REI vs Stock Market
Los Angeles, CA · Member since 2017 · 24 posts · 6 votes
Hey guys, obviously I'm new to REI and trying to understand REI vs investing in the stock market. I have been focusing on SFR to buy and hold and I don't see the returns I do in my stock market portfolio (up 24% YTD). The S&P 500 Index is up 16.23% this year and up 100% in the past 6 years. What am I missing in regards to the BRRRR strategy? The properties I see have a cash flow of $100-$200 for a $150,000 property and I dont see the benefit vs risk. Thanks for any insight or suggested reading (in addition to Brandon's book on rental property investing).
@Desmond Price - you bring up a great point. The returns on the market this past year have been incredible. However, seeing 16%-25% returns on the market is not going to continue. Seeing those returns in real estate are absolutely possible year over year as you have the 4 wealth generators working for you:
1. Cash Flow - Receiving rent from your tenants irregardless of whether the market goes up and down.
2. Appreciation - While year over year, housing prices may fluctuate, in the long term, they will increase. Companies could go out of business leaving you with little or no return. Not to mention, you can always force appreciation into your property. You don't have that type of control in the stock market.
3. Loan Paydown/Leverage - Your tenants are paying down your mortgage AND you can buy a property with as little as 3% down (0% if you're a veteran). That's a very high (or infinite) cash on cash return.
4. Tax Advantages - Uncle Sam rewards homeowners with tax breaks. I am not a CPA, but I know that one of the biggest benefits is being able to deduct depreciation. So your property could actually be cashflowing you month over month, but to the government, it shows that you are losing money. So you will not be taxed on your gains. Those losses carry over to other forms of income as well.
You have some valid points. I invest in both, but can't seem to find a good cash flowing property in the past couple years either. From experience real estate investing is hard. All the stuff I have now does well, because I don't buy things that don't work! I think there's a bunch of people making it sound simple, but it's not!!
@Desmond Price Hello, hope all is well. I can share some knowledge in the stock investing side of your question. I've been trading for over 7 years, and also work in the field. Imo stock investing is one of the most risky and dangerous types of investments. Companies go bankrupt all the time, unexpected news makes headlines every other second, and these random events can make or break your account. Though stock investing may seem glorious now, I've seen countless people loss life times of wealth because of a random unforeseen event. Real estate can be measured, and hedged against in an easier and more effective ways. Sure in RE unforeseen events happen, but not at the degree in the stock market world. How do you think investors in Toys R Us are feeling right now? Did you expect that?
Not sure where the properties you have seen go for $100-200, but that all depends on area. Im new to RE as well, Ill let the other professionals on this help you with the cash flow details. Let me know what you think.
Thanks,
Mo
Well the reason you don't see the benefit vs risk is because, I assume, you're looking in Los Angeles (I am too). The numbers just aren't here.
You threw in the term BRRRR randomly in there... are you specifically comparing the idea of doing that in LA to stocks? There are other options for investing in real estate.
For general thoughts on RE vs stocks, check out-
https://www.biggerpockets.com/renewsblog/2016/02/0...
Hope that helps.
In addition to what Mo said, I like to compare these two from the standpoint of cash flow = dividends, and property appreciation = stock price increase. Buying a property is like investing on margin and the increased leverage allows you to boost your return. If you put 20% on that $150,000 property, and then that property goes up 6%, that's a 30% return. Additionally, your tenants are paying off your loan and putting a few bucks in your pocket.
Thanks to all who provided input.
@Mo Farraj The stocks I was referring to were low-risk index funds with 16% annual returns, not single companies like Toys R Us.
@Ali Boone Where I live in the OC, a rentable 3/2 SFR costs $550,000. That's a $3,200 mortgage while 3/2 SFR rentals are being listed for $2,700-$2,900. For that reason, I was looking at turn-key companies in the Mid-West.
@Michael Johnson Thanks for the number breakdown. That makes sense but the only $150,000 homes I have found are from turn-key providers in the Mid-West and I'm in the process of educating myself on using that strategy. Most recently, with the latest trending post asking about turn-key companies. Any suggestions if I wanted to stay in SoCal?
If you have enough equity in your current home or it is already a conventional loan , you could fha into a multi-unit, what people here call house hacking. Or perhaps find someone to go in with you who willing to live in a unit.
What is your current constriction? Capital, credit, income?
@Michael Johnson I'll DM you.
Stocks are doing well atm, but It will be a whole lot easier to see when the next stock market crash happens and you still have tenants paying off your property. I’ve had incredible stock returns in the past, but I also saw my 401k get chopped in half with nothing to show for it in 2008. Nothing feels better than when you do well in stocks, but nothing feels worse when you lose. It eventually recovered, but the older I get, the less I want to weather something like that again. And when you consider leverage, write offs, randos paying down mortgages/building your equity... there’s no comparison for me.
The only downside for me is the time commitment. Index funds are great if you don’t want to be bothered. The annualized return on the S&P since 2000 is less than 5% though, so you’re looking at a peak year.
@Gabe C. I guess I missed the leveraging concept that I wouldnt get in the stock market.
@Gabe C. I guess I missed the leveraging concept that I wouldnt get in the stock market.
LA happens to be one of the few locations that can keep up with historical index averages, if you can invest there that would be a big time plus. Otherwise it is going to be harder to beat some single stocks like facebook or netflix perhaps. For example 100k in FB five years later is near 600k or 100k in NFLX is near 2 million five years later. Not sure any midwest sfr could have anything close to that upside potential.
Good luck!
@Desmond Price - you bring up a great point. The returns on the market this past year have been incredible. However, seeing 16%-25% returns on the market is not going to continue. Seeing those returns in real estate are absolutely possible year over year as you have the 4 wealth generators working for you:
1. Cash Flow - Receiving rent from your tenants irregardless of whether the market goes up and down.
2. Appreciation - While year over year, housing prices may fluctuate, in the long term, they will increase. Companies could go out of business leaving you with little or no return. Not to mention, you can always force appreciation into your property. You don't have that type of control in the stock market.
3. Loan Paydown/Leverage - Your tenants are paying down your mortgage AND you can buy a property with as little as 3% down (0% if you're a veteran). That's a very high (or infinite) cash on cash return.
4. Tax Advantages - Uncle Sam rewards homeowners with tax breaks. I am not a CPA, but I know that one of the biggest benefits is being able to deduct depreciation. So your property could actually be cashflowing you month over month, but to the government, it shows that you are losing money. So you will not be taxed on your gains. Those losses carry over to other forms of income as well.
I think like 8 pct is the average rate of return on the S&P 500 since inception right? I would think the other benefit to rei would be control. you are more in control because you chose what you buy and how much you are willing to pay.
If you are getting 24pct, good for you. I don't think I'd get off that train. As for me, I'm in index funds and am getting 11 pct.
Diversify, diversify, diversify.
@Mo Farraj I'm a little confused. How can you say that stock is the most risky and dangerous type of investment? For someone "working in the industry", that's a pretty dangerous mentality to have. Also, not knowing that Toys-R-Us is a private company that isn't publically traded also brings up a red flag.
And yes, a lot of people saw Toys-R-us going bankrupt. Toys-R-Us has been shuttering its locations for at least 20 years, and have lost huge market share to amazon and jet. (to name a few). Anyone investing in Big Box stores at this point in the game are setup for a loss.
Now, if Intel, IBM, Apple, Microsoft, etc go bankrupt then sure you have a point.
People lose wealth in the stock market because they either don't pay attention, don't do research, or don't diversify. If you do all three, you will, more times than not, do well. The same can be said for Real Estate.
@Michael Johnson that is mostly true. If the property goes up 6% then sure that's a 30% return. But that's not your full return on the property. Let's analyze it. We'll analyze over 5 years. Assuming 6% return per year on the stock as well with a 3% dividend. Which are pretty conservative numbers.
Stock first because it's the easiest:
Purchase start: $30,000
Trading fee ($7).
Dividend (3%) = $900 a year or 4500 over 5 years.
6% appreciation over 5 years
your investment is now worth:
=FV(0.06,5,0,-29993,1) = $40,137.40 - $7 for selling so $40,130.4
You've made: ($10,140.4 + dividends) or $14,640.4
So, to come out better, you need to make at least $14,640.
Now Rental:
Purchase price: $150,000
Closing Costs: $4000
Cash Flow: $200
Cash Flow for 5 years ($12,000)
Sell Price: $159,000 (6% appreciation)
Mortgage amount after 5 years (assuming 5% 30 year mortgage): $110,378.75
After RE Commission of 6%: your appreciation is wiped out, so you still sell for about 150K
Cost Basis with depreciation recapture: 130K ($4300/Year)
Taxes owed on Deprecation recapture: 5K
$150000-110.378.75 = $39,621.25 - Taxes for depreciation = $34,621.25 - original amount = 4,621.25 + Cash Flow = $16,621.25
I know my math above is not perfect, but it's to illustrate a point.
So, basically, if you replace absolutely nothing in the property and have no major CapEx expense, then you will come out ahead by about 2K. That also assumes no long vacancies, and no evictions.
The biggest knocks on ETFs and Mutual funds are they aren't sexy and they're not fun to talk about at a dinner party.
More importantly though, stocks offer an avenue for every single market. Just like Real Estate, you can profit in a bull, a bear, or a neutral market. You can get in and out in minutes and not months. You have the flexibility to completely change your strategy daily. You can get involved in stock with a Credit Score of 0 and as little as $10 if you wanted.
Using my example above. What if you needed that money for an unforeseen medical bill or other big ticket expense? Could you liquidate your property within a day and have cash within 3-4? In stocks you can. What if the RE market starts its correction and prices start dropping. Can you weather vacancies and evictions and loss of equity until it comes back up again?
With stocks, unless you're trading on margin and doing speculations trading, the most you can lose is the money you put in. In Real Estate, you can be foreclosed, have judgements levied, and your near-term future can be ruined. Not to mention you can be sued and be forced to file bankruptcy. In my field of work if I had a foreclosure or bankrupty on my record, I would lose my job.
I'm not saying one is bad and the other is good. But there should be a place in everyone's portfolio for both stock and real estate. Solely focusing on one opens you up to too much risk.
I agree that lately the stock market has been the way to go. I live in southwest Florida, and while SFH prices certainly aren't SoCal, prices are definitely high and cash flow is hard to find.
The historical return of the S&P 500 is around 8-9% per year. My personal IRA has averaged 14% since 2011 (when I opened it), and 17% over the past year. Yes, these results are abnormally high and non-sustainable. However every investment will have peaks and valleys.
I've noticed that cash-on-cash returns on SFH in this area tend to hover around 5-6% off the MLS. So to increase your return, you work (either working to get a great deal, i.e. direct mail/driving for dollars, or working to force appreciation with improvements). So depending on how you calculate the monetary value of your time, you could come out even further ahead. This also doesn't account for tax advantages/appreciation/loan paydown, which probably help to even the playing field.
My take home message is that real estate is hot right now and, just like any other investment, if you invest in the peak of the market, your returns will be lower. But if you're investing for the long term, this will be but a blip in your historical return. Long term, real estate (including REIT's) is the highest yielding investment (around 10-11%), followed by small cap stocks.
I would strongly argue that a diversified investment portfolio made up of real estate assets, index mutual funds, and liquid cash with low debt is the best long term strategy.
I hear ya. Same reason I've always bought out-of-state turnkeys too. If you need any help, reach out anytime!
Ali, just curious...why do you tell people that you buy out-of-state turnkeys, when the truth is that you are a turnkey provider, selling to investors? Perhaps you were a buyer at one point, but now that you are a turnkey provider, I think you need to disclose that when offering advice on turnkeys.
Your appreciation figure only added 1 year of appreciation. The sales price would be 195,000 minus about 8% for comm and fees leaving you 180k minus the loan so 70K not 39k.
So your off by about 30k in profits there.
Hey guys, obviously I'm new to REI and trying to understand REI vs investing in the stock market. I have been focusing on SFR to buy and hold and I don't see the returns I do in my stock market portfolio (up 24% YTD). The S&P 500 Index is up 16.23% this year and up 100% in the past 6 years. What am I missing in regards to the BRRRR strategy? The properties I see have a cash flow of $100-$200 for a $150,000 property and I dont see the benefit vs risk. Thanks for any insight or suggested reading (in addition to Brandon's book on rental property investing).
Focusing only on cash flow is missing the boat IMO. The thing that makes Real Estate a solid investment is the ability to use other peoples money. You purchase a property using someone else's money (bank) & then pay off your loan using someone else's money (tenant) Couple that with some cash flow & healthy appreciation and you have will have built a solid nest egg by the time you retire.
@Michael Johnson True I read the original comment wrong. Just for completeness, there is also capital gains to be paid. which would be 15% of 45K gain, or another 7K off as well. so 24K in profits.
I'm not sold on being able to get 6% Year over Year on a 150K house in this current market. But I guess that is more area dependent. The only time I saw those numbers were after the market crash in 2008ish.
Take a $150,000 purchase that you use the BRRR strategy on. This means you buy, renovate, rent and refi. When you do that you usually get it appraised for more than you purchased and have little to no money into it. Let's use 10% in this case with a 30 year Am, 4.5% interest.
Money out of pocket is $15,000
Cash flow is $1800/year
Principal pay down over 30 years is $4,500/year
Let's assume we have a 2.5% gain in value/year is roughly $5500/year
So this is $11,800/year in income
76% annualized return
I did this quick, so I may have missed something, but either way RE if done right beats the pants off of stocks.
@Todd Dexheimer uhm. there's a LOT you didn't account for in that.
First, 20% down is almost almost always required unless you're getting hard money.
Second, that's not how an amortization schedule works.
Third no way a 150K house will sell for 300K at the end.
Fourth you forgot to account for the second R in BRRR (Renovation ain't free)
Fifth you didn't account for Capital Expenditures
Sixth you didn't account for taxes
This is fun, lets take this out to 30 years:
At the end of 30 years you will have a 300K asset (says you. I doubt this), with a cost basis of 0. That you now have to pay depreciation recapture on 150K (so Tax bill of 37.5K) + 150K of capital gains (22.5K).
That leaves you with 240K. In that time, you will go through 2 AC units, 3 water heaters, flooring X5, and appliaces X3 on average. In my neck of the woods I'll estimate as follows (6Kx2), (1Kx3), (4Kx5), (2Kx3) = 41K. O and a roof. You'll go through one reroof at 20K. so 61K.
so now that's 179K. With 1800/Year income over 30 years or 54K in cashflow = 233K gain with 30K initially in. I know you will probably be able to get some of that back with the refinance. Maybe all, maybe not. I left it there for now.
Now stock. 30K in over 30 years at the S&P500 rate of 8% YoY. At the end of 30 years, that is 302K + 3% dividend as cash (900/year).
Long Term Cap Gains on 302K-30K = 40K roughly, so 242K + (27K-div tax, or 4K in tax 20 23K in gain) 265K of profit.
Now, lets say you defer taking this dividend by reinvesting it.
Using a DRIP calculator, with 3% dividend/year and 8% annual, you're final value will be: $607,972.12. So no, if done right, your Real Estate does NOT beat Stock everytime.
Hell, at 6.5% annual (a more modest number) this value is $403,544.43
Either way, they're both good problems to have. But stock does not always lose :).
Edit: One thing I forgot to mention. 8% annual is not estimated, it's backed up by historical data of the S&P.
@Todd Dexheimer uhm. there's a LOT you didn't account for in that.
First, 20% down is almost almost always required unless you're getting hard money.
Second, that's not how an amortization schedule works.
Third no way a 150K house will sell for 300K at the end.
Fourth you forgot to account for the second R in BRRR (Renovation ain't free)
Fifth you didn't account for Capital Expenditures
Sixth you didn't account for taxes
This is fun, lets take this out to 30 years:
At the end of 30 years you will have a 300K asset (says you. I doubt this), with a cost basis of 0. That you now have to pay depreciation recapture on 150K (so Tax bill of 37.5K) + 150K of capital gains (22.5K).
That leaves you with 240K. In that time, you will go through 2 AC units, 3 water heaters, flooring X5, and appliaces X3 on average. In my neck of the woods I'll estimate as follows (6Kx2), (1Kx3), (4Kx5), (2Kx3) = 41K. O and a roof. You'll go through one reroof at 20K. so 61K.
so now that's 179K. With 1800/Year income over 30 years or 54K in cashflow = 233K gain with 30K initially in. I know you will probably be able to get some of that back with the refinance. Maybe all, maybe not. I left it there for now.
Now stock. 30K in over 30 years at the S&P500 rate of 8% YoY. At the end of 30 years, that is 302K + 3% dividend as cash (900/year).
Long Term Cap Gains on 302K-30K = 40K roughly, so 242K + (27K-div tax, or 4K in tax 20 23K in gain) 265K of profit.
Now, lets say you defer taking this dividend by reinvesting it.
Using a DRIP calculator, with 3% dividend/year and 8% annual, you're final value will be: $607,972.12. So no, if done right, your Real Estate does NOT beat Stock everytime.
Hell, at 6.5% annual (a more modest number) this value is $403,544.43
Either way, they're both good problems to have. But stock does not always lose :).
Edit: One thing I forgot to mention. 8% annual is not estimated, it's backed up by historical data of the S&P.
you apparently didn't read my post very well. If you're doing a renovation to the property and then re-financing you can get the deal refinance for the appraised value. In nearly every case I have been able to do that with zero dollars out of my pocket in the end. $15,000 should be very doable if it is done right.
You mentioned that I did not account for renovation, but I was considering that part of the $150,000. If you do not consider that part of the $150000 then the property would be worth much more.
Next you mentioned that's not the way amortization works . Yes it does! 100% of the time in 30 years you will have paid off your mortgage, unless you change the terms of the mortgage. Speak with the lender if you are still confused by that
Next you mentioned I did not take into account capital repairs. How do you know that? The original poster said that they will make $150 per month in cash flow. I would assume that includes a $150 per month capital reserve account and takes into account all other expenses in the management. Personally I would not purchase a single-family house unless of cash flow's at least $250 per month including all expenses. If you're not putting aside at least $150 per month into a capital improvement account and telling people you're making $150 per month in cash flow you're fooling yourself.
Next you mentioned that $150,000 property would not be worth $300,000 in 30 years. I think your assumptions on this are really strange. Take $150,000 property today and it's value 30 years ago. Do you think it would've sold for $75,000 or less? In most markets The answer would be yes. That number is actually extremely conservative. In 30 years the property will more likely be worth closer to $400,000.
If you invest in the stock market your chances of doing better than 8% is not very good over the long term. The good thing with the stock market is that your chances of doing much less than 8% over the long term is slim as well.
With real estate if you invest properly and use the right strategies, manage properly and account for all expenses you will beat the stock market over the long term. However, if done improperly you will be left with a very poor investment with a poor rate of return.
Purchase price - $100
Down payment - $25
Loan - $75
Rehab - $20
ARV - $160
Re-finance loan - $120
Take the $120, pay back the original loan of $75, and you are left with a $45 cash out re-finance. You have your $25 down payment back, plus your $20 in rehab back, plus now own a $160 rental property with no capital invested. That property/investment now has infinite returns. Rinse and repeat with the same $45 over and over again. Even better, use other people's money for the $45.
These are just sample figures...feel free to substitute you own.
REI vs stock market is apples and oranges. Both are good investments...it depends on your goals.
@Todd Dexheimer uhm. there's a LOT you didn't account for in that.
First, 20% down is almost almost always required unless you're getting hard money.
Second, that's not how an amortization schedule works.
Third no way a 150K house will sell for 300K at the end.
Fourth you forgot to account for the second R in BRRR (Renovation ain't free)
Fifth you didn't account for Capital Expenditures
Sixth you didn't account for taxes
This is fun, lets take this out to 30 years:
At the end of 30 years you will have a 300K asset (says you. I doubt this), with a cost basis of 0. That you now have to pay depreciation recapture on 150K (so Tax bill of 37.5K) + 150K of capital gains (22.5K).
That leaves you with 240K. In that time, you will go through 2 AC units, 3 water heaters, flooring X5, and appliaces X3 on average. In my neck of the woods I'll estimate as follows (6Kx2), (1Kx3), (4Kx5), (2Kx3) = 41K. O and a roof. You'll go through one reroof at 20K. so 61K.
so now that's 179K. With 1800/Year income over 30 years or 54K in cashflow = 233K gain with 30K initially in. I know you will probably be able to get some of that back with the refinance. Maybe all, maybe not. I left it there for now.
Now stock. 30K in over 30 years at the S&P500 rate of 8% YoY. At the end of 30 years, that is 302K + 3% dividend as cash (900/year).
Long Term Cap Gains on 302K-30K = 40K roughly, so 242K + (27K-div tax, or 4K in tax 20 23K in gain) 265K of profit.
Now, lets say you defer taking this dividend by reinvesting it.
Using a DRIP calculator, with 3% dividend/year and 8% annual, you're final value will be: $607,972.12. So no, if done right, your Real Estate does NOT beat Stock everytime.
Hell, at 6.5% annual (a more modest number) this value is $403,544.43
Either way, they're both good problems to have. But stock does not always lose :).
Edit: One thing I forgot to mention. 8% annual is not estimated, it's backed up by historical data of the S&P.
2. I'm quite sure he knows that is how an amortization schedule works, however he said it was quick math and I think it illustrated his point well, averaging the returns out over the full term.
3. You're right, there's no way a 150k house will sell for 300k at the end. It likely will be much higher. For a home to double in value over 30 years it will have appreciated a meager 2.3% annualized.
5. Capex was included, it is naturally included in his cashflow statement. Cashflow by definition is the money you have left after all the bills are paid.
6. Taxes are better off in real estate. I'd rather get a yearly tax deduction on my investments, and continually defer until I die, than I would pay a 15% capital gains tax every year.
Now for the fun part. At the end of 30 years you likely have a home valued at 397k, this is assuming a 3.3% appreciation rate based on historical inflation rate, which should approximate what real estate will get on a nationwide level. This home also steadily increase in rents, which can be reinvested, I shouldn't have to mention the effects of not counting in 30 years worth of cashflow into other investments will have as opposed to sitting dead the way it did in your math.
For the really fun part, I created an excel product to analyze the returns of stocks versus an estimated rental property a few months back that you might find interesting. The numbers I used was for a recent purchase of mine at 165k purchase price, using 33k down payment +3300 closing costs versus 36,300 worth of stocks. For simplicity sake, if you buy a property that during the first year is completely cash flow neutral after expenses, and yearly raise your rent by 3.3%, and increase your property taxes, capex, repairs, ect by the same 3.3% then after the first year you will make start to make a small profit because your income has gone up, and so too has your expenses but not at the same rate because one of your biggest expenses (debt service) has stayed the same. While you may start out cashflow neutral, at the end of 30years you are cashflowing nearly 1k / month. If you take that gradually increasing monthly cashflow, and reinvest it, (lets just say into the stock market), then after 30 years your home is 437k, plus about 426k worth of stocks (10% annualized) thanks to constantly adding additional capital every month from your cashflow. For a total of 863k, as opposed to roughly 633k with the same 10% annualized had you simply stuck the 36k into stocks from day 1.
There's nothing wrong with stocks, but I seriously doubt anyone can consistently beat the returns of real estate using stocks. Sure you might pick a winning stock and do quite well, but then again you might pick Enron. With stocks, regardless of how much research you do, your fate is ultimately out of your control. We like to think about facebook being a good stock, but what happens when the next trendy social media site is created and everyone migrates there and quits facebook. Does nobody remember how quickly Myspace vanished?
I would also like to jump in a bit but with some real numbers.
These are all in Brooklyn and I won't give a lot of details because frankly, the small details will bore everyone to death. In the end, you'll get the point.
Property A details:
Year Bought: 1998
Price: $340k, 10% down or $34k plus closing around 5% or $17k.
Renovations: $40k
Initial Investment: $34k + $17k + $40k = $91k
2017 Fair Market Value: $1.75 Million
Property B details:
Year Bought: 2004
Price: $890k
Financing: Used Equity loan from Property A to do following: 25% down or $222k plus closing around 5% or $44k.
Renovations: $50k
Initial Investment: ZERO, financing came from Property A. By 2004, Property A was worth approximately $1 Million. Borrowed $222k + 44k + 50k = $316k to finance Property B.
2017 Fair Market Value: $3 Million.
I won't crunch all the numbers, but both Properties A & B gives me cash flow around $7k per MONTH today.
I also have the option of moving into one of these Investments and in 2 years, take advantage of a $500k (for a married couple) capital gains exclusion.
After selling to get that capital gains exclusion, I can then move into the other property, live there for 2 years, and get ANOTHER $500k capital gains exclusion.
Try doing that with your stock investments! (This is an attempt at light humor).
I traded stocks during this time, but eventually decided that while you can get some astronomical returns in Stocks, it was much easier to get similar, but more consistent returns via Real Estate because I had much more control over it than I had over the companies I use to trade.
In most cases, I used protective puts to protect against unforeseen market crashes, such as the flash crash that was mentioned earlier. However, that ate up a lot of profits.
This is significant because in Real Estate, you should never have an investment without having Hazard Insurance.
However, keep in mind that I'm not making an apples to apples comparison because you would need some way to not only protect against fire and liability, but you would have to protect against asset depreciation, which is what a PUT options does for your Stock Investment.
Anyway, I don't want to write a long, lengthy posting.
I'm just illustrating a point that some of us do make astronomical returns over a long period of time, in this case, 20 years.