3 ms·

what is the doubling time of property vs say an index fund?

by m463 3y ago

mitthrowaway2 3y ago
What interest rate will the bank charge me if I borrow $500,000 from them to invest in an index fund?
the_real_cher 3y ago
I think landlords make 10% to 20% net profit plus 4% increase in property value YOY on average. Maybe drop that down with a few percentage points with a property manager. Still better than s and p 500 index fund over time.
- drgiggles 3y ago
  If you were to buy a property today in any major market, the average unlevered cap rate on leasing residential property is nowhere near 20%. In many cases it’s not even profitable without a significant housing price return assumption.
  - deleted 3y ago
    [deleted]
- bequanna 3y ago
  Not even close to that in the current market. Cap rates are around 4-6%. Only people buying right now are parking money hoping for appreciation, not cash flow.
  - the_real_cher 3y ago
    still 4% to 6% cap rate Plus 4% appreciation? that's pushing as good as s&p 500 index fund. then factor in you have more control over the asset than being at the whims of CEOs and boards of directors.
    - bequanna 3y ago
      Sure, but even if you hire a property management company, multifamily ownership is not really passive like owning SPY. There is the potential for lots of sleepless nights and stress. Also, you may need to contribute capital unexpectedly if repairs are needed or vacancy is higher than expected. The last few years in multifamily are NOT normal. Appreciation and rent growth are not straight lines up and the rough times can be very rough indeed. But, history tells us that if you can hold and maintain a property for at least 7 years, you should not lose money.
amatecha 3y ago
To give some perspective, I owned a condo for ~11 years in a suburb of Vancouver, Canada. I sold it a few years ago for ~double what I originally paid for it. The new home I live in has gone up so much in value in just 3-4 years, I could now sell my current home, buy back the condo I sold a few years ago and then buy a second home at the original price of the one I'm in now. In my eyes this is beyond unreasonable and is blatantly unsustainable, but that's just my opinion of course.

what is the doubling time of property vs say an index fund?

by m463 3y ago

what is the doubling time of property vs say an index fund?

mitthrowaway2 3y ago

What interest rate will the bank charge me if I borrow $500,000 from them to invest in an index fund?

the_real_cher 3y ago

I think landlords make 10% to 20% net profit plus 4% increase in property value YOY on average. Maybe drop that down with a few percentage points with a property manager. Still better than s and p 500 index fund over time.

drgiggles 3y ago
If you were to buy a property today in any major market, the average unlevered cap rate on leasing residential property is nowhere near 20%. In many cases it’s not even profitable without a significant housing price return assumption.
- deleted 3y ago
  [deleted]
bequanna 3y ago
Not even close to that in the current market. Cap rates are around 4-6%. Only people buying right now are parking money hoping for appreciation, not cash flow.
- the_real_cher 3y ago
  still 4% to 6% cap rate Plus 4% appreciation? that's pushing as good as s&p 500 index fund. then factor in you have more control over the asset than being at the whims of CEOs and boards of directors.
  - bequanna 3y ago
    Sure, but even if you hire a property management company, multifamily ownership is not really passive like owning SPY. There is the potential for lots of sleepless nights and stress. Also, you may need to contribute capital unexpectedly if repairs are needed or vacancy is higher than expected. The last few years in multifamily are NOT normal. Appreciation and rent growth are not straight lines up and the rough times can be very rough indeed. But, history tells us that if you can hold and maintain a property for at least 7 years, you should not lose money.

amatecha 3y ago

To give some perspective, I owned a condo for ~11 years in a suburb of Vancouver, Canada. I sold it a few years ago for ~double what I originally paid for it. The new home I live in has gone up so much in value in just 3-4 years, I could now sell my current home, buy back the condo I sold a few years ago and then buy a second home at the original price of the one I'm in now. In my eyes this is beyond unreasonable and is blatantly unsustainable, but that's just my opinion of course.