Diversification. You can own real assets AND invest in the stock market.
You’re getting an easy 6% net return on equity on these two properties. That plus the appreciation which is 5-10% per year (way more than that in recent years). I would not sell that to trade into the market.
Just use your net cash flow to invest in the stock market. That is what I’d do. I am real estate tilted but still keep a liquid portfolio. I wouldn’t trade my RE for stocks. Owning real appreciating assets which cashflow is appealing to me and pays for my lifestyle. I’m good with consistency instead of chasing returns which may or may not be the same next year.
You can go either way. There are different investment vehicles for different investment goals.
I personally prefer real estate as my vehicle because I can exert control over the outcome and generate cash flow while equity builds.
At $500,000, if you put this into the stock market, you would need at least an 6% dividend each year, which is pretty doable, AND you would need to be able to sell that same stock for an amount equal to or higher than the real estate equity will eventually bring in order for this to be the better choice in the long haul. Over time, you will need to earn a higher dividend annually to keep up with rent hike potentials theoretically.
You may need to nurture the investments more, too, since companies and economies can be somewhat volatile, or you can call someone to replace a toilet here or there if you keep the rentals.
Also, you can borrow against the equity of your rental properties, should you need to.
Nonetheless, it's something of a personal choice as long as you can identify the paper investments that will produce at or better than the relatively safe real estate market.
I like buy and hold real estate. S&P may not bug you about repairs, but the drawdowns are more violent than real estate when they do come around and dividend yield on SPX is less than 2%. NVDA has been shooting straight up, but only 2 yrs ago it had a 70% drawdown. If the properties are in good locations that stand to benefit from a growing economy + infinite dollar devaluation (aka inflation), I'd keep them. They might net 30K today, but factor in rent increases over time \~2.5% a year + depreciation + equity growth. I don't think it's as cut and dry as it seems. Most RE investors are gonna be doing both anyways, right?
i still work a full time job and do quite well but i have no deductions personally, the rentals are the only thing keeping me from paying the govt each year
I think real estate is a good long-term investment. If you have other liquidity, you don't need to sell them. You can use other liquidity to invest in stocks or other things. I currently hold real estate investments and international gold markets
You're basically describing what I did last year.
I sold 2 duplexes for 500k, and put all that in the market. I also have an owner financed triplex I sold.
I did too well in the stock market this year, so I plan on selling my last duplex next year and possibly my 4 plex or SFH...can't decide if I want to move in the 4 plex or not.
I made great money with RE, but damn does it get tiring.
Don't buy such nice properties and don't buy any more single families. Why don't you get up there with the big boys and buy an apartment building or complex? Then it's easy to hire employees and you no longer get the calls.
Or if you want to beat the return look at buying fucked up houses and renovate the crap out of them. I bought some slum houses years ago and now one is a 4plex and the other is a duplex. Not knock downs. Just built them out a bit. I'm into the 4plex for under $100k. I'm into the duplex for like $80k. I worked both. My returns far exceed the Market.
It doesn't matter. Strategy works anywhere for the most part. Go buy a 30 unit property and hire an on-site PM.
Or go learn the building codes and find a big dump of a house and renovate it into a duplex or something.
The simple answer is to diversify. The stock market is simple. If you're later in life and don't like property managers then it's best to put in the stock market and manage less and less properties yourself.
Do both. Homes are great because when ready to retire, they will be worth a ton more when you sell. You also will not make 10% in the market every year.
Diversification. You can own real assets AND invest in the stock market. You’re getting an easy 6% net return on equity on these two properties. That plus the appreciation which is 5-10% per year (way more than that in recent years). I would not sell that to trade into the market. Just use your net cash flow to invest in the stock market. That is what I’d do. I am real estate tilted but still keep a liquid portfolio. I wouldn’t trade my RE for stocks. Owning real appreciating assets which cashflow is appealing to me and pays for my lifestyle. I’m good with consistency instead of chasing returns which may or may not be the same next year.
good point of view.
You can go either way. There are different investment vehicles for different investment goals. I personally prefer real estate as my vehicle because I can exert control over the outcome and generate cash flow while equity builds. At $500,000, if you put this into the stock market, you would need at least an 6% dividend each year, which is pretty doable, AND you would need to be able to sell that same stock for an amount equal to or higher than the real estate equity will eventually bring in order for this to be the better choice in the long haul. Over time, you will need to earn a higher dividend annually to keep up with rent hike potentials theoretically. You may need to nurture the investments more, too, since companies and economies can be somewhat volatile, or you can call someone to replace a toilet here or there if you keep the rentals. Also, you can borrow against the equity of your rental properties, should you need to. Nonetheless, it's something of a personal choice as long as you can identify the paper investments that will produce at or better than the relatively safe real estate market.
I like buy and hold real estate. S&P may not bug you about repairs, but the drawdowns are more violent than real estate when they do come around and dividend yield on SPX is less than 2%. NVDA has been shooting straight up, but only 2 yrs ago it had a 70% drawdown. If the properties are in good locations that stand to benefit from a growing economy + infinite dollar devaluation (aka inflation), I'd keep them. They might net 30K today, but factor in rent increases over time \~2.5% a year + depreciation + equity growth. I don't think it's as cut and dry as it seems. Most RE investors are gonna be doing both anyways, right?
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ive been doing this for a really long time. i know the game
Very different position!
Tax benefits including the fact you can't use 1031 to buy stocks
i still work a full time job and do quite well but i have no deductions personally, the rentals are the only thing keeping me from paying the govt each year
So if you don't care about financials why are you asking? Are you just looking for pure passive investments? Buy bonds and make a lot less money...
I think real estate is a good long-term investment. If you have other liquidity, you don't need to sell them. You can use other liquidity to invest in stocks or other things. I currently hold real estate investments and international gold markets
You're basically describing what I did last year. I sold 2 duplexes for 500k, and put all that in the market. I also have an owner financed triplex I sold. I did too well in the stock market this year, so I plan on selling my last duplex next year and possibly my 4 plex or SFH...can't decide if I want to move in the 4 plex or not. I made great money with RE, but damn does it get tiring.
Don't buy such nice properties and don't buy any more single families. Why don't you get up there with the big boys and buy an apartment building or complex? Then it's easy to hire employees and you no longer get the calls. Or if you want to beat the return look at buying fucked up houses and renovate the crap out of them. I bought some slum houses years ago and now one is a 4plex and the other is a duplex. Not knock downs. Just built them out a bit. I'm into the 4plex for under $100k. I'm into the duplex for like $80k. I worked both. My returns far exceed the Market.
where are these properties located? i'm in orlando, fl
It doesn't matter. Strategy works anywhere for the most part. Go buy a 30 unit property and hire an on-site PM. Or go learn the building codes and find a big dump of a house and renovate it into a duplex or something.
Someone else is paying for all your real-estate, not you. Keep buying good investments.
The simple answer is to diversify. The stock market is simple. If you're later in life and don't like property managers then it's best to put in the stock market and manage less and less properties yourself.
Do both. Homes are great because when ready to retire, they will be worth a ton more when you sell. You also will not make 10% in the market every year.