How to invest $50k in real estate for rental income without spending excessive time and money?

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  • #94616 Reply

      I see in these post about people who have an additional say $50k or $100k. When they ask WWYD, there is often the real estate believers who say that they would absolutely just buy another property and make another rental stream of income. If you are in a HCOL area, the advice is to just go to another area that is better. This all sounds great as a quick blurb on FB, but how do you do this in the real world? Buying a property is WORK, I don’t mean just finding the right location at the right place then fixing whatever needs to be fixed, then getting and keeping decent tenants, but it is ongoing monthly work.

      I saw that chart recently, how much better taking $50k and buying property is compared to putting it in an index fund. But putting it into an index fund is really just a few clicks, and it is done until you want to change something. RE seems to be a job. You may love this job, and you may be good at this job, but I can’t see it as a set it and forget it investment. How does a “workin man” buy a location in another state (or even local) and not spend a ton  of time and money getting and keeping it running?

      I am not trying to prove the RE faithful wrong, I honestly want to know. I can have $50k, how do I turn that into ongoing rental income that is also appreciating in value?

      #94617 Reply

        If you know a good real estate investor you can “be the bank” as a private lender. The investor does all the work and pays you a nice return. I pay my private lenders double digit YTD returns and they are lien holders on the properties I buy until I pay them back or refinance.

        It’s mailbox money for them every month.

        #94618 Reply

          If it didn’t take work or it was so easy everyone would do it. It takes education and knowledge firstly, but if you’re going to invest money and want the best returns and safest investment, the least you can do is put some time on it.

          Once you have a good deal secured and property management in place, it’s a smooth sail from there and definitely best investment you can do.

          Suggested: US citizens saving for Canadian real estate down payment – best account?

          #94619 Reply

            It’s really not for me either. Alot of headaches in Ma with squatters. Ill keep my options open but with high rates and high prices Ill pass for now. DCA.

            #94620 Reply

              You buy turnkey rentals that are all set up and ready to go with PM in place. All you have to do is sign a contract and approve repairs/maintenance.

              #94621 Reply

                We bought a turnkey property and turned it into a rental a year later. Then bought a fixer upper and are cashflowing renos while we live in it. It is work (I’d say, about 1-2 weeks of full time effort/year, concentrated at the end/beginning of the lease), but will likely take years off of our FI timeline.

                I’d like to own 4 properties within the next few years and stop buying more… this way we will be a bit diversified, with retirement accounts invested in the stock market, and a small-ish real estate protfolio.

                I wouldn’t buy out of state, or out of my neighborhood for that matter.

                Recommended: What’s the average real estate commission in northern NJ?

                #94622 Reply
                Ln Ds

                  Those who prefer real estate will always sing its praises. The truth is, real estate is actually a very risky business. High transaction costs aside, most investors aren’t rich enough to properly diversify real estate, which means a hefty position has to be locked into a single investment. If you know the geography and market very well you could make good money on appreciation, but if you’re just a newbie looking to jump on the bandwagon, it’s extremely risky.

                  I rented out my apartment after migrating overseas – it took many trials and errors to eventually find the right tenant and management strategy. I was lucky – I had a superb agent managing some of the tedious stuff, but even then, I had my fair share of nightmarish tenants and rental disputes.

                  Don’t jump in if you’re not prepared to sink in time and work.

                  #94623 Reply

                    Real estate investor and agent here. Real estate does take a lot of work but you get 4 different elements of return that attribute to higher returns. I’m in California as well and I put my $50k into a duplex a couple years ago. I lived in one side and rented the other. Yes it took work to get started and I have an emergency fund for it as well but now it’s less of a job. My broker got started with 2 units 15 years ago and now has 200+ units of real estate. He is FI just off the cash flow alone but just loves what he does and we teach people to do the same locally as well.

                    Each investor has their preference though. You’re right that some investors make it sound easy in platforms like this. But when you dive into the real estate community you’ll see all that really goes into it. It’s just too much to write on a comment to do it justice I think. We usually have multiple educational meetings and 3 hour area tours with new investors teaching them about RE investing before we even show them a potential property to buy. It takes time and work but it’s a helpful income stream to diversify your portfolio.

                    #94624 Reply

                      You hire a property management company that does all that work for you. It costs you 10% of the revenue, but not 10% of the appreciation.

                      There are plenty of locations in the country where there is enough margin between home prices and rent prices where paying an extra 10% of the revenue to a property management company still leaves you with an appreciating property that also cash flows.

                      The trick is finding the right property, and often the right property is in another state. It can be easier to do it out of state than in state, if you live in a HCOL area.

                      Proposed: Everyone always says: Investing in real estate is the best way to grow wealth

                      #94625 Reply

                        Honestly based on the content of your initial question and some of your responses I read. I don’t think it’s the right fit for you. And there is absolutely nothing wrong with that. Play to your strengths and what you are genuinely interested in.

                        I will fire by 2028 from real estate as long as I keep buying just one property a year, I have bought 6 since 2019.

                        So it works but you have to have a passion for it and believe in it.

                        #94626 Reply

                          I’m in one of the lowcol areas that have been targeted by coastal investors. You used to be able to buy a run down house here for less than a used Camry. That isn’t the case anymore. Starters are $250 to $300k. Locals are about priced out. People used to complain about slum lords not fixing their properties but their rent was $500. Someone has rehabbed most of the cheap housing and they’re $2,000 rent so now they’re complaining about that. My opinion, with both high prices and interest rates you’re late to the party. Speaking as a resident, I would prefer you didn’t use your CA salary to buy up Midwest properties.

                          Even before the price run up, most of my landlord clients were doing well to profit $100 to $200 a month on a property, if everything went right. The ones that did well bought shit boxes for $15,000 cash. That opportunity doesn’t exist anymore.

                          #94627 Reply

                            Basically what Ian said. I’m based in Arizona and I work with California based investors with finding properties, renovating them, and executing different operating strategies from coliving to short term rentals to achieve higher returns.

                            I helped my parents take the equity they already had in their home in CA to buy 3 more homes in AZ that collectively generate $115k/yr in rent, of which $70k/yr is their net income.

                            That said, I think it’s important to evaluate real estate as you would any other investment. If you’re interested, I can send you a financial model that I use for calculating returns and making investment decisions.

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