In all seriousness, I’ll tell you why I decided to buy a small rental.
1. I’m much more likely to lose 20+% in the stock market from this point on, versus losing 20+% in a real estate purchase in an area that has already depreciated quite a bit for the past 2-3 years. I need to take money off of the stock market roulette wheel. And this forces me to do it.
Yes, I could also gain 20+% in the stock market, but then I’m not exactly liquidating stock market completely, so if we do see a monster rally, I’ll just earn less….
2. Dollar is going to get trashed…. Imho, staying in cash is suicide… Folks were saying to say in cash back in Sept/Oct/Nov 2011. That would have been a costly mistake for me personally less 15% gain…
3. Loan dollars is cheap … I am in the process of tapping cheap loans to pay myself back. So, I’ll let the banks take the inflation hit.
4. I can cash flow this thing. Ok, maybe it’s not 10% maybe it’s closer to 8%…. Can’t find too many things that can do about 4-5% these days. (Though the rental has more risk, I know…Vacancy,etc)…
5. I didn’t find a problem finding a tenant because where I’m at, hiring has picked up…
Numerous applicants are just 2-3 years on the job (almost fresh grad)… Some biotech folks, some tech folks… Salary for 2 year of experience ranged from about $80 to about $100k…(And yes, I verified the income)….These folks just don’t have the downpayment (yet) and they are just starting out….So perfect candidates for tenants.
6. I need to diversify and count less on stock/bonds/my w2 income, my side business consulting,etc as i get older. When I retire, there will be no social security, there will probably be no medicare, and I’ll probably be paying up the noses in taxes to support everyone stinking baby boomer that still expects their benefits.
Added bonus: Also, I like to try to max out what I can deduct on schedule E:)
