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I took a break from coding/ops for other people for money a couple years ago to pursue a startup idea I had. It was a cool project but I decided it wasn't a gre

I took a break from coding/ops for other people for money a couple years ago to pursue a startup idea I had. It was a cool project but I decided it wasn't a great business idea due to regulatory issues with the field. After that I had a choice to go back or do something else. I saw an opportunity to do a real estate development deal and I went for that. I liked doing the first real estate project so much, I put together a group of investors and am pursuing a larger deal right now. I do more interesting programming now than when I was working for others and keep my skills fresh. I really like real estate development for a number of reasons. 1) Much better tax treatment of income. Rents are not subject to self-employment taxes, a 15.3% discount. 2) Real estate benefits from access to the fountain of all money, the federal reserve. It's national policy to support RE prices. 3) The ability to do a project, put in a lot of work, and at the end own something valuable in perpetuity. After a year of a very large ops contracting project the checks just stopped. I really didn't like that. 4) Real estate is a market that is very local, with a lot of opportunities for advantage through information asymmetry. It is also something that resists reaching global scale and the race to the bottom competition that induces, and resists automation. 5) I really like the physical quality of the work. I physically feel better due to all the running around and not sitting in front of a computer for 8 hours a day. All of my software and hardware experience benefits me. I see all kinds of possibilities to save time/money with these projects with software. One day I will probably create a startup in the RE space. Most importantly there is a zen like nature to the work I do now, and I do a lot of the work on these houses myself, as the going rate for skilled craftsmen is not far off from a remote dev contractor in a lot of cases, and its easy to do many more hours than many employers would be willing to pay for. Very importantly, the value created is put into the property which is only realized through higher rents (taxed as passive income) and/or a capital gain if the property is sold. This probably means that in the long run I take home more money rehabbing a house than I would coding for cash, due to appreciation and better tax treatment. My only regret in all of this is that I didn't do it sooner. In America real estate investing is a pretty reliable path to wealth for the right kind of person with the right kind of eye.

cfitz 10y ago
I am in a similar place but - very gratefully - at an earlier point in my life. For a young person looking to funnel "tech profits" into real estate, what educational resources do you recommend (if any) for mastering this field? The tangibility of real estate and the ability to get your hands dirty with property improvements engages me in a way that software cannot.
- willholloway 10y ago
  Well there is Bigger Pockets, and some of their video podcasts on Youtube are quite good when they interview a knowledgeable guest. They are pretty honest about things, but I feel like there's kind of a similarity with their messaging and the passive income/get rich quick world, although they will definitely tell you it's a get rich slow method, but it sometimes has that kind of feel to me. But they cater to a lot of newbies. I come from a different perspective because my father was a landlord of a decent number of properties and I grew up in it. I would say the biggest predictor of success is going into the right market and finding a good deal. Your profit or loss is determined by the deal you make. There are a lot of people that buy houses far away from themselves and get property managers to operate for them for a fee. I personally would never buy a lot of properties far away from my home, and I feel like a lot of the people that do, do it from a kind of Dunning-Kruger false confidence, or maybe just a way lower anxiety level about what could go wrong than me. You want to walk the property, you want to keep an eye on things, you want to make sure things are taken care of because you have a lot of liability as a landlord, and that's why I would only buy fairly close to where I lived. Also at the level of buying and renting single family homes, duplexes, triplexes and so on, if you start paying contractors to do work every time something breaks it's going to eat into profit margins or possibly destroy them, at least until you've owned the property for a long time and rents have risen. At that level of investing your profits are going to come from the work you put in yourself, or the price appreciation of a rising market over the long term. It's different if you can do bigger deals, larger buildings with more units. If people are interested I might start blogging about real estate investing for developers.
  - mod 10y ago

cfitz 10y ago

I am in a similar place but - very gratefully - at an earlier point in my life. For a young person looking to funnel "tech profits" into real estate, what educational resources do you recommend (if any) for mastering this field? The tangibility of real estate and the ability to get your hands dirty with property improvements engages me in a way that software cannot.

willholloway 10y ago
Well there is Bigger Pockets, and some of their video podcasts on Youtube are quite good when they interview a knowledgeable guest. They are pretty honest about things, but I feel like there's kind of a similarity with their messaging and the passive income/get rich quick world, although they will definitely tell you it's a get rich slow method, but it sometimes has that kind of feel to me. But they cater to a lot of newbies. I come from a different perspective because my father was a landlord of a decent number of properties and I grew up in it. I would say the biggest predictor of success is going into the right market and finding a good deal. Your profit or loss is determined by the deal you make. There are a lot of people that buy houses far away from themselves and get property managers to operate for them for a fee. I personally would never buy a lot of properties far away from my home, and I feel like a lot of the people that do, do it from a kind of Dunning-Kruger false confidence, or maybe just a way lower anxiety level about what could go wrong than me. You want to walk the property, you want to keep an eye on things, you want to make sure things are taken care of because you have a lot of liability as a landlord, and that's why I would only buy fairly close to where I lived. Also at the level of buying and renting single family homes, duplexes, triplexes and so on, if you start paying contractors to do work every time something breaks it's going to eat into profit margins or possibly destroy them, at least until you've owned the property for a long time and rents have risen. At that level of investing your profits are going to come from the work you put in yourself, or the price appreciation of a rising market over the long term. It's different if you can do bigger deals, larger buildings with more units. If people are interested I might start blogging about real estate investing for developers.
- mod 10y ago