Hi @catnip: Ya I wouldn’t be a fan either… like you’ve pointed out a maintaining a rental place is a lot of work (time & money too).
Once upon a time investment properties such as these could make a good buck… based on my area of Eastern Ontario you could say buy a Townhouse for say under $ 150 K, rent it out for well over $ 1000 month ($ 1200 to $ 1500) to some GOOD TENANTS, do a bit of maintenance… depending on them to do the bulk of it (ie paint, cut the grass, etc). And then after say 10 years or so, spend maybe $ 20 K on it, and sell it for 2x what you paid for it.
So I get where it sounds good.
What they don’t tell you tho is…
1- The real estate market has changed !! Houses aren’t increasing in value now like they once were.
2- The rental market isn’t what it once was. Interest Rates fell, so a lot of “great people” got out of renting and into buying their own places.
3- Finding GOOD TENANTS is hard work. With fewer people renting, then it is harder to find the best people to rent to.
4- BAD TENANTS are a NIGHTMARE !!
5- Even SO-SO TENANTS can be problematic, if you have frequent turn-over. Everytime someone moves out there are costs incurred… and more maintenace that needs to be done on the property… such as repainting, general repairs, etc.
6- And finding NEW TENANTS is hard work. And costs money thru advertising, running around, vetting them etc.
I have many friends who over the years have owned Rental Properties… sometimes 2, 3, 4 at a time (the market was that good)… most of them have now gotten out of that. The few that remain only own 1 or 2 units… and they say times are tough. I know one guy his wife says he spends TOO MUCH TIME NOW on this endeavour (weekends) that to her is isn’t worth it… I think when their current Tenants leases are up, they’ll be done, and selling the units.
Other than that…
He might want to talk to an Investment Advisor… I would think they might be able to fill him on whether they see this to actually be a good investment for his money.
You guys HAVE TO BE ON THE SAME PAGE in my mind… because of the money, time and work involved.
MORE SO IF the purchase would be made out of YOUR JOINT FUNDS… which I assume it would be.
This isn’t just “a hobby” this is a MAJOR COMMITMENT. You cannot just let things go, or drop it… you have to continue on with it for a set period of time. And what if something happened to him… (illness, change of job such as a transfer to another city for a while)… then we would assume that it would be YOU that would need to step in and take over / pick up the slack… so not at all like if his hobby was playing a Sport or running trains in the basement !!
I truly think that as much as it is admirable that you want to support him and not dash his dreams, this is one that needs to be agreed upon by BOTH of you.
You guys need to be talking about this… not sweeping it aside for the future… and the what ifs… for when the time comes.
Hope this helps,