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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 clueles

by jajko 2y 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.

mancerayder 2y ago
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.
hiddencost 2y ago
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%.
- rsanek 2y ago
  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.
  - itake 2y ago
    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.
    - webninja 2y ago
      Volatility decay means if QQQ is flat, TQQQ is negative. It also consumes your dividends.
      - itake 2y ago
        How is that different than leveraged RE? If the property value is flat, you’re in the red due to interest.
        webninja 2y ago
        I suppose you could ask ChatGPT or another AI how to calculate Volatility Decay and it would give you a pretty good answer that you can compare against the fixed interest rate of the mortgage. A lazy way to calculate volatility decay might be to add the returns of TQQQ and SQQQ together, divide by 2 then subtract that against QQQ and then subtract out the dividends. But that doesn’t take into account how RE is providing you with shelter and additional SQ footage. If your total mortgage, insurance and taxes are less than renting, which is the case with mine, then there is pretty much no way to be at a loss with real estate. There’s pretty much only upside then over any 3-5 year period.
- itake 2y ago
  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.

by jajko 2y ago

mancerayder 2y ago

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.

hiddencost 2y ago

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%.

rsanek 2y ago
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.
- itake 2y ago
  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.
  - webninja 2y ago
    Volatility decay means if QQQ is flat, TQQQ is negative. It also consumes your dividends.
    - itake 2y ago
      How is that different than leveraged RE? If the property value is flat, you’re in the red due to interest.
      - webninja 2y ago
        I suppose you could ask ChatGPT or another AI how to calculate Volatility Decay and it would give you a pretty good answer that you can compare against the fixed interest rate of the mortgage. A lazy way to calculate volatility decay might be to add the returns of TQQQ and SQQQ together, divide by 2 then subtract that against QQQ and then subtract out the dividends. But that doesn’t take into account how RE is providing you with shelter and additional SQ footage. If your total mortgage, insurance and taxes are less than renting, which is the case with mine, then there is pretty much no way to be at a loss with real estate. There’s pretty much only upside then over any 3-5 year period.
itake 2y ago
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.