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Poll: Do you invest in real estate?

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  • formerly_cn
    replied
    I have some insight and authority in this matter after doing it a few years.

    Any active business with your expertise in it beats the market by a large margin.

    RE is no different. However, requires knowledge base and, hard work and risk taking ability.

    Just to give you a flavor: I bought land and constructed a retail center. Total cost with everything is around ~$ 2 million. With full tenants right now, based on 6% cap it's coming out to around ~ 4 million. Time frame in all this 2 something years. There is a buyer as well now.

    You can do the math. Stuff like this is repeatable but requires work. Passive investment , most certainly, this is not. But then hard to make 'big bucks' passively unless a very long timeframe.
    timeframe. Which is totally fine for those wanting to just cruise and not take the headache of running a business .

    Leave a comment:


  • dennis
    replied
    Originally posted by Molar Mechanic View Post
    Mrs. Molar and I have been drinking real estate investing for six months, and have a few houses under contract (should have closed Friday on #1?).

    Especially for those of us who have high incomes (surgeons, derm, rad, whatever) combined with smart, capable spouses who didn’t choose a high income career (school counselor, $42k per year, $25k after tax...not worth the hassle), real estate is a ridiculously good path. There is a learning curve, but the tax benefits are a cherry on top of the return that cannot be understated. My goal is that we’ll retire on real estate, leaving the retirement accounts to grow indefinitely.
    Precisely the path I've taken

    Leave a comment:


  • StarTrekDoc
    replied
    Originally posted by Molar Mechanic View Post
    Mrs. Molar and I have been drinking real estate investing for six months, and have a few houses under contract (should have closed Friday on #1?).

    Especially for those of us who have high incomes (surgeons, derm, rad, whatever) combined with smart, capable spouses who didn’t choose a high income career (school counselor, $42k per year, $25k after tax...not worth the hassle), real estate is a ridiculously good path. There is a learning curve, but the tax benefits are a cherry on top of the return that cannot be understated. My goal is that we’ll retire on real estate, leaving the retirement accounts to grow indefinitely.
    This.

    Direct real estate via the non-physician spouse (or part time physician to document sufficient RE hours) affords a huge tax break off the top. For those with large taxable funding -- this is a huge area of opportunity in dollar investment efficiency along with the power of depreciation and leveraging and asset with cheap bank loans.

    Is it passive income? Nope; not even close. Does it outpace index investing? easily if done right, cause it's not passive income. Is it for everyone? no way. neither is primary house ownership or private practice ownership.

    RE does allow for some long term benefits in cashflow and diversification that is also nice generational transfer.

    Leave a comment:


  • Molar Mechanic
    replied
    Mrs. Molar and I have been drinking real estate investing for six months, and have a few houses under contract (should have closed Friday on #1?).

    Especially for those of us who have high incomes (surgeons, derm, rad, whatever) combined with smart, capable spouses who didn’t choose a high income career (school counselor, $42k per year, $25k after tax...not worth the hassle), real estate is a ridiculously good path. There is a learning curve, but the tax benefits are a cherry on top of the return that cannot be understated. My goal is that we’ll retire on real estate, leaving the retirement accounts to grow indefinitely.

    Leave a comment:


  • Dont_know_mind
    replied
    Everything has its positive and negatives.
    I don’t think there is anything special about CRE or residential property or stocks or vacant land.

    It’s hard to go past returns from SP500 in the last 10 years.
    CRE and residential property underperformed the SP500 in that period by a substantial amount.
    If you had applied any amount of leverage to SP500 over the last 10 years, which would be considered conservative on CRE or residential property, your returns would be amazing.

    But the future doesn’t always and often doesn’t resemble the past.
    I’m pretty agnostic and don’t care about the asset class.

    2 things work against each other and often make it very hard to be an active investor:
    1. You need deep knowledge of an asset class to know what is a diamond.
    2. A man with a hammer usually finds lots of nails.

    I’m a believer that investment knowledge compounds over time.

    Very few people seem to invest in stocks and real estate well.

    It’s hard to surpass the diversification and cost benefit of indexes. It’s hard to surpass the benefit of non-callability on some types of real estate leverage.

    Leave a comment:


  • EntrepreneurMD
    replied
    If the majority of the aliens on planet Zondir are green they should not simply alienate (ha!) the desires of the few that are orange.

    Likewise we know the 99% are the 99%, we're sometimes speaking to the minority that have the desire and grit to climb into the 1%. Inclusion>exclusion. Let those that successfully diversify into real estate discuss their story and strategies. Jim, Dennis, CREGuy, WBD, others and I are fans, you, Johanna, burritos and others are not. We're not a homogeneous group nor should anyone insist we be.

    The majority of us don't like investing in individual stocks. How's that recent XOM investment doing for you?

    Leave a comment:


  • fatlittlepig
    replied
    Originally posted by dennis View Post

    The point is I am only 20% stock market and 80% RE and my retirement income is from the RE. The stock market could cease and I would be unaffected. I don't have to sell assets to have income like many docs do in retirement. I don't understand why someone builds wealth then has to cannibalize it to live.
    I’ll reiterate my initial point. Majority of physicians aren’t looking for a second job managing commercial real estate so whatever the returns may or may not be is a moot point.

    Leave a comment:


  • Anne
    replied
    Originally posted by fatlittlepig View Post

    That’s it? Should have stuck with equities.
    My NW is over 1000x what it was in 2002. But I was a med student with a small Roth IRA from prior jobs and a tiny e-fund for ramen. 5x for someone who was a midcareer doc in 2002 is not bad at all. If many of the regulars here have 2-4 million midcareer right now they are not going to be sad about having 10-20 million in 2038. I won’t be sad about it at least.

    Leave a comment:


  • dennis
    replied
    Originally posted by fatlittlepig View Post

    That’s it? Should have stuck with equities.
    The point is I am only 20% stock market and 80% RE and my retirement income is from the RE. The stock market could cease and I would be unaffected. I don't have to sell assets to have income like many docs do in retirement. I don't understand why someone builds wealth then has to cannibalize it to live.

    Leave a comment:


  • EntrepreneurMD
    replied
    To all those employed docs with no interest in real estate:

    You are currently paying rent for someone else to profit off of CRE. Part of your overhead that you pay to your employer out of what you generate thru the daily grind goes to paying the facility rent/mortgage (plus utilities, property taxes, property insurance, property maintenance, repairs and improvements, property manager, etc. AKA NNN). It's just that you're giving up your precious time every month, and someone else makes the money...and gaining that precious free time you gave up. You don't get an invoice or the opportunity to negotiate those rates. You don't have a say in the matter. You will likely to just pay it every month until retirement, in both money and free time - your loss is their gain. Your labor (paying them) means you spin your wheels while they are the ones getting somewhere. They can replicate their system, you can only work so many hours a day.

    You just don't know it yet, you really want to be the other guy, executive investor and not day laborer. My physician tenants work hard every month then send me a fat little check - and like you they have to work a little harder to cover their rent. I deposit the funds, enjoy the real estate appreciation and tax depreciation, and therefore can (and do) work less than them. Replicate. My employed providers, like you, are paying their share of the rent to my business which then pays it to my real estate holding company. More precious time for me, yeah!

    That's why I spend my precious free time learning how to manage and invest in commercial real estate. It gives me more precious free time and contributes to wealth accumulation. That's how you stop spinning your wheels and actually get somewhere - your fair share of Wall Street.
    Last edited by EntrepreneurMD; 09-18-2020, 11:59 AM.

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  • fatlittlepig
    replied
    Originally posted by dennis View Post


    Yes and my wealth is 5X what it was in 2002.
    That’s it? Should have stuck with equities.

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  • dennis
    replied
    Originally posted by fatlittlepig View Post

    Well the stock market is like 3x what it was in 2002, or something like that

    Yes and my wealth is 5X what it was in 2002.

    Leave a comment:


  • fatlittlepig
    replied
    Originally posted by dennis View Post

    I am a doctor, retired 3 yrs now. I did wake up and decide to invest in real estate after the stock market meltdown of 2000-02. My portfolio dropped in half and I saw a number of docs have to keep working because they were dependent on the stock market for their retirement. I decided that wouldn't be me so I educated myself for several yrs and then pulled the trigger on my first apartment buy in 2005. It is work but I find it fun and interesting and it keeps me active in retirement as well as a source of wealth that I feel I wouldn't have had I just stayed in the market.
    Well the stock market is like 3x what it was in 2002, or something like that

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  • dennis
    replied
    Originally posted by fatlittlepig View Post
    CREGuy are you a doctor? I don’t know of any doctors who decide one day they want to spend their precious free time learning how to manage and invest in commercial real estate.
    I am a doctor, retired 3 yrs now. I did wake up and decide to invest in real estate after the stock market meltdown of 2000-02. My portfolio dropped in half and I saw a number of docs have to keep working because they were dependent on the stock market for their retirement. I decided that wouldn't be me so I educated myself for several yrs and then pulled the trigger on my first apartment buy in 2005. It is work but I find it fun and interesting and it keeps me active in retirement as well as a source of wealth that I feel I wouldn't have had I just stayed in the market.

    Leave a comment:


  • CREGuy
    replied
    Obviously not a doctor. My wife is an OB/GYN. There seem to be a lot of doctors here that want to spend their precious free time learning how to manage and invest in stocks, bonds, businesses, etc., and it sure appears that there are at least a handful that are interested in doing the same with commercial real estate. If you're not one of them, that's fine, but your particular circumstance certainly doesn't represent the entire board.

    Leave a comment:

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