Landlords hold all the risk. There's risk of devaluation, risk of renters destroying property, risk of unexpectedly high maintenance costs, risk of insurance/taxes going up more than planned. If anything bad happens to the property, the renter can just walk away, the owner is stuck with it.
I'm not a landlord, sometimes look into it but every time conclude that the risks are far too high for what minimal profit it might bring. So I stick to index funds.
Yes, landlords have risk. My original point was that renters shoulder the same and more risk.
Less time and monetary exposure.
Renters incur less risk.
Feel free to expand upon the argument of real estate as a "little risk" investment.
>Renters are stuck by leases
Leases are on average, an order of magnitude shorter than mortgage loans. Less exposure, less risk. Your leverage is to walk away after a year.
offset by property taxes? Maintenance? Inflation eroding the value of the equity. Time/cost of managing the property. Potentially depreciating property values, depending on area?
I've been a landlord. It's a money sink. Tenants brought in cats (against the lease) that peed all over, making the residence smell unbearable. Had to completely rip out carpet, reseal the floors to get the smell out. Ripped out stair case railings.
It's far from "little risk". It was a time and money sink.
The area itself did not appreciate in value. So after all said and done, definitely lost money.
I'm glad to be done.
I didn't "walk away" like the renters could. I fixed the house, the damage that the renters caused, I assumed the very liabilities that the renters get to punt on. Their leverage in the deal worked in their favor that time. They get to just move on.
