I'm currently 5-8 years from FI. Right now we are putting $72K year into our 3 Deferred Comp accounts (2-457's and one 403b with the catch up provision). All of our money is going into a mixture of stock and bonds. The money going into the DC accounts are "icing on the cake" as we will also both have pensions....We are doing fine and we are on target to achieve FI without becoming landlords.
We have the opportunity to buy a SFR a couple of houses away from where we live. This is in the Bay Area where prices (and rentals) aren't cheap. If we bought the home we would break even or be slightly upside down (Rent less mortgage). However, we have the ability to build a second unit in the back--and if we did this, we would cash positive--making about $1400/month.
I would build the second unit myself, as I have a lot of experience doing this type of thing We would pay for the second unit "as we build" and not need additional funds to build it. We would, however divert approximately $2K per month until we complete the second unit (approx. 3 years). The existing house has been recently remodeled--and is move in ready. It is, however, a small 100 year old home. I have experience with these types of homes, as we live in a 125 year old Victorian. The fact that the home is old, also means that we would pay about 80% less in property taxes as this home is considered "historic" and qualifies for a special tax break.
I like the idea of diversifying our investment portfolio, but have never been a landlord. Do you think this is worth it? How's the stress of being a landlord? What's your feeling about diversifying one's portfolio to include real estate? Does the fact that we would have plenty of money (unless the stock market goes down more than 50%) staying the course and not getting involved in real estate change your mind??? ANY AND ALL FEEDBACK IS WELCOME!