Monday, April 4, 2011

Shaun Gets Nostalgic

I recently spent some time reading Savvy Saver’s blog – particularly her posts about her 4-plex and how that investment has been going for her. She’s had it for 4 years now and it seems to be going well. She and her husband are managing it themselves, so they do have the occasional tenant headache they have to deal with, but all in all, it seems to be doing well for them. I am encouraged that they have held the property this long and that they didn’t jump off the REI bandwagon like so many others have done.

Reading all that has made me slightly nostalgic. Passive investing in nice, but truthfully, I do miss having a more hands-on approach to real estate investing. I really enjoyed rehabbing houses. (I didn’t really enjoy dealing with tenants that much though, so I don’t feel the urge to become a landlord again.) My passive income from hard money lending is nice and I actually am making more per month than I was typically getting from my rentals. Of course, I am also missing out on some of the benefits of property ownership, the biggest being the depreciation write-offs. The flip side is that I don’t need to worry about 1041 exchanges or any of the more complicated tax stuff that goes along with those write-offs.

Still, looking back over all the real estate investing I’ve done, I do miss the hands-on rehabbing stuff. I tend to enjoying creating order out of chaos, which is basically what you are doing when you are fixing up a foreclosure that has been trashed by the previous owner. Hard money lending is truly passive and requires little of my time (thanks to my partner), but it doesn’t make for exciting blog posts.

I’m still on several mailing lists for rehab and foreclosure properties. I’m starting to see the real estate market pick back up in my area (or at least, it appears to have stopped falling). I’m getting the itch to rehab again. Unfortunately, I don’t think I’ll be able to scratch that itch any time soon. We just remodeled our house, which used up most of my credit line. I’ve recently switched jobs and I don’t yet have a feel for how busy I will be here. (Coordinating rehab projects sometimes takes a bug chunk out of my day, not to mention visits out to the property.) Most of my funds are tied up in hard money deals. But I am glad I have a self-directed IRA. Once I have enough funds in there, I could start using that money for either rehabbing or renting property. That day is a ways off though, but it is something to keep in mind.

I remember reading once that financially savvy people know there are many ways to make money whereas those with less financial knowledge think a paycheck is the only way. I see lots of ways and it’s difficult to choose. I guess that’s a good problem to have.

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