Quote:
Originally Posted by mathjak107
in retirement no rent or tenant issues can be a huge problem . unlike passive investing real estate carry's expenses . those expenses when rent is interrupted increases sequence risk greatly as excessive amounts of cash is spent down and that money is gone for future growth .
anything that adds to spending in times of negative returns can be especially painful in the decumulation stage
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I see your point completely, but I would have to be extremely stupid to expect 100% occupancy and factor that in as my primary income in retirement. My expectation in good area is 2-3 months after each tenant moves out. But there will be no mortgage when I retire. Only taxes. At that time, I should have a spare fund for 1-3 years worth of taxes, anyway.
It's basically the same irresponsible thing as earning X amount of money during your work years, but spending 20% more each month using credit cards.
During first years, I will accumulate some rent fund (say, 3-6 months worth of mortgage), the rest will either go to another property or to pay off this one sooner.
I personally believe the greatest risk factor is how will the area change. I've seen so many examples of great areas becoming dangerous one in less than 7 yrs, that it's virtually impossible to guarantee that an average area will stay the same in 20 yrs. That's part of the risk.