Dude I'm missing something - Facebook v Real Estate - You kiddin?

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Dude I'm missing something - Facebook v Real Estate - You kiddin?

Account Closed
Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes

I was looking at the returns of Facebook vs Real Estate and I was well, surprised. . . .

I bought a property in Phoenix using "Subject To" (very little down, & taking over the loan) and turned around and sold it for a very large down payment and owner financing. I cash flow it every Month at $1,000 for $12,000 per year positive cash flow.  

If I had bought Facebook in 2012 in it's IPO and put in $1,000 I would have . . . "$1,000 investment six years ago would be worth more than $4,300 as of Wednesday, according to CNBC calculations."

Whaaa????

Pathetic!!!!

Investors had to Chance $1,000 into an unknown company, that wasn't making a profit in 2012 (Facebook) to wind up with only $4,300 . . . 6 years later???? And that is GOOD?

Investors know (or should know) better than that!

I take on investors as Joint Venture Partners and we put Facebook to shame!!! AND, we don't don't sell people's information! 

https://www.cnbc.com/2018/04/11/if-you-invested-10...

"Popular social-media platform Facebook may have gotten even more popular this week as founder and chief executive officer Mark Zuckerberg testifies to Congress about the company's potential misuse of user data and privacy: Its stock price actually increased.

"Let's face it, they're a revenue juggernaut," Carol Pepper, chief executive of asset-management firm Pepper International, said on CNBC's "Squawk Box Europe."

While the platform's shares fell 11 percent after the scandal began, they rose during the initial hearings, reaching their biggest daily gain in two years and adding nearly $17 billion to Facebook's current market cap.

If you invested in Facebook in 2012, when it made its initial public offering, that investment would have seen an increase, too. A $1,000 investment six years ago would be worth more than $4,300 as of Wednesday, according to CNBC calculations."

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Eric James
Investor · Malakoff, TX · Member since 2017 · 2k+ posts · 2k+ votes
8y

No offense, but this post looks like it's from someone in the 'investor education' business, selling advice on how to get rich quick with my program. A pretty slick message, format, and title.

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  • Account Closed
    OP
    Specialist · Paradise Valley, AZ · Member since 2018 · 3k+ posts · 2k+ votes
    8y

    Don't get me wrong, real estate isn't for everybody. It's just a safer bet than the stock market.

    0Reply
  • Victor S.
    WorldWide · Member since 2016 · 1k+ posts · 1k+ votes
    8y
    Originally posted by @Account Closed:

    Good discussion, what you are missing though:

    is that I continue to buy (as I have for over 25 years) houses for 3% to 5% of their cost using Subject To and Wraps. When you buy Stocks you are putting up 100%.

    You are putting 100% at risk for an asset that isn't cash flowing.

    I am putting 5% at risk for a cash flow return of about 44%. I did the math. ;-) Plus the appreciation of the asset.

     Ever hear of margin and/or trading options instead of underlying stocks? You can use leverage in the stock market as well.

    2Reply
  • Russell BrazilBusiness Member
    Moderator
    Real Estate Agent · Washington, D.C. · Member since 2012 · 17k+ posts · 30k+ votes
    8y

    If we are picking random stocks, why not add in purchasing at margin to triple your returns since real estate is leveraged for a better comparison. Or how about picking random stock options that panned out where you make hundreds of times your investment.

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  • Ian WalshBusiness Member
    Lender · Philadelphia, PA · Member since 2016 · 2k+ posts · 1k+ votes
    8y

    These are two totally different vehicles.  You can compare them if you want, but trading and real estate investing are tough to compare unless they are both understood at the same level.  Trading is way different than most think.

    0Reply
  • Grant Rothenburger
    Investor · Taylor Mill, KY · Member since 2016 · 2k+ posts · 964 votes
    8y
    Originally posted by @Bill F.:

    @Account Closed Congrats on a home run of a Subject-to deal.

    However, I don't see the point of the comparison. Its a bit of a strawman. Picking one stock and comparing it to one specific property in hind sight seems like a waste of time.  

    I bought Ford in for a $1.80 in Jan 2009 and sold it at $15 a few years ago. How does that compare to a subject-to deal? It paid a dividend starting in '12 I think. To me it doesn't matter because I can't go back in time and buy more or sell at a different time. The deal is done and I'm on to the next one. 

    Stocks and RE have similarities, but also difference. A major one is that for most people there is nearly an unlimited supply of shares to buy if they see an undervalue stock. The same can't be said for home run subject-to lease option deals.

    Good point. I like the control RE offers. If you buy right, have and execute your business plan, MOST of the time you are in control of your own fate with RE. I suppose the same could happen if you make a large investment in the "seed" stages (is that what it's called) of an up and coming business and have a say in how it is run and other decisions. Guess it's just personal comfort level. I know real estate makes a lot of millionaires, but it seems like investing in businesses and/or starting successful businesses and either keeping them or selling them makes more billionaires than real estate (based solely on billionaires I can think of off the top of my head right now). 

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  • Dan H.Pro Member
    Investor · Poway, CA · Member since 2015 · 7k+ posts · 8k+ votes
    8y
    Originally posted by @Matt R.:

    I think EF Hutton was sold for millions or billions to Citigroup or JP Morgan I forget which one but one of those types,  so you might want to take off example list. Good luck!

    It is not the only one on the list: DEC was purchased by Compaq in what at the time was the largest merger in the history of the computer industry and later (2002) Compaq was purchased for $25B by HP.  Not exactly companies where the share holders did not do well in their disappearance.

    Also 17 years on average for a stock to recover after a crash?  Really!  I can think of no crash in the history of the stock market that took 17 years.  The great depression crash was 7 or 8 years for full recovery.  The great recession crash took around half as long to recover as the great depression crash.  The reality is most crashes have a quick recovery.

    The OP has an agenda and uses misleading statements (such as the companies that vanished when some were purchased at prices that returned great profits to the share holders) or outright falsehoods (17 years on average for a crashed stock to recover) to try to booster his agenda.

    My view is that money can be made on both stocks and RE.  That there are ways to be a passive investor in either but most RE investors are less passive than most stock investors.  Historically the S&P 500 has returned close to 10% (7% after inflation); not a bad return for a very passive investment.  This means that for RE to be a good investment it must return enough above 10% to be worth the additional effort of being an RE investor.  Fortunately my RE investments have returned far better than 10% return so I continue to invest in RE but I also invest in the stock market.

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