What’s the argument for why investing in rental properties is better than just throwing money into an index fund? Index fund seems pretty good way to go and way less headaches :O are there reasons why RE would be better?

like
Posting as :
works at
You are currently posting as works at

Fund is less work. Real estate is physical, inflation resistant, a way to diversify, and uses leverage. Real estate can beat the index fund average for return over time, but yes it is work. You can have it managed for you, but that cuts into profit.

Briefly, for a well-rented quality unit in a good area with strong annual appreciation, you are benefiting from (1) someone else paying your mortgage on the property // the equity gained with each mortgage payment (2) cash profits (less cash costs) (3) equity growth from rising home values (4) tax advantages (5) massive profit balloon if you hold long enough to pay down the mortgage.

That said, I don't think it's WILDLY better than index fund, assuming historically consistent behavior. But it is meaningfully better in some ways.

like

Earn w2 income, invest in a rental or two, unlock the bonus depreciation (it’s not simple), pay little/no income tax. Get appreciation. Cash flow isn’t the prize. Live in a state with no income tax. Also invest in index fund 15% for retirement. Anything extra fun money account that’s where I play options, crypto whatever. On your primary home you really want a fixer if you are handy. You unlock 250k single/500k married tax free capital gains, but you have to live there for 2 years. To maximize that you need maximum appreciation (the fixer) and have it turn over every 2 years. Real estate is largely tax avoidance for me. I also use real estate to set my remote work location saving me like 30k over my previous state. Being in one market you miss the advantages of the other. I’m up 0% on real estate this year, 80% of stocks. If I zoom out some of my real estate is up 5x over 10 years.

like

Rental properties have some distinct tax advantages that index funds don’t have. There’s also more of an opportunity to buy undervalued assets and directly add value over time. The flip side to that argument is that sometimes things don’t go smoothly with a rental property (broken pipe, bad tenant trashed the place, natural disaster, HVAC goes out, etc) or appreciation / rent growth slows in the micro market that you’re in.

Just like any investment opportunity, anyone who has more information than the average investor can take advantage of an unbalanced market in their favor. I find that’s far easier to do in real estate than it is with securities.

like

Not to be understated, they call real estate an imperfect market. Resurrecting someone’s abandoned vacation home, fixing a trashed rental, off market deals, were all my best money makers. Having access to data like schools, crime, projected appreciation helps me make better decisions over a first time home buyer. I have a distinct advantage. In the stock market I’d be looking for insider information, but that’s not legal for us. Only congress is allowed to do it legally.

smart

Related Posts

Thinking of investing in a Herman Miller chair. Anybody have the light grey mineral color Aeron chair that can share how difficult it is to keep clean? Not sure if I should get that for the aesthetics or go for something more low maintenance like the graphite.

like

Hi BAL has submitted my H1B on 04/24 and yet to receive the receipt number. How soon the attorney will update the receipt number?

like

If you don’t get any scoops of harissa at Cava, you can’t be trusted.

likefunny

Best thrift store in DC area? Please don't mention the one in Falls Church. It's horrible.

like

Anyone build a house in NVA? We're planning to move to a bigger house in a couple of years and building is an option if it's not too expensive. Anyone got any builders or $/sq ft info? Thanks!

like

CD salary in SF? Mid size shop

like

2nd year ACD salary in LA?

Is it possible to wfh after joining ? Can we bunch the 8 days of working together into one single week or so ?

like

Anyone have pay/salaries for Instrumentation work? Not industrial but physical applications of strain gages, temperature, pressure, voltages, displacements, accelerations…

like

Hi Gang, really feeling the burnout a bit heavy now after ~5 years in SaaS and Consulting Sales. What are some of the most transferable roles AEs can move to post sales?

like

If I say same thing to her mom, whatever she said to my mom.
How do I dare to talk her mom like that, I was like wtf.

like

Which agency would you advice against joining and why ?

like

Here is an insight for you all today—key elements to living life with purpose.

Finding purpose in your life changes the way you think, behave, and communicate with others. You lose track of time because you are too busy enjoying what you have at the moment.

To find purpose in your life requires three key elements:

1) Presence
2) Values
3) Challenges

Without these three elements, you can never feel fulfilled and live life with a purpose.

Post Photo
like

Hi i am supposed to join capgemini tomorrow. Got an email to submit documents as part of virtual onboarding. I have submitted the same and then i got another email stating "ON SUCCESSFUL COMPLETION YOU WILL RECEIVE READY RECKONER EMAIL". any recent joinees who can help me with what this is?

Does any one know what is the salary offered for AVP Middle Office role in Citi Belfast Northern Ireland?

like

Hi guys,

I have to prepare a case for a selection process. They tell me that I must find the best way to hire a Head CRM and a Senior Data Analyst. I am stuck in the hire flow process, could someone give me some steps or advice on how to deal with the hire flow in both jobs?

Thanks very much!

like

I made it to the final interview round. I asked what the next steps were and the recruiter told me she would “keep me posted.” It’s been 2 weeks since. Should I reach out again? Or wait...

like

Hi everyone,
Need an help in getting referred to a position in Wipro
Please help at the earliest,i have the relavant job ID.

like

How often do people actually go into the office? I’m about to get an offer as a CE and I live about 90 minutes from the office. Google will give me relocation but if I just need to go in 1-2 a week, I’d be open to stomaching the commute. Any info would be helpful!

like

Additional Posts in The Real Estate Bowl

Who is still in denial about a housing correction? The Fed just made another .75% increase. Powell said they won’t stop until inflation is 2%. He also said a recession would be better than the consequences of unchecked inflation. He announced he will bring rates to a “restrictive level” until “the job is done”. He said that labor demand needs to soften (ie: layoffs). He very explicitly said he wants to slash demand and that housing needs a “correction”.

like

We just moved into a 50 year old house. We got the popcorn ceiling removed in the garage plus had the walls done. We didn’t use an official asbestos expert because of the price.

The horrible, dirty people that lived there before us left us a crappy mess. Hope we are not exposed, nor the neighbors.

like

Looking to move out of California, and considering buying a townhome in Atlanta for ~$650k. Any thoughts on the Atlanta real estate market?

like

Looking to buy in the DMV suburbs (northern VA). Is this the wrong time for such a move? Beyond down payment, got about 6mo emergency fund and must tap into it for moving&house expenses like furniture

like

Hi, has anyone worked at Freddie mac? Particularly the multifamily investments division?

Due to a family situation we are looking to move to a different state. Normally we would sell our current home and buy a new home in our new location. However, with todays prices and interest, will it make more sense to rent out our current home and rent a home ourselves vs. selling and buying immediately when we move? We are moving from Vegas to Sacramento and we are not sure how long we would stay in the new area. Thoughts?

Closing on a condo soon. Need to get 1 accent wall painted and one laundry bifold door installed. What’s an average cost to expect for this. I got quotes for 2000$, seems steep. Any recommendations for contractors in chicago area?

like

I would like to learn more about development and real estate. Can anyone recommend any books or courses that you think are informative. Eventually I would like to own a few apartment buildings, but I know there is a lot I need to learn 1st. Any advice appreciated. 

like

New strat folks.
1. Buy a condo complex.
2. Put the land under said condos into a land conservatorship (for taxes)
3. Rent condos at discounted rates (for taxes)
4. A small fee of the rent goes to a trust as a land conservation fee in perpetuity (for tax reasons)
5. Have another business generating revenue to offset this.

like

How big is to big for an initial investment property. Theres a 20 SFH portfolio for sale by me for about a mil. Is this to big to start with initially? I'm less worried about the Financials (feel comfortable on that end) and more worried about the managerial aspect.

like

Commercial real estate question. When a residential property will likely zone commercial in the coming years, do we, the owner, wait for a buyer/developer to contact us?

like

Anyone sell to Zillow? Got an amazing offer from them, but naturally my floor decided to start deforming right before inspection. No water damage - I can get someone out here to fix it ASAP, but wondering if it’s worth the hassle. Mostly worries inspector will think there’s water or foundation issues

like

Do y’all do 15 year or 30 year for your portfolios? I personally plan to have a “job” or “career” for both the next 15 and possibly next 30 years, so should I just do 15 years to get a free and clear portfolio earlier? 25 year old and just getting started. Have a duplex in a major market (looking to refi out of FHA), and eyeing other opportunities now. I don’t “need” cash flow, so should I try to just build equity?

like

I'm early in my career, managed to save $30K to invest, and want to get my hands dirty with a rental property without too much risk (e.g. no HML/flipping). It sounds like that's a tall order in the NY/CT area given the prices, not to mention whether I'd be able to get a mortgage on anything below $100K, but I figure I'll give it a shot anyway. Any advice on what you might do in my position? Am I being crazy with this idea?

like

The threat of nuclear bombs flying over cities should crash the real estate market

like

Better to aggressively pay off $15k in student loan debt and pay off by early next year or make the min $200 payment and save the rest for down payment/emergency funds?

like

For any of you real estate investors, what tools or sources did you learn from when getting started. Can’t find a mentor currently so want to find some highly recommended books or videos. If focused on the tri-state area (NY, NJ, Long Island mainly) that would be even better. My hope is to buy and rent out a apartment while also owning a house and house hacking that by renting part of it out. Trying to understand all the steps, traps, and how to find if it’s a good investment.

like

What percentage of homes get sold without getting listed on the mls (off market deals)? Is it usually worth it for the buyer or seller?

like

Anyone know the average annual rent increase for 1200 sqft 2 bedrooms? I’m renting and want to know what to expect in a few weeks

like

If I'm adding multiple people to purchase a property but not on the mortgage, when do they get added - do they need to already be on the purchase agreement? I heard it's easier to do upfront vs. adding them later. I've asked this question in a thread but didn't get a clear response. If someone could please help clarify - how do I add other people on the onset on buying a property? This is a new build, buying directly from the builder.

like

New to Fishbowl?

Download the Fishbowl app to
unlock all discussions on Fishbowl.
That was just a preview…
Sign Up to see all discussions
  • Discover what it’s like to work at companies from real professionals
  • Get candid advice from people in your field in a safe space
  • Chat and network with other professionals in your field
Sign up in seconds to unlock all discussions on Fishbowl.

Already a user?
Login here

Share

Embed this post

Copy and paste embed code on your site

Preview

Download the
Fishbowl app

See what’s happening in your industry
from the palm of your hand.

A phone with Fishbowl app

Scan your QR code to download
Fishbowl app on your mobile

Download app

Sign up for free to view this conversation on Fishbowl

By continuing you agree to Terms of Use and Privacy Policy

Already have an account? Log in

Sign up for free to continue using Fishbowl

By continuing you agree to Terms of Use(New) and Privacy Policy(New)
Messaging rates may apply

Already have an account? Log in

For account settings, visit Fishbowl on Desktop Browser or

General

Legal