Gunfighter

Meanwhile over in the world of income producing real estate, we keep raising rent to match inflation and tenants keep paying. The loan payments are the same as always, so even with increased operating expenses, we are keeping 50-75 cents of every additional dollar in rent. It's as if the government and central banks were helping out people who borrowed money to buy assets.

Use $1 to buy $4 of real estate and 10% inflation becomes a 40% gain. If you keep the asset, 10% inflation boosts cash flow by 40%. And for the best situation of all, you do a non-recourse cash out refi, take all your money off the table, keep the asset for an infinite ROI.

cantflylist

till the tenants stop paying rent and the government says you can't do anything about it by executive dictum. Oh, yes btw, your real estate tax bill is going up 17% and its due yesterday. but that could never happen

former landlord

Planetrain

Stock never needs new carpeting, appliances, air conditioners. Never has concrete poured down the toilets (real story), lightbulbs glued into the sockets, evictions where the evicted kids tell your kids’ schoolmates their Dad is kicking out their family and is evil (even though the utilities had been cut 4 months ago and they’ve been using a 5-gallon bucket as a bathroom, rent unpaid for months, etc)….
YMMV

Seriously, the investment property fairy has been golden for some, nightmares for others. Tends to strike those indiscriminately.

Trip7

High income earners like Airline pilots should not be in Single Family Residential real estate where a single door doesn't justify a management company and self management is not worth your time.

Pilots should be in something with more scale, like large, commercial, Multifamily Real Estate, particularly in a limited partnership with an experienced General Partner.

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Gunfighter

I've had a few skips or late payments over the years, but thousands of timely rent payments over the last 15 years covered the losses. Tenant screening helps tremendously in residential property, but residential is just one area of income property. Buying the right assets means you can rent to the right tenants. While the public image presented by the .gov was helping tenants with eviction moratoriums, they were delivering cash to property owners in wheelbarrows out of public view. The best property managers walked tenants through applications on assistance programs and recovered most of the rent, meanwhile the .gov way covering payroll with 100% forgivable CARES act loans.

The RE tax is no joke and represents a significant portion of annual expenses. Utilities, insurance, repairs and property management costs are also up 17%. All of the combined expenses represent approximately 35% of revenue on our storage facilities and 50% of revenue on the multi-family assets. Rents went from $1000 to $1,170. Expenses went from $350 to $410 (17% increase). Net operating income increased from $650 to $760. Debt service is fixed based on the original loan terms, so cash flow increased by $110. The taxes aren't due yesterday, they are due annually and we accrue accordingly.


Sorry to hear about your bad experiences.

Carpeting, appliances and air conditioners are all factored into property reserves. In fact, even the occasional sewer pipe and electrical repairs are accrued. The concrete, glue and evictions are real. It's a law of large numbers and with enough residential tenants there will be problems. Good screening reduces the likelihood of problem tenants. Timely communication from an effective manager reduces dramatic occurrences. Professional "problem tenants" are experts at exploiting amateur landlords. Growing the portfolio reduces the impact of a few bad actors. Most of the horror stories come from accidental landlords or hobby investors who get taken advantage of.

The indiscriminate nature of the property fairy is only a mystery to those who don't understand asset selection and property management.

As an alternative to stocks, real estate syndications can provide 80-90% of the financial benefits including tax savings without any of the management hassle or responsibility. Steer clear of fee laden crowdsourced deals and you can do well.

OOfff

Man I just spend all my money on dumb **** instead of trying to build an empire. Maybe I’m missing out just being a passive investor

Gunfighter

Like button.

Even with years of experience acquiring, developing and managing real estate, investing as LPs with reputable GPs is becoming a large portion the portfolio. When you are a highly paid professional, do what you do (fly airplanes) and pay an expert for skills in their profession like finding/managing real estate.

KirillTheThrill

This is you right now.

https://twitter.com/alifarhat79/status/1500069717314256896?s=20&t=lJ3xfFh6EdiXTXhJo4ztpQ

tcco94

What’s funny about the negative talk of ARKK is Cathie invests heavily into growth stocks and while they are very volatile, she has still strategically averaged down on some of these positions. I just think some of the backlash is shortsighted negativity, largely by the likes of the tabloids like Jim Cramer, who he himself has had worse advice than going off what Cathie is buying.

I don’t own ARKK but I have a few positions Cathie invests heavily in that are down significantly over the last 2 quarters. If you’re invested in the same portfolio style as ARKK and worried about this short decline I think you have the wrong strategy with these stocks. Just my opinion.

Planetrain

Anyone think crude will break $180/bb?

I don’t see how 50-seaters will be profitable over the coming months. This will be a huge headwind for all the airlines, but the RJ operators for sure.

The 2008 snap back was pretty fast. Wonder if we’ll see the same.