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URL:  http://boards.fool.com/i-too-would-not-try-to-fit-your-rentals-to-some-29872549.aspx

Subject:  Re: Asset allocation Date:  2/26/2012  4:27 PM
Author:  Incomeonly Number:  70222 of 75340

I too would not try to fit your rental(s) to some kind of asset class to be rebalanced periodically as the tide on a particular assets comes in and goes out.

Rather, I'd look at net rental income as you look at Social Security or an employee pension...its a source of cash flow. What makes it a bit different is the net cash flow to you could vary, depending on occupancy rates, unexpected maintenance costs, etc. So I would pick a conservative 'average' net monthly income you'd expect from your rental, while keeping a rental 'emergency fund' to cover unexpected expenses...and then replace it if you have to use it.

Lets look at an example, where you and spouse will be drawing, combined, $30,000 from SS and a gross of $35,000 from your rentals, with $10,000 in rental expenses for a net of $25,000:

Required Gross (before tax) househodl income in retirement: $100,000
Social Security:.............................................-30,000
Net Rental Income: ..........................................-25,000
Required from investments: ...................................45,000

Now, asset allocate investments to generate the $45,000/yr you require.

BruceM
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