I invest in rental properties personally and for my clients. Your concern about “worth the headache” is really the risk / reward question that needs to be answered for any investment opportunity. The headache is managing the risk associated with trying to realize the reward for investing.
An investment is “worth” the total return on the initial investment. While holding the investment, the return may be cash flow, dividends or “coupon” payments (from real estate, stocks and bonds, respectively). Once the investment is liquidated (for a profit or loss) the total return can be determined. With a rental property the net cash flow may be positive or negative during ownership and is the primary consideration for determining worth. If the property provides reasonable net income, the liquidation value should take care of itself.
The “headache” of managing a rental property includes tenant relations, maintenance / repairs and financial management. The support of a skilled property manager in any or all of these areas will provide valuable headache relief. In particular, consider a professional property manager for tenant relations in your cash flow calculations. An experienced manager will collect rents, but more importantly provides better tenants, higher rents, efficient removal of problem tenants and can handle nuisance calls – all while allowing you to maintain a more professional management relationship with your tenants. For maintenance and repair issues, you can choose to outsource or do it yourself. You will need to keep control of expenditures and the bank accounts, but a property manager can help with the bookkeeping headache.
I have found owning a rental property well “worth the headache” if you buy for cash flow sufficient to support a skilled professional property manager – particularly for tenant relations.