Not Accounting! Philosophy.

I didn't get into landlording because I thought it would provide a better return than other investments so I can't comment on comparative return results.
Part of the issue for me was that I got into landlording at the end of a serious decline in real estate values around here and things have moved upwards ever since. As an example, and these numbers are real, I bought my own house in 1989. Previous purchaser had paid $176k about 3 yrs prior. I paid 30k. Current value is probably around 450k.

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1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

Worth it?

Well, that depends on your perspective. From a financial perspective, it's certainly worth it. A property that was purchased with $16K of your own money is sold 20 years later at a price of $222K and the remaining debt on the mortgage is $40K. Even if you subtract some negative cashflow (maybe $20K over 20 years), the return is spectacular. I don't think you can match this with a 401K.

From a personal perspective, it's not too difficult to manage three buildings yourself. My problems were acquiring 11 of them at one time. Not enough cashflow to pay a manager and also pay the maintenance and repair..........too much work to maintain and repair. So, I was between a rock and a hard place with them. If I could find labor that would do a decent job at reasonable rates, I'd have been all set. But, that doesn't exist here.

I wish I had kept close track of all the hours I spent managing and maintaining so I could have a clear grasp of my time and effort.
One criteria I used in making my purchases was that all the properties had to be within walking distance of my house. In retrospect, I think this was one of the smarter parts of my decision.

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13

I think Brian takes this into consideration.

I can prove him wrong on the 401K (well, SEP to be technical) challenge though

The time value is difficult because I don't have a log on each property. But, figure that a property typically requires 100 hours of work per year. If I pay myself $30. per hour.........that's $3K per year. Subtract $60K from the profits.

The taxes are paid under capital gains rates..........typically 20%. The return is still quite good.

Without leverage, unless you're an investment genius, you can't win with a SEP.

I've maxed a SEP ira for ten years and it is doing quite well. I balance it with a Roth(old) and a monopoly money trust, but I am not the only person I know that has made more in the stock market than our returns on rental property, so I don't think you have to be a genius to take good advice and hold assets this way with good returns.

If you are a genius, you can beat the S&P 500 for 10 years in a row. I conclude this because only a very small number of mutual funds can claim this achievement.

So, if you're banging down 20% over 10 years, you are definitely a genius. But, I sincerely doubt it.

It still won't compare to the 1100% return (simple) on the rental property over 20 years. Naturally, this depends on the market. If you're only doing 2% in real property appreciation over the long term, your results will be significantly less.

Its very passive...when you get big enough like my uncles to hire people to deal with the BS for you. If a renter is causing problems my cousin gets sent, or someone else.

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2006 CL500
1969 280SE
2023 Ram 1500
2026 Genesis GV70
2007 Tiara 3200

You're making a different comparison that I have in mind. I am talking about a lot more money and a much shorter term and zero sweat equity to factor.

Again, no reason to start bringing terms up like amortization, basis, capital gains tax rates and the like into this discussion without an expert () around, so again, congratulations everyone to all you rich guys working hard not smart

I think the trick with these small rentals is that you either have to steal them way below market value, or come in with all cash.

Building them yourself is also VERY profiitable, my uncles and a lot of the other devlopers in town LOVE doing that. They build/convert a nice building, 10-25 units and when they are done covert it to condo's and sell them for $225k each.

If you get the lots cheap enough, you can build 2-3 familes in my city that cash flow.

__________________
2006 CL500
1969 280SE
2023 Ram 1500
2026 Genesis GV70
2007 Tiara 3200

What kind of margins do you see on spec homes in your area? Arn't you guys getting slammed?

__________________
2006 CL500
1969 280SE
2023 Ram 1500
2026 Genesis GV70
2007 Tiara 3200

A lot more money in a much shorter term that gets you a similar return puts you into the genius category if you can accomplish it with minimal risk. Somehow, I doubt it.

Yep, that's me.........always worked too hard.........not all that smart.

I'm haven't built a spec home in several years, but then it was considered good to do 10-15% (before anyone pops off about this, it was hard money in a JV, so compare it against say 5% for the loss of use of the money which I think is more than fair). I was not the GC so I may have done better or (probably) worse if I had contracted the work myself. I have killed it on two historic properties I restored though on homes I purchased from estates in an area where there is a waiting list and razing and putting up McMansions is not an option. On the second one, I quadrupled my money, and sold the home in June of 2007. I held the house for 5 years.

Good think doctors with bad grades get ****ty residencies

Or ride the wave of a surging market.
I haven't bought anything in over 10yrs because the numbers just wont work for me anymore here. If prices fall, I might consider it.

__________________
1977 300d 70k--sold 08
1985 300TD 185k+
1984 307d 126k--sold 8/03
1985 409d 65k--sold 06
1984 300SD 315k--daughter's car
1979 300SD 122k--sold 2/11
1999 Fuso FG Expedition Camper
1993 GMC Sierra 6.5 TD 4x4
1982 Bluebird Wanderlodge CAT 3208--Sold 2/13