The basic problem I see with this scenario is the tail risk.
You're probably going to be just fine. However there is a non-zero (and impossible to calculate) risk that you're going to lose the entire income stream.
Equities / ETFs allow much greater diversification.
The bit which bugs me though is why are you spending 200k a year. Countless studies show that greater income is not linked to happiness above a fairly low level. I refuse to believe the USA is so expensive that this level is $200k per annum. Reductions in living expenses are far easier to guarantee than increased returns.
Where's the risk of losing the entire income stream? Sure, it can burn down, but that's what insurance is for.
Or are we talking about the possibility that your occupancy may fall or rents may fall or maintenance costs may rise to the point where it's no longer profitable? That makes sense.
> The basic problem I see with this scenario is the tail risk.
you don't think that there's a similar risk in the market? sure, you pick how much risk you take when you invest, but i'd say that you're doing the same when investing in this type of real estate -- making a choice to exchange some safety for higher returns.
> The bit which bugs me though is why are you spending 200k a year.
You're probably going to be just fine. However there is a non-zero (and impossible to calculate) risk that you're going to lose the entire income stream.
Equities / ETFs allow much greater diversification.
The bit which bugs me though is why are you spending 200k a year. Countless studies show that greater income is not linked to happiness above a fairly low level. I refuse to believe the USA is so expensive that this level is $200k per annum. Reductions in living expenses are far easier to guarantee than increased returns.