Why This Expert Investor Owns Only ONE Rental Property
Real Estate Rookie
Deep Dive
Why does Mike Baum own only one rental property despite his expertise in real estate?
Mike Baum owns only one rental property because it has been highly successful, appreciating four times in value over seven years. Additionally, he faced challenges such as rising interest rates and property values in his target areas, making further investments less feasible. He also prioritizes stability and retirement planning, given his disability and reduced income.
What life event led Mike Baum to start investing in real estate?
Mike Baum started investing in real estate after losing his vision due to overworking at Intel, which led to his permanent disability. This life change forced him to find alternative income sources, and he turned a family vacation home into a short-term rental to replace his lost income and contribute to his retirement.
What advice does Mike Baum give to young investors interested in short-term rentals?
Mike Baum advises young investors to avoid starting with short-term rentals. Instead, he recommends using low-down-payment loans like VA or FHA to purchase multi-unit properties (duplexes, triplexes, or fourplexes), live in one unit, and rent out the others. This strategy builds a solid income-producing foundation before branching into other investments.
How did Mike Baum manage to self-manage his short-term rental successfully?
Mike Baum self-manages his short-term rental by implementing robust systems and processes, including regular maintenance schedules, hiring reliable cleaners and handymen, and personally vetting every guest. He avoids automated communication, providing his personal cell number to guests, which has resulted in minimal issues over seven years.
What challenges did Mike Baum face when starting his short-term rental business?
Mike Baum faced challenges such as furnishing the property, finding durable amenities (e.g., sheets that wouldn’t tear), and hiring reliable cleaners in a rural area. His first year was financially lean, but he improved operations over time, emphasizing the importance of preparation and adaptability in short-term rental management.
Why does Mike Baum believe in avoiding FOMO (fear of missing out) in real estate investing?
Mike Baum avoids FOMO by focusing on long-term stability and retirement planning rather than chasing every deal. He attributes his discipline to his age and life experience, recognizing that impulsive decisions can lead to financial losses. He prefers to wait for the right opportunities rather than rushing into investments.
What role did BiggerPockets play in Mike Baum’s real estate journey?
BiggerPockets played a crucial role in Mike Baum’s real estate journey by providing a platform for learning and community support. Through the forums, he gained the confidence and knowledge to convert his vacation home into a short-term rental, and he now actively contributes by helping others with their real estate questions.
What does Mike Baum predict for the short-term rental market in 2025?
Mike Baum predicts that 2025 will be an interesting year for the short-term rental market, with opportunities arising from overzealous investors who bought properties at high prices and are now struggling with high interest rates. He anticipates more properties becoming available as these investors seek to exit the market.
- Mike Baum's career at Intel, lasting 19 years.
- His unexpected disability diagnosis in 2011.
- Significant income reduction after being placed on disability.
- The impact of disability on his emotional and psychological well-being.
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