Comment by jajko
2 months ago
Good insured real estate is always a good safe bet. The best conservative investment that current & few past gens could have done while being completely clueless about stocks, markets, politics etc.
People need to live someplace to be just part of society and also to just survive, plus there is emotional and status aspect. Western construction is lagging behind population growth in popular places plus running / ran out of good space. Do the math.
I've done the math for a bunch of properties family and friends have owned, and they were never beating index funds.
Do the math and you'll find that putting your money in an index fund almost always beats real estate, with much less risk and much less work.
It's easy for one property to underperform the market by a lot. It's hard for an index fund to do the same.
I own a $1.5M rental home in a luxury destination and profoundly regret it. The amount of work I put into it was enormous. I'm not outperforming the market, and I can't sell it because the mortgage rate is 2%.
I've found this to often also be the case, but leverage completely blows these numbers up.
you'd be right if someone was willing to let you lever up 5:1 and bet on index funds. however you can only accomplish this with real estate, and with such leverage the required rate of return is far lower to make it worth it.
TQQQ is 3:1.
Every time I ask people to factor in their time in managing the property (yes, even time spent finding the property to buy counts), they end up way behind.
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Yeah, no one ever accounts for the labor requirements for these projects. If you can earn $100/hr from your career or contracting work, then spending 20 hours per month finding tenants, mowing lawns, fixing plumbing issues, etc, gets expensive fast.
I am not so sure. An article is on the front page of the WSJ (online) about property taxes and insurance becoming more than the mortgage payments.
In parts of the country there's a crash in the works (Sunbelt, Florida in particular).
Where I live renting is substantially cheaper than buying, by thousands a month. You are absolutely better off buying a mutual fund with the difference and enjoying the flexibility of having cash.
I am not so sure what is going on in the housing market, but there is so little inventory in the hotspots, and what appears to be a dump in the no-longer-hot-spots, that it's scarier than buying stocks right now.