I agree with you, I would just say most of the time, (not always)and in the right markets.
(Or at least it has been in the past, which isn’t a guarantee of future returns)
When the property pencils out from day one, there is still risk, but it’s a safer bet than when you need some crazy appreciation to have the “investment” make sense.
There are about 40 states today that have properties that can be bought that will pencil out TODAY as a reasonable investment, based on ROI.
Absentee ownership isn’t for everyone, having property managers and being charged for little things that you cannot drive over and do drives some people nuts.
There are plenty of markets that had no bubble and even areas that have $100,000 +/- houses ALWAYS have renters looking to rent.
With mortgage rates historically low, and 25% down if you qualify, Buying a house for $135,000 that rents for $900-$1000 a month isn’t difficult at all. And the P&I payment on $100K is $616. Even with T&I, and a management fee, (you start off by paying $100 a month in principal) it’s not so crazy.
Don’t forget the lost opportunity value of your down payment (which isn’t much today)
You get a much larger (% of purchase price) tax deduction for depreciation in most other states where land is cheaper.
There is super opportunity and many OUT OF STATE areas probably have hit bottom, and will just be flat for awhile. Rentals in So Cal make no sense to me any more.
When I was kid, it was a simple theory. If you can at least break even PITI from day one, and get the depreciation, just take any appreciation as a bonus and let the tenants pay off your mortgage. Never EXPECT appreciation.
Slow and steady. Turtle & the hare etc..
I talked to a guy today who is out of pocket $5,000 a month on his rentals, and he has negative equity.
He foolishly took 15 YR mortgages on rental properties so has huge payments. Not something that I recommend.
His RE “expert” told him TODAY that the local market is only going down another 5%. I said UH-HUH.
Plenty of opportunity out there for those with the stomach.
YEP, It’s a great time to buy,,,, just not around here.
