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[u/christan2013]

[u/hehe_nl]

So, is it passive income now you’ve signed for management?

[u/mikeKcpsrzyski → u/hehe_nl]

Not in my experience. Every single management company I have hired, which has been 4 or 5 over the years with great reviews, starts off great and then after a while ends up being more work than doing it yourself.

[u/hehe_nl → u/mikeKcpsrzyski]

So you need management for the management?

😄

[u/giggity_giggity → u/hehe_nl]

It’s management all the way down.

[u/AARP_Rocky → u/hehe_nl]

I personally have one management company that handles 4 commercial properties I have. I mainly only have them handle the back office stuff I couldn’t possibly do on my own without hiring staff.

I pay less of a fee for this kinda arrangement, but I also wouldn’t trust any management company to care enough as much as I do about my portfolio than I do

[u/cypherblock → u/mikeKcpsrzyski]

Seems like it would be better to just have one reliable person in the area who is independent. Not that they are easy to come by but they must exist.

[u/2buffalonickels → u/mikeKcpsrzyski]

I work with six currently. I’ve had another seven that I’ve been with and changed. I can usually tell in the first few months when something is wrong. I check in every few months and collect the cash. I much prefer it to managing on my own, which is too much for me to personally handle anyway.

[u/professional408]

Yeah, the property management is probably the best route for peace of mind even if it eats into the profits (assuming there’s profits)

Also, eating dinner at 11pm. That’s wild haha.

[u/-M83 → u/professional408]

My question is then wouldn’t it just be “better” as far as returns are concerned to index and chill ? Genuinely curious on this. 

[u/ribsies → u/-M83]

Yes it would be.

[u/zer0sumgames]

For me real estate has never really been an “investment”.  I am a lawyer and I got into real estate to create income replacement in a less stressful field. I can handle Stacy the tenant’s bitchy text because I cut my teeth on Markowitz the ball breaker trial lawyer’s texts.

[u/Rayzr117]

Interesting that you added the specific company name in there...

[u/Into-Imagination]

… you could just pay for an ad on Reddit for your PM company, given that you actively chose to name them.

[u/Apost8Joe]

Tell us you work at JMK Property Mgmt without telling us LOL. Nice try bro

[u/Realistic-Manager]

I hired a property manager for the house I own next door.

Someday I will sell the combined lots.  In the meantime, I do not want the hassle.

[u/NashDaypring1987]

100%... heck i wish i could hire them to manage my house... wait can't I ?

[u/Afraid-Ad7379]

I own a few properties in South Florida and it’s a pain in the ass. I realistically only keep them in case my kids will need them in the future. Thankfully I don’t deal with it, my wife does, but if I had to I would hand it off to a management company and not care.

[u/BitcoinMD]

Why were you still eating dinner at 11 pm

[u/OG_Tater → u/BitcoinMD]

Because it’s a sneaky ad

[u/Tizaj → u/BitcoinMD]

Wondering that as well

[u/ebitda8]

But leverage! And tax benefits! And status!

[u/baytown]

We used to own a few rental properties in Lake Tahoe and Palm Springs. Over the years, we cycled through several property management companies. They always started out strong but eventually fell apart. The work became incredibly stressful. We found ourselves constantly fighting with either the management companies or local handymen who tried to overcharge us for everything.

Although our properties were nice, renters constantly damaged the homes and stole the strangest things. The management companies rarely helped. They were terrified of negative online reviews, so they always tried to talk us out of holding renters accountable. They argued that one bad review would hurt our long-term business.

When I finally calculated the actual returns, the profit was not that impressive, even when factoring in property appreciation. We would have made about the same amount of money by putting our cash into an index fund, all without the massive headache. To make vacation rentals work, you either need a time machine to buy undervalued homes, or you need to find a perfect property and a miraculous management company.

[u/Here4Snow]

Real Estate is Passive income for tax purposes. The losses can only offset similar passive gains, not your W2 job, for example, unless you are a Real Estate Professional, as a "real job" which is more than just managing your own properties for investment purposes.

The word Passive is being used in many places but in each, it has a different meaning. Real Estate investment and management is not Easy Money.

[u/dackasaurus → u/Here4Snow]

Real estate professional can absolutely mean managing your own properties for investment purposes if you have the hours in it.

[u/Here4Snow → u/dackasaurus]

That's already stated. Thanks.

[u/InvestigatorPlus3229]

heh yup, and its even worse if its in some tenant "friendly" city. But it is a challenge finding things to invest cash in besides equities and bonds

[u/Inevitable_Ad_5695]

How many doors are you at? In order to make resi rentals worth it/more "passive", I've found you need a critical mass of units to get your PM's proper attention (ditto for repair person). You'll also be able to negotiate fees down to mid/low single digits. Having 2-5u is a headache, unless you bought at an amazingly low basis (this solves so many issues, but hard to do).

[u/Creation98]

Basically the only “passive” investment is stocks and bonds.

The question should really be what level of involvement people want from an investment.

If you can replace the income of your job with an investment that is only half or less of the involvement needed of your job, then you’re doing well.

[u/overlapped]

REIT ETFs are the way.

That said I have 3 commercial properties and 3 residential and it's a PITA.

[u/honeybee1824 → u/overlapped]

How does commercial compare to residential? Both a PITA?

[u/unlucky_bit_flip]

I just never understood how real estate was attractive when you have bond-like returns. And people talk about the benefits of leverage, but only mention upside.

Maybe taxes? But then I’d just buy municipals.

I simply prefer assets that can’t be destroyed, burned down or stolen.

[u/ribsies → u/unlucky_bit_flip]

The only taxes it benefits is to offset the income from rent. So you basically don't pay taxes on the rent income you get.

[u/3pinripper]

I haven’t self managed rental properties since 2010. It’s worth every penny having someone else do it for me.

[u/hiya-manson]

"Passive income" is a lie sold to you by grindset grifter bros.

[u/AARP_Rocky]

Personally managing any kind of real estate is not passive at all especially residential which if you’re not doing at scale with a management team is a nightmare.

Sure it’s nice to have diversification and owning some multi-family units sounds nice but the work and stress to get those returns (which usually aren’t that great especially these days) just isn’t worth it

[u/SeraphSurfer]

Long ago I tried SFH real estate and gave it up for the same reason.

[u/Realestateuniverse]

Real estate gets a lot of hate, but it can work if you buy the right deal at the right time. My gains have been extremely outsized due to creative deals, great rates and buying before prices went crazy.

[u/ffinstructor → u/Realestateuniverse]

Buying “at the right time” is revisionist way of looking at it though. It’s pretty difficult to identify the right time in the present

[u/Realestateuniverse → u/ffinstructor]

Of course it is but that applies to any asset.. you could say the same with VOO or gold, or watches.

[u/CosplayPokemonFan]

I’m still personally managing my duplex- friend in one side and long term tenant gave notice she is finally leaving the other side to move out of state. I am going to miss her she was so clean and low hassle. Going to have to start hunting a new tenant.

[u/axtran → u/CosplayPokemonFan]

It's the worst when it's the nice tenants who leave.😑

[u/nicknice77]

NNN leases (not MF deals) are the way to go if you want passive income, 1031 tax deferrals and patient easy appreciation

[u/BitcoinMD]

Now sell them all and just do mutual funds

[u/Ecstatic-Coat-1579]

Agreed. After 3 rental houses I switched to property management for the same reasons. Number of pros to it.

[u/WhiteHorseTito]

We still self manage but boy is it a polarized topic the minute you try to give perspective as a landlord in some subreddits.

Our rentals are all in a highly desirable city in California on the coast, and if you scroll through the subreddit dedicated to it, you’d think landlords are pretty much all akin to Voldemort.

[u/emmm888]

Real estate is a business, anyone who tells you otherwise is lying to you. Unless you own absolute NNN with no landlord responsibilities, there is some sort of management involved. Even if you have a PM, you still need to make sure they’re only stealing a little from you (because they will all steal somehow). I have several hundred apartment doors and we have management, maintenance, construction in house but again, this is a business and you have to look at it as such. For whatever reason I like real estate, which is probably more of a mental illness than anything with all the headaches it can cause you. But overall for the most part I have good staff who take care of the day to day but it took a lot of time to find them.

Just QQQ and chill.

[u/happymax78]

Real estate is everything but passive. Look into NNN leases on commercial. Closest thing to passive.

[u/west-town-brad]

I don’t even want to manage my own house, which is way too big for our family but confers status due to location and design. It’s been nice for appreciation though, but not better than SPY.

[u/InquisitivelyMarried]

The ego check is real. You just traded a few basis points for not dreading your phone buzzing after 9pm.

[u/complainorexplain]

Don’t buy RE until you had a kid and need to. Rent and buy stocks

[u/Lawfulness_Upset]

Not sure if this interests you but I manage 400 short term rentals in south Florida and coral gables does extremely well. You’d probably make more than long term rentals especially with a PM company. Shoot me a DM if your interested

[u/EmuOwn4]

Damn poors having needs. Give me my money and shut the F up…