Quote:
Originally Posted by Dream2retire
I want input and advice about investing in rental property in TV.
...
Obviously there are a lot of details I have left off to try to be brief. Just wanted your input and experiences. Thanks
|
Over the last 100 years, the safest and fastest way to accumulate wealth in the US has been real estate. Up until 20-30 years ago, most large fortunes were made from real estate investing.
10 years ago, Warren Buffett said: "I'd buy a couple of hundred thousand single family homes if I could" (
Access Denied).
Here's a step by step method that worked well for my friend Shane Sigsbee, a former Notre Dame golfer and now an Elite Amateur, with a dozen or so USGA events under his belt:
Using the BRRRR Method to Scale to 35 Short-Term Rental Units with Shane & Rachel Sigsbee - The Road to Family Freedom
I have 3 rental condos in MA, that I manage from Florida. I've only stepped foot in the building once, in the last 3 years. They return about 6% per year + a 5 year appreciation of 40%. They are investments you can see, feel and touch ... they're not some nebulous piece of paper or #'s on a computer.
When the real estate market is weakened by things such as higher interest rates, rents increase and rental units become more valuable ... folks aways need a place to live and many people are forced to move by circumstances, regardless of their inability to buy or sell a home in a given market.
Over the last 50 years, inflation averages out to about 4%/year. Housing appreciation averages out to about 5%/year. That's somewhat deceptive, in that the housing appreciation average, takes into account the vast area of the USA, where real estate appreciation is minimal (generally areas not in a coastal region). Over the last 5 years, real estate appreciation in desirable areas has approached 10%/year.
As is the case with any business (& owning investment real estate is a business), supply & demand is the driving factor. Personally, I think the supply in TV is saturated. What's worse, is it's saturated by amateur real estate owners, who think buying property in TV is an easy "get rich quick scheme".
In the real estate business, your true profit is made when you purchase, not when you sell. If you buy right, in the right location, your profit is made. You might not realize those profits immediately, but the profit is there and tangible, in equity and/or cash flow.
One other benefit to the real estate approach that many seem to forget, are the tax benefits. "Depreciation" on rental property is free money. Not only is it free, your heirs never have to pay it back, as heirs (in most circumstances) take property at market value. If you depreciate a $1,000,000 worth of property over 27.5 years, at a nominal tax rate of 22%, that's $220,000 or $8000/year of "free money".
Don't let the naysayers get you down. There are plenty of opportunities in real estate investing, although TV may not always be the best place to concentrate.