Opinions on Rental RE vs Bonds

[jkern]

Are you planning on selling or holding? The age-old problem with selling is finding replacements, especially replacements that meet the acceptable income ratio.

I plan on holding. My original plan was to sell when it tripled in value or 20 years, whichever came first. Now, my plan is to hold indefinitely and use property management when I'm old.

 

[calmloki]

I plan on holding. My original plan was to sell when it tripled in value or 20 years, whichever came first. Now, my plan is to hold indefinitely and use property management when I'm old.

Our plan was to sell a rental property per year starting in 2008. We had a good offer on 2 little houses in 2007 which we took, (thanks luck), then spent a painful year selling a 3rd in 2009. Since then we haven't been selling, which has meant holding the places and collecting rent. Selling means a huge tax hit since we've owned the places forever, and selling takes income away from our manager.

Property management is problematic. Mostly I view it as a great way to let your expenses climb, your vacancy rate go up, and your tenant satisfaction drop. We are fortunate and have a trusted person who takes care of most of the business when we are down south, but even with him I'm very torn between having things done as I would do them and giving the person on the ground full autonomy. Rents keep climbing and it seems that the best solution is to sell to our manager if I can make the numbers work for us both - but he doesn't have much in the way of down payment, so we would be hitting our savings to pay capital gains. wurra wurra wurra - not as simple as hitting the "sell" button with Vanguard.

 

[Cobra9777]

We own 2 single family rental houses as well as a REIT (VNQ). But we also own bonds. AA is in my signature. We bought the rentals several years ago when prices were very low. No mortgages, no management cost. We've been extremely happy with both the steady cashflow and the appreciation. Workload is negligible.

I don't view investment real estate as a bond alternative. It's a unique asset class that we like in the AA, but only to a point. We also like the role that bonds play.

When I was 48 with only a few years to go, we were 100% equities and bouncing around in a sea of post-retirement investment ideas. We had no solid understanding of what our early-retirement AA needed to be and why. About a year after retiring, and lots of reading, we finally got a handle on what we wanted to own for the long haul, and how we wanted it structured. There was some mildly painful unwinding that had to be done to get there. Wish I had planned that more carefully in the years leading up to ER. Sounds to me like OP needs to put together a comprehensive plan first. Then assess how or if this condo fits into the plan.

 

[Earlyout01]

We own 2 single family rental houses as well as a REIT (VNQ). But we also own bonds. AA is in my signature. We bought the rentals several years ago when prices were very low. No mortgages, no management cost. We've been extremely happy with both the steady cashflow and the appreciation. Workload is negligible.

I don't view investment real estate as a bond alternative. It's a unique asset class that we like in the AA, but only to a point. We also like the role that bonds play.

When I was 48 with only a few years to go, we were 100% equities and bouncing around in a sea of post-retirement investment ideas. We had no solid understanding of what our early-retirement AA needed to be and why. About a year after retiring, and lots of reading, we finally got a handle on what we wanted to own for the long haul, and how we wanted it structured. There was some mildly painful unwinding that had to be done to get there. Wish I had planned that more carefully in the years leading up to ER. Sounds to me like OP needs to put together a comprehensive plan first. Then assess how or if this condo fits into the plan.

Cobra9777 thanks for the input. I do think that I have a plan for the future which includes a mix of commercial property rental income, bridging part time employment income, a residential home rental income and my investment portfolio which is currently at 80% equities and 20% bonds. Once my investment portfolio reaches the value that I am comfortable with, I plan to go more conservative with my AA and quit employment all together. Until then. I feel like I have the flexibility to be more aggressive with my AA. I would appreciate any feedback on this plan.