Great comments on here
To add, I have substantial personal use real estate now only, but have gone through phases with substantial investment property as well.
- Same city only as where I live for the investment properties
- Condos only with virtually zero maintenance required by me and incented tenants to take care of minor things, which worked perfectly. Made my investment virtually turnkey over many years
- Modest (relative to very expensive market) investment properties in high demand, transit served city locations created immediate interest and secured great tenants in all cases
- Moderate your rent increases to keep the great tenants happy and staying at the expense of a few dollars. Time, effort and vacancy way more expensive to deal with
- Hold in a corporation if you have significant other assets, for protection. I have significant other assets. I kept this completely separate
- I stayed away from all stock market related real estate investment while I held these as part of my total portfolio. I have now opened the real estate window since the hard investment properties are gone. Math always considered level of personal use real estate in hand as well.
- Vacation rental in another country. Cash flow disaster. No end of small issues. Got out as soon as practical. Saved only by currency swing in my favor. Would NEVER recommend this to anyone for any reason. Way too many easier and cheaper options now, to not have this type of albatross around your neck
- Mixed use property with commercial and residential. Likely would have done well on capital gain over time but couldn't easily replace lost residential tenant and the commercial tenant was nothing but trouble and was not paying market rate (inherited him). I learned a lot about what and what not to do on that one!
- Cash flow returns make it not worth holding at this point, I have determined. Capital gains significant given that renters paid me to own so I have sold. The CAP rates on my chosen property type (YMMV of course) not worth holding at this point. I find I can do the same or better with no effort in a diverse, dividend growth stock portfolio with significant tax advantages and complete liquidity
This is all in a Canadian tax context and Toronto is the city, and the context matters of course to every decision. Multi-family and commercial have very different nuances here and wherever you may be.