7/18/2006

07-18-06 - 3

07-18-06

Owning property and renting it out is like an amazing cash cow. For one thing, the property is just a good investment that appreciates similar to stock. Then you get the rental income on top of that which is just like a bonus that good growth stocks don't have. It's like combining a good growth stock with a stock that pays a big dividend, which is unheard of. The problem in CA is that rental income is very low compared to mortgage, but in places were mortage:rent is around 1:1, buying property to rent is very easy and very profitable. All you need is a little nest egg to cover the down payment, and then it pays for itself and you get to keep the appreciation. Of course if the area totally crashes you get a double whammy - you might not be able to find a renter (or the rental price will plummet), and the value of property itself plummets.

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