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The middle class people I know who invested in real estate (say, buying one flat to rent it out) would counter your argument with the following two points (not
by skdotdan 7y ago
The middle class people I know who invested in real estate (say, buying one flat to rent it out) would counter your argument with the following two points (not implying that I'm in favor of investing in real estate):
1 - It does not imply that much work. Not even close. For instance, my uncle and aunt rented a flat for 6 years to the same family, and in that time my uncle had to go there about 1-2 times for minor problems, and I don't think it's an exception. There is a bit of work at the time of finding new tenants, but in the case of the people I know, it's like an average of 4 hours of work a year at the very, very most.
2 - (and most importantly): middle class people who invest in real estate are keen on having a rent. Stocks don't necessarily give you that. They see buying a house and renting it out as a way of having a monthly recurrent source of income.
- DanBC 7y agoIn the UK the average tenancy is about 20 months. This is possibly because English law gives much stronger protection to people in the first 6 or 12 months of the tenancy, or maybe because of the student market. Tenancies are getting a bit longer, and this is possibly because moving home can be one route from the legacy benefits onto Universal Credit (which is usually catestrophic for the claimant.)
- skdotdan 7y agoI see, probably the decision on investing in real estate should depend on the legislation of your country of living.
- tonyedgecombe 7y agoI suspect renting to tenants on benefits is a whole different world to renting to a middle class family.
- dd36 7y agoTenancy lengths are rising in US because rents are sky rocketing due to low inventory.
- mcguire 7y agohttps://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/RRVRUSQ156N https://fred.stlouisfed.org/series/ERENTUSQ176N https://fred.stlouisfed.org/series/ERENTUSQ176N https://fred.stlouisfed.org/series/CUURA422SEHA https://fred.stlouisfed.org/series/CUURA422SEHA (Look at what happens after the dot-com boom.) https://fred.stlouisfed.org/series/HOUST?utm_source=series_page&utm_medium=related_content&utm_term=related_resources&utm_campaign=categories https://fred.stlouisfed.org/series/HOUST?utm_source=series_p...
- dd36 7y agoYeah, so what has happened is institutional investors now dominate the SFR rental market. They ask for 5% rent increases every year and therefore have relatively high turn ratios. It makes it easier for mom and pop investors to hold long term tenants.
- raverbashing 7y ago1 - It depends a lot on type of occupation (is it for a family? for a single person? House, Appt, Condo? Older buildings also might require more maintenance). Also it's not only about work, but cost of maintenance.
- skdotdan 7y agoThat's right, but it's like buying stocks/funds. It's not the same investing in S&P500 Vanguard index fund than investing in an active index fund with high commissions and bad performance. You have to find the right house to invest in (eg. a relatively new flat will probably not give many problems).