I’m looking for advice from those who’ve invested in multifamily properties. I recently sold a business and am planning to put the proceeds into four off-market fourplexes. The numbers look good—about 10% CoC with property management factored in (10% maintenance, 5% vacancy, 8% management). There’s also upside with principal paydown, appreciation, and tax deductions.
However, I’ve seen comments from people who regret going into real estate and wish they had just put everything into the stock market instead.
We’re in our late 20s and already have nearly seven figures in the market, but we can’t touch that money since it’s for the long term. Real estate seems like a way to have cash flow we can access if needed.
What’s your take on real estate investing when you’re young? Worth it, or more trouble than it’s worth?
Abi said:
You could avoid the hassle by investing in REITs instead. They offer real estate exposure without the headaches of property management.
REITs are mainly focused on large complexes, condos, and commercial properties, which don’t always reflect the residential market. Plus, real estate has unique tax advantages, like avoiding capital gains with proper planning. It’s not the same.
@Arun
With REITs, you don’t pay corporate taxes, and if held in a Roth IRA, they’re tax-free. If you’re specifically interested in residential, you can find REITs that focus on that sector, like AMH.
You’ve done a great job building wealth so young—congrats! I’d say go for real estate. You’re young and it sounds like you’ve done your homework. Just remember, real estate is a business, not a set-it-and-forget-it investment. Be ready for unexpected costs like an HVAC replacement that can wipe out your cash flow.
I own several properties, and it’s not as passive as influencers make it seem. Since you already have a strong stock portfolio, real estate could be a good diversification play. Just make sure you vet your tenants carefully and have cash reserves for big-ticket repairs.
Real estate allowed me to confidently retire at 60. Yes, it can be a hassle, but with good contractors and solid tenants, it’s worth it. Location and tenant quality make all the difference.
What do you mean by ‘you can’t touch the money’? Is it all in retirement accounts? You could always set up a taxable brokerage account for easier access.
Flint said:
What do you mean by ‘you can’t touch the money’? Is it all in retirement accounts? You could always set up a taxable brokerage account for easier access.
We follow the 4% rule and don’t want to touch the principal. Real estate cash flow feels more accessible without hurting our long-term investments.
Real estate is a job, not a passive investment. If you’re okay with being on call 24/7 or paying for a property manager (and cutting into your returns), it could work. Just be prepared for the unexpected, like a burst pipe at 2 AM.
I used to own rental properties and found the constant maintenance, taxes, and tenant management too much of a headache. Selling them and moving the proceeds into REITs was the best decision I made—cash flow without the hassle.
Real estate is a great inflation hedge. You’re using today’s dollars to buy an asset that appreciates and generates cash flow. Plus, the tax advantages like depreciation and 1031 exchanges make it very appealing. Just don’t over-leverage yourself.
From what I’ve seen, people who do well in real estate enjoy managing their properties and treating it like a business. If you’re just looking for an easy investment, the stock market might be better.
At 25, I’ve invested in Airbnb properties, and the cash flow is worth it. If your fourplexes have strong profit margins even after accounting for expenses, I’d say it’s a great move.