Washington D.C. based Fundrise is one of the most innovative real estate crowdfunding platforms today. They were the first to create the eREIT, a real estate fund that uses crowdfunding regulations to provide access for  non-accredited investors to invest in private real estate across the country. Then they invented the “Internet Public Offering,” where the company directly raised over $14.6 million from 2,300+ Fundrise customers in a matter of 27 hours.

When they contacted me to sponsor a post about their new eFunds offering, I had to oblige as a real estate enthusiast who loves to learn new things.

After hearing direct feedback from about 80 of you through social media, my private newsletter, various post comments, and a poll with over 1,500 votes, I decided to sell my Marina, San Francisco rental house I bought in early 2005. I lived in the house from age 28 -37 and had some wonderful memories there. But after three years of being a landlord, it was time to move on.

The decision was incredibly agonizing because I believe it’s best to hold onto a property forever. When I finally sold the house, I didn’t feel joy, but disappointment. I sat in the lounge area of a bank branch looking at the largest check I’ve ever seen in my life and feeling like I had failed my son, myself, and all of you. I’m long-term bullish on San Francisco property, but I felt I had to start living for today.

20 years from now when my son asks how I could have sold the house for so cheap, I’ll point him to this post as I’ll have long forgotten all the details by then. Hope you can forgive me dear boy.

For the record, I believe the best holding period for real estate is forever. By not selling, real estate owners ride the unstoppable inflation wave and never have to pay any onerous commissions and long term capital gains tax. But forever is a long time.

10 years ago, I had the mindset of buying as many investment properties as possible in order to generate enough rental income to never have to work a day job again. I was enamored with using other people’s money to buy a real asset that tended to rise in value over time. Further, I loved receiving a steady rental income stream that was used to pay down the money I borrowed from the bank. To capture 100% of economic benefits with only a 20% down payment felt too good to be true, so I pressed as hard as I could.

Today, I no longer have the same tolerance for dealing with tenants and maintenance issues. Funny how our attitudes change as we age. Don’t believe for one second your attitudes about work, life, and money won’t change either.

After a tremendous run up in property prices, I’ve noticed more people starting to inquire when to sell. As for your primary residence, please try to hold on for as long as possible. If you are a renter, this post will give you a good idea of the seller’s mindset when it’s your turn to finally buy. 

Real estate is wonderful isn’t it? You get to buy a property with other people’s money at a dirt cheap interest rate. Your costs are largely fixed while rents keep on going up thanks to inflation. You get plenty of tax deductions. And you get to earn a $250,000/$500,000 tax free profit upon sale in America, depending on if you are single or married. No wonder why real estate is my favorite asset class for people under 40 years old. 

But I haven’t done a good enough job over the past eight years telling you about the negatives of owning real estate. The main reason why is because I’ve been bullish on the asset class – coastal city real estate in particular. What a shame it would be to have convinced you out of buying years ago, like some doom and gloom sites who only focus on the negatives.

After a massive run up in property prices, my bullishness has turned neutral-to-slightly-negative. Supply is rising. Valuations are expensive. Rents are falling in places like NYC and SF (where I’m a landlord). While mortgage rates may finally tick up, although they’ve continued to remain low despite the Fed’s moves. Therefore, I’d like to share a reader’s horror story about being a landlord in the last down cycle. I’ve shared my own horror story, which sounds like a first class trip to Paris in comparison.