“The weak part of this article is advocating rental property.”
I agree 100%, particularly in tenant-friendly Blue States, where evicting a problem tenant can take months if not years. Several Blue States have “good cause” eviction laws, which prohibit owners from evicting residential tenants or refusing to renew their leases except for good cause, which is often a very high standard even for deadbeat tenants who claim financial hardship. In addition, some Blue States (i.e., NY) limit the owner’s ability to raise rents to reflect increased operating and maintenance costs, tax increases, supply and demand, etc., if the local municipality determines that the residential vacancy rate is less than 3%.
Commercial tenants present risks as well. Tenant bankruptcies can tie up the property for years. I’m aware of situations where tenants have vacated the property in the middle of the night leaving the owner with thousands of dollars in clean-up costs. Solid locations often turn bad and leave properties vacant for months if not years.
No thanks. In my opinion, the best investments are a well-diversified portfolio consisting of equity, income, and cash (I prefer exchange traded funds), with a solid history of growth and income.
In my experience, the best way to build a portfolio is to pay yourself first by maxing out on tax deferred retirement funds, IRAs, etc. “Dollar cost average” by setting up an automatic investment plan directly from your paycheck or bank account and invest the same amount weekly, bi-weekly, or monthly, into three to five exchange traded funds that meet your investment goals. (This results in the purchase of more shares when prices are low and fewer shares when prices are high.)
Also, except for a primary residence, don’t buy anything unless you can pay cash - including motor vehicles and vacations.
I would add one caveat here. Buying any asset through financing is OK under the following conditions:
1. The interest rate is no more than 2 points above the prevailing rates on 10-year to 30-year U.S. Treasury rates.
2. You have sufficient liquid investments to pay off the loan within five business days if necessary. In other words, you're financing the purchase as a cash flow strategy, not because you don't have the money to pay cash for it.
3A. The life cycle of the purchase exceeds the term of the loan.
3B. For the purchase of an item that depreciates over time (e.g., a motor vehicle), you intend to keep it for longer than you're paying it off.