Investing in Real Estate while working full time in banking

Hi guys, I currently work in Trading but have always had an interest in investing my money in real estate, which I would like to start doing soon.

As I am trying to decide between different strategies (buying and flipping, buying and renting, getting a mortgage, buying and then renting, etc.), I was wondering if any of you would be able to help me with a few articles / books / forums to learn more about the topic.

I am the kind of guy that usually likes to learn the ins and outs of something before pulling the trigger.

Thanks a lot for the help.

Comments (35)

4y
Doekim, what's your opinion? Comment below:

I cut my teeth as a kid getting dirty with my parents on their apt rentals changing toilets and fixing broken fences during storms.....not fun stuff. I still remember the sec 8 lady who was really just a young girl(early 20's) but had 7 kids all different colors in a 2bedroom house. Shit was always broken due to the wear/tear of that many kids but my parents loved the consistent govt pymts.

I would say it really depends on how mentally taxing your work is but the fix/flip game can be physically taxing depending on how involved you want to get. Of course the more involved you are and the more you do yourself, the less tends to go wrong and the lower the expenses are.

A plumber charges me $300 to basically show up yet I can do most basic plumbing e.g. clogs/waxrings for free. I'm also so busy doing my day job that I don't have time to fuck around after work or simply too tired to deal with it so I just call a plumber.

Another factor is property MGMT fees eating up all your profit. A small residential MGMT firm will charge anywhere between 8-10% and they really just do basic book keeping, finding a tenant(sometimes shitty ones) and handling evictions. I do all that myself and get my lease form from NAA and pay a 3rd party screener to do credit checks.

Of the 10yrs I've been doing it, I've had one bad tenant who broke his lease and skipped out early but I got him to pay 2 months as a termination fee and had it leased up a week after he vacated. At my day job, I get at least one eviction a month(1,000 unit portfolio) which isn't bad. I always hear afterwards "oh I knew he was shady" but they don't deny the prospective shithead as a) fair housing and b) they want their commission.

At the end of the day, no better way to learn then rolling up your sleeves and jumping in. My advice though is to go invest with someone who knows what they're doing and just let them make a reasonable fee so you can avoid the headache.

4y
ForTheDream, what's your opinion? Comment below:
Doekim:
I cut my teeth as a kid getting dirty with my parents on their apt rentals changing toilets and fixing broken fences during storms.....not fun stuff. I still remember the sec 8 lady who was really just a young girl(early 20's) but had 7 kids all different colors in a 2bedroom house. Shit was always broken due to the wear/tear of that many kids but my parents loved the consistent govt pymts.

I would say it really depends on how mentally taxing your work is but the fix/flip game can be physically taxing depending on how involved you want to get. Of course the more involved you are and the more you do yourself, the less tends to go wrong and the lower the expenses are.

A plumber charges me $300 to basically show up yet I can do most basic plumbing e.g. clogs/waxrings for free. I'm also so busy doing my day job that I don't have time to fuck around after work or simply too tired to deal with it so I just call a plumber.

Another factor is property MGMT fees eating up all your profit. A small residential MGMT firm will charge anywhere between 8-10% and they really just do basic book keeping, finding a tenant(sometimes shitty ones) and handling evictions. I do all that myself and get my lease form from NAA and pay a 3rd party screener to do credit checks.

Of the 10yrs I've been doing it, I've had one bad tenant who broke his lease and skipped out early but I got him to pay 2 months as a termination fee and had it leased up a week after he vacated. At my day job, I get at least one eviction a month(1,000 unit portfolio) which isn't bad. I always hear afterwards "oh I knew he was shady" but they don't deny the prospective shithead as a) fair housing and b) they want their commission.

At the end of the day, no better way to learn then rolling up your sleeves and jumping in. My advice though is to go invest with someone who knows what they're doing and just let them make a reasonable fee so you can avoid the headache.

Makes a lot of sense, thank you! Any other insights?

4y
Pug, what's your opinion? Comment below:

SB for you. These are the exact three books I had in mind, you beat me to it. Linneman's Textbook is also a good read but probably beyond the scope of what's necessary to know unless you really want to reach a good scale.

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4y
jchen281, what's your opinion? Comment below:
CREation:
My advice would be to invest through real estate crowdfunding platforms like Fundrise/RealtyShares/RealtyMogul. That way you can avoid the headache of property management and still access the potential returns of middle-market real estate deals. Some of the deals on those platforms are shitty but some can give really good risk-adjusted returns.

I wouldn't recommend crowdfunding companies at all - while it's true you're pretty much hands-off, you also don't have much control of anything else either (selling whenever you want, renting to whomever you want, getting bids to repair the property, etc).

I have experience investing in Cincinnati, OH (was there for a few years for college) and New York City (my home). In Cincinnati, my typical investment would be: purchase 2-family foreclosure for 50k, renovate for additional 50k, rent out to tenant for 2k per month (minus 30% expenses), then sell the property 2 or 3 years later for 200k. I've done this a few times. My annualized return requirement is at least 20% because I'm dealing with relatively small dollar amounts, but I've achieved 30% and 40% annualized returns on certain properties.

Now I live in Queens, and invest in Queens and Brooklyn. I typically look for distressed multi-family property where I can achieve a 6 to 8 percent cap rate (not sexy) once the property is stabilized, where then I'll hold onto it for 1 or 2 years, then sell it at a 5 percent cap rate (Mind you, I'm now dealing with 500k to 1M properties now). My annualized return is much lower than I would achieve in Cincinnati, but the property is much more in demand, and the cash flow of one NYC property is the same as 5 Cincinnati properties, and thus, 5x less management.

In NYC, it's very, very hard to find a good deal. You have to find a way to block the competition from finding out about a deal. In secondary and tertiary markets in the midwest, it's much easier to find a deal. I don't know which market you're in, but I just wanted to give you an example of deals in two totally different markets.

3y
ForTheDream, what's your opinion? Comment below:
jchen281:
CREation:
My advice would be to invest through real estate crowdfunding platforms like Fundrise/RealtyShares/RealtyMogul. That way you can avoid the headache of property management and still access the potential returns of middle-market real estate deals. Some of the deals on those platforms are shitty but some can give really good risk-adjusted returns.

I wouldn't recommend crowdfunding companies at all - while it's true you're pretty much hands-off, you also don't have much control of anything else either (selling whenever you want, renting to whomever you want, getting bids to repair the property, etc).

I have experience investing in Cincinnati, OH (was there for a few years for college) and New York City (my home). In Cincinnati, my typical investment would be: purchase 2-family foreclosure for 50k, renovate for additional 50k, rent out to tenant for 2k per month (minus 30% expenses), then sell the property 2 or 3 years later for 200k. I've done this a few times. My annualized return requirement is at least 20% because I'm dealing with relatively small dollar amounts, but I've achieved 30% and 40% annualized returns on certain properties.

Now I live in Queens, and invest in Queens and Brooklyn. I typically look for distressed multi-family property where I can achieve a 6 to 8 percent cap rate (not sexy) once the property is stabilized, where then I'll hold onto it for 1 or 2 years, then sell it at a 5 percent cap rate (Mind you, I'm now dealing with 500k to 1M properties now). My annualized return is much lower than I would achieve in Cincinnati, but the property is much more in demand, and the cash flow of one NYC property is the same as 5 Cincinnati properties, and thus, 5x less management.

In NYC, it's very, very hard to find a good deal. You have to find a way to block the competition from finding out about a deal. In secondary and tertiary markets in the midwest, it's much easier to find a deal. I don't know which market you're in, but I just wanted to give you an example of deals in two totally different markets.

Jchen, this is super helpful. I am from Europe, so would be looking at a country in Southern Europe, where I "know" what value actually is.

4y
TheDebtStar, what's your opinion? Comment below:

The ABC's of Real Estate Investing - This is in the Rich Dad poor Dad Series and is a very quick and easy read. I really enjoyed reading it. The author makes a good argument for real estate over stocks.

Multifamily Millions - This is a book covering multifamily properties specifically. You can make a million dollars in real estate a million different ways but I think MF is a great way to go.

Real Estate Investments and How to Make Them - This is more math heavy than the other books.

The Millionaire Real Estate Investor - Must read by Gary Keller, founder of Keller Williams. He interviews many different real estate investors in his book. Very inspiring.

Eventually, you'll get to a point where you've consumed so much material, the only thing you'll be left to do is just to take action if you want to learn anymore.

4y
Red banana Wagon, what's your opinion? Comment below:

Dude I kid you not, I would search around bigger pockets. Mainly the podcasts. The episodes have people who have built up large portfolios of multifamily and/or single family properties as well as people who do flipping. I don't think I'd ever flip, but from the episodes I've listened to its nothing like you see on TV. The people hardly ever go to the houses, they just make sure the numbers work and get a contractor to do the work. That allows for high volume I guess. But yeah I'd check out those podcasts just to see what strategies sound most appealing as well as realistic based on your circumstances and interests.

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4y
VolatilitySmile, what's your opinion? Comment below:

Perhaps surprisingly, larger properties tend to be easier to own than small ones. The reason is that a large property can support its own management team, whereas a small one cannot. Try and round up some of your trading buddies or your boss to buy a stabilized building with 30+ units. Fix and flip can allow you to build a nest egg more quickly but it's tough to do part time. The people that have gotten absurdly rich from real estate are the ones who've held for 10+ years.

4y
Pokemon Master, what's your opinion? Comment below:

I'd recommend staying far away from rent stabilized buildings in NYC unless that is a niche that you're going to specialize in on a full-time basis. There's way more red tape and potential for law suits. Fixing and flipping is the easy part. The million dollar question is how do I evict or buyout a building full of RS tenants without getting sued? It's possible but it's a full-time job.

I know of a couple value add shops that specialize in this. They've been successful financially speaking but have been sued multiple times before and/or are under investigation by state and city housing authorities. I'm also not sure how good I'd feel about using intimidation tactics to evict immigrant families.

4y
babybaboon, what's your opinion? Comment below:

I can't add much better insight than other posters but I've considered doing a few quick flips to build a nest egg, but in another life I did home demo/remodeling so I don't mind getting a bit dirty if I had the time (also would save some costs).

That being said, maybe also look into the 1031 Exchange if you're going to acquire and sell multiple properties in a short-ish time frame. I don't know all the tax laws surrounding it, but might be a good way to preserve capital so you can get that nice, stabilized MF and hold for 10 years that really makes your cash flow pop.

4y
belovalexei23, what's your opinion? Comment below:

hi guys, I'm also kind of interested in investing in the next years in real estates, not for too long into trading etc., but the last years I started to learn a lo, so now I'm here. currently exploring the recommended books/articles - so big thanks to everyone sharing. I guess it can be really challenging. My parents also invested in real estate so I have an idea about what it actually look likes. when you have another job too, I think you should think about how (mentally) challenging its for you. good luck!

4mo
listingnearby01, what's your opinion? Comment below:

Many people believe that in order to succeed in real estate investing, they must leave their day jobs and dedicate themselves to it full-time. Making this choice is difficult because doing so has many advantages that you should weigh against its drawbacks. Real estate investing offers many opportunities for financial gain, each with a unique time commitment. Some tactics can call for you to work 40-hour weeks while you're engaged in your business. Other tactics might be more reliant on passive methods and call for 40 hours annually. The beauty of the real estate is in the set of alternative choices and the ability to build a business that fits your needs in terms of lifestyle, finances, experience, education, and goals.

4mo
gleb_a, what's your opinion? Comment below:

I do short-term vacation rental management (think 15 properties on Airbnb, not mine). From a management perspective, I charge my clients 15% of gross and have automated damn near everything- messaging, contracts, check-in and check-out, cleaning. It takes a fuckton of time to set it up but once you do it's mostly just dealing with issues that pop up (some shit breaks, which it does quite often)

4mo
gleb_a, what's your opinion? Comment below:

I only work with certain properties in a specific city, so Facebook groups and mostly word-of-mouth. I speak Russian, so many Russian clients of mine tell I'm their friends about me

4mo
Ozymandia, what's your opinion? Comment below:
ForTheDream

Hi guys, I currently work in Trading but have always had an interest in investing my money in real estate, which I would like to start doing soon.

As I am trying to decide between different strategies (buying and flipping, buying and renting, getting a mortgage, buying and then renting, etc.), I was wondering if any of you would be able to help me with a few articles / books / forums to learn more about the topic.

I am the kind of guy that usually likes to learn the ins and outs of something before pulling the trigger.

Thanks a lot for the help.

I would be very wary of jumping into this space on the basis of having read a few books.  At least not actively.

Buying and flipping, for example, requires sticking to extremely tight budgets and schedules in order to deliver returns.  If you want to put 50,000 into a house over 3 months, and that ends up being 75 and 5 months, that's a huge miss.  To meet those budgets and timelines requires a lot of time and sweat on the part of the flipper.  It sounds like you won't have that time if you've got a FT job.

If you want to buy a home and rent it out, that's a little easier and has some more room for error, will give you a good sense of the ins and outs of being a landlord, and might help you build a bit of a rolodex of contactors, lenders, brokers, etc.  Especially since it's a fairly liquid market and the potential for absolute disaster is a lot less than buying a much more expensive MF building.

4mo
CREguy1, what's your opinion? Comment below:

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