Thanks! I guess the two factors that are hard for me to determine are the return on investment and the appreciation of the asset. ROI is something I can determine by figuring the costs of operating and owning the rental minus the rent, then dividing that into the purchase price. But the appreciation of the asset is really hard for me to determine. Since I can take depreciation on the rental, that should help me with income taxes, but when I go to sell the property, then I will need to worry about the taxes on the gain after the depreciation. I really enjoy seeing the UK perspective on rentals. I am US based but I think a lot of what you say fits into my situation.
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From what I've heard, I think there are differences between the US and UK property markets. The impression I get is that in the UK, houses are built to last for many decades or even a century+, so the house is where the value is. In the US, I get the feeling that unless you're in a city centre, the value is in the land with houses being of much lighter construction and expected to last a few decades.
The reality is that none of us can see into the future to know how much appreciation you'll get, and some of it will depend on when in the market cycle you sell, but generally real estate tends to be one of the best performing asset classes in the long term. As long as you can afford to keep up with the running costs and regulatory changes, it's probably a safer bet than most other assets !
I want to visit UK sometime because I think it's very cool that many of the houses that people live in daily are older than the existence of the US. The way we treat everything as a throw-away is pretty depressing in this country. I drive a 25 year old car because it works fine, but most folks would never consider driving something that old in the US. Real estate does seem like a good long-term solution. The entry point might be wrong at this time due to the run-up in prices in the US.
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