What are realistic rates of return for passive investors?

[Shiloh Lundahl]

For people who are non-accredited investors, that want passive investments, what have you found to be the very best return for a passive (or nearly passive) investing opportunity?

[Michael A.]

@Shiloh Lundahl This is an awesome question. I ask this literally every time I am looking at a property for sale here. I still like to look for undervalued stocks while saving up for my next rental. If the market returns 8% on average per year over what now feels like a 10+ year timeframe, then why would I buy a property that returns that? The property is so much more work, risk, etc. since I am shopping in C- neighborhoods. Also, there are some solid stock choices out there that are not at all at risk of declining steeply but also sport a 5-6% dividend alone.

Unless a property returns an estimated 15% or so on paper I do not make an offer. That’s just me being really conservative. Around here that is what I believe to be a really great return provided you can have your offer accepted in this competitive climate. Some other cities I know have much better returns, but I don’t live there and I don’t invest long distance. I have a family and work full time, but also manage my one property so far myself. I have been spoiled by being able to invest from my cell phone for free in the securities market so it really shapes how I look at the risk and responsibility of buying rentals. Great question.