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Originally Posted by burro_blasta
Looks like I'm mostly of the same mind as BimmerDimmer and Corn on this stuff.
Been trying to figure out the #s behind all of this, and I think it comes back to my earlier comment that traditional equities give you 7%-8% a year after taxes (hopefully) and so far it seems like rentals can give you 13% or so ROIC (ie, the IC being your down payment and reserve cash) net of everything as long as you're smart and hardworking about it.
7% vs. 13% isn't get-rich-quick money, but over 10-20 years you're talking a significantly different result. Especially if you get lucky with market appreciation and/or are very smart with improvements and you're in the high teens % return range.
I think the other interesting part about rental properties is the entrepreneurial spirit and lifestyle of it all, compared to a salary job/corporate grind, which is why some people (not here) get very evangelical about it.
Going back to the original topic, maybe it's just that having a few hundred grand in the bank gives you the liquidity and down payment ability to open up these opportunities that are nearly double what you'd get in mutual funds in the long run. BUT, you need to do your research, and have the willingness/energy to deal with the 3 Ts (tenants, toilets, and taxes). So the extra return comes at a "cost" but you can afford that cost if you're determined.
Sure, you can get a rental property with only $20k down, but it's going to be a long time until that growth turns that into game changing wealth...even though you're returning twice as much in % terms I feel like it wouldn't be worth the effort for the $ returns at that level.
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Not think, this is absolutely 100% true. Why would i want to "have to" go to work to make a paycheck? Why deal with a boss? Why take shit from anyone? That is the entire concept behind investing. Don't get me wrong, i still have two other careers in which i work 7 days a week. I love to work, but under my own terms. If i get fired, laid off from one, it wouldnt even matter. Not tooting my own horn, but i see so many lifeless bodies at the hospital, struggling to come to work everyday, moaning and complaining, cant retire becuase of bills etc.. It's sad. I strive to NOT ever have to be in that position.