Downsides of real estate

[TexasHusker]

1. Illiquidity
2. Risk of depreciation
3. Requires more hands-on attention.
4. Subject to acts of God, bee infestation, and just about anything else your mind can conceive.
5. Repairs, maintenance, taxes, and insurance

[97guns]

Does upside outweigh downsides?


1) illiquidity - I disagree, not as liquid as a bank account but I can tap my equity anytime

2) risk of depreciation but potential for appreciation, holds true for any investment

3) requires more hands on attention. More than what? Certainly not more than a Real job

4) subject to acts of god, no rebuttal from me

5) repairs, again no rebuttal



Some upsides include

1) huge tax sheltering

2) for the most part - passive income

[rennigade]

May not be a bad idea for the mods to create a new "area" for real estate everything. Theres been a lot of threads about real estate lately. They're starting to clog up every section.

[StormRichards]

May not be a bad idea for the mods to create a new "area" for real estate everything. Theres been a lot of threads about real estate lately. They're starting to clog up every section.

I was actually going to suggest this in another thread. Clearly there is enough interest in the topic to warrant its own section.

[StormRichards]

3) requires more hands on attention. More than what? Certainly not more than a Real job

Based on his post history, perhaps he was referring to the stock market?

[TexasHusker]

Based on his post history, perhaps he was referring to the stock market?

I was merely regurgitating the usual complaints about real estate, usually from from folks who have never owned real estate.

[StormRichards]

I was merely regurgitating the usual complaints about real estate, usually from from folks who have never owned real estate.

How is that at all helpful to anyone? If you don't believe it, then why post it? To troll? Are you on this site to be helpful or just argue?

[TexasHusker]

How is that at all helpful to anyone? If you don't believe it, then why post it? To troll? Are you on this site to be helpful or just argue?

Just because I don't believe it, others might. These things are repeated all the time on the forum. Obviously none of them are particular deterrents to me. I just don't want to be accused of being an over-enthused sunshine pumper.

Others apparently appreciated it - I got a like out of Tom of all people!

[StormRichards]

Just because I don't believe it, others might. These things are repeated all the time on the forum. Obviously none of them are particular deterrents to me. I just don't want to be accused of being an over-enthused sunshine pumper.

Others apparently appreciated it - I got a like out of Tom of all people!

Well we clearly don't approach internet forums in the same manner. Personally, if I am posting something that is not my opinion then I clearly state that.

And perhaps you received those likes because they mistakenly thought you were trying to be helpful instead of posting things you don't believe in for the sake of trolling.

[TexasHusker]

Well we clearly don't approach internet forums in the same manner. Personally, if I am posting something that is not my opinion then I clearly state that.

Internet forums are for entertainment. Most of the dialogue is mindless. I'm never going to take anything too serious that I read on a message board. Now I do believe everything that's on TV.

[corn18]

I'm liking the new TexasHusker. He stopped bashing savings and is focused on what he has done and seen personally to be successful in real estate. Maybe I don't agree with everything he says about it, but he makes me think outside my boglehead box.

[TexasHusker]

I'm liking the new TexasHusker. He stopped bashing savings and is focused on what he has done and seen personally to be successful in real estate. Maybe I don't agree with everything he says about it, but he makes me think outside my boglehead box.

I turned over a new 🍃

[GoodSteward]

1) illiquidity - I disagree, not as liquid as a bank account but I can tap my equity anytime

I love the idea of real estate for investments due to the potential of passive income and would like to get into it one day if possible. However, I just can't group tapping real estate anywhere near tapping cash investment accounts. I don't even group borrowing against 401ks or other accounts as similar. The main reason is as soon as you borrow just one dollar against a house you no longer own it outright. If you default on that one dollar you have to answer to a bank. For just one dollar, they can own it. After borrowing it you have to pay it back to maintain all of the investment.

On the contrary, you when you borrow from a retirement account you are borrowing from yourself, and pay yourself the interest in the case of a 401k loan. Also, if you lose your job and can't pay it back you are simply out of that money and charged taxes on it as it becomes counted as income (if it was traditional). I just don't see these two as comparable at all, outside of the fact that you can technically use the equity on a home for cash. With a home, though, it's always going to be in the form a loan with collateral, and that collateral is potentially all your equity in that home.

[rennigade]

Maybe I don't agree with everything he says about it, but he makes me think outside my boglehead box.

I think its neat to see/hear the different ways people make money. When you see someone thats really successful at doing something it sometimes plants seeds in your head.

For example this isnt money related but about a year ago I kept watching videos on youtube about people hiking the Appalachian trail. It takes several months...like 2000 miles +. I was thinking how cool it would be, etc etc...im my mind I was actually trying to convince myself I should do this just because of the way people spoke about it, blah blah blah. Granted ive never even camped, ive only ever done long day hikes 20ish miles...it just came down to day dreaming.

I feel the same way about rentals from my pov. I was actually looking up real estate today just out of curiosity because of all of these real estate threads.

I guess my point is people better look before they leap...in anything they do. Also...its not so bad being a boglehead...especially the majority of them with multi million dollar portfolios

[GoodSteward]

I also don't like using real estate value as part of the retirement value you have due to the nature of how you have to use it in real cash forms. The passive income is what I would look at, kinda like how you factor in an annuity. You look at the monthly payment from it, not really the account value.