Guest Post: Smart Money Strategy – Rental Real Estate

by kungfugirl on April 25, 2012

Rental Real Estate

I have to admit I am excited today. Tomorrow I leave for the latest Casey Conference in Florida, held at the beautiful Hyatt Bonaventure Resort.

Far more exciting than the locale, however, is the speaker lineup:

  • Doug Casey (obviously) :)
  • Bud Conrad
  • Rick Rule
  • Porter Stansberry
  • Michael Lewitt
  • John Mauldin
  • Gordon Chang
  • Jim Rickards
  • Harry Dent
  • Andy Miller
  • Adrian Day
  • John Williams
  • John Hathaway

…and of course the rest of the Casey Research team (and probably more that I am forgetting.) I am especially excited to hear the “Harry Dent vs. Jim Rickards Deflation vs. Inflation” battle, and will bring you a full report next week!

It’s also a wonderful opportunity to connect with some fellow like minded investors and Kung Fu Finance subscribers! If you are attending and would like to meet me, please shoot me an email so we can connect (it’s on all of the emails I send you…I’m a real person so just hit reply anytime to get in touch). :)

I would love to meet you in person.

I need to finish about one million things before I leave (Kung Fu Guy has been out-of-town all week so I am a single parent until very late tonight, and my flight leaves at 6am tomorrow) so today I would like to share a guest post with you from our fellow Kung Fu Finance community member, Aunty!

Aunty is a budding and successful rental real estate investor (with positive cash flow!) and a wonderful member of our community.

Today, she shares with us how taking the time to get educated and then taking action based on the courage of your convictions, even though it may not be “perfect”, can still pay you innumerable dividends and rewards.

I hope you enjoy her post…her last one met with rave reviews!

Thank you so much, Aunty, and take it away!

To your financial success,

— Kung Fu Girl

—————————————

Aloha and a big mahalo to Kung Fu Girl for the opportunity of sharing with you!

I started investing in rental real estate just recently because it was the most solid form of investing that I could think of for our imminent retirement years.

Gold and silver coins and bullion are wonderful, but do not cash flow and are more like insurance to me — for that possible (actually probable) collapse of our fiat currency in the near or far future.

I dabble in stocks and options, but I treat it like Vegas money (Hawaii people love Vegas). I lose as much as I make, and is one of the reasons I am a fan of KFG because of her wisdom and discipline in the markets.

I do not understand the commodities market, ETFs, and Forex, so I stay away — for now.

Real estate has always seemed like the gold standard of what to own for me, ever since I was a little girl holding a 100 dollar bill in my hands and racing through the short cuts in our Palolo (suburb in Honolulu) neighborhood to deliver it once a month to our landlord’s house. From that young age, I wanted to be a landlady — but didn’t know how.

Over 50 years later, in late 2009, after plopping down a lot of money into Rich Dad courses, reading Robert Kiyosaki books, taking seminars, and joining real estate investing clubs, I jumped in and began buying real estate in Las Vegas, a city with the highest unemployment and foreclosure rates.

I did everything “wrong” according to the real estate experts willing to advise me.

I bought at market value in a city everyone loved to bash during an economy that was on pins and needles. I bought single family homes instead of 4 plexes or apartments which cash flow better. I did not buy in neighborhoods close to or familiar to me. I bought just looking at pictures on the internet and doing online research rather than walking into and inspecting the properties first. I added improvements and upgrades in appliances that were not necessary because I wanted it to be “nice”.

In short, I invested the wrong way in the wrong town, doing the wrong things.

In spite of all that, 2 years later, I am still in pursuit of more of the same — rental real estate in Vegas — because I get positive cash flow.

Rental real estate is not for everyone. It is slow. Slow to get, slow to gain, slow to cash flow, slow to pay off. It is like a big fat brick of gold that lays little golden pellets once a month.

Buy and flip real estate, on the other hand is fast and exciting. I have done joint ventures with other investors and they have doubled our investment in a matter of 3 months! What a rush! What to do with the doubled money? Buy and flip again, of course. This is good money when the market is stable or moving up. It can kill you if the market is going down. Kind of like stock options without an expiration date.

This is a choice dilemma for anyone entering into real estate investing. Robert Kiyosaki doesn’t flip properties because it is linear income — to get income from buying and selling, you must keep buying and selling. Markets go up and down and you can make a lot of money, but you can also lose a lot of money.

Buy and hold (rental) real estate is income based on cash flow. Great stuff, but lower rates of return than a good flip deal.

For those with limited funds, going for capital growth first with well-played stocks, buy and flip real estate, or other investment choices that increase your liquid asset holdings short-term, then switching gears to rental real estate cash flow as retirement looms is a great strategy.

Currently, we do both — to build our cash on hand in the short-term and to buy and hold rental real estate in the long-term.

Kung Fu Girl is the Bruce Lee fan.

Aunty will instead quote an older Chinese man:

Confucius say,

“When it becomes obvious to you that you cannot reach your goal, don’t adjust your goal, adjust the actions which you are taking.”

——————————————-

Aunty blogs at HonoluluAunty.com and is a committed, successful real estate investor who believes in taking charge of her own finances and not depending on Social Security and/or Medicare for her financial future. She is an active participant here at Kung Fu Finance and I thank her for sharing her story with us!

Print Friendly

About the Author:

Susan Fujii, aka , is an SEC Accredited Investor who believes that anyone can learn to be financially independent.

Susan has authored 199 posts on Kung Fu Finance, and you can connect with her on .

Want to master your finances? Join us now.

Why don't you join our community on your journey to financial mastery.
Sign up below for the FREE Kung Fu Finance newsletter.

Leave a comment!

{ 2 comments… read them below or add one }

Steve April 25, 2012 at 4:30 pm

Aunty and KF Girl,

I did like the RE article, written differently, from a laymans perspective as opposed to a professional sales pitch, well done.

I am jelous of your trip to the conference KF Girl

Thanks again

Steve

Reply

Honolulu Aunty April 25, 2012 at 10:16 pm

Mahalo Steve for your kindness and mahalo KFG for yet another gracious opportunity to talk story!

I really love having rental real estate. It’s not sexy and fast, but it is reliable and steady. When I am older (ahem…older than now), my kids and as yet unrealized grandkids will think that I was one cool grandma for building a family legacy of generational wealth.

with Aloha,

Aunty

Reply

Leave a Comment

{ 1 trackback }

Previous post:

Next post: