# Investing In Rental Property Vs. Stock Market



## jmzf1958 (Jul 27, 2010)

HI.  I own two homes and some land.  I've lived in the home I've owned for twenty-three years.   I had planned to sell it and move in the other home, which has a one bedroom in-law apartment.  Turns out, I couldn't get a variance to rent the one bedroom in-law apartment to anyone other than relatives that rent out the house.  Even if I lived there, I would still have to rent to my relatives only. I don't have any that want to rent it.  Right now, I'm renting out the house only (not the in-law apartment).  I don't want to move into this home, but my real estate agent, who is a friend, advised me to keep it as he thinks it's a good investment.  I eventually want to rent out the house and the apartment to one family, as I can get more rental income which will more than cover the cost of the mortgage (4.125% for 15 years bi-weekly) and taxes, etc.  It will be paid for when I turn 65.  Right now, I'm about $250 short a month.  The home I live in now is paid for.

I know these last few years, prices of houses have gone way down.  In the past, houses have usually appreciated around 4% a year.    By age 65, I'll have this paid for and it will be worth a lot more.  I wouldn't need to sell it for income for awhile after that (I also have a 401K and steady income for life - disability - own occupation.)  

My thought is to rent out this house and possibly buy one more to rent out in the future.  Also, the house I'm living in is too big for me and I'm thinking of renting part of it out for extra income, with the tenant having their own kitchen, bath, etc.  I do love this house, great view, but it's big and has five acres, which I can handle.  I cannot go back to work because of my disability, but I can make money with rental income.

Given the state of the stock market, I thought instead of investing in that, I would put that money towards rental property.  The house I'm renting is in a middle class neighborhood, and if I buy another one, it will be the same type.
I know renting can be a pain, bad tenants, repairs, etc, but I do not work and have the time to deal with this.

As far as the stock market, the crash of 2008-2009 was really difficult for me - way too much stress - and I don't know if I can handle the ups and downs again!   As I said, I do have a 401K that will be in stocks, bonds, etc.  Although another question is have any of you used your 401K to buy rental property?  

Any opinions on any of this would really be appreciated! Stocks & bonds and rental property or just stocks & bonds or just rental property?  

Thanks!   Judy


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## cgeidl (Jul 27, 2010)

*Diversify*

We were fifty/fifty in real estate and stocks and lost big time on both. Keep about 40 % in safe more sure investments at your age and then every 5 years increase this about 5%. At 65 rentals seemed okay but now at 70 I do not like the hassles anymore even though it is a great time to buy with low mortgage rates,low purchase costs, and positive cash flow with good tenants(those who pay).
Good luck ,Judy.


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## ricoba (Jul 27, 2010)

jmzf1958 said:


> Any opinions on any of this would really be appreciated!* Stocks & bonds and rental property*  Judy



I would do this mix if I was you.


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## easyrider (Jul 27, 2010)

The one major thing real estate has over stocks is that real estate in good markets will keep up with inflation. Should the stock market plunge again it could take over half of your retirement with it.

For years, our country has increased our foreign debt instead of fixing the underlying issues. This debt is huge and we can not expect to ever pay this off without increaseing taxes to over 80%. At this rate it would still take years. It probably too late to pay this off. 

Then other countries could stop paying our debt and the world leaders will decide on a solution. This could include a new world currency. 

Add in oil and the problems with energy and it starts to look like 1970's inflation of 5 - 10 % per year. 

Real estate in decent markets bought in the early 70's had a better return than stocks because of inflation until the mid 80's. Some real estate markets never cooled off until the last real estate crash. 

Today its real estate deflation making this a good time to buy. Stocks imo are on a decline for the next 2-5 years.


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## Nickfromct (Jul 27, 2010)

While it appears that the real estate market is much more depressed than the stock market right now, just keep in mind that a real estate investment is much more illiquid than a stock.  So if you need cash in a hurry, its much easier to sell a stock rather than a house.


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## jmzf1958 (Jul 27, 2010)

Thanks for the opinions.  The thought of 5 to 10 percent inflation is scary.  Sounds like a mix of stocks, bonds and real estate is the way to go.   I won't need any of this money for another 15 years or so, so real estate would work for me.  Any other thoughts on how much property taxes will go up?  I live in New York State, which are high enough already.  Also, as far as investing in stocks and bonds, would it be better to go with index funds or use an advisor and go with mutual funds?  Judy


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## hvacrsteve (Jul 27, 2010)

My opinion for what its worth is to find a duplex or more property.
The upkeep is similar but the rent collected can be much more.
Real estate can generate income, right now stocks just suck.

If you can finnd a cash positive property currently, I would go for that.
If it will not pay for itself, it is not a good deal.
There are many deals to be had now.  All of these poor people are still going to need a place to live!

The other is location , location and location!


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## John Cummings (Jul 27, 2010)

It is best to diversify. Real estate can crash just like the stock market as we have seen in the last couple years. The problem with real estate is the difficulty in getting cash out if you need it. There are some good quality stocks paying 7% dividends.


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## ricoba (Jul 27, 2010)

jmzf1958 said:


> Thanks for the opinions.  The thought of 5 to 10 percent inflation is scary.



The concern I am reading and hearing about now is not inflation but deflation, where the prices drop but there is no growth in the economy, so no jobs etc.  I don't really understand it, but I know that deflation seriously hurt the Japanese economy for over a decade.


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## DonnaD (Jul 27, 2010)

*real estate owned in Roth IRA or IRA*

You can invest your retirement funds by purchasing homes for cash...no mortgage. If in a Roth, the rent is tax free. You can't deduct the real estate taxes on your income taxes, etc. but if you buy it right, buy a house in a good location, at a depressed price, you can create a nice cash flow tax free for yur retirement. Rent will go up if we have inflation.  You need to invest some of the rent in repairs or improvments, but if you have the house in good shape before you are ready to tap into the cash flow, you can create a lifetime income tax free. That is important as the taxes increase in the future.

You cannot convert a house you already own to place it in a retirement fund. There is a good site where you can look up the info and requirements for setting up such an account. it is: trustetc.com. they act an a custodian for the account and charge an annual fee.

Another important consideration is to get your IRAs converted to Roth IRAs if you can do so. In 2010 the law allows you to paythe tax due over a 2 year period. Convert as early in 2010 as possible so that the income becomes tax free as soon as possible.

In retirement, only half of your Soc. Security is taxed, so if you can increase your tax free income in a Roth, you will get to keep a lot more of your money.
Whatever your vehicle of investment, you might want to convert to a Roth ESPECIALLY IF THE VALUE IS DOWN NOW. You will pay less tax now on the conversion and then you can keep every penny of your Roth account as it increases in value. Read the IRS rules.

Hope this info is helpful.
DonnaD


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## BocaBum99 (Jul 27, 2010)

We are in a US Treasury Bubble.  Just like the tech bubble of the 1990's and the real estate bubble of the 2000's, this bubble too will burst.  The question is not if, but when.  And, when it happens, where do you want to be positioned?

I sold off about 30% of my stock and bond portfolio today.  I am probably going into TIPS and Gold.

I am also going to purchase more real estate.  This is probably the best time to purchase in our life times.  Just make sure you get fixed rate mortgages.  Then, when the hyper inflation hits, you will have a negative real interest rate.  Your property values will increase and you will be able to increase rents every year.

The worst idea was to own 20 properties in 2005.  In 2011, if you own 20 properties and the carry costs don't kill you, you will become a multi millionaire.


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## John Cummings (Jul 28, 2010)

ricoba said:


> The concern I am reading and hearing about now is not inflation but deflation, where the prices drop but there is no growth in the economy, so no jobs etc.  I don't really understand it, but I know that deflation seriously hurt the Japanese economy for over a decade.



Deflation is a worse problem in that it decreases wealth. The people that gain with deflation are those on fixed incomes that don't plan on moving anywhere. On the other side inflation hurts those same people more than others.


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## pgnewarkboy (Jul 28, 2010)

There is no sure bet in investing.  Rental property, stocks, commodities, all have their own risks.  There is no answer, imo, to your question.  Sure, invest in a really great rental property that will attract only good tenants that pay on time and won't destroy the property.  Make sure that property taxes are low. Make sure that the property is in an area that is not going down in value.  Make sure you get a really great mortgage.  Also make sure you take title in such a way  that will reap the best tax benefits.  Make sure you can get adequate insurance at a reasonable price.  Make sure that the property is not in need of many repairs and that you are able to make repairs yourself or have a really good contractor that is also really cheap.  Basically, it is as simple as that.


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## Dave55123 (Jul 28, 2010)

Real estate investing can be very rewarding, just like stocks, if the right one is selected.

I've been a landlord for a few years and enjoy it, it does have it's ups and downs.

Some things to consider if you do invest in real estate:

- investment properties will generally require a min. downpayment of 25% and mortgage rate is generally 1 - 3% higher than personal residence loans.

- size of property, i.e. single family/townhome/multi-units will attract different potential tenants and turnover.  As for townhomes/condos be sensitive that association rules can limit or not allow rentals which can change in the future

- factor in vacancy rate and property management (even if you self manage)cost

- have a good team of advisors (attorney for leases/evictions/business entity to hold property to limit personal liability; accountant for taxes/book keeping if needed; handyman for repairs/preparing unit for new renters; property management for tenant screening, rent collection, evictions, etc); realtor

- exit strategy and hold time should be considered

I hope to secure another property in the near future.  Good luck.


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## easyrider (Jul 28, 2010)

Its really hard to tell if the economy is coming out of the recession. We have inflation of food, medical care and an increasing consumer price index while we have deflation of real estate and other investments caused by the limited amount of credit available. 

Investments can always bottom out. A person might want to just have cash in a credit union for a while.


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## T_R_Oglodyte (Jul 28, 2010)

Stocks have basically been flat for that last ten years. coming on the heels of one of the biggest runups of all time between 1995 and 2000.  

The flat market of the last ten years is simply sanity returning once again. If you look at long-term growth trends, right now the market is pretty close to where it should be based on long-term growth rates.

*******

The time to buy into any investment is when most everyone else is afraid of it and the time to sell is when most everyone else believes is confident that is the place to put one's money.  If you wait until popular sentiment changes, you will always buy too late and sell too late.

And, since no one can time things exactly, you need to have a horizon that is at least five years long.  


******

The pending collapse of the economy is a recurring theme that occurs during every bear market. In fact, it wouldn't be a bear market if there wasn't a popular story to make everyone fearful.  It's the obverse of the unbridled optimism that fuels a bull market explosion - in those markets is about how there is some new emerging (e.g., the internet) that is going to lead to some grand new economic system.

Forty years ago the story was oil prices.  We were going to run out of oil within 30 years.  All of the wealth of the world was going to transfer to the Middle East.  Our factories were going to shut down because we wouldn't be able to get the fuel to run them.  People were reminded of this daily when they had to wait hours in a line to get gas for their cars, and had to pay what were perceived as astronomical prices. 

*******

A good strong bear market will typically last about 20 years.  It's got to go on long enough so that all of the optimists become generally regarded as lunatics.  One generation of pitiful returns as compared with "safe" investments is about what it takes.

We are ten years into this one, so anything could happen.  Since we're close to the long term growth trend now, we could simply start to follow that line.  Or we might go through another ten years of no return, followed by a significant bull market.

********

My personal  feelings are that there is about a two-thirds chance that we will find ourselves in one of those 20-year bear markets (meaning that we've got about another 10 years of flat performance).


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## easyrider (Jul 28, 2010)

http://stockcharts.com/charts/historical/djia1900.html

The dji 100 year chart shows these cycles. The current cycle looks similar to what happened in the depression. If the market plays out the same way then we would be just past the second peak and on an eight year decline. 

No one has a crystal ball so its really all just best guesses. Thats my guess.


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## T_R_Oglodyte (Jul 28, 2010)

easyrider said:


> http://stockcharts.com/charts/historical/djia1900.html
> 
> The dji 100 year chart shows these cycles. The current cycle looks similar to what happened in the depression. If the market plays out the same way then we would be just past the second peak and on an eight year decline.
> 
> No one has a crystal ball so its really all just best guesses. Thats my guess.


That is a good and informative chart.  There's much to learn from it, and of course one can put their own interpretations on it as well.

*****

I tend to dismiss the 1928-1929 as just speculative froth, similar to the tulip bulb bubble. The period 1930 to 1950 is just another 20-year flat spot on the chart.  

What's instructive in the 1930's is the deep crash, which was caused by governmental Smoot-Hawley meddling. If we don't learn the lessons of history we are condemned to repeat its mistakes.  I have serious doubts that we have learned the lessons, and we are unleashing the Smoot-Hawley of our era.  Hence my personal two-thirds probability guess that we've got another ten years to run to make another 20-year flat spot.

****

For ourselves, we're remaining heavily committed to stocks, but staying strictly with value stocks in well-capitalized and financially strong companies.

I can't predict when the market will turn.  I'm pretty sure that when it turns the largest gains will be made early and will happen while most people are still standing on the sidelines waiting for more confirmation that things have changed.  In those circumstances the companies that bounce back first and strongest are well-capitalized and managed companies that have the resources to respond.  

So that's where I want to be now.  I have no problem waiting ten years.  That's in my horizon.  And since most of those companies are also solid dividend payers, I'll still get some return on my money and a measure of downside support.


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## pgnewarkboy (Jul 28, 2010)

Smoot-Hawley?  Today?  I don't see it.  What you have is the exact opposite of smoot-hawley.   NOBODY in power is suggesting increasing tariffs.  Actually, increasing tariffs is illegal under various international laws and treaties like GATT which didn't exist in 1930.


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## easyrider (Jul 28, 2010)

I think Steve is referring to government regulation and policy in general as a catalyst for recession.

Smoot Hawley Tariff which killed the economy and prolonged the depression was replaced by the Reciprocal Trade Agreement Act of 1934 drafted by Cordell Hull. This same guy wrote the first draft of our tax code and inheritance tax.


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## bogey21 (Jul 28, 2010)

*I have a friend who lives in Las Vegas.  He sold over half his stock portfolio and bought 2 houses (working on the 3rd) for cash at prices less than one half their original selling price.  He rented both at great rents (based on what he paid for the properties).  One was rented to the original owner who gave the house back to the bank and actually never moved out!

George*


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## T_R_Oglodyte (Jul 28, 2010)

pgnewarkboy said:


> Smoot-Hawley?  Today?  I don't see it.  What you have is the exact opposite of smoot-hawley.   NOBODY in power is suggesting increasing tariffs.  Actually, increasing tariffs is illegal under various international laws and treaties like GATT which didn't exist in 1930.



There are many ways to hinder business other than raising tariffs.


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## jmzf1958 (Jul 28, 2010)

Thanks for all the responses.
HVACRSTEVE, a duplex sounds like a great idea.  DONNAD, I'll check out the website about investing my 401K in real estate.  I'm taxed at 10% and my financial advisor said I should not convert to a Roth.  Do you know how my taxes would be affected with a traditional 401K?
BOCA:  I definitely will get a fixed mortgage.  Unbelieveable rates!   As I said earlier, I was lucky enough to get a 4.125% 15 year bi-weekly mortgage for my rental property.
P9NEWARKBOY & DAVE55123:  Great suggestions for buying - thanks.
EASYRIDER:  Great chart - seems to be a trend.
JOHN & TR:  Value/Dividend stocks seem to make a lot of sense now.  Do you buy index funds, mutual funds or individual stocks?
BOGEY:  Sounds like your friend made a good move.


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## ownsmany (Jul 28, 2010)

*considering invest property also.*

I've been looking at investment properties for the past year.  Since I really want a beach property, I haven't found any within 2 hours that is cash positive.  I'm pretty choose where I want to own also.  Don't want big headaches with tenants.

I've been selling off my stocks over the past few months.  Monday I decided to dump most of it, as it hasn't been doing great.

My concern is job security at this tough time.  I'd hate to buy a property and be saddled with a mortgage if  lose my job.  I'm planning on putting a sizable down payment but still the uncertanity worries me.

That said,  I have bid on a few properties already.  Waiting now for an answer on one of them.


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## jmzf1958 (Jul 28, 2010)

I would love to have a beach property down in the Sarasota area of Florida, both as a rental and to use for a few of the winter months.  I just was a little nervous about hurricanes, water level, etc.

I've been out of the market and in cash since around April or May.  It's just too volitile right now.


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## Big Matt (Jul 28, 2010)

There are ebbs and flows in the real estate market and you always want to buy rental properties when property values are down and rental demand is steady or up.

I don't know where you are living, but if there is an active rental market and you can make 10% in positive cash flow you should be able to cover any maintenance costs and still make a little extra.  On the other end of the investment you should yield that 4-5% in growth per year that you quote.

That's a good investment.

My only other advice is that one of the properties should be the one you want to live in once you've made a decision on your final location to live.  You can move in once you've paid off that mortgage and live with no rent/mortgage.  Pay that one off first


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## ownsmany (Jul 28, 2010)

*401k?*

I'm considering buying both parts of a duplex but I don't want a big mortgage.  Can I "borrow" from my 401k without penalty?  It would be a second home - not a first home.  I also have a roth, although the Roth is not worth anything near what my 401ks are.


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## DonnaD (Jul 28, 2010)

*roth vs. ira*

How do you manage to get down to 10% bracket? way to go.It would also be a good time to roll over your 401k while tax impact might have minimal impact on your taxes especially when you can split value over 2 years.

Our concern is on future taxation with all the government spending, someone has to pay the taxes to support our government programs....so taxes will only go up....we have rolled all of our retirement funds into Roths now and with 3 rental houses paying us tax free rent plus Social Security checks on which only half is taxable, we have moved under the radar for future tax increases.  We can also pass remaining funds to heirs tax free. Roths have good features worth considering.

If you buy a house, choose a good school district, convenient location, low maintenance house, with three bedrooms, 2 baths. If you choose a 4 bedroom, you will attract larger families who will be harder on your house. Ranches will be a good choice as older people will want a place without stairs where they can settle in for the long term. They make great tenants who are not likely to be too transient. Just a few thoughts. It doesn't hurt to have a house on a busy street. All you have to do is put a sign in the front yard and wait for the calls. House with good curb appeal is also a good choice to help attract tenants.

Hope it helps you.
DonnaD


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## pgnewarkboy (Jul 29, 2010)

T_R_Oglodyte said:


> There are many ways to hinder business other than raising tariffs.



I agree that there are many ways to "hinder" business.  Sometimes businesses "hinder" business.  One of the best examples of this are monopolies by big business that use their size to eradicate competition by other businesses.   Another way businesses hinder business is by purposely withholding pertinent information from investors.  A recent example of this is the dark hole of mortgage derivatives where investors basically did not know what they were buying.  For markets to flourish investors must have confidence in those markets.  Transparancy is key to confidence.


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## pgnewarkboy (Jul 29, 2010)

ownsmany said:


> I'm considering buying both parts of a duplex but I don't want a big mortgage.  Can I "borrow" from my 401k without penalty?  It would be a second home - not a first home.  I also have a roth, although the Roth is not worth anything near what my 401ks are.



Does your employer contribute to your 401k?  If so, your 401k may be a great place to put and keep your money.  The issue many people have with a 401k is how they allocate the money for investment.

  Having a mortgage on investment properties can be an extremely useful tool for making money.

With all due respect, imo you should speak to a credible financial advisor before taking the action you are discussing.  When I say credible I mean someone who is not out to sell you some financial product they make money on.


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## jmzf1958 (Jul 29, 2010)

DonnaD:  I'm on disability so most of my income is nontaxable.  Also, I forgot to mention I cannot convert to a Roth IRA because my income is not "earned income" from a job, so that's not an option.  Good suggestions on picking a rental.  The one I have is ranch, three bedroom, in a nice neighborhood with curb appeal in one of the best school districts around.  Also, the small village I live in have very few houses for rent, so right now, it's working out well.


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## John Cummings (Jul 29, 2010)

jmzf1958 said:


> JOHN & TR:  Value/Dividend stocks seem to make a lot of sense now.  Do you buy index funds, mutual funds or individual stocks?



I have both mutual funds and individual stocks as well as other investments. I own individual stocks paying 7%.


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## e.bram (Jul 29, 2010)

If you want to be a residential landlord, you better be prepared to clear a clogged toilet or sink, repair a leaky pipe, get the heat or AC working etc.
Using professional services will assure you of losing money.
a commercial landlord will have to deal with an abundance of vacant commercial property available.
If you do not intend to be hands on do not consider being a landlord.


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## Big Matt (Jul 29, 2010)

I agree with your post about being on call, but your comment about hiring a landlord and losing money is misleading.  You may be able to clear enough to cover all of the expenses, especially if you have a small mortgage balance.  

I know a lot of investors who use management companies and make a pile of money.  The key is having a large positive cash flow in an area with high occupancy rates and increasing population growth.





e.bram said:


> If you want to be a residential landlord, you better be prepared to clear a clogged toilet or sink, repair a leaky pipe, get the heat or AC working etc.
> Using professional services will assure you of losing money.
> a commercial landlord will have to deal with an abundance of vacant commercial property available.
> If you do not intend to be hands on do not consider being a landlord.


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## ownsmany (Jul 29, 2010)

pgnewarkboy said:


> Does your employer contribute to your 401k?  If so, your 401k may be a great place to put and keep your money.  The issue many people have with a 401k is how they allocate the money for investment.
> 
> Having a mortgage on investment properties can be an extremely useful tool for making money.
> 
> With all due respect, imo you should speak to a credible financial advisor before taking the action you are discussing.  When I say credible I mean someone who is not out to sell you some financial product they make money on.



Sounds good.  Thanks


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## John Cummings (Jul 30, 2010)

e.bram said:


> If you want to be a residential landlord, you better be prepared to clear a clogged toilet or sink, repair a leaky pipe, get the heat or AC working etc.
> Using professional services will assure you of losing money.
> a commercial landlord will have to deal with an abundance of vacant commercial property available.
> If you do not intend to be hands on do not consider being a landlord.



That is not necessarily true. Our son has rented out their house in Tennessee for 3 years now. He lives in Texas so he uses a professional rental manager. The rent he receives more than covers the mortgage, insurance, taxes, etc. plus the management fee. They not only manage the property but will find another tenant if necessary.


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## easyrider (Jul 30, 2010)

e.bram said:


> If you want to be a residential landlord, you better be prepared to clear a clogged toilet or sink, repair a leaky pipe, get the heat or AC working etc.
> Using professional services will assure you of losing money.
> a commercial landlord will have to deal with an abundance of vacant commercial property available.
> If you do not intend to be hands on do not consider being a landlord.



It helps to know how to work on your properties but many property owners hire repairs out to licensed contractors. This is half our work load. These repairs include total remoldels. While it is true that you could save a bunch of money doing your own repairs all it takes is one mistake to cost you more. An example of this is a recent job that the homeowner did repairs to his toilet. The toilet was flushed and because the new flapper was not properly installed it didn't close when the toilet clogged causing catagory 3 damage to his home. While he only had to pay $1000.00 dedudtable for the $16,000.00 of repairs done it would have only been $120.00 to have this professionally done.

The same could be said about car ownership and repairs. Most people take their cars in.


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## DonnaD (Jul 30, 2010)

*high dividend yielding stocks*

John, 
would you please tell us what stocks you have that are paying 7% dividend? also, how have their prices fluctuated in the last couple years? I am a little intimidated by stocks. It seems that there is so much going on in the board rooms that the little investor is like a flea...on an elephant.
Thanks for sharing your insights.
DonnaD


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## Elan (Jul 30, 2010)

DonnaD said:


> John,
> would you please tell us what stocks you have that are paying 7% dividend? also, how have their prices fluctuated in the last couple years? I am a little intimidated by stocks. It seems that there is so much going on in the board rooms that the little investor is like a flea...on an elephant.
> Thanks for sharing your insights.
> DonnaD



  You can use this simple stock screener to find stocks that meet certain criteria (such as dividend yield >= x%):

http://screener.finance.yahoo.com/newscreener.html


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## John Cummings (Aug 1, 2010)

DonnaD said:


> John,
> would you please tell us what stocks you have that are paying 7% dividend? also, how have their prices fluctuated in the last couple years? I am a little intimidated by stocks. It seems that there is so much going on in the board rooms that the little investor is like a flea...on an elephant.
> Thanks for sharing your insights.
> DonnaD



My favorite is Verizon "VZ" which actually is now paying 6.5% as the stock price has gone up since I posted. AT&T is another that was paying 7% but is now at 6.48% due to stock price increase. Both are solid companies.

What is important to look for are the basic fundamentals of the company. Past performance is not an indicator of what will happen in the future. You need to look at their financial stability, P/E ratio, prospect for future growth, etc. Typically one buys high dividend stocks for income, not capital appreciation.

I am retired so income stream is most important to me.

There are a ton of web sites that will tell you what you need to know. Do a search for "high dividend stocks" and you will find a lot of good web sites.


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## geekette (Aug 2, 2010)

*Drips*

I decided a long time ago to go dividend paying stocks over any other wealth-building scenario.   There was just too much involved in rental property for me to consider it long and we've never had a strong cash flow so the ability to "wade in" made a difference.   Auto deducts were as low as $50/month!

This is the kind of "work" I enjoy, a hobby of managing my own little mutual fund.  it's a game to avoid/minimize %take on fees and commissions.  I don't sell, but could if I needed to, and quickly.  If I have to take a loss, I can offset later with a gain.  I plan to live off dividends in 30 - 40 years.   I need every little bit working for me, gaining shares quarterly.

I can do the work so long as my mind is sound, I do not have to rely on my body or a third party, I control my entire portfolio with no unexpected expenses.   Obviously, the operation of companies that I own and swings of stock market are beyond my control.  I've taken paper losses and been able to buy low, really low.  The dividends have continued throughout the economic downturn.  That's right, not one of my holdings ceased paying dividends.   

I don't watch yield, I watch patterns of increasing earnings, increasing dividends, payout ratio.  ROA, ROE.  Yahoo Finance shows div histories along with all the other screening goodies and reports.  google Dividend Aristrocrats  

I've had Merck, AEP, and a pet gift for Mom, Bob Evans, for over a decade, my first buys.  Dollar cost averaging is the friend of the small time investor, but compounding dividends over the long haul is what will keep me from living on the streets when I'm 90.  

I buy and hold companies I believe in over the long haul, so, mostly blue chips, but some smaller companies, too, if I like their numbers/mgmt well enuf.  I'm in different industries to mitigate sector risk.   decades from now I expect to turn the spigot from reinvesting dividends to collecting them in cash, which I can do with some or all, and turn back to reinvesting if I want.  I'll still have the stock to sell if needed, lump sum or piecemeal, it will always be My Choice.

I like TIPS but only in a tax shelter.  You can buy direct at treasurydirect.gov for your IRA if administrator allows it.   I bought some ETFs for that and treasuries of varying maturities to pad a Roth I started this year with about 25 stocks.   I've had a 401k for almost 20 years, so it is the bulk of our nest egg that I have managed carefully, but not liquid.  

I think that instead of doing something with my money to try to make money, I would prefer to work directly on my money to make me money.


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## Elan (Aug 2, 2010)

RE: Dividend stocks

http://www.fool.com/investing/divid...out-there.aspx?source=ihpdspmra0000001&lidx=4


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## jmzf1958 (Aug 5, 2010)

Thanks for the responses.  I like the idea about buying a duplex and living in one half of it.  I'd also love to buy a condo on anna maria island that I could live in part of the year and have the property management rent out for the rest of the year.  By selling the house I live in now, I could buy a two family and a condo with just a small mortgage.  After paying expenses and accounting for times when rent is not coming in, it just seems to make sense.  At least I'd know about what my rental income would be each month.  I'd also keep my 401K in stocks.  Does this make sense as a retirement plan?


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## MelBay (Aug 5, 2010)

Posted in wrong place, sorryl


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## MelBay (Aug 6, 2010)

I inherited real estate when my parents died, and I don't mind the real estate.  It's the people that live in the real estate that are going to drive me to an early grave.  My father had a knack for picking some real winners, and I just don't have the patience to deal with them.  I'm a big Dave Ramsey fan, and believe me, these people couldn't pay a bill on time if their lives depended on it and the concept of debt free is so totally foreign to them.  They're not renting, we're owner financing the notes.  I've pontificated enough about my dislike of real estate on TUG so I won't bore everyone with my ramblings. 

But make sure you have the stomach to act as surrogate parents to some of your "peoples" (as we call them).  They love to call and tell us why they can't make their payment this month.  Do I look like I care? :rofl:  Wisdom teeth, UTI, broken toes, you name it, we've heard it.


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## hvacrsteve (Aug 6, 2010)

The bottom line is to pick something that you enjoy doing, I love houses!
I always have and always will, I love them from the income perspective but more importantly, I have a passion to buy a piece of junk that has good bones and make it something that no one can believe.

So do what you love or what you would do for free given the chance, you will never regret it.  With stocks you are always depending on other people as well the rules that are in place at the time.

I always have a line to buy or rent any of my homes!
Even in this market.  I add extra things like radiant floors, skylights, big open rooms, warm colors, the things that others have no idea how to do.

When someone walks in if they say WOW! you have them and they are willing to pay a premium for that WOW effect!


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