For reference, my wife and I are in our mid-30s, with no kids. We plan to have kids soon. We both work full time.
Things have been going well for us and I recognize that we’re very, very fortunate. We’re beginning to think long-term about how to build wealth for our family. We’ve been saving and investing for as long as we’ve been together (since our mid-20s), but this was mostly untargeted, into index mutual funds. We also own our own home. We have no debt aside from our mortgage.
Our income-to-expense ratio is getting to the point that we hope we can make our money work for us in a more significant way. Right now we save or invest about 15% of our after-tax income. We’re thinking very strongly about buying a small property somewhere outside the city and suburbs to get some rental income. We live in the DC area, and we’re thinking to start very small, looking for something in the range of $60-80K (which would mean at least an hour or two away from DC, most likely). I’m pretty sure we could afford the mortgage for a place this small essentially in perpetuity even without a renter, since we wouldn’t be comfortable buying a place that we couldn’t afford without renters. We’d probably get a local property manager and see how this went for a year before evaluating whether being landlords is something we want to do for a long period of time. If it went well, we’d consider additional properties depending on how our income were to grow and what it could handle.
Is this a reasonable way to start to build long-term wealth, or is it pie-in-the-sky? How risky is it? What are other ways to seriously build wealth, with no more than moderate risk? What else should we be thinking of? What are your experiences?