[quote=briansd1]BG, you mention the money that boomers have. If there were more investment opportunities, in factories and other productive uses, the boomers would have their money in their 401k, insurance companies, etc…
The problem we have today is lack of consumer demand. Therefore business don’t see a need to invest and hire.
Since we have lack of private demand, government today does not have to compete with the private sector. Government should be raising taxes on the people who have the cash to pay, and investing in infrastructure for the future.
As far as owning a vacation home or rental properties far from home, there are cost associated with travel and management. Not everyone is equipped to do that. To make it worthwhile, you have to combine real estate investing with travel you would otherwise make anyway.
How much can you make on a condo rental? How much would the trips cost you? And if you don’t enjoy visiting your properties, then it becomes hard work.[/quote]
I don’t think most boomers have necessarily saved more than say, their (higher-earning) 40-45 yo (Gen X) counterpart. But the difference is that they can legally access their retirement funds without penalty. And there are some other, cultural and values-based differences such as most boomers were able to go to college much cheaper and buy their earlier RE purchases cheaper than Gen X and beyond. Many boomers have lived in the same property for more than 30 yrs, and, as a group, are satisfied with less house in more established areas, which have retained their values over decades.
This means they have successfully lived on and raised families on less (sometimes FAR less) money than subsequent generations did (no matter how much they made) and were likely able to save more money for retirement (as a percentage of their incomes).
A $100K 3/2/2 SFR in a good area of PHX (spdrun’s example) would have annual property taxes of $1800 and an annual water bill of $900 (lot is landscaped with rock, concrete and cacti).
I would guess that prevailing rent for this would be $1400 – $1600 mo. Is this too low?
At $1500 mo, that is $18K in rent per yr – 20% vacancy rate or $14,400 annual rent. If turned over to a property mgr (who charges 10% of rent collected), that leaves $12,960 yr rental income to the owner. Take out the $900 water exp and $1800 tax exp and that leaves $10,260 in net rental income, which is a 10.26% annual ROI.
Sounds more than okay to me.
Did I do this right?
How much is the prevailing rent for a 1700 sf 3/2/2 SFR in a good area of PHX?
And what is the current vacancy rate for rental houses there?
