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| You can talk yourself out of it if you talk long enough. What you don't get is leverage. There are opportunities out there that cash flow with the bank's money. If you can find they will allow good growth, but they aren't going to be as easy as plunking some money in an index fund. There was a period when hog barns worked that way. 20 years ago I had a series of years with 18% growth without counting land inflation. Basically the barns paid their mortgage ,utilities and repairs. The only thing I got out them was fertilizer. The barns paid for the manure haulingso the manure was free so to speak. At the end of 10 years the barns were paid for and I have continued to use them for 27 years total so far. The loan was for 90% of construction costs. I had some rental property that I traded for some farm gound that worked out also. You do as much maintenance as you can. Your limitations are your time and skills but you do the best you can because you can afford to pay somebody to do it all. My son wants to farm some day. I wanted him to start building net worth. He started talking about hog barns. The numbers just don't work like they used to. He started looking for a house of his own. He would show me listings. He came across a multi unit building. The rule I had always heard for the last 40+ years was monthly rent needed to be 1% of the purchase price. That one met the rule. I had a small patch of land that didn't have a mortgage so I put that up so he could get a loan for 100% of the purchase price. He has been at it for 4years and it cash flows. As he goes in and freshens up apartments he raises the rent accordingly. From the records it appears that the place cost $300,000 in 1980 to build. My son paid $1,000,000 in 2022. Buildings that are well kept up appreciate. My son also puts money in Index funds atleast enough to get the maximum match from his employer. But he also works pretty hard keeping up his rental property. | |
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Rental Income Breakdown and K Shaped Economy
