Reply to Knowing when to cut your losses

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[quote=Anonymous][quote=Anonymous]This situation describes me exactly too, from breaking even, to the amount I would lose if I see. PP, you make a good point about income stream, however, what about the opportunity costs of taking this money instead and investing it either in a different property or just in a mutual fund for the next 20 years. Wouldn't this make more sense in the long run? Assume a $300k condo.[/quote]

PP here: its really the initial downpayment and the upkeep (anything that you pay that is not covered by the rent) that is your opportuntity cost.  Generally speaking, you need about $800,000 yielding you 4% to get you 3k a month (apologies for any errors in math).  In the end, it should all work out the same, but its really how you get there with rental income (by using other people's money) that is the benefit in my mind.  Or as you suggest you could put your money into a fund, but that would be mean (say you put in 100k), you need it to go 8x where it is today (not including dividends reinvested) to get the same result over the same period.   Could happen, maybe not. [/quote]

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