Reply to Stocks, rental property, or upgrade house?

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[quote=Anonymous][quote=Anonymous][quote=Anonymous]NP .. I am a tad surprised that a lot of folks are saying that renting is not the way to go. If you have paid off the house .. isn't the rental free cash flow ? What am I missing ?[/quote]

Just to give you a basic idea of how the numbers work out on a townhouse I have in VA. House is paid off and worth 350k. I net approx 1k/month. I bought the house for 175k, and prior to the mortgage being paid off, I would break even.

Right now I am basically getting a 5% rate of return. So the rate of return isnt the greatest, but it's ok when you consider that it's reliable income.[/quote]

I am getting 6.5% annual rate of return on $2.7 multi-unit building in DC if rented long term, 9% if rented furnished mid term (this requires more management, I spend one weekend a month and an hour/day on renters' communication). It's not a bad rate of return, and it's not fluctuating (was making the same even during financial stock market downturns in 2008, 2013 and now). My 401K is minus 7% this year.

I also consider the fact that if the building was sold, I would pay capital gain tax and depreciation recapture income taxes, so I would get about $2mm in cash. I don't think $2mm in cash invested into stocks would bring me annually over 200K guaranteed.

But I only invest in multi-unit properties, as a small RE investor. Never invest in a condo or a SFH it's money drain[/quote]

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