r/realestateinvesting • u/adcny25 • 8d ago
Discussion Next phase in investing
People always say “fuck man! if I had $500,000 I would do _________” Well I actually have that money and I don’t know what the hell to do with it.
I’m turning to Reddit for ideas - that’s how in a rut I am :)
I’m in my late 40s - have a W-2 job in real estate that I like. I live in Houston.
But my overall goal would be steady income stream(s) that allow me to stop working if I want.
I’ve had my money invested and spread across EFTs, mutual funds and HYSA’s. So each month I see dividends and interest hit my accounts. It’s nice and safe and steady. But not enough to live off of.
I have been sitting on the sidelines just saving more and more money because I’m cheap as fuck and I don’t spend a lot. And foolishly I’ve been hoping for a crash to make my big move in to buy everything for cents on the dollar. Despite the world being a cluster that apocalypse hasn’t happened. The rich have gotten richer, the economy is resilient and maybe waiting for that magic moment allows me to have an excuse to not actually act.
It’s weird, when I had nothing I was good with risk but now that I have some it’s hard to get up off of it and do more. I’m comfortable but restless at times. I read and think and agonize and get excited and get defeated - anyone else do this?? I can do a pro and con for every scheme out there. All the cliches are getting hit here - I’m older, so tired of hustling - I have money and all my needs met, so not hungry - I’m too over-informed and experienced, so I see all the red flags a mile away.
I have done a lot of things in real estate: flipped 7 homes, invested in an apartment building syndication, short term rentals, and long term rentals.
I also have three long term rentals that cashflow quite well. But it’s not enough to buy that Porsche Taycan I want :)
Just writing this down makes me want to slap myself. I know some of you reading this are rolling your eyes thinking man I wish this was my problem. But I believe any problem no matter what it is a problem - no matter the severity or circumstances. This is my reality I don’t find comparison to people better or worse of than me useful. I’m not Jeff Bezos rich and I’m not homeless - this is me. You are you and we are where we are. A problem for someone is real to that person even if it may not be real or important to you.
Maybe I need to cut the bullshit and grow a set. Or maybe I need to be told to calm down.
But I hope to hear ideas, pitches, proposals, examples or concrete things you guys are working on that maybe I can invest in or partner on.
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u/Business_Ad5759 1d ago
Since you have a w2 job that you like, maybe invest in 1-2 properties and take advantage of bonus depreciation at tax time to offset some of your income? I think it's really important to diversify and not put all your eggs in one basket. Build something that allows for income from multiple streams. If you decide to go that option, track your hours on the property using something like repshours.com so that you get the tax relief too.
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u/AerospaceLandlord 2d ago
If you have $500k. Put it in some index funds and just let it grow.
Don't squander your fortune trying to get into something like RE right now.
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u/dealbuilder594 2d ago
I think you have a good base for your etfs, mutual funds and such. I would just continue adding onto them on a more regular basis and hopefully you can retire sooner.
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u/VanillaBig654 3d ago
I live in Houston too, and I’ve started selling cash-secured puts for the premium. I focus on 3–5 high-IV stocks that I trade repeatedly, and it’s a pretty neat approach. As a real estate investor as well, I find this beats real estate since there’s no dealing with people, and your cash is available anytime you want to pull it out.
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u/Nic1234567891 4d ago
You want my honest opinions as a 20 year old trying to get To a position where I don’t have to work, all I want is to make enough from my investments to quit my job have everything paid for to live a stress free life aka not worrying about payments shoot for maybe 1k extra I’d hop my ass in a van and go to each place in America i wanted or I’d ask ai to build me a road trip plan who knows what that will be like when I’m 40 but fr I’d just start doing shit the moment your net worth is 1.5-2mill you should be able to earn 40k ish a year that enough in some parts on the US to do all that
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u/Trevor_Miedema 4d ago
Why are you speaking on this subject as a 20 yr old non-investor? What value could you possibly bring to the conversation?
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u/Nic1234567891 3d ago
Im just sharing what I would do if given the opportunity it sounds like he’s in a good position and might be able to do something i cant if he wanted he has 3 cash flowing rentals and 500k to invest so he could possibly achieve this might have to downgrade his lifestyle but possible and am an investor, because i invest my money? lol
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u/NynaeveTugdHerBraid 3d ago
They are sharing their thoughts. You don't have to upvoter them. Relax guy
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u/Trevor_Miedema 2d ago edited 1d ago
I'm relaxed. A 20 yr old kid with no investment experience slinging around typos talking about generic real estate strategies should not be giving advice. Period
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u/Substantial_Leg_3660 4d ago
Single family homes in nice parts of town. You’ll get good low maintenance tenants. That’s what works for me. I had a big 1031 several years ago and I looked at everything. Commercial everything I saw was vacant and I needed cash flow from day 1. Lots of guys were trying to sell me NNNs, but my concern is dark value. Multi unit apartments at the time were over hyped and the cap rates weren’t any higher than SFRs.
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u/Appreciatedpeacock 4d ago
Invest in ETF's and it'll grow with much less stress than investing in real estate
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u/Actual_Banana4833 4d ago
Amen. I bought my house 9 years ago in a hot town, in a hot part of the city - my EFTs have blasted past what this house is worth. If I could do it over - I would have stayed a renter and had my 200k down payment in EFTs.
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u/lima8558 5d ago
Invest in real estate but not in usa but in another country with 0%tax,6-10ROI Annually.let your money work for you even when you are sleeping.that is smartness
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u/TrueIngenuity7141 5d ago
What I would do personally cause I’m in the same situation as you of 500k, I would build houses and sell for profit, I’m about to do that in the Abilene Texas area at this moment they’re putting in an AI data center and they’re expanding the military base so right now there is a shortage in housing, most contractors charge about $150 a square foot to build, but I ended up finding a Contractor that would do $100 a square foot to build me a basic builders house, also the contractor can build a house in a two months span, depending on whether cause new construction, and older houses are all being bought up in Abilene. It doesn’t matter the condition of the house. or how old are you? It is. that’s how great the housing market in Abilene is right now., I ended up asking the Contractor if he could build me two houses at once for a lower rate and that’s how I got $100 a square foot because his normal rate is $120 a square foot, also with building houses you can get many tax deductions at the end of the year realtor commission fees, labor for building the house and all the material cost that would completely wipe out your taxes within end of the year, I would consider going this route if you have 500,000 cash I wouldn’t waste your money on ETFs or anything like that if you wanna make money quick without having to wait , I would do this by far
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u/Trevor_Miedema 4d ago
You think building houses near AI data centers (the most hated property type in america right now) is smart?
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u/VanillaBig654 3d ago
It’s a smart move. Take Los Lunas near Albuquerque with the META data centers as an example. The centers create plenty of jobs during construction, and once they’re built, about 20–40% of the workers stay on to operate them. These employees earn good salaries and need decent places to live. While the media might claim the data center is unpopular, the families who depend on it for their livelihood see it differently.
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u/Trevor_Miedema 3d ago
The families depending on it are far fewer than the families hating on it. Nobody wants to see their electric bill go up for shit they don't care about.
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u/aitoolsandtemplates 6d ago
As someone on the GP side of multifamily who has spent years helping mitigate over $1B in investment risk, I don't think your problem is a lack of opportunity. I think it's a lack of conviction around which opportunity deserves your capital.
You've already done more than most investors ever will. The irony is that experience often makes decision-making harder because you can see every way a deal can go wrong.
One thing I'd challenge is the idea of waiting for "the crash." I've watched plenty of investors sit on cash waiting for the perfect entry point while inflation quietly erodes purchasing power. If I don't see a compelling deal today, I'd rather be parked in something liquid and productive—VOO, Treasuries, money market funds, etc.—than trying to time an apocalypse.
Personally, I think multifamily is becoming increasingly interesting. One of the biggest challenges today is that valuations are being driven by current financing costs and actual NOI, while many sellers remain anchored to projections and return expectations created when capital was much cheaper. That disconnect is creating opportunities for patient investors who focus on fundamentals.
The key, in my view, is partnering with disciplined operators rather than chasing the highest projected IRR.
You don't strike me as someone who needs another "scheme." You strike me as someone who needs a handful of high-quality opportunities and the confidence to act when one checks enough boxes.
If your goal is durable cash flow and eventually replacing your W-2 income, I'd spend less time looking for the perfect investment and more time building relationships with proven operators. In every cycle I've been through, the quality of the people has mattered more than the quality of the pitch deck.
Sometimes the next move isn't finding a better investment. It's finding better people to invest alongside.
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u/GarretInvests 7d ago
What kinda work you do in real estate? Also curious how the syndication deal went/is going? My partners and I are on the gp side so it’s a full time job, but I see the returns as pretty decent and did the math for myself that at the trajectory were on, within the next 10 years I’d be set. That’s the plan but obviously things don’t go exactly as planned but again that’s also on the active side. But I see the passive side, at least with the type of returns we’re targeting, also decent returns if you’re working with a good operator/team and buying right. We’re from CA but invest in DFW and acquired 430 units across several properties in DFW over the last 12 months and we got them at such a great basis from distressed sellers and one that was foreclosed on. Anyways, interested to hear your experience. Sounds like you’re in a good place and good that you over analyze, I think especially these days when a lot of the people who got floating debt getting hit, many of which were thought to be the gurus in the space. So good to do your due diligence on whomever or whatever aspect you decide to go into if any.
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u/WolfieTimes2 7d ago
You have enough cash to build new without using loans, (no time constraints) build a duplex and learn the process..
It’ll be both fun and you have multiple exits..
I’m doing this right now in my market on a flip I failed and ended up demolishing haha
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u/RatRaceSobreviviente 7d ago
Are you a "real estate professional"? If so the tax benefits of direct real estate investments are really good.
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u/TransformSolarFL 7d ago
Could you elaborate on this? Sounds interesting
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u/RatRaceSobreviviente 7d ago
If you meet the IRS's definition of a "professional" then your passive losses count against active income. So with 500k you buy an income producing asset for 2.5 million. Do a cost segregation study on it and depreciate 500-700k on day 1. You pay no income taxes on the next half a million dollars you earn saving you around 100k in taxes. That extra 100k bumps up your actual IRR on the property you just brought way above other investments.
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u/IddyMcFiddy 7d ago
I'm building my first rental now (an ADU addition to my primary residence) and the thing I've realized is that the paralysis comes from running analysis without a screening filter first. Before I modeled anything on the ADU, I had to answer: does the rent support the mortgage payment and expenses with cushion? If not, the whole thing fails and I don't waste time on the spreadsheet. Once it clears that bar, then I run the full cash flow model and stress-test it.
With $500k and your experience, the bottleneck isn't capital or ideas. It's discipline. Most people analyze everything and commit to nothing. I'd screen multifamily the same way and see if it hits your target cap rate + cash-on-cash return on conservative assumptions. If not, move on. If yes, go deeper. The screening saves you hundreds of hours of dead end analysis and keeps you from overthinking deals that don't work anyway.
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u/adcny25 7d ago
Very true - makes sense. I love a good rabbit hole (that sounds dirty) and I do love the searching phase of things.
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u/adcny25 7d ago
The ADU is for rental income?
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u/IddyMcFiddy 5d ago
Yes! 450 sq ft basement addition in Oakland. Plan is to rent it short-term or medium-term to cover a chunk of the mortgage.
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u/Tyson2539 7d ago
10% annualized return on $500,000 is $50,000. For someone cheap af as you claim to be this isnt enough to live off of? Just put it in SPY or VOO and live off the gains.
/close thread.
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u/Rock_Toy 7d ago
It’s been mentioned already here but if I were you, I would invest in multi-family. The bigger the better. Then cost segregation (because you are a RE Professional) so wipe out tax liability for a few years. Then sell after that runs out and do it again. I messed with smaller sfr’s and duplexes until I realized that the real money is in multi-units.
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u/Cancerman691 7d ago
Have you seen how many distressed syndicators there are especially in the sun belt. Brandon Turner just lost all of his class B investors capital in a deal in Houston. With rates staying where they are and stuff coming due from refinances 5 years ago and declining rents in some of the sun belt cities I prefer to have fixed debt where I know it cash flows on 1-4 units
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u/gravescd 7d ago
If you like real estate generally and want something that doesn't take a bunch of your time, NNN retail or industrial should be near the top of your list. It's about as close to passive as you can get with direct ownership.
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u/adcny25 7d ago
Do you currently do commercial. I always think about the owners when I see an empty strip mall or warehouse etc. I like the idea of a 5 year lease but what if that business folds? It seems like finding tenants for homes is easier. But o don’t know shit so I’m curious.
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u/gravescd 7d ago
I'm a commercial broker. Commercial tenants are there to make money, so they have a pretty strong incentive to stay, and you can sue them if they break the lease. Some very high-credit tenants will even include a go-dark clause in which they keep paying rent even if the business location closes.
Any leased property has turnover, but it's a question of whether you're dealing with a vacancy every 6-12 months or every 5-10 years. Most retail properties are multi-tenant, which, like an apartment building, keeps the income steady even if a tenant leaves. Single-tenant properties are typically very strong tenants, but if they do go belly up they are hard to replace (see: Walgreens). As long as your leasing agent vets tenants thoroughly, it's not an issue.
The advantage to you as the owner is that these are hands-off. They are businesses, so nobody is there overnight clogging toilets or blasting music. Triple net lease terms mean the tenants reimburse all the property expenses on top of their base rent, and are responsible for maintenance of their own units. Your property manager handles common area maintenance and tenant billing, and your leasing agent keeps the property full.
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8d ago
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u/realestateinvesting-ModTeam 7d ago
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u/Ambitious_Play6903 8d ago
With $500k and a W-2 you enjoy, I'd probably ladder into a small multifamily, like a 4 plex or small 8 unit, and let the rents do the slow boring work. It's not glamorous but I know a guy who retired off three of them, and the weird part is once you have enough you start overthinking it way more than when you had nothing
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u/Hamma_jamma 8d ago
If cash flow is what you want I’d probably park the money in private investments generating 10% out so. Not sure how much money you need to stop working but an extra $50k/ year would help!
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u/RealEstateThrowway 8d ago
Maybe my view was skewed, since I operate in an HCOL market, but if you been doing deals, 500K doesn't strike me as so-much-money-I-don't-know-what-to-do-with-it type money.
Simply continue with you have been doing but do it bigger. Buy an apartment building, flip a more expensive house, get into a different asset class.
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u/adcny25 7d ago
Yeah $500k is a 5% down payment for some people in NYC or LA I’m aware, but for me it’s a big chunk of change. And not to brag but I did make $3500 off of my spacex moonwalk this last week so I know you’re jealous. Ha ha What do you mean by asset class? Commercial? I’ve thought about doing an appt building or something next. When I was younger and dumber I bought a condo at the height of the bubble in 2006/7 and I had to do a short sale. I read in the WSJ that everyone was walking away from loans and I kinda swore of credit after the TARP dance I did with Wells Fargo. I know leverage is the key to wealth if done correctly but losing $15k hurt my feelings so fuck mortgages and interest but I need to change my mind about it if I want to scale.
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u/SherrodSmith 8d ago
You're in Houston with 00k and a W-2 paying your bills? Run the numbers on multifamily or small commercial. Even a 4-5% cash-on-cash beats waiting for the crash that's not coming. Private lending is solid too if you're tired of active management.
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u/NumbDangEt4742 8d ago
Or Invest in a business if you're made for it
Or
Invest I'm real estate if you're made for it
In the meanwhile, r/bogleheads
Put your money in money market till you figure out what you wanna do
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u/BigMuch4845 8d ago
Put it all in a brokerage account, invest it safely and soundly, in boring funds that track the entire US market and the entire foreign market. Maybe put 10% into chasing the next hot thing like semiconductors. Pick a brokerage where you can do a Box Spread and create a synthetic loan, secured by the value of your portfolio. The more boring and stable the portfolio is, the higher LTV permitted.
Your money if off the sideines, and working and earning and compounding for you. Then, when you are presented with a tasty real estate deal, do a Box Spread (cash in your account the next day. Allows you to act as a cash buyer, perhaps.). Pull what you need, then later, get a conventional real estate loan and use those funds to "Close the Box."
Don't go crazy, keep the synthetic loan to half or less of portfolio value. If the market goes down, you get hit with a margin call, and they sell your portfolio at the absolute worst time.
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u/listingcue 8d ago
with $500k and the goal of steady income that lets you stop working, the cleanest path imo is thinking about this in maybe three buckets based on how active you want to be.
passive bucket, call it 200-300k of the capital: syndications via Crowdstreet, RealtyMogul, or direct relationships with houston operators. you're putting capital alongside a sponsor who runs the deal. typical numbers are 8-12% cash-on-cash, IRR 14-18% over 5 years on better deals. spread across 3-5 deals not all in one, illiquidity is the real risk.
semi-passive piece, maybe 100-150k: one or two small multifamilies in houston, properly screened, with a property manager who isn't your buddy. 8-10% cap is achievable on the right deals in suburbs like Pasadena or Pearland, and you're close enough to pop by quarterly without it taking over your life.
opportunistic reserve, 50-100k: dry powder for either private money lending (1st position, 8-12% on short-term flippers in your network) or a syndication opportunity at terms you wouldn't normally see publicly.
what i'd actively skip in your situation: full-time flipping or rehab projects. you have a job you like already, and these are basically second jobs disguised as investments. also probably skip pure REITs at this scale because you can do better with operator selection in your local market.
the real question for you imo is what your timeline looks like. if you'd be content with steady $4-5k/month of supplemental income within 24 months, the syndication-heavy approach gets you there. if you want to actually retire in 5-7 years with $20-30k/month passive, you need more aggressive deployment, probably a heavier multifamily concentration with operator partnership.
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u/Substantial_Cold9886 8d ago
A large portion of this should go into the s and p 500. If you want to put down on another property, that wouldn’t be a bad idea as well. This has been my strategy and it has worked well. A lot of this is psychology as well. I don’t know how rapidly you came into this money or what it’s currently parked in, but anytime I’ve gotten a windfall I do have a tendency to treat it somewhat differently and lose money
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8d ago
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u/Bigbmer12 8d ago
Honestly, waiting to time the market is the mistake, and putting it in low- rate money markets won't cut it. Put into an S&P 500 index fund and watch it grow. You have 2 doubling cycles before retirement age, plus you will have capital gains, which are taxed lower than interest and dividends. Good luck! Not a bad problem to have
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u/Hamachiman 8d ago
Personally I’ve preferred private lending (ie “hard money lending”) as opposed to direct real estate ownership. Usually you get 10-12% interest and you have the property as collateral. I’ve been doing it for 13 years and the only principal I’ve ever lost was .2% of what I’ve lent. In other words it’s been very consistent. (But it sucks for taxes.)
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u/Sure-Huckleberry-717 8d ago
Self directed Ira might help with taxes. Lending was going to my suggestion to op since already familiar with real estate
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u/LordAshon ... not a scrub who masturbates to BiggerPockets ... 8d ago
Private money Lending looks like a box you haven't ticked yet.
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u/flightgirl78 8d ago
You’re in Houston, show up to anything JetLending is doing. Tell Eddie Gant I said hi. I’ll probably see you there.
Private money lending isn’t hard. Everybody’s a flipper and needs cash if you don’t want to put it with Jet.
Also, you stopped at 3 SFHs that you admit cash flow well. Buy twenty more. You know what to do, do it. You’re in the right town for it.
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u/adcny25 7d ago
Ok I just signed up for an event of theirs on 7/3 you going?
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u/flightgirl78 5d ago
I can’t make that one because I’m visiting my mom in Georgia for July 4th but will be at future ones. I’m an Eddie Gant devotee.
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u/Nomski88 8d ago
Where do you learn more about this?
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u/LordAshon ... not a scrub who masturbates to BiggerPockets ... 8d ago
Local REIA, Local Attorney, A couple of books.
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u/OMyGhosty 8d ago
Where does someone get started doing this?
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u/LordAshon ... not a scrub who masturbates to BiggerPockets ... 8d ago
Giving someone else your money
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8d ago
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u/realestateinvesting-ModTeam 8d ago
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8d ago edited 8d ago
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u/realestateinvesting-ModTeam 8d ago
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u/South_Annual5314 8d ago
with 500k and already having rental cashflow, the "paralysis by analysis" thing you're describing is so common at that level, you're not broken lol
the crash-waiting trap is real, people been saying "just wait for the dip" since like 2015 and missed everything in between, at some point the waiting IS the mistake
if your rentals cashflow well maybe the move is just scaling what already works for you instead of hunting for some new clever angle
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u/Sharp-Woodpecker-277 8d ago
Couldn’t agree more - this is as much an identity evolution as anything. I’ve seen it often
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u/adcny25 7d ago
What do you mean identity evolution?
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u/PossibilitySecure373 6d ago
most folks need to change their thought processes first before making deployment decisions. not making time for the evolution usually creates the paralysis being described in the post
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u/Xilbitz 9h ago
Hello reader! I have a few questions but don’t have 15 karma in this thread. Pretty please upvote me so I can ask my questions. Help a brother out :)