Lump sum of cash into rental property or markets?

[Ninepoint5]

I am sure this is another age old question, however I am too lazy to search. So please don't flame on me too much. I have an opportunity to purchase a nice rental property ($75k) in which I would have the 20% DP.

Question is better to move that lump sum into equities or this passive income opportunity? Merry Xmas all.....

 

[calmloki]

"passive income"

Had rentals before?

 

[Ninepoint5]

"passive income"

Had rentals before?

Got two now....and yes, they're a pain in my arse! However, I dont like the fact of getting a good deal on the property and someone paying my note then some. Just curious if the wisdom shared in here would put the cash into the markets or property...

 

[calmloki]

As an old landlord I'd say owning income producing rentals is a good thing. We got up to 53 doors, then thought we would sell out slowly. Then it was 2009. Oops. Held the rentals for the next decade plus, and they were plenty lucrative, but now I'm in my 70's and just really don't care to do it anymore. Sold hard the last couple years and are down to a triplex and a 16-unit. Taxes bit hard as our places were pretty much depreciated out. We've plugged money into the market, which I have trouble doing as it feels based on stock buyer mood rather than an actual service or object. But if everybody is doing it.. hard to buck the stream.

My thought, were I younger, is that inflation will make a leveraged rental purchase real worthwhile and protected on the down side by rent payments. Stocks feel like they are way high and due for a crash and sustained low values. But I bet wrong a whole bunch, countered by working the rental business like a business, so hopefully smarter people will chime in.

Midwest at $75k?

 

[FlaGator]

Think it depends on the market. Mine is looking way out of wack right now.

In the Redneck Riviera, the local paper just featured someone who tore down an existing house to build a 4 story, 7,500 sq. ft, 18 bedroom rental-not on the beach, but nearby. Expecting to rent it to "extended families and corporations booking for golf weekends".

3,000 sq. ft. houses in my neighborhood are now selling for $400/ft or more, and I can't make the math work as a vacation rental. Good luck making that massive house pay as an investment.

As Calmloki advised, treat it as a business, which means being thoughtful about your entry point, a realistic assessment of your income, and the effort to make that income.

 

[RetiredHappy]

If you are experienced with rentals and enjoy working on them, especially in-between tenants, then it is a form of diversification. For me, it sounds like alot of work and stress that I don't need. My last 2 rentals, lost more money to taxes than gain.

 

[Ninepoint5]

Midwest at $75k?[/QUOTE]

Thx for the feedback…out here in west Texas you can still find some properties that are well under $100k

 

[wolf]

Midwest at $75k?

Thx for the feedback…out here in west Texas you can still find some properties that are well under $100k[/QUOTE]

Must be why, a lot of my fellow California's are leaving.