Taking exit strategies into account...
Our downpayment on a buy-and-hold OC condo 4 years ago was over $200k. We owe a little over $100k on it. Its value has increased by at least $100k since we bought it, but if we were to sell it and not do a 1031, we'd only get something like $80k back after taxes and commission.
As much as I love real property, I would've leaned toward investing in notes.
@Wendy Black You can re-finance and get your equity out of the property. Use that to (A) invest in more properties or (B) invest somewhere else.
Income from investing in notes also comes with its share of issues - primarily, income tax.
There is no magic pill. One has to balance liquidity with non-liquidity (very hard to do).
@Wendy Black , Check your numbers. You started that property with $200K of nontaxable equity. Appreciation added another $100K in taxable gain equity. It's difficult to figure how you'll only net $80K after a capital gain of $100K. Unless your commissions are killing you. Do you mean your after tax profit is $80K after 4 years? That would be an average 10% annual cash on cash not counting NOI from rent.
We got a 3.75% interest loan for it. Looked into refinancing previously, and we couldn't have gotten anything like that. Also reticent to take on more mortgages at our age. Cancer with our daughter-in-law and 2 pets slammed us financially.
Our notes are doing fine. The best income, though, is coming through some mobiles.
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