There can be a lot of work and risk involved in being a landlord. However I can see how being nearby with ADU and having handyman skills are a plus.
Has anybody with big/appropriate house considered doing a “roommate agreement”? I have a neighbor who would like to do this. Alas, for a few years I’ve kept my ears open for her for the right, trustable person… no luck so far. (I did notice a few leads on a local nonprofit’s FB page, but they were dog owners - that’s a no go with her 18 year old cat.)
Theoretical returns for a $100k lump sum invested from 2002 to present are below, with different types of investment. I am assuming dividends/yield are reinvested. Like the overwhelming portion of 20+ year periods, large equity indexes such as total market outperformed bonds by a wide margin. It’s not guaranteed that you’d make a gain over 23 years (chosing duration based on 2002 to 2025), but there has never been a 23 year period during which a lump sum investment in the S&P 500 did not make a large gain, with dividends reinvested.
This relates to why time horizon of investment is important. The shorter the time horizon, the greater the risk of loss with equities or rentals, and more reason to emphasize fixed income. If time horizon is short enough, nearly 100% fixed income may be appropriate. Similarly the longer the time horizon, the less risk of loss, and more reason to emphasize equities over fixed income.
Also note that the highest return was $890k. Under 4% rule of thumb, that would support $35k/year spending in 2025 $ and future spending increased corresponding to inflation such that purhcasing power remains constant (~$40k/year spending in 2030). It’s a nice benefit, but hardly “never have to work a day in her life” type money.
Total US Equity Index – $890k
S&P 500 Index – $860k
Total World Equity Index – $725k
REIT – $700k
– Gap –
20-Year Bonds Held to Maturity, then Reinvested – $320k
TIPS – $270k
Long Term Treasury Bond Index – $250k
Total Bond Market Index – $215k
Cash – $150k
now take 1 1 mil, have it earn $45k a year the first year and be reinvested - over and over and over. She’d have a lot more than she does now which is 1.25 and yes they took out a few hundred thousand for college etc They’re in so many funds - DFA is the brand they mainly use. The firm is well known in the NE with multiple offices.
They’ve got her in many more classes that you are showing - all in the name of reduced volatility - blah blah blah.
.8 every quarter - it’s always (depending on value) $2200-2500 a quarter. Last statement balance was 1.211M. As said, several hundred thousand have come out.
Every year I sign their statement - I think the target is always 6.2 or 6.4%.
I’m just saying - it’s way underperformed.
I don’t need to get into a debate about it.
I’m just back to - just because someone is a CFP doesn’t mean they are a god. That’s all.
Lots of different ideas and advice on this thread. It is important for folks to do their due diligence themselves. We all don’t know all of the ins and outs of anyone’s financial picture here. They can do this with the help of a professional, or by reading bogleheads, or whatever.
But for retirement, planning ahead is important, if you can. We started thinking about retirement plans when we both started full time jobs. Goal was to retire and have sufficient resources for our needs.
In our case, we would not have considered buying real estate as an investment of any kind close to or when we were retiring. But others could view this differently. Some of this would depend on your current cash flow (buying real Eastgate isn’t free).
So my free advice @Jolynne_Smyth look at everything. Income and expenses that you currently have. Needs vs wants. Look at your cash flow. Can that really support the purchase of additional real estate, and do you want that responsibility. Only you and your husband can answer these questions.
We own rel estate and it provides a good revenue stream. Pushed reply before I finished. There are so many variables to consider. Cost to buy, rents in the area. In our experience single family residential houses don’t provide the income that a multi family dwelling does for the same cash outlay.
Right now, I have to decide whether to approve a $2,700 estimate to repair an air conditioner in one of my dad’s units. I don’t know! I asked ChatGPT, and it said it’s a reasonable cost IF all the listed items are required, but they might not be. Ugh. I didn’t sign up for this.
In 2023, we had the a new Champion AC with a 10 year warranty installed in one of our units for $2600. I just doubled checked our invoice to make sure I remembered correctly. This is in the midwest where labor is undoubtedly cheaper, but $2700 just for repairs seems like a lot.
I rented my parent’s home for nearly 15 years as they took a bad hit arounbd 2008 and the area did not recover well. I finally sold to the tenant in the pandemic.
It was annoying how little they made in ~30 years ownership & I found long distance landlording annoying.
And yet, I have a vacation home that I short term rent and have for over a decade. Now I have multiple homes in that location and it is so fun for me. I enjoy the hospitaliy aspect of short term renting.
I am helping a friend short term rent their place in a very different town- I think they have already had, this year, more bad guests than I have had in a decade. Location matters.
We just had an AC compressor replaced under warranty. It was still $2100 - only the part was warrantied. I think the unit was $7k 8 years ago. It’s a Lennox we bought via Costco.
This type of stuff is a blind item. You hope they’re being honest.
Ours was filthy. We don’t service it annually like you’re supposed to. But also it was surrounded by plants and we were told to cut them away so we did. Hopefully it keeps the condenser cleaner.
So it may not be unreasonable but yes ask for a deeper explanation.
I realize we’re way off topic here, but I don’t want @MaineLonghorn to get ripped off! Based on what @tsbna44 paid, I wondered if I was confused, so I googled our model number….the retail price (no labor) for the unit is roughly $1800, BUT it was only a 2.5 ton size (adequate for cooling our 1800 sq ft house) AND only 13.4 seer. (I had wanted amore efficient one but HVAC guy convinced me that then we’d have to replace the furnace too). I’m sure @tsbna44 got a bigger/better AC for $7k.
It’s impossible to know what price is low/high for an AC unit or AC unit repair without more information. Prices can vary dramatically based on size, efficiency, brand/model/features, year, … Repair costs are even more varied because different components fail. The compressor is typically the most expensive part, and often costs thousands to replace. If the compressor needs to be replaced, it can make more sense to replace the whole external condenser unit with a new model instead, particularly if the unit is older. A fair price for replacing compressor/condenser on a central AC could be well above the listed $2700 or well below the listed $2700 depending on size, efficiency, brand, features, year, … If it were me, I’d get more information before committing, including getting multiple quotes, including for different alternatives if relevant.
I have 3 central AC units in my home, which are all decades old. During my most recent AC failure 2 years ago, I initially received quotes of several thousand. I contacted a specific AC repair person who I trusted and have had positive experiences with in the past. After some thought and discussion about the nature of the failure and how unit worked, we found a creative solution that did not involve replacing the more expensive components, which dropped repair down to his company’s min charge of $150. The unit doesn’t look pretty, but it still functions great today, 2 years later.
Sometimes on a big (40,000 person) local FB group I see renters rant bitterly about home rental costs, especially if they think the house is paid-off. They don’t seem to understand the landlord burdens of tax, insurance, maintainance, repairs (above AC situation is a good example)…. and the lost earnings from not selling and investing the proceeds. I think the landlords put up with it all because there has been a good trend of increasing home values over time.
