Should I add Real Estate into my portfolio? Pros and Cons?

[NCTarheel]

Should I add real estate into my portfolio?

Currently I have 100% of my investments in the stock market.

Considering: 1-2 real estate investments (small $ condos/townhouses- Charlotte NC area) to spread the risk.

Questions:
•   1:  Do you have real estate in your portfolio of investments

•   2: What % of your total investment portfolio is real estate

•   3: Estimated return for your RE portfolio

•   4: Any advice of guidance before jumping in?

(Yes, I read all of the “real estate and land lording” forum entries.. before any Haters start Hating)

I appreciate any feedback/advice that you can offer.

Thanks in Advance.

[wenchsenior]

Do you have any equity in your own home?  Our equity amounts to about 15% of our overall net worth, which seems a little  high to me right now. I think ~5-10% of portfolio in real estate to sound reasonable for us.  In the next few years as our investment value increases faster than our equity, we should be hitting that balance.

[damnedbee]

I wasn't comfortable investing in real estate on my own, but I keep about 8% in REITs.

[Fishindude]

Questions:
•   1:  Do you have real estate in your portfolio of investments
YES

•   2: What % of your total investment portfolio is real estate
35-40%

•   3: Estimated return for your RE portfolio
Not much, about 3% annually, but much of mine is in long term holdings for wealth preservation.  Big returns will come if / when I sell.

•   4: Any advice of guidance before jumping in?
Understand what it takes to be a landlord.
Have a plumber, electrician, heating & AC guy and a general handyman on call to fi=x problems and issues so you don't have too.  Treat these guys well and don't dicker prices.
Use good legal contracts with your renters so there are no surprises.
Allow for routine inspections in your contract so you can see how they are taking care of the place.
No pets, or charge a premium for pets.

[NCTarheel]

Thanks Fishindude..

Exactly the input that I was looking for.

[Bimmy]

I have spent the last couple months listening to the Bigger Pockets podcast after they guest starred on a Mad Fientist podcast. Those guys are almost 100% invested in Real Estate. Its a really good podcast to start you learning about real estate.

We own our home and 0 rentals. So today- 100% stocks. However, I want to add real estate to gain diversity.

[NCTarheel]

Thanks for the head ups about Bigger Pockets.. will check out the site.

[NCTarheel]

Thank you Pizza Steve for the great insight..

- Realize RE investing is a side gig job+investment
- Realize RE investing does not really diversify you very well, it likely concentrates your risk with hope of higher returns
- Don't trust a third party to manage, unless you can also provide direct oversight of books, property
- If it looks too good to be true, it probably is.  A thorough inspection is your friend

[NCTarheel]

I was hoping to find the Magical story with 10+ mortgage free rentals that produces a endless supply of cash flow.
(ie. 10 rentals producing $1,000 per month= 10k per month--- Easy living..) 

It could happen but the risks (empty rentals/ poor tenants/ constant calls in the night/etc) always bring me back to earth.

[BTDretire]

I would not go out and buy a house just to have real estate exposure.
 Having a rental house is a part time job, if you expect to out source the management and maintenace
that means less revenue for you.
 If it is your plan, you must find a good deal in order to make it generate cash flow, but the deals may not be where you are going to have price appreciation, that's why the are a good deal.
 It takes a lot of research to get lucky and buy the right property.
 Are you prepared to do the research so you know the market(s)?