Quote from @Kevin S.:
Thanks for the advice, Rob. Good to hear from someone who actually did BOTH for a LONG time. Would your opinion change if all the RE was handled by professional PM company? This will remove all the factors you mentioned such as managing, keeping with the landlord laws etc? Thanks.
That would depend on the market you're in and your AGE. If you're under 65 or so then you can lever up on the RE and let the tenants pay off the mortgage
1. Cap rates in most markets are pathetic and not much more than the 10 yr T-bond, future "appreciation" is baked in to the RE markets. Thus, to make a good return, and decrease the risk of a long-term flat market, you'll need to use leverage in RE (tenant pays off the mortgage), so you'll make money irregardless. If you can't leverage the RE and cash flow from day 1, then it's a hard pass
2. Important: you'll need to find a good property manager, this will make or break your RE investment. So you'll need to cash flow after PM fees, taxes, insurance, repairs, vacancy and the mortgage pymt
3. The best way, if you're dead set on owning RE rentals, is to find a property in a good neighborhood that will attract GOOD tenants... from a wholesaler. You can find them in Facebook real estate wholesaling groups. Have them add you to their list of cash buyers. When you find one well below market value that needs work, you can put some money into rehab, then rent it, and you'll have instant equity and a higher cash on cash return
4. For stocks, in this environment, I would only own large cap companies with a solid history of increasing dividends year after year, and reinvest the dividends which decreases your cost basis over time. Decreasing the cost basis protects principal
5. You could do a 50/50 mix of stocks and real estate (depending on the real estate market you're in). In CA, not likely, in OH, then yes very likely, for example
