Why rental properties if they return is so low

[evan12]

I know it is easy choice , but most rental properties ROI is less than 5% beside the hassle , isnt stock market a better deal , I am still think with all its fluctuations is better .

 

[The_flying_dutchman]

Some people I know who have rental properties do so because the tenants are essentially paying the mortgage of the property for the owners. So they put down payments for 2-3 rental properties and in 30 years they will own 2-3 houses and can sell them and basically get the return on their investment.

 

[LiveFreeX]

rental properties are an easy way to pay your rent. Don't think in terms of HOUSES, think MULTI-FAMILY. Du/Tri/Quad or 6 plexes, 5 are pretty rare. You stay in one apartment, the tenants pay your mortgage or utils. Otherwise you are nuts to invest in ONE house for someone to rent, you can pretty much guarantee it'll be completely ****ed up by the end of the rental period. Personally, I'd rather have someone else pay my rent and that's precisely why my wife and I are buying a multi-family building this year.

I want to continue on into Robotics and Automation, I think my wife wants to do Dentistry next and I want to go to school without worrying about the bills getting paid at the end of the month. Later if we decide to move, it'll be a background money maker. Regular houses are just a bvllsh1t headache waiting to happen. I can maintain my own boilers/furnaces for the entire installation anytime I want, do all the electrical and plumbing in the building and tenants will only have to leave a notice under my door at night if its urgent. It'll beat the sh1t out of having to drive there from wherever and wait till tenants are home to get the repairs done.

And no stock markets are NOT a better deal unless you are some kind of shark. My uncle made millions in the markets but unless you know the tricks you'll be the one losing the money. You can rest assured that there will always be someone searching for a rental no matter the economy, its almost a guarantee that you will meet your minimum payments each month.

 

[Bible_Belt]

I can buy a $10,000 trailer and rent it for $500 a month. But that only works because I can do all of the maintenance and upkeep myself.

 

[BeExcellent]

Real estate is a great vehicle if you know how to drive it but it is a business and you have to know how to run it. I buy houses well under 50K, make the needed updates/repairs and rent them for anywhere from $350 to $800 depending on the house. Before I am 50 my portfolio will set me free. I use my other income for debt service mostly. It is a business where you make your own luck to a large degree and you have decisional control regarding the assets and how to manage them. You do not have this in the stock market unless you are managing a tremendous amount of money or you yourself have a tremendous amount of money. My houses are not going to impress the country club set over drinks. But I'll compare my % returns to anyone on Wall Street.

Now those returns are not going to happen in San Francisco or LA or Miami unless you bought in years and years ago. I have friends who did and they have done well (a la Brad's post above). Now days you gotta get to main street, USA. If you buy houses, buy in bulk. One house of 1 vacant = 100% vacancy. One house of 10 = 10% vacancy. And you better understand how to deal with renters. My money came out of the financial markets years ago. I would do it again because the rentals are now repaying the money I pulled out with the cash flow. Its very nice.

 

[PrettyBoyAJ]

Real estate, in my opinion, is always the best and safest bet.

My sister and brother in law purchased a property that is now worth four times more than when they bought it eight years ago. There were some rough times but renting out a spare room or two helped them cover expenses. Otherwise, they would have had to sell it a long time ago and move to a smaller house which increased in value by very little.

I have a large piece of land that my family originally purchased almost 30 years ago for $375,000. Last year, I got an offer for it totaling $3.85 million. I turned it down.

It's a really big house, and I live there when I'm not at my girlfriends. I put up a few walls and constructed some new rooms, and now I rent out eight rooms to renters, at about $600 a month each. That's almost $60,000 a year cash which, because a lot of it isn't reported, is equivalent to having a job where I'm making $120,000 a year before tax. And I basically do nothing except collect the rent every month.

The property pays for itself.. property tax and insurance are taken care of. Plus I have a huge amount of left over cash for other things. I long ago paid off the mortgage. And meanwhile, every year the property is increasing in value.

I have an uncle who recently died. Him and my aunt bought a piece of farmland in what seemed like at that time to be be the middle of nowhere, in the early 1970s. He rented out rooms to cover expenses. Every year he did this, wondering what he would do with all that land by himself after my aunt died. But six years ago the outskirts of a nearby city finally reached his farmland and a builder purchased his land to develop it.

Can't remember how big it was (maybe 100 acres?) but he sold it for $38 million.

If you know what you're doing, and rent out to good people, you can make some great cash or at least cover your expenses.. with a minimum of effort. And if you're lucky and really good at it, you might even make a fortune.

Those are some big gains my friend. Whats the best way to buy land?

I wouldn't mind buying some land for a cool 10-30k and then selling it for a million.

 

[evan12]

Thank you all , it is really great advice here , I am mainly moving from stock market because these corrections is eating most of my gain which is not that big in the first place .

Become an expert by learning everything you can. Then you will be in a better position to find out what would be the best choices to make in maximizing your returns.

That is right , I dont want to make a blind jump , but it seem most people have positive experience with real-estate investment

 

[Bible_Belt]

I am mainly moving from stock market because these corrections is eating most of my gain which is not that big in the first place

That's because you're investing and not trading. A good trader would have made a lot of money shorting stocks in the past few weeks.

 

[yuppee]

if you know a trustworthy veteran and if you can employ him, full time at minimum wage, for 6 months, doing repairs and managing a "many person" rental building, you can bypass the need for PMI, downpayment and closing costs. That makes huge difference in your startup costs. I know a guy who paid the vet a check, $300 a week. Vet cashed the check and handed back $200 per week. He was getting a free place to live and had to do very little, so why not? When you know a few tricks, things get much easier. A big old house can be rented out to 20 people, $100 per week each, if you go at it right, providing cable tv, small fridge, locker, bed, free laundry, free Net, AC, heat, electric thrown in. The "extras" are worth half of the rental fee. Have a safe up front for anything truly valuable. Make certain that the weekly rental is done by "at will, clean-living' contract, so you can evict them without wait or hassle. Include a clause that lets you look into their room every morning, checking on your PC and TV, as well as for filth, bugs, rodents.