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Why Aren't Most Realtors Investors?

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Doug Leedy

Freshman Member
Joined
Sep 11, 2003
I've found over my career that most Realtors (and appraisers too) are not investors in their own industry. Does this make sense?
 

bnmappraisal

Elite Member
Gold Supporting Member
Joined
Nov 9, 2011
Professional Status
Certified Residential Appraiser
State
Florida
Does this make sense?
Yes
I keep busy enough with appraising, so I don't look into investment properties. Although I have "all the tools" in front of me, I'm busy enough, so I guess I don't utilize said tools. I also have 2 kids under 10, so that keeps me busy as well.
 

BRCJR

Elite Member
Gold Supporting Member
Joined
Sep 20, 2005
Professional Status
Licensed Appraiser
State
Virginia
I have owned rental property and managed several apartment complexes (7 to 75 units).
I do not like the late night calls (locked out/ice maker leak/ etc.) nor dealing with collections.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
Some are and very successful at it. I've oft quoted an old geologist as saying "Never believe in your own geology." Remember you are doubling up. The best example I know was Enron. Employees of Enron filled their own 401k's with Enron stock encouraged to do so by the very top management. The end result was when Enron crashed, the employees lost not only their jobs but their entire life savings.

I long advised clients who get large bonuses from oil company leases to NOT spend that money investing in the very company that leased them. I know one landowner who bought $60,000 in stock in a penny stock oil company who promptly drilled six wells and declared bankruptcy.

Diversify.
 

Michael S

Senior Member
Joined
Mar 18, 2009
Professional Status
Certified General Appraiser
State
New Mexico
As soon as I save up a few hundred grand I'd love to invest in real estate. Until then I'm more focused on saving up to buy my own house first. I know many brokers and appraisers that are also investors. I think having that first hand experience would be very helpful. On the other hand I've seen enough distressed properties and heard enough horror stories that I will never get involved in a real estate investment partnership, nor will I borrow money to buy investment property.
 

Terrel L. Shields

Elite Member
Gold Supporting Member
Joined
May 2, 2002
Professional Status
Certified General Appraiser
State
Arkansas
get involved in a real estate investment partnership
Partners are often a problem. Misery loves company and we often don't trust ourselves and think we are spreading risk by taking a partner. But I am convinced doing so invites friction, a break up of the partnership, and often financial distress for one or both.

Few partnerships work well. One is lazy. Both think they are doing the most work, etc. etc. It falls apart at the wrong time, one partner pays too much to buy the other. And that partner could be a relative. It won't matter. I know two brothers who hardly speak to each other. Finally split the company and that bro. run it into the ground and lost the entire company and thousands of acres of land with it.
 

DTB

Elite Member
Joined
Jun 11, 2004
Professional Status
Certified Residential Appraiser
State
Illinois
I have owned rental property and managed several apartment complexes (7 to 75 units).
I do not like the late night calls (locked out/ice maker leak/ etc.) nor dealing with collections.

No late night calls here. Tenant welcome letter outlines "office" hours, any call other than for leaking pipe(s)or no heat situation is not tolerated. Real emergencies, call 911 I'm not police, fire or an EMT.

Lock outs etc. are dealt with when tenants call the 24 hour locksmith etc. listed in their welcome packet. Don't remember who it was? Start calling around but you won't get the same favorable pricing that I was able to negotiate because I know the percentage of sorry asses that will lock themselves out and promise all the work to one guy.
 

timd354

Elite Member
Joined
Jan 11, 2008
Professional Status
Certified Residential Appraiser
State
Maryland
, nor will I borrow money to buy investment property.
That is just silly. Borrowing money to pay for an investment property with a positive cash flow is just smart and a way to leverage the growth of your net worth. I purchased a property in 2008 at a distress sale (although the property was in good condition) and financed it with 20% down with a 15 year mortgage The monthly PITI mortgage payment is approximately $1250/month and I initially rented for $1,400/month and after a couple of rent increases, the rent is now $1650 per month. The property has been rented the entire time I have owned it with the exception of one month on three separate occasions when tenants moved at the end of the lease and I had to get a new tenant. When the loan is paid of in 2023, the entire loan balance with the exception of a handful of payments will have been paid off with someone else's (the tenants') funds....you can't beat that...and I will eventually end up owning a house in which only 20% of the purchase price was paid by my own funds.

The key to this property is that it is a clean property in a good neighborhood in a good school district, which means I have been able to select only very high quality tenants with excellent credit - I personally don't want to fool around with properties in marginal areas where you end up renting to questionable people.
 
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