Does rental real estate really beat inflation, after all the costs, deprecation, and leverage?

Answer 1

It depends on how you work it.
I bought a building & put enough down that I lived in 1 apt (free) & still ended every month w/ enough to pay the utilities.
I'm a 4th generation landlord & a paralegal specializing in landlord/tenant relations. I do all my own maintenance & I have very strict rules for whom I will rent to.
1. Don't rent to someone for any reason other than they fit the profile of your ideal tenant. Not because they've had a hard time in life & you wnat to cut them a break. You'll be their next hardluck story of a scumlord. People are in the life that they've built for themselves.
2. Don't evereverever rent to friends or relations. They'll buy a new car & then loose their job. They'll expect you to cut them some slack. Your mortgage holder isn't going to cut you any slack. But, you'll be the bad guy.
3. Make extra principle payments. Every dollar you pay extra on your mortgage gives you 5 dollars at the back end. It doesn't cost you very much to make a whole extra payment. Usually only a couple $$ out of every hundred goes toward principle. that means you can put a couple $$ & knock of whole month off the back end of your loan. that's credit for your entire payment, for just a few $$!
4. Don't leverage!!!!! You'll be giving other people $$ to use their money. PUt that $$ in your own pocket!
5. Atract the right tenant.
a. I price my units at 85% of the local market. I have more applicants to choose from, and when a tenant becomes unhappy, they go shopping for new housing & are sobered up by what they can get for what they pay now. They get reall happy real quick.
b. I give a discount for the good grades of the kids of my tneants. Kids who are inside studying don't work on distroying my building. If the parents get paid for the grades, what do you think the answer is likely to be when the kid says he's going out w/ his friends? The kids has a better self image, they are happier in my building & tell their friends when a unit is coming up. Those friends are often on the honor role. I find out about an impending vacancy when I collect rent. There are people in nearly every apt wanting the coming vacancy. I rarely advertise, instead I rent by referal. The school has to verify the grades, so they know about the program. Somehow the kids w/ good grades find out & so do their parents.
I've made upward of 7 figures in the last 10 yrs, by buying & HOLDING real estate. I think I've beat inflation. Holding it is the key. don't keep giving someone commissions, no matter how manhy time they tell you you have to do it to make $$.

Answer 2

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Answer 3

Not as often as you might think.