Comments on: Rental Property vs REIT

By: Apartment Rentals Hayward

Apartment Rentals Hayward — Mon, 14 Dec 2009 07:26:25 +0000

This definitely is a tough decision to make, especially in this economic climate. You need to make sure that you are prepared for the worst and be willing to lose money. However, your friends’ impressive ROI makes this seem like an easy industry to get into.

By: Rachel

Rachel — Thu, 01 Oct 2009 09:31:59 +0000

Purchasing in a great neighborhood is another important tip to remember. Do your research on the neighborhood of the property you are considering. Ensure that rentals will be accepted in the area. Also make sure that the area is safe. Most people won’t want to rent a property in a crime laden neighborhood.

By: MoneyNing

MoneyNing — Mon, 17 Aug 2009 01:14:27 +0000

I’m a little skeptical when I first heard it as well, but after hearing the numbers, I believe him. He told me that the condo cost him $140,000. With rent at $1,500+, it seems that 9% is possible. If it’s 5%, it would mean that he’s getting a net of $7,000 per year, which means something like $600 a month. I’ve got to believe that he’s not spending $900+ a month on repairs and one time expenses.

By: Kyle

Kyle — Sun, 16 Aug 2009 18:22:36 +0000

It seems like your friend calculated his return incorrectly. He also has to factor in non-cash expenses such as capital improvements and other one-time or periodic expenses. Since these don’t happen every month and many of them don’t involve cash at all, most investors forget about them, thus dramatically overstating their returns. The REIT’s price and dividend, however, takes all these hidden costs into account, so comparing his stated 9% return to the REIT’s 5% dividend return is apples to oranges. In reality, I’d be very very surprised if his actual cash return on that rental property is higher than 5%.

By: Liz

Liz — Sat, 15 Aug 2009 02:44:01 +0000

An FYI – You can purchase a rental property with your IRA. There are conditions – you have to use the funds in your IRA – no mortgage allowed and the property must strictly be an investment – you can’t self manage because then it isn’t an investment but a side job. Check with your financial advisor to find a company set up to administer this type of retirement investment.

By: Wilson Pon

Wilson Pon — Wed, 12 Aug 2009 06:32:01 +0000

Ning, I thought the REIT is a program, which is specially designed for a corporation investing in real estate to reduce the corporate income taxes. After reading your article, I discovered it covered more than I firstly thought…

By: Matt_SF

Matt_SF — Wed, 12 Aug 2009 04:01:39 +0000

I’ve been considering jumping back into an investment property as a hedge against (possible) inflation. Locking in a 15 year below 5% would be a sweet deal if we get 3% to 4% inflation over the next few years after printing all those new dollars.

You might also want to checkout carbon based MLPs (master limited partnerships). They trade just like stock, but have a yield around 5% to 15%. Some of the other oil pipeline stocks are decent yielders too.

By: Danielle

Danielle — Tue, 11 Aug 2009 14:12:39 +0000

We really enjoy the tax benefits of rental property ownership as well as the positive monthly cash flow. We only invested 15,000 in the property and our net cash flow after PITI is $300/month. So yeah, I like making $3600/yr on a $15,000 investment!

By: marci

marci — Tue, 11 Aug 2009 03:58:42 +0000

You get depreciation on the rental house – plus all your repairs can be written off. ALL your repairs!

By: MoneyNing

MoneyNing — Tue, 11 Aug 2009 02:37:47 +0000

Wow 31% is just crazy high…. I don’t care how safe it looks because if it’s sustainable, the price will go up to a point that it won’t be 31% anymore!

I will look through MPW. Medical buildings do look more stable than almost every other real estate out there right now.