Solar Panel Neighborhood by Lauren Wellicome, on Flickr

Murphy’s First Law for Real Estate: Your best tenant will get a job transfer during the worst rental market of the decade.

I make no bones about the fact that I am a fan of investment real estate, particularly rental properties. I have nothing against flip houses; my wife and I simply don’t have the skill set to appropriately deal with them and make them profitable. I’ve arrived at my position through years of experience, and not an insignificant number of mistakes along the way.

In fact, while we have other assets to support us if necessary, our plan for ensuring we don’t get anywhere near our safe withdrawal rate in retirement is to have our living expenses (plus a buffer for budgeting errors) covered by 50% of our rental property income. We do, after all, try to live by the BiggerPockets rules when it comes to expenses and investing in real estate.

Ideally, we could simply hand the rental properties over to a multi-generational property management company, and they’d manage the properties until we rode off into the sunset.

However, at some point, we’re going to get to be too old to deal with rental properties, even in the ultra-passive mode that we’re in and we’ll want to move into safer investment instruments. This will be particularly the case as our cognitive skills decline. We’re not going to want to deal with spreadsheets, cap rates, and the like.

Plus, our property manager is about our age, and we figure she’ll want to retire in her sixties, leaving us potentially up in the air for finding property management at the quality she offers, not to mention the possibility that we won’t even be geographically co-located with our rental property portfolio by then.

To further complicate matters, while we’re in a suburb …read more