I can’t really wrap my head around it, you can have a tenant in there that maybe covers the mortgage, but it’s not really a good investment if you’re not getting a return?
Even if you use 500k to buy a property cash, wouldn’t that money be better off in the market?
In: Economics
If you have a good amount of assets, you’re better off buying leveraged REIT funds that are professionally managed, and lever up further with a margin account.
No property taxes, no maintenance, no insurance, no occupancy issues, none of the nonsense. You can liquidate it on a moment’s notice. You get a tax deduction on the distributions (assuming they get extended which they likely will). They can yield 8% or more in this environment and you can either reinvest it or pay down the margin loan. And You can easily diversify sectors and geographies and types of real estate.
And, you can actually sell and rebuy as the market pricing swings, which you can’t do on a house without paying a ton of commissions and fees.
Oh, and no commissions and fees when buying/selling/refinancing.
Before anyone says margin loans are expensive, step one is to negotiate a better margin rate (see first line about “if you have a good amount of assets”). If you pay the standard rate then you’re not gonna be a happy camper.
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