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Daniel Han
  • Investor
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Investment strategy with roofstock

Daniel Han
  • Investor
Posted Aug 8 2019, 10:45

Everyone has different circumstances and different risk tolerance. Here are my situation and some thoughts to invest in rental SFH.

Maybe I'm just clueless beginner... can someone help to see what's wrong with my thinking?

Current situation

1. I live in HCOL area (California). 

2. I don't need the cash flow for living expenses. 

3. I have a nearby rental home - used to be occupied by parents. Looking at the rent, cost, and taxes, it doesn't seem to be a good investment. But it's ok and I'm going to keep it.

4. I want to diversify some of my stock investments. The main goal is capital preservation and generating some income and some appreciation. 

Let's say you have $1M in the bank (I don't have that much, but for the sake of argument).

1. invest in S&P 500 ETF - the historical average is 7.96%. 

2. buy 4 properties in Texas - good school, good neighborhood 

according to roofstock, you can purchase a house near Houston for $230k with

Annualized Return = 7.5%, Cap Rate = 4.8%, Gross Yield=10.1%, Appreciation 4.4%, monthly cash flow = $900.

It seems like it's about the same as S&P 500 but I don't have all my assets in the stock market.

I understand that the number on roofstock might be optimistic. But if the goal is diversification and capital preservation, it looks like a good option.

What am I missing here? 

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