my bad, it’s .567% a month, it works out to about 6% a year, but same difference. And No!! I think I wrote too much and lost you scardey, the 6% a year is the dividend, that ignores future value. If you buy 100k in gold and it goes to 107k in value, nobody actually writes you a check for 7k, you have to sell the asset to see the reward. But YES!! owning gold is much easier. I don’t think gold, stocks or bonds are bad, they are different and you aquire them for different reasons. I actually think a combination of them is the way to go. If you had to decide on just one investment, then a rental probably shouldn’t be your first choice. If you have stocks, bonds and maybe some commodities plus a primary residence, then it’s o.k. to take a little risk, the rental has a unique element, it’s a two pronged bet, the future value and the future rent. As time goes on, the value may go up and the rent may go up, not every year, but over time it usually does. It also has more liklihood to rise in value than decline over the long haul, there are fluxuations, like right now, there are times when it goes up too much, like 2003 to 2006. Let’s say, in my example, the value reaches 200k in ten years (which is still not a return to 2006 levels which was 300k), then you get $567 a month and 100k appreciation over 10 years and that is if rent never rises in those ten years, which it may.
The original point of the thread is that investors haven’t learned their leson from recent losses in R/E and my stance is that they were unwise to invest in rentals between 2003 and 2006 because they were blinded by the appreciation alone, they ignored fundamentals like rent multiplier. Now that the fundamentals are in line in some situations, a different type of investor is surfacing with a different plan, like the plan I outlined. If I can get a rent nuetral rental or a positive cash flow rental then I begin toying with the idea, like I am now, but I will not sell my other investments to do so, I plan on making a part of a healthy breakfast. I also think that if you wait for the perfect storm where you have verifiable proof that R/E is going up in value and rents are rising and economic conditions are improving, then you will not find the same opportunities because everyone else will want to bet on a sure thing too.
