, the benefits of being a RE investor are basically the same as the benefits of owning any business. Some have used the word ‘freedom,’ but I don’t really think that’s correct because owning your own business you will often give up the basic ‘freedoms’ that people with normal jobs have (like not worrying about the job after hours [no such thing with the self-employed] or worrying about where you next paycheck is coming). Better to say “control.” As the owner, aka the BOSS, you have the control on deciding what to, or not to, do.
Raj
With my rental property business, there are 4 things I REALLY like.
- FREEDOM (most important to me)
- Monthly cash flow (which allows me to be free)
- Building significant Wealth
- No Employees!
Freedom is the most important aspect of this business to me. After working like a dog for 2 1/2 years, I finally got to the point where the business will support my lifestyle and I only need to work 3-4 hours, 3-4 days each week to keep up. This week is a perfect example.
Monday, I went to a real estate auction and then worked all afternoon fixing a clogged main sewer line in one of our single family houses. That is the glamorous part of real estate investing!
Tuesday, I worked about 3 hours on one of our apartments.
Wednesday, I attended the Sheriff’s Sale/Tax Sale in the morning. Didn’t buy a single property at either auction because all 10 of the properties sold at a higher price than I would pay. Just after the sale, I got a return call from a guy that was selling his motorcycle. I had seen his ad on the internet the day before and thought this was an absolute steal. I took the rest of the day off on Wednesday to go buy the motorcycle.
Thursday morning, I spent about 3 hours steam cleaning the carpets in one of our houses and meeting potential tenants at the same house. Four college kids came to look at it and did rent it. I took the afternoon off to go play with my new toy (motorcycle).
Friday was the first day of spring in Ohio. After several weeks of TERRIBLE weather, it was sunny and 61 degrees!!! I took the entire day off. My wife and I rode our bicycles in the morning and then spent the entire afternoon riding my new motorcycle. What a GREAT DAY!
What do I like about the rental property business…?
Mike
I would say in addition to the above, that real estate investing is an oportunity to work your tail off for a little while in order to experience the things that the above people have mentioned. Read up on Property manager. He does a good job of reminding you that it takes working like a dog for a while to get to where he is.
To me real estate’s main benefit is as a vehicle to put aside money made in my chosen business ( agriculture ) and develop income and net worth outside of my farm, instead of living high right now, so that I can attain many of my goals later. I want to have a large net worth outside of my farm, so that I can decide how to help my kids get started if they want it. I see so many others that have to sell the farm to the kids, and then they sell it to their kids, and the family just keeps buying the same land over and over again. I want to develop a sustainable business that can continue to grow generationally.
DB
Another advantage is that you can get rich. I don’t know why people don’t like get rich quick schemes, because there is no other way to get rich except for quick. My example of get rich quick involves a concept called leverage. If you go to a bank and ask them to loan you $70,000 on undervalued stocks that should be worth $100,000 they will say no. But you can go to a bank and they will loan buy the $70,000 on a house valued at $100,000. That means that leverage is possible.
What that means is that if you took $100,000 cash and bought an investment (stocks or a house) and it went up 10% then you now have $110,000 worth of an investment. You have made $10,000 or 10% on the money you have invested. But with real estate if you put down $10,000 on that same $100,000 house and it goes up that same 10% it is still worth $110,000 and you still have made $10,000 but that is on an investment of $10,000 so you have made 100% on your investment. That is the beauty of leverage. That is why you get rich quick. On a side note if you get that same $100,000 with no money out of your own pocket then you determine the rate of return by dividing by zero, which is an infinite rate of return.
Bluemoon,
I don’t know of a single person that has gotten rich quickly with real estate - not one. Of course, it also depends on your definition of “rich”.
I know many people who have made a lot of money and built a lot of wealth over several years, but get rich quick???
Mike
I’d say both rich AND quick are different for everyone.
Get rich slow means that you save $100/month and using compound interest you have a million dollars by the time you are 60. Get rich quick means invest in business opportunities (like real estate) that allow you to replace your income from your job in 5 years. That is quick.
Get rich quick means invest in business opportunities (like real estate) that allow you to replace your income from your job in 5 years.
Five years isn’t bad, but I wouldn’t consider simply replacing your income to be “rich”, unless you’re already rich of course.
Would having a million dollars of equity be rich?
Would having a million dollars of cash be rich?
I don’t think so. Not bad, but not rich.
Mike
I find investing a great way to spend more quality time with my family . There is always a cockroach cleanout or a poopy tub tragedy to keep us togather on a Friday Night :flush
The real question is “are you happy”??
I wrote about my dad above, and in the early 1970’s had the chance to buy more property, and his wealth would be in the tens of millions. He would be making 100K/month in rent, rather than just 7K.
But I’m sure many folks would be THRILLED making 7k/month for 20 minutes of work.
He asked me, “I’m a ‘sit at home’, watch TV type of guy, and I’m not happy running around traveling. Maybe you like traveling, not me”. “So what does someone sitting at home watching TV need 100K/month in rent he asks”?? He says, “if I had so many properties, I can’t sit home and watch TV anyway”.
In a word, he’s “content”.
I offered to pay for a vacation and take him along to to Disneyworld one year, but he said he’s happier if I just took videos and he can watch it on the TV when I came back.
And what’s wrong with that?? My wife says he’s got no “ambition”. I say he’s got no “greed”. My dad’s take is "when is “enough enough”?? “How much do you want me to make to leave behind for you”??
I know him well enough that even if he made 100K/month, he’ll still spend 2k/month anyway. He tells me he hates shopping and travelling.
Does putting away 98K a month instead of 5k/month make him a better man??
being an RE investor offers a lot of flexibility; you can choice to do as little as much as you like and add incremental as your life situation allows. To elaborate on that point, I have about 30 rental units under management, but I still maintain a full time in my chosen professional and intend to. I make some monthly income which I use mainly to continue to build my RE “side” business". With that said, I’m reaching a point where I’m not sure I want to add to my business as I’m very time contrained and I have other professioanl interest as well as spending more time with my 2 yr old son. So, RE offer the flexibility so me to not be under constant pressure to acquire/build the business, but rather I’m content to hold at my current number of units. Maybe in a few years, I’m get real active in acquiring properties.
At this point, I’m like a well-fed bear sitting my the river waiting for the biggest, tastiest trout to swim by before I put my paw in the water.
With that said, its taken me 9 years and a whole lot of work to get to this point.
That is another part of my basic philosophy is to live where it is cheap to be rich. It costs the same to be poor in every town in the US. I live where it is cheap to be rich so I don’t need $100k/month to be rich. I consider rich to be able to live in a house like those guys on the TV show cribs with a pool and home theatre and travel on vacation every month. I can do that on my salary if I don’t have to go to work. So living in Houston allows you to rich by only replacing my current income.
Remember it not about the money it is about the lifestyle.
rich or wealthy?
Given a few years of VERY hard work, you could become both rith and wealthy, but I don’t think either one is going to happen quick.
Mike
freedom
If it doesn’t happen quick then it will happen slowly. Slowly gets you rich when by the time you are 60 years old when it happens. 5 years is quick.
Perhaps, , but who wants to live in Houston?