Retire and Become Landlord to Supplement Income?

[PandaBear]

Originally Posted By: KneeGrinder
It is definitely no cake walk. There is quite a learning curve. There are a lot of A**h***'S, drug addicts, alcoholics, liars, shysters, scammers, cigarette smokers, and people that just don't give a [censored] about you or your property. Did I leave anyone out? Unfortunately you have a difficult time trying to see into the future to protect yourself from the mayham of these people. On the other side of that, if you have a retirement fund that you have not paid taxes on, you get full depreciation of the purchase price over 27.5 years. So, you can actually take money out of a 401k without paying taxes on it! Its the only reason "Rich" people own rentals.


Yup, you left out people who rent the place and convert it into grow house or meth lab. That's why you have to add a "inspection every month" clause to the lease even if you don't plan to inspect, that'll scare away criminals who dress up as nice people to sign the lease.

That 27.5 years is only the building depreciation, you cannot deduct the land cost in depreciation.

 

[PandaBear]

Originally Posted By: SeaJay
I would not want my investments to be tied up in rental properties. There may come a time in retirement when they are badly needed. Its one thing if you were younger and want to build a retirement portfolio. It is quite another to already have that portfolio and to then invest in in real estate which as history has suggested can crash badly.

We purchased a condo in 2010 in south florida about a mile from the beach. At that time monthly rents for 2 bedroom, two bath units in that complex were in the $300 to $400 range. People were renting them out for nickels and dimes to help with the carrying costs because they would lose their socks, shoes, shirt and bloomers if they were to try and sell at that time. It took a few years before the rents and selling prices for the units returned to some semblance of normal.

Maybe a crash like that never happens again, but it might.


It will happen again eventually, we human are forgetful between generations and always thought things are different this time around.

The main benefit of real estate investment if done right is to borrow money to work against inflation. Small investors cannot borrow money to buy other assets as easily as real estates. If I walk into a bank trying to finance a duplex it would be approved. If I walk into the same bank telling them I want to borrow 2M to buy stocks, bonds, or to start a catering business, they would likely not lend me the money.

 

[fdcg27]

My parents owned a number of rentals that they gradually sold off around the time they retired since their idea of retirement didn't include the duties and minor headaches of being a landlord.
They had bought these properties right and they were in what remains a desirable upscale community with few available rentals, most having been converted to condos years before, and very high house prices.
They were always blessed with good tenants, but part of that is qualifying your renters. There wasn't then and isn't now anything that prevents a property owner from having prospective tenants sign an agreement allowing credit and background checks to be used in determining whether they qualify to lease a property.
If you sell your properties at the right time, you'll make money on that end as well and you'll have enjoyed a stream of extra income after tax while you owned them.
There is also nothing easier to leverage than real property.
There is work and effort involved in owning rental property, but there are solid returns as well.
To me, the returns don't justify the effort as well as the illiquidity, but if everyone thought as I do, there'd be no residential rental units anywhere.
I work with a woman who owns some Section 8 units and while the subsidized rental rates are super, the headaches are as well.

 

[CT8]

Originally Posted By: gfh77665
I bought all my properties during the housing crisis, when foreclosures were everywhere. I honestly have done fantastic with my rentals (7). I bought newer homes in good neighborhoods with great school districts. A few minor issues along the way, but nothing major.

FWIW, you are far more likely to hear "horror stories" than good experiences, because people with things going well typically don't voice it like those with complaints.
Buy low sell high who would have thunk it

. I bought at the same time 2 homes that were forclosures and sold the both this year to the tenants at a discount. They rented them trouble free for almost 6 years for $1250.00 per month and I made $110,000.00 over the purchase price . I rolled them into two four plexes and have them managed. I am some what happy .

 

[pandus13]

Originally Posted By: CT8
... I rolled them into two four plexes and have them managed. I am some what happy .

1031 exchange?