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This is a great idea but not so much from the investment p.o.v but from the perspective of having a property all ready by retirement age. Realize, no one wants to be a renter in old age.

Now that the bear market has started, real estate will not be going up at 3-5%, year after year, but will be flat for another decade or two. Thus, if you shop around, you should do fine in getting decent rental property, somewhere. In general, it's good to be near university towns or medical centers, as they tend to have a lot of mid-term transient residents.

I'm thinking about the same thing. Quite cheap to buy in the Georgia town back East where some of my family lives. I despise management agencies though, they have little interest beyond doing the minimum necessary to keep checks coming in. If I pull the trigger, it will be with family members able to maintain the property and keep an eye on it for me.

Don't do it! I live in Seattle and have a rental property in Whistler. The biggest problem is not being able to get to the property to inspect the property or meet/interview new tenants. This has lead to many problems - tenants who are not who they seem to be based on phone interviews, unreported damage and repairs needed, and getting ripped off by contractors and tenants. I recommend waiting until your local market makes it worthwhile to buy in your area, then buy a place that you want to move into eventually yourself.

My wife and I almost bought a place in the South Bay in '05, but decided against it because it didn't make financial sense. No government bail-outs for us making the right decision. We then bought out-of-state rental property.

We fell into the Robert Kyosaki trap back in '05 as he played up all the deductions you can take as a real estate investor. Unfortunately, as RG pointed out, your deductions phase out as you move closer to the 150k AGI and once you pass that bar.....NADA. I haven't been able to take any deductions for 4 years now, but I continue to incur the expenses (losses). We were renters in Los Gatos, CA and bought a 5 apartment + office space multi-use historic building for $150k in '06 in the Saint Louis area where I grew up. BTW - it's on the market if anyone is interested. You are absolutely at the hands of local people whether it be your property manager (10% fee) or repairmen (A/C, plumbing, etc). The hassle and time to me isn't worth the income.

If I had to do it over, I would not buy rental property until the foundation of my own financial house was strong, which to me is owning the roof that's over my head..my primary residence. You build equity, hopefully it appreciates, but not guaranteed, and the mortgage interest deduction reduces your AGI. Rental property should be part of your asset diversification, but not all of it, and after your foundation is solid.

The adage of "too good to be true" still holds true. Consider your opportunity costs. I wouldn't consider a 40-60% down payment for cash flow to be the deal of the century. Consider all your costs such as vacancy and your time (it is valuable). Also plan on having a maintenance/emergency fund for when things do go wrong whether it's caused by the tenant or just age (roof, AC, etc). One of my ex-bosses used to say, "Proper planning prevents poor performance."

Good luck!

I'm looking to buy some more properties remotely. Just do a lot of research.

What percentage of your assets(not including primary residence) should be rental income property?

Ralph says

... Realize, no one wants to be a renter in old age.

Really? No one? Renting in retirement is precicely what I am contemplating.

I will be mortgage free next year. Big deal. Owning is still nowhere near free. I still have property tax and maintenance costs.

I am so sick of the responsibility and costs that come with owning. What if that overgrown tree branch falls on the neighbor's garage? Fork over hundreds of dollars to trim the trees, or $1200 each to cut them down. $8-9K for new roof. $10K+ to remodel the bathroom because it looks old and will hurt the value when I sell.

If I rent, I'll let the landlord worry about the roof. If the bathroom meets my needs I don't care if it's outdated. If there is something I don't like or if I just want to live in a different town, I finish out my lease and move.

Related but embarrassingly ignorant question: let's say I own my first (starter) home and then rent it out to tenants when I buy my second (family-raising) home. The second home is purchased with a mortgage whose monthly payment is equal to the rent my tenants are paying me.

In your state, would I be able to have the tenant pay my mortgage directly, or would the money have to pass through my hands, with income taxes being taken out, before I could pass that money on to my bank?

robertoaribas says

many parts of Phoenix cashflow like crazy.

Yes, it’s kind of shocking how much gross rents can be as a percent of purchase price. I’ll spam my own forum here - check out the numbers for Phoenix in Patrick’s Property Finder

That all sounds great on paper. But personally I know someone who's a landlord in Phoenix and they cannot find a tenant. It's a brand new place too so they are currently out something like $1200 a month out of pocket until they find a tenant.

No actually they're trying to rent it for something like $800 it's a brand new townhouse
in Scottsdale.

Can't find a tenant because there are too many investors coming in trying to rent out properties.

that sounds decent... we rented a condo for about that much (but included some utilities)

looking at a few townhouses in scottsdale for purchase (same hoa for all 3)funny thing is the prices
63k
39k
159k

all for 3 bd 1 ba and the most expensive one isn't even an end unit. all look to be in good shape.