I’m going to be starting as a first year in IB in NYC and was curious about the time commitment/feasibility of buying a rental property while being an analyst. I have student loans I need to pay down first so this wouldn’t be for probably at least a year, but is owning and maintaining a rental property manageable for someone with a job this time consuming? Wouldn’t be buying in NYC though probably in the North Jersey area.
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You won’t have the money to be doing that at least not till you’re an associate.
As a first year analyst you save about $1k a month (no bonus, $85k salary). Add your student loans to that and you’re probably saving almost nothing.
Also you want at least 6 months savings/emergency fund (~$20k) so that effectively washes up your first year bonus.
Also the time to take care of rental properties is very high and is underestimated.
How come you only save $12K and nothing from your bonus your first year? I'll be working at an EB and thought I could at least save $30/40K.
Posted this before but will post below. In general you will save about $1k a month (not accounting for bonus)
Some simple breakdown. Once again average estimates for rent and stuff, some of my analysts friends pay $2k others pay $1.5k whatever works for you. Below in monthly basis and $85k salary.
Take home: ~$4.5k (max out 401k company match/health insurance) Rent: $1750 Utilities: $100 Lunch: $250 (M-F around $12 a meal) Drinks/weekend hangout: $400 (this will highly very, could easily be more once again) Roth IRA: $500 (good practice to max out) Subway: $80 (includes weekend trip / take company car home)
Total: $3080
Leftover money: ~$1,300 Misc spending; $300 - 500 Leftover money: ~$800 - $1,000
Once again people who go out a lot/splurge could easily spend more. A lot of friends go to a gym/coffee thats easily another $100 a month.
You can always get a property management company which will get your time commitment down to basically 0 (I spend MAYBE 1 hour/month reviewing documents etc), obviously that will mean a pretty heavy hit to your cash flow, they typically take about 8-10%/month plus half of the first month's rent if they find the tenant. It's worth it to me--property is still roughly cash flow neutral month to month but getting a few grand at tax time for depreciation and the value has skyrocketed since I bought it--but YMMV.
REITs over rental properties. Diversify with investment grade bonds and blue chips.
Yeah but isn't the entire value proposition of real estate investing that you can get huge leveraged returns on a relatively small initial cash down payment? Why not go the route turnkey rental properties with property management doing the micromanaging?
YAAAS. Less time to invest and more beneft
Unless you can go in with partners who can help manage it , do not recommend. You’ll more likely have to pay out the ass for any issues because you can’t handle them yourself (unless u can call on fam to help) and it won’t be worth headache in LR.
If u got friends in non-IB u trust maybe pay them to manage the property but this makes sense only when u got a few places going. I’d say wait a bit. This early best investment is u make in urself and how good fo a job u do at work. Just throw it in the s&p
Im bumping this because i am interested in doing it. For those saying REITs, the goal is to to be able to extract equity and place across several properties in 5-10 years (compounding asset growth). Does anyone have any experience in actually purchasing a rental property?
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