I've been thinking about buying a second home and renting it out as an investment; a way to save and invest money for retirement.
I know that many folks are putting money away in stocks and mutual funds, and I wanted to consider alternatives.
The biggest advantage I can think of is that if I purchase a home as an investment, the home has strong intrinsic value; barring a cataclysmic economic crash, it will always be valuable (though the value may go up and down).
The basic idea is to save up a 20% down payment on a property and take out a mortgage, making most of the payments from rental income.
I am aware that this is not without risk. The property can decline in value. A tenant may damage the property or fail to pay rent.
On the other hand, in today's US economy, rental payments are close to mortgage payments, and once the mortgage payments are done, the rental payments can go straight into my pocket. Furthermore, while inflation is likely to raise the rental payments, the mortgage payments will stay the same.
What are the most important facts to keep in mind as I consider this?