I think that what you’re hearing here is that being a landlord isn’t for everyone–and that’s true, although it’s hard to say until you actually do it. It helps, however, to have someone with experience who can help you when you first start out. We had that because my DH’s family has a lot of properties and we lean on their expertise a lot. We can’t afford to use a management company so we manage our own, but we’ve got a quad so we live on the premises. DH’s family uses a management company now, but they have like, 10 or so different buildings and maybe 60+ tenants? Too many for one person to manage unless that’s your FT job.
Some things that I can say generally:
1. I’m not a financial whiz, so take this with a grain of salt, but I think that dollar for dollar, most financial whizzes would tell you that regular investing is on principle, a better deal than real estate-better ROI and greater flexibility/liquidity. Real estate requires repeated investment that yields phantom costs and you’re also paying interest on a mortgage, plus taxes. Now, that’s dollar-for-dollar, and you DO get something for investing in real estate, at least in the sense that if it’s your own house, you get to live in it (versus not being able to live in a stock). But the question of dollar-to-dollar is a bigger deal if you’re not going to live in the property yourself, so do your homework and run the numbers and make sure it’s an investment that makes sense becuase it WILL be a lot of work. There is something to be said for the fact that some people feel better equipped to handle real estate versus investment because one is real and the other is abstract. You do control things better, you do get some tax breaks, and in the US, the government is generally pro-homeowning. But do remember that you’re kind of making a lifestyle choice here, not just an ‘investment.’
2. Understand that if you are a landlord, the deck is sort of stacked against you in terms of tenant vs. landlord rights. There’s a saying that the Court case is only resolved when the tenant wins and it’s kind of true. Part of that means that you have to enact a pretty pragmatic attitude as well as a really business savvy kind of sensibility–and like MelissainNC: mentions it translate to being ruthless about the fact that your relationship wtih your tenants is a business relationship. That’s easier said than done though because you know, you’re human and you’re providing another human housing.
3. It is work. It requires constant attention and organization–most landlords I know put aside several hours per week just to make sure their ducks are in line (the number of hours correlates to the number of units). Taxes take extra time. You have to save and organize receipts. You need strong paper trails. It’s a bit like owning a business in that respect.
4. It’s not magic or rocket science, however. Millions of people are landlords and they’re usually everyday people just like you or me–it’s not something you can get a degree in and it’s not something that people are really ‘talented’ at. I’m not a veteran landlord myself, but my sense of it is that it’s really just kind of solving problems, and some people have a better temperament for that type of thing than others; others would rather drink bleach than come home from work and find out they have to spend their evening researching plumbers.
A resource we like is this book: http://www.amazon.com/Landlording-Handymanual-Scrupulous-Landladies-Themselves/dp/0932956378