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Is Real Estate Investing a Job or a Hobby?

By: Gregg Cohen, CEO, JWB Real Estate Companies
June 10, 2012
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The American dream can be described as something you absolutely love to do and actually get paid to do it. Many people are finding that real estate is their version of the American dream. The thousands of vacancies that are in populated areas like Jacksonville, Detroit, Michigan and Phoenix are creating more self-employed individuals that any other time in U.S. history. Getting into real estate does not take much effort as far as paperwork or documents but it does require knowledge. You should know if real estate investing a job or a hobby to you after evaluating the difference between the two. You might find that one or the other is easier for you instead of thinking you're doing something that you're really not.

 

Real Estate Can Be a Job 

Beating the pavement, making cold calls and advertising your investment property is sometimes a necessity. This is hard work. If you want your property to be successful, there should be none of these activities skipped along your path to success. It is a job meeting with or hiring contractors to perform repairs on a property after you purchase it. Understanding contracts, state laws and landlord-tenant issues are a constant part of real estate work.

Keeping your personal finances separate the entire taxable year that you own an investment property is a job in itself. There are many aspects of real estate that can help define real estate as an actual job that takes up a lot of your available time. Real estate as a job can quicly consume your life and cause you to have to structure your daily life around your investment strategies. 

 

Real Estate Can Be a Hobby

Real estate is definitely one investment that can be a lot of fun when you are part of a group. Assembling a team of investors or partners can definitely make real estate appear more like a hobby. The risks are much smaller when you have 2 or more people along with you making financial contributions and helping to make tough decisions. If you pay for property management, the majority of the day-to-day problems that landlords have to deal with are removed from your investment equation. You can spend more free time doing other things in your life and banking the monthly rent checks that come in from your property. 

A property that pays for itself in every sense of the word will not be a strain on you personally or professionally. A turnkey property is a good example of how real estate can appear more like a hobby because the risk of losing your investment is removed in exchange for guaranteed monthly income. 

 

Investment Property Income is Passive

Whatever definition you use for real estate does not change the fact that the income generated is passive. The IRS sees rental property income as a luxury and not a necessity regardless if you treat it as a business. You can have fun or spend your life being stressed as a real estate investor. Being brutally honest with yourself and finding out is real estate investing a job or a hobby can help you make the decisions that are best for you as an investor.

 

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