Real Estate vs Stocks

[Anonymous]

Anonymous wrote:You can't really make money in the DC area with real estate unless you are investing in very sub-prime properties or you get significant appreciation in your property.

This is true in DC proper. My husband and I purchased our home in an affluent neighborhood in 2002 before the market went crazy for a little under $800K. It is now worth between $1.6 on the low end and $1.8 on the high end. We plan to cash out in a few years as soon as our kids graduate from high school and downsize to the suburbs. It is still very much a sellers market in DC.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

to each their own. I find REITS add the diversity without the hassle of actually owning

I spend about 15 minutes a month on my stock portfolio at the beginning of each month

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

[Anonymous]

My inlaws sold their house (not DC area) for about what they paid for it 30 years ago. Their neighborhood, which was middle class and seemed stable when they bought, developed issues over the years. They have good retirement savings and pensions so are doing fine but it’s a really good thing they didn’t have to rely on appreciation on their house for savings. Between inflation and the amount of mortgage interest paid, their house was a catastrophe from an investment perspective. From the perspective of just having a place to live, it was fine.

[Anonymous]

Anonymous wrote:My inlaws sold their house (not DC area) for about what they paid for it 30 years ago. Their neighborhood, which was middle class and seemed stable when they bought, developed issues over the years. They have good retirement savings and pensions so are doing fine but it’s a really good thing they didn’t have to rely on appreciation on their house for savings. Between inflation and the amount of mortgage interest paid, their house was a catastrophe from an investment perspective. From the perspective of just having a place to live, it was fine.

Very similar experience with my mother-in-law. She's still living in the house she and her husband bought nearly 40 years ago. After adjusting for inflation, the house is worth basically the same now as it was when they bought it. 40 years and no real appreciation whatsoever. It served its purpose as a house, but was awful as an "investment." This was not in the DC metro, but was in a close-in suburb of another large east coast metro.

[Anonymous]

Anonymous wrote:

Anonymous wrote:My inlaws sold their house (not DC area) for about what they paid for it 30 years ago. Their neighborhood, which was middle class and seemed stable when they bought, developed issues over the years. They have good retirement savings and pensions so are doing fine but it’s a really good thing they didn’t have to rely on appreciation on their house for savings. Between inflation and the amount of mortgage interest paid, their house was a catastrophe from an investment perspective. From the perspective of just having a place to live, it was fine.

Very similar experience with my mother-in-law. She's still living in the house she and her husband bought nearly 40 years ago. After adjusting for inflation, the house is worth basically the same now as it was when they bought it. 40 years and no real appreciation whatsoever. It served its purpose as a house, but was awful as an "investment." This was not in the DC metro, but was in a close-in suburb of another large east coast metro.

But if we're just looking at appreciation, isn't that the wrong metric?

If you rent out a house, you get someone else's money to pay the mortgage, which then becomes your money when you sell.

And even if you just live in a house, you get the money when you sell - in contrast to being a renter, where the money never becomes yours.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My inlaws sold their house (not DC area) for about what they paid for it 30 years ago. Their neighborhood, which was middle class and seemed stable when they bought, developed issues over the years. They have good retirement savings and pensions so are doing fine but it’s a really good thing they didn’t have to rely on appreciation on their house for savings. Between inflation and the amount of mortgage interest paid, their house was a catastrophe from an investment perspective. From the perspective of just having a place to live, it was fine.

Very similar experience with my mother-in-law. She's still living in the house she and her husband bought nearly 40 years ago. After adjusting for inflation, the house is worth basically the same now as it was when they bought it. 40 years and no real appreciation whatsoever. It served its purpose as a house, but was awful as an "investment." This was not in the DC metro, but was in a close-in suburb of another large east coast metro.

But if we're just looking at appreciation, isn't that the wrong metric?

If you rent out a house, you get someone else's money to pay the mortgage, which then becomes your money when you sell.

And even if you just live in a house, you get the money when you sell - in contrast to being a renter, where the money never becomes yours.

Instead of renting it out you could sell it and then invest the proceeds.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:My inlaws sold their house (not DC area) for about what they paid for it 30 years ago. Their neighborhood, which was middle class and seemed stable when they bought, developed issues over the years. They have good retirement savings and pensions so are doing fine but it’s a really good thing they didn’t have to rely on appreciation on their house for savings. Between inflation and the amount of mortgage interest paid, their house was a catastrophe from an investment perspective. From the perspective of just having a place to live, it was fine.

Very similar experience with my mother-in-law. She's still living in the house she and her husband bought nearly 40 years ago. After adjusting for inflation, the house is worth basically the same now as it was when they bought it. 40 years and no real appreciation whatsoever. It served its purpose as a house, but was awful as an "investment." This was not in the DC metro, but was in a close-in suburb of another large east coast metro.

But if we're just looking at appreciation, isn't that the wrong metric?

If you rent out a house, you get someone else's money to pay the mortgage, which then becomes your money when you sell.

And even if you just live in a house, you get the money when you sell - in contrast to being a renter, where the money never becomes yours.

Instead of renting it out you could sell it and then invest the proceeds.

Also most rentals in DC aren't cash flow positive when all of the costs are factored in. The purchase price and taxes are just too high in most part of DC compared to rents.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

How so?

So the rental was purchased for $250k in 2012 and I put down $70k of my own money. Tenant's rent has been covering/paying for the mortgage. It's now worth conservatively about $350k, or an $100k increase in 6 years...remember I only put in $70k of my own money so that's like 142% ROI.

Has your stock portfolio done better?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

How so?

So the rental was purchased for $250k in 2012 and I put down $70k of my own money. Tenant's rent has been covering/paying for the mortgage. It's now worth conservatively about $350k, or an $100k increase in 6 years...remember I only put in $70k of my own money so that's like 142% ROI.

Has your stock portfolio done better?

So you’ve spent 70k (possibly more) and if you sold you’d make a 100k plus the original 70k investment. Yes, you’d have a lot more than 170k had you invested 70k in the market six years ago. You’d also have way less stress

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

How so?

So the rental was purchased for $250k in 2012 and I put down $70k of my own money. Tenant's rent has been covering/paying for the mortgage. It's now worth conservatively about $350k, or an $100k increase in 6 years...remember I only put in $70k of my own money so that's like 142% ROI.

Has your stock portfolio done better?

The reason this is a bad investment is because you’d barely have a return except for the appreciation. There’s a decent chance your property won’t appreciate at the same rate over the next few years. You don’t want a rental property that solely relies on appreciation. You want to invest your 70k and have a monthly income from it.

[Anonymous]

Anonymous wrote:1% rule is that Rent should be 1% or more than the purchase price which is very difficult in Northern VA

yea, near impossible. I bought my first house in Northern Virginia for 180K in 2001. At the time the going rent was $1300/mo for that townhouse. I then kept it and rented it out for $1800/mo when it was worth 425K at the peak of the market in 2006.

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

How so?

So the rental was purchased for $250k in 2012 and I put down $70k of my own money. Tenant's rent has been covering/paying for the mortgage. It's now worth conservatively about $350k, or an $100k increase in 6 years...remember I only put in $70k of my own money so that's like 142% ROI.

Has your stock portfolio done better?

So you’ve spent 70k (possibly more) and if you sold you’d make a 100k plus the original 70k investment. Yes, you’d have a lot more than 170k had you invested 70k in the market six years ago. You’d also have way less stress

I guess you're assuming you had matched or beat the SP500 performance the pass 6 years? have you actually looked it up and do the calculation or you just pulling this out of thin air?

[Anonymous]

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've been a landlord for 20+ years and the 1% have never applied to the DC metro area.

Correct. This area is too expensive. This is the wrong place for rental investments. Most investors here rely heavily on home appreciations to make money.

Perhaps, but there’s another rule that it’s stupid to have rental properties that are hours away from where you live. So what should people who live here do?

our rentals rents for around $1850/month and its current assess values are around $350k...so around 6% gross ROI. We collected these rentals around 2011-2013 for around $250-300k.
Just because the 1% rule doesn't apply, it doesn't mean RE is not a decent stable investment...

But it means you can earn more money investing elsewhere. Rental properties are a lot of work for something with a suboptimal return!

Considering we put down about 70k per property, or around 25%...I think it's decent return...also, we have a large amount already in the stock market and figure diversification is a sound strategy.

It’s a horrible return. You’d have 4x as much money if you’d invested in stocks

How so?

So the rental was purchased for $250k in 2012 and I put down $70k of my own money. Tenant's rent has been covering/paying for the mortgage. It's now worth conservatively about $350k, or an $100k increase in 6 years...remember I only put in $70k of my own money so that's like 142% ROI.

Has your stock portfolio done better?

The reason this is a bad investment is because you’d barely have a return except for the appreciation. There’s a decent chance your property won’t appreciate at the same rate over the next few years. You don’t want a rental property that solely relies on appreciation. You want to invest your 70k and have a monthly income from it.

By the same token, there's a decent chance the market won't be appreciate at the same rate over the next few years neither.