Wealth building and rental/income properties ...

This is sort of a general question. Do you have rental properties for income stream purposes? What type (e.g., house, duplex, apartments, launderette, etc.)? How has it helped, or hurt, your wealth building?


Thanks for sharing.

 

I am retiring in less than 10 years and with the substantial amount of retirement pay I would receive, my husband and I plan to buy a lot (or lots maybe) and build an apartment that we can rent out for subsistence in our old age. Rental properties are the safest because it appreciates in value so even if the income from rental is not much but at least the capital is safe and sound in real estate. And if an apartment is not possible then maybe a house or a duplex will do. If we get more money then we can even build a small commercial building.

 

I have not and probably will never invest directly into apartments. While I do enjoy passive income and think real estate is a good way to get it, I'd much rather own REITs than direct apartments. It's easier and diversification is easy to accomplish even with smaller amounts of money.

 

A few years ago I owned 2 houses apart from the one I lived in, and I rented those properties out for a few years and I earned quite a bit from it.

In the end I sold the 2 houses and used the money from the sale to invest in my own home, and into a business venture. Sometimes I wish I'd have kept them, but at the time the market was high and by selling when I did, I made a lot more on the properties than I ever would have done, so for me it was the right option at the time.

 

That is what I've done thus far. That is our real estate holding is our home and acreage. Investment in the real estate market has been in the form a REIT. The results haven't been bad and I hear you about the lack of hassle factor. Still, I wouldn't mind having some additional income streams.

 

My dad has 2 places and is buying an apartment for about $300k less than what it's supposed to be due to a section of the roof that needs to be replaced, but he has connections and can get it done w/excellent quality for half that. At current occupancy, he will be making 30~40% ahead of the payments every month

 

This reminds me of my father-in-law who would advise our relatives with money to buy real estate particularly old houses needing repairs. In fact, we bought this house for a cheap price because it was 20 years old with so many repairs needed. And after all is done, we had spent a total of $50,000 for the cost of the house and the repairs. After the repair job, our house was valued at $60,000 in the housing market. It was a good advice for those with knowledge in house repairs and construction. But if you don't know the trade, just buy a good brand new house to save you from the hassles of repairs.

 

You can maximise your rental income with the right sort of tenants. Several tenants renting rooms in a house, all using a shared kitchen and bathroom will often give you more income, but there can be problems with this as well. Arguments between tenants, potential damages to your property and sudden departures with rent money outstanding can all occur so although you may receive more income for such an arrangement, the associated problems can sometimes make it not worth your while unless you choose your tenants carefully. Renting an entire property to one family, or just a couple is usually far easier but you will not make as much from it.

 

My family used to rent out our other house which is located just beside the house we currently live in before but when my dad found a farm lot he was really interested in, he decided to sell the house and the lot it was built on so he could use the money in buying the farmland. Now, after years of tending the farm land, he has once again decided to sell it so he could buy another property that he thinks would be better at earning him more income. So it was sort of a real estate buy-and-sell thing for my dad.

 

Renting it out by room instead of just renting out the whole thing can work well in certain areas. But yeah there is always more work to do, most of your tenants will end up being students and unemployed etc. Very few people prefer to live with others, usually it's due to the cheaper rent that one chooses this form. Also these people will probably move out as soon as their financial situation improves.

But yes it can be a pretty good way of doing things if you are in an area where people need this sort of accomodation. (close to universities would be the first thing that comes to mind)