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Is it just me or is real estate by far the best reliable way

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Is it just me or is real estate by far the best reliable way to grow net assets?

Let's say we have 20k to invest

In the stock market you could expect maybe 10% a year. After a year your net worth goes from 20k to 22k.

If you invested in Real estate...

-Get a 200k apartment with a 20k downpayment, 180k loan
-Pay about 5% interest over 30 years
-Pay about 900 a month, about half of which is interest
-Rent the apartment for 1.5k a month, and lets say 1.5k renting expenses each year

You pay about 5400 a year in interest, you get about 16k profit from renting the property, lets say 10k after taxes. So we're looking at upwards of 4000 in a year after tax, and that's not even including appreciation which is probably another 3%+ a year, which itself is about 6k

So in a year our net worth went from 20k to 30k, a 50% return

Seriously, what am I missing?
>>
>>985642
>Seriously, what am I missing

insurance, taxes, and utilities mostly.
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>>985653
Taxes are included.
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>>985642
>Seriously, what am I missing?

>Utilities
>Insurance
>Property maintenance
>Time having to deal with property or the renters.
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>>985654

+ property tax
+ income tax
+ insurance
+ utilities

if you look at the competition and do the actual math you'll likely barely break even, if at all.

obviously in some areas it may be worth it, but in a lot of areas it really isn't.
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>>985657
I included income tax. Property tax is really low where I live. So I guess it's down to insurance and utilities. Though where I live Im pretty sure that price listed includes utilities.

So it's all down to insurance. Definitely not a matter of break even.
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>>985653
>>985657

Why would you pay for your tenants utilities?
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>>985662
And property maintenance. When the roof needs to be repaired for $5k, it's you who will need to fix it, not the renters.
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>>985667
I included that.
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>>985642
>getting a loan atm. with a floating rate

gunna be fun
>>
>>985668
>I included that.
>in my made-up fictional numbers that will likely bear no relationship to reality
>>
>>985707
usually it's about 10% of the rent that goes towards a reserve fund up to X amount, which should be based on your working capital.
>>
>Vacancy months
>Eviction
>Renter Damage
>Rental tax is higher than property tax
https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Tips-on-Rental-Real-Estate-Income-Deductions-and-Recordkeeping
>Assuming your property will appreciate.
>Assuming the housing market is always going up
>Getting 10% down on a loan
>Not counting in the work it takes to fix up property
>Why would someone sell a rental unit in pristine condition in a bull housing market?

Take in all of these factors and ask yourself if 10k for a year of work is good.

Yes rental property is a great hedge against an already diverse portfolio, but it isn't some magic turnkey situation you see on infomercials. It is a lot of work, which is why people hire 'property managers'.
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>22
>inherited million dollar property
>its appreciating 70k a year

All the things people listed here is correct, it makes money but there's a shit ton of fees, school tax, welcome tax, property tax, insurance, small weekly repairs. Also someone said 5k to fix a roof well that depevds on the damage a friends roof broke 3 mo this ago and for 12 grand to fix
>>
>>985730
Sorry for the typos I'm on mobile
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>>985642
But what you're forgetting is that real estate is no where near as liquid of an asset as equity securities are.

Real estate is great to add to an investment portfolio, but I already know the downside of the investment vehicle. After inheriting all of my father's investments, which were all real estate property, the only way I can now find quick returns on it is if I auction it off below market value.

It's by far, much easier to find a buyer for stock than it is for a piece of real estate property, but I do understand your point whenever it comes to the appreciation end of things.
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>>985712
>which is why people hire 'property managers'.
And if they do, is it still decently profitable?
>>
I invest in rental property. Getting a mortgage for rental property always leads to disaster.

>higher insurance premium
>you have to fix everything the tenant breaks
>plumber arrives but tenants aren't home? you pay
>property management
>etc etc

You'll never make a profit. You would be better off using that $200K to buy yourself a dragon dildo and a few thai ladyboys. Take the $20K and go to school to become a realtor. In the meantime start networking with well off people. I fixed a laptop for a guy on Craigslist who owned his own business and we became friends. When I became a realtor, he was my first client. First home sale was a $1.2M house. Since then I've met his circle and I've been selling $750K+ houses in the DFW area ever since, taking 5% commission.
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>>985759
>school
>for realtor
It's like a 63 hour course where I'm at. I really want to get my license but I dont think people will take me serious at 19
>>
>>985642

You've got it.

There is no better investment than real estate. Especially commercial lots.
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>>985642
Did this with my first apartment.

Bought apartment for ~120k with 35k down. Spend 15k on the apartment.

2 years later sell for 220k. ~1% interest rate on the loan. Also the monthly bill was ~60% of what my rent would be in the private market.

Pretty much made 170k in 2 years from that one apartment + the other 40% that i would have paid extra in rent on the private market
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>>985642
Real estate is pretty amazing. Especially since you are leveraging the bank's money (good debt). Income property pretty much pays for it self. The larger the loan you can take out, the higher your net worth.
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>>985751
>property managers

Take between 5-10% of your rent, in return they:

1. Get tenants
2. Deal with tenants
3. Hire the people (at your expense) to fix broken toilets etc.
4. Collect rent
5. Evict tenants

I am building a quadraplex which will be finished this month. I'm going to (attempt to) manage it myself. If I can't, there's a local property manager that only takes 5%.
>>
>>986191

I have no experience with real estate but I feel like property managers are a good service to use.

The only issue I can think of is that they can work under the table with any repair companies to purposely over charge you for things you don't need and the property managers get their cut.
>>
Where are you finding tenants willing to pay $1500/mo to rent a 200k apartment?
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>>985642
200k apartment is going to cost more than 10% down, unless you lie and say you'll be staying in it.
lets assume you are not trying to do that.

property taxes on income property is more than your taxes as living in it yourself

apartments have regime fees more times than not. thats another 150-200mo

costs for maintaining the property can vary. many times its a big cost item instead of small things so you need at least 2k in the bank for emergencies.

5% sounds about right but 900 a mo payment doesnt. plus add that PMI since you did not put down 20%

lets talk renters. you have to find them, vet them, make sure they pay, and if they dont, kick them out quickly and legally before you have to take someone to court over 2 mo rent. if you get a property management company congratulations you now have to pay them a cut of profits.

so in a nutshell. the difference between letting your money sit in an index fund and going into real estate is risk, and time.
>>
>>986245
in addition at under a 20% down payment doesn't that increase insurance costs?
or is that strictly for residential home owning purposes.
>>
>>986257
Depends on who is insuring you. Small time groups will give you a break if you file the apartment under business.

But you aren't getting a business commercial property for less than 25% down. So if you sneak in under 20% you are lying to bank about who is living there in the first place.

All in all, this anon shat post and /biz/ collectively came together for the truth on real estate investing.

If only we could do that on other things.
>>
Primarily the risk.

You can get people who don't pay and yet can't be legally evicted.
>>
>>986257
Wow I cannot read apparently.
>>
>>985642
It's called leverage. Btw your gainz from rent are taxed as income whereas in the market they are capital gainz
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>>986187
>the larger the loan the higer your NET worth
Holy fuck tell me you're trolling
>>
>>986257
instead of putting a down payment, buy the house in cash and then go get the mortgage. you'll get better rates
>>
>>985642
you're missing the assessment which on a 200k apartment will likely be in the 400-500/month range.
>>
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>>985745
>After inheriting all of my father's investments
>>
>>985712
>>985730
>>985745
>>986245
listen to them anon. The maintainence/renters headaches and poor liquidity are a big deal. The lucky can get rich in real estate, but it certainly isn't a reliable way to get rich.
>>
My grandparents owned 6 rental units up until about 5 years ago. Grandpa did all the maintence himself, though he was the kind of guy who could build a house from the ground up with his own two hands.

They turned a decent profit, but I also think he kept doing them because he liked to fix them, they sold them once he got to be about 80 and couldn't really keep up.

That said, looking into some index REITs, I've found that they've performed better than the overall stock market. Anybody know more?
>>
>>985751
>>986191

It can be profitable to use property managers. If you are only renting a few properties that are all local to you, it's not worth it vs just doing it yourself. If you are highly selective of tenants, most of them will be unlikely to do much damage beyond normal wear and tear. Thing is, you have to be local, and it is definitely a second job to take care of things. Property management companies are for if you are some combination of supremely lazy, too busy, or investing long distance.

Most of the people I know with over 100 houses take care of many things themselves, and run their own property management company because it's so much cheaper, and they get to fire employees on the spot for major fuckups (things like someone using their uncles social security number while having a very similar/same name to hide the fact that he's spent 14 years in jail for 3 different A&B charges. Gee this guy looks 40, why is his SSN 63?)

>I am building a quadraplex which will be finished this month. I'm going to (attempt to) manage it myself. If I can't, there's a local property manager that only takes 5%.

I'm always wary of property managers "on the cheap." Plenty of crooks at all ends of the spectrum, but shitty property management can bankrupt you in a couple of months.

Word of advice. NEVER under any circumstances sign any contract with liability waivers. If a property management company just wants to make a quick buck and put shitty tenants in, you will end up with a destroyed building and very little recourse (trailer trash tier tenants are usually effectively uncollectable). Always keep the leverage to sue them for putting in tenants that don't meet your requirements. If they can prove that they did their due diligence and someone slipped through, that's one thing. If they can't it becomes an entirely different ballgame. The last thing you want is for them to be able to say lolnotourproblem when catastrophic events happen.
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>>987088
>My grandparents owned 6 rental units up until about 5 years ago. Grandpa did all the maintence himself, though he was the kind of guy who could build a house from the ground up with his own two hands.

This is the only way you can turn a reliable profit with rentals. You will have to work, but it can be done around your day job.

Proof of income, credit checks, and reference checks will scare off most of the shitty renters. Section 8 gives you a consistent check, but you can't use any of the above methods to avoid shitty renters.
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>>986288
>You can get people who don't pay and yet can't be legally evicted.

If this happens you are a shitty landlord. You can always evict someone who isn't the combination of being a single mother with multiple children, in a tenant friendly state, and the middle of winter. If you can't, you fucked up somewhere.

Know the laws in your state. Know if your county/city has any special cases. ALWAYS record EVERY interaction leading up to and during an eviction. 2 party consent state? Put consent in the lease. Give proper notice, and consistently enforce any rule across all of your properties (late fees never get waived without advance written consent, etc). And for fucks sake, hire a good lawyer for the first couple of evictions. Again, outside of shitholes like CA, WA, and MA, if you cannot get someone out, especially for non payment, YOU fucked up somewhere. If someone refuses to pay, I can have a bailiff escorting them off the property in under a month guaranteed. That includes several days pay or quit notice, going to court, getting writs of restitution, and scheduling the eviction with the county.

My first eviction took 70+ days, and they stole several appliances before smashing every single window in the house and stuffing the sinks with plastic bags and letting the water run. I learned my lesson. If someone is more than 24 hours late, they get a pay or quit notice. Then it get's filed with the court. If they've been with me for a long time and are good tenants, I will give them the benefit of the doubt for a week, once, and only if they notify me about it 48 hours before rent is due.

There's also the other angle. Ounce of prevention is a pound of cure (more like several tons when it comes to rental properties.) Screen your tenants. 6 month's vacancy is recovered within a couple of years. One piece of trailer trash can do several DECADES worth of damage in a matter of months, if not weeks.
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>>988612
Section 8 is completely fine, just word stuff so that they are required to conform the same way as everyone else. Lots of states have ruled that you can only request proof of income for the part of rent that the section 8 tenant owes. IE if you demand proof of triple income, and the govt pays 900 out of 1000 dollars, the tenant only has to prove that they earn 300 dollars a month.

There are ways around that, but section 8 is in general a cat and mouse game with the govt if you want to screen people aggressively. Lots of people just rent at "above market rates" and that auto disqualifies section 8.

I will say this, if you rent to a tenant who does not have to pay anything, you are in for a woooorrlld of pain. The most entitled dipshits are the ones who don't have to pay for anything. I flat out refuse to rent to section 8 tenants who have a completely free ride. They are the most problematic rage inducing cunts on earth. I've seen them deliberately break faucets so that they can complain to get the property manager out there so they can beg for cigarettes.

Thankfully the states I operate in don't give a fuck about that, so I don't have to be creative in dodging many of the section 8 tenants.
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>>988625
You guys make me feel like a shitty tenant. I don't think I've payed my rent on time in almost a year, it's like a $5 a day late fee. I don't pay it on time not because I don't have the money, but more so that I'm lazy as fuck.

I recently had some trailer trash neighbors in the ajoining apartment. They moved in a few money after I did and they literally only paid rent twice. They trashed their apartment so bad that the property maintenance was working on it for well over a month before it was livable again.
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>>985665
I think it varies from country to country and contract to contract but most of the time the owner adds the utilities in the rent. That way he has much more control on what happens in the house.
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>>988645
I only buy property in areas where I can easily place people. As such I have far fewer qualms about giving people the boot. I admit my late fees are high, but it's majorly inconvenient for me to spend 2 and 3 days doing banking instead of 1. I pressure people very hard for direct withdraw setups. I charge extra for checks and cash, and don't accept cashiers checks under any circumstances (seen too many fake ones.) Paper billing is extra work for me, and I will charge for that.

People who setup direct deposit not only eat late fees, but also eat overdraft fees on their bank account. If you were my tenant, would you rather make sure that you can pay on time, and have it entirely automated? Or, would you rather eat a combined set of late and overdraft fees that are probably going to run you anywhere from 100-250 dollars?
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>>988651
I should add, I don't really give a shit if someone is always 1 or 2 days late and pays me the late fee no questions asked every single time. It's annoying, and it's another line item against them when lease renewal comes up, but if they otherwise are a good tenant, it's a thousand bucks every year for very little overhead.

It's the people that argue about how it's not their fault that they can't manage money/time and didn't get the check in the mail until after the weekend because they were off visiting family, and then they spent too much money shopping, oh wait they really meant their car broke down and waahhhh wahhhhh wahhhh.
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>>985642

monero
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