First investment property

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

It could make sense if you can rent your property out for more than your carrying cost. Most mom and pop landlord's are renting out a home they used to live in (like, their one bedroom condo or smaller starter home). Investors who don't plan on living in the property want a profit ASAP. The thing is, even for the mom & pop landlord, it really depends on what their cash flow is on the property. I would bet in most cases, they would have been better off selling and putting money in the market.

This. Rental properties are a management concern. It's a part-time job, and you're dealing with obtaining and keeping tenants, getting rid of bad tenants, maintaining the property, dealing with rising costs like RE taxes, and having no easy way to get out quickly if you need to.

[Anonymous]

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

Exactly - you need an income stream. It is really hard to generate an income stream buying a rental property, today. You're betting on an income stream starting probably 5-8 years out, coupled with real estate appreciation. It's not very appealing.

[Anonymous]

We bought a townhome in a prime area in DC 12 years ago for 750k. We invested about 100k in it and lived there for 5-6 years. When we moved out, we decided to rent it out. Now the house is probably worth 1.1/1.2 mil and we rent it for 6k. We could increase the rent a bit, but we prefer to find tenants quickly and never have more than a week in between tenants. So far, it has worked out great. We occasionally have to do some small repairs and had to replace the washer. Other than that, the rent is almost double what we pay in mortgage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

Do your own research, and draw your own conclusions.

https://money.usnews.com/investing/articles/real-estate-vs-stocks-which-has-higher-returns

https://awealthofcommonsense.com/2024/01/what-is-the-historical-rate-of-return-on-housing/

https://www.experian.com/blogs/ask-experian/real-estate-vs-stocks-which-is-better/

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

You're comparing two totally different things.

Real estate has leverage and that's a huge advantage.

Real estate provides income, which is more similar to bonds than equities.

[Anonymous]

Real estate has leverage and tax advantages which can boost your return. Income is dependent on your costs. And its not passive - you need to maintain the property. Finally, don't forget real estate is an illiquid asset and there is a lot of friction to sell.

[Anonymous]

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

+1 It's about diversification. You don't know what the stock market will do.

Most RE investors play the long game. If you bought an investment property even at a high in 2007 (right before the 2008 crash), then you'd have a great ROI now.

Investors deduct every expense and depreciate the asset. Many are fine with being in the negative the first few years. Eventually rents and property values rise. Just be prepared to ride out the ups and downs and don't panic sell on the dip.

[Anonymous]

Cap rate (capitalization rate) is a metric used to measure the performance of a rental real estate property, providing an estimate of the potential return on investment.
Cap rate can help investors quickly assess the value of a property in comparison to other potential investments.
To calculate cap rate, follow this formula: (Gross income – expenses = net income) / purchase price * 100.
Cap rates between 4% and 12% are generally considered good, but it’s important to remember that other factors, such as potential improvements, should also be considered when evaluating a property.
Cap rate does not account for changes in cash flow due to improvements or renovations, and it does not consider leverage.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

People forget the leverage of real estate investment.
If you put 20k down and buy $100k home and then the house appreciates 5%.
Your cash to cash return is 25%.

[Anonymous]

Well, now would not be the time to go about it...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

People forget the leverage of real estate investment.
If you put 20k down and buy $100k home and then the house appreciates 5%.
Your cash to cash return is 25%.

Minus maintenance, repairs, property taxes, transaction costs when going to sell, etc...

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:OP - the whole premise of the question seems largely missed by most of the answers. Where’s the ROI from investing in real estate? I’m not insistent on buying a rental but clearly many do including several in my own neighborhood in ffx county. Based on the answers that doesn’t make sense to do.

In this area you are mostly looking at long term price appreciation. Like the PP suggested, it can make sense if it's a former residence that your only investment is a 10k down payment many years ago.

It doesn't make much sense to compare real estate returns to the stock market because the future is unknown and stocks can have negative returns for 15 + years or kick butt like we've seen recently. It's more about diversification and whether it's a good fit for you.

To give you an idea of how difficult it is to create cash flow in this area, let's look at the 1% rule. Current townhouses in my area are selling for 450k, yet are renting for 2.5k. Those numbers arre mierda.

Historically, RE as a asset class returns less than the stock market. If you're a long-term investor, the choice is clear. Stocks on average return 8-12% annually, while RE generates returns of 2-4% annually, with less liquidity and more management hassle. Of course any individual stock or piece of real estate can vary widely from those general averages, but it's much more difficult to be widely diversified in RE than in stocks, making it more likely you'll see those average with equities rather than with one or a small number of RE properties.

Stocks don't return 3x that of RE. I've never heard anyone use the argument that having a reliable income stream from RE is a bad thing (lacks diversification) when presumably the vast majority of your portfolio is allocated to stocks. I can see how it kind of makes sense when you are looking at it through the lens of a hot us stock market for the last ten years. But during the previous 10 years, real estate income obliterated US stocks.

People forget the leverage of real estate investment.
If you put 20k down and buy $100k home and then the house appreciates 5%.
Your cash to cash return is 25%.

Minus maintenance, repairs, property taxes, transaction costs when going to sell, etc...

Ok pal.

Great day to be in real estate!