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Real estate investing for dummies



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amother
OP


 

Post Thu, Jun 03 2021, 10:34 am
How do I get started? How does one invest in a real estate property, how does one grow the amount of properties, and find financially worthwhile deals? How does it work with taking out more mortgages, and any tax benefits etc?
I live in Lakewood - but do people also invest far away? Please help me out Smile
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leah233




 
 
    
 

Post Thu, Jun 03 2021, 11:08 am
If your knowledge of real estate investing is so limited that you are asking on imamother rather than speaking to successful investors think twice before you get involved.

Like all investments the bigger the potential for gain the bigger the risk of loss is. Real estate is unique that it is also from the few investments that you can lose a LOT more than you put in. Bankruptcy is common.

The people who are making money off real estate (1)are by nature very cut out for dealing with real estate challenges (2)also have a decent amount of mazal.

You may be better off just investing in a REIT or investing with a successful investor.

That said plenty of people do make mega money off real estate. Google some online courses to get more of a feel and that should answer your question. Or read a book like this one

https://www.amazon.com/Investi.....pth=1
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amother
OP


 

Post Thu, Jun 03 2021, 11:20 am
So I tried talking to people but people don't want to talk.

I did read online but would love to hear from experienced women on this site.

Online they did not make it seem like real estate is so risky, so that just goes to show that reading articles and books may not be as useful to me as real life experience from women who might know.
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Amarante




 
 
    
 

Post Thu, Jun 03 2021, 11:21 am
I agree with leah233's analysis.

Real estate investment is really not for amateurs who are asking very basic questions. If you want to buy a two family house and rent out the other apartment, that's a different story but investment in properties that are solely for investment is risky and you need enough capital so that you can ride out inevitable issues whether they be tenants not paying or major maintenance.

You would be much better off investing money in a market rate mutual fund. If you then have enough assets in a relatively safe place, you can take the excess and think about purchasing real property.

You really can't trust internet advice on anything especially investment unless it is coming from a very reliable conservative source. Many real estate advisors actually make their money on selling their advice and NOT on the actual real estate. This is very true whenever they have "seminars" on how to make money on real estate as their money comes from people buying the courses.
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amother
OP


 

Post Thu, Jun 03 2021, 11:31 am
Good thing I asked here instead of reading books and articles Wink none of the books and articles said you had to be rich to get into real estate.

The situation is: some $ is in mutual funds. We will be selling an asset and getting $ from it in the future. Wondering if we should use it to buy real estate but it seems the consensus here is stick with mutual funds.

(Can people get rich that way? At least w real estate you can use the rent from one property to take out a mortgage on another etc and build up.)
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Amarante




 
 
    
 

Post Thu, Jun 03 2021, 11:42 am
amother [ OP ] wrote:
Good thing I asked here instead of reading books and articles Wink none of the books and articles said you had to be rich to get into real estate.

The situation is: some $ is in mutual funds. We will be selling an asset and getting $ from it in the future. Wondering if we should use it to buy real estate but it seems the consensus here is stick with mutual funds.

(Can people get rich that way? At least w real estate you can use the rent from one property to take out a mortgage on another etc and build up.)


A lot depends on whether you have a stomach for high risk. Most people who want to "get rich" as an investment goal don't succeed. Even the most sophisticated hedge fund/portfolio managers don't manage to come out ahead all of the time.

Statistically putting your money in a low cost market fund winds up yielding the highest returns down the line.

When you have enough money in safe investments, you can think about investing in stuff where you might lose money.

Leveraging your money in real estate is not without possible pitfalls. Again, do you have money to pay for major repairs? What about money to pay the mortgage, taxes and other expenses if you don't have tenants. Think of all the landlords who were paid no rent this past year because of the pandemic.

From the questions you are asking, I think you would be better off investing the money in a relatively small mutual fund.

By the way, when you have the cash, don't put it in the market all at once. The best way to purchase stocks or funds is to purchase over a period of time so that you don't buy when it is at a peak. If you put a portion of money in over a period of time you will probably buy when it is both high, low and medium so your investment will average out.
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amother
Indigo


 

Post Thu, Jun 03 2021, 11:49 am
If you live in a house that is easily rentable, I'd start by renting out your house and buying a new one. This is what we're hoping to do, however we'll probably need to wait awhile because the housing market is crazy right now. The advantage of doing this is that the mortgage on a primary residence has a lower interest rate and lower down payment requirements. So you're buying the house as a primary residence and then renting it out after you've lived in it. You'll need to live in the house for at least a year before renting it out.
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amother
Ruby


 

Post Thu, Jun 03 2021, 12:07 pm
I'd just like to encourage you to explore and continue asking.

I say this from a huge huge feeling of gratitude to imamother because some posts a very long time ago planted the seeds for my DH and I to invest in real estate on a very small scale. We bought condos in an area he was very familiar with but was far away at an insanely cheap price. They ended up going up in value a lot and we sold for 3 times the price. We then bought homes in our hometown which are rented out. They are a huge part of our future in terms of planning for our financial security. Of course, no one knows what will be, but we are hopeful that they will continue to be rented out and also go up in value when we need to sell.

We did try to find a commercial deal, but they were difficult to find, we didn't have enough capital ourselves, it would be hard to get a bank loan because we weren't established players, and while we found potential partners it was hard to agree on things. In the end, most things fell through or weren't so wise (like in an unfamiliar place in a bad neighborhood that would require a lot of travel) and I'm glad we stayed with investing in our hometown.

So anyway, I would encourage you to keep asking people, research your options, and don't give up if you will have a chunk of money available to invest. It can really work out, even if you aren't a major player, and one thing may lead to another... Good luck!
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amother
Periwinkle


 

Post Thu, Jun 03 2021, 12:10 pm
DO NOT invest in property that’s out of town, except if you are ready to be on site as a building manager 75percent of the time.

Your best bet as an amateur is to invest in some small properties in Lakewood, start with one, screen potential tenants well, and pray they pay and behave Smile
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amother
Pumpkin


 

Post Thu, Jun 03 2021, 12:25 pm
If you are thinking about buying a property and renting it out, I would strongly suggest you speak with a landlord tenant lawyer who is familiar with the jurisdiction that the property is located in. Specifically, find out if the county is more tenant friendly or more landlord friendly.

For instance, NYC, including Kings, Queens, etc. is tenant friendly. This means that if you have a deadbeat tenant who doesn't pay, destroys the property or whatever, if the tenant knows how to play the system, it can take a year or more to have them evicted. And you will not recover the lost rent.

Also right now, there is still a moratorium on eviction proceedings in NYC and it's unclear whether it will be extended. This also means that when the moratorium is lifted there will be a huge backlog of cases and the courts will be flooded. So again, it will take much longer than pre covid to evict someone and it's unlikely you'll recover lost rent or even attorneys fees during that time.

However, not every jurisdiction is like this.
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West End Tova




 
 
    
 

Post Thu, Jun 03 2021, 1:07 pm
amother [ OP ] wrote:
The situation is: some $ is in mutual funds. We will be selling an asset and getting $ from it in the future. Wondering if we should use it to buy real estate but it seems the consensus here is stick with mutual funds.


There are real estate mutual funds, such as Vanguard https://investor.vanguard.com/.....VGSLX and T. Rowe Price https://www.troweprice.com/fin.....html.

Might not be as exciting as a reality TV show, but you will have real estate as part of your overall asset allocation and it will be a lot less risky for you, IMHO.


Last edited by West End Tova on Thu, Jun 03 2021, 1:36 pm; edited 1 time in total
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amother
Scarlet


 

Post Thu, Jun 03 2021, 1:09 pm
Please be careful.

My dh invests himself about an hr away and with others (large sums for big investments).
BH for us it’s worked. It’s a side hustle. No big bucks.
But bec ppl know that my dh dies this they call with so many sob stories. Or for help. Bought properties in Trenton and it’s losing daily. Or bought with big investors and deal was a bust. It’s Mazel. Some ppl have do very well.
With our houses if we weren’t managing them ourselves we’d make very little. There is hours of work involved, headache.

How we started. We had like 30k. Bought really cheap fixer upper. Refinanced. Bought another. Bought a few. Refinanced all. Invested large sum in big project (advantage is no headache - the guy just sends out quarterly payments and you get back some of your initial investment when they refinance). Got back initial investment. Refinanced homes again. Made larger investment. Etc.
but we don’t live off this.
We’ve decided not to flip the houses but hold on to them. They generate some income. Great for tax depreciation and increase in value over time.
Some ppl would rather flip and sell them refinance.
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