upkeep, insurance, maintenance, property taxes, utilities, fees, and all other expenses are usually accounted for in the cash flow. I am sure there will be instances when you budget $2000 or so a year for maintenance and it exceeds that, but there will be years when you have budget 4% appreciation and you get 6% appreciation. So it all works out. Still, I only anticipate 4% appreciation.
true, you can leverage in the stock market, but that requires a high level of skill, knowledge, and expertise that I and most other investors do not have. I’m pretty sure I can figure it out, but I’d rather kind of go into real estate, let everything fly on automatic and then kind of check back into it when I feel like it, as opposed to having to check the stock market every hour.
Like I said earlier, real estate is kind of like individual stock picking. I still understand real estate better than the stock market though and its slow moving nature tends to be more conducive to predictability as opposed to the stock market’s gyrations.
I agree that property management companies (they are charging me 10% of income btw) are not trying to save you money. However, their primary purpose is to let you keep an eye on the big picture. After all, you don’t expect the CEO of Ford to actually do the data entry and filing for his affiliiate in Hokanokee, Florida, do you? The property management is there to let you delegate and keep an eye on the bottom line – profitability. As a real estate investor, your job is to look for more properties and to do research, not to do gruntwork. When you start handling dozens of properties, you’ll be inundated with paperwork and you will have to hire other people to do it anyways.
Finally:
The bottom line is that if you are looking to optimize real estate you better be willing to get your hands dirty.
This statement is absolutely correct. Believe me, real estate has its advantages, and the stock market has its advantages. I actually invest in both! I still like real estate more though.
