Ask HN: Easy Real Estate Investments = Oxymoron?

[bmcd]

Have any of you purchased real estate solely for the passive income? And how did you go about it? I have a contact that sells turnkey rentals and some cash saved up but I want to get opinions/stories before I go any further.

[codegeek]

"real estate solely for the passive income"

Now that is an oxymoron in my opinion. Real estate even though on the surface seems passive (rent it out while you sit on a beach) is far from that. There will be periodic maintenance, dealing with renters and god forbid you get bad ones, big item expenses once in a while (you bought a 15 year old house and even though the last owner did upgrades, you suddenly have to replace the roof), rent collection (this one can be painful too).

Investing in real estate is not always a bad thing depending on your capacity and the location/market of course. But please be aware that becoming a landlord is not passive at all even though you will not be working at the property on a daily basis.

[akg_67]

Agree with you. There is nothing passive about becoming real estate landlord.

Property management firms can manage only so much and cost a lot. They will come to you for most big expenses and decisions. Unless you have lot of rentals, property management firms tend to be expensive and you barely break-even on one or two properties.

Another issue with rental real-estate is squatting and defacing of the property if your property stays vacant for a month or two and not in good shape.

From passive income aspect, it is better to invest in REITs to get exposure to real-estate or join property management/ real-estate partnerships as LP/GP.

[bmcd]

I know it would cut into the monthly profit, but I've researched property management companies that have great reviews and they do everything from tenant placement to rent collection to repairs. I'd probably take the profit hit to automate it even more, thoughts?