October RIA Roundup: How to Make Rentals Passive, Mr. Money Mustache on the Economy, & Voting
Happy Halloween, investors! Welcome to the October roundup.
Is rental property investing truly “passive”? Our lead story examines that critical question. After that, you’ll find a summary of all the important real estate & economic news from October, my monthly portfolio report, and my picks from around the web this month. My final thoughts cover the voting process, as I just cast a ballot in Virginia for the first time.
Enjoy!
Lead Story: How Passive are Rental Properties?
Rental investing is attractive because (among other things) it offers the promise of “passive income”. But we all know they’re not 100% passive in the way that, say, buying a Total Stock Market Fund would be — which is why some people hedge and say that rentals are “mostly passive”, or “passive enough”. Meanwhile, others avoid rental investing because they think it’s too ACTIVE (i.e. the mythical 2am broken toilet calls.)
So who’s right? Just how passive can rental properties truly be?
In my latest long-form article, I closely examine this question, and make the case that professional property management, despite all its pitfalls, is the ONLY way to be a passive real estate investor at scale. (Think about it: without my property managers, I’d be doing landlord stuff right now, and not writing this newsletter!)
I share the good AND the bad of property management in this article — so if you want to get a real take on PMs vs. self-managing, check it out.
Also on the RIA blog this month:
Portfolio Reports: Things have finally begun to stabilize in my portfolio after a rough summer. In September, my portfolio of 25 Memphis rental properties produced $11,962 of cash flow. Check out all the details in the September Monthly Portfolio Report.
A new “Property Spotlight”: You can now get up close & personal with Property #7 in my portfolio. If you’re a RIA super-fan, you might remember that time a colony of 50,000 bees took up residence inside a wall of one of my houses. Well, this is that house! How has it performed as a rental so far, despite the bees and other challenges? Check out all the details.
An oldie but a goodie: The use of debt through mortgages — aka “leverage” — is one of the key ways that real estate investors make money. But it’s also the most common way they go broke. Here is my article with details on 8 Ways to Finance Rental Properties, including some of the riskier ways you should probably avoid.
My picks from around the web this month:
A fascinating look at how the CPI – our preferred inflation metric – is produced.
The “flash crash” of 2010 forced the realization that a new market-monitoring system was needed. After 14 years, the system is now live – but legal challenges may yet kill it.
The “baby shortage” may be the problem nobody knows how to solve — though some say it’s not a problem at all.
FEMA flood maps underestimated the risk in North Carolina. Luckily, there’s a better way to understand a property’s flood risk, as discussed in the article.
Finally, the inimitable Mr. Money Mustache takes on the economic misconceptions that politicians want you to believe.
And now this!
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In Other News…
Photo Quiz!
Why were these three images in the news recently? Keep reading for the answers…
Real Estate & Business, Domestic News
Inflation cools further. Inflation dropped to a 2.4% annual rate in September, the lowest rate since early 2021.
New homes sales pick up steam. Purchases of new homes increased markedly in September to an annualized rate of 700,000, perhaps in response to lower interest rates – but rates have since ticked back up.
Open AI completes funding round. The ChatGPT maker completed a funding round in an increasingly competitive AI startup environment. But they’re still the kings of the castle, raising $6.6B at a valuation of $157B — all for a chatbot often gets basic facts completely wrong.
Ease Coast port workers strike. Container ships sat idle due to the strike, but only for three days: a deal was quickly reached that will raise dockworkers’ pay 62% over the next 6 years, another in a long line of big wins notched by organized labor in the past few years.
Miami tops list of bubbly real estate markets. If you live in Miami, beware: the bubble may eventually burst. In a UBS report, Miami was deemed to be most at risk of a real estate bubble, topping Tokyo and Zurich. Other US markets in the top 15 were LA and Boston.
International News, Science & Technology
Renewable energy keeps surging. Led by solar, renewable energy is expected to meet half of global electricity demand by 2030. The growth is largely driven by basic economics: renewables are now the cheapest way to bring new electricity online in nearly all countries around the world.
Starship rocket is “caught” safely on return. In a major step to full rocket reusability, SpaceX successfully returned the world’s largest rocket safely to the launch pad.
Passing comet gives Earthlings a sky show (A). Comet A3 Tsuchinshan-ATLAS swung around the Sun and then sped away in October, providing unusually good naked-eye viewing for people across the globe. (How good? The shot in the photo quiz was taken by my brother-in-law…out of a moving vehicle. Shout out, Joel!) If you missed it, not to worry: it’ll be back again in 80,000 years.
Israel and Iran trade rocket strikes. In the first direct confrontation between the two countries in decades, Iran fired a barrage of rockets into Israel, and Israel fired back weeks later targeting 20 military sites.
Cuba plunged into darkness. The entire country suffered a days-long blackout as its aging power grid failed.
Arts & Culture, Sports, and All the Rest
Nadal announces retirement from tennis. The 22-time Grand Slam Champion will leave the game after this year’s Davis Cup. He left-handed Spaniard was among the best tennis players of all time — and unquestionably the best ever on clay.
New Chopin waltz uncovered (B). A previously unknown piece from the beloved Polish piano master was discovered in the holdings of the Morgan Library & Museum in New York City. Hear it played.
Annual Dog Photography Awards announced (C). Yes, it’s the moment you’ve all been waiting for: check out the 2024 Dog Photography Award Winners! The photo quiz shot was the 1st place winner in the Portrait category.
Final Thoughts: Voting
I cast a ballot in Virginia for the first time the other day. After years of voting in New York, my move required me to register in a new state, find a new polling place, and experience a new voting process. Given that “election integrity” has become such a hot-button issue of late, I want to describe what that process was like — a first-person account of my direct encounter with our electoral systems.
Voters can of course register in Virginia without a Virginia driver’s license, but it’s more straightforward if you DO have one, and I needed one anyway — so I decided to get my driver’s license first. I went online, and was able to submit all my application information to the DMV, and make an appointment to complete the process in person. On the day of my appointment in early October, there were some delays and setbacks at the DMV (their reputation is hard-earned), but after a few hours everything was sorted, and I had my temporary license — the permanent one would be sent to me by mail within 10 days. It arrived early.
As part of the process at the DMV, I was given the option to submit my information to the local registrar so that I could be added to the voter rolls. Seemed like it would save me a step, so I opted in for that. I was given a letter saying that my information had been submitted, and would be processed within 30 days. That would be after Election Day, but I hoped it would be processed much faster than that — and if not, I knew I could cast a provisional ballot, which would only be counted if my eligibility was subsequently confirmed.
Once my permanent license arrived, I decided to see if I could vote early. Virginia has a relatively long early voting period, which this year began on September 20th. I took my license, along with the letter from the DMV, and walked the three blocks to my early voting location inside City Hall. From the street, I followed the clear way-finding signs toward the correct door. A friendly canvasser for a local City Council candidate greeted me outside (but more than 40 feet from the entrance, as required by Virginia law), told me where to go, and offered me a promotional flyer, which I declined.
Inside, there were two people in line to check in. Several volunteers staffed the voting area. When I reached the front of the line, I explained that I was a new voter. The volunteer took my license, scanned it into his computer, and said my voter registration was already active. (Behold, government efficiency!) He printed a ballot for me, and explained how to mark it and feed it into the electronic scanner: “any way but sideways!” I selected my preferred candidates for President, Senate, House, and City Council, as well as an amendment to the state Constitution. I then fed my ballot into the scanner, whose counter ticked up from 3638 to 3639, confirming my vote had been counted.
I thanked the volunteers and walked out. The entire process took no more than 2 minutes. It was exactly what you would want a voting process to be: easy to access, simple, fast, extremely well-organized, and secure. The whole thing worked perfectly, exactly as designed, which felt just a little miraculous.
Walking out, I reflected on the vast infrastructure required to administer an election at this scale. All over the country, precinct by precinct, voters are casting their ballots, facilitated by armies of volunteers (and paid government employees) whose sacred duty it is to ensure that our elections remain free, fair, secure, and the envy of the world.
It is truly a marvel.
The stakes of the upcoming election are extraordinarily high. I hope you will also make your voice heard, and vote for the candidates who best reflect your policy preferences, as well as your hopes and aspirations for the future of your community, the country, and the world. I believe participating in the electoral process is both a civic duty and a privilege; voting is a powerful act, one that reaffirms our commitment to our country, and also connects us indelibly to past and future generations.
So get out and vote. And be sure to thank the election workers on your way out.
Happy investing,
Eric
About the Author
Hi, I’m Eric! I used cash-flowing rental properties to leave my corporate career at age 39. I started Rental Income Advisors in 2020 to help other people achieve their own goals through real estate investing.
My blog focuses on learning & education for new investors, and I make numerous tools & resources available for free, including my industry-leading Rental Property Analyzer.
I also now serve as a coach to dozens of private clients starting their own journeys investing in rental properties, and have helped my clients buy millions of dollars (and counting) in real estate. To chat with me about coaching, schedule a free initial consultation.
Free Rental Property Analyzer
You probably know that a well-designed rental property calculator is the most important tool a real estate investor has. It allows you to quickly calculate key metrics and understand your cash returns on a target property. You can also answer questions like:
How much do your cash-on-cash returns improve if you use a mortgage vs. paying in cash?
What will your average monthly cash flow be?
How will your returns change in future years?
Those questions can be easily answered with side-by-side comparisons in the RIA Property Analyzer. I guarantee this is the best free rental property calculator out there today, and many of my readers have told me the same. It’s both powerful and very simple and intuitive to use. Check it out!
