Real Estate and landlording

[vatreefarmer]

I'm wanting to diversify my portfolio, as of right now most all of my holdings (besides my residence) are in equities. I'm thinking maybe 20% of my portfolio should be in real estate. Either single family, multi family, or possibly REITs. I've seen a few homes locally that that appeal to me as investments, and would bring in the upper tier of monthly rents. Nothrup-Grumman is opening a facility in this little town and will bring a bunch of 6 figure jobs to the area, so I'm expecting RE values to being short terms stable and growing in the long term. So...whats the formula for seeing what numbers work for value vs income? If I take money out of my equity investments, I would lose that growth and return income. Are there tax or other advantages to having some of it mortgaged or is cash the king?

I found this link https://www.turbotenant.com/landlord...ty-calculator/ which may provide some insight to some of my questions, but nothing beats first hand experience

[j.george1220]

Cash is always king! Dont be slave to any lender.

In my opinion, you will have some that disagree, buying rentals can be profitable but i do not think as profitable as good investments. Rentals come with maintenace, renters tearing up your property, repairs, and on average about a 4-5% appreciation rate. If you borrow the idea is the renter pays the mortgage cause they dont have credit and you do.. youre really just profiting future appreciation.... with hopes you keep good renters for 20 to 30 years to pay off yhe mortgage for you.

In the right funds and investments you can see 15-20% yearly appreciation without the headache of trying yo collect rent monthly. Right now just a money market account is paying 5%. Compound interest over 20-30 years will make you really rich without the upkeep of property.

As far as taxes, just make the money and pay them. Paying taxes means youre making good money!!!!

[Aj14]

I own several stocks and found out I don't have the stomach for the volatility of them in today's economic times.
Real estate where I own doesn't fluctuate like other investments.
At least for mine, all continue to climb.
Owning several houses has it's rewards and for me, very few downsides. If you don't know how to turn a screwdriver stay out of the rental business as the contractors you hire eat up your profits.
Then once Air B and B started, that's where the some of the headaches ease and very good money is to be made as long as you are in the correct area.
It does take some work though to manage your Air B and B's.

[NitroZ7]

If you want real estate exposure without the hassle and illiquidity that comes from owning the actual homes, then there are several sectors of REITS that may be appealing to you. There are apartment REITS, like AVB, MAA, and Essex that pay around a 4% distribution and give you a wide geographic representation.

I think the choice depends on how passive you want these to be. Dealing with maintenance, non performing tenants etc. can be a real pain. Also when you buy and sell there are transaction costs associated with it. I would sort of write down the pros and cons of doing each to help you decide.

[breeves2245]

One of the better websites for research on the topic is www.biggerpockets.com.

[digthemup]

My experience was way prior to Air B&B, and mine were multiple units with one single that I sold and held the loan for 7 yrs till things went bad going through foreclosure to reclaim the property. I am glad to hear that some folks here currently are have no issues, but tenants can be difficult at best with retention being the last of your issues. Maintenance is a problem with many little things always needing care, and many times it will be at the most inconvenient times. When tenant move out or you have to move them out, you will find out courts are not in your favor, and if they leave their crap behind and you dispose of it, they have the right to take you to court for restitution.
Being three and four units, you will need to deal with tenants arguing at best or shooting at worst, Lord willing you are not the one involved in the shooting, and then there is dealing with SSI, which can be a blessing or a curse. I was blessed when got out of it during my first divorce yrs ago, and I have never gotten back in.