Can Real Estate Investing Really Lead to the Good Life?

[Dbbuzbee]

Hey guys, as I have said before, I am a 16 year old who joined this forum a week or so ago. I have been absorbing all the info I can through past threads and I read one specifically, @SteveO s thread about his amazing golf course purchase. Before reading about him and a few other guys on here, I saw real estate as a slowlane that only is a fastlane for the top 1% guys in that industry like Donald Trump. Now I see it seems to be a fastlane as long as you are good and work hard at it am I correct? I have always loved to watch HGTV shows on flipping houses and such but never thought of being a real estate investor. I think I could really have a serious passion for it. My purpose behind this thread is to ask if anyone here would be willing to offer me some advice in learning the industry and what I can do now to position myself to succeed. Also, if anyone has any books or resources on the topic of real estate investing that are good and comprehensive, I would also be very appreciative.

 

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[Dougema]

Hello @Dbbuzbee I'm sorry i'm not able to give yourself anything on Real Estate now because like you, I'm still trying to figure it all out. However, I think you asked some good questions so I'll be following your thread to check on the replies. Best of luck!

 

[SteveO]

Do you play sports? How about run marathons?

In football there is an extreme strategy. The best team is not always the biggest and strongest. Nor may it be the fastest... It is usually the smartest or the one that makes the right strategic moves at the right moment. But, sometimes taking chances pays off while other times a conservative approach wins.

It just all depends.

But one thing about football is that there are winners and losers. All in all, most people are going to win in the real estate game over time. But your initial assessment may be correct in that making it fastlane will be the result of luck or skill.

I like to think that all businesses have strong parallels to marathon training. If you want good results, there is a large amount of dedication that needs to be applied. Some people can train and make it through but if you want to stand out, you need to train and plan at a very high level.

You might plan and train for six months to run the race. Many will drop out of the training program either due to time commitments, lack of discipline, or from injuries.

Once you make it through to race day, you must strategize your race. These races are 26.2 miles long. Pace too slow and you will not have the results you want. Too fast and you will likely be forced to drop out. It takes time and practice to fine tune it all.

Ultimately, an injury could force you to stop your effort to achieve your goal.

Nothing in the world comes easy. Real estate has a lot of competition. There are many in the business that would run you over and leave you for dead in order to make a dollar. There are cycles that one must learn to read in order to accelerate. And, it takes a lot of time and effort to be fastlane.

 

[Raoul Duke]

https://www.thefastlaneforum.com/community/threads/seneca-on-the-shortness-of-life.66545/

 

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[LTL]

if you can source properties/raise capital

then you won't need to invest in real estate

just facilitate deals and collect a cut....

Even better when this done in commercial RE but that's another story

 

[SteveO]

if you can source properties/raise capital

then you won't need to invest in real estate

just facilitate deals and collect a cut....

Even better when this done in commercial RE but that's another story

Who is going to give you money to use if you don't have a track record?

 

[TheGrind]

Once you reach a point when you have 100 rentals and a property manager, then I'd consider it to be fastlane.

 

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[LTL]

Who is going to give you money to use if you don't have a track record?

I mean raising capital for developers/real estate groups....

 

[lowtek]

IMHO, real estate is a form of wealth preservation rather than accumulation. My wife and I have experience in multi family units, and you really need to get above 10 tenants to make some good money (unless you're taking advantage of marketing timing).

We're going to sell the 4 plex and be on the hunt for something with 8 - 12 units, as a better place to park our money. The bump in cash flow this gives us will never make us rich, but it will serve as a safety net in case something goes wrong and we're broke.

 

[EvanOkanagan]

This is a tough question because it can really depend on where you live, what the vacancy rate is, home prices etc.

I can tell you though that it doesn't have to take long to achieve decent passive income.

I started about 3 years ago, make just shy of 50k/year (in cash flow after all expenses--not counting mtg paydown or appreciation) and manage my own properties which is less than 2 hours per month of my time.

So it's a pretty good life... not Lambo fast lane for me but I could travel for a few years or even retire if I wanted to live conservatively at 29 years old.

My secret has been to keep re-investing in the business. I don't touch the cashflow I see from my rental properties. I just keep it building up in my accounts which accelerates the further purchase of more rental properties-- so this has a compounding effect on the increase of cashflow. I'm also a hard-working Realtor and invest the majority of my income into this machine as well (live off of about 15% of my income).

This would be called I believe "Intentional iteration" as MJ calls it in his book. If I keep going at this rate I know I'll eventually grow my net worth and cashflow exponentially and in another few years be living a lot more comfortably.. maybe even "fastlane"

 

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[SteveO]

IMHO, real estate is a form of wealth preservation rather than accumulation.

I have accumulated millions through real estate. All it takes is a good plan. There are books that can help.

I started with a 4-plex and a plan...

 

[goodguude]

I have accumulated millions through real estate. All it takes is a good plan. There are books that can help.

I started with a 4-plex and a plan...

Hey SteveO,
could you recommend some books about this topics? I planned to read "The Real Estate Game" next.

Thank you.

 

[Mr4213]

Go to local REIA meetings. A lot of potential mentors there who can help set you on the right path.

 

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[SteveO]

Hey SteveO,
could you recommend some books about this topics? I planned to read "The Real Estate Game" next.

Thank you.

The real estate game is good. It is intended to open your mind to possibilities. It tends to focus on some of the larger and more creative deals though.

I have not read any books on the topic in quite a while. How to buy and sell apartment buildings by Vollucci and The complete guide to buying and selling apartment buildings are good books that complement each other very well. One focuses on the value play while the other is built around right place/right time. The examples will be very old but valid.

I started my entire program by melting these books together. Of course I came up with my own process as I progressed.

 

[TonyStark]

https://justaskbenwhy.com/

 

[MattCour]

The ABCs of Real Estate Investing by Ken McElroy is a pretty solid RE book focusing on apartment complexes. I believe his company has acquired over 10,000 units across the country, possibly 15k at this point.

 

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[csalvato]

Not sure I agree with that...

Imagine flipping two houses per year in your spare time and earning an extra $50K per year doing that. Now, assume you put that $50K per year into buy-and-hold real estate with a cap rate of 10%, leveraged at 3:1 (typical 75% LTV) with 20 year full amortization periods and an average of 8% interest rate across the 20 years (since rates will inevitable rise between now and then). Each year, you purchase $200K worth of real estate that way.

Based on those assumptions, each year you generate about $3700 in income for each previous year you've invested, and ignoring inflationary forces, in 20 years, you've invested $1M to purchase $4M in property. If you stop investing in Year 20, your loans will start to fully amortize (one per year); in year 19, you have will have cash flow of $74K/year, but that cash flow will increase linearly for the next 20 years, at which point you'll be earning about $376,000 per year in passive income.

While not get-rich-quick, I can't think of too many other safe and relatively easy ways to generate $376K in annual passive income with about 20 years of not-so-hard work.

Of course, that's in addition to whatever other stuff you've used to build assets and cash flow over that time.

when people spout useless platitudes about grinding and hustling come on this forum and waste everyone's time by pandering, then ask me what I find valuable, if not their useless bullshit...I am going to link to this post

thanks @JScott

 

[snowbank]

Can you make a ton of money in RE? Yes.

Is RE slower than business? Usually much slower, yes. But it's all relative.

I've watched my brother build a real estate empire much faster than I would have thought it could be done. HOWEVER- it's more of a business than just "real estate". + he's busting his a$$ it's not the passive stuff you read about from 'get rich' stuff. He's got systems, teams, a huge network now and is basically hustling 24/7(his phone is blowing up all the time- bankers, wholesalers, employees, contractors, other leads, etc) He's getting the returns he's getting because he couldn't just "outsource" to someone to get the type of deals he's getting. He's not just clicking "buy it now" on houses and collecting checks like a lot of people would want you to believe.

I know of an RE investor in Austin who raised a massive amount of capital, bought up a chunk of prime real estate in Austin, and got filthy rich in his 20s. Like, big money rich. He's one of the only ones I know of that became that level rich through real estate so fast, most other RE guys can get rich, but it's more of a grind it out and the math works out long term so you get rich game. There's nothing wrong with that game at all, it's just usually slower than business success.

I know a lot of guys who start businesses and have made a ton of money very fast, and after the start up phase it's often significantly more passive than RE(referring to biz vs RE as 'wealth growth' not preservation). For example several friends I caught up with recently who raised money and did well with their businesses, are 4-5 years into their business and are basically passive, and are already worth a LOT of money. They already reached the stage where they brought in a CEO to replace them and they can either live the 4 hour workweek, or they can go start another biz and try to build even more wealth. Don't know many RE guys who do it in anywhere near that timeframe.

You're young so it's important you understand that the goal isn't to just make the most amount of money the fastest though. I can tell you from experience that the 4 hour workweek is boring as hell. You can only travel and 'hang out' for so long before you'll want to go back to actually doing something with your life. This is important:

I think I could really have a serious passion for it.

I can't stress this enough. You HAVE to have passion either for what you're doing, OR the end result of what it will bring you. It has to be legit value you're adding, but if you just do something because it supposedly makes more money than something else you'll eat up your life.

The more you like something, the longer you'll stick it out and the better you get. The better you get the better results you'll get, and the cycle continues. Where, if something else could have made more money but you didn't like it as much, you would have made more at the thing that would normally make less.

Why does my brother do well at RE? Because he REALLY likes the stuff he does. He's also really good at it but he's really good at it only because he was in the game long enough to get good at it, and he was only in long enough to get so good at it because he liked it a lot.

If I tried the same style of RE my brother does I wouldn't like it, so I wouldn't make the money he makes from that style of business/RE investing.

And vice versa if he tried some of the stuff I'm into he might not do as well because he wouldn't like it as much, so he wouldn't stick it out to rise above others in the space, and that's where you reap the rewards in any market, not from dabbling in what's theoretically better money than something else, but in rising to the top of a market, which can't be done without sticking it out to be better than others in that market, which usually can't be done without really enjoying what you're doing, or at minimum enjoying the end result of that(usually the former though).

You're 16, so besides that here's what I would tell you:

Find out what you want out of life. It will change in time because you don't know yourself well yet, and even if you don't intend for it to happen you'll subconsciously think you want things because of what you believe others will think of you if you do them, but if you're always as true to yourself as you can be, and you pick a certain route that gives you a chance to have those results that you want in life, and you're doing something you enjoy, you'll be on a good path. A good way to do that is to find people who have been where it is that you want to go. Ignore EVERYONE else.

Example:

If your goal was to become a successful multi family investor, find someone like SteveO and read everything he has ever written, take action and find someone like that who could help guide you along the way.

Someone else may want to teach you RE- have they been where you want to go? Doesn't matter what their website says- have they? If not, IGNORE, and stick to the plan.

The game only gets hard when you complicate things like this- chasing money, taking advice from those who talk about the game but haven't played, doing things you don't like because that's supposedly where the money is, quitting too soon if you're following these rules, etc...

Keep the game simple.

 

[LTL]

Wholesaling real estate is a tough job. What you say above is great in theory, but I don't know many people who do it successfully over long periods of time. Most people I know who try end up never seeing a first payday...and when you're working with commercial RE, you're dealing with more sophisticated buyers and sellers, so plan to work for a couple years learning the industry before you expect to make much/any money.

That part is all anecdotal based on your personal experience.
I've seen it in real life...not in theory.

Most wholesalers are focused on selling a deal not building a relationship with their investor list
Most wholesalers don't have a reserve requirement to weed out tire kickers
Most wholesalers aren't partnering with charities, law enforcement or even universities/institutes to source deals...
Most wholesalers aren't moving other income vehicles such as Pre-IPOs, financing deals etc....
Most wholesalers don't have former SEC attorneys working with them for maximum compliance....

You get the picture....

Your experience in flipping houses says it take years making money in commercial RE because of sophisticated buyers and sellers ...

Sweet Zeus!

Stick to residential man

Here's the thing with real estate -- unless you are generating recurring income from the underlying asset, you're going to find that all you have is a job. Potentially a lucrative job (I've flipped 200+ houses and made a lot of money doing it), but a job nonetheless (if all I did was flipping, the day I stopped would be the day I stopped making money). That's the problem with flipping houses or wholesaling or any other active real estate strategy -- the day you decide to stop sourcing deals, the income stops. Also, it's very difficult to scale a real estate business for most people, it's very difficult to put a real estate business on auto-pilot, and you'll almost certainly never start an active real estate business that you can sell.

It's easy to scale a real estate business and have it run autonomously when you have the proper items in place.
The problem is most people focus on the real estate not the transactions or business itself.
You are right about it being difficult for most people...but most people are linear thinkers with a degree of solipsism

My advice to anyone who wants to get rich in real estate: Find an active source of income (could also be real estate, like flipping houses) and then plow all the profits into buying and holding assets. Take your time, consistently work to build a portfolio and in a few years/decades (depending on your effort/success/goals), you'll find that your real estate is paying you enough that you can focus on other things.

Sounds slow with a high criteria for profit/long liquidation periods

I'll pass but I'm sure those who value security over geometric growth will find it useful

 

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[csalvato]

That part is all anecdotal based on your personal experience.
I've seen it in real life...not in theory.

Most wholesalers are focused on selling a deal not building a relationship with their investor list
Most wholesalers don't have a reserve requirement to weed out tire kickers
Most wholesalers aren't partnering with charities, law enforcement or even universities/institutes to source deals...
Most wholesalers aren't moving other income vehicles such as Pre-IPOs, financing deals etc....
Most wholesalers don't have former SEC attorneys working with them for maximum compliance....

You get the picture....

Sophisticated buyers and sellers in commercial RE...

It's easy to scale a real estate business and have it run autonomously when you have the proper items in place.
The problem is most people focus on the real estate not the transactions or business itself.
You are right about it being difficult for most people...but most people are linear thinkers with a degree of solipsism



Sounds slow with a high criteria for profit/long liquidation periods

I'll pass but I'm sure those who value security over geometric growth will find it useful

What's your experience in Real Estate?

I know @JScott's, and since you're on the opposite end of the discussion, I am wondering what experiences brought you to this contrarian conclusion...mostly because your opinions fly in the face of the opinion of several other successful real estate investors and wholesalers I have been studying.

Not saying it's wrong, just trying to understand the reasoning and where it's coming from?

 

[LTL]

What's your experience in Real Estate?

I know @JScott's, and since you're on the opposite end of the discussion, I am wondering what experiences brought you to this contrarian conclusion...mostly because your opinions fly in the face of the opinion of several other successful real estate investors and wholesalers I have been studying.

Not saying it's wrong, just trying to understand the reasoning and where it's coming from?

I focus on transactions/relationships not the real estate itself

Fix and flip 200 houses ?

Or partner with a brokerage firm to sell 200 houses then use that intellectual property to license to 10 others for royalty fees ?
Or partner with a mortgage company to get 200 quality approvals then trade that cut for an equity stake ?
Or work with a research institute/womens shelter to sell 200 homes for a new home builder then accept houses as commission ?
Or conduct luncheons/conference calls with 200 investors for an assisted living center/ hospital for huge fees ?
Or partner with 4 apartment owners on improving their 50 tenant occupancy/quality and reducing net operating expenses ?
Or sell 200 acre vineyard/dutch industrial lot to a private equity fund/logistics company ?


I wouldn't touch flipping houses for a hobby but that's just me...

I don't want to wait 20 years to make 6 figures subtractively

 

[csalvato]

I focus on transactions/relationships not the real estate itself

Fix and flip 200 houses ?

Or partner with a brokerage firm to sell 200 houses then use that intellectual property to license to 10 others for royalty fees ?
Or partner with a mortgage company to get 200 quality approvals then trade that cut for an equity stake ?
Or work with a research institute/womens shelter to sell 200 homes for a new home builder then accept houses as commission ?
Or conduct luncheons/conference calls with 200 investors for an assisted living center/ hospital for huge fees ?
Or partner with 4 apartment owners on improving their 50 tenant occupancy/quality and reducing net operating expenses ?
Or sell 200 acre vineyard/dutch industrial lot to a private equity fund/logistics company ?
Or sell 200 million worth of Lyft pre-IPO blocks to Arab royals in the Gulf ?


I wouldn't touch flipping houses for a hobby but that's just me...

I don't want to wait 20 years to make 6 figures subtractively

I understand what you're saying...I meant, what is your experience? What have you done?

Just curious.

 

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[snowbank]

What's your experience in Real Estate?

I know @JScott's, and since you're on the opposite end of the discussion, I am wondering what experiences brought you to this contrarian conclusion...mostly because your opinions fly in the face of the opinion of several other successful real estate investors and wholesalers I have been studying.

Not saying it's wrong, just trying to understand the reasoning and where it's coming from?

I focus on transactions/relationships not the real estate itself

This is the equivalent of someone saying "I do internet stuff".

 

[csalvato]

.

 

[Get Right]

I'm trying it. You can see my progress thread here.

 

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[The-J]

[HASHTAG]#notable[/HASHTAG]?

 

[The-J]

Can you make a ton of money in RE? Yes.

Is RE slower than business? Usually much slower, yes. But it's all relative.

I've watched my brother build a real estate empire much faster than I would have thought it could be done. HOWEVER- it's more of a business than just "real estate". + he's busting his a$$ it's not the passive stuff you read about from 'get rich' stuff. He's got systems, teams, a huge network now and is basically hustling 24/7(his phone is blowing up all the time- bankers, wholesalers, employees, contractors, other leads, etc) He's getting the returns he's getting because he couldn't just "outsource" to someone to get the type of deals he's getting. He's not just clicking "buy it now" on houses and collecting checks like a lot of people would want you to believe.

I know of an RE investor in Austin who raised a massive amount of capital, bought up a chunk of prime real estate in Austin, and got filthy rich in his 20s. Like, big money rich. He's one of the only ones I know of that became that level rich through real estate so fast, most other RE guys can get rich, but it's more of a grind it out and the math works out long term so you get rich game. There's nothing wrong with that game at all, it's just usually slower than business success.

I know a lot of guys who start businesses and have made a ton of money very fast, and after the start up phase it's often significantly more passive than RE(referring to biz vs RE as 'wealth growth' not preservation). For example several friends I caught up with recently who raised money and did well with their businesses, are 4-5 years into their business and are basically passive, and are already worth a LOT of money. They already reached the stage where they brought in a CEO to replace them and they can either live the 4 hour workweek, or they can go start another biz and try to build even more wealth. Don't know many RE guys who do it in anywhere near that timeframe.

You're young so it's important you understand that the goal isn't to just make the most amount of money the fastest though. I can tell you from experience that the 4 hour workweek is boring as hell. You can only travel and 'hang out' for so long before you'll want to go back to actually doing something with your life. This is important:



I can't stress this enough. You HAVE to have passion either for what you're doing, OR the end result of what it will bring you. It has to be legit value you're adding, but if you just do something because it supposedly makes more money than something else you'll eat up your life.

The more you like something, the longer you'll stick it out and the better you get. The better you get the better results you'll get, and the cycle continues. Where, if something else could have made more money but you didn't like it as much, you would have made more at the thing that would normally make less.

Why does my brother do well at RE? Because he REALLY likes the stuff he does. He's also really good at it but he's really good at it only because he was in the game long enough to get good at it, and he was only in long enough to get so good at it because he liked it a lot.

If I tried the same style of RE my brother does I wouldn't like it, so I wouldn't make the money he makes from that style of business/RE investing.

And vice versa if he tried some of the stuff I'm into he might not do as well because he wouldn't like it as much, so he wouldn't stick it out to rise above others in the space, and that's where you reap the rewards in any market, not from dabbling in what's theoretically better money than something else, but in rising to the top of a market, which can't be done without sticking it out to be better than others in that market, which usually can't be done without really enjoying what you're doing, or at minimum enjoying the end result of that(usually the former though).

You're 16, so besides that here's what I would tell you:

Find out what you want out of life. It will change in time because you don't know yourself well yet, and even if you don't intend for it to happen you'll subconsciously think you want things because of what you believe others will think of you if you do them, but if you're always as true to yourself as you can be, and you pick a certain route that gives you a chance to have those results that you want in life, and you're doing something you enjoy, you'll be on a good path. A good way to do that is to find people who have been where it is that you want to go. Ignore EVERYONE else.

Example:

If your goal was to become a successful multi family investor, find someone like SteveO and read everything he has ever written, take action and find someone like that who could help guide you along the way.

Someone else may want to teach you RE- have they been where you want to go? Doesn't matter what their website says- have they? If not, IGNORE, and stick to the plan.

The game only gets hard when you complicate things like this- chasing money, taking advice from those who talk about the game but haven't played, doing things you don't like because that's supposedly where the money is, quitting too soon if you're following these rules, etc...

Keep the game simple.

@SteveO, @JScott, and @EvanOkanagan made some excellent replies. But this...

OP doesn't realize what he got with this post. He got more than he bargained for... and then some. I wish someone told me this when I was 16.

 

[JustAskBenWhy]

I am not passionate about real estate. But, it pays for my Tesla and J Scott's gambling addiction, so I think it's fair to say that RE can indeed work lol

 

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[SteveO]

I know of an RE investor in Austin who raised a massive amount of capital, bought up a chunk of prime real estate in Austin, and got filthy rich in his 20s. Like, big money rich. He's one of the only ones I know of that became that level rich through real estate so fast, most other RE guys can get rich, but it's more of a grind it out and the math works out long term so you get rich game. There's nothing wrong with that game at all, it's just usually slower than business success.

The funny thing is that it is "business success". You can sell tacos from a cart and make money or buy a house to rent out. Or, as you have clearly stated, you can apply systems, leverage, and hard work to grow these to epic proportions. Business is business. There are all kinds.

 

[SteveO]

OP doesn't realize what he got with this post. He got more than he bargained for... and then some. I wish someone told me this when I was 16.

Our good friend, Billy, likes to talk. He is very good at it!

He was a "snot nose" when we first met. Now look at him...

@snowbank