Reply to Why do people have investment properties over stocks?

Forum Index » Money and Finances

Reply to "Why do people have investment properties over stocks?"

Subject:

Emoticons





More smilies

Text Color: Font: Close Marks

[quote=Anonymous][quote=Anonymous]We live in a TH with a rock bottom mortgage rate in a good school zone and are torn between selling it or keeping as a rental when moving up. We would get about 225k equity out of it if we sold and it would rent for around  $3500/month based on comps.

The monthly cost for the house (PITI + HOA) before any maintenance is $2200. Best case scenario after dealing with upkeep and vacancies we would cash flow maybe $1000/month, but would also benefit from $850/mo principal pay down and a few % appreciation per year on a 600k TH. This looks like ~40k/yr in gains putting those three together if we assume 3% appreciation. Over 20 years time frame if we assume rent and house value grow at 3%, and all cash flow is reinvested into the SPY, the total value we are left with in the end is about $1.5M if we combine the stocks and TH equity.

On the flip side if we just sold and invested the 225k equity up front in the SPY then averaging 10% would yield $1.5M in 20 years, so pretty much the same as renting the house but with zero hassle.

It seems like this math holds true for most situations where someone has at least 30-40% equity in their house, it’s almost always better to sell the house and invest the equity in stocks. Not only do you get better returns but there’s no headache involved. Only in situations where you’re highly leveraged with very small amounts of equity is it more ideal to turn it into a rental.

So my question for the people here with lots of rental properties that are at least 1/3 of the way paid off: what keeps you from just selling and investing the proceeds in stocks? Even with all the tax deductions available for landlords I still can’t get the math to make sense. [/quote]

th and condo are bad idea, HOA can make renting expensive or banned [/quote]

Options

	Disable HTML in this message
	Disable BB Code in this message
	Disable smilies in this message

Review message

Search Recent Topics Hottest Topics