All Forum Posts by: Ryan Daulton

Absolutely, it's great that you're doing your research and seeking to understand the advantages of real estate investing over other forms of investment. Here are some additional advantages of real estate that you can share with your family member:

1. 1. Leverage: Real estate allows you to leverage your investment capital to purchase a larger asset. For example, you can use a mortgage to buy a property, which means you can control a more valuable asset with less of your own money.
2. 2. Inflation Hedge: Real estate has historically been a good hedge against inflation. As the value of properties and rents tend to rise with inflation, your investment can maintain its value over time.
3. 3. Control: Unlike stocks or bonds, where you have little control over the performance of your investment, real estate allows you to directly influence its value. You can make improvements to increase the property's value and income potential.
4. 4. Diversification: Real estate can be a valuable addition to a diversified investment portfolio. It doesn't always follow the same trends as the stock market, so it can provide a level of stability and diversification to your overall portfolio.
5. 5. Tax Benefits: Real estate offers several tax advantages, including deductions for mortgage interest, property taxes, and depreciation. These deductions can significantly reduce your taxable income and increase your cash flow.
6. 6. Income Potential: Rental income from real estate can provide a steady stream of passive income, which can be particularly attractive for retirement planning or supplementing other income sources.

While your family member raised valid concerns about the risks and expenses associated with real estate investing, it's important to weigh these against the potential benefits and your own investment goals. Every investment carries risks, but with careful research, planning, and management, real estate can be a rewarding and profitable investment option.

I'd say to first and foremost make that clear distinction that it's NOT an "investment" that it's you, or anyone, starting a Business. 

Yes, the Business "invests" in it's assets that it will need and use to create the revenue. Just like a contractor with his tools, truck, scaffolding etc.. And if anyone says a GC doesn't have nearly as much $ tied up into assets, lol, tell em they couldn't be more wrong, I had way more in tools and equipment then any 2 properties cost whole $ but when factor against just the capital outlay.... my shop and all equipment was roughly 12 if not 15,20 properties worth of "stuff". 

One simply can not compare a Real Estate Business like Landlording for standard rentals too "investing" such as CD's, stocks, bonds etc., there just totally different things as comparable as a CD vs a Taco Truck. 

Down the rabbit hole a bit more.... 

Let's say you DO try to do Real Estate as a "pure investment". You setup a trust, who sets up an LLC. With that LLC it buys real estate and conveys it to you, the person, on a Triple-net lease basis for your personal actions of letting for profit.

Now comparing the biz to a CD.... Let's say it's $50k to play with, over 5yrs. 

CD earns say 5%. That's it, done deal, 5%, nothing else. - $12,500 "profit".

With Real Estate, say we get $200k property, and now were $50k out of pocket "invested". 

Real Estate appreciates just 4% annually - $43,330.58 "profit"

Let's say rents 1st yr are, say $1,700 and so it's a net 0 1st yr. But rents appreciate just 4% per yr. - By end, rents are touching on $2k per month. $7,200+ profits from rent over the time. 

Mortgage paydown via tenant payments. Now let's say that accounts for JUST $50mnth 1st yr and only grows at $50mnth each yr, because of the amortization curve (no, I don't feel like pulling out the chart and doing this full-out for real'sies)- That's $9k "profits". 

We will skip tax advantages, as this case by case and too much math to make argument here. 

So what have we go? We have CD at $12,500 vs Real Estate at $59,530.58

Real Estate could perform HALF of what I laid out here, which is rather conservative really, and it would still be WAY more than double the profitable return CD is....... 

It's not a competition between the two anymore than a foot race between a snail and a cheetah.