Still think real estate investing is too risky?

Question

At what point is it considered too risky to not be investing in real estate?

Rents are up, our financing is locked in for 5-30 years, and we have control over management. The same can’t be said about my retirement  accounts….

It’s funny how all my old co-workers and friends who used to use the “unclogging toilets at 2am”

excuse as a reason to not invest in real estate are now asking me how to start investing. I guess it took the last week for them to realize

diversifying your stock portfolio doesn’t help much if the market drops the way it did.

Who else is see

ing a change in attitude from past real estate nay sayers?

Theresa Harris · Answer

People get in trouble with investing if they overleverage things.  Even with prices up, people can still get in trouble.  Get a tenant that trashes the place, a large unexpected expense, over renovate.

Michael Plante · Answer

I THOUGHT about buying it when it was $333 because I like the number

But no I did not. 😢

Jay Hinrichs · Answer

this attitude could keep price points up instead of falling like so many U tube alarmist are saying.    And where are all the crypto fan boys now LOL.. unless of course you bough in the beginning at 1k or so a coin.

Tony Kim · Answer

I've HONESTLY never met or known anyone in my life who has expressed a negative opinion to me about investing in Real Estate. I generally keep what I do pretty quiet, but whenever the topic of RE comes up, most people express a genuine desire to invest. A few buddies of mine that know will joke around sometimes by calling me 'the super' but that's about it. They all know and understand the benefits and will come to me for advice once they have enough money saved up. But then again, I've worked for asset managers and hedge funds my whole life, and Asians in general are pretty big on the concept and benefits of property ownership.

Carlos Ptriawan · Answer

Kind of agree, I think we're already in recession already. I'm thinking whether we will see similar Lehman's collapse and whether there will be "too big too fail" so gov. has to rescue their friend, and QE will be restarted..... this is especially true for bank that's financing company like Coinbase/Celcius/any crypto company.Also my bet is if tomorrow's oil price goes back to $80 (like it always happened) then suddenly everything is back to normal.

Tony Kim · Answer

Private markets generally take about 8-16 months to catch-up to a sustained public market correction. Believe me, it'll be coming soon if we enter a recession...which is something most asset managers feel is inevitable at this point.

Jeremy Horton · Answer

It's never not to risky to invest in real estate and there's many benefits to other types of investments - few examples:

401k (I'm a W2 employee) - I write-off 20.5k a year. That money isn't taxed, used as a tax deduction and should average 8-10% a year and requires no effort or thought. And my employer matches a small percentage. Just because the market goes down doesn't mean I'm not going to invest. It went up tremendously the past couple years and on average earns 8-10% a year.

Roth IRA - 6k a year tax free growth. Again requires no thought and will average 8-10% a year

Mutual fund/ETFs etc - again requires no thought and will average 8-10% a year.

HSA - 3k a year, tax free, used for medical expenses. (aka I need a weekend at the beach for my mental health)

Unless your speculating, diverse investment in index funds (such as an S&P 500 tracker) is an easy relatively low risk thing for anybody to do - doesn't require much thought, can give you basic tax deductions, can get tax free growth etc. Just because the market goes up and down doesn't make something high risk.

As if real estate doesn't come with risk - realistically it takes education, money, getting loans (relatively good credit helps tremendously), time etc. It's a hand on investment. You can be faced with property issues as well - slab, plumbing, fires, floods, tenant destruction, adjustable rate mortgages...the list goes on. You have to meet people and create a team. You hear about a lot of people that do well and make it, but believe me there are just as many that don't. So you take steps to mitigate risk, same as you'd do with index funds.

Both investment can be good but any investment has inherent risk.

Rodney Sums · Answer

That S&P chart isn't all bad.

John McKee · Answer

Well the stock market has done well since the last recession, so in some ways I am jealous that I had money on the side lines or in real estate.  I only chose real estate because it's simpler to understand the fundamentals of growth and I have control of the asset.  Businesses come and go, but real estate seems to stand the test of time.

Carlos Ptriawan · Answer

We are the only 'asset class owner' so far that doesn't get hit in the last two months.Simply because the government can't print houses.If they can, we will crash too lol, thanks to 2008 stricter lending practice.In the last 60 days:Crypto owner wiped out stock owner is bustedBond also crashedmoney-market instrument like MINT and low volatility hedging ETF is also down (too complicated to understand)even mortgage-REIT is crashing as well (this one,hard for me to understand why).So far only three asset class survived: SFR/MF, energy sector and NNN assets.

Still think real estate investing is too risky?

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