Buying and Renting Property

[Jodi1980]

One of my co-workers' goal is purchase one unit per year for the next 10-20 years. He will buy duplexes and rents them out. One side's rent will pay for the mortgage and the rest is profit. Sounds like a great retirement plan.

 

[JimB.]

Hopefully your co-worker has experience as a landlord.

It is one of the BIGGEST pains in the a** I have ever experienced.

BUT, it can be quite profitable IN THE LONG RUN. Short term, think taxes, maintenance, depreciation, etc., etc., etc.,.

Also rent is taxed as regular income. Depending on where you live & buy, his plan may work if rents are high, but the $$ left after the mortgage payment is not pure profit (see above).

In fact, at least on paper, he will most likely LOSE $$ in the early years of the mortgage.

And if he is not escrowing $$$ for future manitenance, he is making a major error in his thinking.

But tell him good luck!

 

[ZachnElli]

Originally posted by Jodi1980
One of my co-workers' goal is purchase one unit per year for the next 10-20 years. He will buy duplexes and rents them out. One side's rent will pay for the mortgage and the rest is profit. Sounds like a great retirement plan.

Tell him to read "Rich Dad, Poor Dad" if he hasn't already. My dh started doing this just a year ago, but he has much larger goals, 5-10 units a year. He has 5 now and he bought his first "flip" property in May with cash that was just from the profits of his rentals. He also has the cash to pay for the fixing up of the flip (it's almost done) and nothing has come out of our pockets, just the profits from his rentals.