Post: #1

I’m starting accrue cash and feel the stock market has rallied to an extent that I’m cautious to keep investing in it too highly right now.

I’d love to get a rental property in the $200-250k range. Is it fairly easy to find one that can achieve a 4-5% annual return after expenses?

Would going to a decent realtor be a good place to start? Any cities/areas people would recommend?

Thanks.

Post: #2

I'm no real estate expert, but 4-5% seems quite low. Personally, I'm looking at sites like Fundrise which have around 8-11% annual returns through real estate.

Are you looking at investing in RE more for appreciation or for cash flow?

Post: #3

If you're just looking to park your money, you can get ~8% annual return by putting your money in various indices (S&P 500, DJIA, etc) and leaving it there for a few years. Indices in the U.S. always trend up, and so long as you don't panic and sell during downturns, your wealth will grow over the long term.

Current inflation rate is 2.8% so a 4-5% return isn't worth your time.

Post: #4

Good points but I am assuming that the value of the property appreciates at around inflation as has been historically the way.

Post: #5

I would buy something where you can pay the mortgage, property taxes, and general maintenance and upkeep with the amount you are collecting in rent. Put the money down on the property and let it pay for itself, calculate your portion of the mortgage payment that is equity as your profit, but remember, you will still be cash neutral. At the end of the day, you want something that sustains itself. If you don't obey this basic rule, you could end up with something that makes you feel poorer , even if you're technically up on your capital gains. Still, real estate is usually a winner, better than stocks in my mind, you just have to be smart, plan, and hustle a bit for it, which keeps a lot of people out of the market. Also -- remember the rule is you make money when you Buy at a great price.

Post: #6

Dupe thread. Do a search, some good info in the other rental real estate thread.

Post: #7

Good REITs (real estate investment trusts) return around 4-5%, but most REITs are down about 4-5% equity on the year.

Over the last 2-3 decades hosing has been pretty consistent with the stock market.



If you are looking for the best yields, you can get about 15% in Costa Rica; average is about 7.5%.

I'm waiting before I buy anything more. There isn't much under-priced at the moment and holding those could take a long time to get good returns, i.e. gold.

Also for property I would only buy a property for holiday rental (so that I might use it to). Managing a property is too much work; and having someone else manage it is going to eat nicely into the profits. It also adds a lot of complications to your life, like insurance.

Post: #8

I have one rental property so I'm no expert but my rent is $1400 and my mortgage is $700, way more than 4% returns, at 4% your gonna be operating at a loss as that's not even enough money to deal with vacancies, repairs, etc.

I believe most people in real estate want 10% returns minimum and even that is low for some peoples comfort

Post: #9

(07-09-2018 09:31 PM)NoMoreTO Wrote:  I would buy something where you can pay the mortgage, property taxes, and general maintenance and upkeep with the amount you are collecting in rent. Put the money down on the property and let it pay for itself, calculate your portion of the mortgage payment that is equity as your profit, but remember, you will still be cash neutral. At the end of the day, you want something that sustains itself. If you don't obey this basic rule, you could end up with something that makes you feel poorer , even if you're technically up on your capital gains. Still, real estate is usually a winner, better than stocks in my mind, you just have to be smart, plan, and hustle a bit for it, which keeps a lot of people out of the market. Also -- remember the rule is you make money when you Buy at a great price.

You can't just operate at break even. What happens if you have a bad tenant who takes 6 months to get out and who trashes your property, now that's 100% on you. What happens if you have a vacancy? Then that's a 100% less.

My property rents for $1400, mortgage is $700. Every month I'm putting away $700. After 6 months I have $4200 saved up. If a furnace or AC goes out, that covers it, over the course of a couple years that money will cover a new roof or a larger expense. If I have a bad tenant I'm losing profits not my personal money.

Post: #10

I wouldnt go in on property that looks like 4-5% on paper. not a good market or you didnt look at enough options. and unforseen costs will cut that 4-5% down. your better off going with a reit at 8%+ and no work in that case.

Post: #11

I wouldnt go in on property that looks like 4-5% on paper. not a good market or you didnt look at enough options. and unforseen costs will cut that 4-5% down. your better off going with a reit at 8%+ and no work in that case.