Let's say there are two investors, Bob and Joe.
Bob is 25 years old and pays 20% down on a rental property that costs $200,000. His mortgage is $1000 a month and his tenant pays $1500 a month in rent. Once Bob turns 30, he once again has enough money for a 20% down payment for another rental property and goes on own two rental properties.
Joe is 30 years old and purchases a rental property for $200,000 and pays cash. His tenant pays $1800 a month in rent.
I know I haven't contributed many factors such as repairs, taxes, paying 5% down and living with tenants, etc. But, is one individual better off than the other? One leveraged their investment and therefore faces a lot of risk. One paid cash and faces a lot fewer problems. But Joe faces opportunity cost. Instead of buying one house for $200,000 cash, he could have bought 3-5 houses with 20% down payments and have five sources of income instead of one. When he would retire he would of had five tenants paying maybe five times as much.
Submitted February 09, 2019 at 01:11PM by wrangler_fan http://bit.ly/2GyBL95
