Is Real Estate Income Safe?

Landing-Page-Slice_01Is real estate income safe?  I hear this question all the time.  This wasn’t always a question; indeed, at one point they were flat out telling me that it’s not safe and I am crazy.  Now, having seen me succeed, they ask.  Well – while there’s no one way to answer it, today I’ll tell you a story:

I am writing this mid-day on a Sunday.  I am in bed since my immune system, having noticed how much everyone around me was enjoying the flu, decided to supply me the pleasure – I got the flippin’ flu!  I started feeling ill on Friday night, was absolutely plastered yesterday, and while I’m feeling much better today, I’m still not up to the task of running around with kids. 

Friday night is what I want to tell you about.  You see, a friend approached me about a week ago in regards to playing the violin at her father’s funeral; her dad passed a few days ago.  I don’t typically play for money any longer, and neither does Patrisha, but both of us will play if we want to – “want” being the operative word.  To honor a friend’s father’s memory qualifies…to be sure, my friend is going to pay us something, but I never quoted the price because it didn’t matter; we would have played for free.

The funeral took place on Friday, and thus, Patrisha and I found ourselves at the funeral home.  We came in, prepared, and started to play easy selections, as per my frineds’s request.  However, it wasn’t 20 minutes into the gig when I began to feel some aches and pains creeping-in, which became progressively more pronounced and by 2 hours in I was damn near “stick a fork in me” done – can you say Flu?!

I thought for a minute about leaving, but let’s face it – I told a friend I’d be there; done!  So, we stayed and played…for 3 hours.  I can’t put on paper the exact terms that were resounding in my feverish mind for most of that time, but I can tell you that none were PG13.

When we finally left after 3 hours, it only took one second in the cold, night, Ohio air to make my whole body shake like a leaf.  In fact, if I had to put a key into the ignition, as opposed to just pressing a button, I don’t know that I could have started the car…

Perspective

My experience Friday night exemplifies a life of a musician, which likely explains why I’ll have no piece of it now-days.  But, more than that, it exemplifies the life of most people who generate W2 and/or 1099 income – in other words people who are under contractual obligation to perform services for money!  Getting up and leaving if you’re not feeling well is just not an option, at least not a good one, and if it ever becomes necessary to exit the game, then it’s accompanied by a loss of income – plain and simple.  So, all ya’ all out there – that’s beyond dangerous!

On the Other Hand

As I was in bed with fever (on Saturday), I heard my phone ring.  I thought it might have been my parents checking up on me, so I picked up.  In fact, this was a tenant calling about a plumbing issue…oops.  Fever or not, it was time to act as a landlord should – with the phone still in my hand, I promptly sent a text to my plumber.  Done!  

I suppose I’ll follow up with a phone call on Monday, but how hard is that, especially in comparison to needing to “show up and play”…?!

Is Real Estate Income Safe

Do you know what it feels like to play the fiddle with a developing fever due to flu?  Not likely, and I hope you never find out.  But, I am sure you can relate in some way…  I hope to have illustrated to you that while real estate income is not necessarily exciting or sexy, in some ways it is indeed a lot safer than any other!

Do you agree?

8 Comments

  • Luis Roa Reply

    Ben,

    hope you get better! … I think the question is really around variability more than anything else. Typically throughout the life of a real estate property there will be maintenance that needs to take place, upgrades to do, things to repair, etc. If you were to take, say 10 properties, exactly the same (built on the same date, by the same crew, same floor plan, etc) you can find throughout the lifetime of the properties that the timing and cost of repairs, upgrades, etc varies quite a bit across the properties (due to tenants, management, weather, etc, etc). As investors typically acquire the properties somewhere in the lifetime, and there is that inherent variability, it is not possible to fully predict what would happen. Of course, experienced investors can minimize the risks (via more thorough inspections, better management, not deferring maintenance, etc). But the reality is things have unpredictable variability. It is also true that disaster stories make for better stories than success cases. So, they tend to propagate more, helped by the variability I mentioned, thus creating the apprehension you describe. Perfectly reasonable to expect in a casual investor.

    The way to address this, from my point of view, is to 1) have adequate funds set aside for the unexpected problems, and 2) have much more income from the properties than you expect to be able to use without risk (say 50% more: e.g. you want 10,000 income per month from your RE investments, then create a 15,000 income stream, the extra 5,000 will address the expected variability, as well as replenish the set aside funds, whenever they are used… in reality, this is just another way to view some of those “rules of thumb” that are discuss in the forum periodically, but is a different way, perhaps preferable, to present to those skeptical investors)

    • Ben Reply

      Luis – thanks! I am better indeed. I agree – Louise Pasture put it best:

      “Chance favors the prepared mind”! All I can add to that is that a “prepared checkbook” is also a plus 🙂 And with that said, stable real estate income is safer than W2 any day of the week…

      Thanks indeed for jumping in!

  • Joakim Reply

    Ben,
    glad you feeling better.
    Good post as usual.

    I always jump on the email when I get them.

    Happy holidays
    Joakim

    • Ben Reply

      Thank you so much, Joakim!

  • Jim Braun Reply

    Ben
    Hope you are feeling better. It is not good to be sick.

    • Ben Reply

      I’m all good now, Jim – thanks! One thing about the all-natural westin rpice diet Patrisha has us on – we thankfully don’t get ill too often, and when we do, we tend to shake it expeditiously. If life stays this way, I am good!

      Thanks indeed for your comment!

      • Curt Smith Reply

        Wow Ben, your typing mangled: weston price, which has the http://westonaprice.org as the national org who offers how to eat nutritionally dense and healthy food.

        Incredible to hear. We are WAP members too. A lot of our passive income goes to buy blue ice fermented cod liver oil and many many other health giving foods.

        We got sick this fall too with what ever was going around but we know we are doing the best for our health by knowing personally the farmers we buy our food from.

        • Ben Reply

          Curt,

          We’ve been WP as well as GAPS for 2 years now. Healing an autistic kid…:)
          Take a look at this video – this is my wife’s presentation to WP. She is a chapter leader.
          And this website is hopefully going to make a difference in this world – our latest work in progress: http://www.thedamageundone.com

          Stick together brother!

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