Posted on 09/15/2025 10:00:59 AM PDT by SeekAndFind
“Passive income.” That’s the sales pitch for rentals. Tenants cover the mortgage, you collect the rent, the property appreciates, and you’re off sipping margaritas. Sounds dreamy… until Saturday morning shows up with a broken appliance. Ask me how I know.
Here’s the reality from my own ledger: one of my rental properties in the Finger Lakes, NY area is locked at $2,200/month. That’s the ceiling. Meanwhile the expense list has no ceiling.
In the last year alone I replaced the gas range, microwave and dishwasher. That’s just a tiny sample of a seemingly never-ending list of surprise expenses. “Passive” income? Cute.
Dividend growth investing is the opposite. Buy once. Collect forever. No clogged toilets, no surprise repair bills, no property taxes and utility rates creeping up on you.
And even if you hire a property manager, you’re still managing the manager, and still paying the fees. If it looks like a part-time job and feels like a part-time job… you know the rest.
Dividend growth investing, on the other hand, is wonderfully boring. You own world-class companies that pay you — and raise your pay — year after year. Checks show up on a schedule with no emergency texts attached. Many blue chips hike payouts annually, so your income compounds without effort.
There are no midnight repair calls, no vacancies, no capex surprises. Rent is negotiated. Dividends are announced. One demands your time; the other deposits into your account.
And when it comes to predictability, dividends win again. Public companies publish payout schedules so you can plan cash flow to the week. With rent, tenants move out, markets cap rent hikes while your costs climb, and what looks steady on paper often becomes “where did the month go?” in real life.
Both rentals and dividend stocks can build wealth, but they do it in very different ways. With real estate, you’re betting on appreciation plus rent checks — both tied to location, cycles, and constant upkeep. Dividend growth investing has two engines working at once: rising payouts and rising share prices. Reinvest those dividends and the snowball rolls itself.
And let’s not forget time, the most ignored line item in most spreadsheets. Rentals demand hours of tenant screening, late-night calls, and vacancy fills — an ongoing to-do list. Dividends? Build the portfolio, then get back to your life. Weekends at the lake beat weekends under a sink.
Numbers matter, but so does cortisol. With rentals, you’re always one call away from a “situation.” With dividend growth, you’re one click away from an income stream that quietly gets bigger. When companies hike payouts, it feels like a raise you didn’t even have to ask for.
| Factor | Rental Property Income | Dividend Growth Stocks |
|---|---|---|
| Income | Capped by lease until renewal | Payouts rise over time (dividend hikes) |
| Expenses | Unlimited: repairs, taxes, insurance, upkeep | None after purchase; no surprise maintenance |
| Time | Hands-on (or pay a manager) | Hands-off once built |
| Predictability | Vacancies & timing risk | Announced schedules; highly predictable |
| Growth | Market-dependent; capex drags returns | Dividends + price appreciation compound |
| Scalability | Capital & debt heavy; slow to scale | Scales instantly with reinvestment |
True stability. True scalability. Truly passive.
He eventually passed and his daughter and son in law now manage the business. Last I knew they had about 60 apartments all in one town. The BIG thing the author of the article leaves out is ASSET DEPRECIATION. Running a property rental business allows you to depreciate company assets. That asset is not onlt the houses, but the pickup truck, the lawn mower and any other thing purchased to maintain those properties. This is why a COMPANY can afford to buy a $100K pick up truck every few years. There have been years recently when the Federal Government allowed you to depreciate the cost of that asset(the pick up truck) in ONE year.
On the other side of the coin a guy I used to work with got into the rental business in southern Maine.
He bought a cottage across the street from the ocean in Wells, ME. He rented it that first summer. The next winter it got flooded out in the worst storm in a hundred years.
The cottage got 2+ feet of water in it. He had to gut it down to the studs. Spent $70K rebuilding it. He decided to sell it. He made a small profit and was glad to be done with it.
The next year he got a call about the family living in a duplex about twenty miles inland from the ocean in South Berwick, ME. One of their kids had tested positive for LEAD PAINT EXPOSURE. He spent another $30K(or more) on lead abatement and sealing. He still owns that property. Luckily for him the people moved out and didn’t bring a LAWSUIT. It could have come from the neighbors house next door that had recently been scraped and painted.
He has made most of his rental income off his house in York Beach, ME. It is about five minutes from the ocean/beach. He rents it weekly in the summer as a vacation rental.
This summer he was getting about $650/night from June until Labor Day.
I've got to admire his "stick-to-itiveness". Pick yourself up; dust yourself off. Start all over again. That guy is a winner.
“I just retired in May and I’m going to be living off of SS and stock dividends.”
I retired mid-June of ‘24 and use SS and dividends for living expenses. My portfolio is up 25% since retiring. So far so good but I expect it to not always be smooth sailing.
And I’m not trashing real estate. I have a couple of properties myself that have appreciated significantly but they are not rentals. As I said on the thread, wisely selected and given the right conditions, real estate can produce a good return. That said, I prefer to invest in financial instruments, but it can be admittedly be a rough ride at times. LOL
Re folks not paying attention, most people don’t seem to have the aptitude, interest or skills to actively monitor their investments. And I don’t mean to imply that they are lazy or ignorant, just that in various phases of life we get preoccupied with other things and tend to neglect keeping a close eye on such things. They can hire help to do it but that too requires some due diligence.
If you want to invest in real-estate, buy REITs.
I guess I coulda got lucky and "simply" picked juuuuust the right stocks and realized a little more - or a little less -equity gains, but none of those stocks would have yielded anywhere near the thousands and thousands (and thousands) in rents I've collected over the years.
Well done BC.
Most stocks grow their dividends over time. Microsoft for instance has a 10 year annual compounded rate of growth in its dividend of slightly over 10%. That’s doubling the (tax advantaged) divided in about 7 years but its possible to do even better with other choices. So stocks can produce both capital appreciation and regular dividend payouts. Of course there’s always the potential for loss as well. Admittedly, there are more variables that can affect a company’s fortune than there are in the world of real estate.
A lot of people don’t want to put any work into investing in real estate, but similarly a lot of people don’t want to put any work into evaluating, selecting and monitoring stocks. Both take time and effort, and a lot of patience, to have any chance of real success.
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