Income property, mortgage vs cash purchase

[(former)FormerSanDiegan]

Since the rand has seen a run-up of about 35% in the past year, relative to the dollar, I think it makes sense to move some funds into dollar-denominated assets as a hedge while you are in the US. I also read somewhere that the South Africa Real estate market was among the strongest in the world in 2009. SO, partly diversifying out of rand-denominated assets into dollars would seem prudent if you are planning to be in the US for a number of years.

Where you put that depends on your tiume horizon. If you are going to be in the US temporarily (e.g. 5 years or less) I would avoid buying property, unless it represents less than 25% or so of your net worth.

I would also avoid buying investment property anywhere unless you have lived in the area for a time and understand the subtleties of the neighborhoods in which you invest.

As for REITs. They have had a nice run over the past year. Dividend payouts are still above other investments, but I would not jump all-in on REITs at this point. Look for pull-backs and buy into them with small increments. I’ve held a couple REITs throughout the past decade (notably, Realty Income : O), and I have been happy with using that as a tool for balancing my portfolio and boosting my overall yield. Recently, I started tip-toeing back in using REZ (ETF for residential real estate) thinking that at some point the rental market will pick up with the economy (people that have moved back home or doubled up will find their own apt when they get back to work).

[UCGal]

I’ve been looking seriously at rental properties… So far nothing has cashflowed. Looked at a duplex today that I calculated would work at about $100k less than asking… Found out there was a cash offer at $50k less than asking and a full list offer (typical financing).

I don’t see appreciation in rents or in the rental units… so if it doesn’t cashflow, it’s not worth it.

At least with CD’s it’s not losing money.

[UCGal]

I’ve been looking seriously at rental properties… So far nothing has cashflowed. Looked at a duplex today that I calculated would work at about $100k less than asking… Found out there was a cash offer at $50k less than asking and a full list offer (typical financing).

I don’t see appreciation in rents or in the rental units… so if it doesn’t cashflow, it’s not worth it.

At least with CD’s it’s not losing money.

[UCGal]

I’ve been looking seriously at rental properties… So far nothing has cashflowed. Looked at a duplex today that I calculated would work at about $100k less than asking… Found out there was a cash offer at $50k less than asking and a full list offer (typical financing).

I don’t see appreciation in rents or in the rental units… so if it doesn’t cashflow, it’s not worth it.

At least with CD’s it’s not losing money.

[UCGal]

I’ve been looking seriously at rental properties… So far nothing has cashflowed. Looked at a duplex today that I calculated would work at about $100k less than asking… Found out there was a cash offer at $50k less than asking and a full list offer (typical financing).

I don’t see appreciation in rents or in the rental units… so if it doesn’t cashflow, it’s not worth it.

At least with CD’s it’s not losing money.

[UCGal]

I’ve been looking seriously at rental properties… So far nothing has cashflowed. Looked at a duplex today that I calculated would work at about $100k less than asking… Found out there was a cash offer at $50k less than asking and a full list offer (typical financing).

I don’t see appreciation in rents or in the rental units… so if it doesn’t cashflow, it’s not worth it.

At least with CD’s it’s not losing money.

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[EconProf]

I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.

[CA renter]

[quote=EconProf]I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.[/quote]

Agree with this, and have been telling everyone I know that this is most definitely a sellers’ market. Lots of people still think the market is slow (because they aren’t out there watching it). If I had some property to sell, I would be listing it tomorrow.

[CA renter]

[quote=EconProf]I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.[/quote]

Agree with this, and have been telling everyone I know that this is most definitely a sellers’ market. Lots of people still think the market is slow (because they aren’t out there watching it). If I had some property to sell, I would be listing it tomorrow.

[CA renter]

[quote=EconProf]I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.[/quote]

Agree with this, and have been telling everyone I know that this is most definitely a sellers’ market. Lots of people still think the market is slow (because they aren’t out there watching it). If I had some property to sell, I would be listing it tomorrow.

[CA renter]

[quote=EconProf]I am about to sell a 5-year old Normal Heights/University Heights house. I see rents falling, little future in investments in this state, and a brief window of opportunity to sell during the subsidy-hyped winter months before buyer’s credit ends.
Rental houses only make sense in San Diego in the rare periods of strong appreciation. We won’t be there for quite a long time.[/quote]

Agree with this, and have been telling everyone I know that this is most definitely a sellers’ market. Lots of people still think the market is slow (because they aren’t out there watching it). If I had some property to sell, I would be listing it tomorrow.

[Author]

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