Real Estate is a HASSLE
- Owning real estate is a hassle.
- Selling real estate is a hassle.
- Buying real estate is a hassle too.
That said, we all know & agree there are fortunes to be had buying, owning, & selling real estate!!
Owning real estate for rental income is a hassle because it’s actually NOT PASSIVE INCOME. In order to reap the benefit of rental real estate, whether commercial or residential, you MUST manage the deal closely.
Even when you have professional property management, you still must monitor their decisions & actions for effectiveness. When vacancy comes, especially in larger commercial & industrial property, the cost to bring in new tenants often runs multiple six figures not including the 1-2 year (or much more) carrying cost while the property is on the market for that lease.
Selling real estate is a hassle too. Many brokers read this email-and they’re handsomely compensated for each transaction because of their skill in navigating the market and getting the deal to closing. If it was as easy as selling a stock (click of a button), the brokerage business wouldn’t exist.
The difficulty in selling may also be the feature that saves you from panic selling on bad news-as so many stock investors are doing as you read this because of the war in Iran. The difficulty in selling builds a safetly into accidentally selling the real estate you wished you could keep.
That said, if you choose to sell me a property, I strive to make every aspect of our transaction much more like selling a stock.Â
After closing, I want you to say, “Wow, I never knew selling that property would be so easy & I cannot believe how fast we got to closing!” (We have closed some residential deals same day, most commercial/industrial deals close in 75 days or less-usually environmental is the hold up)
Buying real estate is a hassle too. First you make the offer, then it’s accepted. Often you run around like a headless chicken to obtain a loan. Doesn’t matter if it’s a hard money or conventional lender-it’s a hassle. Then the insurance…
On distressed property, like vacant houses, or much more challenging, vacant commercial & industrial property, obtaining ANY insurance can be difficult. Many insurers simply will not insure a high vacancy commercial property. Again, when we are buying, we are already aware of this challenge and have the resources to get the deal to closing anyway.
Why Am I Complaining About the Hassle of Real Estate today?
I’m in the middle of closing out a small residential 6 flat I own personally in Chicago. I renovated the entire building, owned it for 5 years, and am earning about a 2% profit on the deal.
The buyer is getting a great deal and is a much better person to own & operate this deal. He and his wife will be a much better manager than me & my property managment company because he manages himself.
Even though I’m basically breaking even on the deal, I am happy with the transaction. The price is fair and I am being released from the burden of owning & managing that property. The scale of Diamond Equity is dramatically larger than it was 5 years ago and the deal is a distraction.
Additionally, the new owner will find better tenants than I could. Those tenants will be happier with that personal managment structure than I could provide there. I feel like I’m leaving the neighborhood & building in a better position than I found it and am giving a solid foundation for the new owner to prosper there over the next few years. Grateful to be part of this deal.
Do you (or any clients) own any property that’s become a hassle? Â Here’s what I’m buying:
Currently Owned, and Buying throughout the US:
- Value Add Deals, Ideally occupied with below market rents
- Industrial & Commercial Property, 10K sq. ft. – 250K sq. ft.
- Mobile Home Communities (50 pad minimum)
- Well located Retail Development Sites
- Residential MFR & SFR
If you’re selling a property that could use some “value add”, reply to this email with details including the address, size, price, & photos, if available, and we can get the ball rolling.