Now we have to step back. What are the benefits I’m overlooking.
Some people would say “rent’s increase,” but so do costs and taxes.
Other’s would say “its in the long-term that you make the real money” – I agree, if you are pocketing $5-8k a year (equity will build faster in later years) and you keep the property for 30-years — It’s going to build a lot of cash and equity, but at the same time – that’s 30 years!
“More units equal more money,” I agree – but your risks and problems also increase with more rentals. At some point you also are going to have to hire someone to help you out with your empire, which can destroy your bottom-line.
So why is it that I constantly feel the appeal of rentals? Even after all of that math and logic – I feel the appeal.
Why would I put up with tenants, evictions, damage to my investments, vacancies, increases in taxes, risk a real estate depreciation, mowing yard, etc. – all for a tiny bit of cash?
I think there are several reason people buy rentals.
- In the long-long-term – it can pan out very well.
- There is something about owning property that is tangible
- There is always the chance your multiple properties will increase in value (Say you have $750,000 in properties and the market goes up 10% in 5-years for example)
- People who have a drive to make money – want a way to make money. Sure there are other methods, but this is a proven method with a track record. The appeal is generating what some people call “passive income” (although I would argue it is hardly passive).
It’s getting late here and I’m off to bed – and I’m happy to report I will not be woken up by a tenant calling me at 3am with a problem that I would stress about until it is resolved.