Investor · Greenville, SC · Member since 2016 · 5k+ posts · 13k+ votes
I listen and occasionally call in to a satellite radio show that helps listeners with personal financial matters (paying down debt, saving for college, retirement planning, asset allocation, etc.). The show is great but every time I call (or a someone calls) and ask a question about real estate, the hosts advise against investing in real estate unless you are a real estate professional. They are not advising against it for their own personal financial benefit, they just don't think it is a good investment option for their listeners. Many people don't know what they don't know...
Guy with Great Hair · Austin, TX · Member since 2013 · 2k+ posts · 4k+ votes
10y
It's just bias.
just like tons of people on BP say not to invest in the stock market because real estate is way better.
the people on the personal finance show say that stock investing is better.
They also probably don't want to give out too much risky advice and get themselves hemmed up. Real estate is much more complicated than: max out your 401k, spend less than you earn, buy stock in X.
I actually may take a contrary opinion and suggest it should be avoided by most. Given the 80/20 rule, the 80% will most likely fall into one of three buckets:
People who will 'invest' by buying a primary residence at or above market value and giving into what is essentially a weak forced savings account. House hacking is a good way to do investment when the numbers make sense, but I do find this is a dubious proposition in a lot of modern class A or coastal urban markets.
People who have the ability and market numbers to take action, but have no cash position to take any considerable risk. Consistent advice from BP guests and CRE professionals is to have cash on hand, and the ability to withstand market shocks. Some people have their expenses and family life in a place that a couple hundred dollars a month in stocks (much more liquid) is much safer than a large portion of their net worth in physical property.
People who will research, learn, and never get started.
All three of the above mentioned archetypes is safer with stocks and bonds. On top of that, this is the majority of the public.
If real estate were the best investment choice for everyone, we would have no tenants! (Granted, some people are irresponsible in general, may still get them as tenants). It takes a unique combination of factors and resolve, and I don't think it says anything more positive or negative about someone if they don't choose this route.