I think it's more like a spot of clear sight. There is no rational basis for me to invest in stocks. Me personally. Not every person in existence. (Though, to be fair about my biases, I can't imagine any rational basis for anyone else to either other than activist hedge funds and insiders). But we digress from the topic of real estate.

Any advice on hiring someone long distance to go inspect houses for me?

Let's take your earlier example of an equal 8 cap investment in two different areas, Austin and Arkansas I think it was. I believe that there is a reasonable argument to be made that given two similar investments you make the one that has the highest net potential, including the potential for appreciation.

I also believe that there is a reasonable case to be made that what you want in an income property is *stability* since it's generating income.

Speaking only for myself, I'd rather buy in a place that has a diversified industry base and low, stable (e.g. 0.5%-1.5%) appreciation rates for a long time than a market where the near term appreciation has been high. Largely that's because 1) my returns are already at or above my minimum criteria, 2) income from rents is how I feed my family so I don't highly value variability in rents that might lead to vacancies, 3) I don't really want to keep selling properties and doing 1031 exchanges (which are expensive and time consuming) to balance my return on equity. It's also my opinion (valid or invalid I guess) that fast appreciation often is met with fast price price drops if the **** hit the fan economically. So I intentionally avoid "hot" markets for rental investing. I might be persuaded that for commercial investing a different approach is better.

I'm not saying that this is how everyone should do it, but that's how I do it at this point in my career.

If you're going to do long distance investing the most valuable knowledge base that you can have is in how to interview and manage a property manager. Picking well on that is the make-or-break item in long distance in my experience.

Yeah, call around to all the agencies in town and ask for the agent that deals with investors the most. Then ask that person who, other than themselves is the person in town that deals with the most investors. That second name is usually the better lead. Also ask if there are any agents in town that also have property management companies. Then call all of those people and do the same thing. You'll start with 100 agents in a city, and pretty quickly get it down to like 5 agents that are actual investors or deal mostly with investors.

those are the agents that you can hand a set of criteria and they can find deals that might work. For the first handful, I'd go view the properties myself so the agent knows what I want and what I don't want. After that you can set them loose and they'll channel stuff to you that's at least in the ballpark of what you want to buy.

****ing awesome.

Yah, I don't care about stability. I want maximum 10 year total return. That said, I agree that focusing on pie in the sky appreciation can cause one to forgo the more important hard numbers.

I have $100k to invest, and want max 10 year return. I have a day job, and manage - with my wife - the 8 units we already have in our spare time. Question: Next investment near Seattle (like our 8 units) at 6-8% cap rate, or go out of state and seek 15-20% cap rate? I expect we will get 5.5% interest rate again based on past experience, 75% LTV, whether near or far from home.

Also agreed that manager interviewing/managing would be key if we buy far away from home.

Thanks again.

I would always go for the higher cap rate. Plus, once you figure out how to work out long distance investing, the world is your oyster.

What's not to love?

You do realize there are people out there that don’t have time to look for RE deals and research them or aren’t smart enough, right? You don’t think they should invest in the stock market (either by hiring someone to invest their money at less than 1% or put it in an index fund)? What should they do with their extra money?

The stock market has returned over 10% annually over the past 90 years. C’mon man.

But is it going up tomorrow?

They should learn how to be competent investors. If it isn't important enough to them to make the time, then I'm not sure what else to say. Everyone has the time, it all depends on how you chose to use your time. But just because tossing your money blindly into something (stock market or anything else) is common wisdom doesn't mean that one should do it.

Sitting down to learn investing for someone who owns their own business probably isn’t worth their time when the alternative is to get stock market returns. I would argue this applies to far more people than just business owners and likely more than a majority of US citizens. Many of them have full time jobs and would prefer to spend time with family and friends than learning about RE which may not produce the type of returns they may get in the stock market.

If you buy long distance please fly in before your inspection period is over. You must see what you buy, the neighborhood, the schools, etc

And spex, would you also sell the deal I talked about if you were hit with a 53% capital gains tax hit and could not 1031? Welcome to canada lol. You should never sell here, you have usually more money just refinancing and you keep your asset.

Edit: come to think of it. Selling it would have been doable if I structured the deal as a flip. I bought it in my personnal name so will get taxed in the same bracket as my personnal income when I sell, BUT if I bought in a corporation because I intended to sell the deal so fast. I would get hit with 53% tax for the cashflow, BUT only 19-23% on the capital gains! Interesting, didn't think about it at all whenI bought, a great solution for the future thought!

ugh yeah that changes the picture dramatically. Awful.

Come on it's just you guys are spoiled little brats with your tax laws. I suspect this is part of the reason why our cap rates are so low.. why would you ever sell when facing such huge taxes?

For real I will invest in the US in a few years, land of opportunity. You can still built wealth here for now!

I would say that this person's best investment would be to expand their successful business. Or hire managers to operate their business so they can focus on starting a new business.

It's unclear to me why they would be better off owning stocks in that scenario.

I guess if your position is it is better to work really hard and know what you are doing when investing in real estate than it is to just throw money at random stocks, then you are correct.

Even though having to work hard and understand your investments are a requirement with RE I would still say it is debatable if RE is better than stocks long term, but I guess better isn’t a well defined term.

I'm pretty sure you could throw a dart at a map and find a property that beats 8% ROI.

Bummer if you hit Detroit.

I'd kill to have the knowledge to invest in Detroit. You can pay off a house with rental income in less than a year.

My position is that anyone would be better off to only investing in things where they know what they're doing. Because the alternative is completely random. I have the exact same opinion about stocks that I do about real estate, which I've stated probably 1,000 times in this thread. If you are unable to directly influence the outcome, either by special information, better understanding of value, or impact on operations, then *don't invest*. I do believe that it's possible to directly influence the outcome of stock investments. Just not for most people. Anyone can do this in real estate, which is part of what makes it a special investment class IMO.

How are you defining "RE" and "stocks" here? I would debate this, but we have to define the terms. If you are saying that I can't beat the S&P over time with my real estate investments then you're dead wrong. And not a little wrong. A lot wrong.

Lets clarify the arguments here. It seems like what you're saying is that Joe Blow the mailman, knowing nothing about either stocks or RE, would be better off with the stocks. I'd ask you to explain why. Both outcomes are entirely random, since he knows nothing about either. So on what basis does one make the determination that he's making a "better" investment in one vs the other??

My argument is that in that scenario he should invest in neither. Rather, he should learn about one enough to gain an advantage and not invest until he does that. There is no rational basis that I've ever heard that convinces me a person can make a good investment with no knowledge.

I think it's possible. I absolutely believe that if you spent enough time there you could develop enough insight to find a profitable strategy. I mean, almost 700k people still live there. Its just 300k less than were there 30 years ago. Which means a lot of empty houses. That's a tough situation, so you gotta find the core value plays there. My guess is any social programs (e.g., Section 8) will be insanely competitive there for landlords. Logically, I'd expect that detroit S8 tenants have the nicest homes of anywhere in the country!

Maybe the play is trying to develop urban farms for lease to locals? Maybe it's renovating warehouses? Maybe it's some weird hybrid business that nobody has ever done haha. If I knew, I'd be doing it. But I do believe it's possible in any market.