Does anyone invest in RE on the side? I want to diversify my investments and buying commercial/residential RE is a good way to do so. I am just beginning my due diligence and need some reading or course recommendations. Thanks in advance!
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I guess it depends how much you have to invest, but an easy/low-entry barrier way (aside public market REITS / REOC's) could be property crowdfunding? I'm not particularly well placed to talk about it and it comes with it's obvious risks and downsides but it's an easy way to gain exposure.
I would be extremely wary of just "investing" in real estate. If that's the way you want to go, either find a friend who does it full time and put some money with them or invest in REIT stock. Owning a building, even a small one, is essentially a full time occupation - you are always on call and when your tenant reports a leak, or the boiler goes out, you can't tell them to hold on a few hours til you're done with your day job to take care of it
This. I used to manage a 15 unit apartment complex. Water leaks, toilet issues, are going to be the majority of the calls. You will also have to deal with structural issues as well - roots, cracks in cement, etc.
I would call the owners at 1-3 AM and they would still show up to resolve the issue, or contact a licensed professional. This was located in a ghetto area, so we dealt with tenants with 5-10 people living in a 2 bedroom apartment.
Know what you’re getting yourself into. Once you have it down, you can utilize your knowledge to keep things less chaotic.
Hah, wait - they paid you to manage the properties yet you’d call them at 2 AM to come fix a leak?
can’t you just pay the 8% in property management to take care of those headaches?
I've been quoted closer to 4-5% in my market, but they also charge 1 month rent as a fee for new leases which is killer. There are services where you only outsource the maintenance aspect of PM and handle the marketing/accounting yourself which are much cheaper too, which is what I am planning to use. I've also heard of investors in my market that will try to lease up their units themselves on 2+ year terms and THEN hire the aforementioned PM groups so they have at least a couples years of just ~4% before they have to start paying the leasing commission fee. As long as my returns are still acceptable with a modest PM/maintenance fee included there's no reason I'll have to respond to maintenance headaches like the classic 2am leaky toilet example (at least not regularly).
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