Truth, Lies, and Hype: Sorting Through the Messaging Around Real Estate

I find myself in a very interesting place in the investing world where I get flak from real estate investors for “not understanding just how awesome real estate investing is,” while still getting flak from more traditional investors for investing in real estate—while also talking about and teaching about real estate. Like with politics, that’s probably a good sign. When you’re getting flak from both sides, you’ve probably struck the right balance.

Let’s talk about some of that balance today.

Real Estate Is a Second Job

The anti-real estate folks like to say that real estate is a second job. The real estate folks say, “Nah, it’s super easy and pretty darn passive income.” The truth is somewhere in the middle. If the default investing solution is to stick 20% of your gross income into index funds once a month (or even automate the process), then YES, real estate investing absolutely is going to take more work than that. But real estate investing is a spectrum, and you can choose your level of passivity. It ranges all the way from just automatically plopping money into a real estate index fund once a month to digging the hole yourself in which you’re going to build a house.

But there’s plenty of stuff in between. Like turnkey properties. You don’t ever have to even see the property you own across the country, and one hour a month is a reasonable expectation of time to spend on it. Or you could go with a private real estate fund. Yes, there’s some upfront due diligence required and the wiring of money to do, but after that, it’s basically mailbox money. I don’t even have to read the periodic emails that are sent out if I don’t want. A “second job” isn’t quite the right description for that, even if it is more work than maintaining a portfolio of index funds.

There Will Be 3am Toilet Calls

This is another favorite of the anti-real estate folks. Real estate aficionados view that statement as the primary sign of someone ignorant about how real estate really works because most of them have never had a 3am toilet call. They just don’t happen. And besides, if you’re serious about real estate, you’ve probably outsourced your management by the time you’ve got a handful of properties. If it happens, that 3am toilet call isn’t coming to you anyway.

But investing in direct real estate IS a little like being on call for an ED as a dermatologist. You’re not going to get called very often, but the possibility of it happening is always hanging over your head (kind of like that overseas deployment starting in 24 hours that I received in the military on a Friday night at 9pm while moonlighting).

More information here:

How to Start Investing in Real Estate

Why Is There So Much Hype in Real Estate Investing?

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