Being a landlord feels like slavery.
Hear me out. If one more dude in an Armani suit tries to knock on my door and sell me real estate, I’m gonna puke. The Western world is obsessed with real estate investing, according to research from The Economist. Just look at the suckers trying to get rich on real estate.
People call Bitcoin a scam. I’m starting to wonder whether real estate is the real ponzi-scheme. Since the pandemic, real estate investing has gone even more parabolic. Real estate is the new virus.
“Buy property,” says our parents. “Buy real estate,” says the nice lady in the bank branch. “Get rich on property,” says the cheap salesman at the latest investment seminar. It’s a joke.
When everybody tells you to do something, become skeptical. I smell B.S with all the noise about real estate. You should be skeptical too.
Being a landlord isn’t the path to fame, fortune, and the life of a Kardashian.
Here’s what is missed about real estate investing
There are two ways you make money investing in real estate (1) the price of the property goes up (2) you get a tenant to pay rent.
The price of real estate goes up like a Bezos spaceship if you measure it in dollars. It’s enough to get anyone’s juices flowing. Then when you measure the growth of real estate prices in something else (gold, central bank balance sheet, digital assets), the tears start flowing.
Trillions of dollars have been created out of thin air by governments all around the globe. This isn’t a conspiracy theory — it’s a fact. So when money is given out all around the world for free by central bank Santa Clauses, prices of stuff go up. You feel richer. It’s only with a financial education most of don’t have that you realize you’re getting poorer.
Inflation is missed
Inflation (prices increase) is through the roof in places like America where it’s 5.4%. Many investors make 6%-7% on their property every year and then jump for joy. Once you minus the 5.4% things don’t look so rosy compared to what the smiling real estate agent and banker told you.
You can still make money in real estate, but the real numbers are a lot less than the snake oil being peddled by the media that get tonnes of money from the real estate industry in return for ads and PR.
Time lost is missed
Owning a property is a freaking headache. Pain-in-the-ass tenants who want you to come over and wipe their butt for them because the toilet roll holder broke. Time spent dealing with real estate agents who supposedly manage the property but really do nothing.
The average real estate agent has hundreds of properties to manage. Do you really think they’re at an office carefully planning out ways to make your life and the tenant’s life better? Do you really think they’re fussing over interior design magazines so they can help you earn more money from your little slice of heaven? God no.
So what happens? Well, you waste time dealing with repairs and property damage. Then when the tenants rotate, as they often do, you deal with all the headaches of finding new ones and convincing them to stay in your shack for a fee.
Time is worth more than money. Rarely do people add up the time lost to own an investment property.
The stress of debt is missed
Unless you’re Elon Musk’s disgustingly rich son, you’ll probably need debt to buy that real estate fantasy. Debt means going to a bank (where I used to work) and getting down on your knees to plead for a loan. The bank will play with you and make you fill out tonnes of forms.
*Puts on the voice of Jigsaw from the Saw Movies*
Do you want to play a game?
They’ll put on a formal voice and say “Now Mr Anderson … let me see … hmmm. Your debt to equity ratio looks too high. The industry you work in is not so safe anymore. We’ll probably need you to take mortgage insurance to protect ourselves from the risk (and make more money).”
At the end of the process you’ll feel like you won the lottery for getting the loan. The amount they give you will always be less than you asked for — just to mess with you even more.
Then the repayments start. Suddenly the huge debt that appears in your banking app starts to have an effect. What makes it hard is when the inevitable recession happens. Tenants panic. Prices of real estate can go down. Sudden cascades of owners wanting to sell can flood the market. And if you lose your job, or the tenants lose their job, you can be in for a world of pain.
Debt is stress.
What’s the point of making an average return on property if the stress from it decreases the quality of your life?
The amount of time it takes to get rich
Property takes years for its magic powers to ever make you money. It’s a slow grind. If the whole property fantasy does work out for you, then you’ll be old and unable to enjoy the money to its full potential. You’ll be tired from all the work and stress it took to get there.
I’m not interested in betting a large amount of money using debt, to buy real estate, hope it does well, and then collect the profit when I’m close to my deathbed. No thank you, pal. Maybe you can relate?
This one’s rarely spoken about: Access to property
There’s a little secret in the finance world I’ve spent most of my life in: access. The best investments are typically off-market. What does that mean? Us normies aren’t told, or able to buy many investments.
This applies to real estate. The bargain properties are often quietly marketed to the rich before the scraps are marketed to the masses. We can’t (yet) buy 0.1% of a penthouse in Manhattan. Nope. You either buy the whole property to access the excellent returns or you buy none.
The rich get access normal people don’t so their investment returns in real estate, which you hear about in hype news channels, can’t be replicated by normal people. I call it information inequality.
Here’s what’s better than stinking real estate
The problem is we’re told to buy real estate because it supposedly requires very little work once you’re in. The reality is far different. Nothing worthwhile in life comes easy.
There are two simple solutions that don’t require pain-in-the-butt real estate.
1. Invest in real businesses
Maybe you’re not a hip entrepreneur with a backpack and Starbucks cappuccino in hand. I get it. Businesses make money. They require plenty of analysis and research before deciding which ones to invest in.
Investing in high-growth tech or blockchain will make you much more money. Billionaire Mark Cuban says to look for tech companies like Amazon that have a focus on artificial intelligence. I love game-changer tech like Ethereum. Do your research and find out what the trends are. As technology changes the planet, your personal wealth can grow exponentially with it.
Making home real estate a pretend business is where we went wrong.
2. Build a tiny business
You don’t need any employees. You can simply be a freelancer or a content creator or sell eCommerce products. The key is to build your tiny business on the side after work. Then you can either keep the business on the side or have it become your main gig.
Again, real estate is lazy. The work of starting a business is hard. Hard obviously pays better than lazy in the long run.
It boils down to this
The buying property to get rich dream needs to die. It’s modern-day snake oil that takes decades to realize it’s wrong.
A small number of real estate investors make money, the average person does not. And they endure enormous stress in the process.
Thanks to inflation and the creation of money out of nowhere, many real estate investors never see the losses. And when the government needs more money, they can simply tax your land. Unfortunately, real estate isn’t portable. You can’t say “Sorry California, I’m moving my land elsewhere.”
You can obviously sell but then the market can discount your property by the cost of the new taxes.
I will never be a stinking landlord. There are better ways to make money when you learn about business or dare to start your own.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.