Originally Posted by v0rtex
Assuming a 6% appreciation (US historical average), a $210,000 house will be worth just over $500,000 after 15 years so you only need 2 houses to hit $1m in equity - or $84,000 in cash for downpayments. Spread out over 4 years that's $22,000 per year which is a realistic savings target without having to eat dog food. After 19 years you'd have $1m in equity with at least $2,000/month in income (assuming $1k/mo/house in rental income, with no appreciation).
OK so about $2000 dollars a month to cover 2 properties, interest only with about a 180k loan on.
Do you have the income spare to be able to pay an extra $2000 per month when there are void periods?
The recent average void period is one month per year in the UK, so you could take that from the rental income and reduce the net yield.
But one month is just the average - if you go several months, you need that $2000 a month of your own cash. I don't know many people with $2000 per month of truly disposable income!
People still forget that it's 360 thousand dollars of debt on their shoulders, just because they "have" something physical they can see. There is no diversification, and managing a property is like running a small business if you do it yourself.
Would you take out a $360k debt to buy a portfolio of shares, if those shares paid you "a rent" back? Very few people would, all things being equal as it's not something they can see and touch, despite (again assuming a fictional rent was paid to you) equities giving a great deal of diversification and being very liquid.