Anonymous wrote:Why doesn't wasting time and money paralyze people? You'd have 4-5 million without much risk after twenty years if in the market.

+1. With no worries or work really required.
Only reason to keep is if you plan to return in 2-3 years. Otherwise, sell, invest and enjoy not being a landlord to a remote home that is older and will likely have many repairs

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've read some retirement forum comments that say real estate is the way to grow your net worth and is always a good investment. I disagree for the reasons that PPs have mentioned, but maybe that's why I'm not rich.

Well, just do the math. In today's dollars (inflation adjusted), OP can expect to get $2k/month rental income (assuming management co) and retain the property, or 4% return in the market on $600k from sale. Over 25 years, that's $1.2M rental income plus retained property value, vs about $1.2M in the stock market. It's about even either way.

It is not. The property will need work. And over 25 years, the needed repairs/improvements will be substantial. Then, there will be times when the property is not rented, etc. Also, where are the property taxes and the home owners insurance (for landlords), which is much higher than owner occupied.

OP, you don’t have to be a financial guru or pay anyone to manage your money. Just buy a diversified index fund and be done.

Any work done on the property is tax deductible and the rent pays for both the money being funneled into a brokerage and money being funneled back into a house. It is also natural diversification because the stock market isn't always going to be pretty.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:I've read some retirement forum comments that say real estate is the way to grow your net worth and is always a good investment. I disagree for the reasons that PPs have mentioned, but maybe that's why I'm not rich.

Well, just do the math. In today's dollars (inflation adjusted), OP can expect to get $2k/month rental income (assuming management co) and retain the property, or 4% return in the market on $600k from sale. Over 25 years, that's $1.2M rental income plus retained property value, vs about $1.2M in the stock market. It's about even either way.

It is not. The property will need work. And over 25 years, the needed repairs/improvements will be substantial. Then, there will be times when the property is not rented, etc. Also, where are the property taxes and the home owners insurance (for landlords), which is much higher than owner occupied.

OP, you don’t have to be a financial guru or pay anyone to manage your money. Just buy a diversified index fund and be done.

4% in the market seems low, especially over 25 years. I would say 5-7% if inflation adjusted.

Anonymous wrote:Emotional attachments aside, it is too much NW to be tied up in the house. Sell it and put the money to work.

I would not want to deal with renters across the country. That could get bad very quickly.

Anonymous wrote:It's so easy to rent it out with a management company. They will find a renter and take care of all repairs. Even after the repairs and their fees, you will make net prob more than a low interest mortgage payment on it. In Reston you'll get good renters. A lot of military and other people who don't plan to settle in this area need sfh rentals near good schools. Talk to a management company, and you'll be surprised at how profitable it can be.

Yes, Reston is a nice area. And no doubt it's a prime location for good renters. But rentals in the DC area rarely have cash flow of more than a couple hundred bucks a month, even if purchased 20 years ago. I know because I own several. And management companies border on being useless. Nobody knows your property better than you, and nobody will care for your property better than you.

Anonymous wrote:

Anonymous wrote:I've read some retirement forum comments that say real estate is the way to grow your net worth and is always a good investment. I disagree for the reasons that PPs have mentioned, but maybe that's why I'm not rich.

Well, just do the math. In today's dollars (inflation adjusted), OP can expect to get $2k/month rental income (assuming management co) and retain the property, or 4% return in the market on $600k from sale. Over 25 years, that's $1.2M rental income plus retained property value, vs about $1.2M in the stock market. It's about even either way.

It is not. The property will need work. And over 25 years, the needed repairs/improvements will be substantial. Then, there will be times when the property is not rented, etc. Also, where are the property taxes and the home owners insurance (for landlords), which is much higher than owner occupied.

OP, you don’t have to be a financial guru or pay anyone to manage your money. Just buy a diversified index fund and be done.

Anonymous wrote:Sell it before you lose your capital gains exclusion.

This^^^

Anonymous wrote:I've read some retirement forum comments that say real estate is the way to grow your net worth and is always a good investment. I disagree for the reasons that PPs have mentioned, but maybe that's why I'm not rich.

Well, just do the math. In today's dollars (inflation adjusted), OP can expect to get $2k/month rental income (assuming management co) and retain the property, or 4% return in the market on $600k from sale. Over 25 years, that's $1.2M rental income plus retained property value, vs about $1.2M in the stock market. It's about even either way.

Sell it before you lose your capital gains exclusion.

I’d sell and use the money for various investment vehicles, assuming you don’t need the equity for a new home purchase. Or split the proceeds among various investments + new down payment in new location. Also depends on the condition of the house and what sort of repairs you’ll need to do if you hold on.

I've read some retirement forum comments that say real estate is the way to grow your net worth and is always a good investment. I disagree for the reasons that PPs have mentioned, but maybe that's why I'm not rich.

Why doesn't wasting time and money paralyze people? You'd have 4-5 million without much risk after twenty years if in the market.

It's so easy to rent it out with a management company. They will find a renter and take care of all repairs. Even after the repairs and their fees, you will make net prob more than a low interest mortgage payment on it. In Reston you'll get good renters. A lot of military and other people who don't plan to settle in this area need sfh rentals near good schools. Talk to a management company, and you'll be surprised at how profitable it can be.

First of all, it’s not wise to have half of your net worth tied up in such an illiquid investment. In the best of times, it takes months to liquidate a house, and if the market slows down, it could take years.

Also, make sure you look at all the tax implications of renting, including how depreciation recapture works. Also the impact of losing the capital gains tax exemption, if the house has appreciated since you purchased it.

FWIW, I inherited several rental properties in a hot real estate market and, after doing the math on all the expenses (maintenance, taxes, insurance, management fees, business license, etc), and then add in the loss of tax basis through depreciation, it didn’t pencil out as investment vs. the stock market. You can buy a CD now that has over 5% interest, and you don’t have to hassle with renters.

It looked to me like rental real estate is a good investment IF you are highly leveraged AND in a market that is appreciating, and could cover all of your expenses, including mortgage, with the rent. That worked much better when you could get a sub 3% interest rate.

Yes, never invest in real estate because a renter could destroy it lol.

OP, I would hang on to it if you were local and enjoy tinkering with house stuff. I've done the long distance landlord thing and I wouldn't do it again. A condo wouldn't be so bad, but definitely not worth the hassle with a SFH.