Why Real Estate is Bullsh*t

[rileysather]

So first off, I am new to the forum. But as far as the title goes (Yes, I know it was clickbait), I ask you if Real Estate is worth it or not because I was watching an Alex Hormozi video and he said once you commit to an investment (stocks, real estate, crypto) Then you are stuck with that. He also said you should invest in yourself first through courses and learning skills. Is this true?

Edit: None of you can seem to figure out that the headline was there just to get you to comment something because I know little to nothing about entrepreneurship so far. No need for dickhead comments.

 

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[Antifragile]

Yes, Real Estate is 100% bullshit, I agree. There is nothing in it for anyone. I've never met a single person who got rich in Real Estate, only losers. Sam Zell could have been somebody and yet look at him now. He chose Real Estate so I am not going to feel pity on his horrible performance, a lame $6 Billion net worth. Just imagine what he could have if he chose something truly worthwhile, like selling T-Shirts on the internet!

And you are also 100% right, once you choose a path there is nothing you can do to change your mind or direction. We humans are like that, if only there was something between our ears that could allow us to change our minds.



/satire

 

[GPM]

Another reason why real estate is BS that @Antifragile missed. What is the point of real estate? Do we really need to live in houses? I think the answer is no, just as Herr Klaus. Also, we don't need businesses either as they are just greedy and steal from people and profit should be outlawed. And we all know that businesses are in buildings, and that is all on real estate.

I rest my case.

 

[Antifragile]

What kind of exercise do lazy people do?
Diddly-squats.

 

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[JAJT]

once you commit to an investment (stocks, real estate, crypto) Then you are stuck with that. He also said you should invest in yourself first through courses and learning skills. Is this true?

You can't honestly not know the answer to this, right?

How can you ever be "stuck" with an investment? I own a rental duplex right now - I could sell it anytime I want to. I'm not going to though, because right now there are two lovely tenants paying me enough to not only pay down the mortgage but also put a few hundred bucks in my pocket every single month.

With a typical investment you open an account and deposit funds every month to grow it over time. With real estate I paid 20% of the then-market value and someone else is going to be depositing those funds into my account. Every month. Forever.

Even still - I COULD sell it. I'm not stuck. Same with any other investment. I owned crypto for a while, didn't like the experience, and got out. Nothing stopping me from divesting. Also, why can't you invest in yourself AND invest in a financial tool at the same time? It's not "one OR the other", and its not "one THEN the other" - it can very well be "one AND the other".

If you don't know what you're doing you can certainly lose money but that holds true for just about anything you spend money on without understanding it - including personal development! There are countless people who have gone to a free personal/professional development seminar only to learn basically nothing and get upsold to the $1,000 "VIP" seminar where the 'real' information is, only be to upsold to the $5,000 per year "Executive Members Club" where the super-elite share the 'real' secrets, only to be upsold on the $20,000 Super-Exclusive Cruise where you get 'exclusive access' to the ultra-wealthy face of the scam who will eat shrimp cocktails and tell you the real key is to pay attention to the new program coming out next year that you're hearing about before anyone else and will get preferential pricing to, you lucky guy you.

 

[Two Dog]

So first off, I am new to the forum. But as far as the title goes (Yes, I know it was clickbait), I ask you if Real Estate is worth it or not because I was watching an Alex Hormozi video and he said once you commit to an investment (stocks, real estate, crypto) Then you are stuck with that. He also said you should invest in yourself first through courses and learning skills. Is this true?

Do YOU think that's true?

Keep in mind that you're not Alex Hermozi. You don't have his experience, skills or financial success.

All of which implies to me that you should learn enough to make your own decisions vs. blindly parroting someone else.

 

[SalesGod]

When Alex and other business owners say these things they are referring to the average person making 50-70K per year with 20-30K in savings, yes real estate is BS and is not going to make you wealthy in any timeframe less than a decade.

Your first focus with extra money at that income level should be put into:

1. Acquiring new skills, moving places, networking, doing literally anything to scale your income (eg. going from low level sales rep selling windows in Utah to enterprise SAAS rep in New York tech, 50K->200-400K income)

2. Starting a company that will ROI better than any RE deal.

If you go from 50K to making 400K a year you will have 5 figures every month worth of disposable cash to invest which can actually make a dent. But sacrificing your disposable income (when you only make a modest income) putting 500-1000 toward real estate isn't going to do much in terms of ROI.

Just go watch an episode of shark tank, you'll see folks who started a company with 500-5000 and if it goes well they are profiting 6+ figures per year within 1-3 years. They suddenly have an asset worth nearly or beyond 7 figures. This never happens in real estate, the math just doesn't check out.

Investing only becomes interesting when you have large cash reserves, one line that stuck with me from MJs books was something along the lines of:

6% of 1 million is only 60K per year which isnt going to do much except pay the bills, now 6% of 10 million is 50K per month and you can live a great life on 50K per month.


Short version: RE can make you wealthy over a very long time horizon and the market trending in your direction, but 0% of people go from 30K->7,8 figures in under 5 years when they start with typical levels of income/savings, but that happens in business all the time.

 

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[Two Dog]

Just go watch an episode of shark tank, you'll see folks who started a company with 500-5000 and if it goes well they are profiting 6+ figures per year within 1-3 years. They suddenly have an asset worth nearly or beyond 7 figures. This never happens in real estate, the math just doesn't check out.

You're right about the short term math. RE is not for earning spending money. However, you're also ignoring the reality that RE investing is largely passive vs. building a business throwing off six figures in annual profits takes a considerable amount of work and skill.

As usual, it's not an either or. Most people running a business can easily add a bit of RE to their assets. Purchase a home and add roommates, rent out half a duplex, buy an office building and lease it out to other business owners, start a co-working space. It's no different than putting money into an investment portfolio while earning a living.

 

[rileysather]

You're right about the short term math. RE is not for earning spending money. However, you're also ignoring the reality that RE investing is largely passive vs. building a business throwing off six figures in annual profits takes a considerable amount of work and skill.

As usual, it's not an either or. Most people running a business can easily add a bit of RE to their assets. Purchase a home and add roommates, rent out half a duplex, buy an office building and lease it out to other business owners, start a co-working space. It's no different than putting money into an investment portfolio while earning a living.

Real estate is not passive.

 

[Kak]

Real estate is not passive.

“Real estate” is an entire economic sector, not a business. There are thousands of different real estate related business models.

Either way, you’re right, it’s BS. We should all be living in the wilderness and eating bugs. Civilization is stupid.

 

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[inputchip]

There are more low-IQ rich people in real estate than any other industry. But I'm not implying it's foolish to be in real estate.

What I'm saying is -- if you want to get rich without being a genius, real estate has a high probability of success.

 

[ygtrhos]

I own a 3 room flat, which I bought in 2020. After paying loan and admin costs, it leaves me 200-250€ every month. Just because it is in a city that not many people prefer to invest in. (imho, due to ignorance and prejudice) It also pays 140€ loan back (direct into my net worth).

I paid around 6500€ upfront for this. It has amortised itself already, I guess. And I have an interest guarentee for 11 years from now on.

I did not even have to put a nail in it to find a tenant for the flat. Very clean one.

This kind of deal happens 1 in 100, but I was into driving my car that summer in Saxonian countryside. So I invested some time and money into finding properties. (like a side hustle)

I spent maybe 6-10 hours in a year for this property, since I bought it. So we can consider it "passive".

Does that rental income of 250€ make me "rich"? No.

Does it make me "richer"? Yes.

As a well-paid employee, I made leverage of cheap money I was able to loan.

Furthermore, I learnt that making good use of borrowed money brings income.

Back in the day, I could get a loan for 1,2% for 100% loan. Now I cannot even get 4% for 90% loans.

It made sense back in the day, because buying a flat with 1.2% interest for 1k€/sqm and renting it for 6-7€/sqm made a lot of sense.

Now it is 1.2k€ / sqm, rent the same and loan interests are 4-4.5%.

Unless the buying price is reduced, it makes very little sense for me.

So now, in my area, I would rather not buy any properties.

 

[JAJT]

Real estate is not passive.

Passive doesn't mean "no work", it means your income is "disconnected" from the time you put in.

You to go to work, put in 8 hours, get paid for 8 hours = your time is directly connected to your income. 8 Hours of work in, 8 hours of income out. That's a 1:1 trade.

If you spend 20 hours looking at investment properties, 2 hours doing paperwork, 40 hours fixing up the rental, and then offer it for rent, you've spent a lot of "active" time here. The key though, is that going forward, you are getting paid while you sleep, work out, play with your kids, etc. Your income is now disconnected from time. You may need to spend an hour on paperwork here or property maintenance there, but you have escaped the 1:1 trade of time for money.

I've been paid for 10 months of rental income on my duplex this year. I can tell you I've spent maybe 10 hours all year on this. A broken water tank, a rent increase, a unit turnover, etc. Mostly fixed by sending an email or call to my property manager and paying a few bills. In return, I've received tens of thousands of dollars.

All passive income requires up front work and regular maintenance. Doesn't matter if that's an online store, a franchise, real estate, money lending, etc. Breaking the 1:1 trade is what defines passive income, not a lack of work or effort.

 

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[LateStarter]

Investing in yourself first is always the right move. Whether it's getting MJ's book(s), taking a course, or investing your time in YouTube tutorials and forums; those are investments in yourself and your future.

Real estate is not BS. I hit my net worth goal in less than 10 years thanks to real estate. It's not overnight, but it's not slow lane either. Now I'm trying to figure out how to scale it 10x.

As people have already pointed out, it's an industry and there are many different approaches and angles to using real estate to build your net worth. It's cash intensive and can take some skill to scale quickly. It's also easy to overextend and get yourself into trouble. Diversifying your interests to maximize the opportunities and reduce your risk takes some knowledge and vision. In many ways, it's no different than any other niche or business opportunity; you can half-a$$ it, or commit.

 

[SalesGod]

As a well-paid employee, I made leverage of cheap money I was able to loan.

This is the key part, investing in RE, Stock market etc only becomes interesting & highly rewarding when you have a high saving ratio:

Someone making 400K per year can easily live off 20% of their after tax income and invest the rest (over 150K) per year in RE/Stocks if they like.

But someone making an average salary of 50K which leaves them with approx 3K per month after tax. Even if they live in a 500 a month basement, live off ramen noodles and water never go out etc you still won't be able to invest meaningful amounts in RE

 

[thechosen1]

But someone making an average salary of 50K which leaves them with approx 3K per month after tax. Even if they live in a 500 a month basement, live off ramen noodles and water never go out etc you still won't be able to invest meaningful amounts in RE

I had a job making about 60k post tax after college and I was living with my parents with pretty much no bills. I did this for a year, saved basically all of my money, and it kickstarted my real estate investing career. 3 years later I had equity north of $300,000 - with quite a few bills of my own.

Yes, you could invest meaningful amounts in real estate on 50k per year, in a 500/month apartment, eating ramen noodles as well.

It's called being resourceful, disciplined, and creative. If you want to make it happen, you'll find a way. If you don't, you'll find an excuse.

 

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[LateStarter]

This is the key part, investing in RE, Stock market etc only becomes interesting & highly rewarding when you have a high saving ratio:

Someone making 400K per year can easily live off 20% of their after tax income and invest the rest (over 150K) per year in RE/Stocks if they like.

But someone making an average salary of 50K which leaves them with approx 3K per month after tax. Even if they live in a 500 a month basement, live off ramen noodles and water never go out etc you still won't be able to invest meaningful amounts in RE

Not true. What you've described, and tried to pass as fact, is a limiting belief.

You need to have enough capital to start with 1 property and, depending on where you live, there are different programs available to help you minimize your down payment to get in the game.

Those with an average salary have even more upside potential by getting into real estate early on! A simple BRRR strategy with a duplex can make you a rent-free homeowner in literally months.

 

[heavy_industry]

If you want to make it happen, you'll find a way. If you don't, you'll find an excuse.

One of the best quotes I've read.

 

[Antifragile]

Real estate is such a broad field, almost anything and everything is possible here.

I can't take anyone seriously who doesn't understand. In our business, we use over 300 consultants to deliver projects. Each one of them is a business that's tied to RE. That's the number of various businesses that can be done in RE.

Why is everyone always focused on "When I have a few $mil I'll buy something to rent out" and see that as "Real Estate business"? That's the lowest hanging fruit and is mostly capital preservation.

What is Fastlane in RE?

• Architects use 3D modelling software,
• construction (general contractors) use software for sequencing projects,
• sales teams use software to track clicks and lawyers automate Purchase and Sale contracts!

That's just a few ideas on software alone, there are literally hundreds of ways to make it in RE.

Other ideas:

• Interior design,
• furniture rental for staging,
• tenant improvements (renovations!)
• material supply
• and yes... even website design and copywriting

All of it is possible under the RE umbrella. And as you learn and earn, you can then do the capital preservation by buying Income Producing Properties (IPPs).

Thats why I love this industry, it is whatever you want it to be!

 

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[Patryk.]

One of the best quotes I've read.

The one chosen quote. Subscribe now for more!

 

[Black_Dragon43]

Real Estate is worth it

For you, no, real estate is probably not worth it. And for every other average Joe out there - probably not worth it.

For you competent employee (and this isn’t an average Joe who smokes pot and chills watching Netflix) - I’m referring to doctors, lawyers, engineers - real estate is probably the best you can do with your extra money.

For hungry, ambitious deal makers real estate is the original fastlane. Big prices means big deals. Big deals means potentially big profits.

If you fall in this category, your “game” isn’t to get a mortgage, buy some property who knows where, and rent it out. Or even go about fixing it yourself to sell it.

Your game is to find great deals, with motivated sellers, and secure funding through partners if you have no cash of your own, to buy the property at a win and then resell it for big profits.

OR

To build a dream team, secure big funding on an ambitious project, and crush it that way as a developer, even with 0 cash of your own. You’ll have to get projects made by architects and specialists on a deferred payment basis, make sure your team has some big names for credibility, and you do the work of putting the deal together, gettingn approvals, preselling it, getting bank loans and all the rest. One deal could make you a millionaire.

Since these last two options aren’t what your average Joe is capable of or even thinking about for that matter, real estate sucks balls as an option for them. Find another business. Ideally something simpler to start with.

Like go buy and resell stuff on eBay.
Or go learn a skill and start freelancing.

Just do something productive that is realistic and within your capabilities. Your capablities will grow with time.

 

[ygtrhos]

This is the key part, investing in RE, Stock market etc only becomes interesting & highly rewarding when you have a high saving ratio:

Someone making 400K per year can easily live off 20% of their after tax income and invest the rest (over 150K) per year in RE/Stocks if they like.

But someone making an average salary of 50K which leaves them with approx 3K per month after tax. Even if they live in a 500 a month basement, live off ramen noodles and water never go out etc you still won't be able to invest meaningful amounts in RE

I have also around 50k€ net income (which is high, but not in top 5%) but I am not living in a top tier city. I save around 50-60% of that income every year.

I repeat, I paid only 6k€ and loaned 77k€. Everybody can save 6k€. But nobody showed interest in the places I wanted to invest in. I was trying to become a bigger fish in a smaller pond.

This is nothing Fastlane or whatever. Nothing fancy either. 250€ a month is not making me rich. But it is income.

Also: I had that option, when cheap money was around. But those days are gone.

 

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[MJ DeMarco]

Real estate is not passive.

We have a member chronicling their AirBNB profits with ONE property on the INSIDERS forum. He owns several. He has a property management company that does everything. I'm guessing he spends 1 hour a week to earn $80K+ on one property alone. Most people have to work and commute 50+ hours a week for the entire year to earn a comparable income.

If one hour a week for $80K a year is not passive enough, I'm not sure what is.

Likewise, I own nearly 7-figures in REIT stocks that pays me several thousand dollars a month in free "mailbox money" -- it also takes me about 1 hour per week to manage (a glancing look) at these stocks. I purposely get a check sent to my house every month and it is 99% passive -- it actually feels like winning money.

While I prefer business over real estate in terms of wealth accumulation, making binary, absolute statements like this will not endear you to the community.

 

[Walter Hay]

Real Estate has been good to me, but it has never been what I would call a business.

I did well out of careful observation of the market, and buying at the right time and in the right place.

My first home after marrying was small, but the land was at a bargain basement price, being the last block in a small subdivision and the developer had been unable to sell it because of a drainage easement. That was no problem for me because the drainage was already underground, well clear of the flat area near the front where I built the house.

Money was tight in those early days mainly due to my medical bills, but I managed to landscape the entire 1/2 acre, and by the time the market was booming I had no trouble selling at a very big profit without the aid of a Real Estate agent.

I already had another bargain in my sights. A nice house on 5 acres of bushland where I could build my factory. The vendor's agent didn't need to work hard because I could see by the amount of unfinished parts of the house that the owner was in financial trouble.

Seven years after that, the local government authority re-zoned the area as residential, with subdivision of allotments down to 1/4 acre. I sold at an excellent profit.

Another 5 acre property nearby with a beautiful home was on the market due to the owner's bankruptcy, and I paid cash. There was a semi-secluded area where I was able to build a new factory, and we enjoyed the location with great views.

The next purchase had 2 homes on 100 acres of extremely productive land where we started our cattle breeding enterprise. The smaller home served as the office for my next business, importing and marketing badges, and building my franchise empire.

Another 7 years passed, and we sold by auction at 2 1/2 times the price we had paid. This led to a move to a 2,000 acre property with beautiful mountain views, where we greatly increased the size of our herd. I and my family were somewhat like nomads, and after 10 years we moved again.

Every move had substantially increased our wealth, but our property choices had to be in places where we enjoyed living. Our last home was on a hilltop with views that embraced green low country and views to distant mountains as far away as 100 miles.

I never set out to be a Real Estate entrepreneur. In effect I was an opportunist.

Walter
P.S. I always sold without the aid of a RE Agent. I tried a couple and gave up on them considering them not worth feeding. I could outsell them any day.

 

[Two Dog]

Real estate is not passive.

Sounds like someone who's never owned RE. Name an investment you consider to be passive.

 

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[wanttogofaster]

We have a member chronicling their AirBNB profits with ONE property on the INSIDERS forum. He owns several. He has a property management company that does everything. I'm guessing he spends 1 hour a week to earn $80K+ on one property alone. Most people have to work and commute 50+ hours a week for the entire year to earn a comparable income.

If one hour a week for $80K a year is not passive enough, I'm not sure what is.

I was thinking about this a few days ago and wondered why no one had mentioned the Airbnb businesses here in the forums.

I came across a few over the summer that didn't even own the properties, they are just renting them out and still making a bunch (meaning, if you are in the correct city, etc, one does not even need a lot of money for down payments, etc.)

Definitely not cents, as you are relying on Airbnb (some have their own property websites, but who knows how much traffic they get on those) and many are fighting against local/HOA regulations, but definitely better than getting $2K~$3K a month from regular, long term rentals.

 

[Johnny boy]

So first off, I am new to the forum. But as far as the title goes (Yes, I know it was clickbait), I ask you if Real Estate is worth it or not because I was watching an Alex Hormozi video and he said once you commit to an investment (stocks, real estate, crypto) Then you are stuck with that. He also said you should invest in yourself first through courses and learning skills. Is this true?

Edit: None of you can seem to figure out that the headline was there just to get you to comment something because I know little to nothing about entrepreneurship so far. No need for dickhead comments.

I agree with you.

 

[thechosen1]

So first off, I am new to the forum. But as far as the title goes (Yes, I know it was clickbait), I ask you if Real Estate is worth it or not because I was watching an Alex Hormozi video and he said once you commit to an investment (stocks, real estate, crypto) Then you are stuck with that. He also said you should invest in yourself first through courses and learning skills. Is this true?

Edit: None of you can seem to figure out that the headline was there just to get you to comment something because I know little to nothing about entrepreneurship so far. No need for dickhead comments.

You asked if real estate was worth it or not and you got a lot of golden responses about real estate from some people with tremendous experience… even some guys with very big businesses and high net worths doing various things involving real estate.

They’re not all “dickhead comments.” This turned into a pretty good thread actually.

 

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[Two Dog]

None of you can seem to figure out that the headline was there just to get you to comment something because I know little to nothing about entrepreneurship so far. No need for dickhead comments.

Try it a few more times and see how it works out. If you think these are "dickhead comments", look in the mirror.

 

[Antifragile]

Try it a few more times and see how it works out. If you think these are "dickhead comments", look in the mirror.