A lot of bloggers that write about dividends often mention real estate as a way to bring in yet another source of alternate income. If you’re good enough, you can go out, buy an investment property, and make some money on the side after maintenance expenses, taxes, and the mortgage. There’s something about Real Estate that has made me very iffy about getting into it however. I can’t seem to get over this hurdle, because it goes against the fiber of how I live and what I believe in. Sounds like a serious issue? It really shouldn’t be, but it is..and that’s debt.
Ever since I graduated from college with a just-large-enough-to-be-annoying student loan, I’ve had an extreme distaste for leverage and credit. I don’t pay interest, I receive it. It pains me to think of whatever fatcat is calculating the monthly interest on the money I borrowed, and I cringe when I make my payment on my loan each month. It’s much akin to dumping the money into a black hole. I’m appreciative of the fact that it got me an education that I’ve utilized for a great job, but that doesn’t make the sting any less when I see “X amount of your payment went to interest.” Additionally, the instrument in which debtors are forced to be governed by, the credit score, is a rather inaccurate, somewhat broken system that dictates to lenders what favorable or unfavorable terms they’ll offer to you. Seeing people bound by this arbitrary number so completely that there are tons of books, articles, and blog posts about improving your credit score immediately throws up red flags for me.
Buying stocks on margin is considered risky business because you are investing money you don’t have. I take real estate in the same stride. I don’t want a mortgage, I just want the house. If that means I have to live in an apartment for several years whilst I save up, then so be it. If I want to create additional streams of income, I’ll utilize the funds I have at my disposal.
Which brings me to my final point. I’m perfectly fine with investing in real estate and I understand it’s potential, but if I wanted to go that route, I’d much prefer REITs (Real Estate Investment Trusts) as my vehicle of choice. In this way I can add additional diversity to my portfolio, take advantage of hefty yields often sported by these instruments, and forgo the dealing with tenants, paying for maintenance, and worrying who I’m going to get to pay the mortgage in times of vacancy.
Your mileage may vary.
Tags: Alternate Income, dividends, Real Estate Investing
My name's Frank and I'm a life long seeker of passive income and dividends. I work in Financial Services and invite you to join me in my search for the holy grail of finance: passive income. My methods tend to be unorthodox but effective. Whether it's through investing or other means, I believe in creating many sources of income to give me the flexibility to live the life I want, when I want it.
