Ask HN: Learning Real Estate Investing Through Investor Profiles

Speaking only for myself, I don't really care very much about what someone else did in a different geographical market under different economic market conditions, except as a curiosity. I can't assume any of what they did will work for me, so what's the point?

What's holding me back is that even though I'm interested, I tested the RE waters a decade ago and hated everything about being a landlord except the money, which wasn't nearly enough to offset how much I hated it long enough to get to a point where I was better at it and it sucked less.

Did you try using a property manager? For me, it's mostly been hands-off relying on my PMs to manage all my rentals. Every now and then I will have to step in regarding an issue with a tenant though, for sure. But it seldom occurs, so hasn't been much of a headache for me.

At first, I was living in the 3-plex and renting out the other two units, so I figured it made sense to do it myself. I didn't account for the fact that selecting my own tenants without experience meant choosing awful neighbors, nor that I wouldn't even be able to go after them for damage after I evicted them because they knew where I lived and I couldn't trust them not to vandalize my things further.

When I moved away, I tried to hire a property manager, but as I only had 3 fairly low-priced units, none of the established managers would take me on. I naively hired someone who had strong references, but for commercial real estate, not residential, and she made the whole process such a nightmare that I gave up and sold my units. (It had become impractical to step in for her when she failed over and over again.)

Once bitten, twice shy, as they say. I took the 50% increase on the value of the property and the 3 years of covered housing expenses combined with massive internal resistance as a pretty good sign that I didn't like the process even when it was profitable.

I might try again someday, but I value the lack of stress an awful lot.

Accounting for the 50% increase, it sounds like you walked away with a profit then. If you invested a small fraction of your monthly cash flow into a good property manager, it sounds like RE would be a good fit for you. You know the game (having had direct experience), you're aware of the financial returns on your initial capital (as well as tax benefits), and a PM would save you from the headaches you went through in the past. Is that a fair conclusion on my part?

Exactly this. Real estate is highly localized, and economy has a lot to do with success/ failure. The folks who do well are specialists, and disciplined to be able to surf the ups and downs of any market condition. I second that it would be a cursory curiosity. Plus the home shows have done this ad nauseoum

Would you be more interested in RE then if you were exposed primarily to properties in your geographic market with a strategy that is specific to the macro-economy at that time / effective across different economic conditions?

I think you're going to find HN to be against most rent seeking forms of "investment". There's a lot of hate on landlords, for both good and bad reasons. HN isn't on the friendlier side of the spectrum.

I also got that impression, but was curious to know why. PE firms like Blackstone or large corps exclusively buying up 1000s of SFHs I understand. But why would HN take issue with small mom & pop investors?

HN may take issue with investors, whether large corporations or small mom & pop investors, buying up single-family homes (SFHs) for a few reasons.

investors have the financial resources to buy up properties in bulk and pay cash, which can drive up prices in already expensive housing markets. This can lead to a decrease in affordable rental properties and can make it more challenging for first-time homebuyers to enter the market.

some investors may use SFHs as short-term rental properties, such as Airbnb, which can disrupt the long-term rental market and further exacerbate the affordable housing crisis.

there is a concern that some investors may not have the resources to maintain their properties properly, leading to the deterioration of the homes and the neighborhoods they are in. This can lead to blight and a decrease in property values, which can negatively impact the entire community.

While it is true that interest rates play a significant role in the housing market, investors leveraging properties and investing in short-term rentals can lead to market distortions that exacerbate the housing affordability crisis.

it's not necessarily small mom & pop investors that HN takes issue with, but rather the larger trend of investors buying up SFHs without proper consideration for the broader impact on the community and the housing market.

I agree with you regarding investors with deep pockets buying up so much of the already low supply of SFHs across the country. And I also imagine HN wouldn't take much issue with small mom & pop investors who only own a few properties at most. Their involvement in the LTR market likely has a net positive impact on the macro economy and are too small to shift the market supply of homes to purchase enough to cause the issues we see in society today (which have more to do with home builders having not built enough homes and government regulations regarding zoning and such).

No. For the most part, success in this field requires having access to capital or debt, which would provide a platform for loan to own folks

Doesn't success in the stock market or scaling a startup require access to capital or debt as well? Sure you can bootstrap the latter, or play the long game by gradually investing in index funds for the former...but do you see the real estate as orthogonal? I got started with little capital and grew over time, as is common for most ventures.