Where are people investing for income these days?

[Scallywag]

Probably not quite what you're asking for... But the only real income-producing asset that I have and partly rely upon is a paid-off rental property. It does (and has for the last ~4 years) reliably provided ~$1k/mo profit above expenses. In all, I earn an ~8-9% ROI. Lower than it could be in the investment RE world (often up to double that), but considering it was previously my own home, bought brand new, and primarily as my own home with only a secondary interest in later renting it out, it does pretty well for me.

Now, is your mother keen on becoming a landlord? I expect the answer is no, and I know that you've said in the past you're not interested in RE yourself either. But if done properly, it really can be a good option. Buy a good property, research and hire a really good property manager, and RE can be fairly simple to own & manage. Honestly, I love my property manager, because I've found them entirely trustworthy, reliable, and attentive. I pay them handsomely (10% of rents + occasional fees), but they've allowed me to earn a good, reliable income while owning the property at arm's length. The only involvement I need to have with the property is checking the cashflows monthly (which the PM reports to me), paying taxes/insurance/HOA annually, and occasionally (maybe 2-3x/yr) responding to questions about specific repairs or other minor issues. The PM advertises & maintains the property, finds & vets renters (for me to approve), regularly inspects the property, and handles all interactions with the renter. They definitely eat into my profits, but over time, the reliability of the income has made them highly valuable. Done well, you can get quality, long-term renters into a property that produces a highly reliable income stream.

Just a suggestion to consider... I know it's not going to be high on the list, but it could be a viable option for her. Investing $150k into a single ready-to-go rental property could probably produce cashflow of ~$800/mo (~6.5% direct ROI), plus she'd also be able to write off the expenses for tax benefits, and the home would slowly appreciate in value as well (likely bumping ROI to at least 9%). Do that for multiple homes, and you can do even better -- PMs charge incrementally less for multiple properties, directly boosting your bottom line. Plus, with multiple properties, you get multiple income streams that can level out a vacancy in one while others are still producing. (Note: that all ignores the more involved option of buying a 'distressed' property and investing the time/money/effort to produce a significantly higher ROI).

Another related option.... for a totally hands-off investment, perhaps consider REITs. If you buy into a single specific REIT, there's alot of due-diligence research to do. But there are also REIT mutual funds that will moderate your risks (and returns) with far less due-diligence required.

There's no escaping the fact that RE is a far higher-risk income stream than CDs, bonds, and so forth.... But the returns are there to offset those risks.

Kork, interesting you bring up rental properties. My parents have a real estate portfolio and some if their tenants are just not paying rent now. Thankfully, they paid off everything decades ago but do have to pay property taxes and maintainence - not having their monthly rental income has been a damper on their returns. Not to mention, the eventual evictions process IF tenants continue not paying if / when moratorium is lifted.

I doubt their situation is isolated. You're really lucky if your tenants are still paying rent. I just purchased two apartment REITS for my non-IRA account. I know I'll owe taxes but I couldn't find another place to park this cash thay I won't need for the next 5 years.

[kork13]

You're really lucky if your tenants are still paying rent.

I've honestly been very grateful for having the tenants I do. They take good care of the house, pay their rent timely & reliably, and they're attentive to when things aren't working right to call & get it fixed. In fact they just signed a new lease in September for another year, so let the good times roll. We paid off the rental house in Oct'18, so it's now just serving as a consistent, relatively low-risk income stream for us. As I said back in July, RE isn't for everyone. But if you have the stomach for it & the cash to buy outright, RE can be a great option for income generation.

[LivingAlmostLarge]

Kork, interesting you bring up rental properties. My parents have a real estate portfolio and some if their tenants are just not paying rent now. Thankfully, they paid off everything decades ago but do have to pay property taxes and maintainence - not having their monthly rental income has been a damper on their returns. Not to mention, the eventual evictions process IF tenants continue not paying if / when moratorium is lifted.

I doubt their situation is isolated. You're really lucky if your tenants are still paying rent. I just purchased two apartment REITS for my non-IRA account. I know I'll owe taxes but I couldn't find another place to park this cash thay I won't need for the next 5 years.

What percentage of people do you think aren't paying rent? Do you think they legitimately can't pay rent or is it they don't want too? Or is it more a maybe they know they should be focusing on paying other bills?

[~bs]

What percentage of people do you think aren't paying rent? Do you think they legitimately can't pay rent or is it they don't want too? Or is it more a maybe they know they should be focusing on paying other bills?

In our state, a comprehensive study showing that 15% isn't.

[riverwed070707]

What percentage of people do you think aren't paying rent? Do you think they legitimately can't pay rent or is it they don't want too? Or is it more a maybe they know they should be focusing on paying other bills?

With the federal moratorium on evictions I think rent feels lower priority to tenants than other bills and obligations. Will be interesting to see how things pan out because at present it feels like come January there's going to be a housing crisis of epic proportions after the moratorium is lifted and tenants are forced to pay months of back rent or leave.

I have 5 units. Fortunate to have most still paying. One stopped paying in April despite not losing his job and having additional unauthorized tenants I wasn't aware of until that time. I was able to sneak in an eviction in July during the short window where the state moratorium was lifted, the courts were open and before the federal moratorium was put in place. After I got it repaired and cleaned up, it sat on the market for 6 weeks before I decided to pull it off and do some overdue updates which will hopefully be wrapped up this week. It normally brings in $1,400/mo and I haven't had any income on it in 7 months. Anyway, lengthy response to say, I think if you have good, responsible renters (and probably a bit dependent on how impacted your area is by covid), people are going to pay if they can but would I choose right now to get into the business with so much uncertainty? Probably not. Its definitely not a hands off way to put your money to work.

Something I have been tossing around the idea of as I realize more and more how much I hate dealing with tenants is hard money lending.... lending money to other proven real estate investors for short term deals that are backed by the property they're building or rehabbing. Aside from vetting the borrower, that's a much more hands off way to get into real estate.

[amarowsky]

I have to admit to being intrigued by closed end funds. But I"m still hooked on real estate.

It took me a while to get more comfortable with these... Seemed like a lot of "too good to be true" (at least for my modest expectations of the stock market and risk/return). But I dipped my toe in nearly a decade ago now (I think) and the water has been quite inviting for a small-modest investment.

Real estate is my other answer to this (income producing asset, outside of the public equities market). I'm super thankful that both of my tenants are still paying rent. I even postponed the pre-determined "rent hike" on one of the houses, as the times are tough. We reached out to one of the tenants right away to make sure "he was ok to pay". He got plugged into unemployment right away when Michigan got locked down. So I think there may have been a "slight delay" in one months payment. But he got back on track right away.

I should note, our rents are fairly modest, and very very very competitive (as to keep vacancy's away) @ $1000 & $1250 / mo. And we're also fortunate enough to have paid ours off already. (I would not be able to sleep so well if I leveraged as HxC as some RE investors do....). That type of greed invites a ton of risk, and thankfully I'm just not that interested in "more money" @ that type of risk cost.
There are not so many opportunities to buy R.E. where I'm at now. But this intense housing "melt up" leaves me kinda baffled.... It'll be interesting when these subsidies and cash hand outs dry up. I just hope.... Not as many lose everything, like it was back in 2008. That was a nightmare for the poverty class....

[kork13]

And we're also fortunate enough to have paid ours off already. (I would not be able to sleep so well if I leveraged as HxC as some RE investors do....). That type of greed invites a ton of risk, and thankfully I'm just not that interested in "more money" @ that type of risk cost.

Yeah, that's basically my thought as well.... Now that we've gotten our first rental & our primary homes both paid off, there's no way we're ever going to subject ourselves to the risk of a mortgage again. Having the rental paid off makes 1-2 months of vacancy or a medium-large repair a relative non-issue, because the only ongoing costs we have are the annual taxes & insurance, so cash flow and saved rents can cover everything no problem. Our next rental (if we don't transition our current home) will be bought in cash in 3-5 yrs to preserve that security. It's slower growth, but WAY safer.

[LivingAlmostLarge]

It took me a while to get more comfortable with these... Seemed like a lot of "too good to be true" (at least for my modest expectations of the stock market and risk/return). But I dipped my toe in nearly a decade ago now (I think) and the water has been quite inviting for a small-modest investment.

Real estate is my other answer to this (income producing asset, outside of the public equities market). I'm super thankful that both of my tenants are still paying rent. I even postponed the pre-determined "rent hike" on one of the houses, as the times are tough. We reached out to one of the tenants right away to make sure "he was ok to pay". He got plugged into unemployment right away when Michigan got locked down. So I think there may have been a "slight delay" in one months payment. But he got back on track right away.

I should note, our rents are fairly modest, and very very very competitive (as to keep vacancy's away) @ $1000 & $1250 / mo. And we're also fortunate enough to have paid ours off already. (I would not be able to sleep so well if I leveraged as HxC as some RE investors do....). That type of greed invites a ton of risk, and thankfully I'm just not that interested in "more money" @ that type of risk cost.
There are not so many opportunities to buy R.E. where I'm at now. But this intense housing "melt up" leaves me kinda baffled.... It'll be interesting when these subsidies and cash hand outs dry up. I just hope.... Not as many lose everything, like it was back in 2008. That was a nightmare for the poverty class....

Maybe but you are also investing still in RE by not selling. But to own RE without leverage do you think that's why you do it?

[bjl584]

I own a monthly paying dividend fund.
I've had it for years but have always reinvested the dividends back into it.
That's about the only income investing that I have at the moment

[disneysteve]

For example, in the partner programs Crypto & Bitcoin, ordinary investments

Those are not income producing investments. They are pure speculative purchases.