Why Real Estate

Why Real Estate

Why Real Estate.

Here are several reasons that I have chosen real estate as my go to investment.  It is not my only investment, but it is and will continue to be the bulk of my investment.  I have also included the downsides for balance.

Upsides  

  1. I have a tangeable asset.  Something I can touch and feel rather than paper equity.
  2. With the tangeable asset, I am in control and I choose how to deal with any issues.  Not some CEO that may have other interests such as his own self interest.
  3. Relatively safe.  Historically real estate has always performed reasonable well in a longer term in non singular-industry cities.
  4. Leverage.  With the relative safety of the investment vehicle and the ease of leverage.  I find it to be the best, safest and easiest investment vehicle to leverage.
  5. I have found my like minded network of people to help me along the way.  I have advice from people who actually know what they are talking about from experience, not because their grandfather said it once in 1973.
  6. I can minimize the downsides listed below.
  7. It is replicable and repeatable.  I can hold onto a property for a period of time and after some mortgage paydown, increase in rents and market appreciation, I can re-finance and then duplicate the situation and therefore duplicate my gains.
  8. I can help others invest so we both benefit from everything listed above.

Downsides.

  1. Bad tenants (not paying rent, damage, neighbor complaints)
  2. Market down turns (If the investment is not cashflowing and unable to ride out for the long term)
  3. Not a fast turnaround
  4. Not very liquid
  5. Difficult entry barriers
  6. Large sums of money for every investment
  7. You might get the urge and be able to retire early.  Awe, shucks

My take

I am trained in how to minimize any issues that come up from the “Downsides” column.  With a cashflowing property, you can ride out any other issues that come up such as market corrections.  I am in it for the long term and that will flatten pretty much any of the downsides.

I often hear “I don’t want to go and unclog a toilet at 2am”.  Neither do I but once a year for $11k/year plus market appreciation I will.  I would unclog ten, if I could for that price. I would hire someone to do it for me, pay them $3K/year and net the extra $8K and do it 100 times.  Think about it.