FIRE vs "younger boomers" (or Gen X) not really different except the age you started concentrating on your retirement goal
Rental Income Property
- You own the properties
- Appreciation belongs to you.
- Rental Income stream belongs to you.
- You can make changes as your situation changes or you see changes in your "business model." (Location, multi- or single family, etc.)
- You decide when to sell or buy a property
A. If you are in a position where you have plenty of spare time and need some challenges, that might be ideal.
B. If you have a job or business that requires e.g. 60 working hours or more every week, realistically you will have to find someone you trust to delegate the property management responsibilities.
C. Or if property management is not your wheelhouse.
- Geographic market(s)
A. If you live in a modestly priced real estate market, you might realistically acquire, over time, multiple properties. Multiple properties would be a form of diversification as opposed to having one very large tenant, e.g. an office building with only one tenant.
B. But if you live in a high-priced area e.g. New York, San Francisco, just generating the financial ability to buy one rental property could be a large challenge
A. Unlike broader financial markets, selling a property "every business day that markets are open" is not a trivial matter.
B. And real estate prices might fluctuate broadly, putting you in a difficult situation if you need to cash out for any pressing reason.
- Index or actually any broadly available funds can typically be bought or sold any business day at market price
- So they require minimal time to "manage," unlike the time necessary for real estate property management
- If you are investing in "broad market" Index Funds, arguably that comparison is not "apples-to-apples." It is not even "apples-to-oranges." it is more like "apples-to-socket wrenches!"
- But in theory you could invest in market-based funds whose underlying asset is real estate, even residential rental property.
- The advantages might still be better liquidity and less management time required.
- When you own an actual property, you decide what is in your best interests regarding the ultimate buying and selling of that property.
- That control would remain in the hands of fund management, not you, if you go the funds route
- When you own a piece of real property 100%, i.e. yourself, you take on all the risks but you also take on all the rewards. You would have to read prospectus or other offering documents carefully to understand what portion of income and / or appreciation is kept by the fund and what gets distributed to investors.
Can work both ways. Owning real estate can have tax advantages. If you are employed and can put significant amount away in a 401(k) or the like, doing the after-tax arithmetic could be illustrative
Depending on your situation, you might start out with some of each and see which fits your situation best.