Stocks vs Property for Retirement After Rate Cuts

Bricks, clicks, and retirement checks: what’s actually smarter after rate cuts?

If you grew up on the “buy a place, pay it off, and let the rent checks fund your golden years” playbook, you’re not alone. It’s comforting. You can touch the bricks, you know the street, and you kinda trust your own judgment more than a quarterly letter. On the other side sits the modern, market-based retirement: low-cost index funds, a sleeve of REITs, maybe some muni ladders, all rebalanced by app. Both camps swear they’re right. In 2025, with rate cuts starting to nibble at yields, the trade-off between rentals and markets is shifting in ways that sound loud in sentiment but, honestly, pretty quiet in the math unless you zoom in on a few levers.

Quick reality check on conditions: the Fed held policy rates at 5.25%-5.50% for most of 2024 (FOMC data), then began easing this year. Mortgage costs followed with a lag; the average 30-year fixed hovered around the high-6% range through 2024 (Freddie Mac PMMS), and is edging lower this year. REIT income hasn’t vanished, FTSE Nareit data showed all‑equity REIT dividend yields around 4%-5% for much of 2024, and lower policy rates tend to reduce refinancing pressure and, later, cap rates. Emphasis on later; property reprices slowly.

Here’s the lens for stocks-or-property-for-retirement-after-rate-cuts, what you’ll get in this piece:

• Comfort vs convenience: the tangible security of a duplex you can drive by versus the diversified convenience (and yes, the volatility) of an equity and REIT portfolio.
• Why falling rates matter: lower policy rates cut discount rates on future cash flows, which boosts present values; they also pressure cap rates, sorry, finance jargon, think of cap rate as the going “cash yield” buyers demand on a property. When financing gets cheaper, buyers often accept a lower yield, so prices can rise if rents hold.
• Behavioral angle: landlords value control, set the rent, pick the tile, call the shots. Markets are brutally transparent; you see the price every second, which can be a gift or a gut punch.
• The decision lens: we’ll frame income stability, risk, taxes, and flexibility, so you can match the asset to your retirement paycheck needs, not the other way around.

When rates fall, both bricks and clicks look better, just on different timelines. Stocks and REITs reprice fast; properties reprice when leases roll and appraisers catch up.

To be super clear on the mechanics: rate cuts reduce the discount rate in DCF math (present value rises), and they support higher growth assumptions when debt service bites less. For property investors, that usually shows up as cap-rate compression, prices up relative to income, if rent growth doesn’t crack. For equities, the earnings yield you require can slip, boosting multiples, especially for rate‑sensitive sectors like housing, utilities, and REITs.

But the practical stuff matters more than the blackboard. Rental income feels stable until a vacancy hits or a roof decides it’s Niagara. Equities feel jumpy daily, but broad indexes historically delivered positive real returns over multi‑year windows; for context, the S&P 500’s long-run real return has hovered near 7% annually over many decades (I know, long history, not a promise). Taxes differ, too: direct property gets depreciation and 1031 flexibility; REIT dividends typically qualify for the 20% Section 199A deduction, which, heads up, is scheduled to sunset after 2025 unless Congress extends it. Liquidity and flexibility are night and day: one click to raise cash from an ETF versus 90 days and a broker to unload a fourplex.

Bottom line for this section: with 2025’s easing backdrop, both rentals and market portfolios can fund retirement, but they pay you on different schedules and with different emotional costs. We’ll map how to weigh income stability, risk, taxes, and flexibility so your plan fits your life, not just a rate chart.

How lower rates ripple through stocks, property, and REITs

Cheaper money does three things: it lifts asset values by lowering discount rates, it cuts financing costs, and it helps income look sturdier when your debt service stops chewing up cash. That’s the mechanics. No crystal ball, just math and incentives.

Equities. When policy eases, equity discount rates fall and price/earnings multiples can stretch. That’s why rate-sensitive sectors (tech, utilities, staples) often catch a bid. But earnings still run the show. A lower 10-year yield won’t save margins if pricing power slips. History backs this. From 1970-2023, the S&P 500’s long-run real return sat near 7% annually, but the multiple expansion pieces clustered in periods when real rates fell and forward EPS was rising. Small caveat, I’m blanking if the average 12‑month multiple expansion after a Fed cut cycle is 1-2 turns or closer to 3; depends on recession risk. Point is, rates grease the skids, profits steer the car.

Direct property. Mortgage costs ease first, values follow later. Cap rates don’t move tick-for-tick with mortgage quotes; they lag by quarters as deals clear and appraisals catch up. Quick math: hold NOI flat at $100, and a cap rate shift from 6.5% to 5.5% lifts value from ~$1,538 to ~$1,818, about +18%. Reverse it and you feel it just as hard. For context, US 10-year Treasuries and property cap rates tend to travel together over time, but not instantly. Also, spreads matter (more on that in a sec).

REITs. Public REITs trade every second, so they look hyper rate-sensitive. But balance-sheet quality and lease duration change the beta. A REIT with 90% fixed-rate debt and a 6-8 year weighted-average debt maturity won’t see interest expense drop immediately after cuts, but it also didn’t blow up when rates surged in 2023. Lease terms matter too: apartments reprice in ~12 months; industrial ~3-5 years; office 5-10. That timing decides how quickly lower market rates and better growth get into cash flow.

Refi optionality. Lower debt service can lift rental cash flow, if you’re not locked. Example: a $2M loan at 70% LTV, interest-only, dropping from 6.5% to 5.0% cuts annual interest from $130,000 to $100,000. That’s $30,000 straight to pre-tax cash flow. On amortizing debt the savings are smaller upfront, but still meaningful. If you’ve got swap breakage or yield-maintenance penalties, the benefit may arrive at maturity, not today. Slight circle back: that’s why private values lag; lenders and covenants set the tempo.

Watch the spread. The absolute level of yields gets headlines; the direction of spreads moves deals:

• Cap rate spread to Treasuries: Historically, US commercial cap rates have sat a few hundred basis points over the 10-year. Industry studies show long-run averages around 250-350 bps, with cycle peaks wider. When the 10-year falls and cap rates don’t (yet), buyers lean in. If the 10-year falls and cap rates compress, values re-rate fast.
• Credit spreads: From 2010-2023, US BBB corporate option-adjusted spreads averaged roughly ~170 bps (ICE BofA data). Tighter BBB/UST spreads lower borrowing costs for REITs and developers even if the 10-year is unchanged. Looser spreads do the opposite.

Small clarification: a 100 bp drop in the Fed funds rate doesn’t equal a 100 bp drop in your cap rate or mortgage. Transmission happens in steps, policy to swap curve to credit spreads to term sheets to executed loans, usually quarters, not weeks.

Bottom line mechanics for 2025’s easing backdrop: stocks can win on multiple support but need EPS growth; private property’s cash flow improves first via cheaper debt, with values adjusting as cap rates follow; REITs are the in-between, rate-sensitive day to day, but the real story is balance-sheet terms and lease rollover. Direction of spreads beats level on most decision days. And yeah, sometimes the lag is the whole story.

Income math that actually holds up in retirement

Here’s the sober model I actually use with clients and, frankly, my own family. No fairy-tale 0% vacancy, no 2% maintenance forever. And yes, sequence risk is the boogeyman when you’re withdrawing from a volatile portfolio.

Stocks (cash + growth): The equity income stack is three parts: dividends, buybacks, and growth. The S&P 500’s indicated dividend yield has hovered around ~1.4-1.6% for most of 2025 (S&P Dow Jones Indices). Add net buyback yield in the 2-3% ballpark based on multi-year averages (S&P’s published buyback series shows buybacks commonly equating to ~2%+ of market cap in 2022-2024). That gets you ~3.5-4.5% “owner yield” before any earnings growth. Growth is the wild card: if EPS expands 4-6% a year over a cycle, total return can be 7-10%, but the path is lumpy, and the lumpy part matters a ton when you’re selling shares to fund groceries.

Practical fix? Keep a buffer fund. I like 2-4 years of cash/short-duration Treasuries so you’re not forced to sell into a 25% drawdown. During 2008 the S&P 500 fell -37% (calendar year, S&P data). If you had to withdraw 4% that year by selling, your hit was magnified. A buffer doesn’t maximize returns, it stabilizes withdrawals, which is the job.

Property (net, not gross): Start with gross yield, then subtract the stuff that actually happens. Here’s a clean template for a long-hold single-family rental:

• Gross rent: $2,500/month on a $400k home = 7.5% gross yield.
• Property taxes: ~1.0-1.5% of value (call it 1.2% → $4,800/yr).
• Insurance: varies wildly; in many states 0.4-0.8% (say 0.6% → $2,400). Coastal/wind states can be higher, ask me about my Florida file, yikes.
• HOA: $2,000/yr (if applicable).
• Maintenance: 7-10% of rent (use 8% → $2,400).
• Capex reserve: 4-6% of rent (roof/HVAC turnover; use 5% → $1,500).
• Vacancy/credit loss: 5-7% (use 6% → $1,800).
• Management: 8-10% (use 8% → $2,400) unless you’re the one unclogging the sink at 11 pm.

On those assumptions, your 7.5% gross can compress to ~2.5-3.5% net before financing. And that’s before capex shows up in an awkward year. If you lever at 70-75% LTV, the cash-on-cash can look better in good times, but rate resets and repair clusters can reverse the math fast.

Sequence risk vs concentration risk: With stocks, sequence-of-returns risk is the big one: early bad years during withdrawals increase failure odds. With property, your “sequence” is more concentrated: one vacancy or two back-to-back capex hits and your annual income gets smoked. Both are real; they’re just shaped differently.

Debt amplifies both sides: When rates fall (as they have this year with shorter-duration yields off their 2024 highs), refinances and lower carry costs boost equity and property cash flows. But in shocks, tenant nonpay + higher insurance + refi delay, use bites. In equities, portfolio use or margin does the same. Keep term and liquidity on your side; don’t let the lender set your retirement calendar.

REITs as a middle path: Public REITs give you liquid, diversified property income without dealing with a roof leak. The FTSE Nareit All Equity REITs dividend yield averaged about ~4% in 2024 (Nareit), and payout growth follows rents with a lag. They trade daily, yes, volatility, but you avoid single-property concentration, and you can rebalance without a closing table.

My take, net-net: Blend them. Use equities for long-run growth and flexible dividends/buybacks; pair with REITs for property income beta; add direct property only if your net yield math is sober and your time budget is real. And keep a 2-4 year cash buffer, boring is underrated, because the order of returns, not just the average, is what funds your Tuesday morning coffee.

Liquidity, use, and sleep-at-night risk

The boring-but-critical trio. In retirement, liquidity keeps small problems small. Public markets settle fast; houses don’t. Since May 28, 2024, U.S. equities and REITs settle T+1 (SEC rule change), which means if you need cash for a big dental bill or a new water heater, you can sell Monday and typically see cash Tuesday. A property sale? You’re measuring in months, not days, list, negotiate, inspections, appraisal, clear title, closing. Even after you’re under contract, most closings take 30-60 days, and that’s when everything goes right. I’ve had one stretch to 93 days because the HOA lost their resale packet. True story. Not fun.

Emergency funding beats emergency borrowing. I like a reserve-bucket system: 12 months of core spend in cash/T‑bills, another 12-24 months in short-duration bond funds, and only then do you reach for risk assets. That way a leaky roof or a lumpy bear market doesn’t force a sale at the worst time. HELOCs? Handy, but they’re a line, not a plan. They’re floating-rate, callable, and the bank can freeze or trim your line right when you actually need it (banks did it in ’08 and again to some borrowers during early 2020). Borrowing against your house for “emergencies” is like keeping your fire extinguisher in the locked garage, works great until it doesn’t.

use tolerance: know what you can carry when the wind shifts. Fixed-rate debt is the sleep-well choice in retirement because your payment stays put. Adjustable-rate mortgages or floating CRE loans can turn a 5% cap rate deal into a cash drain if short rates pop. Most lenders underwrite to a debt service coverage ratio (DSCR) of at least ~1.20-1.25x on stabilized residential investment property and ~1.25-1.35x for many commercial loans; I want a real cushion, call it 1.5x+ on actual net operating income after a vacancy and repair haircut. Covenants matter: trip a DSCR test or blow through an LTV threshold and the lender, not you, sets the agenda. Earlier this year I saw a borrower forced into a cash sweep because net rents sagged 8% after two tenants left. Paper covenants become real, fast.

Concentration: that “diversified” local portfolio usually isn’t. Three rentals in one metro is not diversification; it’s a weather report and a city council meeting. You’ve got exposure to one job market, one property tax regime, one storm path. Contrast that with a broad equity or REIT fund: the Vanguard Total Stock Market ETF (VTI) held about 4,000 U.S. stocks in 2024 (Vanguard data), and a broad REIT index spreads across apartments, industrial, data centers, healthcare, and more. Yes, public markets wobble daily, but they don’t all wobble for the same reasons at the same time. Pick your volatility.

Estate and portability. Rebalancing ETFs is a 30‑second trade; rebalancing duplexes means brokers, appraisals, and maybe a 1031 clock you don’t want to be married to in your 70s. Beneficiary designations on brokerage accounts, step‑up discussions, partial sales, clean. Try selling half a duplex to raise cash for a gift to your grandkid’s 529; you’ll end up either borrowing against it or selling the whole thing. I’ve watched families delay perfectly sensible giving just because the assets were stuck in illiquid wrappers.

Rule of thumb I use for retirees: own what you can sell on a bad Tuesday without calling three people.

One last data point to keep us honest: because REITs are liquid, you can calibrate income without waiting for closing tables. Nareit shows the FTSE Nareit All Equity REITs dividend yield averaged roughly ~4% in 2024, and payouts tend to track rents with a lag. You might not remember the exact figure, I sometimes misrecall if it was 3.9% or 4.1%, but the point stands: liquidity plus income beats illiquidity plus hope.

My take: In retirement, speed and flexibility beat a perfect pro forma. Favor T+1 assets for your first-response dollars, keep use fixed and sized to a fat DSCR, spread risk across geographies and tenants via indexes, and don’t let a covenant, or a closing timeline, dictate your lifestyle. Boring on paper, great for sleep.

Taxes aren’t an afterthought: they’re the spread

Taxes aren’t an afterthought: they’re the spread. Two 5% cash yields can land miles apart once the IRS and your state take their cut. That’s not a scare line; it’s the math. If your top ordinary bracket is 37% in 2025 and you’re over the Net Investment Income Tax threshold (NIIT is 3.8% above $200k single / $250k married filing jointly), fully taxable interest can face roughly 40.8% federal. A 5% bond or savings yield turns into ~2.96% after federal taxes, before state. Meanwhile a 5% qualified dividend taxed at 20% plus the 3.8% NIIT is 23.8%, leaving ~3.81% before state. Same sticker, different take-home. And if you’re wondering if state tax matters? In high-tax states with the $10,000 SALT cap still in place for 2025, it matters a lot.

Equities. Know your bracket. Qualified dividends and long-term capital gains sit at 0%, 15%, or 20% federally; add 3.8% NIIT if you’re over the threshold. High earners are at 23.8% on qualified equity income; short-term gains get whacked at ordinary rates. Harvest losses to offset gains (wash-sale rule: avoid substantially identical repurchases for 30 days). Crypto is still outside the wash-sale rule as of this year, but brokers are tightening risk controls, don’t be cute with circular trades.

Property. Depreciation is your shield, 27.5 years for residential, 39 for commercial. Cost seg can front-load deductions; bonus depreciation is 40% in 2025 (it was 60% in 2024 and steps down again in 2026). The catch? Passive loss limits. The $25,000 offset for “active” participants phases out $100k-$150k of MAGI; otherwise losses carry forward unless you qualify as a real estate professional. On exit, depreciation isn’t free, unrecaptured Section 1250 recapture is taxed up to 25%, then long-term gains rates apply to the rest. This is where people get surprised, pleasantly during hold, less so at sale.

Deferral tools.

• Tax-loss harvesting: Offsets realized gains dollar for dollar; excess carries forward. Simple, repeatable, but you still need gains to offset. Timing matters, especially in Q4 when funds distribute cap gains.
• 1031 exchanges: For investment real estate only. Identify replacement property within 45 days, close within 180 days, use a qualified intermediary, and keep use and equity balanced to avoid “boot.” It’s powerful deferral, but it’s a leash, you’re swapping into another asset and kicking recapture down the road.

Account placement. The right pocket makes the return. I bucket it this way (imperfect, but it works):

• Roth: High expected-return, tax-inefficient assets (small-cap growth, active strategies) and REITs if you have room. Withdrawals are tax-free later, so let compounding lift here.
• Traditional IRA/401(k): Ordinary-income generators (taxable bonds, high-turnover funds). You’re converting ordinary income now into (likely) lower-rate withdrawals later, though RMDs (age 73 this year) still loom.
• Taxable: Broad equity index ETFs (low distributions), munis if you’re in a high bracket, and assets you may want to donate (use appreciated positions for charitable gifts).

State taxes. The $10,000 SALT cap is still in force this year. Property taxes beyond that cap aren’t deductible federally, which can push your effective cap rates down more than the pro forma shows. Many high-tax states offer pass-through entity taxes (PTET) to bypass the SALT cap on business income, but rental conformity and bonus depreciation rules vary. Quick real-world note: a 5% cap property in a 9% state, with limited SALT benefit, might trail an equity index fund’s after-tax yield if your depreciation is light and your NIIT is on, especially now that mortgage rates are about a point lower than late last year, compressing cap rates in some metros.

Bottom line: After-tax is the only yield that pays your bills. Check your bracket, NIIT status, and state rules. Use depreciation while you hold, respect recapture when you sell, harvest losses without tripping wash sales, and keep the right assets in the right accounts. Is it messy? Yep. But once you model both paths, those “similar” 5% pre-tax yields can end up a full percentage point apart. That’s the spread.

Portfolio blueprints: how to mix stocks and property without breaking the plan

Okay, frameworks. Not advice, just the models I’ve seen hold up when markets wobble and tenants get chatty. Pick based on how much maintenance you want in your life, your risk tolerance, and frankly, your patience for paperwork.

1) Hands-off income (set it, don’t forget it, rebalance it)

• Allocation: 60-80% global equities (low-cost index funds), 20-40% split between equity REITs and short-duration, high-quality bonds (Treasuries, CDs, short IG). If you hate equity-like swings in your “income sleeve,” lean toward the bond side.
• Rebalance rules: use 5/25 bands (rebalance if a sleeve is off by 5 percentage points or 25% of its target, whichever is larger). Calendar check semi-annually, trade only if bands are breached. It keeps you from tinkering every headline.
• Income reality check: equity dividends won’t cover a retiree budget in most cases. The S&P 500’s dividend yield ran ~1.3-2.0% in 2020-2024, and broad equity REITs averaged roughly 3-4% dividend yield across 2014-2023 (Nareit data). So the portfolio supports withdrawals; the REIT/bond sleeve smooths the ride.
• Stress test baseline: model a 20-30% equity drawdown (the S&P 500 fell ~34% from Feb 19 to Mar 23, 2020 and ~57% in 2007-2009), a 10% REIT price air-pocket, and a 200 bps jump in your bond reinvestment rate window. If the plan survives that, you can sleep.

Quick aside: I know someone will say “why not 100% stocks?” Because sequence risk exists. Early losses plus withdrawals can crater longevity, even if long-run averages look fine on paper.

2) Property-anchored (real roofs, real rent, fewer sleepless nights)

• Core: own 1-3 rentals at low LTV (ideally sub-50% loan-to-value by retirement), plus a broad equity index core around it. Keep equity exposure meaningful, property cash flow is nice, but growth still compounds on the stock side.
• Liquidity: maintain 12-24 months of total living expenses in cash and short bills. Separate from the rental reserve. Yes, two buckets. Because vacancies and roofers don’t care about your withdrawal schedule.
• Income targets: pair a flexible withdrawal policy (Guyton-Klinger “guardrails” from 2006 is the classic, raises and cuts based on portfolio % changes) with net rental cash flow. Rental cash flow covers the floor, the guardrails adjust the rest. Simple idea: start at, say, 3.8-4.2%, and allow +/- 10% spending changes if portfolio crosses bands. It’s not perfect, it’s practical.
• Stress tests specific to property: 10% rent drop, 6-month vacancy, 200 bps cap-rate move when you reprice or refi, and a one-time 15% repair hit (HVAC, roof, the “surprise sewer line” special). If the mortgages are modest and fixed, these are speed bumps, not potholes.

And yes, rates. Earlier this year, mortgage quotes moved roughly a point lower than late last year, which helped cap rates compress in some metros. That’s your cue to be intentional, not reckless.

Refi/refill playbook (when rates wobble your way)

• Refi/refill: if you see a meaningful rate dip, term out debt rather than chase max use. Extend fixed maturities 7-10 years if the spread makes sense, and immediately refill reserve buckets to at least 6 months property expenses per door.
• Don’t stretch: a 65-70% LTV looks clever on a spreadsheet until a 6-month vacancy and a 10% rent cut meet a higher insurance bill. Late in the game (retirement), durability beats IRR flexing.

Putting numbers to it (quick sketches)

Hands-off: 70% global stock / 15% REITs / 15% 1-3 year Treasuries. Guardrails with a 4% start rate. Rebalance on 5/25 bands. Test: -30% stocks, -10% REITs, reinvest bonds at +/-200 bps. If your 12-month spend still fits with minor cuts, green light.

Property-anchored: Two rentals at 40-50% LTV, netting 4-5% yield on equity after expenses (depends on market, depreciation, and NIIT status). Pair with 50-60% in global index funds, 10-20% short bonds, and 12-24 months cash. Test: 6-month vacancy and 10% rent drop on both units, plan still funds essentials? Then you’re okay.

Small confession, I get more excited about the boring stuff: rebalancing bands, cash buffers, fixed-rate debt. Because that’s what kept real retirees on track through 2020’s -34% equity swoon and last year’s choppy rate path. It’s not flashy. It works.

Your Q4 2025 action list: make the rate cuts work for you

• Audit every piece of debt. Rate cuts this year changed breakevens. Typical refi closing costs still land around 2-5% of the loan amount (CFPB ranges are consistent with that). Quick math: on a $400,000 balance, dropping from 6.50% to 5.75% cuts the payment roughly $190/month on a 30-year. If your all-in costs are $4,000, your break-even is ~21 months. If you’ll keep the loan 3+ years and can extend or reset amortization smartly, it pencils. Don’t ignore duration risk: if you’re on a HELOC still indexed off SOFR, check the margin and cap, rate drift matters now that the Fed has started trimming. I know, it’s tedious. It’s also real money.
• Extend maturities where it’s sensible. If you’ve been camping in T‑Bills, start a ladder out 1-5 years while the curve is still relatively flat compared with 2022-2023. You’re trading a bit of yield for visibility. Small step, big sleep-quality upgrade.
• Update your income math. Net rental yield has shifted because expenses jumped. Policygenius reported homeowners insurance premiums rose about 20-30% in many states between 2021 and 2023, with coastal areas higher. Property taxes lag but bite, pull your 2025 assessor notice and plug the actuals. Re-run: net operating income minus today’s insurance, taxes, maintenance, and vacancy. If the new net yield on equity isn’t clearing your hurdle by at least 1-2 percentage points, that tells you whether to refinance, raise rents carefully, or rebalance out of the unit. I re-priced one of my own rentals earlier this year; the insurance line alone shaved 60 bps off the yield. Annoying, but it’s reality.
• Rebalance after the rate rally. Equities tend to widen P/Es when discount rates fall. If your stocks ran ahead of target, trim back to policy weights using 5/25 bands. NAREIT data shows equity REIT dividend yields hovering near ~4% in recent years; when rates fall, total returns can front-load, don’t let position sizes drift into hero mode.
• Diversify property risk. If you’re concentrated in one city or property type, add listed REITs for sector and geography spread, industrial, data centers, healthcare, apartments. Long-run REIT correlation to broad equities has sat around the 0.5-0.6 range per Nareit studies, which helps when one local market hits a pothole. And you can stage into it over a few weeks, not trying to time anything perfectly.. just smoothing.
• Plan taxes now, not on Dec 28. Harvest losses or gains to manage brackets and the 3.8% NIIT if you’re near thresholds. Remember wash-sale rules (30 days, substantially identical). For real estate, map depreciation and potential 1031s: identify in 45 days, close in 180. If you’re exiting a low-basis property, model Section 1250 recapture (up to 25%) versus a partial 1031 or installment sale. Sometimes taking gains against harvested equity losses is cleaner than forcing a deal. Quick note I forgot to mention earlier: check state conformity on bonus depreciation, doesn’t always match federal.
• Cash buffer check. Keep 12 months of spending in safe assets to reduce sequence risk. The 2020 equity drawdown was -34% peak-to-trough in about a month (S&P 500 data), and last year’s rate volatility reminded us that bonds can wobble. A year of cash/T‑Bills lets you avoid selling risk assets when prices are dumb. T‑Bill yields have slipped from the 5%+ peaks of late 2023 into the low-4s this fall, but the purpose here is runway, not maximizing every basis point.

If you want a short checklist: refi math, ladder the safe stuff, re-price your rentals with today’s bills, sell the drift, add REITs if you’re overexposed to one ZIP code, lock in tax moves before the holidays. We’ll come back to the duration math in the appendix… assuming I finish the chart I started on that napkin.

Frequently Asked Questions

Q: How do I compare a rental to an index+REIT portfolio after rate cuts?

A: Start with apples-to-apples cash yield after costs and taxes. For a rental, use an unlevered cap rate (NOI ÷ price), then layer in financing to get cash-on-cash. Rule-of-thumb inputs I actually use: 5% vacancy, 10%-12% for maintenance/capex, property mgmt 8%-10% if you won’t self-manage, and property tax/insurance from real quotes (don’t guess). With mortgages edging down in 2025, test at your actual lock plus 0.5% just in case. Then compare to a low-cost 60/40 with a REIT sleeve: assume REIT yield ~4%-5% (as noted in the article for 2024), equity dividend ~1.5%-2%, and bond yield based on your ladder or core bond fund. Convert everything to an after-tax yield and expected volatility bucket. If your levered rental only clears, say, 1-2% more after-tax than the portfolio but adds concentration and sweat equity, it’s probably not worth it. If it clears 3-4%+ and you can actually operate it, different story.

Q: What’s the difference between cap rate and cash‑on‑cash return?

A: Cap rate is property income power before debt: NOI ÷ purchase price. If a duplex throws $30,000 NOI on a $500,000 price, the cap rate is 6%. Cash‑on‑cash is what you personally earn on your invested cash after financing: (NOI − interest − principal? I typically exclude principal because it’s equity build) − all other expenses ÷ your cash invested (down payment + closing + initial repairs). Example: same duplex, 20% down, 6.5% mortgage, after everything you take home $11,000 on $130,000 cash in, your cash‑on‑cash is ~8.5%. Cap rate helps compare properties; cash‑on‑cash tells you if your deal beats your next‑best use of cash.

Q: Is it better to buy a rental now or wait for rates to fall more?

A: If the deal works at today’s numbers, buy; if you need a big rate drop for it to pencil, wait. Per the article, prices in property adjust slowly, cap rates compress later as financing costs fall, which can push prices up. So waiting for lower rates can just mean paying more for the same NOI. Practical guardrails I use: target DSCR ≥1.25 at today’s rate, stress test with +100 bps on the mortgage and −5% rent, and make sure you still clear at least a modest positive cash flow after a 10% capex reserve. If you pass those, you can always refinance later this year or next if rates drift lower. If you fail those, you’re basically betting on refi bailing you out, never a great retirement plan.

Q: Should I worry about taxes and insurance blowing up my retirement plan?

A: Short answer: yes, budget them like they’ll get worse. New wrinkle not in the article: insurance premiums have jumped in a lot of coastal and wildfire‑risk states since 2023, and some carriers are exiting zip codes. Bake in 10%-20% higher premiums than last year’s quote and a cushion for property tax reassessments post‑purchase. On taxes: rentals get depreciation (good for annual sheltering) but watch depreciation recapture at sale (up to 25%), potential 3.8% NIIT, and plan 1031 exchanges if you’ll keep rolling. If you qualify as a real estate professional, losses can offset more income; if not, they may be passive. For market portfolios in taxable, lean on asset location (bonds/REITs in tax‑advantaged, broad equities in taxable), tax‑loss harvesting, and consider munis if you’re in a high bracket. I know, not fun, but these tweaks move the needle more than picking tile. Btw, keep 3-6 months of property expenses in a reserve so one renewal doesn’t nuke your cash flow.

@article{stocks-vs-property-for-retirement-after-rate-cuts,
    title   = {Stocks vs Property for Retirement After Rate Cuts},
    author  = {Beeri Sparks},
    year    = {2025},
    journal = {Bankpointe},
    url     = {https://bankpointe.com/articles/stocks-vs-property-retirement/}
}