When I came to this country right before the turn of the century, I had no idea my path would lead to real estate investing. In fact, I had no idea what “real estate” or “investing” meant. I was born and brought up in Albania – a rugged country in southern Europe on the Mediterranean and home to one of the most ruthless communist regimes anywhere. If you want to know what it was like, just watch any documentary about North Korea and you’ll have a close enough picture. No private property, no religion, no notion of freedom or free speech.
I was ten years old when the winds of change blowing south from the Berlin wall took down the regime in violent revolts. Eight years later I found myself in Texas studying accounting and finance and getting a first glimpse at the world’s greatest economy at work. After college I started working for a small real estate firm in Houston handling mostly commercial and investment real estate. And I don’t know why or how but I just felt like a fish in water – I had found my calling.
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Ten Years Later
Fast forward ten years later – With the proverbial ten thousand hours under my belt and standing on the shoulders of giants, I find myself devising real estate investing strategies for people to help them retire using real estate investments.
Go along with me on a comparison, if you will. On the one hand, as a vital part of the investing process, prospective investors ask me skeptical questions about risks involved that could derail the performance of their investing portfolio. There’s a natural hesitation there that wants to make sure this first important step is placed firmly on secure ground. My business thrives on the basis of answering those questions and in the process, dissipating that hesitation.
On the other, my friends living and working throughout Europe (Italy, France, UK) read my writings on real estate investing and sigh. These real estate investing strategies just aren’t possible where they live. The lethal combination of sky high prices and low rents ensure thousands in negative cash flow every single year. And that’s not even considering economies in recession and sky high unemployment.
Investing in Real Estate in Europe vs. the United States
Take a look at the map visualization of price to rent ratios all over the world. Madrid 26.99, Milan 22.86, Berlin 16.91. Even, Moscow 23.3, Liverpool 11.96 and Guadalajara 16.91. Then look at the house price to income ratios, too. Quick, what do the back of the napkin cashflow numbers look like for a property with a price over 20 times rent? Not pretty, that’s for sure.
During a phone call last year, an engineer friend of mine living in Italy put it best: “What you guys are able to do with rental property in the US is amazing! It’s like finding treasure every day you wake up.”
That really puts things in perspective for investors in the US, doesn’t it?
So what’s the moral of the story, kids? Skepticism is fine – even prudent in some cases. But if you live in the US and have the means to invest in real estate but choose not to out of fear or low tolerance for inconvenience, that’s like finding treasure every day but turning it down because the gold is too dusty.
Do you agree? Let me know in the comments!