Motley Fool and Rentals

[Bill S.]

www.fool.com/investing/general/2013/12/08/to-buy-or-not-to-buy-your-first-rental-property.aspx

This had some good points but I would say if you are only looking at 5 year return then RE is not your game. Also, they sort of assume no learning. That is, you would sit on an empty for 6 months. They strongly advocate learning about stocks, if you do the same with RE it's my opinion that you will be way ahead because of leverage. Slightly before I started in RE I also joined a stock investment club. My money there has an average annual rate of return of a little better than 10% return over almost 14 years (roughly doubled in value). Not bad since we started out before the tech bubble burst.

Due to leverage RE is significantly better than this.

[Ed S.]

Bill, thanks for posting this. I am a paying member of Motley Fool Stock Advisor newsletter. I have found there are two things that MF is biased against: personal real estate investment and (non-index) mutual funds. It might be the cynic in me, but I tend to think this is because MF makes no money off of either of these investment types, and view them as a competitive threat to their fee-based news letters and stock tip sheets.

Jay Jenkins, the author, has painted a relatively bleak narrative about real estate investment by choosing the hypothetical he does. He could have just as easily described the sample house to be cash-flow positive and profitable for the investor in spite of the operating and holding costs he stated. We hear these success stories all the time on BP. Instead, he chose the "REI is scary" narrative. Then, in the last paragraph of the article, he shamelessly plugs a fee-based stock research service:

"Of the Fool’s 575+ stock picks, which 3 should you buy right now? For a limited time you can discover which 3 Motley-Fool-recommended stocks hedge fund veteran and Motley Fool Million Dollar Portfolio advisor Ron Gross has put $192,197 of our company’s own money behind -- and why -- by simply clicking here."

I've grown weary of receiving so much advertising from MF, both within the newsletter I am already paying for (upsell), and in my e-mail in-box. It makes me less trusting of their research.

I think Jay is an honest author. Heck, he even mentions owning a rental. However, I think he has a natural bias against REI.

Regardless, it's important for all real estate investors to learn from others' mistakes, and make sure each deal is properly vetted before jumping in. In this way, Jay does his audience a favor.