I’m feeling FOMO about real estate because it’s popular in the FIRE community and among my social circle. However, I see real estate as risky with tenant issues and maintenance costs, compared to more liquid investments like S&P index funds.
I’m considering real estate mainly as a hedge against market crashes and for potential rental income during downturns, assuming I have good tenants. Is this why it’s so popular?
I wonder if the enthusiasm in the FIRE community for real estate overlooks the risks, with success stories overshadowing potential losses. None of my contacts seem to be getting rich from it, yet many see it as a path to retirement.
Real estate investing is popular due to its potential for generating rental income, property appreciation, and profits from business activities tied to the property. Key benefits include passive income, stable cash flow, tax advantages, diversification, and leverage, making it an attractive option for building wealth and financial stability.
Real estate is material. I can drive by and have a look at a house if I own it. I am aware of the address. I also feel like I have power because I can decide whether to accept a particular tenant, alter the color of the paint, etc.
Sincere query: what would happen if you took into account both the potential capital gains from the sale of the property and the tax benefits of depreciation during the rental property’s ownership? Those two elements would surely affect your property’s actual cash in-cash out returns.
Lilnim, I appreciate you pointing out the advantages of real estate investing. It is undoubtedly a desirable alternative for accumulating wealth and ensuring financial stability due to the possibility of producing rental income, property appreciation, and other earnings in addition to passive income and tax benefits. Thank you for your wisdom!
That is a really well-made point, Brianna. The tangible components of real estate ownership, such having the opportunity to personally inspect the property and make decisions about improvements and tenants, can provide one a sense of control and contentment with their ownership. It’s one of the unique advantages of investing in real estate.