I see all sorts of comments as to why investment properties are good/bad. Many of the bad seem to come from those who don't have any. So take it for what it is. Many of the common gripes are they take too much work. So is that true? really depends on the type of property you buy. If you buy a fixer, then yes, those first few months are going to hurt. But once its all fixed and rented out, the number of times you'll hear from your properly screened tenant is maybe 2 or 3 times a year . I currently have 8 rentals, i haven't heard from a tenant in over 4 months (i just screwed myself here i'm sure). We self manage and both my wife and i work full time jobs. There's still have plenty of time to go out and play. Have i had to cancel a trip or two due to a vacancy coming up? yep. But in the grand scheme of things, a little sacrifice is going to pay off. So, do they take more work than an index fund? yes, Cant refute that in the least.
Do they require you have a reasonable pile of cash? yes. Down payments aside, A few years ago i noticed the roof over one of my front porches was sagging. Both the supporting posts had rotted out, this cost 7k to fix, The next month another properties furnace had an issue costing me 1500. So things do come up and you need to have some cash available. We drove 10+ year old cars for years. Now that my portfolio is aging (read rent is a lot more than the mortgage now) we've been able to buy much nicer cars (with cash).
Can they make you more money than the market? The ones I purchased prior 2006 have killed it. One of my homes i paid 200k for, its worth 600k now. The more recent ones I've purchased obviously haven't been able to put up the 18% returns the market has and frankly probably never will. Many investors out there with bigger pockets than me are in search of yield and have been buying rentals, so there's be a bit of yield compression in that market. But each year the rents rise and my principal is paid down the numbers get better and better.
I"m sitting about half my NW in rentals the other half in the market. I look at my rental portfolio as my pension. I know what i'll be getting each year from my rent, i cant know what i'll be getting from my investments. During the GFC you know how much my rent went down? None, i even raised the rent during that time.
I will add one of my biggest concerns is the liability issue. Owning index funds comes with zero personal risk. The though of someone getting harmed on a property of mine and being able to sue me for all i'm worth scares the hell out of me. I have a 3 mil umbrella policy and the properties are in LLC's, but will that stand up to a lawsuit if i really do F up?? I hope to never find out.
A few other things rentals have vs index funds. You get to be a counselor. I've had tenants not get along with other tenants (in my duplex's) those are always fun conversations one group hated each other so much one was throwing rocks on the roof at night to bug the other one. I told em to knock that sh!t off or they are out of there... I also had a neighbor call me to complain the kids at my rental house are playing basketball in the shared driveway and the ball keeps hitting his house and waking him up during his naps. I was like are you kidding me?? I literally told him to move to the country if you don't want to hear your neighbors. Side note, we see that neighbor all the time since i don't live far from that rental, we are courteous to each other and have even had a beer or three together.
You do get to be really good at fixing things. 15 years ago i couldn't paint a wall. Now i can fix almost anything, and if i don't want to fix it, i can hire someone to do it.
Every time you see a tenants name come up on your phone you blood pressure jumps a little bit. Every time..
Depending on where you live you also are vilified. I live in Portland OR, and wow do the cities politicians and a subset of the population hate us. Never have I been hated on for owning my Apple stock.
So i get why people don't have them. There are times i'm like ugh why am i doing this. But those are pretty few and far between. I just don't trust the market enough to go all in. I like control and that's what owning rentals gives me, a little bit of control over my investments. If any of that changes, i can always sell.