Do you have any idea what the rate of return on your real estate investments are, net after expenses? Just curious.
For those who don’t want to get involved with managing and maintaining properties, REITs may be an alternative. Most REITs pay a healthy yield but the dividends do not get the beneficial tax treatment that qualified dividends do.
Good question that I don’t know the answer to. I know what ROI is and how to compute it but I am not a very sophisticated investor. I would think (again, depending on individual circumstances) that my present real estate investment circumstances provide an ROI north of 20% and much better than a REIT (which I have owned and can be great investments). If one does decide to go the rental route, I would advise keeping the investment local, (no out-of-town condos, timeshares or pooled money purchases etc), owning small houses in stable neighborhoods needing some cosmetic work but structurally sound. Local markets usually rise and fall more on local economic conditions but other investments are impacted by national and international conditions. You would be shocked at how many people would pass over a prospective rental due to a lack of imagination, skill or ability to turn a dog into a charming rental property. Biggest issue is not ownership its making sure to find good renters and compliance with sometime onerous federal and state fair housing laws.
Those rental properties are not for the short term. You get them and hold on to them for years, decades. If you get them while you’re young and making good income you can use the losses to offset some of your income. That used to be pretty much unlimited but now they cap it and the alternative minimum tax makes it less attractive.
At some point, with rents going up and your mortgage payments ending you’ve got a positive cash flow AND the property itself has appreciated tremendously. Of course when you sell it you’ve already depreciated it but you can always avoid that for a while with a 1031 exchange.
You have to like to do it though. If you don’t, it’s not worth it.