Do You Have to Go "All-In" with Real Estate? Of Course Not!
Articles on Bigger Pockets are usually very good to excellent. However, a recent article portrays real estate investing as either all-in or impossible (almost).
That is plain wrong.
Successful part-time real estate investing is not only very feasible, part-time real estate investing enables hundreds of thousands of Americans, including me, to simultaneously achieve financial freedom and happiness by assuring desired levels of passive income and net worth WITHOUT DRIVING OURSELVES CRAZY (as some full-time investors do) while having enjoyable occupations outside of real estate investing.
A Saturday workshop that focuses exactly on this topic will be presented in Cincinnati next month on October 13 (coming soon to other cities as well). Alternatively, attend a 90-minute seminar on this topic next Monday, September 17, in Iselin, NJ.
To clarify, successful part-time real estate investing, done properly over time, is feasible to achieve $10,000 per month of passive income and $2 million in net worth. While this might not be considered “rich”, this is adequate for most people.
By the way 89% of single family home rentals in the US in 2016 were owned by landlords who owned 10 or less such rentals (out of 17.7 million SFH rentals). These are NOT "all-in" landlords.
On a scale of 1-10, I enjoy my primary occupation at a 10 and I enjoy real estate investing at an 8. That combination of engaging in a primary occupation with great passion, then supplementing this with profitable and rather enjoyable part-time real estate investing, is optimal for me and it’s a great way to live life over decades.
In addition, I PURPOSELY avoid being all-in with any single source of income since putting all eggs in one basket is financially risky due to the inevitable periodic downturns in economic sectors that happen within the span of a person’s financial life. I have seen too many all-in real estate investors lose EVERYTHING in a downturn. That happens when you're all-in.
Going all-in with real estate investing works for many investors. But part-time real estate investing works for many more investors. That’s the reality.
Diversification is better than all-in for most people to protect your position. That includes different types of real estate investments. In fact, even though I focus my real estate on renting and flipping single family homes, I invested yesterday in a 32-unit apartment complex. I did this to diversify my real estate investments, including to have a more passive position. Of course, I did due diligence to assure that the property is worth more than the investment (in terms of both value and rents are well under market rent that can be corrected in a reasonable time frame) in case the market for that particular property changes. As investors, we don't buy at retail price. The point is that laser focus on only one category of real estate investment is placing an all-in bet on that one category. All-in bets over an extended period of time increases risk.