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Old 12-23-2016, 08:36 AM
 
Location: Full time in the RV
2,869 posts, read 6,410,961 times
Reputation: 2432

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Stock market.

In 1986 I bought my first house that I was going to live in. It was a rental and for the first two weeks I owned it I was actually a landlord as the tenants had two weeks left on their lease and I got their rent credit at closing.

It was a nightmare. Pigs in human suits lived there. The condition of the house between the time I saw it and the time I closed was night and day. Tenants were responsible for trash removal-take to the dump or pay for collection. They did neither. They used the two car garage as their landfill. The bathrooms were indescribable. The refrigerator was some sci-fi horror experiment. Stacks and stacks of mail-much unopened-from multiple prior addresses of collection notices, evictions, past due bills, utility shut offs, etc etc. The $200 security deposit it said on the lease was actually $50. More pets than allowed on the lease. That whole experience soured me on ever being a landlord.

Years later I owned a different home with a guest house for my parents. After they died wife wanted to rent the guest house. I refused. Visions of my last (and only) landlord experience kept haunting me. Wife wants to rent our guest house and I don't-need opinions

OTOH my parents bought a duplex in the Florida town they planned to retire to. They rented it for a few years until they retired then moved into one side until they built their retirement house. Once they moved out the stumbled into the perfect tenants. Retired widows on a fixed income each moved within about a year one each other and stayed for 16 and 17 years. One was 92. Parents never talked much about it as a property management dealt with them. I don't think they were at market rates either as one time mom told me the company raised the rent without their permission and they were ordered to lower it. Doubt they had many complaints or ongoing maintenance issues either.

When parents moved in with me due to failing health they put the property up for sale. Almost immediately one tenant announced she was moving and the other shortly thereafter. When I went to check the one place for return of the security deposit it looked much like when I last stepped foot in there in 1983--and it was 2003. Being a landlord worked for my parents but I think because they got the perfect tenants and held onto them.
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Old 12-23-2016, 08:44 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,506 posts, read 4,106,897 times
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Quote:
Originally Posted by mathjak107 View Post
10 years in anything can be to short a time frame for good results if they are in the catagory of long term investments . today 8-10 years is considered an intermediate time frame not a long term time frame . . we had a real estate down turn in real estate here in nyc after the stock market crash of 1987 that took many years to recover from .

in the mean time 1987 to 2003 saw the greatest bull market in history for stocks averaging almost 14% cagr for 17 years
I agree, but a few people here are reporting how great the stock market is but are counting just the last few years which have been really good, but not adding in the preceding years which would bring down their return.
Since they were doing a shorter time span I chose to compare a shorter time span also.
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Old 12-23-2016, 08:49 AM
 
Location: Sarasota, FL
2,637 posts, read 1,547,800 times
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As a current landlord, IMO rental property works for seniors if you have: (1) model tenants, (2) a good, dependable handyman, and (3) some extra disposable income to cover unforeseen expenses. People think its somehow more secure to have real estate, but IMO there are at least as many chances for unexpected losses, if not more, than in the market.
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Old 12-23-2016, 08:49 AM
 
71,703 posts, read 71,829,507 times
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the markets seek their own level eventually over the long term . the years leading up to the lost decade were some of the best ever . when you average the preceding best 17 years with the last 15 years you get an typical average return .


likely when all is said and done the time frames we just had with great returns will be diluted with future below average returns and the two together will once again work out near the long term averages .
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Old 12-23-2016, 10:12 AM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,506 posts, read 4,106,897 times
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Quote:
Originally Posted by mathjak107 View Post
the markets seek their own level eventually over the long term . the years leading up to the lost decade were some of the best ever . when you average the preceding best 17 years with the last 15 years you get an typical average return .


likely when all is said and done the time frames we just had with great returns will be diluted with future below average returns and the two together will once again work out near the long term averages .
Agree 100%

I think they said the market averaged 8% yearly in the long term? With rental real estate in my case the 13 to 14% beats that and that doesn't include appreciation, tax benefits, etc.

But I understand that many people misunderstand real estate and tend to compare gains on their personal residences, not rental real estate. I also realize for some it is too far out of the box and too much work which is fine with me. If everyone realized how lucrative it was it might not be any longer as I would have a lot of competition to buy houses.

Some people just like to show up for work and collect their paychecks-just like those that click and buy stock.
Others become entrepreneurs and take more risks, learn more, maybe devote more time, and sometimes make way more money-Real estate investors.

Finally I agree you need to invest in whatever you are most comfortable and knowlegable with.

Sleeping well at night is a must.
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Old 12-23-2016, 10:20 AM
 
2,296 posts, read 1,563,056 times
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Quote:
Originally Posted by JRR View Post
I agree. For me at least, I like being able to trade when I want to without having the constant responsibility of having rental properties. I like making a buy right after the market open and then putting in a sell order and going out for breakfast and some errands. And coming back and finding that the stock has sold and I have booked the $$. If only I could do that every time. But this has been a really good year so I will stick to stocks vs real estate.
As has been illustrated many times (and folks like to talk about the 40k house they bought in the 60s that's now worth 400k or whatever)...they'd be much further ahead to have bought a broad index fund once and then watch it grow to many time over the 400k. Not to mention it's easier to do a mouse click than to actively mange properties, deal with buying them blah blah blah.

But I"m glad some people wanted to invest in a nice apartment complex like the one I live in so I can take advantage of the stock market and do other things with my time like travel, etc. other than actively manage rentals (what a pain that must be.)..well, I did have a rental once for about five years..what a pain in the butt.
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Old 12-23-2016, 10:39 AM
 
Location: NE Mississippi
13,689 posts, read 8,594,306 times
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Quote:
Originally Posted by Burkmere View Post
As has been illustrated many times (and folks like to talk about the 40k house they bought in the 60s that's now worth 400k our whatever...they'd be much further ahead to have bought a broad index fund once and then watch it grow to many time over the 400k. Not to mention it's easier to do a mouse click than to actively mange properties, deal with buying them blah blah blah.

But I"m glad some people wanted to invest in a nice apartment complex like the one I live in so I can take advantage of the stock market and do other things with my time like travel, etc. other than actively manage rentals (what a pain that must be.)..well, I did have a rental once for about five years..what again in the butt.
The only way to "buy a broad index fund once" in 1965 would be to have the money. $40,000 in 1965 is the equivalent of $303,237 in 2016.
In 1965 I was 20 years old and (unsurprisingly) didn't have the money. Just like (unsurprisingly) I don't know any 20 year olds who have $303,237 today.

Good plan on paper, though.
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Old 12-23-2016, 12:48 PM
 
Location: Formerly Pleasanton Ca, now in Marietta Ga
5,506 posts, read 4,106,897 times
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Quote:
Originally Posted by Burkmere View Post
As has been illustrated many times (and folks like to talk about the 40k house they bought in the 60s that's now worth 400k or whatever)...they'd be much further ahead to have bought a broad index fund once and then watch it grow to many time over the 400k. Not to mention it's easier to do a mouse click than to actively mange properties, deal with buying them blah blah blah.

But I"m glad some people wanted to invest in a nice apartment complex like the one I live in so I can take advantage of the stock market and do other things with my time like travel, etc. other than actively manage rentals (what a pain that must be.)..well, I did have a rental once for about five years..what a pain in the butt.
Once again people like to say how the stock market outperformed the real estate market. You are comparing the earnings of the stock market against a personal residence in which case the stock market probably eeked out a better return.
But no one likes to address comparing the stock market versus RENTAL PROPERTIES because then the stock market doesn't look as rosy then.

You assume people who own apartment complexes like the one you live in are killing themselves managing it and have no life. I'd be willing to bet they have a better life than you and probably make more money than you. Most apartments employ a property manager and the owners do very little. They have more time than you do because they make a healthy income while assigning the day to day work to someone else.

Two of my friends retired with rental properties in their mid 30's and have property managers. They are not a couple, but two seperate people and lives.) Both were aggressive real estate investors for under five years. They are both currently traveling in Asia ( seperately) full time having the times of their lives and no timetable to return to the US.
A third took on a lucrative part time consulting gig because after retiring 2 years ago and self managing 16 rentals was bored with all the free time she had. She doesn't like to travel and is a home body and her hobbies are pretty low cost.

Did the stock market do that for you at age 30? Are you still currently working? If you are do you have to wait for a vacation to travel? My two friends travel whenever they want and for how long they want. They aren't spending all their time managing properties.

The fact that you had a rental for five years and did so poorly with it shows you didn't know what you were doing. That's not the say you couldn't learn how to do it right.

I and other real estate investors are thankful for people like you though because you pay the rents which pays off my rental cash cows and when paid off you pay for my travel and toys. My rentals are paid off so people like you are just paying for my living expenses and playtime.
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Old 12-23-2016, 01:15 PM
 
4,003 posts, read 3,225,942 times
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The only hands on real estate I own is the house I live in. There enough work in it such that I certainly dont want more of the same. I do have passive real estate in owning REITs thru the stock market. So much easier for me, and keeps my toes in the real estate market without all the headaches.
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Old 12-23-2016, 01:42 PM
 
Location: SoCal
13,252 posts, read 6,345,210 times
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Real estate is all about location. From reading here, it's not good to invest in Florida.
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