I had small residential properties for 25 years. From that background I see some red flags:
1) You learn about rentals through OJT. The toilet clogs at 11PM you get the call, for example. Late rent? You get to contact the tenant(s) and wheedle them into paying. With a few units this may not be a huge problem but the fact that you have no experience virtually guarantees you will be optimistic about the workload. Thinking about just hiring a manager? There goes most or all of your cash flow.
2) We're now at the age when we have realized that we are mortal. What happens to the rentals when (not if) you die? DH doesn't want this burden. If you both die, your executor has the burden in spades. In either case the properties will probably be sold at fire-sale prices, eating into your gains.
3) In many places, larger cities at least, the attitude towards landlords has become quite negative. Lots of new rules on what tenant screening criteria can and can not be used. Rules on nonpayment, evictions, eviction moratoriums, picky maintenance details, etc. seem to be proliferating. Even rent control in some places.
I was always on pretty good terms with my tenants. In this new adversarial age I'm not sure that is possible any more.
You could get lucky,though! Buy a duplex, luck into long-term regular-paying tenants, have no major maintenance issues, ... That would be the dream.
I largely agree. My family owns RE and we have seen it all. During the pandemic, a few tenants decided to stop paying rent with eviction moratoriums in place. Once we did evict 1 of the 2 tenants it was a load of fun removing all his s#it from the property he left behind. And there is no recouping that time and lost money paying for dump fees and fixing up the property. The time and money are simply gone. No amount of rent increase on the next tenant will solve that.
Another thing on turnover. If you get a bad tenant, its almost guaranteed 3 months of lost rent with little ot no recourse. Sure small claims court, if they show up, and if they even pay after you get lucky enough for a ruling in your favor...then what? Garnish the wages of a self employed low-life. Sure screen, screen, screen. Its impossible to screen to the perfection your business minded self is thinking will be best case scenario.
The second tenant we are working to get rid of just installed a flag pole and flag over the newly wrapped garage brick mold. So now the association is charging us to fix the problem. Of course we would love to pass that cost onto the tenant, but he's already not paying his rent.
The saying is, they come in like a kitten and go out like a lion and its never been more true than in the landlording business.
Had a tenant leave there kitten behind and when we did find out 7 days after they moved out from another tenant in the building, we went in...found the kitten, and all the poop and damage it had caused. Did we allow animals...NO. Do the tenants care about your rules...generally no.
My equities never leave kittens behind. They never break a toilet at 11pm. They never decide they are going to just up and leave. Its a cost benefit analysis, but one bad year can totally screw you. The only time a rental is good is when it can constantly cash flow, and appreciate and when it's paid off its a very nice ROI. But getting from purchase, to tenant fully paying off the purchase price takes a decade. If you charge $2500.00 a month in 10 years that is $250,000. Good luck finding a decent livable unit for $250k these days. The hassles you will have in that 10 yrs is unknowable at best.
Sure, rents increase with inflation, tax breaks are great yadda, yadda yadda. It's no different than owning a business. Good years and bad years. Risk of liability and litigation. Investing into equities never has those issues.
You put 250k into an investment, in 10 years its doubled 2x to $1MM. Find me a property that can return that in 10 years. Even being conservative, let's say it simply doubles 1x to 500k. It would take 10 years of $50,000 in yearly returns to get that (unless you invest your returns into equities). In the long run you can make it work over 20-30 or 40 years, but like anything, buy low, sell high. And the asset depreciates. It physically depreciates. The roof needs replacing, the siding, the paint, carpet. All of that cost doesn't come with owning an equity.
I do own real estate...but its not a very great argument to keep at it when we've had such a phenomenal bull run in the markets. I think there can be a balance, and maybe the multi-unit owners will disagree...but its like franchising, sometimes one is bleeding out while the other is turning a hefty profit.
Everyone's views on this will vary wildly. i just personally can't stand the lack of respect many tenants have. Sure we get some good ones every now and then. DF has had the same tenants for decades on one property, but the n another one is constant turnover.
Then lets talk about heirs. DS passed away and left 3 properties. My other DS is not making a dime managing them, and in fact has drained out nearly all of the cash account supporting the properties, paying the mortgage and some of the utilities tenants stiffed her on rather than having solid tenants with positive cash-flow. 1 of the 3 properties is cash-flow positive since she passed away. Its pretty easy argument to sell, especially in the high -demand market we are in right now. DS has found out quick how "fun" owning rental property is, and its not even hers...its the trusts.