2 ms·

>It's still possible, depending on what real estate market you look in, and if you're ok buying somewhere out of state and having someone manage it for you. A f

>It's still possible, depending on what real estate market you look in, and if you're ok buying somewhere out of state and having someone manage it for you. A friend who lives in the bay area bought two rental properties in Dallas ~2 years ago and (even with a property manager fee) it's been a great supplement to her income. I've been thinking about doing something similar. From personal experience -- buying in a market you are not familiar with (i.e. you don't live there) inherently increases the riskiness of the investment because you are on the short end of information asymmetry. You may be able to ride momentum, but in aggregate you are signing up to the short end of the bargain. More importantly, what are her after tax returns on capital after the management fees, and what is her leverage? What is the profile of her risk exposure on these properties? Just because the properties are working out for her now from an absolute returns perspective doesn't mean that (a) there aren't better investment options out there, and (b) the risk adjusted returns are good. Just my 2c.

branchless 11y ago
Most amateur landlords do not factor in voids, repairs or the possibility that housing will not rise and rise. Luckily most don't have to factor in opportunity cost because most don't "own" but are in fact highly leveraged. Housing is the only mainstream access to leveraged debt - that's why people love it. Go to your bank and ask to borrow $400K "because you think google's shares will go up". They will say no. But real estate? They love it, especially as it's all back-stopped by the government now. Everyone wants to pile in and exploit other people working to capture some of their labour. What happened to adding value and working hard? Can we all be rentiers? Who will grow the food?
- fsk 11y ago
  >Go to your bank and ask to borrow $400K "because you think google's shares will go up". They will say no. You could buy call options, which include a leverage component. An at-the-money 1 year call option (LEAPs) is a huge leveraged bet that the price will spike. If you are wrong, buy another at-the-money option in a year. But you must be prepared to lose 100% if you are wrong. (Like like you would have lost 100% if you were leveraged to the max on housing in 2008.)
  - branchless 11y ago
    This is why I put "only mainstream". Every time I put that someone like you who thinks options are a way to show financial intelligence comes along.

branchless 11y ago

Most amateur landlords do not factor in voids, repairs or the possibility that housing will not rise and rise. Luckily most don't have to factor in opportunity cost because most don't "own" but are in fact highly leveraged. Housing is the only mainstream access to leveraged debt - that's why people love it. Go to your bank and ask to borrow $400K "because you think google's shares will go up". They will say no. But real estate? They love it, especially as it's all back-stopped by the government now. Everyone wants to pile in and exploit other people working to capture some of their labour. What happened to adding value and working hard? Can we all be rentiers? Who will grow the food?

fsk 11y ago
>Go to your bank and ask to borrow $400K "because you think google's shares will go up". They will say no. You could buy call options, which include a leverage component. An at-the-money 1 year call option (LEAPs) is a huge leveraged bet that the price will spike. If you are wrong, buy another at-the-money option in a year. But you must be prepared to lose 100% if you are wrong. (Like like you would have lost 100% if you were leveraged to the max on housing in 2008.)
- branchless 11y ago
  This is why I put "only mainstream". Every time I put that someone like you who thinks options are a way to show financial intelligence comes along.