Author Topic: 23 with +$100k in Liquid Assets and Thinking of Investing in RE  (Read 3658 times)

BenjaminGraham

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Hello,

New to the site here - I am thinking of beginning to invest in rental properties for passive income, but want to make sure that I am not taking on too much risk. Please read my profile and let me know if I am in a financial position to do so

About Me:

Net Worth:

Cash Savings: $60,000
Stock Market (Mostly ETFs): $30,000
Retirement Accounts: $25,000


Annual Profile:

Post-Tax Annual Take Home Pay: ~$100,000 a year
Rent per Year: ~$20,000
Annual Expenses: ~$20,000
True Discretionary Cash per Year: +$50,000

RE Investment Plan:

I hope to contribute $30,000 a year to RE investments

Balkins

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #1 on: August 09, 2016, 08:40:46 AM »
Careful. You can get burnt real bad (like i did).

Find a mentor in your area, and get in with him. Learn from an expert first before diving in. IF you can find a trustworthy carpenter, then you can buy fixer uppers. Otherwise, IMO, finding good deals on RE is like finding a needle in a haystack (or it has been in my big city).

I'm no expert so, lets hear what others say.

BTDretire

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #2 on: August 09, 2016, 08:56:38 AM »
 Be aware, owning rental real estate is a second job with unpredictable hours.
 If you have an after work life you may not want to get involved with rentals.
 There is also paperwork involved when you have evictions, sales, and taxes.
I had 5 houses at one time and was very happy when I sold them all.
 You don't need passive income you want growth of assets, hopefully untaxed
as it grows. Kinda like an index fund :-)
  Congrats on living well under your income, keep up the good work!

EAL

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #3 on: August 09, 2016, 11:58:29 AM »
I began investing in real estate at 23 when I bought my first rental property.  It is hard work but it had been a great investment for me and I would recommend it to many people. But it can be a lot of work if you manage and maintain your properties yourself.  Some people just aren't interested in the level/type of work and risk (depending on your area).  I started small so I wouldn't lose everything if I failed.  I would recommend that so you have a safety net. Good luck. It's a great investment.

thedayisbrave

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #4 on: August 09, 2016, 02:50:16 PM »
Where do you live?

You might be a good candidate for house hacking.  Buying a duplex and live in one side, rent out the others.  Check out BiggerPockets (www.biggerpockets.com) -- lots of great resources there.

BenjaminGraham

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #5 on: August 17, 2016, 09:27:18 PM »
Live in the Big Apple, but I have no interest in buying local due to: (1) Cap Rates (2) Insane Entry Values

Plan was/is to hire a management company in any city that I purchase a rental apartment

hankscorpio84

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #6 on: August 17, 2016, 10:08:47 PM »
Bigger pockets is a great resource, as is affordanything.com.  The gal who writes afford anything does a good job of being positive, yet realistic about real estate investing.  I have dabbled in real estate recently and am discovering that it is not for me.  There is certainly money to be made, but if you want truly passive income why not buy REITs?  (In tax advantaged accounts, of course)   

arebelspy

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #7 on: August 21, 2016, 08:14:38 AM »
Seems like you're in a pretty good spot, financially, to start RE investing, depending on how stable your job is.

Keep healthy cash buffers at all times--real estate income and expenses are lumpy, and you don't want to be stuck in a bad position.

Check out the real estate section of the forums (and I'll move this thread there so you get some input from the RE investors) for more reading, especially the sticky with recommended books.

Good luck!  :)
We are two former teachers who accumulated a bunch of real estate, retired at 29, spent some time traveling the world full time and are now settled with two kids.
If you want to know more about us, or how we did that, or see lots of pictures, this Business Insider profile tells our story pretty well.
We (rarely) blog at AdventuringAlong.com. Check out our Now page to see what we're up to currently.

SwordGuy

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #8 on: August 21, 2016, 08:30:30 AM »
Plan was/is to hire a management company in any city that I purchase a rental apartment

Good plan.  Make sure the numbers support you doing that even if you decide to do the job yourself.

ARebelSpy's comments are spot on, as usual.   

There are lots of books out there about finding property and negotiating for a good price.

Frank Gallinelli's book ([link]https://www.amazon.com/Estate-Investor-Financial-Measures-Updated/dp/1259586189/ref=sr_1_1?ie=UTF8&qid=1471789684&sr=8-1&keywords=gallinelli+real+estate[/link]) is the best I've found for explaining how to do the numbers.

Real Estate is a numbers game, you make or lose money on the day you buy, so learn to do the math.   I'm assuming with a screen-name of BenjaminGraham (patron saint of value investing) you won't have an aversion to math. :)

SwordGuy

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #9 on: August 21, 2016, 08:31:03 AM »
Also, check out your local real estate investment association.

MrSpendy

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #10 on: August 21, 2016, 01:45:44 PM »
Just curious, given your name, why you wouldn't try out some individual stock investing before individual property investing? Does your employer prevent you from buying individual names?

Your income and name tell me you work in investing / finance, right?

BenjaminGraham

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #11 on: August 21, 2016, 11:08:20 PM »
@mrspendy

Yes - I go through hoops to buy ETFs and am blocked from using leverage of any kind in the stock market.

Given the low COD right now, I would like to take advantage of it - especially, leverage against a hard asset like an apartment

BenjaminGraham

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #12 on: August 21, 2016, 11:10:05 PM »
@SwordGuy - Would love to hear your thoughts about Charlotte, NC for rental (multi-family apartment)

adamcollin

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #13 on: August 22, 2016, 04:29:29 AM »
Looking at your profile, this can be a good option for you.

rothwem

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #14 on: August 22, 2016, 07:03:56 AM »
I feel like you're an easy target for a scammer.  Have you ever owned a house before and had to deal with the maintenance?

You're young, inexperienced, and have a ton of liquid cash.  Lots of out of staters get burned trying to buy cheap properties out of town, both on the purchase (paying too much for a shitty house) and the management.  I've personally looked at several houses that were owned by out of state landlords, and usually they're in awful shape--even the good property managers stop caring if they never see you. 

If I were you, I'd look to buy something within easy driving distance. Maybe New Jersey somewhere?  Husdon Valley? My rental property is the other side of my duplex and sometimes even that's inconvenient.  I can't imagine making any money if I had to spend $500 on a plane ticket every time there was an issue with the house. 

Landlady

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #15 on: August 22, 2016, 11:30:56 AM »
Whether real estate makes you rich or not will depend on your rental market and the appreciation on property values. I had great luck with buying a duplex and living in one half. It was the single best decision my younger self made for me. I felt stretched at the time I was buying it, but within a few years I saw the rental market take off and before I knew it my full mortgage was being paid by my tenant next door. Since I was on site I could respond easily to a problem and learn from the fix.

If you don't mind giving away your location you may get some good local Mustachians able to give you more specific market advice. Cheers!

SwordGuy

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #16 on: August 22, 2016, 04:29:00 PM »
@SwordGuy - Would love to hear your thoughts about Charlotte, NC for rental (multi-family apartment)

Sorry, I know nothing about that real estate market and my only experience so far is with single-family homes.

endleesss

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Re: 23 with +$100k in Liquid Assets and Thinking of Investing in RE
« Reply #17 on: August 23, 2016, 02:31:20 AM »
Don't forget about cost segregation on your rental property, so you can accelerate the depreciation deductions