Poll: Do you invest in real estate?

[Larry Ragman]

I think this no eviction thing has a lot of landlords spooked.
It will be interesting to see what happens after this eviction monatorium ends !

Probably, but good tenants go a long way. I’ve had one for 28 years in one property, and only four over 30 years in another.

[Dont_know_mind]

If you plan on self managing be sure you do the tenant screening extremely well since you won't be able to evict for a non payer for the foreseeable future.

I think this no eviction thing has a lot of landlords spooked.
It will be interesting to see what happens after this eviction monatorium ends !

[Larry Ragman]

FYI: I belong to a real estate landlord association and we recommend you go to a month to month lease rather than yearly so that if you get a non payer you can just not renew the lease rather than evict for no payment. It's a work around of the eviction moratorium. If the tenant balks thinking you could raise the rent at will you could put in a clause that you won't raise the rent for a year.

Is the landlord association local or national?

[dennis]

Truth!

FYI: I belong to a real estate landlord association and we recommend you go to a month to month lease rather than yearly so that if you get a non payer you can just not renew the lease rather than evict for no payment. It's a work around of the eviction moratorium. If the tenant balks thinking you could raise the rent at will you could put in a clause that you won't raise the rent for a year.

[Molar Mechanic]

If you plan on self managing be sure you do the tenant screening extremely well since you won't be able to evict for a non payer for the foreseeable future.

Truth!

[dennis]

We're moving into buy and hold as well as BRRRR style real estate in a big way. We'll close our first property friday and start rehab, and should have four by the end of October.

My wife will qualify as a real estate professional, and the tax savings plus the opportunity is too good.

If you plan on self managing be sure you do the tenant screening extremely well since you won't be able to evict for a non payer for the foreseeable future.

[Molar Mechanic]

We're moving into buy and hold as well as BRRRR style real estate in a big way. We'll close our first property friday and start rehab, and should have four by the end of October.

My wife will qualify as a real estate professional, and the tax savings plus the opportunity is too good.

[dennis]

Has anyone thought about investing in mortgate REITs lately? The mortgage REITs were hit hard in March so their prices are still at a discount compared to their recovering book value. With the Feds purchasing mortgage backed securities and intent on keeping interest rate low, it seems like an ideal setup for these REITS to prosper, in principle.

With the eviction moratorium dictated (I think illegally) by the CDC there may be a lot of landlords unable to pay mortgages. It is currently set to last until 12/31 but odds are it will be extended. According to Moody Analytics tenants are currently behind by $25bn and headed to $70bn soon. If there is no rent being paid and you can't evict them landlords will default on the loans.

[GIMD]

Has anyone thought about investing in mortgate REITs lately? The mortgage REITs were hit hard in March so their prices are still at a discount compared to their recovering book value. With the Feds purchasing mortgage backed securities and intent on keeping interest rate low, it seems like an ideal setup for these REITS to prosper, in principle.

[dennis]

I don't know any physicians that have actually done the 1031 exchange for a triple net lease. I suspect the cohort is small but I really want to avoid the huge tax hit. Alternatively, like you said, the kids can inherit the property and we benefit from the stepped-up basis. I was thinking of a QPRT before they increased the estate tax limits. I told my wife, we will likely do the exchange for NNN given minimal work and I will have to find a good intermediate to execute it properly within the 180 days.

I've used IPX several times and found them very easy to work with and reasonably priced. They're at ipx1031.com

[BladeRunner]

A practice partner and I formed an LLC and built our 2 medical office buildings nearly 2 decades ago. We the rented them back to our practice via a NNN lease. We aggressively built equity via 15 year mortgages. Three years ago, we were approached by several REITs looking to buy medical office buildings and lease them back to practices. We sold the buidings to a private REIT corporation and now lease back from them.I was truly financially naive when I originally signed the several million dollar bank loans back in the beginning. Had I fully understood all of the risks, I may not have signed on. Nonetheless, if you want to do RE, being your own landlord is pretty ideal.

It has been the single best investment that I have ever made. It resulted in a doubling of our net worth.

In some ways, it is a shame that fewer and fewer young physicians have this opportunity to build their wealth..

[EntrepreneurMD]

^^^^^^

Put a few bucks into 2 commercial properties. 5 total professional tenants. 5 monthly invoices. 2 property insurance policies, 2 annual property tax statements, 2 roofs for potential leaks, etc.

To put the same amount into basic $50K properties, I would have to own 90 properties to equal that same investment equity. 90 tenants. 90 monthly invoices. 90 homeowners insurance policies. 90 annual property tax statements, 90 roofs for potential leaks, etc.

Two very different routes.

[CREGuy]

Part of the disconnect here is that there are many different avenues to allocate capital towards RE. Direct RE investment is about as broad of a category as you can get. All RE is not created equal. It's a completely different animal investing in a single family home vs a large multifamily project vs a retail center vs a medical office building, etc. etc. etc. Of course, any direct RE investment is going to require a good amount of knowledge and/or a group of advisors to assist you through the process. If you don't have any interest in learning about RE and the nuances and work that comes along with it, then it's probably best to stick with a REIT.

I think most people responding to this thread, especially those with negative outlooks on direct RE investment, probably arrived with the concept that direct real estate investment is buying a house or duplex to rent out. It makes sense, as it's the lowest cost to entry, and everyone is inherently familiar with residential property and the leasing of residential property. It's pretty easy to understand if that is what you think of when you think direct RE investment, that you would be turned off by it. It's a lot of headache and work to grind out a couple hundred bucks a month in income, especially for the relatively affluent folks here. Who wants the headache and work of renting a single family home to make $2500/year when they can make that in a shift? There's nothing inherently wrong with that mindset, but there is a whole other world of opportunities out there, specifically in the commercial world, where you can realize much bigger returns with far less risk and operational involvement. Part of that is simply bigger numbers make for bigger returns, and part of that is the inherent lease structures and valuation models that exist in those opportunities. Like any opportunity, if you aren't interested or capable in learning the industry and/or assembling a group of advisors to help you through the process, your results may underperform others.

[IJ]

Triple net leases are easy on the landlord, minimal work. Generally with a triple net lease, a known solid business entity leases your property and they pay taxes, insurance and maintenance. They basically care for the property while you simply collect rent. Triple net leases typically involve only commercial properties.

Personally, I invested in residential properties because it was much easier for me to understand the balance of forces in the market and to make good judgments on what to buy and what would rent well. I was concerned that the commercial market was not in my wheelhouse and I would be more likely to misjudge pricing and demand. I also know that in good locations with a reasonable economy, there is always demand for residential rentals. If you have the knowledge to buy smart, then triple net lease properties would be easier to manage than residential properties. In these times, the risk seems likely higher, but residential properties are also higher risk at this moment. I am fortunate because I own residential properties that are for upper middle class families seeking good schools, and in this Covid situation, the knowledge workers seem to be doing just fine working from home.

I don't know any physicians that have actually done the 1031 exchange for a triple net lease. I suspect the cohort is small but I really want to avoid the huge tax hit. Alternatively, like you said, the kids can inherit the property and we benefit from the stepped-up basis. I was thinking of a QPRT before they increased the estate tax limits. I told my wife, we will likely do the exchange for NNN given minimal work and I will have to find a good intermediate to execute it properly within the 180 days.

[childay]

could be worse- she could like only pineapple pizza

Don't even start blasphemer