Trying to word this succinctly, sorry for long post...
I have been contemplating the idea of purchasing some rental income properties to add to my portfolio and retirement plans, as many members of this forum do. And have been evaluating the various pros and cons to see if this is an endeavor worth pursuing. Wondering what other members experiences and opinions with this would be, or if I am missing anything.
My current situation is that I am pretty much in the OMY stage, as my portfolio of equities is not too far from being (theoretically) enough on it's own. But doing another 0-5 years of salary would add some nice additional cushion and/or luxuries.
Basically, some see generating income from rental properties as an alternative to generating income from a very large portfolio of equities. Or perhaps a good thing to complement one's portfolio of equities.
The big benefit of rental properties is that they generate income FROM BORROWED MONEY, that you can get much earlier in life than income from equities.
Income from Equities Portfolio is reached pretty much just from a lifetime's worth of accumulation from your salary at w*rk.
Income from Rental Properties can be reached by getting a mortgage loan to buy the properties, which one can do at basically any age, and just make sure that the income is greater than the mortgage loan payments. So you can theoretically retire sooner with this method.
As I am currently seeing it
PROS of rental income properties are:
-Generate income from BORROWED FUNDS earlier in life, as opposed to 20-30 years of salary accumulation for an Equities Portfolio
-No matter what happens to real estate home prices, or the stock market, your property should still be generating the same income. More stable/secure?
-Hedge / diversify your income from equities, or from real estate price increase alone
-Continiously increasing your number of properties to 2, 4, 6... properties can eventually become VERY lucrative.
-Be your own boss
CONS of rental income properties are:
-I have heard and seen many NIGHTMARE stories from people, including my father who regretted getting into this industry.
-Entirely new industry for me that I thus far have not been super interested in, though I am probably capable.
-Would be best to learn a lot about home improvements and repairs.
-It is more semi-passive income compared to equities, as you still need to maintain the properties and deal with tenants and renting it out etc.
-Purchasing a property is not an insignificant ordeal involving a lot of paperwork: (property taxes, land transfer taxes, utilities, Real estate agent stuff, mortgage stuff)
-Could get some bad tenants that cause lots of stress and additional work.
-Could be hard to go on extended vacations, as I might get called up at any time to fix a problem. Need to always be available.
-Would pretty much need to own a car again.
-Would be carrying a large dept for many years.
-Difficult to do in big cities due to cost of the properties being much higher for the income they generate.
Is taking on this endeavor worth pursuing? I am completely overlooking large aspects of this? Do forum members who do this recommend it? Has it been a positive experience that was worth it or something they regret? Thanks
(also note there are a couple threads related to this in the past in some ways, but I guess this looks to delineate the PROS / CONS a bit more thoroughly and relate a bit more to my personal situation)
I have been contemplating the idea of purchasing some rental income properties to add to my portfolio and retirement plans, as many members of this forum do. And have been evaluating the various pros and cons to see if this is an endeavor worth pursuing. Wondering what other members experiences and opinions with this would be, or if I am missing anything.
My current situation is that I am pretty much in the OMY stage, as my portfolio of equities is not too far from being (theoretically) enough on it's own. But doing another 0-5 years of salary would add some nice additional cushion and/or luxuries.
Basically, some see generating income from rental properties as an alternative to generating income from a very large portfolio of equities. Or perhaps a good thing to complement one's portfolio of equities.
The big benefit of rental properties is that they generate income FROM BORROWED MONEY, that you can get much earlier in life than income from equities.
Income from Equities Portfolio is reached pretty much just from a lifetime's worth of accumulation from your salary at w*rk.
Income from Rental Properties can be reached by getting a mortgage loan to buy the properties, which one can do at basically any age, and just make sure that the income is greater than the mortgage loan payments. So you can theoretically retire sooner with this method.
As I am currently seeing it
PROS of rental income properties are:
-Generate income from BORROWED FUNDS earlier in life, as opposed to 20-30 years of salary accumulation for an Equities Portfolio
-No matter what happens to real estate home prices, or the stock market, your property should still be generating the same income. More stable/secure?
-Hedge / diversify your income from equities, or from real estate price increase alone
-Continiously increasing your number of properties to 2, 4, 6... properties can eventually become VERY lucrative.
-Be your own boss
CONS of rental income properties are:
-I have heard and seen many NIGHTMARE stories from people, including my father who regretted getting into this industry.
-Entirely new industry for me that I thus far have not been super interested in, though I am probably capable.
-Would be best to learn a lot about home improvements and repairs.
-It is more semi-passive income compared to equities, as you still need to maintain the properties and deal with tenants and renting it out etc.
-Purchasing a property is not an insignificant ordeal involving a lot of paperwork: (property taxes, land transfer taxes, utilities, Real estate agent stuff, mortgage stuff)
-Could get some bad tenants that cause lots of stress and additional work.
-Could be hard to go on extended vacations, as I might get called up at any time to fix a problem. Need to always be available.
-Would pretty much need to own a car again.
-Would be carrying a large dept for many years.
-Difficult to do in big cities due to cost of the properties being much higher for the income they generate.
Is taking on this endeavor worth pursuing? I am completely overlooking large aspects of this? Do forum members who do this recommend it? Has it been a positive experience that was worth it or something they regret? Thanks
(also note there are a couple threads related to this in the past in some ways, but I guess this looks to delineate the PROS / CONS a bit more thoroughly and relate a bit more to my personal situation)
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