So, let's say that I've got $50,000 that I can either invest in a taxable account or use as a down payment on my first rental home. This is Baltimore City, btw, and an overly simplified situation.
If I'm placing the down payment, I have a nice safety margin in 'oh-shit' money and mortgage for both the rental and my current home, which is nearby.
In a taxable account, $50,000 @ 7% for 15 years comes out to roughly $138,000.
For the rental, the $50,000 is transformed (over 15 years of the rent covering and completing the mortgage) into a $1000/month net for me, (after maintenance costs, taxes, etc) which is equivalent to 4% of $300,000 in a taxable account.
It seems that the rental unit will generate significantly more cash for me to use in my retirement than investing the $50,000 in a taxable account.
I feel like I'm missing something. Am I even remotely close to reality in this approximation?
Thanks!