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I tried to find my answer on this forum but I do have a unique situation I was hoping for some advise. Currently we are about 20 years from retirement. My husband and I currently do not own a home nor rent because we live in corporate housing which is part of his compensation. We have been saving since living pretty much rent-free since he has taken this job. We have about $50K+ to either purchase a home or invest in stocks in saving for our future. We do have 401K and a traditional IRA's so my question is... Is it better to diversify as some suggest and purchase real estate and rent it out? (we were thinking of purchasing a condo/townhome in a tourist area so it would be a vacation rental property) We wanted to purchase something we could afford even if the unit never rented which is highly unlikely in this particular area of our state. With not paying any mortgage or rent it's definitely an advantage if we needed to make any monthly payments throughout the year. We live in the state of Washington which has a strong real estate market history. We usually don't experience the major lows like some states have experienced. I wanted to know if you have an investment property, can it still be included as a tax right off? I know when you own a second home, it changes things for tax purposes so not sure how that tax right off would apply to me since it's an investment property but the only property I own. I definitely don't want to rule out the stock market. I think I am leaning more towards real estate because of lack of knowledge when it comes to the stock market but I am sure someone or company that can manage something like that for me. Any advise is really appreciated. THANKS!
Having owned a vacation property, a couple of things come to mind;
- would you be paying cash for the whole thing, no mortgage, for $50K? That seems too good to be true for a place in a popular vacation rental area.
- talk to some people about how often and for how much they rent units the size you are looking at
- find out what kind of taxes, HOA's and realtor's fees you would have to pay?
- what would your plan be for retirement, recognizing that plans may change over time - sell the place for the equity? move into it? keep it for rental income?
- with taxes, there is a lot you can deduct as far as expenses on an income property, but it sounds like you won't have a mortgage on it anyway - for a primary home, the mortgage deduction is the biggie
It sounds like the key is having positive income from the place. A place costing $50K may not have a much higher resale value, so the cash it produces will determine whether it's a good choice. If it does produce income, you can always put the profits into the stock market if you choose.
Unless you have extensive experience with stock investing, and are alright with the daily stock price fluctuations, you're probably better off investing in real estate and renting out the property. You won't make as much as you would in the stock market over the next few years, but you'll receive a steady income and some appreciation from the property.
If it's just for retirement and you plan on holding for a long time I'd suggest ETFs. QQQQ, for example, mirrors the NASDAQ and pays a small dividend. You can find them for the Dow and S&P, too. Basically as the market goes up, your stock will go up and as the market goes down, your stock will go down. It's the easiest thing to do what everybody suggests but nobody does, which is to buy a diverse set of stocks and hold them for a long time.
Real estate is going to be a hassle unless it's something you actually like doing.
it shouldnt be only one asset class because i then call it speculating not investing...when you hope for only 1 economic scenerio panning out and one investment to be the star thats speculation...cover all the bases,thats the best way unless you got the crystal ball and know which one is the right asset class
A vaction condo is not an investment, it is a toy that might make you money. My dad just bought one cash 18 months ago, and the condo fees, property taxes, and insurance comes to $15,000 a year. If he had to pay that with a mortgage he would be losing money. When buying a rental property you want to pay cash, and you want it to be fairly cheap. I would look for a small 2 or 3 bedroom house that you can pay cash for. Probably a fixer upper.
i go for stocks...... i think stock market investing is the best
Looks like a "you have a bit of money? I know how to make you a millionaire!" scam.
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