“Joey, should I invest in real estate?” A two word answer.
Should you invest in real estate? Two words: tenants and toilets.
“But, Joey, this guy in my town boasts about his $10,000,000 real estate portfolio. He’s always bragging about its passive income. Where can I get some passive income?”
Reasonable question. An answer list:
There’s no such thing as a free lunch. Everything takes work, or at least some trade-off.
Therefore, “passive income” is an oxymoron. There’s no such thing as passive income.
Plus, two more words for ya in addition to tenants and toilets: opportunity cost.
A $10,000,000 real estate portfolio comes with opportunity costs. For example, would you like me to calculate for you sometime how much Mr. Real Estate Bragger could be drawing in dividend income from a dividend growth portfolio of $10M? I can do that for you in the time it takes you to say “tenants and toilets are a pain in the you-know-what.”
You know what you don’t have to worry about as a dividend growth investor? Tenants and toilets.
There’s no such thing as a free lunch, but compared to tenants and toilets dividend growth investing seems like, well, passive income.
Already have your retirement portfolio locked and loaded? Sure, buy some real estate, rent it to some tenants, and hire someone else to unclog the toilets. Do it as an act of radical generosity. Offer a house to a family who otherwise wouldn’t have such a magnanimous landlord as you.
But, no, for your main investing, we’ll stick with dividends. They don’t rip up the furniture or leave a stench.