Is rental income a good mode for providing for retirement?
Yes, but you will have to worry about a number of things.
- Ticket size is big. typically, a house accounts for a large chunk of your money.
- You have to worry about periodic vacancy. Tenants will come and go, depriving you of income.
- You have to look after the maintenance of the property.
- You also have to be lucky with the location of the house you have put on rent. On the other hand, rent gets inflation-adjusted and you get real estate appreciation.
Also, with rental income, you are managing a property yourself. With mutual funds, you can delegate this to professionals and achieve effective diversification.