Quote:
Originally Posted by Piotrsko
Not much return on equity there, but how did the income taxes work out? And you did end up with the cash value of the house on sale, although a savings account or targeted date fund might have had better returns during the same period.
Didn't seem to me the being a landlord was ever worth the added hassle
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No not much return on the money invested. With the depreciation and other tax advantages only about 1/3 of that profit was taxable and was taxed at our normal tax bracket. (Income taxes aren't factored into that ROI)
Yes, I have the cash value of the house as an asset on my balance sheet. I could borrow against it or sell it to generate cash. The problem with that is both methods have high fees to access that money. If I take out a loan I pay loan fees plus interest. If I sell the house I lose more than 6% to realtor and other fees.
My wife and I decided to invest in real estate for diversity. We have maxed out all the taxed advantages ways to invest (401K, IRA, HSA) so and additional investing is taxable. It is also a different kind of revenue stream. We will be retiring soon and start drawing on our retirement and investment accounts. About the worst situation you can be in in retirement is to have a major downturn and be forced to sell stocks and other assets to pay your day to day bills while the market is down. For most people one of the last things they stop paying is their rent because they need a place to live. (Of course that was before the new paradigm where the Federal and State governments said people didn't have to pay rent AND they couldn't be evicted)
It is also a way to stay invested in real estate while selling our personal house and going mobile. In worst case scenarios if investments went bad we would still have a paid off place to live.