Out of curiousity, how much money do you need (as an investor) to make tracking RE worthwhile?
It seems like you know your stuff but I am trying to get my head around how much dough / how many properties I need to be able to buy before it is worthwhile.
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I don’t think I have an answer. I don’t think you need much to track and learn, for me it’s just a hobby, one that I got into a few years ago after being frustrated with the market and the fundamentals, I read and read, watched and watched, I enjoyed it and kept doing it. It was all about buying my primary residence, I sold somewhere around 2005, got back in a few months ago, now my attention is on my first rental. My family trust has a few rentals and has for decades, but they aren’t mine really and I don’t manage them, one day I will but that day may be a long ways out, in the meantime, I’d like to pick one up during this downturn, just for me. That makes me small time, but that doesn’t mean I have to make avoidable mistakes or bank on appreciation. My goal is to get one cheap enough and with a nice rent multiplier that I can accelerate the payoff before retirement, just stay with one and avoid leveraging. My pops is retired and has a couple of paid off rentals that he thoroughly enjoys. For me, one would be worthile, something small enough that I can pay it off in short order. Let’s take my example of a 65k place that brings in $900 in rent. 20k down, 45k loan for 5 years at 5.5 is just uner $900, equal to rent. I’d eat the hoa and taxes of a few hundred a month and all vacancy time and maintenance. In five years it flows $700 a month forever, has a potential of appreciating at some point in the next 20 years, rent should track inflation and I can sit tight and enjoy the monthly stipend or if finances and the market allow for it, go for another one on the next downturn, using the flow from the first to accelerate the next one, lather rinse, repeat and you find yourself in your sixties with a few cash cows all paid off. This I learned from my father, and I learned the most important part of making it work is selecting the time to do it. Flipping requires an appreciating market and an expanding economy, cash cow hunting requires fire and brimstone in the wall street journal, pick one up today and that’s what you’ll read. The short answer to your question is that I don’t have suitcases full of money and it has already been worthwhile, plus what else am I going to track until football season starts.
