It's good if you can afford it. Around here (northern NJ), in a safe town, an apartment is $14K/year, including heat, school taxes, and property upkeep. A house, in addition to the mortgage payments, will cost at least $8K/year in taxes and several thousand more for heat and property maintenance.
invest in high dividend ETFs or buy to rent?
- Thread starter magmiv
- Start date
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Good points,denner;
but a pinball wizzard wannabe personality would goof up any etf...
Historical trends of low taxes;
most likely will trend low & lower. The trend is still your friend[not a prediction] For example, TN just lowered its food tax[to about 5.25%, but still fairly high total tax on food usually about 9-10%;
except on the farmers market food , no tax, roadside stand, no tax.Buy eggs @ Save- a- LOT, Kroger, Food Giant you pay tax-thats the law.
My bottom line, i like some dividends/some capital gains;
but JPM, C, LEH, Bear Stearns, GM, DAL,BAC, home builders... made so many goofs, prefer more real estate owned. But i dont have rental houses, thats not my personality @ present time. Nor do I believe JPM,/J Dimon calling'' the bottom ''[election year,LOL] in RE.
I dont really think stupid socialists in Spain, Greece..,ILL..DC could mess up etfs,REITS, real estate much more in USA. But they could goof up liquidity for many months,[possibly years] in RE,etfs...A tithe given helps
Iceberg inventory could smash/crash any market, any direction.
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Great points;
both.
Also I was not naming anyone a ''pinball wizzard want to be'' ;
simply making a trend comment.
And I am not clear if op is buying to rent with a bank loan or cash. I would not borrow any money now from C, JPM, BAC... Not just because those stocks have had good downtrends a & may crash. Like Dave Ramsey says/paraphrase they dont have good customer service.
In this market i may borrow from a non big bank;
especially not a big bank listed above.But my last buy was ''cash'' Like ,its better to collect interest/dividends than pay interest.LOL
So i agree, ''both''
We could write a book or 2 on this;reading helps. I may become a residental landlord, but so far so good & i have not. Hope this helps & wisdom is profitable to direct
The down side to rentals vs ETFS are the expenses. Property tax, insurance premiums, pest control, fixing broken things, management fee unless you plan to show and screen applicants yourself. Also harder/slower to sell out of your position.
The plus is that some of those expenses are tax deductible. You can fix it up and possibly make it worth more - can't do that with an ETF. The value probably doesn't fluctuate quite as much. You could always live in it if you had to.
With interest rates as low as they are, now probably is a pretty good time to buy if you are going to though.
Around here the banks generally want 25% down on an investment property. So they are basically giving you 4 to 1 leverage.
TT
The plus is that some of those expenses are tax deductible. You can fix it up and possibly make it worth more - can't do that with an ETF. The value probably doesn't fluctuate quite as much. You could always live in it if you had to.
With interest rates as low as they are, now probably is a pretty good time to buy if you are going to though.
Around here the banks generally want 25% down on an investment property. So they are basically giving you 4 to 1 leverage.
TT
thx for supporting the "both" strategy, if you want to write a book I am in 
4-1 leverage I would not recommend it, the risk is that if "something goes wrong" you may end up paying the rent to the bank.
Also I do agree that renting is more time consuming then staying long on 3-4 ETFs. Btw, the combination is a must for ensuring some diversification.
In renting vs buying sometimes the lifestyle of a person may have an influence. If you move often you are not going to consider to buy a home, just because is too much work and taxes for living there 1-3 years.
On the other hand let's not forget that the Harvard portfolio has only 5% in physical properties.
4-1 leverage I would not recommend it, the risk is that if "something goes wrong" you may end up paying the rent to the bank.
Also I do agree that renting is more time consuming then staying long on 3-4 ETFs. Btw, the combination is a must for ensuring some diversification.
In renting vs buying sometimes the lifestyle of a person may have an influence. If you move often you are not going to consider to buy a home, just because is too much work and taxes for living there 1-3 years.
On the other hand let's not forget that the Harvard portfolio has only 5% in physical properties.