Risks and rewards of the industry
While Aliza is hard-pressed to see the glamor in real estate (“it’s just another job”), many others strike gold (or, at least, copper) in real estate investment. Let’s look at the different types of real estate investing, what the experiences of the investors were like, as well as their tricks of the trade.
Though Hershel from Cleveland, Ohio considers himself a newcomer to real estate investing, his portfolio says otherwise. He started off buying an inexpensive home in Far Rockaway, New York. With experience in construction, he was able to fix it up himself, raising its value. Next he refinanced, and was able to withdraw equity from his house in the form of cash. Then he used the cash from his refinance to buy another property that had just hit the market.
Now Hershel was at a crossroads. He consulted with his rav, who advised him to take advantage of opportunities that would present themselves. Ultimately, he decided to focus on properties in lower-income neighborhoods that came with guaranteed rent from tenants, in the form of Section 8 vouchers. (Housing Choice Voucher Program, also known as Section 8, is the federal government’s program for assisting low-income families, the disabled, and the elderly afford housing.) Hershel is careful to treat his tenants like he would want to be treated. “This is even more important since most of my tenants are not Jewish, but know I’m an Orthodox Jew,” he says.
Business took off, and before long, he had properties in Alabama, upstate New York, and Ohio. “Diversification in investing is important, but in real estate, it can hurt you,” says Hershel. He was spread too thin. At this point, he decided to consolidate his portfolio and look into hiring a management company. “I heard management companies weren’t a good idea, but I found a great company to work with. This allowed me to still keep real estate as a passive income. Yes, there are extra expenses when you hire a management company, but it freed up my time to do more.”
Create a free account to keep reading.
