They have insurances for downturns built into the cost of the deal.
Even if the value of the property doesn't increase as much as expected, you are still making a decent amount in income from the rent being paid. 6% maybe doesn't sound like much, but it's tax free income due to being able to deduct from that income the depreciation from the property and appliances and such which in my experience always is more than enough. It makes it pretty competitive with alternatives such as index funds long term IMO and again in my experience so far over the last 11 years.
The worst case scenario is basically you hold onto that property longer and make about nothing on the sale which is more than can be said about the stock market in my experience. At least you still have what you made passively in the meantime.
Sure, I can't predict the farther future, but I still make decisions to continue this or change my holdings based on policy changes like that.
I'm not claiming this is some magic get rich quick scheme, but so far it has been working out well and definitely has given me income without me doing anything, which fits the definition of passive income here, so I just thought I'd share it.
I believe your account, and agree that this investment has turned out well for you. The last 11 years are not normal in my opinion, and I believe the time will come where policy changes will make this investment strategy much less desirable.
Have you looked at the return from S&P 500 in the last 10 years? 1,964 -> 5,823 is about 11.5% per annum, compounded. It is one of the biggest bull markets in 100 years. And you are telling us that your investment properties are sustaining the same returns? Unbelievable. Neither is sustainable.
Yes. I feel like you are not understanding anything about what these investments entail.
A struggling apartment complex property in an up an coming area is purchased and I put money into that deal. I am only say 100 or 200K of an otherwise ~10 million investment. The complex is massively overhauled, new facilities are built, units are completely refurbished, the on-site staff are replaced, bad tenants not paying are evicted, and new vetted tenants are found. The whole place is re-branded and then after all this is complete is sold for a substantial profit. All while making income from rents during the time the property is held.
It's a LOT of work. Not by me as I am just an investor, but by the managing partners who spent months or longer searching or and analyzing the area and working with the bank for the loan and then doing all that work to completely overhaul the place.
When you find and invest with a management partner who has been doing this awhile and has a proven track record yes the returns are as good as I am saying.
Even if the value of the property doesn't increase as much as expected, you are still making a decent amount in income from the rent being paid. 6% maybe doesn't sound like much, but it's tax free income due to being able to deduct from that income the depreciation from the property and appliances and such which in my experience always is more than enough. It makes it pretty competitive with alternatives such as index funds long term IMO and again in my experience so far over the last 11 years.
The worst case scenario is basically you hold onto that property longer and make about nothing on the sale which is more than can be said about the stock market in my experience. At least you still have what you made passively in the meantime.
Sure, I can't predict the farther future, but I still make decisions to continue this or change my holdings based on policy changes like that.
I'm not claiming this is some magic get rich quick scheme, but so far it has been working out well and definitely has given me income without me doing anything, which fits the definition of passive income here, so I just thought I'd share it.