Can’t pull the trigger on real estate investment?
I’m 32, net worth 1.5M liquid, all in vanguard funds, diversified across total us, total international and some muni bonds. I can’t help but feeling I would really benefit from some real estate diversification. I already own some Vanguard reits in my 401k but it’s not the same as having a more direct exposure. I’m not interested in buying my house here in the Bay since I don’t have a family to please and my rent is affordable. I’m also not comfortable with buying an out of state rental and dealing with a property manager, I am “domestically challenged” and feel I would be easily taken for a ride. I also don’t like the online services such as fundrise, they are basically just a glorified reit targeted at millennials and are terribly tax inefficient, I care a lot about taxes so I stick to Vanguard reit in the 401k. I was thinking to maybe try some syndications, but there are so many sponsors and it’s really hard to trust some random marketer enough to throw 100k at them. Thoughts?
Like all things, once learned, you will eventually become great at it. This is your choice. If you don’t see good reason, don’t do it. You must be highly motivated to own a home. You must be very responsible and it requires a very different way of thinking. Being a property owner, who rents out their property, is extremely different from being a home owner. In fact, it’s the second phase after being a successful home owner. If you’re looking for high rewards, a risky but usually a fair investment, and a ton of hard work, then pull the trigger.
I have done both and I loved both. Renting out was a bit of a pain for me but the check every month was extremely sweet!
REIT in Roth
That’s what I basically do already. REIT in 401k and in backdoor Roth
Smart. Same
Real estate is not passive. If you don't feel like it's made for you then don't.
Agreed
Amazon, are you trying to get PIP’ed
In my opinion unless you’re into actual real estate management, reit is the way to go. I doubt you’d be able to extract extra spread without getting into routine operations on a property. You can always diversify within reit space. When I look at real estate my goal is diversification rather than the yield. For instance last year reit did very well compared to equity indexes
I concur
Excuse my lack of knowledge in this area. Isn't buying a rental with a mortgage like buying equities on margin, so the advantage is that while I'm not super liquid I can invest larger amounts and make more? It seems easier to get a mortgage than a large margin
I was considering Fundrise. Could you share your reasons as to why is it tax inefficient?
It’s taxed at your marginal tax rate, the worst possible outcome. It means that your 7% becomes 3.5% at most TCs in coastal states. Compare that to direct real estate ownership and it’s a night/day different.
Don’t. Can’t. Not. Count those words in your post
Is that supposed to be some motivational crap? Otherwise I don’t understand your point. I said can’t because I don’t have time to deal with property managers, and am wondering how other busy Blind folks invest in real estate so I can hopefully diversify my net worth.
How did you save 1.5M at age 32?
I didn’t save all of it, a good portion is investment returns. Frugal living, sp500 returns and a smallish (500k) startup payout.
Clearly, whatever you’re doing is working. I’d hesitate to change much in your approach to spending and investing. Actually you might be able to retire already.
Don’t bother with real estate, plenty of other investment avenues with faster growth and stronger returns
Crowdstreet
I believe the term you’re looking for is “pull the trigger.”
Totally. Still sleepy lol.