Rental property can be an alternative way to generate an income stream in retirement. It has other challenges, but maintaining control of the underlying asset and a level of inflation protection are valuable.
Recently shifted from 80% domestic 20% international to 70% domestic 30% international for equities. Reasons were the relatively high cost of US equities and top heavy nature as others have noted.
I like to think of monthly income from rental property as a form of a dividend. While month to month net income can vary quite a bit, over a longer time horizon income from rental property can be predictable.
Interesting observation regarding the midcap stocks that are included in VB. This prompted me to double check that there's no overlap in holdings between Vanguards VO midcap ETF and VB. There does not appear to be based on the respective index each tracks.
Part of our retirement plans (many years down the road) include rental properties. We look at rents collected each month as a sort of paycheck. Unlike an annuity, the initial capital investment is still under your control in the sense that the asset can be sold and moved to something else if you choose to. While many pensions do not have a cost of living adjustment, the market rate for rents will increase over time, and this serves as an inflation hedge. Certainly there are other challenges, and rental properties are not hands off even if a management company is used, however, it can be a nice option for regular cash flow in retirement.
Thanks for the article Steve! I appreciate your writings about rental property. I think I'll stick with a no pets policy. An additional advantage of private real estate ownership is some level of control. Examples include choices about how you'll handle the application process for potential tenants, timing of certain improvements, and potential "sweat equity". I periodically enlist my kids to help with landscaping at our rental properties. It's a decent way for them to earn a little spending cash, provides an opportunity to talk to them about investments and specifically how rentals work, and avoid the cost of a landscaping company as well.
Great topic, thanks for the post. I don't mind paying for healthcare, but would like more bang for my buck. The fact that the US spends more per capita on healthcare than any other country (with mediocre results by most measures) leads me to believe healthcare is costing me more than it should. I recall at a previous company being surprised that colleagues from other countries, who had the same insurance plan as myself, consistently scheduled routine doctor, dentist, eye doctor and other appointments for when they traveled back home every few years. Clearly they felt the value was better elsewhere.
Comments
Rental property can be an alternative way to generate an income stream in retirement. It has other challenges, but maintaining control of the underlying asset and a level of inflation protection are valuable.
Post: Automatic Income stream? How important to you?
Link to comment from June 28, 2026
Recently shifted from 80% domestic 20% international to 70% domestic 30% international for equities. Reasons were the relatively high cost of US equities and top heavy nature as others have noted.
Post: International allocation
Link to comment from January 14, 2026
I like to think of monthly income from rental property as a form of a dividend. While month to month net income can vary quite a bit, over a longer time horizon income from rental property can be predictable.
Post: Dividend Days
Link to comment from July 5, 2025
Interesting observation regarding the midcap stocks that are included in VB. This prompted me to double check that there's no overlap in holdings between Vanguards VO midcap ETF and VB. There does not appear to be based on the respective index each tracks.
Post: Vanguard Small-Cap: What’s in a Name?
Link to comment from July 21, 2024
Great article. I wonder if the annual net income would have increased, particularly when the mortgage was fully paid.
Post: Sleepless in Seattle
Link to comment from July 3, 2024
Part of our retirement plans (many years down the road) include rental properties. We look at rents collected each month as a sort of paycheck. Unlike an annuity, the initial capital investment is still under your control in the sense that the asset can be sold and moved to something else if you choose to. While many pensions do not have a cost of living adjustment, the market rate for rents will increase over time, and this serves as an inflation hedge. Certainly there are other challenges, and rental properties are not hands off even if a management company is used, however, it can be a nice option for regular cash flow in retirement.
Post: Missing That Paycheck
Link to comment from April 27, 2024
A high yield savings account.
Post: What’s the best place to stash money you’ll spend in the next few years?
Link to comment from January 27, 2024
Thanks for the article Steve! I appreciate your writings about rental property. I think I'll stick with a no pets policy. An additional advantage of private real estate ownership is some level of control. Examples include choices about how you'll handle the application process for potential tenants, timing of certain improvements, and potential "sweat equity". I periodically enlist my kids to help with landscaping at our rental properties. It's a decent way for them to earn a little spending cash, provides an opportunity to talk to them about investments and specifically how rentals work, and avoid the cost of a landscaping company as well.
Post: Don’t Get Catty
Link to comment from August 22, 2023
Interest on a car loan.
Post: What costs are you most loath to pay?
Link to comment from April 15, 2023
Great topic, thanks for the post. I don't mind paying for healthcare, but would like more bang for my buck. The fact that the US spends more per capita on healthcare than any other country (with mediocre results by most measures) leads me to believe healthcare is costing me more than it should. I recall at a previous company being surprised that colleagues from other countries, who had the same insurance plan as myself, consistently scheduled routine doctor, dentist, eye doctor and other appointments for when they traveled back home every few years. Clearly they felt the value was better elsewhere.
Post: Bill Him Not Me
Link to comment from October 25, 2021