Years ago my contractor (at that time) asked if I could help him with his business. He was working hard and making money, but struggling to pay his bills every month. He couldn’t understand why he wasn’t doing better. 

After reviewing everything, I realized he was not taking into consideration the overhead costs of running his business. In reality, he was (for that current year) LOSING money each month. When I suggested he would be better off staying at home, sleeping in, and doing nothing, he didn’t get it. I explained, but quickly understood he was going down and would never fully understand what hit him. 

I hope you got the point of that story, because I want you to get the point of this tip. It’s more of a business tip than an investing tip, but here it is:

Compare everything with everything. 

If you work hard on a real estate deal and make a 5% return on your money, please rethink what you are doing. There are a number of passive investments that make a better return than that. Why do we suggest you seek an 8-9% return as a minimum on your buy and hold properties? Because you can make nearly that much passively. In fact you can often make more than that, but won’t enjoy some of the tax advantages.