Honest question, why lockup your money in real estate when over the past decade crypto (bitcoin) has better returns and you can now earn passive income and are much more liquid than buying a home? I am moving more and more of my money into crypto and selling homes to accumulate crypto assets, I can make 8.6% interest on a digital dollar that is paid monthly, doesn’t fluctuate and compounds. I also make 6% on Bitcoin and my interest is paid in bitcoin. I don’t have to deal with repairs and the other stresses of managing a property. I would love peoples thoughts on this.
You can't leverage bitcoin, you can't improve it and you have no control over it. Can't BRRR it either. REI is a lot of work, takes a long time, it's messy - so I can see the appel of something that is quick and easy!
To me in many ways crypto reminds me to my first stock investing days back in 1999, it's great until it's not.
@Kevin H. I love investing in real estate and will continue on this path for retirement. However, given the significant increase in prices, limited supply, bidding wars and rates creeping up, we've slowed down on real estate and are investing in crypto during its bull run. We plan to invest the gains back into real estate once dust settles down. There's nothing wrong with diversifying into what you believe in. Though timing is a big factor.
Are we seriously having a crypto debate on a real estate investing forum? Yes, some cryptos have done AMAZING... not far off from any speculative new investment... some people scoffed Facebook when it was first launched. Look, I'm not saying some amazing crypto returns can be made, and I'm not going to compare my real estate investments to some crypto returns. However, ten years from now when most cryptos have stabilized, I still plan on beating the market with real estate. For example, I just closed on a condo I bought for $104k cash. It needs $500 dollars in repairs and my wife and I are going to re-list for $190k. A unit just like mine went pending yesterday which was listed at $185k. Soooo yeah crypto, bring it on!
We launched our first blockchain fund (we’re nearly all real estate, around $110MM aum). The returns are pretty wild - even if btc stays flat 40% returns - and since the mines depreciate there’s even tax advantages. It’s a pretty great looking class of investment that I recommend at least checking out.
I am really getting sick of the crypto-cryptocurrency-pimping on this site.
If you think this is crypto-currency-pimping, you should check out reddit and twitter.
I actually think the discussion about it is pretty even-keeled here and I've never seen any outright shilling.
It's something we SHOULD be talking about it, as you can already borrow against your bitcoin and use it for RE projects. It will only become more relevant to the RE world over time, so it's good to learn about it.
BTC and real estate are not alternatives for the same set of goals. One is volatile, high risk/high reward, and passive...and the other is predictable, low risk, and active. It's comparing apples to orangutans.
@Justin Thorpe @Joe Villeneuve
1. Again going over historical numbers BTC has given investors a YoY return of over 200%. I’m not even factoring the compound 6% APY you get paid out monthly on blockfi or if you want to avoid risk the 8.6% monthly compounded interest for you USD. Again, I can’t predict the future, however ytd btc is up 73%. We are not even 3 months into the year and that is a better return of my money that 5% in value of my home and the cash flow, plus it is easier and way more liquid than doing a re-fi.
What has driven the returns of BTC in the past and will they continue in the future?
@Kevin H. I love your enthusiasm and fear your high as a kite on "hope-ium".
I started in crypto when BTC was under $1.00. I actually have a wallet out there with a few hundred in it, yup, I'm one of those.
To call crypto stabile is so out of touch with reality. When it first touched on $20k the "hope-ium" pipe was passing around as well, then BTC collapsed more than 50%, cratering. Fact is BTC and ALL crypto's are vulnerable to going to $0.00. They are based upon usership and that is all, nothing else. Remember the Pet-Rock, yeah.
Now you will expound of how BTC will take over all transactions, to be brutally honest that is infantile thinking. Do you really believe the Fed's of the world will ever allow such to happen, to just clap their hands and say "welp boys, I guess we had a good run, some naka-yaka-maka fellow did us in", lol.
Let me give you a glimpse of the future, and some education in crypto and just how little you know.
WHEN the pre-eminent super power of planet earth (U.S.A.) embraces a crypto it WILL be controlled by the powers that be, fact. AND that's actually very easy to say because it already exists and has been in use for years, simply not available to the general public.
When time comes, the Fed WILL control "The" officially authorized digital currency of the U.S.A. AND in it's being "The" authorized digital currency of the US, it will over-night become "The" digital currency of planet Earth. BTC will fall straight off a cliff into oblivion, taking all those fortunes with it. Same as the 187 other cryptos, and adding daily. That alone is a sign of the end of crypto coming soon, the rapid expansion of a multitude of different cryptos. Exactly how can commerce function when an item can be purchased with 1 of 47 payment tokens?
No, enjoy your "hope-ium", I will happily enjoy my assets because guess what, they will always be valuable regardless of whatever currency is used be it USD, DGC (a little secret hint there) or chickens and cows. Homes and property has been the safeguard of wealth for centuries on end, without fail, name 1 currency that can match.
@Kevin H. Do both 😎👍
Better diversification can give you better protection.
Taxes on crypto can be pretty tough.
@Kevin H.
CA is an appreciation market and I personally know north of 20 people who have built 8 figure net worths investing in CA markets like SF. There is no way they would have gotten there by BP cash flow metrics like $100 per door which work in smaller tier 2 and tier 3 markets. It’s like saying AMZN is a poor investment vs zombie company xyz only because zombie pays a dividend and Amazon does not. One does not buy AMZN for a dividend for sure!
As for crypto it is not an asset to invest in if one does not understand its technicalities and like I have said previously 99% of people who pound the table on crypto do not have a darn clue of what it truly is, how it works.
Bluntly at this point in the cycle, crypto talk is like the stock tip that comes shoe shine boy! The story goes that Joseph Kennedy shorted the market right before you stocks fell market crash in 1939 and that’s because everyone including the shoe shine boy had become an “expert” in stocks. Not saying it’s not a solid asset class, just that it won’t go up in a straight line and there will be several people who will get badly burnt along the way!
My opinion may not be popular, but I think BTC is doomed to fail, be it 10 or 100 years.
The amount of bitcoin is finite, and right now spending BTC is not common practice. Most people treat it like gold, and are just watching it appreciate. That being said, as people continue this, they start using more secure methods to store their BTC in things like paper wallets or hardware wallets (USB drives & paper QR codes) - over time these physical wallets will inevitably break in some fashion or another. As years pass, the total amount will slowly decline
On a side note, its worth mentioning that using BTC historical performance as a reference is like testing a new drug on 100 people before releasing it to the general public for use. Not nearly enough information has been gathered to accurately predict its future performance.
@Justin Thorpe @Joe Villeneuve
1. Again going over historical numbers BTC has given investors a YoY return of over 200%. I’m not even factoring the compound 6% APY you get paid out monthly on blockfi or if you want to avoid risk the 8.6% monthly compounded interest for you USD. Again, I can’t predict the future, however ytd btc is up 73%. We are not even 3 months into the year and that is a better return of my money that 5% in value of my home and the cash flow, plus it is easier and way more liquid than doing a re-fi.
2. You’re able to take loans out on your crypto, without selling it and investing into other things. I would say it is similar with slight more risk. As you assume home prices will continually go up in value. Just like any market there are up/down cycles. Depending on when you buy/sell you may not be able to pull out equity on your home, as you maybe underwater.
3. Bitcoin is a speculative asset and has its cycles just like any asset in growth. I honestly believe bitcoin will continue outperforming all assets for many more years. It is meant to be a digital store of value and is replacing gold. Golds total market cap is 10 trillion, while btc is only at 1 trillion at the moment. I also believe it will continue to eat up other markets as the roi outperforms any asset. I do agree with diversifying.
As Justin stated there are other cryptos that can 100x in a year, these are way more speculative and risky. I am not talking about these. I believe for the next 10 years I can more than 100% my roi each year, while receiving a 6% compounded yield. That will far outperform any real estate investment in my opinion. Again, it is speculative and more risk and I won’t go into the details on why I believe so. I also know the bear markets in Bitcoin areebrutal, 85% loss from last cycles all time high. However if I am in it for the long run, or want to limit my risk, I can collect 8.6% compounded yield on a digital dollar without risk of price fluctuation, which is a better return than a lot of rei, without the headache.
I am not trying to shill anything, I am just starting to rethink how I invest my money, as I previously thought rei was the best route to grow my wealth.
OK. Give me exact numbers in dollars, and throw out the percentages. Percentages don't mean anything since they ultimately lie...as you will soon see.
If we both start out with $100k today, and you followed your BC path, based on what you have done, what are the actual dollars you are at after 10 years? Include the calculations.
@Kevin H.
Hello Kevin, your post is VERY VERY appealing to me.
I started to buy some crypto, and I want you tell me the other part of your statement to earn more, like the passive income in crypto, how do I jump in the wagon?
Thank you in advance
@Joe Villeneuve have you looked into this "golden goose" of a company @Kevin H. is talking up? I did and here is the TRUTH.
First, Kevin H. should have disclosed his financial gains for referring such via the affiliate agreement. Kevin??????
Second, it clearly states on the companies website it is NOT a savings account, it is NOT insured or secured by any agency, group, super-hero or anything. It clearly details the company takes your crypto and loans it out........ AGAIN, they take your crypto and issue it out to others as loans, with 0 security for yourself, zero, zilch, nada. And all this for "as-much-as 8% annual".
Aaaaahhhh so let me see, dump my money into a crypto that changes value more than my teenage daughters attitudes, than hand that to a company who is going to loan that out to other people who than use it to buy MORE bi-polar crypto, and IF they pay back on the loan I can make up to, UP TO 8%APY...... or if they don't, loose everything, or most everything, or get paid but now the crypto is worth half......
Seriously, can anyone think of a dumber investment??????
How about this, send me $10k, I will mail you a hammer to than bludgeon yourself with. Than return the messy hammer and I will send back $9,500.00 as your "return on investment" and odd's are it will far beat this insanity.
Not to mention their "Affiliate Marketer" program which covers anyone willing to sign-up, literally, it even details how you can harass people any means possible from text-bombing (because we all love that) too every other form of marketing known to man.
So yeah, sorry everyone, surprise-surprise the "easy money" wasn't so legit after all.
@Joe Villeneuve have you looked into this "golden goose" of a company @Kevin H. is talking up? I did and here is the TRUTH.
First, Kevin H. should have disclosed his financial gains for referring such via the affiliate agreement. Kevin??????
Second, it clearly states on the companies website it is NOT a savings account, it is NOT insured or secured by any agency, group, super-hero or anything. It clearly details the company takes your crypto and loans it out........ AGAIN, they take your crypto and issue it out to others as loans, with 0 security for yourself, zero, zilch, nada. And all this for "as-much-as 8% annual".
Aaaaahhhh so let me see, dump my money into a crypto that changes value more than my teenage daughters attitudes, than hand that to a company who is going to loan that out to other people who than use it to buy MORE bi-polar crypto, and IF they pay back on the loan I can make up to, UP TO 8%APY...... or if they don't, loose everything, or most everything, or get paid but now the crypto is worth half......
Seriously, can anyone think of a dumber investment??????
How about this, send me $10k, I will mail you a hammer to than bludgeon yourself with. Than return the messy hammer and I will send back $9,500.00 as your "return on investment" and odd's are it will far beat this insanity.
Not to mention their "Affiliate Marketer" program which covers anyone willing to sign-up, literally, it even details how you can harass people any means possible from text-bombing (because we all love that) too every other form of marketing known to man.
So yeah, sorry everyone, surprise-surprise the "easy money" wasn't so legit after all.
Yes I did...look at the site too. That's one reason why I asked for specific numbers based on dollars (not percentages), that he received over the last 10 years. I don't want projected numbers based on events that have not happened yet. I want actual dollars made.
Again, that's why I asked for specifics of "how" in dollars, not percentages, and for him to include the formulas/calculations so we can see exactly how and where this "return from the Gods" is generated. It appears as though the majority of his potential projected returns are based on his ability to expand his "downline" affiliates.
Honestly I don’t really think it matters so much what you’re putting your money in so long as your just not holding too much cash. Hold 10-25% cash to capitalize on opportunities, but no more.
RE, crypto, stocks, notes, and the other bagillion ways of investing all have their pros and cons. Just do something rather than nothing.
I think your point about high growth of crypto in the past decade might be faulted though. REI has been around for over a millennia and has proven a true wealth builder through different types and stages of economies. Crypto doesn't seem like it's had that kind of trial by fire yet.
Crypto money should crazy money meaning you can lose it .The up/down swings are staggering don't use scared money .
@Kevin H.
Crypto currency is like its own stock market Crypto currency can also go away. Real estate is the only thing that has ever stood the test of time. We have a lot of clients that are more interested in the passive income than trying to get rich quick.
I am really getting sick of the crypto-cryptocurrency-pimping on this site.
If you think this is crypto-currency-pimping, you should check out reddit and twitter.
I actually think the discussion about it is pretty even-keeled here and I've never seen any outright shilling.
It's something we SHOULD be talking about it, as you can already borrow against your bitcoin and use it for RE projects. It will only become more relevant to the RE world over time, so it's good to learn about it.
POWER IS NEVER INNOCENT. Cryptocurrency WILL be shut down. FDR robbed the rich of their gold holdings. You will be robbed of your Bitcoin holdings, one way or the other. You live under a repressive social order that will crush you when you challenge it. Your neck has yet to feel the government's jackboot on it, that's all. You are all soft ivory-tower dreamers imagining you live in a fair and just society that will gradually give way to an even fairer, more just society, because it's best for its people. For the children. For all mankind. Happy days in a happy land of endless flowing rivers of milk and honey and Bitcoin.
@Joe Villeneuve
Hi Joe, I think your statement is and was valid, however you still have to lock up your money for a year, deal with renovations, maintenance, renting and tenant issues for a historical average of 3% yearly returns on property value, with an 8-10% return on cash. Just look at the returns on Bitcoin since it has been around.
https://www.google.com/amp/s/d... real estate give you those types of returns over 10 years? I’m not saying it’s going to continue to have such crazy returns and I know it is volatile, but ytd it’s up 73%, plus I make a passive 6% off that hold and could sell and be liquid instantly. Why lock up my money for a year hoping to make 10%?
First, why are you trying to compare REI based on the average return? If you invest correctly, you should make well above the average return, and again, you're missing the most important points:
1 - You are buying RE at no more than 20% of its face value. If you put in $100k into BitCoin, what is the immediate value of it? Not in a percentage, but real dollars? If you gained 5% in REI vs 15% in BC, what would the new number values in DOLLARS now look like? Now add the cash flow on top of that for each.
2 - You can recover all of your cost in RE within a year (at worst 5). That means you can reinvest it over again...and again, and again, and... You are compounding your original cost, and never actually spending it. Pull the original investment dollars out completely and you are now investing with "house" money, with infinite returns on your investment.
3 - How long do you think these returns on BC can sustain itself? This is a new vehicle with absolutely no track record, but RE has one of the longest, if not THE longest track record of investment returns.
@Joe Villeneuve,
What do you mean by "You can recover all your cost in RE within a year"? as in the down payment should be recoverable within a year?
@Joe Villeneuve
Hi Joe, I’m not part of any affiliate group, nor am I shilling specific cryptos as Bitcoin is way to main stream for me to move the needle. I will give you numbers though and pardon me if my math is wrong, as it should be close though if it is. First off you’re right blockfi isn’t fdic backed, I feel like the risk is worth it as I have done my own research and am comfortable with the risk. Let’s go into my scenario. I invested into btc in may of 2020, we’ll say after I bought, I put it into blockfi and haven’t sold. This is what my returns are:
Blockfi pays a 6% APY, monthly payout that is able to be compounded and my interest is paid out in BTC:
May 1st 2020 - purchase price: 1 BTC = $87771.57
June 1st 2020 - BTC price $9564.95: 1.005 BTC, .BTC interest = $47.82 and my total holdings = $9612.77
July 1st 2020 - BTC price $9153.95: 1.01 BTC, BTC interest = 45.77 and my total holdings = $9245.72
Aug 1st - BTC = $11354.16: 1.015 BTC, BTC interest = $56.77 and total holdings = 11582.95
Sept 1st - BTC = $11964.21: 1.02 BTC, BTC interest = $59.82 and total holdings = $12205.29
Oct 1st - BTC = $10626.6: 1.025 BTC, BTC interest = 53.13 and holdings = $10894.93
Nov 1st - BTC = 13662.97: 1.03 BTC, BTC interest = $68.81 and holdings = $14181.05
Dec 1st - BTC = $29391.78: 1.035 BTC, BTC interest = $146.96 and holdings = $30436.05
Jan 1st - BTC = $33543.77: 1.04 BTC, btc interest = $167.72 and holdings = $34909.24
Feb 1st - Btc = $45159.5: 1.045 btc, btc interest = $225.8 and holdings = $47232.8
Interest alone I’ve made $872.6 for 10 months, I accumulated.045 more btc which is now worth $2032.18 and my initial investment is up 438%. Again I’m not saying I am done with rei, I just feel at the moment if I had $100k today and was looking to invest it, real estate has too many risk and is less attractive (excessive government printing, unemployment, high housing prices, eviction moratorium’s, etc) I personally feel it would be hard for me to yield a nice return on my money and don’t want to deal with the headaches. As stated, I can put that 100k and earn 8.6% compounded yield and can borrow on it. Yes I miss out on the appreciation of the home and tax benefits, but at the moment bitcoins roi is way better than what real estate could do for me.
It's really comparing apples and oranges. You actually have some level of control with RE investing. You will be able to exert no control over the whims of the market and speculative nature of bitcoin (like the stock market in general). Also, look at volatility index of BTC. Obviously, you're free to invest in what you want and to each there own.
@Dan Rowley @Jim K.
Again, my main question was are people very bullish on the overall real estate market with all the laws and issues going on? In the northeast, they’re not tenant friendly, home prices have gone through the roof and taxes will continue to go up. My goal is to build wealth and rei for me was the best avenue. I am now looking for new alternatives as I don’t have a bottomless piggy bank and crypto is the best choice for me at the moment. I wanted to see if people are looking for different avenues with their money. Jim you sound way to negative, technology is coming, if you do your own research, bitcoin is can not be band as it is decentralized and no entity controls it. It could be regulated and in the short term would hurt the price, it is extremely volatile, but a lot smarter and richer people are poring millions to billions in it. The market cap is too large and too many rich and powerful people are holding it. Blockchain is the new frontier in my opinion, is btc going to be around in 10 years, idk. I do know that forms of crypto are hear to stay and will disrupt many industries, housing included, you can research why. Again it could go to $0 or $1M, idk and I didn’t say I would never get out of it, I listen, learn everyday and decide if it is still viable for me. As of right now, rei makes no sense for me where I feel comfortable putting my money. Clearly the majority of people feel differently and that’s ok.
Hey @Kevin H. I also own some crypto but only a small % of my portfolio. I am mostly in RE. I feel like there is so much potential in Crypto's with strong use cases that one can not really afford to miss the boat if it moons so I participate and also earn passively as you mentioned.
1. Can't use leverage as in Real estate. Yes there are some asset backed loans but not the best rates yet.
2. You can't live in a Bitcoin lol, You can't touch it and you can't renovate it to change it's value. you are limited to buying and selling positions and yes earning passively. Real Estate gives you a lot of control. Most Crypto has very limited exit strategies. The utility of some crypto moving forward with staking, mining, loans etc will soon give one more options however.
3. History and track record. Crypto has not really been proven over a long enough time period. I invest in Real estate because I want some stability in my life. I know mortgages are being paid down, cash flow is coming in and often times the property is appreciating. In 10 years I will be able to go up to my property and touch it. I have a fairly good idea of what it will be worth etc. Find me one person in the world that can tell me a fairly accurate prediction of the price of any crypto 10 years from now.
4. Massive uncertainty in Crypto. Lets look at Bitcoin for example. At the moment large institutions are viewing it mainly as a store of value. Investing in this now old tech to offset the deflation on the fiat dollars they hold. Governments hold and retain control of the population with fiat dollars. They will likely eventually step in to protect their fiat currency. The argument that Bitcoin is decentralised and thus the government can do nothing is silly to me. The government is and will always remain in control by any means necessary. There was a time when gold, also decentralised, was made illegal to own. The same can be done with Bitcoin with the stroke of a pen. Yes it can still be held on a private key but what would it be worth?
5. More uncertainty - Certain countries have already banned Bitcoin mining. The effects on the environment are devastating with the massive power draws of mining. Does this sound like it is in line with the current initiatives of the current administration or does it sound like the exact opposite of what is the current agenda?
Pipeline = bad for the environment (public perception) outcome = banned. Bitcoin = bad for the environment (soon to be public perception) outcome=?
I am pretty sure Biden signed yet another EO yesterday that negatively affects the crypto space. Also the SEC is currently suing Ripple to get a cut of their profits. What if Biden wakes up tomorrow and another EO is placed in front of him that he doesn't read that banned all crypto? As someone who still references record players does he understand all of the potential benefits of the crypto space? No outcome would surprise me but we must know there is massive uncertainty in this space. Much more than most see.
Passive returns are great on crypto but I am looking for a return of investment too. Real estate will do that for me, will crypto?
In my opinion crypto is still speculative since it's not viewed as worth something at most establishments although this is slowly changing.
At this point it's in the same group to me as pokemon cards. It's incredibly volatile, speculative and unproven long term.
Bitcoin could go to the moon, or it could be there already we have no idea. It's a brand new thing and how it will behave long term is impossible to predict or even attempt to forecast. For that reason it's speculative or educated gambling not investing.
Realestate had hundreds of proven strategies to generate wealth long term, bitcoin doesn't.
That being said if having some bitcoin gives you joy buy some and see where it goes. But be prepared to lose large amounts of money very quickly and hope it goes to the moon.