There’s a huge lag between when I start thinking of something and when I eventually get into it. For years, I’ve invested in equity, building up an okay portfolio of long term assets that I expect to keep contributing to until I’m old enough to retire essentially treating it as money I don’t have unless really extraordinary situations call for it and also more recently, engaging in more short term trading which I hope to translate in the medium term into some kind of on going fund albeit under a completely different (and formal) structure than what I’m doing right now. The biggest change in my life since the last year and half is that I graduated college and started working so I’m making a little more money now, which translates to more fire power. The downside is that I’m incredibly pressured for time. Being that I intend to go back to B school full time within the next year or so, that situation might soon reverse.
Given all that, I’ve been scouting for investment opportunities that are more under my immediate control than stocks. Don’t get me wrong, I love stocks and will always be invested in them especially when I find really amazing businesses with considerable growth at great valuations. I happen to be okay at a lot of things finance related but for me one of the biggest goals as an investor is to reduce the element of luck to its barest minimum. And with stocks, no matter how good you get, there’s always an element of luck. With any investment you could wake up tomorrow and find out that the value of your equity is down by more than 50%, but it’s truer for the highly liquid, constantly swinging world of stocks. So I’m starting to think it’s time to invest in real estate. Real, physical property that one can live in or rent, not REITs (although REITs are not a bad way to get real estate exposure, they’re still subject to market swings like every other security.)
So I’ve started doing my research, and over the next six months, I intend to develop a broad plan that fits my circumstance and risk tolerance as well as get the capital I need ready. I’m already gathering information on cap rates, pricing in the area, property taxes, mortgage rates (in case I end up using financing although that’s unlikely) and getting advice from a few real estate agents in my network, one of whom is the mother of a close friend. I also discussed with a lawyer friend about any potential legal hiccups for an international buying real estate in the U.S. and any requirements I need to know of under the Foreign Investment in Real Property Tax Act (FIRPTA), stuff that a U.S Citizen or permanent resident wouldn’t need to bother about. As an aside, during my research I stumbled upon this tidbit: apparently, an F1 student can own a business in the U.S as long as he either a) does not work for it or b) applied for an OPT and does business in an area related to his/her academics. I’m not sure who that will help but still, I thought it was interesting.
I’ll discuss more practical thoughts and strategies as I move from planning and theory to action. If you have any helpful information, please share in the comments or hit me up on twitter @eldivyn.