{ "media_type": "text", "post_content": "As a first year AC, should I be investing in property and renting it out? (houses are cheap where I live, and got even cheaper bc of covid) Or should I be investing in stocks/index funds?", "post_id": "612b9ce65d9c1d0025012b0c", "reply_count": 7, "vote_count": 2, "bowl_id": "552d1d24dc1c586b09d2d051", "bowl_name": "Consulting" }

As a first year AC, should I be investing in property and renting it out? (houses are cheap where I live, and got even cheaper bc of covid) Or should I be investing in stocks/index funds?

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As a first year AC, would consider the time requirement needed to manage real estate investments. The AC job can have intense hours at time, and my view is that your biggest risk with real estate is you aren’t in a position to give it enough attention while focusing on your day job (which will give you income growth)

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I'd wait until you have a better handle on your job as an AC first. Wait a year to get established, while reading up on what property managment entails, and then re-evaluate if you have the time and energy for that a year from now.

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Depends on you and your goals. I would look at Cap Rate of rentals you can buy assuming you hire a property manager to run it. Make sure you include budget for repairs etc. But starting down this path early is a great way to passively build up wealth if you select properties in areas with stable/growing property values and strong rental demand.

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For me: cash flow > cap gain That said, do you know anything about real estate, or property management? It’s a tough learning curve

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At one point I owned 6 properties. Sold them all expect primary residence and a vacation home that I rent out on Airbnb and VRBO. Generating passive income from property is a lot less passive than it’s cracked up to be as finding and dealing with renters takes time and money as does maintaining the house / condo. You can go the property manger route but then you lose a lot of the income. Also, because of property taxes, HOA costs, maintenance costs, acquisition costs, mortgage interest, 6% realtor fees, plus a whole bunch of other fees and services vs. the $0 hold costs of stocks and $5 liquidation costs for stocks and ETFs, your returns need to dramatically outperform the stock market yo be worth it. Net net, unless you are really good at this, love customer service, and married to a realtor, you are almost definitely better off putting the capital you have in ETFs. The one thing that property does allow you to do is leverage your investment. But remember that you can only borrow 75% of purchase price on rental properties, the interest rates are higher, and you will be liable for income taxes on the income (rather than dividend taxes) and capital gains tax when you liquidate.

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Check the historical returns, and other qualitative factors such as future performance, liquidity, risk etc

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