Author Topic: Was Mr Money Mustache's rental a good deal?  (Read 3156 times)

FrugalSaver

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Was Mr Money Mustache's rental a good deal?
« on: March 05, 2017, 07:22:05 PM »
IIRC, he spent $400,000 on it and rented it out for $2,400 / month.

The way I model rentals this would be a bad deal but curious of the perspective from the smart people here.

Ben Hogan

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #1 on: March 05, 2017, 07:43:39 PM »
U would have to calculate in the the principal and how long he intended to keep it vs what the rise in value. Plenty of real estate deal ends up looking better in the long run, but you cant count on it when doing the initial estimation.

FrugalSaver

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #2 on: March 05, 2017, 09:34:13 PM »
U would have to calculate in the the principal and how long he intended to keep it vs what the rise in value. Plenty of real estate deal ends up looking better in the long run, but you cant count on it when doing the initial estimation.

Agreed and of course that's the tricky part is no one knows what will happen with the property value in the future.  I'm still curious of people's thoughts all things being equal and "typical" property value appreciation.

TheAnonOne

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #3 on: March 05, 2017, 09:46:03 PM »
U would have to calculate in the the principal and how long he intended to keep it vs what the rise in value. Plenty of real estate deal ends up looking better in the long run, but you cant count on it when doing the initial estimation.

Agreed and of course that's the tricky part is no one knows what will happen with the property value in the future.  I'm still curious of people's thoughts all things being equal and "typical" property value appreciation.

I think it's tough now to get anything at a good price. Most would agree with me.

Though, if your willing to put in a little (read: a lot) of work, you can probably double your return with a run-down foreclosure.

Drifterrider

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #4 on: March 06, 2017, 06:33:34 AM »
IIRC, he spent $400,000 on it and rented it out for $2,400 / month.

The way I model rentals this would be a bad deal but curious of the perspective from the smart people here.

It was a good deal for someone.

NESailor

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #5 on: March 06, 2017, 06:40:23 AM »
IIRC, he spent $400,000 on it and rented it out for $2,400 / month.

The way I model rentals this would be a bad deal but curious of the perspective from the smart people here.

He admitted himself that it was an inferior investment.  In the article where he describes how he sold it - he would have made a ton more money had he sold it immediately and dumped into VTSAX.  Emotion got the better of him.

JumpInTheFIRE

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #6 on: March 06, 2017, 08:53:11 AM »
Agreed and of course that's the tricky part is no one knows what will happen with the property value in the future.  I'm still curious of people's thoughts all things being equal and "typical" property value appreciation.

Typical property appreciation is in line with inflation.  There will be some properties that appreciate faster and some that appreciate slower or depreciate but overall the real estate market tracks inflation.

Bateaux

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #7 on: March 06, 2017, 09:13:32 AM »
Maybe he just likes having the rental as a hobby.  At $2,400 a month on a 400k home he's subsidizing someones rent.  Getting less than 1% of the value in rent from a property monthly I'd dump it and choose VTSAX. 

financepatriot@gmail.com

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #8 on: March 06, 2017, 09:37:29 AM »
I believe he wrote an article on this saying his rental was not a good deal, he should have invested in stocks instead. 

moneymustard

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Re: Was Mr Money Mustache's rental a good deal?
« Reply #9 on: March 06, 2017, 02:13:33 PM »
I'm trying to find this article.  Can someone link it? 

I just posted a similar inquery here: http://forum.mrmoneymustache.com/welcome-to-the-forum/should-i-sell-my-income-property/

Where I'm basically wondering if we should sell our rental property now.

 

Wow, a phone plan for fifteen bucks!